3 E Network Technology : Annual Report for Fiscal Year Ending June 30, 2025 (Form 20-F)

About this update from 3 E Network Technology Group Ltd

[{"type":"text","content":" UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 20-F (Mark One) \n ☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934 OR \n ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended June 30, 2025. OR \n ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 OR \n ☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of event requiring this shell company report For the transition period from to Commission file number: 001-42466 3 E Network Technology Group Limited (Exact name of Registrant as specified in its charter) N/A (Translation of Registrant's name into English) British Virgin Islands (Jurisdiction of incorporation or organization) No.118 Connaught Road West, 3003-2 \n Hong Kong (Address of principal executive offices) Tingjun Yang Chief Executive Officer Tel: +852 97502047 E-mail: [email protected] No.118 Connaught Road West, 3003-2 \n Hong Kong (Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person) Securities registered or to be registered pursuant to Section 12(b) of the Act. Title of each class Trading Symbol Name of each exchange on which registered Class A ordinary shares, par value \n US$0.0001 per share MASK The Nasdaq Stock Market LLC \n (The Nasdaq Capital Market) Securities registered or to be registered pursuant to Section 12(g) of the Act. None (Title of Class) Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act. None (Title of Class) \n Indicate the number of outstanding shares of each of the issuer's classes of capital or ordinary shares as of the close of the period covered by the annual report. \n There were 11,830,000 ordinary shares, comprised of (i) 11,250,000 Class A Ordinary Shares, par value $0.0001 per share; and (ii) 580,000 Class B Ordinary Shares, par value $0.0001 per share, as of June 30, 2025. \n Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. \n Yes ☐ No ☒ \n If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. \n Yes ☐ No ☒ \n Note - Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections. \n Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. \n Yes ☒ No ☐ \n Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). \n Yes ☒ No ☐ \n Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or an emerging growth company. See definition of \"large accelerated filer,\" \"accelerated filer,\" and \"emerging growth company\" in Rule 12b-2 of the Exchange Act. \n Large accelerated filer \n ☐ \n Accelerated filer \n ☐ \n Non-accelerated filer \n ☒ \n Emerging growth company \n ☒ \n If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards † provided pursuant to Section 13(a) of the Exchange Act. ☐ \n † \n The term \"new or revised financial accounting standard\" refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012. \n Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐ \n If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐ \n Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐ \n Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing: \n ☒ U.S. GAAP ☐ International Financial Reporting Standards as issued by the International Accounting Standards Board ☐ Other \n If \"Other\" has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. \n ☐ Item 17 ☐ Item 18 \n If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). \n Yes ☐ No ☒ \n (APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS) \n Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. \n Yes ☐ No ☐ \n TABLE OF CONTENTS \n INTRODUCTION \n iii\n FORWARD-LOOKING INFORMATION \n iv\n PART I \n 1\n \n \n ITEM 1.\n IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS \n 1\n \n \n ITEM 2.\n OFFER STATISTICS AND EXPECTED TIMETABLE \n 1\n \n \n ITEM 3.\n KEY INFORMATION \n 1\n \n \n 3.A.\n [Reserved] \n 9\n \n \n 3.B.\n Capitalization and Indebtedness \n 9\n \n \n 3.C.\n Reason for the Offer and Use of Proceeds \n 9\n \n \n 3.D.\n Risk Factors \n 9\n \n \n ITEM 4.\n INFORMATION ON THE COMPANY \n 50\n \n \n 4.A.\n History and Development of the Company \n 50\n \n \n 4.B.\n Business Overview \n 51\n \n \n 4.C.\n Organizational Structure \n 68\n \n \n 4.D.\n Property, Plant and Equipment \n 69\n \n \n ITEM 4A.\n UNRESOLVED STAFF COMMENTS \n 69\n \n \n ITEM 5.\n OPERATING AND FINANCIAL REVIEW AND PROSPECTS \n 69\n \n \n 5.A.\n Operating Results \n 69\n \n \n 5.B.\n Liquidity and Capital Resources \n 76\n \n \n 5.C.\n Research and Development \n 78\n \n \n 5.D.\n Trend Information \n 78\n \n \n 5.E.\n Critical Accounting Policies and Estimates \n 78\n \n \n ITEM 6.\n DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES \n 81\n \n \n 6.A.\n Directors and Senior Management \n 81\n \n \n 6.B.\n Compensation \n 82\n \n \n 6.C.\n Board Practices \n 84\n \n \n 6.D.\n Employees \n 86\n \n \n 6.E.\n Share Ownership \n 86\n \n \n ITEM 7.\n MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS \n 88\n \n \n 7.A.\n Major Shareholders \n 88\n \n \n 7.B.\n Related Party Transactions \n 88\n 7.C. \n Interests of Experts and Counsel \n 89\n \n \n ITEM 8.\n FINANCIAL INFORMATION \n 89\n \n \n 8.A.\n Consolidated Statements and Other Financial Information \n 89\n \n \n 8.B.\n Significant Changes \n 90\n \n \n ITEM 9.\n THE OFFER AND LISTING \n 90\n \n \n 9.A.\n Offering and Listing Details \n 90\n \n \n 9.B.\n Plan of Distribution \n 90\n \n \n 9.C.\n Markets \n 90\n \n \n 9.D.\n Selling Shareholders \n 90\n \n \n 9.E.\n Dilution \n 90\n \n \n 9.F.\n Expenses of the Issue \n 90\n \n \n ITEM 10.\n ADDITIONAL INFORMATION \n 91\n \n \n 10.A.\n Share Capital \n 91\n \n \n 10.B.\n Memorandum and Articles of Association \n 91\n \n \n 10.C.\n Material Contracts \n 98\n \n \n 10.D.\n Exchange Controls \n 98\n \n \n 10.E.\n Taxation \n 99\n \n \n 10.F.\n Dividends and Paying Agents \n 106\n \n \n 10.G.\n Statement by Experts \n 106\n \n \n 10.H.\n Documents on Display \n 106\n 10.I. \n Subsidiary information \n 106\n 10.J. \n Annual Report to Security Holders \n 106\n \n i ITEM 11. \n QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK \n 107\n ITEM 12. \n DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES \n 107\n 12.A. \n Debt Securities \n 107\n 12.B. \n Warrants and Rights \n 107\n 12.C. \n Other Securities \n 107\n 12.D. \n American Depositary Shares \n 107\n PART II \n 108\n ITEM 13. \n DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES \n 108\n ITEM 14. \n MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS \n 108\n \n \n 14.A. - 14.D.\n \n \n Material Modifications to the Rights of Security Holders\n \n \n 108\n 14.E. \n Use of Proceeds \n 108\n ITEM 15. \n CONTROLS AND PROCEDURES \n 108\n ITEM 16A. \n AUDIT COMMITTEE FINANCIAL EXPERT \n 110\n ITEM 16B. \n CODE OF ETHICS \n 110\n ITEM 16C. \n PRINCIPAL ACCOUNTANT FEES AND SERVICES \n 110\n ITEM 16D. \n EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES \n 111\n ITEM 16E. \n PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS \n 111\n ITEM 16F. \n CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT \n 111\n ITEM 16G. \n CORPORATE GOVERNANCE \n 111\n ITEM 16H. \n MINE SAFETY DISCLOSURE \n 111\n ITEM 16I. \n DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS \n 111\n ITEM 16J. \n INSIDER TRADING POLICIES \n 111\n ITEM 16K. \n CYBERSECURITY \n 112\n PART III \n 113\n ITEM 17. \n FINANCIAL STATEMENTS \n 113\n ITEM 18. \n FINANCIAL STATEMENTS \n 113\n ITEM 19. \n EXHIBITS \n 113\n SIGNATURES \n 115\n \n ii \n Table of Contents INTRODUCTION \n Except where the context otherwise indicates and for the purpose of this annual report only: \n ● \n \"BVI\" refers to British Virgin Islands; \n ● \n \"China\" or \"PRC\" refers to the People's Republic of China, including Hong Kong, Macau and Taiwan, and only when referring to specific laws and regulations adopted by the People's Republic of China in this annual report, excludes Hong Kong, Macau and Taiwan, where the legal and operational risks associated with operating in China or PRC also apply to operation in Hong Kong, Macau and Taiwan, as applicable; \n ● \n \"Class A Ordinary Shares\" refers to our Class A ordinary shares, par value US$0.0001 per share; \n ● \n \"Class B Ordinary Shares\" refers to our Class B ordinary shares, par value US$0.0001 per share; \n ● \n \"ordinary share\" or \"shares\" refers to our ordinary shares, par value US$0.0001 per share; \n ● \n \"RMB\" or \"Renminbi\" refers to the legal currency of the People's Republic of China; \n ● \n \"US$,\" \"dollars\" or \"U.S. dollars\" refers to the legal currency of the United States; \n We have made rounding adjustments to some of the figures included in this annual report. Accordingly, numerical figures shown as totals or percentages may not be an arithmetic calculation of the figures that preceded them. \n Unless otherwise noted, all translations from Renminbi to U.S. dollars and from U.S. dollars to Renminbi in this annual report are made at RMB7.1636 to US$1.00, and all Hong Kong dollar and US dollar conversions in this annual report are based on the exchange rate of HK$7.8499 to US$1.00, the exchange rate set forth in the H.10 statistical release of the Federal Reserve Board on June 30, 2025. We make no representation that any Renminbi or U.S. dollar amounts could have been, or could be, converted into U.S. dollars or Renminbi, as the case may be, at any particular rate, the rates stated below, or at all. \n This annual report contains information and statistics relating to China's economy and the corporate learning market derived from various publications issued by market research companies and PRC governmental entities, which have not been independently verified by us. The information in such sources may not be consistent with other information compiled in or outside China. The industry in which we operate is subject to a high degree of uncertainty and risk due to variety of factors, including those described in the \"Risk Factors\" section. These and other factors could cause results to differ materially from those expressed in these publications and reports. iii \n Table of Contents FORWARD-LOOKING INFORMATION \n This annual report contains statements that constitute forward-looking statements. Many of the forward-looking statements contained in this annual report can be identified by the use of forward-looking words such as \"anticipate,\" \"believe,\" \"could,\" \"expect,\" \"should,\" \"plan,\" \"intend,\" \"estimate\" and \"potential,\" among others. \n Forward-looking statements appear in a number of places in this annual report and include, but are not limited to, statements regarding our intent, belief or current expectations. Forward-looking statements are based on our management's beliefs and assumptions and on information currently available to our management. Such statements are subject to risks and uncertainties, and actual results may differ materially from those expressed or implied in the forward-looking statements due to of various factors, including, but not limited to, those identified under the section entitled \"Item 3. Key Information-Item 3.D. Risk Factors\" in this annual report. These risks and uncertainties include factors relating to: \n ● \n general economic, political, demographic and business conditions in China and globally; \n ● \n our ability to implement our growth strategy; \n ● \n the success of operating initiatives, including advertising and promotional efforts and new solution development by us and our competitors; \n ● \n our ability to develop and apply our technologies to support and expand our solution offerings; \n ● \n the expected growth of the digital corporate learning industry in China; \n ● \n competition in the digital corporate learning industry in China; \n ● \n changes in government policies and regulation; \n ● \n other factors that may affect our financial condition, liquidity and results of operations; and \n ● \n other risk factors discussed under \"Item 3. Key Information-Item 3.D. Risk Factors.\" \n In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all. Forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update them in light of new information or future developments or to release publicly any revisions to these statements in order to reflect later events or circumstances or to reflect the occurrence of unanticipated events. \n You should read this annual report and the documents that we reference in this annual report and have filed as exhibits to the registration statement, of which this annual report is a part, completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements. iv \n Table of Contents PART I ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS \n Not applicable. ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE \n Not applicable. ITEM 3. KEY INFORMATION \n Corporate Structure \n 3e Network was incorporated on October 6, 2021 under the laws of the BVI. We own all of the outstanding shares of BVI 3e Holdings, which owns all the issued and outstanding capital stock of HK 3e Network. \n Guangzhou Sanyi Network was established by Guangzhou Leihou Software Development Company Limited as a PRC limited liability company on August 1, 2017. On September 30, 2018 Guangzhou Leihou Software Development Company Limited entered into a sell and purchase agreement whereby HK 3e Network agreed to acquire 100% of Guangzhou Sanyi Network from Guangzhou Leihou Software Development Company Limited for a consideration of RMB10,000 (approximately US$1,456). The share sale was completed and registered with the relevant authorities in the PRC on November 13, 2018. \n Guangzhou 3E Network was established by HK 3e Network as PRC limited liability company on January 17, 2023. It was established as a subsidiary to focus on our emerging business in developing software products for photovoltaic power plants, while Guangzhou Sanyi Network continues to focus on our other main business lines. \n On September 30, 2018, HK 3e Network entered into a Share Purchase Agreement with Guangzhou Leihou Software Development Company Limited to purchase all of the latter's shares in Guangzhou Sanyi Network. Pursuant to the agreement, HK 3e Network paid RMB10,000 (approximately US$1,456) for 100% shares of Guangzhou Sanyi Network. After this share transfer Guangzhou Sanyi Network became a wholly-owned subsidiary of HK 3e Network. \n On January 3, 2024, the Company filed the amended and restated memorandum and articles of association with the Registrar of Corporate Affairs of BVI to increase our authorized shares from 50,000 Ordinary Shares, par value US$1 per share, to 500,000,000 shares with a par value of USD 0.0001 each, comprising i) 400,000,000 shares of Class A Ordinary Shares, par value USD 0.0001 per share and ii) 100,000,000 shares of Class B Ordinary Shares, par value USD 0.0001 per share. Simultaneously, the Company effectuated a forward split of all issued and outstanding shares at a ratio of 1-for-10,000, and converted all existing issued and outstanding ordinary shares into Class A Ordinary Shares of the Company at a ratio of 1-for-1. \n On January 10, 2025, the Company closed its initial public offering of 1,250,000 Class A Ordinary Shares, par value US$0.0001 per share. \n On January 24, 2025, the Company adopted written resolutions and approved the issuance of 300,000 shares of Class B Ordinary Shares to Jianping Niu and 280,000 shares of Class B Ordinary Shares to Huabei Zhu, with a nominal value of 0.0001 per share, with such amounts to be paid in cash. Each of Jianping Niu and Huabei Zhu is an employee of the Company. Pursuant to the Company's amended and restated memorandum and articles of association, holders of the Class B Ordinary Shares shall not receive the right to any dividend paid by the Company and distribution of the surplus assets of the Company on its liquidation, and may not convert their Class B Ordinary Shares into shares of any other class. Each Class B Ordinary Share in the Company confers upon the shareholder the right to twenty votes at a meeting of the shareholders of the Company or on any resolution of shareholders.\n In March 2025, HK 3e Network entered into two equity transfer agreements with HongKong Techfaith Limited (\"Techfaith\") and sold to Techfaith (i) 60% of equity interest of Guangzhou Sanyi Network for a total consideration of approximately RMB6,204,000 in cash; and (ii) 100% of equity interest of Guangzhou 3E Network for a total consideration of approximately RMB1,390,000 in cash. These sales reflect our broader strategy to reallocate resources toward expanding its overseas operations, particularly in Hong Kong and Southeast Asia. Following the completion of these transactions, our operations were primarily carried on by our Hong Kong subsidiary, HK 3e Network. 1 \n Table of Contents On June 9, 2025, the Company entered into a securities purchase agreement with L1 Capital Global Opportunities Master Fund (\"L1 Capital\"), pursuant to which the Company issued 1,248,611 Class A Ordinary Shares, and pre-funded warrants to purchase an additional 213,389 Class A Ordinary Shares to L1 Capital, along with convertible notes and warrants for L1 Capital to purchase up to a certain number of Class A Ordinary Shares (the \"L1 Securities Purchase Agreement\"). See \"Item 5. Operating and Financial Review and Prospects-5.A. Operating Results-Recent Development\" for details. \n On October 17, 2025, we entered into a securities purchase agreement with L1 Capital, pursuant to which we agreed to sell and issue a convertible promissory note convertible into a certain amount of Class A Ordinary Shares (the \"L1 Convertible Note Agreement\"). See \"Item 5. Operating and Financial Review and Prospects-5.A. Operating Results-Recent Development\" for details. \n The following chart illustrates our corporate structure, including our significant subsidiaries as that term is defined under Section 1-02 of Regulation S-X under the Securities Act and certain other subsidiaries as of the date of this annual report:\n \n 2 \n Table of Contents Name Background Ownership Principal activities \n 3e Network Technology Holdings Limited (\"BVI 3e Holdings\") \n ● \n ●\n A BVI company \n Incorporated on October 8, 2018 \n Currently 100% owned by 3 E Network Technology Group Limited, a BVI company controlled by Joseph Shu Sang Law \n Investment holding \n 3e Network Technology Company Limited (\"HK 3e Network\") \n ● \n ●\n A Hong Kong company \n Incorporated on August 30, 2018 \n 100% owned by BVI 3e Holdings \n Investment holding; Sales & Marketing \n Maskmeta Limited (\"Maskmeta\") \n ● \n ●\n A Hong Kong company \n Incorporated on February 25, 2025 \n 100% owned by BVI 3e Holdings \n Investment holding; Sales & Marketing \n Guangzhou 3e Network Technology Company Limited (\"Guangzhou Sanyi Network\") \n ● \n ●\n A PRC company \n Incorporated on May 26, 2017 \n 40% owned by HK 3e Network \n Information Technology \n Licenses and Approvals \n Business Operation \n As of the date of this annual report, we have obtained all material licenses and approvals from relevant regulatory authorities that are material to our operations in China. The following table sets forth a list of material licenses and approvals that our PRC subsidiaries are required to obtain to carry out our operations in China as of the date of this annual report. Entity License and Approvals PRC Regulatory \n Guangzhou 3e Network Technology Company Limited \n Business License (Obtained) \n \n Guangzhou Haizhu District\n \n Permission Required for the Offering and Overseas Listing \n Our operations in China are governed by PRC laws and regulations. On August 8, 2006, six PRC regulatory agencies, including the MOFCOM, jointly issued the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the M&A Rules, which became effective on September 8, 2006 and were amended June 22, 2009. The M&A Rules contains provisions that require that an offshore special purpose vehicle (\"SPV\") formed for listing purposes and controlled directly or indirectly by Chinese companies or individuals shall obtain the approval of the CSRC prior to the listing and trading of such SPV's securities on an overseas stock exchange. 3 \n Table of Contents On December 28, 2021, the CAC jointly with the relevant authorities formally published Measures for Cybersecurity Review (the \"Cybersecurity Review Measures\") which took effect on February 15, 2022. The Cybersecurity Review Measures stipulates that operators of critical information infrastructure purchasing network products and services, and online platform operator (together with the operators of critical information infrastructure, the \"Operators\") carrying out data processing activities that affect or may affect national security, shall conduct a cybersecurity review, and any online platform operator who controls more than one million users' personal information must go through a cybersecurity review by the cybersecurity review office if it seeks to be listed in a foreign country. The \"Regulation on Network Data Security Management,\" which was announced on September 24, 2024, and came into effect on January 1, 2025, reiterates the above requirements. Based on these regulations, we cannot ensure that we will not be subject to cybersecurity review requirements in the future. If Chinese regulatory authorities determine that we need to undergo a cybersecurity review, or if relevant government agencies issue new interpretations or implementation rules requiring us to undergo a cybersecurity review before listing, we may need to complete the review process within the specified time frame. Failure to do so may result in legal risks and penalties, including business suspension and other consequences. These legal requirements could affect the timing and process of our fundraising, and may even negatively impact the company's reputation. \n As of the date hereof, we are of the view that we are in compliance with the applicable PRC laws and regulations governing the data privacy and personal information in all material respects, including the data privacy and personal information requirements of the CAC, and we have not received any complaints from any third party, or been investigated or punished by any PRC competent authority in relation to data privacy and personal information protection. We have adopted corresponding internal control measures to ensure the security of our information system and confidentiality of our customers' personal information, including, but not limited to the followings: \n On December 28, 2021, the Cyberspace Administration of China, or the CAC, and several other government authorities published the Revised Cybersecurity Review Measures, which came into effect on February 15, 2022. The Revised Cybersecurity Review Measures provide that an online platform operator, which possesses personal information of at least one million users, must apply for a cybersecurity review by the CAC if it intends to be listed in foreign countries. \n ● \n We have established information security management systems which stipulate the standardized procedures for the management of information system. Through the information security management systems, we classify our staff based on their positions and responsibilities and grant them different access rights and adopt password control to identify system users. We adjust, shut down or deregister the access rights in a timely manner when such staff change their positions or take long vacations or terminate their employment agreements with us. Moreover, we conduct information system security inspections and periodically check the access logs of our information system to identify abnormal accesses and remove accounts with abnormal activities. \n ● \n We provide training to our employees to ensure that they are aware of our internal policies in relation to data protection. \n ● \n We have specific network administrator responsible for installing the network firewall, remoting backup storage of important databases, business data, and documents, and promoting information security awareness among our employees. 4 \n Table of Contents As a company providing B2B IT business solutions, we do not collect data or personal information from end users of our platforms maintained by our corporate customers, and we do not maintain or store such data or personal information on our server. We do not collect personal information other than limited contact information of our corporate customers. We do not hold any user data, nor have shared, transferred or publicly disclosed user data without prior consent or authorization from the customers, unless otherwise permitted by relevant laws and regulations. We are required to comply with laws and regulations in the PRC relating to data privacy and personal information, and failure to comply with such laws and regulations may potentially lead to regulatory or civil liability. \n On February 17, 2023, the CSRC promulgated the Trial Administrative Measures and five supporting guidelines, which became effective on March 31, 2023. According to the Trial Administrative Measures, among other requirements, any domestic companies that seek to offer or list securities overseas, including those indirect overseas offering and listing which meet certain conditions, should fulfil the filing procedures with the CSRC within three business days after the submission of the overseas offering and listing application. We believe that we are required to complete filing procedures with the CSRC pursuant to the Trial Administrative Measures. We submitted the initial filing documents to the CSRC on October 9, 2023, and the CSRC published the notification on our completion of the required filing procedures on January 8, 2024 for our offshore offerings. If the filing procedure with the CSRC under the Trial Administrative Measures is required for any future offerings or any other capital raising activities, we cannot assure you that we will be able to complete such filings in a timely manner, or even at all. Any failure by us to comply with such filing requirements under the Trial Administrative Measures may result in a ratification order, warnings or fines against us and could materially hinder our ability to offer or to continue to offer our securities. \n Furthermore, if the CSRC or other regulatory agencies later promulgate new rules or explanations requiring that we obtain their approvals for our offshore offerings and any follow-on offering, we may be unable to obtain such approvals which could significantly affect our ability to offer or continue to offer securities to our investors. For instance, in the event that the CSRC approval or any regulatory approval is required for our offshore offerings while we inadvertently concluded that such approval was not required, or if the CSRC or any other PRC government authorities promulgates any new laws, rules or regulations or any interpretation or implements rules before our listing that would require us to obtain the CSRC or any other governmental approval for our offshore offerings, we may face sanctions by the CSRC or other PRC regulatory agencies for failure to seek CSRC approval for our offshore offerings. These sanctions may include fines and penalties on our operations in the PRC, limitations on our operating privileges in the PRC, delays in or restrictions on the repatriation of the proceeds from our offshore offerings into the PRC, restrictions on or prohibition of the payments or remittance of dividends by our PRC subsidiaries, or other actions that could have a material and adverse effect on our business, financial condition, results of operations, reputation and prospects, as well as the trading price of our Class A Ordinary Shares. The CSRC or other PRC regulatory agencies may also take actions requiring us, or making it advisable for us, to halt our offshore offerings before the settlement and delivery of the Class A Ordinary Shares that we are offering. Consequently, if you engage in market trading or other activities in anticipation of and prior to the settlement and delivery of the Class A Ordinary Shares we are offering, you would be doing so at the risk that the settlement and delivery may not occur. Any uncertainties or negative publicity regarding such approval requirements could have a material adverse effect on our ability to complete our offshore offerings or any follow-on offering of our securities or the market for and market price of our Class A Ordinary Shares. See \"Item 3. Key Information-3.D. Risk Factors-Risks Related to Doing Business in China - With the promulgation of the new filing-based administrative rules for overseas offering and listing by domestic companies in China, the PRC government may exert more oversight over overseas public offerings conducted by China-based issuers, which could significantly affect our ability to offer or continue to offer our Class A Ordinary Shares to investors and could cause the value of our Class A Ordinary Shares to decline or become worthless.\" \n Holding Company Structure \n We are a holding company incorporated in the BVI on October 6, 2021 under the BVI Business Companies Act, Revised Edition 2020 of the BVI, as amended, supplemented or otherwise modified from time to time, which we refer to below as the BVI Act. Historically, our operations were conducted primarily through our PRC operating subsidiaries, Guangzhou Sanyi Network and Guangzhou 3E Network, which were incorporated in the PRC on May 26, 2017 and January 17, 2023, respectively. Our BVI subsidiary BVI 3e Holdings was incorporated on October 8, 2018 under the BVI Act, and our Hong Kong subsidiary, HK 3e Network, was incorporated in Hong Kong on August 30, 2020. 5 \n Table of Contents In March 2025, HK 3e Network entered into two equity transfer agreements with HongKong Techfaith Limited (\"Techfaith\") and sold to Techfaith (i) 60% of equity interest of Guangzhou Sanyi Network for a total consideration of approximately RMB6,204,000 in cash; and (ii) 100% of equity interest of Guangzhou 3E Network for a total consideration of approximately RMB1,390,000 in cash. These sales reflect our broader strategy to reallocate resources toward expanding its overseas operations, particularly in Hong Kong and Southeast Asia. Following the completion of these transactions, our operations were primarily carried on by our Hong Kong subsidiary, HK 3e Network. \n Dividend Distributions or Assets Transfer among the Holding Company and Its Hong Kong Subsidiary \n We are a holding company with no material operations of its own and do not generate any revenue. We currently conduct all of our operations through our Hong Kong subsidiary, HK 3e Network. We are permitted under PRC laws and regulations to provide funding to operating entities only through loans or capital contributions. Subject to satisfaction of applicable government registration and approval requirements, we may extend inter-company loans or make additional capital contributions to our operating entities to fund their capital expenditures or working capital. We cannot assure you that we will be able to obtain these government registrations or approvals on a timely basis, if at all. See \"Item 3. Key Information-3.D. Risk Factors-Risks Related to Doing Business in China-PRC regulation of loans and direct investment by offshore holding companies to PRC entities may delay or prevent us from using the proceeds of our offshore offerings to make loans or additional capital contributions to our PRC subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand our business.\" \n Neither 3e Network or its Hong Kong subsidiary has cash management policies dictating how funds are transferred, and each entity needs to comply with applicable laws or regulations with respect to transfer of funds, dividends and distributions with other entities. \n As of the date of this annual report, there were no cash flows including all dividends, transfer and distribution between 3e Network and Hong Kong subsidiary; and there has been no dividend or distributions made between U.S. investors, other investors and any of the Company's entities. Cash proceeds raised from overseas financing activities, including the cash proceeds from our offshore offerings, may be transferred by 3e Network to the BVI 3e Holdings, and then transferred to HK 3e Network, as capital contribution and/or shareholder loans subject to applicable regulatory approvals, as the case may be, respectively. Any transfer of funds by us to our PRC subsidiaries, either as a shareholder loan or as an increase in registered capital, are subject to approval by or registration or filing with relevant governmental authorities in China. Any foreign loans procured by our PRC subsidiaries is required to be registered with the SAFE in its local branches and satisfy relevant requirements, and our PRC subsidiaries may not procure loans which exceed the difference between its respective total project investment amount and registered capital or two times (which may be varied year by year due to the change of PRC's national macroeconomic policy) of the net worth of our PRC subsidiaries. According to the relevant PRC regulations on foreign-invested enterprises in China, capital contributions to our PRC subsidiaries are subject to the registration with SAMR in its local branches, report submission to MOFCOM in its local branches and registration with a local bank authorized by the SAFE. Please see \"Item 3. Key Information-3.D. Risk Factors-Risks Related to Doing Business in China - We must remit the offering proceeds to mainland China before they may be used to benefit our business in mainland China, the process of which may be time-consuming, and we cannot assure that we can finish all necessary governmental registration processes in a timely manner.\" We intend to keep any future earnings to re-invest in and finance the expansion of our business, and we do not anticipate that any cash dividends will be paid in the foreseeable future. \n Under BVI law, a BVI company may pay a dividend on its shares, provided that the directors of the company are satisfied on reasonable grounds that immediately after the dividend the company will pass the solvency test set out in section 56 of the BVI Act. If we determine to pay dividends on any of our Class A Ordinary Shares in the future, as a holding company, unless we receive proceeds from future offerings, we will be dependent on receipt of funds from our BVI subsidiary, which will be dependent on receipt of dividends from our Hong Kong subsidiary in accordance with the laws and regulations of the PRC and Hong Kong. \n Guangzhou Sanyi Network's ability to distribute dividends is based upon their distributable earnings. Current PRC regulations permit Guangzhou Sanyi Network to pay dividends to HK 3e Network only out of their accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. In addition, Guangzhou Sanyi Network are required to set aside at least 10% of their after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of their registered capital. Each of such similar entity in China may also set aside a portion of its after-tax profits to fund an optional reserve, although the amount to be set aside, if any, is determined at the discretion of such entity's shareholder. The reserves can be used to increase the registered capital, cover losses made in past years and enhance the company's productivity and expand its business, however a company's capital reserve shall not be used to cover the company's losses. 6 \n Table of Contents The PRC government also imposes controls on the conversion of RMB into foreign currencies and the remittance of currencies out of mainland China. Therefore, we may experience difficulties in completing the administrative procedures necessary to obtain and remit foreign currency for the payment of dividends from our profits, if any. Further, if our subsidiaries in the PRC incur debt on their own in the future, the instruments governing the debt may restrict their ability to pay dividends or make other payments. \n Our subsidiaries in the PRC generate and retain cash generated from operating activities and re-invest it in our business. As of the date of this annual report, our PRC subsidiaries have not paid any dividends to the offshore companies. \n Based on our understanding of the Hong Kong laws and regulations, as of the date of this annual report, there is no restriction imposed by the Hong Kong government on the transfer of capital within, into and out of Hong Kong (including funds from Hong Kong to mainland China, except for transfer of funds involving money laundering and criminal activities). Notwithstanding the foregoing, we cannot assure that there will not be any changes in the future in the economic, political and legal environment in Hong Kong and that the PRC government will not in the future exert influence over changes to laws and regulations of Hong Kong to impose restrictions on the transfer of capital within, into and out of Hong Kong. Based on the BVI laws and regulations, as of the date of this annual report, there is no restriction on the transfer of capital within, into and out of BVI. Please see \"Item 3. Key Information-3.D. Risk Factors-Risks Related to Doing Business in China - To the extent any funds or assets in the business is in mainland China or Hong Kong or a mainland China or Hong Kong entity, the funds or assets may not be available to fund operations or for other use outside of mainland China or Hong Kong.\"; \"- PRC regulation of loans and direct investment by offshore holding companies to PRC entities may delay or prevent us from using the proceeds of our offshore offerings to make loans or additional capital contributions to our PRC subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand our business.\"; \"- We may rely on dividends and other distributions on equity paid by our Hong Kong and PRC subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our PRC subsidiaries to make payments to us could have a material and adverse effect on our ability to conduct our business,\"; and \"- Governmental control of currency conversion may limit our ability to use our revenues effectively and the ability of our PRC subsidiaries to obtain financing.\" \n Cash dividends, if any, on our Class A Ordinary Shares will be paid in USD. If we are considered a PRC tax resident enterprise for tax purposes, any dividends we pay to our overseas shareholders may be regarded as China-sourced income and, as a result, may be subject to PRC withholding tax at a rate of up to 10%. \n In order for us to pay dividends to our shareholders, we may rely on payments made from Guangzhou Sanyi Network and the distribution of such payments to HK 3e Network as dividends from Guangzhou Sanyi Network. Certain payments as dividends from Guangzhou Sanyi Network to HK 3e Network are subject to PRC taxes, including withholding taxes. \n Pursuant to the Arrangement between the Mainland China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income, or the Comprehensive Double Taxation Arrangement, dividends paid by a PRC company to a Hong Kong resident enterprise may be taxed in accordance with the laws of the PRC and the rate of the tax so charged, in 2 tiers, may be lowered from 10% to 5% of the gross amount of the dividends if the Hong Kong resident enterprise (being the beneficial owner of the dividends) directly owns no less than 25% of the capital of the PRC company. However, the 5% withholding tax rate does not automatically apply and certain requirements must be satisfied, including without limitation that (a) the Hong Kong company must be the beneficial owner of the relevant dividends; and (b) the Hong Kong company must directly hold no less than 25% of share ownership in the PRC company during the twelve (12) consecutive months preceding its receipt of the dividends. In current practice, a Hong Kong company must obtain a tax resident certificate (i.e. a Certificate of Hong Kong Resident Status) from the Hong Kong tax authority to apply for the 5% lower PRC withholding tax rate. As the Hong Kong tax authority will issue such a tax resident certificate on a case-by-case basis, we cannot assure you that we will be able to obtain the tax resident certificate from the relevant Hong Kong tax authority and enjoy the preferential withholding tax rate of 5% under the Comprehensive Double Taxation Arrangement with respect to dividends to be paid by our PRC subsidiaries to their immediate holding company, HK 3e Network. As of the date of this annual report, we have not applied for the tax resident certificate from the relevant Hong Kong tax authority.HK 3e Network intends to apply for the tax resident certificate when Guangzhou Sanyi Network plans to declare and pay dividends to HK 3e Network. See \"Item 3. Key Information-3.D. Risk Factors-Risks Related to Doing Business in China-We face uncertainty regarding the PRC tax reporting obligations and consequences for certain indirect transfers of the stock of our operating company.\"\n \n 7 \n Table of Contents Implication of the Holding Foreign Companies Accountable Act \n On March 24, 2021, the SEC adopted interim final rules relating to the implementation of certain disclosure and documentation requirements of the HFCA Act. An identified issuer will be required to comply with these rules if the SEC identifies it as having a \"non-inspection\" year under a process to be subsequently established by the SEC. In June 2021, the Senate passed the AHFCAA, which reduced the time period for the delisting of foreign companies under the HFCA Act to two consecutive years instead of three years. If our auditors cannot be inspected by the PCAOB for two consecutive years, the trading of our securities on any U.S. national securities exchanges, as well as any over-the-counter trading in the U.S., will be prohibited. On September 22, 2021, the PCAOB adopted a final rule implementing the HFCA Act, which provides a framework for the PCAOB to use when determining, as contemplated under the HFCA Act, whether the PCAOB is unable to inspect or investigate completely registered public accounting firms located in a foreign jurisdiction because of a position taken by one or more authorities in that jurisdiction. On December 2, 2021, the SEC issued amendments to finalize rules implementing the submission and disclosure requirements in the HFCA Act. The rules apply to registrants that the SEC identifies as having filed an annual report with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction and that PCAOB is unable to inspect or investigate completely because of a position taken by an authority in foreign jurisdictions. On December 16, 2021, the PCAOB issued the Determination Report on its determinations that it is unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered in mainland China and in Hong Kong, because of positions taken by PRC authorities in those jurisdictions. \n On August 26, 2022, the Statement of Protocol was signed by the PCAOB, the CSRC and the MOF governing inspections and investigations of audit firms based in mainland China and Hong Kong. Pursuant to the Statement of Protocol, the PCAOB conducted inspections on select registered public accounting firms subject to the Determination Report in Hong Kong between September and November 2022. On December 15, 2022, the PCAOB board announced that it has completed the inspections, determined that it had complete access to inspect or investigate completely registered public accounting firms headquartered in mainland China and Hong Kong, and voted to vacate the Determination Report. \n Our former auditor, HTL International, LLC (\"HTL\"), the independent registered public accounting firm that issued the audit report included elsewhere in this annual report, an auditor of companies that are traded publicly in the United States and a firm registered with the PCAOB, is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards. HTL is headquartered in Houston, Texas, and is subject to inspection by the PCAOB on a regular basis. On June 20, 2025, we announced the appointment of GGF CPA Ltd (\"GGF\") as our new independent registered public accounting firm to audit our financial statements, effective June 19, 2025. The appointment was made after a careful and thorough evaluation process and has been recommended and approved by the audit committee of our board of directors, and subsequently approved by the our board of directors. GGF succeeds HTL International, LLC (\"HTL\"), our previous independent registered public accounting firm. On June 19, 2025, HTL declined to stand for re-election as the independent registered public accounting firm for us. The audit reports of HTL on the financial statements of us as of June 30, 2024 and 2023 and for the fiscal years ended June 30, 2024 and 2023, did not contain an adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles.\n Both our former and current auditors are not identified in the report issued by the PCAOB on December 16, 2021 as a firm subject to the PCAOB's determination. Notwithstanding the foregoing, in the future, if there is any regulatory change or step taken by PRC regulatory agencies that does not permit HTL to provide audit work papers located in mainland China or Hong Kong to the PCAOB for inspection or investigation, or the PCAOB re-evaluates its determination as a result of any obstruction with the implementation of the Statement of Protocol in the future, you may be deprived of the benefits of such inspection which could result in limitation or restriction to our access to the U.S. capital markets and trading of our securities on a national exchange or \"over-the-counter\" markets may be prohibited under the HFCA Act. In addition, under the HFCA Act, our securities may be prohibited from trading on the Nasdaq or other U.S. stock exchanges if our auditor is not inspected by the PCAOB for three consecutive years, which could be reduced to two consecutive years if the AHFCAA, passed by the U.S. Senate on June 22, 2021, is signed into law, and this ultimately could result in our Class A Ordinary Shares being delisted by the exchange. On December 29, 2022, the CAA was signed into law by President Biden. The CAA contained, among other things, an identical provision to the AHFCAA, which reduces the number of consecutive non-inspection years required for triggering the prohibitions under the HFCA Act from three years to two. Further, we cannot assure you whether Nasdaq or regulatory agencies would apply additional and more stringent criteria to us after considering the effectiveness of our auditor's audit procedures and quality control procedures, adequacy of personnel and training, or sufficiency of resources, geographic reach or experience as it relates to the audit of our financial statements. \n See \"Item 3. Key Information-Item 3.D. Risk Factors-Risks Related to Doing Business in China - Our Class A Ordinary Shares may be delisted under the HFCA Act if the PCAOB is unable to inspect our auditors for two consecutive years. The delisting of our Class A Ordinary Shares, or the threat of their being delisted, may materially and adversely affect the value of your investment.\" 8 \n Table of Contents 3.A. [Reserved] \n 3.B. Capitalization and Indebtedness \n Not applicable. \n 3.C. Reason for the Offer and Use of Proceeds \n Not applicable. \n 3.D. Risk Factors \n Investors are purchasing equity securities of a BVI holding company rather than equity securities of our subsidiaries, that have substantive business operations in the PRC and Hong Kong. You should carefully consider all of the information in this annual report before making an investment in our Class A Ordinary Shares. Below please find a summary of the principal risks and uncertainties we face, organized under relevant headings. These risks are discussed more fully in the section titled \"Item 3. Key Information-Item 3.D. Risk Factors.\" In particular, as we are a China-based company incorporated in the BVI, you should pay special attention to subsections headed \"Risks Related to Doing Business in China,\" \"Risks Related to Doing Business in Hong Kong\" and \"Risks Related to Our Corporate Structure and Our Class A Ordinary Shares.\" \n Below please find a summary of the principal risks we face, organized under relevant headings. \n Risks Related to Our Business and Industry \n ● \n Risks associated with our limited operating history. For details, see \"Item 3. Key Information-3.D. Risk Factors-Risks Related to Our Business and Industry-Our limited operating history subsidiaries may not be indicative of our future growth and may make it difficult to predict our future prospects, business and financial performance. We may not be able to achieve anticipated growth, which could materially and adversely affect our business and prospects.\" \n ● \n Risks associated with the renewable energy utility industry in which our customers operate. \"Item 3. Key Information-3.D. Risk Factors-Risks Related to Our Business and Industry-The renewable energy utility industry in which our customers operate is a new and evolving market, which may not grow to the size or at the rate we expect.\" \n ● \n Risks associated with government subsidies and economic incentives. \"Item 3. Key Information-3.D. Risk Factors-Risks Related to Our Business and Industry-The reduction, elimination or expiration of government subsidies and economic incentives for solar energy systems could reduce the demand for our products and services.\" \n ● \n Risks associated with government regulations. \"Item 3. Key Information-3.D. Risk Factors-Risks Related to Our Business and Industry-Existing regulations, and changes to such regulations, might present technical, regulatory and economic barriers to the installation of solar energy systems, which may significantly reduce demand for our solar energy systems.\" \n ● \n Risks associated with our ability to anticipate and develop new services and enhance our existing services. \"Item 3. Key Information-3.D. Risk Factors-Risks Related to Our Business and Industry-The growth and success of our business depends on our ability to anticipate and develop new services and enhance existing services in order to keep pace with rapid changes in technology and in the industries we focus on.\" \n ● \n Risks associated with competition. \"Item 3. Key Information-3.D. Risk Factors-Risks Related to Our Business and Industry-We might lose business to competitors that underbid us and might be unable to compete favorably in our highly competitive industry.\" 9 \n Table of Contents ● \n Risks associated with reduced price and bargaining power. \"Item 3. Key Information-3.D. Risk Factors-Risks Related to Our Business and Industry-We may be forced to reduce the prices of our services due to increased competition and reduced bargaining power with our customers, which could lead to reduced revenues and profitability.\" \n ● \n Risks associated with the global economic environment. \"Item 3. Key Information-3.D. Risk Factors-Risks Related to Our Business and Industry-Adverse changes in the economic environment, either in China or globally, could reduce our customers' purchases from us and increase pricing pressure, which could materially and adversely affect our revenues and results of operations.\" \n ● \n Risks associated with human resources. \"Item 3. Key Information-3.D. Risk Factors-Risks Related to Our Business and Industry-Due to intense competition for highly skilled personnel, we may fail to attract and retain enough sufficiently trained personnel to support our operations; as a result, our ability to bid for and obtain new projects may be negatively affected and our revenues could decline.\" \n Risks Related to Doing Business in China \n ● \n Uncertainties regarding the changes and development in the PRC legal system and the interpretation and enforcement of PRC policies, laws and regulations. For details, see \"Item 3. Key Information-3.D. Risk Factors-Risks Related to Doing Business in China-Because substantially all of our operations are in China historically, and we expect to generate revenue in China through our wholly-owned subsidiary based in Hong Kong, we face risks arising from the legal system in China, including risks and uncertainties regarding the enforcement of laws and that rules and regulations in China can change quickly with little advance notice. The PRC government may exercise oversight and discretion over the conduct of our business or may intervene or influence our operations at any time, and our operations may be affected by evolving regulatory policies, which could result in a material change in our operations or the value of our securities, significantly limit or completely hinder our ability to offer or continue to offer securities to investors, or cause the value of our securities to significantly decline or become worthless.\" \n ● \n Uncertainties regarding the development of laws and regulations of the PRC. For details, see \"Item 3. Key Information-3.D. Risk Factors-Risks Related to Doing Business in China-We are subject to the laws and regulations of the PRC, which can change quickly with little advance notice and differ in material aspects from the laws of the United States.\" \n ● \n Risks associated with the PRC regulatory requirements in connection with our issuance of securities overseas. For details, see \"Item 3. Key Information-3.D. Risk Factors-Risks Related to Doing Business in China-With the promulgation of the new filing-based administrative rules for overseas offering and listing by domestic companies in China, the PRC government may exert more oversight over overseas public offerings conducted by China-based issuers, which could significantly affect our ability to offer or continue to offer our Class A Ordinary Shares to investors and could cause the value of our Class A Ordinary Shares to decline or become worthless.\" \n ● \n Uncertainties regarding the changes and development in China's economic, political or social conditions or government policies. For details, see \"Item 3. Key Information-3.D. Risk Factors-Risks Related to Doing Business in China-The PRC government has significant authority to exert influence on our operations in mainland China. Mainland China's economic, political and social conditions, as well as changes in any government policies, laws and regulations may be quick and, could have a material adverse effect on our business and the value of our Class A Ordinary Shares.\" \n ● \n Risks associated with preferential tax and other treatments. For details, see \"Item 3. Key Information-3.D. Risk Factors-Risks Related to Doing Business in China-If we fail to maintain continuing compliance with the PRC state regulatory rules, policies and procedures applicable to our industry, we may risk losing certain preferential tax and other treatments which may adversely affect the viability of our current corporate structure, corporate governance and business operations.\" \n ● \n Risks associated with oversight by the CAC over data security. For details, see \"Item 3. Key Information-3.D. Risk Factors-Risks Related to Doing Business in China-Recent greater oversight by the CAC over data security, particularly for companies seeking to list on a foreign exchange, could adversely impact our business and our proposed offering.\" 10 \n Table of Contents Risks Related to Doing Business in Hong Kong \n ● \n Uncertainties regarding the changes and development in the Hong Kong legal system. For details, see \"Item 3. Key Information-3.D. Risk Factors-Risks Related to Doing Business in Hong Kong-Hong Kong's legal system is evolving and has inherent uncertainties that could limit the legal protection available to you.\" \n ● \n Risks associated with compliance with a variety of PRC laws and other obligations. For details, see \"Item 3. Key Information-3.D. Risk Factors-Risks Related to Doing Business in Hong Kong-We may become subject to a variety of PRC laws and other obligations regarding M&A Rules, the Trial Measures and data security, and any failure to comply with applicable laws and obligations could have a material and adverse effect on our business, financial condition and results of operations.\" \n Risks Related to Our Corporate Structure and Our Class A Ordinary Shares \n ● \n Risks associated with the price of our Class A Ordinary Shares. For details, see \"Item 3. Key Information-3.D. Risk Factors-Risks Related to Our Corporate Structure and Our Class A Ordinary Shares-A sale or perceived sale of a substantial number of our Class A Ordinary Shares may cause the price of our Class A Ordinary Shares to decline.\" \n ● \n Risks associated with our continued listing on the Nasdaq Capital Market. For details, see \"Item 3. Key Information-3.D. Risk Factors-Risks Related to Our Corporate Structure and Our Class A Ordinary Shares-We may not meet continued listing standards on the Nasdaq Capital Market.\" \n ● \n Risks associated with our market price. For details, see \"Item 3. Key Information-3.D. Risk Factors-Risks Related to Our Corporate Structure and Our Class A Ordinary Shares-The market price for our shares may be volatile.\" \n ● \n Risks associated with our dual-class voting structure. For details, see \"Item 3. Key Information-3.D. Risk Factors-Risks Related to Our Corporate Structure and Our Class A Ordinary Shares-Our dual-class voting structure will limit your ability to influence corporate matters and could discourage others from pursuing any change of control transactions that holders of our Class A Ordinary Shares may view as beneficial.\" and \"-Our dual-class voting structure may render our Class A Ordinary Shares ineligible for inclusion in certain stock market indices, and thus adversely affect the trading price and liquidity of our Class A Ordinary Shares.\" \n ● \n Uncertainties regarding the development of the HFCA Act and the AHFCAA. For details, see \"Item 3. Key Information-3.D. Risk Factors-Risks Related to Our Corporate Structure and Our Class A Ordinary Shares-The Class A Ordinary Shares will be prohibited from trading in the United States under the Holding Foreign Companies Accountable Act, or the HFCAA, if in the future the PCAOB is unable to inspect and investigate completely our auditor. The delisting of and prohibition from trading the Class A Ordinary Shares, or the threat of their being delisted and prohibited from trading, may cause the value of the Class A Ordinary Shares to significantly decline or be worthless.\" \n ● \n Risks associated with our status as a \"controlled company\". For details, see \"Item 3. Key Information-3.D. Risk Factors-Risks Related to Our Corporate Structure and Our Class A Ordinary Shares-As a \"controlled company\" under the rules of the Nasdaq Capital Market, we may choose to exempt our company from certain corporate governance requirements that could have an adverse effect on our public shareholders.\" \n ● \n Risks associated with our status as a foreign private issuer. For details, see \"Item 3. Key Information-3.D. Risk Factors-Risks Related to Our Corporate Structure and Our Class A Ordinary Shares-We are a foreign private issuer and, as a result, will not be subject to U.S. proxy rules and will be subject to more lenient and less frequent Exchange Act reporting obligations than a U.S. issuer.\" 11 \n Table of Contents Risks Related to Our Business and Industry \n Our limited operating history subsidiaries may not be indicative of our future growth and may make it difficult to predict our future prospects, business and financial performance. We may not be able to achieve anticipated growth, which could materially and adversely affect our business and prospects. \n We have a relatively short operating history, with significant but uneven growth, interrupted by significant disruptions of the COVID-19 pandemic. Our revenues were US$37,130 in the year ended June 30, 2023, and continuously grew to US$859,344 in the year ended June 30, 2024 and US$4,835,167 in the year ended June 30, 2025. However, our short operating history may not serve as an adequate basis for evaluating our prospects and future operating results, including, but not limited to, key operating data, net revenue, cash flows and operating margins.\n In addition, to adapt to various economic, operational and regulatory challenges, our business strategies and product and service offerings have also experienced significant shifts during the COVID-19 pandemic. As some industrial and economic norms and patterns have changed whereas others may not last, we may need to continue to adjust our business strategies and product and service offerings in the near term. Failure to anticipate future changes or adequately adapt to such changes may impact our operations, financial performances and long-term success. \n More generally, we have encountered, and may continue to encounter, risks, challenges and uncertainties frequently experienced by companies at an early stage, including those relating to our ability to adapt to the industry, to maintain and monetize our customer base, to introduce new offerings and services and to maintain consistent business growth. If we are unable to successfully address these risks, challenges and uncertainties, our business, financial conditions and results of operations could be materially and adversely affected. \n We intend to continue our expansion in the foreseeable future to pursue existing and potential market opportunities. Our growth has placed and will continue to place significant demands on our management and our administrative, operational and financial infrastructure. Continued expansion increases the challenges we face in: \n ● \n recruiting, training, developing and retaining sufficient IT talents and management personnel; \n ● \n creating and capitalizing upon economies of scale; \n ● \n managing a larger number of customers in a greater number of industries and locations; \n ● \n maintaining effective oversight of personnel and offices; \n ● \n coordinating work among offices and project teams and maintaining high resource utilization rates; \n ● \n integrating new management personnel and expanded operations while preserving our culture and core values; \n ● \n developing and improving our internal administrative infrastructure, particularly our financial, operational, human resources, communications and other internal systems, procedures and controls; and \n ● \n adhering to and further improving our high quality and process execution standards and maintaining high levels of customer satisfaction. \n Moreover, as we introduce new services or enter into new markets, we may face new market, technological and operational risks and challenges with which we are unfamiliar, and it may require substantial management efforts and skills to mitigate these risks and challenges. As a result of any of these problems associated with expansion, our business, results of operations and financial conditions could be materially and adversely affected. Furthermore, we may not be able to achieve anticipated growth, which could materially and adversely affect our business and prospects. 12 \n Table of Contents The renewable energy utility industry in which our customers operate is a new and evolving market, which may not grow to the size or at the rate we expect. \n We have recently entered the renewable energy utility market where we provide software and IT solutions for solar farms and other renewable energy utility systems. The renewable energy industry is a new and rapidly growing market opportunity. We believe the renewable energy industry will still take several years to fully develop and mature, but we cannot be certain that the market will grow to the size or at the rate that we expect. Any future growth of the renewable energy market depends on many factors beyond our control, including recognition and acceptance of the solar service market by consumers, the pricing of alternative sources of energy, a favorable regulatory environment, the continuation of expected tax benefits and other incentives. Our business might be adversely affected should the markets for solar energy not develop to the size or at the rate we expect, or should our customers not experience the kind of growth we anticipate and rely on for our business development. \n In particular, solar energy has yet to achieve broad market acceptance and depends in part on continued support in the form of rebates, tax credits, and other incentives from central and local governments in China. If this support diminishes materially, our ability to attract customers for our products and services could be adversely affected. Growth in residential solar energy also depends on dynamic macroeconomic conditions, retail prices of electricity and customer preferences. Declining macroeconomic conditions, including labor markets and residential real estate markets, could contribute to instability and uncertainty among customers and impact their financial ability or interest in entering into long-term contracts, even if such contracts would generate immediate and long-term savings. It also remains prohibitively expensive for new market participants to enter the industry. \n Market prices of retail electricity generated by utilities or other energy sources also could decline for a variety of reasons. Any such declines in macroeconomic conditions, changes in retail prices of electricity or changes in customer preferences would adversely impact our business opportunities. 13 \n Table of Contents The reduction, elimination or expiration of government subsidies and economic incentives for solar energy systems could reduce the demand for our products and services. \n National and local government bodies and utilities in China provide incentives to end-users, distributors, system integrators and manufacturers of solar energy systems to promote solar electricity in the form of rebates, tax credits and other financial incentives such as system performance payments and payments for renewable energy credits associated with renewable energy generation. These incentives enable our customers to lower the price they charge for solar energy systems, but might expire on a particular date, end when the allocated funding is exhausted, or be reduced or terminated as solar energy adoption rates increase and often occur without warning. Applicable authorities might also adjust or decrease incentives or include provisions for minimum domestic content requirements or other requirements to qualify for these incentives. The reduction, elimination or expiration of such incentives or delays or interruptions in the implementation of favorable federal or state laws could substantially reduce our customers' profit margin, increase the comparative costs of our products, and disincentivize further development of our customers' operations, resulting in a significant reduction in demand for our products, which would negatively impact our business. \n Existing regulations, and changes to such regulations, might present technical, regulatory and economic barriers to the installation of solar energy systems, which may significantly reduce demand for our solar energy systems. \n The installation of solar energy systems is subject to oversight and regulation under local ordinances; building, zoning and fire codes; utility interconnection requirements for metering; and other rules and regulations. Certain jurisdictions may have ordinances that prevent or increase the cost of installation of our solar energy systems. New government regulations or utility policies pertaining to the installation of solar energy systems are unpredictable and might result in significant additional expenses or delays, which could cause a significant reduction in demand for solar energy systems. \n The growth and success of our business depends on our ability to anticipate and develop new services and enhance existing services in order to keep pace with rapid changes in technology and in the industries we focus on. \n The market for our services is characterized by rapid technological change, evolving industry standards, changing customer preferences and new product and service introductions. Our future growth and success depend significantly on our ability to anticipate developments in IT services, and develop and offer new product and service lines to meet our customers' evolving needs. We may not be successful in anticipating or responding to these developments in a timely manner, or if we do respond, the services or technologies we develop may not be successful in the marketplace. The development of some of the services and technologies may involve significant upfront investments and the failure of these services and technologies may result in our being unable to recover these investments, in part or in full. Should we fail to adapt to the rapidly changing IT services market or if we fail to develop suitable services to meet the evolving and increasingly sophisticated requirements of our customers in a timely manner, our business and results of operations could be materially and adversely affected. \n We might lose business to competitors that underbid us and might be unable to compete favorably in our highly competitive industry. \n Some of customers are government-related or state-owned enterprises (\"SOEs\") with some project awarded through a competitive bidding process in which price is the determining factor, and we compete against multiple competitors in many of the markets in which we operate. Some of our competitors are larger than us and are vertically integrated, and competitors larger than us may be able to better exploit economies of scale to receive higher discounts or rebates. An increase in competition may result in decreases in new project awards to us at acceptable profit margins, and adversely impact our financial condition, results of operations or liquidity. \n We may be forced to reduce the prices of our services due to increased competition and reduced bargaining power with our customers, which could lead to reduced revenues and profitability. \n The IT industry in China is developing rapidly and related technology trends are constantly evolving. This results in the frequent introduction of new services and technologies and significant price competition from our competitors. We may be unable to offset the effect of declining average sales prices through increased sales volumes and or reductions in our costs. Furthermore, we may be forced to reduce the prices of our services in response to offerings made by our competitors. Finally, we may not have the same level of bargaining power we have enjoyed in the past when it comes to negotiating for the prices of our services. 14 \n Table of Contents Adverse changes in the economic environment, either in China or globally, could reduce our customers' purchases from us and increase pricing pressure, which could materially and adversely affect our revenues and results of operations. \n The IT services industry is particularly sensitive to the economic environment, either in China or globally, and tends to decline during general economic downturns. Accordingly, our results of operations, financial conditions and prospects are subject to a significant degree to the economic environment, especially for regions in which we and our customers operate. During an economic downturn, our customers may cancel, reduce or defer their IT spending or change their IT outsourcing strategy, and reduce their purchases from us. The recent global economic slowdown and any future economic slowdown, and the resulting diminution in IT spending, could also lead to increased pricing pressure from our customers. The occurrence of any of these events could materially and adversely affect our revenues and results of operations. \n Due to intense competition for highly skilled personnel, we may fail to attract and retain enough sufficiently trained personnel to support our operations; as a result, our ability to bid for and obtain new projects may be negatively affected and our revenues could decline. \n The IT services industry relies on skilled personnel, and our success significantly depends on our ability to recruit, train, develop and retain qualified personnel, especially experienced middle and senior level management. The IT services industry in China has experienced significant levels of employee attrition. There is significant competition in China for skilled personnel, especially experienced middle and senior level management, with the skills necessary to perform the services we offer to our customers. Increased competition for these personnel, in the IT industry or otherwise, could have an adverse effect on us and cause a significant increase in our attrition rate, which could decrease our operating efficiency and productivity and could lead to a decline in demand for our services. Additionally, failure to recruit, train, develop and retain personnel with the qualifications necessary to fulfill the needs of our existing and future customers or to assimilate new personnel successfully could have a material adverse effect on our business, financial conditions and results of operations. Failure to retain our key personnel on customer projects or find suitable replacements for key personnel upon their departure may lead to termination of some of our customer contracts or cancellation of some of our projects, which could materially and adversely affect our business. \n Our success depends substantially on the continuing efforts of our senior executives and other key personnel, and our business may be severely disrupted if we lose their services. \n Our future success heavily depends upon the continued services of our senior executives and other key employees. We currently do not maintain key-man life insurance for any of the senior members of our management team or other key personnel. If one or more of our senior executives or key employees is or are unable or unwilling to continue in their present positions, it could disrupt our business operations, and we may not be able to replace them easily or at all. In addition, competition for senior executives and key personnel in our industry is intense, and we may be unable to retain our senior executives and key personnel or attract and retain new senior executive and key personnel in the future, in which case our business may be severely disrupted, and our financial conditions and results of operations may be materially and adversely affected. If any of our senior executives or key personnel joins a competitor or forms a competing company, we may lose customers, suppliers, know-how and key professionals and staff members to them. Also, if any of our business development managers, who generally keeps a close relationship with our customers, joins a competitor or forms a competing company, we may lose customers, and our revenues may be materially and adversely affected. Additionally, there could be unauthorized disclosure or use of our technical knowledge, practices or procedures by such personnel. Most of our executives and key personnel have entered into employment agreements with us that contain non-competition provisions, non-solicitation and nondisclosure covenants. However, if any dispute arises between our executive officers and key personnel and us, such non-competition, non-solicitation and nondisclosure provisions might not provide effective protection to us, especially in China in light of the uncertainties with China's legal system. \n Increases in wages for professionals in China could prevent us from sustaining our competitive advantage and could reduce our profit margins. \n Our most significant costs are the salaries and other compensation expenses for our professionals and other employees. Wage costs for professionals in China are lower than those in more developed countries and India. However, because of rapid economic growth, increased productivity levels, and increased competition for skilled employees in China, wages for highly skilled employees in China, in particular middle- and senior-level managers, are increasing at a faster rate than in the past. We may need to increase the levels of employee compensation more rapidly than in the past to remain competitive in attracting and retaining the quality and number of employees that our business requires. Increases in the wages and other compensation we pay our employees in China could reduce our competitive advantage unless we are able to increase the efficiency and productivity of our professionals as well as the prices we can charge for our services. In addition, any appreciation in the value of the Renminbi relative to U.S. dollar and other foreign currencies will cause an increase in the relative wage levels in China, which could further reduce our competitive advantage and adversely impact our profit margin. 15 \n Table of Contents We have a relatively small number of customers for our exhibition and conferencing services, the loss of which could reduce our revenues and significantly harm our business. For our software solution services, there are significant turnovers in our customers from one year to another. Failure to recruit new customers, expand our relationship with our existing customers or expand to new product categories may reduce our revenues and significantly harm our business as well. \n We believe that in the foreseeable future we will continue to derive a significant portion of our revenues from a small number of major customers. For the year ended June 30, 2024, our top three customers, Minerva Semiconductor Corp. Limited, Genesis Global Financial Group Limited and Yunding Internet Technology Co., Ltd. accounted for 48.38%, 31.34% and 23.27% of our revenue, respectively. For the year ended June 30, 2025, our top four customers, AUSPICIOUS APEX PTE. LTD., Minerva Semiconductor Corp. Limited, HongKong Sunny Infosystems Limited and BigBeaver Tech Limited accounted for 20.68%, 20.01%, 17.15% and 11.74%, respectively of our revenue.\n Our ability to maintain close relationships with major customers is essential to the growth and profitability of our business. However, the volume of work performed for a specific customer is likely to vary from year to year, especially since we are generally not our customers' exclusive IT business solution provider, and we do not have long-term commitments from any of our customers to purchase our services. In addition, our reliance on any individual customer for a significant portion of our revenues may give that customer a certain degree of pricing leverage against us when negotiating contracts and terms of service. A number of factors other than our performance could also cause the loss of or reduction in business or revenues from a customer, and these factors are not predictable. These factors may include corporate restructuring, pricing pressure, changes to its outsourcing strategy, customers' decision to switch to another service provider or returning work in-house. In the future, a small number of customers may continue to represent a significant portion of our total revenues in any given period. The loss of any of our major customers could adversely affect our financial conditions and results of operations. \n For our other business lines, our software customer base tends to vary from one year to another, as each purchase agreement tends to be a one-off event with few repeat customers. A major customer in one year may not provide the same level of revenues for us in any subsequent year. The IT services we provide to our customers, and the revenues and income from those services, may decline or vary as the type and quantity of IT services we provide change over time. \n We plan to significantly expand the number of customers we serve to diversify our customer base and grow our revenues. Revenues from a new customer often rise quickly over the first several years following our initial engagement as we expand the services that we provide to that customer. Therefore, obtaining new customers is important for us to achieve rapid revenue growth. We also plan to grow revenues from our existing customers by identifying and selling additional services to them, and to expand into new product categories and offerings to broaden our market access and appeal. However, there is no assurance that we will be able to develop new product categories and offerings on an ongoing and regular basis. Our ability to attract new customers, as well as our ability to grow revenues from existing customers, depends on a number of factors, including our ability to offer high quality services at competitive prices, the strength of our competitors and the capabilities of our sales and marketing teams. If we are not able to continue to attract new customers or to grow revenues from our existing customers in the future, we may not be able to grow our revenues as quickly as we anticipate or at all. \n If we are unable to collect our receivables from our customers, our results of operations and cash flows could be adversely affected. \n Our business depends on our ability to successfully obtain payment from our customers of the amounts they owe us for work performed. As of June 30, 2025, our accounts receivable balance, net of allowance, amounted to approximately US$3,219,313. For the years ended June 30, 2023, 2024 and 2025, nil, and US$190,786 allowance of doubtful accounts were provided for the Company's total accounts receivable balance, respectively. For the year ended June 30, 2025, 5.55% of the Company's total accounts receivable balance were provided as allowance of doubtful accounts.\n \n 16 \n Table of Contents Since we generally do not require collateral or other security from our customers, we establish an allowance for doubtful accounts based upon estimates, historical experience and other factors surrounding the credit risk of specific customers. However, actual losses on customer receivables balance could differ from those that we anticipate and as a result we might need to adjust our allowance. There is no guarantee that we will accurately assess the creditworthiness of our customers. Macroeconomic conditions, including related turmoil in the global financial system, could also result in financial difficulties for our customers, including limited access to the credit markets, insolvency or bankruptcy, and as a result could cause customers to delay payments to us, request modifications to their payment arrangements that could increase our receivables balance, or default on their payment obligations to us. As a result, an extended delay or default in payment relating to a significant account will have a material and adverse effect on the aging schedule and turnover days of our accounts receivable. If we are unable to collect our receivables from our customers in accordance with the contracts with our customers, our results of operations and cash flows could be adversely affected. \n A significant portion of our income is generated, and will in the future continue to be generated, on a project basis with a fixed price; we may not be able to accurately estimate costs and determine resource requirements in relation to our projects, which would reduce our margins and profitability. \n A significant portion of our income is generated, and will in the future continue to be generated, from fees we receive for our projects with a fixed price. For the years ended June 30, 2023, 2024 and 2025, all of our income was generated from fees it received for projects with a fixed price. Our projects often involve complex technologies, entail the coordination of operations and workforces in multiple locations, utilizing workforces with different skill sets and competencies and geographically distributed service centers, and must be completed within compressed timeframes and meet customer requirements that are subject to change and increasingly stringent. If we fail to accurately assess the time and resources required for completing projects and to price our projects profitably, our business, results of operations and financial conditions could be adversely affected.\n If we cause disruptions to our customers' businesses or provide inadequate service, our customers may have claims for substantial damages against us, and as a result our profits may be substantially reduced. \n If our professionals make errors in the course of delivering services to our customers or fail to consistently meet service requirements of a customer, these errors or failures could disrupt the customer's business, which could result in a reduction in our net revenues or a claim for substantial damages against us. In addition, a failure or inability to meet a contractual requirement could seriously damage our reputation and affect our ability to attract new business. \n The services we provide are often critical to our customers' businesses. Any failure in a customer's system or breach of security relating to the services we provide to the customer could damage our reputation or result in a claim for substantial damages against us. Any significant failure of our equipment or systems, or any major disruption to basic infrastructure like power and telecommunications in the locations in which we operate, could impede our ability to provide services to our customers, have a negative impact on our reputation, cause us to lose customers, reduce our revenues and harm our business. \n Under our contracts with our customers, our liability for breach of our obligations is in some cases limited to a certain percentage of contract price. Such limitations may be unenforceable or otherwise may not protect us from liability for damages. In addition, certain liabilities, such as claims of third parties for which we may be required to indemnify our customers, are generally not limited under our contracts. We currently do not have commercial general or public liability insurance. The successful assertion of one or more large claims against us could have a material adverse effect on our business, reputation, results of operations, financial conditions and cash flows. Even if such assertions against us are unsuccessful, we may incur reputational harm and substantial legal fees. \n The proper functioning of technology use is essential to our business, and any difficulty experienced by such system would materially and adversely affect us. \n The products and services offered by us may not continue to be supported by third-party service providers on commercially reasonable terms or at all. Moreover, we may be subject to claims by third parties who maintain that the technology of the service providers of us infringes the third party's intellectual property rights. Although the agreements between us and their third-party service providers often contain indemnities in favor of us with respect to these eventualities, we may not be indemnified for these claims or these entities may not be successful in obtaining indemnification to which they are entitled. \n To the extent that the technologies and systems that we use to manage the daily operations of their business malfunction, these entities' ability to operate their business, retain existing customers and attract new customers may be impaired. We may not be able to attract and retain sufficiently skilled and experienced professionals to operate and maintain these technologies and systems, and their current service offerings may not continue to be, and new service offerings may not be, supported by the applicable third-party service providers on commercially reasonable terms or at all. In addition, any harm to the personal computers or other devices owned by the customers of us caused by the software owned by these entities, or other sources of harm, such as hackers or computer viruses, could have an adverse effect on the customer experience and our reputation. 17 \n Table of Contents We need to invest heavily on our technology in order to sustain or grow our business, and the uncertainties associated with the evolving customer needs and emerging industry standards create risks with respect to such investment. On one hand, the ongoing investment in technology may not generate the expected level of returns; on the other hand, any failure of us to adopt new technologies to adapt to such changing environment may materially and adversely impact our business. \n Cyber-attacks and other security incidents, both real and perceived, impacting confidentiality and integrity of our information technology and digital infrastructure could lead to loss of reputation and financial obligations. \n Considering the high business dependency on our information technology and digital infrastructure to interconnect offices, employee systems, partners and customers for day-to-day business operations, as well as our hosting of data and service delivery, any potential cyber event impacting the confidentiality, integrity and availability of this environment could lead to financial loss, disclosure of data, breaches of privacy or security, reputational and customer loss, and legal, regulatory and contractual obligations upon us that may directly impact us and our relationships with our customers and partners. \n Given the rise of connected devices, transition to cloud and use of other emerging technologies, the impact of threats continues to increase while the threat attack area is evolving and increasing beyond the enterprise. Cybersecurity incidents, both actual and attempted, involving unauthorized access, malware, fraud, leakage, misuse/loss/tampering of personal and business data, denial of services exploiting weakness in the systems or programs, errors, omissions, deliberate or accidental act of our employees or former employees, partners, third-party business providers or other stakeholders both internal and external are on the rise. Our internal security controls may not be able to keep pace with these evolving and intensifying threats. \n Breaches of our security measures or the accidental loss, inadvertent disclosure or unapproved dissemination of confidential customer data could expose us, our customers or the affected parties to a risk of loss or misuse of this information. We could be subject to termination of contracts for non-compliance with our customer's information security policies and procedures. If additional safeguards are required to comply with laws relating to privacy, security and data protection, our costs could increase further, which would negatively affect our results of operations. Unauthorized disclosure of sensitive or confidential customer data, whether through breach of our computer systems, systems failure, loss or theft of assets containing confidential information or otherwise, could damage our reputation and cause us to lose customers. \n In response to COVID-19, all of our employees have occasionally been asked to work from home while various security control mechanisms are deployed and periodically re-enforced, these security control mechanisms may not always be successful, considering the complexity of the environments, inter-dependencies, sophisticated attack methodologies, highly dynamic heterogeneous systems, global digital presence, hosted both in the cloud and on premises, and work from home arrangements. Our service delivery and operations are aligned to various industry, geographical and regional regulations, privacy, security, reporting, data localization, standards and legal requirements which are continuously evolving and changing, mandating us to enforce required security and privacy controls and frameworks. \n Our property management company clients and the residents in the properties they manage use WeChat, a third-party social media platform, or WeChat mini program, a sub-application on the platform, for accessing the property management systems that we develop. If services of WeChat are limited, restricted, curtailed or degraded in any way or become unavailable for any reason, the access of our clients or the residents may be significantly impacted, as a result of which our business may be materially and adversely affected. \n We help our property management clients to set up and integrate their property management systems with WeChat or WeChat mini programs to offer more convenient user experiences to the residents in their properties. We often design and integrate many of the service modules within the property management systems with WeChat, as it is one of the most popular App in the PRC. However, neither we or our clients have control over the operations or accessibilities of WeChat and WeChat mini program. WeChat or WeChat mini programs is not available, we could help our clients set up a webpage-based log-in interfaces for our clients and residents to access the property management system. Although we can create separate log-in profiles and interfaces for our clients and residents to access the WeChat-linked services via a separate web portal, or we can even create a separate set of web portals or webpage-based log-in interfaces for our clients to manage for certain services not linked to the WeChat mini programs, WeChat or WeChat mini-program offers convenience and better user experience, and are much more accessible to residents. In addition, in some cases, we have set up payment functions for property management companies to request utility or service fee payments from residents or to set up community e-store for selling certain food, drink or other items. Such transactions are often conducted through WeChat Pay, the mobile payment and digital wallet services offered by Tencent on WeChat. Any disruptions to WeChat's accessibility will significantly curtail our clients and the residents' access to WeChat Pay. If services or access to WeChat are limited, restricted, curtailed or degraded in any way or become unavailable for any reason or for extended periods of time, our business may be significantly impacted. 18 \n Table of Contents We may face intellectual property infringement claims that could be time-consuming and costly to defend. If we fail to defend ourselves against such claims, we may lose significant intellectual property rights and may be unable to continue providing our existing services. \n Our success largely depends on our ability to use and develop our technology and services without infringing the intellectual property rights of third parties, including copyrights, trade secrets and trademarks. We may be subject to litigation involving claims of violation of other intellectual property rights of third parties. We typically indemnify customers who purchase our services and solutions against potential infringement of intellectual property rights underlying our services and solutions, which subjects us to the risk of indemnification claims. The holders of other intellectual property rights potentially relevant to our service offerings may make it difficult for us to acquire a license on commercially acceptable terms. Also, we may be unaware of intellectual property registrations or applications relating to our products and services that may give rise to potential infringement claims against us. There may also be technologies licensed to and relied on by us that are subject to infringement or other corresponding allegations or claims by third parties which may damage our ability to rely on such technologies. Parties making infringement claims may be able to obtain an injunction to prevent us from delivering our services or using technology involving the allegedly infringing intellectual property. Intellectual property litigation is expensive and time-consuming and could divert management's attention from our business. A successful infringement claim against us, whether with or w...

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