CNET 10-K & 10-Q changes, risk factors and insider trading

The PRC Cyber Security Law, effective on June 1, 2017,2017 and subsequently amended on October 28, 2025, stipulates that a network operator must adopt technical measures and other necessary measures in accordance with applicable laws and regulations as well as compulsory national and industrial standards to safeguard the safety and stability of network operations, effectively respond to network security incidents, prevent illegal and criminal activities, maintain the integrity, confidentiality and availability of network data.

We do not plan to initiate any ICO in China or any other jurisdictions. WeBased have been advised byon our understanding of the current PRC counsel,law and regulations, we believe that as long as we do not issue any virtual currency coins, we only need to record filing as required by the Cyberspace Administration of China's Regulations on the Management of Blockchain Information Services that went into effect on February 15, 2019. We do not believe that such record filing procedure will have a material effect on our blockchain-powered platform. However, as the laws and regulations governing the blockchain in China are developing and evolving and subject to changes, we cannot assure you that that our blockchain technology related business will continue to be compliance with the PRC law. If our practice is deemed to have violated any PRC law or regulations, our blockchain related business would be materially and adversely affected.

We conduct our operations in China through our PRC subsidiaries, our VIEs, with which we have maintained contractual arrangements, and their subsidiaries in China. Our operations in China are governed by PRC laws and regulations. The PRC government has significant oversight and discretion over the conduct of our business, and it may influence our operations, which could result in a material adverse change in our operation and/or the value of our securities. Also, the PRC government has recently promulgated certain regulations and rules to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers. For example, on July 6, 2021, the relevant PRC government authorities made public the Opinions on Strictly Cracking Down Illegal Securities Activities in Accordance with the Law (the “Opinions”). The Opinions emphasized the need to strengthen the administration over illegal securities activities and the supervision on overseas listings by China-based companies and proposed to take effective measures, such as promoting the construction of relevant regulatory systems to deal with the risks and incidents faced by China-based overseas-listed companies. On February 17, 2023, the CSRC released the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies and five supporting guidelines (collectively, the “Filing Rules”), which came into effect on March 31, 2023. Pursuant to the Filing Rules, domestic companies that seek to offer or list their securities in an overseas market, whether directly or indirectly, are required to fulfill relevant filing procedure and report relevant information to the CSRC. On December 28, 2021, the NDRC, the MIIT, and several other administrations jointly published the Measures for Cybersecurity Review, effective on February 15, 2022, which required that, among others, operators of “critical information infrastructure” purchasing network products and services or network platform operators carrying out data processing activities, that affect or may affect national security, shall apply with the Cybersecurity Review Office for a cybersecurity review. In addition, a network platform operator holding over one million users’ personal information shall apply with the Cybersecurity Review Office for a cybersecurity review before any public offering at a foreign stock exchange. On November 14, 2021, the CAC released the draft Administrative Measures for Internet Data Security (the “Draft Measures for Internet Data Security”), for public comments, which requires, among others, that a prior cybersecurity review should be required for listing abroad of data processors which process over one million users’ personal information, and the listing of data processors in Hong Kong which affects or may affect national security.

Since the Draft Measures for Internet Data Security is in the process of being formulated, and the Opinions, the Filing Rules and the Measures for Cybersecurity Review are relevantly new and remain unclear on how it will be interpreted, amended and implemented by the relevant PRC governmental authorities, it remains uncertain whether we can obtain the specific regulatory approvals from, and complete the required filings with the CSRC, CAC or any other PRC government authorities for our future securities offering in a timely basis or at all. If we are unable to obtain such approvals or complete such filings, or such approvals or filings are rescinded even if obtained, our ability to continue to offer securities to investors will be significantly limited or completely hindered, and the value of such securities may be significantly decline or be worthless. In addition, implementation of industry-wide regulations directly targeting our operations could cause the value of our securities to significantly decline. Therefore, investors of our company and our business face potential uncertainty from actions taken by the PRC government affecting our business.

In a Q&A released on the CSRC’s official website, the respondent CSRC official stated that the domestic companies which have listed their securities in the overseas market as of March 31, 2023 will be regarded as the existing overseas listed companies, which will not be required to file with the CSRC until they conduct any new offerings subject to the filing requirements under the Filing Rules. The Q&A also addressed the contractual arrangements and pointed out that, as for companies with contractual arrangements seeking overseas offering, the CSRC will solicit opinions from relevant regulatory authorities and complete the filing procedures for companies with contractual arrangements complying with relevant laws and regulations. If we fail to file with the CSRC in a timely manner or at all, for any future offering (including, among others, follow-on offerings, issuance of convertible corporate bonds and exchangeable bonds, and other equivalent offering activities) pursuant to the Filing Rules due to our contractual arrangements, our ability to raise or utilize funds could be materially and adversely affected, and we may even need to unwind our contractual arrangements or restructure our business operations to rectify the failure to complete the filings. We have submitted the filing documents in connection with the issue of shares pursuant to the Securities Purchase Agreements under the Recent Developments contained in Item 1 of this Annual Report to the CSRC in accordance with the Filing Rules. However, as the Filing Rules were recently promulgated, there remain substantial uncertainties as to their interpretation, application, and enforcement and how they will affect our operations and our future financing.

In addition, we cannot assure you that any new rules or regulations promulgated in the future will not impose additional requirements on us. If it is determined in the future that any additional approval and filing from the CSRC or other regulatory authorities or other procedures, including the cybersecurity review under the Measures for Cybersecurity Review and the Draft Measures for Internet Data Security,Review, are required for our offshore offerings, it is uncertain whether we can or how long it will take us to obtain such approval or complete such filing procedures and any such approval or filing could be rescinded or rejected. Any failure to obtain or delay in obtaining such approval or completing such filing procedures for our offshore offerings, or a rescission of any such approval or filing if obtained by us, would subject us to sanctions by the CSRC or other PRC regulatory authorities for failure to seek CSRC approval or filing or other government authorization for our offshore offerings. These regulatory authorities may impose fines and penalties on our operations in China, limit our ability to pay dividends outside of China, limit our operating privileges in China, delay or restrict the repatriation of the proceeds from our offshore offerings into China or take other actions that could materially and adversely affect our business, financial condition, results of operations, and prospects, as well as the trading price of our listed securities. The CSRC or other PRC regulatory authorities also may take actions requiring us, or making it advisable for us, to halt our offshore offerings before settlement and delivery of the shares offered. Consequently, if investors engage in market trading or other activities in anticipation of and prior to settlement and delivery, they do so at the risk that settlement and delivery may not occur. In addition, if the CSRC or other regulatory authorities later promulgate new rules or explanations requiring that we obtain their approvals or accomplish the required filing or other regulatory procedures for our prior offshore offerings, we may be unable to obtain a waiver of such approval requirements, if and when procedures are established to obtain such a waiver. Any uncertainties or negative publicity regarding such approval requirement could materially and adversely affect our business, prospects, financial condition, reputation, and the trading price of our listed securities.

Shareholder claims or regulatory investigation that are common in the United States generally are difficult to pursue as a matter of law or practicality in China. For example, in China, there are significant legal and other obstacles to providing information needed for regulatory investigations or litigations initiated outside China. Although the authorities in China may establish a regulatory cooperation mechanism with the securities regulatory authorities of another country or region to implement cross-border supervision and administration, such cooperation with the securities regulatory authorities in the Unities States may not be efficient in the absence of mutual and practical cooperation mechanism. Furthermore, according to Article 177 of the PRC Securities Law, or Article 177, which became effective in March 2020, no overseas securities regulator is allowed to directly conduct investigation or evidence collection activities within the territory of the PRC. WhileThe detailedConfidentiality interpretationand Archives Management Provisions which took effect on March 31, 2023, provides that the investigation and evidence collection relating to the oversea securities offering and listing of PRC domestic companies by the overseas securities regulatory authorities and other relevant authorities must be conducted through a cross-border cooperation mechanism for supervision and administration, and that the PRC domestic companies must obtain prior consent from the CSRC or implementationother rulesrelevant underauthorities Articlebefore 177cooperating havewith yetsuch overseas authorities in connection with the relevant inspections or investigations or providing relevant documents to besuch promulgated,overseas thesecurities regulatory authorities or relevant authorities. The inability for an overseas securities regulator to directly conduct investigation or evidence collection activities within China may further increase difficulties faced by you in protecting your interests.

On NovemberMarch 1,26, 2023,2026, we received a notice (the “November Notice”) from Nasdaq indicating that itsour common stock, failed to comply with the $1.00 minimum bid price required for continued listing on The Nasdaq Capital Market under Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Requirement”) based upon the closing bid price of the Commoncommon Stockstock for the previous 30 consecutive business days prior to the date of the November Notice.days. The Nasdaq rules provided the Company a compliance period of 180 calendar days from the Notice, or until AprilSeptember 29,22, 2024,2026, to regain compliance with Rule 5550(a)(2). OnIf Mayat 1,any 2024,time before September 22, 2026, the bid price of the common stock closes at $1.00 per share or more for a minimum of 10 consecutive business days, Nasdaq will provide written confirmation that we receivedhave anotherachieved noticecompliance. (the “Second Notice”) from Nasdaq indicating that, whileIn the Companyevent haswe do not regainedregain compliancecompliance, withwe themay Bid Price Requirement, Nasdaq has determined that the Company isbe eligible for an additional 180-daytime. period,To orqualify, untilwe Octoberwill 28,be 2024,required to regain compliance. According to the Second Notice from Nasdaq, the Staff’s determination was based on (i) the Company meetingmeet the continued listing requirement for market value of its publicly held shares and all other Nasdaq initial listing standards,standards for The Nasdaq Capital Market, with the exception of the minimum bid price requirement, and (ii)will theneed Company’sto provide written notice to Nasdaq of itsour intention to cure the deficiency during the second compliance periodperiod, by effecting a reverse stock split, if necessary. We filed a Certificate of Amendment to our Articles of Incorporation with the Secretary of State of the State of Nevada to effect a one-for-four (1 for 4) reverse stock split of our common stock pursuant to NRS Section 78.209, which became effective on September 30, 2024. As a result of the filing of the Certificate, the number of shares of the Company’s authorized Common Stock was reduced from 50,000,000 shares to 12,500,000 shares and the issued and outstanding number of shares of the Common Stock was correspondingly decreased. On October 15, 2024,If we receivedmeet athese letter fromrequirements, Nasdaq notifyingwill inform us that we have been granted an additional 180 calendar days. However, if it appears to Nasdaq had determined that forwe 10will consecutivenot businessbe days,able fromto cure the deficiency, or if we are otherwise not eligible, Nasdaq will provide notice that our securities will be subject to delisting. If compliance cannot be demonstrated by September 30,22, 20242026, toNasdaq Octoberwill 14,provide 2024,written thenotification closing bid price ofthat our Common Stock hadwill beenbe atdelisted. $1.00At perthat share or greater. Accordingly,time, we regainedmay complianceappeal withNasdaq’s thedetermination Bidto Pricea RequirementHearings and this matter was closed.Panel.

There can be no assurance that we will be able to regain compliance with the Bid Price Requirement or will otherwise continue being able to comply with Nasdaq’s rules or will otherwise be in compliance with other Nasdaq continued listing criteria. If Nasdaq delists our Common Stock from trading on its exchange, we could face significant material adverse consequences including:

There is currently only a limited public market for our Common Stock and there can be no assurance that a trading market will develop further or be maintained in the future. As of AprilMarch 11,30, 2025,2026, the closing trade price of our Common Stock was $1.48$0.68 per share. As of AprilMarch 15,31, 2025,2026, we had approximately 607616 shareholders of record of our Common Stock, not including shares held in street name. In addition, during the past two fiscal years our Common Stock has had a trading range with a low price of $1.55$1.18 per share and a high price of $11.38$4.40 per share.

Our company was incorporated in the State of Texas in April 2006 and re-domiciled to become a Nevada corporation in October 2006. As a result of a share exchange transaction we consummated with China Net BVI in June 2009, we are now a holding company, which through certain contractual arrangements with operating companies in the PRC,PRC and our operating subsidiaries outside of mainland China, is primarily engaged in providing Internet advertising, precision marketing, blockchain-basedinfluencer SaaSmarketing services andas e-commercewell online to offline (“O2O”) advertising and marketing andas the related data and technical services to SMEsSMEs. The Company also develops blockchain enabled web/mobile applications and provides software solutions, i.e., Software-as-a-Service (“SaaS”) services for clients and engages in IP licensing services. As part of an ongoing strategic shift, the PRC.Company’s operations are now primarily conducted outside mainland China.

Through our PRC operating subsidiaries and VIEs, we primarily operate a one-stop services for our clients on our Omni-channel advertising, precision marketing and data analysis management system. We offer a variety channels of advertising and marketing services through this system, which primarily include distribution of the right to use search engine marketing services we purchased from key search engines, influencer marketing services, provision of online advertising placements services on our web portals, provision of ecommerce O2Odigital advertising and marketing services as well as provision of other related value-added data and technical services to maximize market exposure and effectiveness for our clients. From early 2022, we started to introduce our new SaaS services to customers. The SaaS services were designated in providing one-stop blockchain-powered enterprise management solutions via our BIF platform in forms of unique NFT generations, data record, share and storage modules subscriptions etc.

For the distribution of the right to use search engine marketing service, the provision of advertising placement services, and the blockchain platform subscription service,service and our IP licensing service we recognize revenues over time when we consider the services have been delivered to our customers, with the related benefits being simultaneously received and consumed by our customers. Revenues related to our influencer marketing services and internet advertising and marketing service are recognized based on when the marketing service is completed and accepted by our clients. For NFT generation service provided through our BIF platform, revenues are recognized based on a fixed price per NFT generation, when a NFT is generated, delivered and accepted by customers (“point in time”).

For the distributionall of theour rightbusiness to use the third-party’s search engine marketing service,segments, we recognize the revenuesrevenue on a gross basis, because we determine that we are a principal in the transaction, who controls the service before it is transferred to the customers.

Total Revenues: Our total revenues decreased to approximately US$4.61 million for the year ended December 31, 2025 from approximately US$15.44 million for the year ended December 31, 2024 from approximately US$30.59 million for the year ended December 31, 2023,2024, which was primarily due to the winding down of our distribution of the right to use search engine marketing service in the PRC but increases in higher margin internet advertising and related marketing services such as influencer marketing.marketing and other digital marketing services outside of mainland China. As part of an ongoing strategic shift, the Company’s operations are now primarily conducted outside mainland China.

We derive the majority of our revenues from distribution of the right to use the search engine marketing (“SEM”) services, sale of advertising space on our internet ad portals,advertising and provisionrelated marketing services which includes our influencer marketing and digital marketing services outside of themainland related data and technical services,China, all of which management considers as one aggregate business operation and relies upon the consolidated results of all operations in this business unit to make decisions about allocating resources and evaluating performance. Looking forward in 2025,2026, we will becontinue positioningto position our client focus outside of themainland PRCChina with an emphasis on higher margin internet advertising services and the blockchain and digital asset business. We will also be looking to acquire and build teams with businesses with AI capabilities and proprietary intellectual properties that enable more accurate marketing solutions and cost efficient content creation. In addition, the Company will expand its capabilities to include AI-enabled applications and deployment solutions, with a focus on enhancing existing service offerings. These initiatives include the development and integration of AI-assisted tools to support customer engagement, financial management, and operational workflows, as well as the incorporation of blockchain-based functionalities for data security, tokenization, and payment processing where applicable.

Our cost of revenues consistedprimarily consists of advertisingsearch engine marketing resources costspurchased directlyfrom relatedkey tosearch theengines, offeringinfluencer agency costs, cost of our Internet advertising, precision marketing servicesservices, andamortization of intellectual property cost, amortization of software platform amortizationdevelopment costcost, relatedcosts relating to enhancing our blockchain-based SaaS services and other direct costs associated with providing our services. The following table sets forth our cost of revenues, disaggregated by type of services, by amount and gross profit ratio for the periods indicated, with inter-company transactions eliminated:

Cost of revenues: our total cost of revenues decreased to approximately US$14.99US$4.26 million for the year ended December 31, 2024,2025, compared with US$31.02US$15.0 million for the year ended December 31, 2023.2024. Our cost of revenues primarily consists of search engine marketing resources purchased from key search engines, influencer agency costs, cost of outdoormarketing advertisingservices, resources,amortization of intellectual property cost, amortization of software platform development costcost, costs relating to enhancing our blockchain-based SaaS services and other direct costs associated with providing our services. The decrease in our total cost of revenues for the year ended December 31, 20242025 was primarily due to the decrease in costs associated with the distribution of the right to use search engine marketing service we purchased from key search engines, which was in line with the decrease in the related revenues as discussed in the revenues section above.

As a result of the foregoing, we incurred a gross profit of approximately US$0.35 million for the year ended December 31, 2025, compared with a gross profit of approximately US$0.45 million for the year ended December 31, 2024, compared with a gross loss of approximately US$0.44 million for the year ended December 31, 2023.2024. Our overall gross margin rate for the years ended December 31, 20242025 and 20232024 was approximately 2.9%7.7% and -1.4%,2.9%, respectively. The gross profit and the increase in overall gross margin were primarily due to the overall increase in revenuegross profit margin for all of our higherbusiness margin internet advertising and related data service business.segments.

Impairment on long-term investments: For the year ended December 31, 2024,2025, we recognizeddid annot approximatelyrecognize US$0.002 millionany impairment loss on long-term investments,investments. For the year ended December 31, 2024, we recognized approximately US$0.002 million in impairment on long-term investments which was related to the following: 1) our cash investments in our unconsolidated investee entities whose business activities had become dormant as of the end of fiscal 2024.

We are a Nevada holding company with operations primarily conducted through our subsidiaries outside of mainland China, with limited operations in mainland China conducted through our PRC subsidiaries, VIEs and VIEs’ subsidiaries. The intercompany flow of funds within our organization is effected through capital contributions and intercompany loans. We do not have written policies regarding intercompany cash transfer within our organization. In accordance with our current internal cash management practices, all intercompany cash transfer within our organization requires prior approval by our financial director and our chief financial officer/or our chief executive officer before execution.

AsWhile we conductcurrently ourhave limited operations primarily in mainland China conducted through our PRC subsidiaries, VIEs and theirVIEs’ subsidiaries, and we intendmay continue to transferprovide mostlimited of our cash raised from the U.S. stock marketfunding to these operatingentities. entitiesTo tothe supportextent theirwe operationsdo and expansions,so, our ability to pay dividends to U.S. investors may depend on receiving distributions from our PRC subsidiaries and settlement of the amounts owed under the VIE agreements from the consolidated VIEs. Any limitation on the ability of our PRC subsidiaries and the consolidated VIEs to make payments to us, or the tax implications of making payments to us, could have a material adverse effect on our ability to pay dividends to our U.S. investors.

Our liquidity needs include (i) net cash used in operating activities that consists of (a) cash required to fund the initial build-out, continued expansion of our networkdigital marketing and new services and (b) our working capital needs, which include deposits and advance payments to search engine resources and other advertising resources providers, payment of our operating expenses and financing of our accounts receivable; and (ii) net cash used in investing activities that consist of the investment to expand technologies related to our existing and future business activities, investment to enhance the functionality of our current advertising portals for providing advertising, marketing and data services and to secure the safety of our general network,activities and investment to establish joint ventures with strategic partners for the development of new technologies and services. To date, we have financed our liquidity need primarily through proceeds we generated from financing activities.

In addition, for the next 12 months from the date hereof, we anticipate to generate additional cash inflows and/or improve our liquidity through the following: (1) our short-term working capital loans provided to unrelated parties will mature within the next 12 months that we anticipate collecting these loan principals and the related interest income within the next 12 months; (2) ifequity at any time we anticipate insufficiency of our working capital, we can apply for revolving credit facility from commercial banks in the PRC to supplement our short-term liquidity deficit. We have not experienced any difficulties in obtaining such credit facility before, and this could result in fixed obligations and incremental cost of interestfinancing; (3) equity financing for which we have already entered into securities purchase agreements; (4) we plan to reduce our operating costs through optimizing the personnel structure among different offices and reduce our office leasing spaces, if needed. This may incur incremental costs related to employee layoff compensation and contract termination penalty.

In the long term, beyond the next 12 months, we plan to further broaden the application scenarios of our blockchain-based SaaS services to be offered to the customers, continue expanding our core Internet advertising and marketing business through acquisitions, and develop Internet advertising and marketing channels that target overseas Internet users.users outside of mainland China. In addition, the Company will expand its capabilities to include AI-enabled applications and deployment solutions, with a focus on enhancing existing service offerings. These initiatives include the development and integration of AI-assisted tools to support customer engagement, financial management, and operational workflows, as well as the incorporation of blockchain-based functionalities for data security, tokenization, and payment processing where applicable. As such, we may decide to enhance our liquidity position or increase our cash reserve for future investments through additional equity financing in the U.S. capital market. This would result in further dilution to our shareholders. We cannot assure you that such financing will be available in amounts or on terms acceptable to us, or at all.

The Public Company Accounting Oversight Board (the “PCAOB”) had historically been unable to inspect our auditor in relation to their audit work performed for our financial statements and the inability of the PCAOB to conduct inspections over our auditor deprived our investors of the benefits of such inspections.

Our auditor, ARK Pro CPA & Co. (“ARK”), the independent registered public accounting firm that issues the audit report in our SEC filings, as 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. Our auditor is located in Hong Kong Special Administrative Region of the PRC ("Hong Kong"), China, a jurisdiction where the PCAOB was unable to conduct inspections and investigations before 2022. As a result, we and investors in our securities were deprived of the benefits of such PCAOB inspections. On December 15, 2022, the PCAOB announced that it was able to secure complete access to inspect and investigate PCAOB-registered public accounting firms headquartered in China mainland and Hong Kong in 2022. However, the inability of the PCAOB to conduct inspections of auditors in Hong Kong in the past made it more difficult to evaluate the effectiveness of our independent registered public accounting firm’s audit procedures or quality control procedures as compared to auditors outside of China mainland and Hong Kong that have been subject to the PCAOB inspections, which could cause investors and potential investors in our securities to lose confidence in our audit procedures and reported financial information and the quality of our financial statements.

We believe that the assumptions and estimates associated with revenue recognition andrecognition, estimation of current expected credit loss and fair value measurement of warrant liabilities have the greatest potential impacts on our condensed consolidated financial statements. Therefore, we consider these to be our critical accounting policies and estimates.

A. RESULTS OF OPERATIONS FOR THE SIX AND THREE MONTHS ENDED MARCHJUNE 31,30, 2026 AND 2025

Total Revenues: Our total revenues decreased to US$0.38US$1.04 million and US$0.65 million for the six and three months ended MarchJune 31,30, 20262026, respectively, from US$1.65US$2.2 million and US$0.55 million for the same periodperiods last year.year, Thisrespectively, declinewhich was primarily due to a temporary reduction in demand for our services, driven in part by broader economic headwinds. The Company is refocusing its efforts on expanding its AI services segment. As part of an ongoing strategic shift, the Company’s operations are now primarily conducted outside mainland China.

Our cost of revenues primarily consistsconsisted of searchcosts enginedirectly related to the offering of our Internet advertising, precision marketing resourcesand purchased from key search engines, influencer agency costs, cost of marketingrelated services, amortization of intellectual property cost, directamortization costs relating to providingour IP services, software platform amortization cost related to our AIblockchain-based services,SaaS service and costs relatingrelated to enhancing our blockchain-based SaaS services and other direct costs associated with providing our services. The following table sets forth our cost of revenues, disaggregated by type of services, by amount and gross profit ratio for the periods indicated, with inter-company transactions eliminated:

Cost of revenues: ourOur total cost of revenues decreased to US$0.36approximately US$0.96 million and US$0.61 million for the six and three months ended MarchJune 31,30, 20262026, respectively, from US$1.49approximately US$1.99 million and US$0.50 million for the six and three months ended MarchJune 31,30, 2025.2025, respectively. Our cost of revenues primarily consists of search engine marketing resources purchased from key search engines, influencer agency costs, cost of marketing services, amortization of intellectual property cost, directsoftware costsplatform relatingamortization cost related to providing our AIblockchain-based services,SaaS service, costs relating to enhancing our blockchain-based SaaS services and other direct costs associated with providing our AI services. The decrease in our total cost of revenues for the six and three months ended MarchJune 31,30, 2026 was primarily due to the decrease in costs associated with the Internet advertising and related marketing service, which was in line with the decrease in the related revenues as discussed in the revenues section above.

As a result of the foregoing, for the six months ended June 30, 2026, we generated a gross profit of approximately US$0.03US$0.07 million for the three months ended March 31, 2026,million, compared with a gross profit of approximately US$0.16US$0.21 million generatedfor the six months ended June 30, 2025. For the three months ended June 30, 2026, our gross profit was approximately US$0.05 million, compared to approximately US$0.05 million for the three months ended MarchJune 31,30, 2025. Our overall gross margin ratewas decreased7.1% toand 7%7.2% for the six and three months ended MarchJune 31,30, 2026, respectively, compared with 10%9.4% and 8.6% for the threesame monthsperiods endedlast March 31, 2025.year. The decrease in gross profit and gross profit margin were primarily due to the temporary decrease in demand for our Internet advertising and marketing related services, driven in part by broader economic headwinds.

Operating expensesExpenses: TotalOur total operating expenses was approximately negativeUS$0.38 US$0.05million and US$0.43 million for the six and three months ended MarchJune 31,30, 2026, respectively, compared to operating expenses ofwith approximately US$0.74US$1.47 million and US$0.73 million for the samesix periodand inthree 2025.months ended June 30, 2025, respectively.

NetLoss Income/(loss)from operations: As a result of the foregoing, we incurred a loss from operations of approximately US$0.30 million and US$1.26 million for the six months ended June 30, 2026 and 2025, respectively. For the three months ended MarchJune 31,30, 2026 and 2025, we incurred a netloss incomefrom operations of approximately US$0.13US$0.38 million and a net loss of approximately US$0.85US$0.68 million, respectively.

The PRC regulations currently permit payment of dividends only out of accumulated profits, as determined in accordance with PRC accounting standards and regulations. Our PRC subsidiaries, the consolidated VIEs and their subsidiaries in China are also required to set aside at least 10% of their respective after-tax profit based on the PRC accounting standards and regulations each year to the statutory surplus reserve, until the balance in the reserve reaches 50% of the registered capital of the respective PRC entities. In accordance with these PRC laws and regulations, our PRC subsidiaries, the consolidated VIEs and their subsidiaries are restricted in their ability to transfer a portion of their net assets to us. As of MarchJune 31,30, 2026 and December 31, 2025, net assets restricted in the aggregate, which include paid-in capital and statutory reserve funds of our PRC subsidiaries, the consolidated VIEs and their subsidiaries that are included in our consolidated net assets, were approximately US$13.10US$13.07 million and US$13.11 million, respectively. Appropriations to the enterprise expansion fund and staff welfare and bonus fund of a foreign-invested PRC entity and appropriation to the discretionary surplus reserve of other PRC entities are at the discretion of the board of directors. To date, none of our PRC subsidiaries, the consolidated VIEs and their subsidiaries appropriated any of these non-mandatory funds and reserves. Furthermore, if these entities incur debt on their own in the future, the instruments governing the debt may restrict their ability to pay dividends or make other payments.

Cash Flow Analysis for the ThreeSix Months Ended MarchJune 31,30, 2026 and 2025

Cash and cash equivalents represent cash on hand and deposits held at call with banks. We consider all highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents. As of MarchJune 31,30, 2026, we had cash and cash equivalents of approximately US$0.72US$0.61 million.

Our liquidity needs include (i) net cash used in operating activities that consists of (a) cash required to fund the initial build-out, continued expansion of our network and new services and (b) our working capital needs, which include deposits and advance payments to search engine resources and other advertising resources providers, payment of our operating expenses and financing of our accounts receivable; and (ii) net cash used in investing activities that consist of the investment to expand technologies related to our existing and future business activities, investment to enhance the functionality of our current advertising portals for providing advertising, marketing and data services and to secure the safety of our general network, and investment to establish joint ventures with strategic partners for the development of new technologies and services. To date, we have financed our liquidity need primarily through proceeds we generated from financing activities.

For the threesix months ended MarchJune 31,30, 2026, our net cash used in operating activities of approximately US$0.29US$0.40 million were primarily attributable to:

For the threesix months ended MarchJune 31,30, 2025, our net cash used in operating activities of approximately US$0.98US$0.30 million were primarily attributable to:

Net cash provided by/(used in) investing activities

For the threesix months ended MarchJune 31,30, 2026, (1) we received repayment of short-term loans and interest income of approximately US$0.05 millionmillion. whichIn the aggregate, these transactions resulted in a net cash inflow from investing activities of approximately US$0.5US$0.05 million for the threesix months ended MarchJune 31,30, 2026.

For the threesix months ended MarchJune 31,30, 2025, (1) we purchased office equipment and leasehold improvement of approximately US$0.04US$0.07 million; (2) we received repayment of short-term loans and interest income of approximately US$1.12 million; and (3) we purchased intellectual property of approximately US$0.60 million through the acquisition of Rahula; and (3) we received repayment of short-term loans and interest income of approximately US$1.12 million.Rahula. In the aggregate, these transactions resulted in a net cash inflow from investing activities of approximately US$0.48US$0.46 million for the threesix months ended MarchJune 31,30, 2025.

For the threesix months ended MarchJune 31,30, 2026, we had no cash was provided by or used infrom financing activities.

For the threesix months ended MarchJune 31,30, 2025, our cash provided by financing activities included the following transactions: (1) we received advances from investors of approximately US$0.50US$0.75 million.

Our future short-term liquidity needs within 12 months from the date hereof primarily include deposits and advance payments required for the purchase of search engine marketing resources and other online marketing resources to be distributed to our customers and payments for our operating expenses, which mainly consist of office rentals and employee salary and benefit.

The unaudited condensed consolidated financial statements as of MarchJune 31,30, 2026 have been prepared under the assumption that the Companywe will continue as a going concern, which contemplates, among other things, the realization of assets and the satisfaction of liabilities in the normal course of business over a reasonable period of time. The Company'sOur ability to continue as a going concern is dependent upon itsour uncertain ability to increase gross profit margin and reduce operating loss from itsour core business and/or obtain additional equity and/or debt financing. The accompanying financial statements as of MarchJune 31,30, 2026 do not include any adjustments that might result from the outcome of these uncertainties. If thewe Company isare unable to continue as a going concern, itwe may have to liquidate itsour assets and may receive less than the value at which those assets are carried on the financial statements.

In the long term, beyond the next 12 months, we plan to further broaden the application scenarios of our blockchain-based SaaS services to be offered to the customers, continue expanding our core Internet advertising and marketing business through acquisitions, and develop Internet advertising and marketing channels that target Internet users outside of mainland China. In addition, the Company will expand its capabilities to include AI-enabled applications and deployment solutions, with a focus on enhancing existing service offerings. These initiatives include the development and integration of AI-assisted tools to support customer engagement, financial management, and operational workflows, as well as the incorporation of blockchain-based functionalities for data security, tokenization, and payment processing where applicable. As such, we may decide to enhance our liquidity position or increase our cash reserve for future investments through additional equity financing in the U.S. capital market. This would result in further dilution to our shareholders. We cannot assure you that such financing will be available in amounts or on terms acceptable to us, or at all.