ZW Data Action Technologies Inc.

Previous wording

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, is primarily engaged in providing Internet advertising, precision marketing, blockchain-based SaaS services and e-commerce online to offline (“O2O”) advertising and marketing and the related data and technical services to SMEs in the PRC.

Current wording

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 and our operating subsidiaries outside of mainland China, is primarily engaged in providing Internet advertising, precision marketing, influencer marketing services as well as the related data and technical services to SMEs. 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 Company’s operations are now primarily conducted outside mainland China.

Previous wording

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 O2O 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.

Current wording

Through our 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, digital 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.

Previous wording

For the distribution of the right to use search engine marketing service, the provision of advertising placement services, and the blockchain platform subscription 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 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”).

Current wording

For the distribution of the right to use search engine marketing service, the blockchain platform subscription 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”).

Previous wording

For the distribution of the right to use the third-party’s search engine marketing service, we recognize the revenues 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.

Current wording

For all of our business segments, we recognize revenue 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.

Previous wording

Total Revenues: Our total revenues decreased to 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, 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 services such as influencer marketing.

Current wording

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, 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 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.

Previous wording

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, and provision of the related data and technical services, 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, we will be positioning our client focus outside of the PRC 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.

Current wording

We derive the majority of our revenues from our internet advertising and related marketing services which includes our influencer marketing and digital marketing services outside of mainland 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 2026, we will continue to position our client focus outside of mainland China 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.

Previous wording

Our cost of revenues consisted of advertising resources costs directly related to the offering of our Internet advertising, precision marketing services and software platform amortization cost related to our blockchain-based SaaS 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:

Current wording

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, amortization of software platform development cost, costs 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:

Previous wording

***Cost of revenues:***our total cost of revenues decreased to approximately US$14.99 million for the year ended December 31, 2024, compared with US$31.02 million for the year ended December 31, 2023. Our cost of revenues primarily consists of search engine marketing resources purchased from key search engines, influencer agency costs, cost of outdoor advertising resources, amortization of software platform development cost and other direct costs associated with providing our services. The decrease in our total cost of revenues for the year ended December 31, 2024 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.

Current wording

***Cost of revenues:***our total cost of revenues decreased to approximately US$4.26 million for the year ended December 31, 2025, compared with US$15.0 million for the year ended December 31, 2024. 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, amortization of software platform development cost, 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, 2025 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.

Previous wording

As a result of the foregoing, we incurred 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. Our overall gross margin rate for the years ended December 31, 2024 and 2023 was approximately 2.9% and -1.4%, respectively. The gross profit and the increase in overall gross margin were primarily due to the increase in revenue of our higher margin internet advertising and related data service business.

Current wording

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. Our overall gross margin rate for the years ended December 31, 2025 and 2024 was approximately 7.7% and 2.9%, respectively. The increase in overall gross margin were due to the overall increase in gross profit margin for all of our business segments.

Previous wording

Operating Expenses: Our operating expenses were approximately US$4.20 million and US$5.58 million for the years ended December 31, 2024 and 2023, respectively.

Current wording

Operating Expenses: Our operating expenses were approximately US$2.31 million and US$4.20 million for the years ended December 31, 2025 and 2024, respectively.

Previous wording

Loss from operations: As a result of the foregoing, we incurred a net loss from operations of approximately US$3.76 million and US$6.01 million for the years ended December 31, 2024 and 2023, respectively.

Current wording

Loss from operations: As a result of the foregoing, we incurred a net loss from operations of approximately US$1.95 million and US$3.76 million for the years ended December 31, 2025 and 2024, respectively.

Previous wording

Interest income: For the year ended December 31, 2024, we recognized an approximately US$0.3 million interest income, which was primarily related to the interest we earned from the short-term loans we provided to unrelated parties during the year.

Current wording

Interest income: For the year ended December 31, 2025, we recognized an approximately US$0.19 million interest income, which was primarily related to the interest we earned from the short-term loans we provided to unrelated parties during the year.

Previous wording

Impairment on long-term investments: For the year ended December 31, 2024, we recognized an approximately US$0.002 million impairment loss 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.

Current wording

Impairment on long-term investments: For the year ended December 31, 2025, we did not recognize any impairment loss on long-term 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.

Previous wording

***Loss before income tax (benefit)/expense and noncontrolling interest:***As a result of the foregoing, our loss before income tax (benefit)/expense and noncontrolling interest was approximately US$3.37 million and US$5.98 million for the years ended December 31, 2024 and 2023, respectively.

Current wording

***Loss before income tax (benefit)/expense and noncontrolling interest:***As a result of the foregoing, our loss before income tax (benefit)/expense and noncontrolling interest was approximately US$1.77 million and US$3.37 million for the years ended December 31, 2025 and 2024, respectively.

Previous wording

***Income tax (benefit)/expense:***For the year ended December 31, 2024, we recognized a deferred income tax expense of approximately US$0.40 million. For the year ended December 31, 2023, we recognized a total deferred income tax benefit of US$0.002 million in relation to the net operating loss incurred by one of our operating VIEs, which we consider likely to be utilized with future earnings of this entity

Current wording

***Income tax (benefit)/expense:***For the year ended December 31, 2025 and 2024, we recognized a deferred income tax expense of approximately US$0.001 million and US$0.40 million, respectively.

Previous wording

***Net loss:***As a result of the foregoing, for the years ended December 31, 2024 and 2023, we incurred a net loss of approximately US$3.77 million and US$5.97 million, respectively.

Current wording

***Net loss:***As a result of the foregoing, for the years ended December 31, 2025 and 2024, we incurred a net loss of approximately US$1.77 million and US$3.77 million, respectively.

Previous wording

Net loss attributable to ZW Data Action Technologies Inc.: Net loss attributable to ZW Data Action Technologies Inc. was approximately US$3.76 million and US$5.97 million for the years ended December 31, 2024 and 2023, respectively.

Current wording

Net loss attributable to ZW Data Action Technologies Inc.: Net loss attributable to ZW Data Action Technologies Inc. was approximately US$1.77 million and US$3.76 million for the years ended December 31, 2025 and 2024, respectively.

Previous wording

We are a Nevada holding company with operations primarily conducted in China 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.

Current wording

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.

Previous wording

For the year ended December 31, 2024, we transferred US$0.48 million in cash to our operating subsidiaries. For the year ended December 31, 2023, we did not transfer any cash to our operating subsidiaries; however, one of our subsidiaries paid US$0.79 million operating expenses in cash on behalf of us to the service providers, as a repayment of the shareholder loans provided by us to this subsidiary in previous years.

Current wording

For the year ended December 31, 2025, we transferred US$0.40 million in cash to our operating subsidiaries. For the year ended December 31, 2024, we transferred US$0.48 million in cash to our operating subsidiaries

Previous wording

For the year ended December 31, 2024, our consolidated VIEs transferred US$0.02 million to our consolidated subsidiaries as repayment of loans. For the year ended December 31, 2023, our consolidated subsidiaries transferred US$0.55 million cash to the consolidated VIEs in form of loans, respectively.

Current wording

For the year ended December 31, 2025, our consolidated VIEs transferred US$0.09 million to our consolidated subsidiaries as repayment of loans. For the year ended December 31, 2024, our consolidated VIEs transferred US$0.02 million to our consolidated subsidiaries as repayment of loans.

Previous wording

As we conduct our operations primarily in China through our PRC subsidiaries, VIEs and their subsidiaries, and we intend to transfer most of our cash raised from the U.S. stock market to these operating entities to support their operations and expansions, 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.

Current wording

While we currently have limited operations in mainland China conducted through our PRC subsidiaries, VIEs and VIEs’ subsidiaries, we may continue to provide limited funding to these entities. To the extent we do 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.

Previous wording

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 December 31, 2024 and 2023, net assets restricted in the aggregate, were approximately US$13.23 million and US$13.41 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.

Current wording

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 December 31, 2025 and 2024, net assets restricted in the aggregate, were approximately US$13.11 million and US$13.23 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.

Previous wording

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 December 31, 2024, we had cash and cash equivalents of approximately US$0.81 million.

Current wording

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 December 31, 2025, we had cash and cash equivalents of approximately US$0.97 million.

Previous wording

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.

Current wording

Our liquidity needs include (i) net cash used in operating activities that consists of (a) cash required to fund the expansion of our digital marketing and new services and (b) our working capital needs, which include deposits and advance payments to 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 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.

Previous wording

For the year ended December 31, 2023, our net cash used in operating activities of approximately US$2.01 million were primarily attributable to:

Current wording

For the year ended December 31, 2025, our net cash used in operating activities of approximately US$0.93 million were primarily attributable to:

Previous wording

For the year ended December 31, 2023, our cash provided by investing activities included the following transactions: (1) we provided short-term loans of US$2 million in the aggregate to one unrelated party during the year. The current interest rate is 12% per annum for the loan; (2) we received an aggregate of US$0.17 million repayments of short-term loan principals, of which US$0.1 million was related to a loan provided in fiscal 2021 and US$0.07 million in loan interest income; (3) investment and advances to ownership investee entities of US$0.06 million; (4) proceeds from the disposal of subsidiaries and investee entities in aggregate of US$0.43 million; (5) made payments for leasehold improvements and the purchase of vehicles, furniture and office equipment for US$0.08 million. In aggregate, these transactions resulted in a net cash outflow used in investing activities of approximately US$1.54 million for the year ended December 31, 2023.

Current wording

For the year ended December 31, 2025, our cash provided by investing activities included the following transactions: (1) we received an aggregate of approximately US$1.12 million repayments of short-term loan principal and interest; (2) Purchase of intellectual property through our acquisition of Rahula of US$0.6 million; (3) made payments for leasehold improvements and the purchase of vehicles, furniture and office equipment for US$0.07 million; (4) made deposits for other investing contracts of US$0.30 million; and (5) cash paid for acquisition of equity interests of US$0.30 million. In the aggregate, these transactions resulted in a net cash outflow used in investing activities of approximately US$0.14 million for the year ended December 31, 2025.

Previous wording

In addition, in order to further develop our core business, i.e., our Internet advertising and related data service business, broaden and diversify the online marketing channels for customers, reinforce our industry competitive advantage, we are actively seeking to acquire businesses and build teams with AI capabilities and proprietary intellectual properties that enable more accurate marketing solutions and cost efficient content creation. On March 7, 2025, ChinaNet Investment Holding Limited (the “Purchaser”), a British Virgin Islands company and an indirect wholly-owned subsidiary of ZW Data Action Technologies Inc. (the “Registrant”) acquired the 10,000 shares of Rahula Digital Media (HK) Limited, a Hong Kong company (the "Rahula") that Vickie Chan, an individual (the “Seller”) owned, pursuant to that certain Share Sale and Purchase Agreement, dated March 3, 2025, entered into by and between the Purchaser and the Seller for a total consideration of US$0.6 million. Rahula owns 100% equity interest in Shenzhen Shangye Business Consulting Services Co., Ltd., a People’s Republic of China company (together as “Rahula Group”). Rahula Group is principally engaged in the development and monetization of intellectual property rights on agent management, marketing data management, targeted marketing and mass marketing systems and technologies.

Current wording

In addition, in order to further develop our core business, i.e., our Internet advertising and marketing service business, broaden and diversify the online marketing channels for customers, reinforce our industry competitive advantage, we are actively seeking to acquire or invest in businesses and build teams with AI capabilities and proprietary intellectual properties that enable more accurate marketing solutions and cost efficient content creation. We may also pursue acquisitions or investments in businesses that expand our blockchain-based SaaS services, including technologies and platforms related to the tokenization of real-world assets. On March 7, 2025, ChinaNet Investment Holding Limited (the “Purchaser”), a British Virgin Islands company and an indirect wholly-owned subsidiary of ZW Data Action Technologies Inc. (the “Registrant”) acquired the 10,000 shares of Rahula Digital Media (HK) Limited, a Hong Kong company (the "Rahula") that Vickie Chan, an individual (the “Seller”) owned, pursuant to that certain Share Sale and Purchase Agreement, dated March 3, 2025, entered into by and between the Purchaser and the Seller for a total consideration of US$0.6 million. Rahula owns 100% equity interest in Shenzhen Shangye Business Consulting Services Co., Ltd., a People’s Republic of China company (together as “Rahula Group”). Rahula Group is principally engaged in the development and monetization of intellectual property rights on agent management, marketing data management, targeted marketing and mass marketing systems and technologies. The acquisition of Rahula and its intellectual property has enabled us to establish our IP services business segment. We generate revenue by licensing the intellectual property acquired through Rahula to our customers. In the short term, we expect that cash flows generated from this business segment to help improve our liquidity, as it does not require significant ongoing capital investment or material cash outflows. On November 24, 2025, we changed the corporate name of Rahula to Cnet Technology (HK) Limited.

Previous wording

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) if 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 interest; (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.

Current wording

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) equity financing; (3) 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.

Previous wording

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. 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.

Current wording

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.