Aphoenity International Holdings Inc.

Current report

Although 2024 marks a period of relative stabilization compared to the peak years of the pandemic, residual challenges and structural shifts continue to affect our operations, client demand, and overall financial performance.

Current report

During the height of the pandemic, many businesses reduced discretionary spending, including consulting services, which led to a temporary decline in our revenue. While economic activity has rebounded, some industries we serve, particularly in sectors like retail, travel, and hospitality, are still recovering from prolonged disruptions. Additionally, remote work trends and digital transformation initiatives have altered client needs, increasing demand for technology-driven consulting services while reducing traditional in-person engagements.

Current report

Global supply chain disruptions and inflationary pressures, exacerbated by the pandemic, have increased the cost of certain services and operational expenses. While we have taken steps to mitigate these impacts through strategic pricing and cost management, ongoing economic uncertainty continues to pose a risk to profitability.

Current report

The evolving regulatory landscape related to health and safety measures, data security in remote work environments, and government assistance programs has required continued compliance efforts. Any changes in these regulations could impact our cost structure and operational flexibility.

Current report

As we move forward, we remain focused on adapting to post-pandemic shifts by enhancing our digital consulting capabilities, optimizing cost structures, and diversifying service offerings. While uncertainties persist, we believe that our strategic investments in technology and human capital position us well for sustained growth in the evolving business environment.

Current report

Despite lingering challenges from COVID-19, we are optimistic about the long-term prospects of our industry and our ability to drive value for our clients and stakeholders.

Current report

Our operations across Southeast Asia are subject to stringent and evolving data privacy and personal data protection laws, including but not limited to Malaysia’s Personal Data Protection Act 2010 (PDPA) and Singapore’s Personal Data Protection Act 2012 (PDPA). These regulations govern the collection, use, storage, and transfer of personal data, imposing strict compliance obligations on businesses operating within these jurisdictions. Failure to adhere to these requirements may result in significant fines, legal actions, and reputational damage. In Malaysia, businesses must obtain consent before processing personal data and ensure adequate safeguards are in place, while in Singapore, companies are required to implement robust data protection policies, conduct regular audits, and report data breaches promptly. Other Southeast Asian countries, such as Thailand, Indonesia, the Philippines, and Vietnam, have introduced or are in the process of strengthening their data protection regimes, increasing the complexity of cross-border operations. Divergent regulatory frameworks and enforcement practices across the region pose operational challenges, requiring continuous monitoring, staff training, and investment in data security infrastructure. Non-compliance with these data protection laws could materially and adversely affect our business operations, expose us to regulatory scrutiny, and undermine stakeholder confidence.

Current report

Under Malaysia’s Computer Crimes Act 1997 and other related legislation, unauthorized access, theft, or misuse of data, including personal information, is a criminal offense, punishable by fines and imprisonment. Companies operating in Malaysia are required to take reasonable steps to secure their networks and information systems, prevent data breaches, and ensure the lawful processing of personal data. Non-compliance with these data protection and cybersecurity regulations can lead to enforcement actions, reputational damage, and potential disruption to business operations.

Current report

Oversea Listing Requirement for local entities

Current report

Additional disclosures may be required to ensure that Malaysian investors are adequately informed. Companies are also expected to comply with Bank Negara Malaysia’s (BNM) foreign exchange administration rules when raising funds overseas, particularly regarding the remittance of proceeds and cross-border transactions.

Current report

Post-listing, Malaysian entities remain subject to domestic financial reporting and disclosure requirements, alongside the ongoing obligations of the foreign stock exchange. Non-compliance with these requirements may result in regulatory action, fines, or reputational damage, potentially affecting the company’s financial position and market perception.

Current report

Our business, financial condition, and future growth prospects may be adversely affected if we fail to retain existing clients or attract new businesses seeking to pursue the U.S. public listing route. Our ability to maintain and expand our exposure to emerging entities across Southeast Asia, including Malaysia, Singapore, Indonesia, Thailand, and other developing markets, is critical to our long-term success. These markets represent significant growth opportunities; however, competition is intensifying, and clients may seek alternative advisory firms or financing avenues.

Current report

Furthermore, delays or defaults in collecting accounts receivable from clients could strain our working capital, disrupt cash flows, and impact our profitability. Extended payment cycles or non-payment, particularly from startups and growth-stage companies in emerging markets, could further exacerbate these risks. Failure to address these challenges could materially and adversely affect our business operations and financial performance.

Current report

Importance of Fundraising Advisory and Potential Impact.

Current report

As a Listing Consultant, our ability to offer clients strategic fundraising options is a critical component of our service offering and is essential to their successful listing and post-listing growth. We facilitate access to various financing avenues, including pre-IPO funding, private placements, bridge financing, and public market capital raising, enabling our clients to secure the necessary working capital to support their business expansion and listing ambitions. Our capacity to identify suitable investors, structure financing solutions, and navigate cross-border fundraising regulations—particularly in Southeast Asia and the U.S.—enhances our value proposition. However, if we are unable to maintain strong relationships with funding partners, or if market conditions deteriorate, limiting access to financing for our clients, our advisory capabilities may be compromised. This could lead to reduced client confidence, delays in listings, and the potential loss of business. Furthermore, if clients are unable to secure sufficient funding through our advisory network, they may resort to less favorable financing terms or alternative consultants, which could materially and adversely affect our business performance and growth prospects.

Current report

Procurement of Services and Financing Support in Public Listing Advisory

Current report

Our ability to successfully deliver public listing advisory services is contingent upon the availability of essential third-party service providers, including legal advisors, auditors, underwriters, valuation experts, and other professionals involved in the listing process. In certain instances, our capability to secure and coordinate these services in a timely and cost-effective manner is critical to meeting client expectations and ensuring the smooth progression of listing mandates. Additionally, our success relies significantly on the expertise and networks of our key personnel, including consultants who possess specialized knowledge of listing regulations and well-established connections within the financial and regulatory ecosystem. Any disruption in securing these external services, or the loss of experienced and well-connected professionals, could delay client projects, erode client confidence, and negatively impact our business performance.

Current report

We believe that maintaining, protecting, and enhancing our brand and reputation is of significant importance to the long-term success and growth of our business. Our brand represents the trust and confidence our clients, partners, and investors place in our services, particularly within the highly competitive consulting and public listing advisory sector across Southeast Asia and other markets in which we operate. A strong and recognizable brand allows us to differentiate ourselves from competitors, attract and retain new clients, and strengthen our relationships with existing clients.

Current report

Any failure to preserve the integrity of our brand or any negative publicity—whether arising from regulatory issues, client dissatisfaction, adverse market perception, or operational shortcomings—could materially harm our reputation, reduce market demand for our services, and undermine our competitive position. Moreover, as we expand our operations and seek to grow our presence in Malaysia, Hong Kong, and other key markets, consistent brand development and reputation management will remain vital in gaining market acceptance and driving sustainable business performance. We intend to continue investing in marketing, client engagement, and service quality enhancement initiatives to maintain and elevate our brand’s standing, which we believe is a critical factor to our continued success.

Current report

The Malaysian government, along with other regulatory authorities in South-East Asia, exercises significant oversight and discretion over the conduct of business operations, the offering of securities, and foreign investments within their jurisdictions.

Current report

Our operations in Malaysia and Southeast Asia are subject to the authority of various regulatory bodies, including the Securities Commission Malaysia (SC) and Bank Negara Malaysia (BNM), which possess the power to influence business activities, capital markets, and foreign investments. Regulatory interventions or sudden changes in policies could affect our ability to raise capital offshore, attract foreign investors, or proceed with securities offerings. These actions may negatively impact the value of our securities and could impair our financial position.

Current report

The regulatory environment in Malaysia and the broader Southeast Asia region is dynamic, with ongoing updates to policies governing investments, corporate practices, and financial markets. Businesses with offshore holding structures, such as ours, must remain adaptable to these regulatory developments to ensure continued compliance and sustain operational and financial flexibility. Failure to comply with new requirements may expose us to penalties or operational disruptions.

Current report

Additionally, shifts in government priorities or regional geopolitical uncertainties may create obstacles for foreign investors and affect market sentiment. Protective policies or stricter financial controls could limit our access to funding sources or delay expansion initiatives. These uncertainties, coupled with evolving regulations, may pose risks to our growth outlook and shareholder value.

Current report

The political environment in Malaysia has experienced periodic changes and transitions in government leadership over recent years, often resulting in shifts in national policies and regulatory priorities. Changes in the ruling administration, shifts in coalition dynamics, or political instability can lead to uncertainty in the business environment. These developments may affect government approaches toward foreign investments, financial regulations, taxation policies, and economic development strategies, all of which could have a direct or indirect impact on our business operations and financial performance.

Current report

A change in government leadership or policy direction could result in the introduction of new laws or amendments to existing regulations governing sectors relevant to our business, including the consulting, public listing advisory, and capital markets sectors. For instance, stricter requirements on foreign ownership, limitations on offshore investments, or changes in licensing conditions for professional service providers could restrict our business activities or increase our compliance obligations. Additionally, delays in policy implementation or the reversal of previously approved development plans could disrupt our business strategies or delay project execution.

Current report

Political uncertainty in Malaysia may also affect investor confidence and market stability, particularly if it leads to concerns over the future direction of the economy or regulatory framework. This could reduce the willingness of potential clients to proceed with capital-raising activities or public listings, impacting our revenue streams. Furthermore, changes in government-driven incentives or support schemes for businesses operating in Malaysia could alter the cost structure or growth prospects for our operations. Any such political shifts could materially affect our ability to maintain stable business operations, achieve growth objectives, and ultimately influence our financial condition and the value of our securities.

Current report

The Holding Foreign Companies Accountable Act (HFCAA) requires that the Public Company Accounting Oversight Board (PCAOB) be permitted to inspect and investigate the audit work and practices of public accounting firms for issuers listed on U.S. stock exchanges. If a company's auditor is based in a jurisdiction where PCAOB is unable to conduct inspections for three consecutive years, the company risks delisting from U.S. securities exchanges. Malaysian companies, particularly those with local auditors unfamiliar with U.S. audit oversight requirements or those operating in an environment where local regulations restrict access to certain audit work papers, may face significant compliance challenges. There is uncertainty as to whether Malaysian authorities will fully cooperate with PCAOB inspection requirements, as Malaysia’s regulatory and confidentiality laws regarding audit practices could potentially conflict with U.S. standards. Any failure by our previous Malaysian auditors to comply with PCAOB inspection requests could result in our company being identified as non-compliant under the HFCAA, leading to potential trading prohibitions or delisting from U.S. exchanges, which could adversely affect the liquidity and value of our securities and restrict our access to U.S. capital markets.

Current report

Our business operations are subject to the regulatory framework in Malaysia, which continues to evolve. Regulatory authorities in Malaysia, including the Securities Commission Malaysia (SC), Bank Negara Malaysia (BNM), Companies Commission of Malaysia (SSM), and other government bodies, periodically introduce new legislation and update existing rules that govern corporate practices, foreign investments, financial services, data protection, taxation, and anti-corruption. Any adverse regulatory developments, such as the imposition of additional licensing requirements, restrictions on cross-border transactions, enhanced taxation policies, or stricter foreign exchange controls, could increase our operational complexity and compliance costs. Such changes may also limit our business flexibility and affect our ability to conduct cross-border financing and investment activities, which are critical to our regional operations and long-term growth.

Current report

Additionally, recent regulatory shifts and government enforcement efforts in Malaysia, including heightened anti-corruption measures under the Malaysian Anti-Corruption Commission Act 2009 (MACC Act) and the Corporate Liability Provision (Section 17A), may lead to increased regulatory scrutiny on companies conducting business in Malaysia. This environment could result in additional regulatory reviews or audits of our Malaysian operations, exposing us to potential penalties or reputational harm if any non-compliance is identified.

Current report

Furthermore, in response to the evolving regulatory landscape in Malaysia and the broader Southeast Asia region, the U.S. Securities and Exchange Commission (SEC) may adopt or strengthen disclosure obligations and oversight measures for companies like ours with operations in Malaysia. These measures could include expanded reporting requirements regarding financial transactions, internal controls, and compliance with anti-corruption and anti-money laundering laws. Any such regulatory developments by the SEC or other U.S. regulatory bodies could increase the complexity of our financial reporting processes, subject us to more rigorous disclosure obligations, and elevate our compliance burden.

Current report

The combination of stricter domestic regulations in Malaysia and potential additional scrutiny by U.S. authorities may significantly increase our compliance costs, require the enhancement of our internal compliance systems, and divert management attention from our core business activities. Failure to comply with any newly introduced regulations or disclosure requirements could result in fines, sanctions, reputational damage, or other adverse outcomes, all of which could negatively affect our business operations, financial performance, and the value of our securities..

Current report

We face uncertainty with respect to indirect transfers of equity interests in Malaysia resident enterprises by their non-Malaysia holding companies.

Current report

We may face regulatory uncertainty with respect to the transfer of equity interests in our Malaysian operating entity held indirectly through our non-Malaysia holding companies, including our intermediate holding entity in Hong Kong. Malaysia’s legal and regulatory framework governing mergers, acquisitions, and the indirect transfer of ownership interests in resident enterprises by foreign entities is complex and subject to interpretation and administrative discretion. Transactions involving offshore transfers of shares or changes in control of non-resident holding entities with underlying Malaysian subsidiaries could trigger reporting requirements, tax implications, or regulatory approvals under Malaysian law, including under the Financial Services Act 2013, Income Tax Act 1967, and guidelines issued by Bank Negara Malaysia (BNM) and other authorities.

Current report

Although there is currently no comprehensive, codified regime specifically addressing indirect offshore equity transfers, Malaysian regulators may scrutinize such transactions to assess whether they result in changes in the ultimate ownership or control of Malaysian resident entities. Any such determination could result in obligations to notify the relevant authorities, reassess tax liabilities, or comply with other regulatory procedures. Failure to make timely disclosures or obtain necessary approvals could expose us to penalties, additional tax assessments, or operational disruptions.

Current report

Any uncertainty or adverse interpretation regarding indirect transfers of our Malaysian equity interests by our offshore holding companies could increase transaction costs, introduce delays in executing corporate restructurings, or limit our ability to efficiently transfer ownership stakes to potential investors. Furthermore, such regulatory uncertainty could adversely affect the valuation and liquidity of our interests in the Malaysian market, which may reduce the attractiveness of our business to foreign investors and impair our ability to raise capital. These factors could materially and adversely affect our business, financial condition, and shareholders' investment returns.

Current report

The regulatory environment in Malaysia and Southeast Asia regarding cross-border equity transactions continues to evolve. We cannot predict whether additional restrictions, reporting obligations, or tax measures targeting indirect offshore equity transfers will be introduced. Any such changes could further increase compliance burdens and create additional uncertainties for our future financing, restructuring, or divestment activities involving our Malaysian operations. We remain committed to monitoring regulatory developments and ensuring compliance; however, any adverse regulatory actions or shifts in policy could materially affect our operational flexibility and overall business performance.

Current report

The M&A Rules and certain other South-East Asia regulations may make it more difficult for us to pursue growth through acquisitions.

Current report

Our ability to expand our business operations through mergers, acquisitions, or strategic investments in Southeast Asia is subject to various regulatory requirements and government approvals, which may impose significant limitations or delays. In jurisdictions such as Malaysia, Singapore, Indonesia, and other Southeast Asian countries, mergers and acquisitions involving foreign investors are often subject to review by regulatory authorities, including competition regulators, foreign investment bodies, and sector-specific licensing agencies. In Malaysia, for instance, the Malaysian Competition Act 2010 regulates anti-competitive mergers, while the Equity Conditions and Licensing Requirements imposed by certain government agencies may restrict foreign ownership in strategic sectors. Similarly, Singapore’s Competition and Consumer Commission (CCCS) closely monitors transactions that may lessen competition within the market.

Current report

Additionally, some Southeast Asian countries maintain foreign equity restrictions and screening mechanisms for foreign investments, particularly in industries deemed sensitive, such as telecommunications, finance, and natural resources. Compliance with these M&A rules often requires obtaining prior approval, conducting due diligence to satisfy ownership and control requirements, and ensuring alignment with national interests or local partner arrangements. These processes can be time-consuming and may result in increased transaction costs or, in some cases, prevent us from completing proposed acquisitions altogether.

Current report

Further, regulations on cross-border capital flows and foreign exchange, including those enforced by Bank Negara Malaysia (BNM) and other central banks in the region, may restrict the remittance of funds or impose limitations on financing acquisition activities through offshore sources. Delays or obstacles in securing the necessary approvals for acquisitions could hinder our ability to respond swiftly to market opportunities or execute our growth strategy effectively.

Previous report

During March 2020, the World Health Organization declared the rapidly growing coronavirus outbreak to be a global pandemic. The COVID-19 pandemic has significantly impacted health and economic conditions throughout Hong Kong and China. National, regional and local governments took a variety of actions to contain the spread of COVID-19, including office and store closures or capacity limitations. These developments have caused a material adverse impact on the Company’s results of operations, financial condition and cash flows.

Previous report

We cannot predict how soon we will be able to resume normal operations as our ability to resume will depend in part on the actions of a number of governmental bodies over which we have no control. Moreover, once restrictions are lifted, it is unclear how quickly customers will commence operations and resume consuming our products and service, which may be a function of continued concerns over safety and/or depressed consumer sentiment due to adverse economic conditions, including job losses. Considering the significant uncertainty as to when we can resume operations and the uncertain customer demand environment, in addition to the actions described above, we expect to engage in conversations with potential investors to secure additional sources of financing.

Previous report

The outbreak of COVID-19 has caused significant disruptions to the Company’s ability to generate revenues and cash flows, and uncertainty regarding the length of the disruption may adversely impact our financial condition and ability to raise additional capital. As part of our business continuity efforts, we reduced expenses broadly, including cutting back capital spending. The ultimate impact of the COVID-19 pandemic on our business, results of operations, financial condition and cash flows will depend on our ability to have sufficient liquidity until such time as we again generate revenue and profits capable of supporting our ongoing operations, all of which remain highly uncertain at this time.

Previous report

In recent activity, the PRC government has issued extensive regulations affecting the digital industry such as online gaming, online tutoring, e-commerce and other online and technology companies, including foreign ownership of, and the licensing and permit requirements pertaining to, companies in the digital space. These laws and regulations are relatively new and evolving, and their interpretation and enforcement involve significant uncertainty. As a result, in certain circumstances it may be difficult to determine what actions or omissions may be deemed to be in violations of applicable laws and regulations. There is also uncertainty regarding such laws may be expanded to increase its effect on our business and operations. Issues, risks and uncertainties relating to PRC regulations of digital businesses include, but are not limited to, the following:

Previous report

The interpretation and application of existing PRC laws, regulations and policies and possible new laws, regulations or policies relating to the digital industry have created substantial uncertainties regarding the legality of existing and future foreign investments in, and the businesses and activities of, Internet businesses in China and Hong Kong including our business. There are also risks that we may be found to violate the existing or future laws and regulations given the uncertainty and complexity of China’s regulation of the digital industry.

Previous report

Our business generates and processes personal data and face risks inherent in handling and protecting personal data. In particular, we face a number of challenges relating to data we collect through our game distribution platform, including:

Previous report

Governments around the world, including the PRC government, have enacted or are considering legislation related to online businesses. There may be an increase in legislation and regulation related to the collection and use of anonymous internet user data and unique device identifiers, such as IP address or mobile unique device identifiers, and other data protection and privacy regulation. The PRC regulatory and enforcement regime with regard to data security and data protection is evolving. We may be required by Chinese governmental authorities to share personal information and data that we collect to comply with PRC laws relating to cybersecurity. All these laws and regulations may result in additional expenses to us and any non-compliance may subject us to negative publicity which could harm its reputation and negatively affect the trading price of our securities. There are also uncertainties with respect to how these laws will be implemented in practice. PRC regulators have been increasingly focused on regulation in the areas of data security and data protection. We expect that these areas will receive greater attention and focus from regulators, as well as attract continued or greater public scrutiny and attention going forward, which could increase our compliance costs and subject it to heightened risks and challenges associated with data security and protection. If we are unable to manage these risks, we could become subject to penalties, fines, suspension of business and revocation of required licenses, and our reputation and results of operations could be materially and adversely affected. In addition, regulatory authorities around the world have recently adopted or are considering a number of legislative and regulatory proposals concerning data protection. These legislative and regulatory proposals, if adopted, and the uncertain interpretations and application thereof could, in addition to the possibility of fines, result in an order requiring that we change our data practices, which could have an adverse effect on our business and results of operations.

Previous report

In November 2016, the Standing Committee of China’s National People’s Congress passed China’s first Cybersecurity Law (“CSL”), which became effective in June 2017. The CSL is the first PRC law that systematically lays out the regulatory requirements on cybersecurity and data protection, subjecting many previously under-regulated or unregulated activities in cyberspace to government scrutiny. The legal consequences of violation of the CSL include penalties of warning, confiscation of illegal income, suspension of related business, winding up for rectification, shutting down the websites, and revocation of business license or relevant permits. In April 2020, the Cyberspace Administration of China and certain other PRC regulatory authorities promulgated the Cybersecurity Review Measures, which became effective in June 2020. Pursuant to the Cybersecurity Review Measures, operators of critical information infrastructure must pass a cybersecurity review when purchasing network products and services which do or may affect national security. On July 10, 2021, the Cyberspace Administration of China issued a revised draft of the Measures for Cybersecurity Review for public comments (“2021 Measures”), which required that, in addition to “operator of critical information infrastructure,” any “data processor” carrying out data processing activities that affect or may affect national security should also be subject to cybersecurity review, and further elaborated the factors to be considered when assessing the national security risks of the relevant activities, including, among others, (i) the risk of core data, important data or a large amount of personal information being stolen, leaked, destroyed, and illegally used or exited the country; and (ii) the risk of critical information infrastructure, core data, important data or a large amount of personal information being affected, controlled, or maliciously used by foreign governments after listing abroad. The 2021 Measures became effective on February 15, 2022. The Cyberspace Administration of China has said that under the 2021 Measures companies holding data on more than 1,000,000 users must now apply for cybersecurity approval when seeking listings in other nations because of the risk that such data and personal information could be “affected, controlled, and maliciously exploited by foreign governments.” The cybersecurity review will also investigate the potential national security risks from overseas IPOs. Article 7 of the 2021 Measures states that “Where any network platform operator who possesses the personal information of more than one million users seeks foreign listings (“国外上市”), it shall file an application with the Office of Cybersecurity Review for cybersecurity review.” The cybersecurity review will also investigate the potential national security risks from overseas IPOs.

Previous report

We do not know what regulations will be adopted or how such regulations will affect us. In the event that the Cyberspace Administration of China determines that we are subject to these regulations, our securities may no longer be traded on the OTC QB and we may be subject to fines and penalties.

Previous report

We believe that we will not be subject to the cybersecurity review by the CAC for this offering, given that: (i) our products and services are offered not directly to individual users but through our business customers; (ii) we do not possess a large amount of personal information in our business operations; and (iii) data processed in our business does not have a bearing on national security and thus may not be classified as core or important data by the authorities. However, there remains uncertainty as to how the 2021 Measures will be interpreted or implemented and whether the PRC regulatory agencies, including the CAC, may adopt new laws, regulations, rules, or detailed implementation and interpretation related to the 2021 Measures. If any such new laws, regulations, rules, or implementation and interpretation comes into effect, we will take all reasonable measures and actions to comply and to minimize the adverse effect of such laws on us.

Previous report

On August 20, 2021, the Standing Committee of the NPC approved the Personal Information Protection Law (“PIPL”), which will become effective on November 1, 2021. The PIPL regulates collection of personal identifiable information and seeks to address the issue of algorithmic discrimination. Companies in violation of the PIPL may be subject to warnings and admonishments, forced corrections, confiscation of corresponding income, suspension of related services, and fines. We offer our products and services mainly to corporate clients and have limited interactions with individual end-users, which means our potential access or exposure to end-users’ personal identifiable information is limited. However, in the event we inadvertently accesses or becomes exposed to end-users’ personal identifiable information, through its corporate clients’ end-user-facing applications which access or store end users’ personal identifiable information, then we may face heightened exposure to the PIPL. We cannot assure you that PRC regulatory agencies, including the CAC, would take the same view as we do, and there is no assurance that we can fully or timely comply with such laws. In the event that we are subject to any mandatory cybersecurity review and other specific actions required by the CAC, we face uncertainty as to whether any clearance or other required actions can be timely completed, or at all. Given such uncertainty, we may be further required to suspend relevant business, shut down our website, or face other penalties, which could materially and adversely affect our business, financial condition, and results.

Previous report

We generate a substantial part of our revenues from advertising or marketing customers who engage us to develop their customized gaming content to launch in their digital interactive marketing campaigns. However, because our advertising customers are not under long term contracts, we may not be able to retain our advertising customers in the future, attract new advertising customers continuously or be able to retain our advertising customers at all. If our advertising customers find that they can generate better returns elsewhere, or if our competitors provide better online advertising services to suit the advertising customers’ goals, we may lose some or all of our advertising customers. Since most of our advertising customers are not bound by long-term contracts, they may easily reduce or discontinue advertising arrangements without incurring material liabilities. Failure to retain existing advertising customers or attract new advertising customers to advertise within the video content produced by us or on our e-commerce platform may materially and adversely affect our business, financial conditions and results of operations.

Previous report

The financial soundness of our marketing customers and agencies may affect our collection of accounts receivable. We make a credit assessment of our marketing customers and agencies to evaluate the collectability of the digital marketing service fees before entering into a contract. However, we may not be able to accurately assess the creditworthiness of each customer or agency, and any inability of customers or agencies to pay us for our services in a timely manner would negatively our liquidity and cash flows and may materially and adversely affect our business, financial condition and results of operations.

Previous report

We may need to raise additional financing to support our operations and future acquisitions, but we cannot be sure that we will be able to obtain additional financing on terms favorable to us when needed. If we are unable to obtain additional financing to meet our needs, our operations may be adversely affected or terminated.

Previous report

Our ability to generate future operating revenues depends in part on whether we can obtain the financing necessary to implement our business plan. We will likely require additional financing through the issuance of debt and/or equity in order to establish profitable operations, and such financing may not be forthcoming. There can be no assurance that we will be able to obtain financing to fund our operations in light of factors beyond our control such as the market demand for our securities, the state of financial markets, generally, and other relevant factors. Even if additional financing is available, it may not be available on terms favorable to us. At this time, we have not identified or secured sources of additional financing. Any sale of our Common Stock in the future may result in dilution to existing stockholders. Furthermore, there is no assurance that we will not incur debt in the future, that we will have sufficient funds to repay any future indebtedness or that we will not default on our future debts, which would thereby jeopardize our business viability. We may not be able to borrow or raise additional capital in the future to meet our needs, which might result in the loss of some or all of your investment in our Common Stock. Even if we do raise sufficient capital and generate revenues to support our operating expenses, there can be no assurance that the revenue will be sufficient to enable us to develop our business to a level where it will generate profits and cash flows from operations or provide a return on investment. In addition, if we raise additional funds through the issuance of equity or convertible debt securities, the percentage ownership of our stockholders could be significantly diluted, the newly-issued securities may have rights, preferences or privileges senior to those of existing stockholders and the trading price of our Common Stock could be adversely affected. Further, if we obtain additional debt financing, a substantial portion of our operating cash flow may be dedicated to the payment of principal and interest on such indebtedness, and the terms of the debt securities issued could impose significant restrictions on our operations. If we are unable to continue as a going concern, you may lose your entire investment.

Previous report

Our procurement of new games and amusement offerings is contingent upon availability, and in some instances, our ability to obtain licensing rights.

Previous report

Our ability to continue to procure new games, amusement offerings, and other entertainment-related equipment is important to our business strategy. The number of suppliers from which we can purchase games, amusement offerings and other entertainment-related equipment is limited. To the extent that the number of suppliers declines, we could be subject to the risk of distribution delays, pricing pressure, lack of innovation and other associated risks. We may not be able to anticipate or react to changing amusement offerings cost by adjusting purchasing practices or game prices, and a failure to do so could have a material adverse effect on our operating results. In addition, any decrease in availability of new amusement offerings that appeal to customers could lead to decreases in revenues as customers negatively react to lack of new game options.

Previous report

We have successfully developed several proprietary amusement offerings that are not available to operations outside the Company. Our ability to develop future offerings is dependent on, among other things, obtaining rights to compelling game content and developing new amusement offerings that are accepted by our customers. There is no guarantee that additional licensing rights will be obtained by us or that our customers will accept the future offerings that we develop. The result could be increased expenses without increased revenues putting downward pressure on our results of operations and financial performance.

Previous report

A significant disruption in our computer systems and our inability to adequately maintain and update those systems could adversely affect our operations and our ability to maintain user confidence.

Previous report

We rely extensively on our computer systems to manage and account for inventory, process user transactions, manage and maintain the privacy of users data, communicate with our vendors and other third parties, service accounts, and summarize and analyze results. We also rely on continued and unimpeded access to the Internet to use our computer systems. Our systems are subject to damage or interruption from power outages, telecommunications failures, computer viruses, malicious attacks, security breaches, and catastrophic events. If our systems are damaged or fail to function properly or reliably, we may incur substantial repair or replacement costs, experience data loss or theft and impediments to our ability to manage inventories or process user transactions, engage in additional promotional activities to retain our users, and encounter lost user confidence, which could adversely affect our results of operations.

Previous report

We continually invest to maintain and update our computer systems. Implementing significant system changes increases the risk of computer system disruption. The potential problems and interruptions associated with implementing technology initiatives, as well as providing training and support for those initiatives, could disrupt or reduce our operational efficiency, and could negatively impact user experience and user confidence.

Previous report

If our efforts to protect the security of information about our resellers, customers, and other third parties are unsuccessful, we may face additional costly government enforcement actions and private litigation, and our sales and reputation could suffer.

Previous report

We regularly receive and store information about our resellers, customers, merchants, vendors and other third parties. We have programs in place to detect, contain, and respond to data security incidents. However, because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently and may be difficult to detect for long periods of time, we may be unable to anticipate these techniques or implement adequate preventive measures. In addition, hardware, software, or applications we develop or procure from third parties or through open source solutions may contain defects in design or manufacture or other problems that could unexpectedly compromise information security. Unauthorized parties may also attempt to gain access to our systems or facilities, or those of third parties with whom we do business, through fraud, trickery, or other forms of deceiving our team members, contractors, and vendors.

Previous report

To date, we have not encountered significant incidents of data breach or breaches that were material to our consolidated financial statements. If we, our vendors, or other third parties with whom we do business experience significant data security breaches or fail to detect and appropriately respond to significant data security breaches, we could be exposed to government enforcement actions and private litigation. In addition, our users could lose confidence in our ability to protect their information, which could cause them to discontinue using our e-wallets, our digital products, or loyalty programs, or stop shopping with us altogether.

Previous report

We believe that maintaining and enhancing our brand is of significant importance to the success of our business. Our well-recognized brand is critical to increasing our user base and, in turn, expanding our shoppers for our e-commerce platform and attractiveness to advertising customers and content providers. Since the internet video industry is highly competitive, maintaining and enhancing our brand depends largely on our ability to become and remain a market leader in Hong Kong, which may be difficult and expensive to accomplish. To the extent our original content is perceived as low quality or otherwise not appealing to users, our ability to maintain and enhance our brand may be adversely impacted which in turn may result in a loss of users for our mobile and online video and e-commerce platform.

Previous report

The PRC government has significant oversight and discretion over the conduct of a Hong Kong company’s business operations or to exert control over any offering of securities conducted overseas and/or foreign investment in China-based issuers, and may intervene with or influence our operations, may limit or completely hinder our ability to offer or continue to offer securities to investors, and may cause the value of such securities to significantly decline or be worthless, as the government deems appropriate to further regulatory, political and societal goals.

Previous report

The PRC government may intervene or influence our operations at any time with little to no advanced notice, which could result in a material change in our operations and/or the value of our common stock. For example, the PRC government has recently published new policies that significantly affected certain industries such as the education and internet industries, and we cannot rule out the possibility that it will in the future release regulations or policies regarding any industry that could adversely affect the business, financial condition and results of operations of our company. Furthermore, the PRC government has also recently indicated an intent to exert more oversight and control over securities offerings and other capital markets activities that are conducted overseas and foreign investment in China-based companies. Any such action, once taken by the PRC government, could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or in extreme cases, become worthless.

Previous report

Recently, the PRC government initiated a series of regulatory actions and statements to regulate business operations in China with little advance notice, including cracking down on illegal activities in the securities market, enhancing supervision over China-based companies listed overseas using variable interest entity structure, adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement. We believe we are not subject to cybersecurity review with the Cyberspace Administration of China, or CAC, given that: (i) our products and services are offered not directly to individual users but through our institutional customers; (ii) we do not possess a large amount of personal information in our business operations; and (iii) data processed in our business does not have a bearing on national security and thus may not be classified as core or important data by the authorities. See also “Risk Factors -We may become subject to a variety of laws and regulations in the PRC regarding privacy, data security, cybersecurity, and data protection. We may be liable for improper use or appropriation of personal information provided by our customers.”

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We believe that we are not subject to merger control review by China’s anti-monopoly enforcement agency due to the level of our revenues which provided from us and audited by our auditor, and the fact that we currently do not expect to propose or implement any acquisition of control of, or decisive influence over, any company with revenues within China of more than RMB400 million. Currently, these statements and regulatory actions have had no impact on our daily business operation, the ability to accept foreign investments and list our securities on an U.S. or other foreign exchange. Since these statements and regulatory actions are new, it is highly uncertain how soon legislative or administrative regulation making bodies will respond and what existing or new laws or regulations or detailed implementations and interpretations will be modified or promulgated, if any, and the potential impact such modified or new laws and regulations will have on our daily business operation, the ability to accept foreign investments and list our securities on an U.S. or other foreign exchange.

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Our business operations may be adversely affected by the current and future political environment in the PRC. The PRC government has exercised and continues to exercise substantial control over virtually every sector of the Chinese economy through regulation and state ownership. We expect the Hong Kong legal system to rapidly evolve in the near future and may become closer aligned with legal system in China with the PRC government exerting more oversight and control over companies operating in Hong Kong, offerings conducted overseas and or foreign investment in Hong Kong based issuers. The interpretations of many laws, regulations and rules may not always be uniform and the enforcement of these laws, regulations and rules may involve uncertainties for you and us. Our ability to operate in Hong Kong, conduct overseas offerings and continue to investment in Hong Kong based issuers may be harmed by these changes in its laws and regulations, including those relating to taxation, import and export tariffs, healthcare regulations, environmental regulations, land use and property ownership rights, and other matters. Accordingly, government actions in the future, including any decision not to continue to support recent economic reforms and to return to a more centrally planned economy or regional or local variations in the implementation of economic policies, could have a significant effect on economic conditions in Hong Kong or particular regions thereof, and could limit or completely hinder our ability to offer or continue to offer securities to investors or require us to divest ourselves of any interest we then hold in Hong Kong properties or joint ventures. Any such actions (including divesture or similar actions) could result in a material adverse effect on us and on your investment in us and could render our securities and your investment in our securities worthless.

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There are substantial uncertainties regarding the interpretation and application of PRC laws and regulations, including, but not limited to, the laws and regulations governing our business, or the enforcement and performance of our contractual arrangements with borrowers in the event of the imposition of statutory liens, death, bankruptcy or criminal proceedings. Only after 1979 did the Chinese government begin to promulgate a comprehensive system of laws that regulate economic affairs in general, deal with economic matters such as foreign investment, corporate organization and governance, commerce, taxation and trade, as well as encourage foreign investment in China. Although the influence of the law has been increasing, China has not developed a fully integrated legal system and recently enacted laws and regulations may not sufficiently cover all aspects of economic activities in China. Also, because these laws and regulations are relatively new, and because of the limited volume of published cases and their lack of force as precedents, interpretation and enforcement of these laws and regulations involve significant uncertainties. New laws and regulations that affect existing and proposed future businesses may also be applied retroactively. In addition, there have been constant changes and amendments of laws and regulations over the past 30 years in order to keep up with the rapidly changing society and economy in China. Because government agencies and courts that provide interpretations of laws and regulations and decide contractual disputes and issues may change their interpretation or enforcement very rapidly with little advance notice at any time, we cannot predict the future direction of Chinese legislative activities with respect to either businesses with foreign investment or the effectiveness on enforcement of laws and regulations in China. The uncertainties, including new laws and regulations and changes of existing laws, as well as, may cause possible problems to foreign investors.

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Although the PRC government has been pursuing economic reform policies for more than two decades, the PRC government continues to exercise significant control over economic growth in the PRC through the allocation of resources, controlling payments of foreign currency, setting monetary policy and imposing policies that impact particular industries in different ways. We cannot assure you that the PRC government will continue to pursue policies favoring a market oriented economy or that existing policies will not be significantly altered, especially in the event of a change in leadership, social or political disruption, or other circumstances affecting political, economic and social life in the PRC.

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The Holding Foreign Companies Accountable Act was signed into law on December 18, 2020, and requires Auditors of publicly traded companies to submit to regular inspections every three years to assess such auditors’ compliance with applicable professional standards. On June 22, 2021, the U.S. Senate passed the Accelerating Holdings Foreign Companies Accountable Act which, if passed by the U.S. House of Representatives and signed into law, would reduce the number of consecutive non-inspection years required for triggering the prohibitions under the HFCA Act from three years to two, thus reducing the time before our securities may be prohibited from trading or delisted. As a result, the time period before our securities may be prohibited from trading or delisted will be reduced. If the U.S. securities regulatory agencies are unable to conduct such investigations, there exists a risk that they may determine to suspend or de-register our registration with the SEC and may also delist our securities from applicable trading market within the US. On December 2, 2021, the SEC adopted final amendments implementing congressionally mandated submission and disclosure requirements of the Holding Foreign Companies Accountable 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.

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According to Article 177 of the Securities Law of the PRC (“Article 177”), overseas securities regulatory authorities are prohibited from engaging in activities pertaining to investigations or evidence collection directly conducted within the territories of the PRC, and Chinese entities or individuals are further prohibited from providing documents and information in connection with securities business activities to any organizations and/or persons abroad without the prior consent of the securities regulatory authority of the State Council and the competent departments of the State Council. As of the date of this prospectus, we are not aware of any implementing rules or regulations which have been published regarding application of Article 177.

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We believe Article 177 is only applicable where the activities of overseas authorities constitute a direct investigation or evidence collection by such authorities within the territory of the PRC. Our principal business operation is conducted in Hong Kong. In the event that the U.S. securities regulatory agencies carry out an investigation on us such as an enforcement action by the Department of Justice, the SEC or other authorities, such agencies’ activities will constitute conducting an investigation or collecting evidence directly within the territory of the PRC and accordingly fall within the scope of Article 177. In that case, the U.S. securities regulatory agencies may have to consider establishing cross-border cooperation with the securities regulatory authority of the PRC by way of judicial assistance, diplomatic channels or establishing a regulatory cooperation mechanism with the securities regulatory authority of the PRC. However, there is no assurance that the U.S. securities regulatory agencies will succeed in establishing such cross-border cooperation in this particular case and/or establish such cooperation in a timely manner.

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Furthermore, it remains unclear as to how Article 177 will be interpreted, implemented or applied by the Chinese Securities Regulatory Commission or other relevant government authorities. As such, there are uncertainties as to the procedures and requisite timing for the U.S. securities regulatory agencies to conduct investigations and collect evidence within the territory of the PRC. The Holding Foreign Companies Accountable Act requires the Public Company Accounting Oversight Board (PCAOB) be permitted to inspect the issuer's public accounting firm within three years. If the U.S. securities regulatory agencies are unable to conduct such investigations, there exists a risk that they may determine to suspend or de-register our registration with the SEC and may also delist our securities from applicable trading market within the US.

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The recent regulatory developments in China, in particular with respect to restrictions on China-based companies raising capital offshore, may lead to additional regulatory review in China over our financing and capital raising activities in the United States. In addition, we may be subject to industry-wide regulations that may be adopted by the relevant PRC authorities, which may have the effect of limiting our service offerings, restricting the scope of our operations in Hong Kong, or causing the suspension or termination of our business operations in Hong Kong entirely, all of which will materially and adversely affect our business, financial condition and results of operations. We may have to adjust, modify, or completely change our business operations in response to adverse regulatory changes or policy developments, and we cannot assure you that any remedial action adopted by us can be completed in a timely, cost-efficient, or liability-free manner or at all.

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On July 30, 2021, in response to the recent regulatory developments in China and actions adopted by the PRC government, the Chairman of the SEC issued a statement asking the SEC staff to seek additional disclosures from offshore issuers associated with China-based operating companies (including Hong Kong) before their registration statements will be declared effective. On August 1, 2021, the China Securities Regulatory Commission stated in a statement that it had taken note of the new disclosure requirements announced by the SEC regarding the listings of Chinese companies and the recent regulatory development in China, and that both countries should strengthen communications on regulating China-related issuers. Since we operate in Hong Kong, we cannot guarantee that we will not be subject to tightened regulatory review and we could be exposed to government interference from China.

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Under the PRC enterprise income tax law that became effective on January 1, 2008, an enterprise established outside the PRC with “de facto management bodies” within the PRC is considered a “resident enterprise” for PRC enterprise income tax purposes and is generally subject to a uniform 25% enterprise income tax rate on its worldwide income. On April 22, 2009, the State Administration of Taxation, or the SAT, issued the Notice Regarding the Determination of Chinese-Controlled Overseas Incorporated Enterprises as PRC Tax Resident Enterprise on the Basis of De Facto Management Bodies, or SAT Circular 82, which provides certain specific criteria for determining whether the “de facto management body” of a PRC-controlled enterprise that is incorporated offshore is located in China. Further to SAT Circular 82, on August 3, 2011, the SAT issued the Administrative Measures of Enterprise Income Tax of Chinese-Controlled Offshore Incorporated Resident Enterprises (Trial), or SAT Bulletin 45, which became effective on September 1, 2011, to provide more guidance on the implementation of SAT Circular 82.

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According to SAT Circular 82, an offshore incorporated enterprise controlled by a PRC enterprise or a PRC enterprise group will be considered a PRC tax resident enterprise by virtue of having its “de facto management body” in China and will be subject to PRC enterprise income tax on its worldwide income only if all of the following conditions are met: (a) the senior management and core management departments in charge of its daily operations function have their presence mainly in the PRC; (b) its financial and human resources decisions are subject to determination or approval by persons or bodies in the PRC; (c) its major assets, accounting books, company seals, and minutes and files of its board and shareholders’ meetings are located or kept in the PRC; and (d) not less than half of the enterprise’s directors or senior management with voting rights habitually reside in the PRC. SAT Bulletin 45 further clarifies the resident status determination, post-determination administration as well as competent tax authorities.