As confirmed by our PRC Legal Advisor, according to relevant PRC laws, any future net profit that we make will have to be first applied to make up for our historically accumulated losses, after which we will be obliged to allocate 10% of our net profit to our statutory common reserve fund until such fund has reached more than 50% of our registered capital.
The Internal Control Consultant performed the Internal Control Review in November and December 2025, identified internal control deficiencies and provided recommendation accordingly.
Business · p. 220
These deficiencies primarily concerned internal control policies with respect to information system control, monitoring of software usage on employees’ computers, monitoring of regulatory filing process, and other deficiencies in relation to the Company’s governance structure and policies required for a listed company according to the Listing Rules, none of which had resulted in any material adverse impact on the Group’s business operation and financial performance.
The main issues identified during the Internal Control Review in relation to the review scope include that information disclosure management policy and related party transaction management policy need to be established according to the latest Listing Rules.
Business · p. 217
We had thereafter adopted the recommended internal control measures and rectified the internal control findings identified.
In view of our accumulated losses, as advised by our PRC Legal Advisers, according to the relevant PRC laws and regulations and the Articles of Association, we shall not declare or pay dividend until the accumulated losses are covered by our after-tax profits and sufficient statutory common reserve are drawn in accordance with the relevant laws and regulations.
Our PRC Legal Advisers is of the opinion that, based on the foregoing provisions, the Company may not distribute dividends directly if it has accumulated losses.