During the Track Record Period, we transacted with one customer that was added to the Entity List in December 2020.
Business · p. 180
During the Track Record Period, we transacted with three customers and one third-party payor under our Third-Party Payment Arrangements that were subsequently added to the SDN List, which is defined as a list that subjects listed parties to asset blocking and U.S. dealings restrictions.
Business · p. 181
We have ceased all dealings with these entities and confirmed that we will not enter into any further transactions with them.
During the Track Record Period, certain of our Relevant Resources, including voltage converters, transceivers, switches, wireless microcontrollers and design software for printed circuit boards, are subject to the EAR, which means that the export, re-export and transfer of such Relevant Resources shall comply with the EAR.
Business · p. 162
As advised by our International Sanction Adviser, all of the Relevant Resources subject to the EAR procured by us can be exported by our suppliers to us without a U.S. export license based on the ECCNs of such items and the corresponding destination-based controls.
Business · p. 162
While these Relevant Resources subject to the EAR are important components incorporated into our products and software used to design our products, these items could generally be replaced from alternative sources in other jurisdictions around the world, at comparable quality and price.
During the Track Record Period and up to the Latest Practicable Date, we had transactions with certain customers on the Entity List, CMIC List and UFLPA Entity List and certain suppliers on the Entity List and CMIC List.
Business · p. 176
During the Track Record Period, we procured parts or materials from eight suppliers included on the Entity List.
Business · p. 176
The aggregated amounts of the Russia and Belarus Sales were approximately RMB116.8 million, RMB170.0 million, RMB64.1 million and RMB6.1 million in 2023, 2024, 2025 and the three months ended March 31, 2026, respectively, each representing approximately 2.3%, 3.4%, 1.0% and 0.4% of our total revenue for the respective year/period.
Although we had certain business in Myanmar, we did not provide any items with U.S., EU, or UK content to those customers, none of our U.S., EU, or UK subsidiaries or personnel was involved in such business, and no U.S. dollars, euros, or pounds sterling were used in connection with such business.
Business · p. 153
Our business with a major ICT client and any other companies on the Entity List, the CMIC list, or the CMC list was conducted lawfully because we did not provide any software or other items with U.S. content or otherwise subject to the U.S. Export Administration Regulations to such companies, and none of our U.S. subsidiaries or U.S. personnel was involved in such business.
Business · p. 153
As advised by our international sanctions counsel, after reviewing our business, our use of U.S., EU, and UK software and hardware, and our suppliers, customers, shareholders, Directors, senior management, lenders, and subsidiaries, we had complied in all material respects with applicable U.S., EU, and UK export control and sanctions laws and regulations during the Track Record Period and up to the Latest Practicable Date.
We have procured an EDA software during the Track Record Period for chipset design and development at an aggregate cost of USD1.3 million.
Business · p. 178
As advised by DLA Piper, we can use the software without an export license, as long as we do not take action that violates the EAR.
Business · p. 178
As advised by DLA Piper, based on its review of our relevant compliance manuals, our screening procedures and the measures described above, and taking into account our current supply chain, business model and customer base, our trade compliance program is reasonably adequate and effective in relation to export control risks.
As advised by DLA Piper, our Directors believe that we are likely to be deemed a Covered Foreign Person engaged in one of the "covered activities" (including (i) semiconductors and microelectronics, (ii) quantum information technologies, and (iii) artificial intelligence systems) as we design integrated circuits as described in the definition of "notifiable transactions" in 31 C.F.R. §850.217.
Business · p. 179
Based on the above, and that, as advised by DLA Piper, it is the responsibility of the U.S. person engaged in a "notifiable transaction" to make a notification to Treasury pursuant to the Final Rule, our Directors do not believe that the Final Rule is expected to have a material adverse impact on our business, results of operations, financial condition or the [REDACTED].
During the Track Record Period, we had sales and deliveries of new energy products and dehumidifiers to customers located in jurisdictions subject to comprehensive or selective sanctions imposed by Relevant Jurisdictions, in particular, Syria, Iran, North Korea, Russia, and Belarus (each, a “Relevant Region”, and collectively, “Relevant Regions”).
Business · p. 174
As advised by our International Sanctions Legal Advisor, these U.S. dollar-denominated transactions with customers in Syria involved violations of U.S. primary sanctions laws that prohibited the use of U.S. financial institutions to export and supply financial services for trades with Syria.
Business · p. 174
After consulting with our International Sanctions Legal Advisor, we made an initial notification of voluntary self-disclosure (“VSD”) to OFAC on January 23, 2026 and filed the comprehensive VSD letter to OFAC on July 20, 2026 related to the Syria Sales.
Our Group sold products and provided services to a total of 13 customers who are on the Entity List.
Business · p. 191
The revenue recorded from such sales of products and provision of services from customers on the Entity List represented 1.68% of the total revenue in 2023, 3.02% in 2024, 6.20% in 2025 and 0.82% for the four months ended April 30, 2026.
Business · p. 191
our International Sanctions Legal Advisor advised us that our sales of the Assembled Products and On-Sold Products to the Covered Entity customers and our use of the relevant U.S.-origin software and items for the blueprint design process during the Track Record Period are not subject to material U.S. export control risks, and our provisions of services and sales of products to Covered Entity customers did not implicate actual or potential violation of the EAR during the Track Record Period and up to the Latest Practicable Date.
As we engage in activities involving developing certain AI systems for the control of robotic systems (which is an activity described in the definition of "notifiable transaction"), we are likely to be deemed a "covered foreign person" under the Final Rule and certain of our business activities are considered "covered activities" as defined under the Final Rule.
Business · p. 195
Based on the above, our Directors are of the view that the impact of the Final Rule on our Group is generally limited and manageable.
During the Track Record Period, seven of our customers (the "Relevant Customers") and one of our suppliers (the "Relevant Supplier") were included on the Entity List administered by BIS.
Business · p. 170
During the years ended December 31, 2023, 2024 and 2025 and the five months ended May 31, 2026, the revenue generated from our transactions with the Relevant Customers amounted to nil, RMB2.5 million, RMB3.0 million and RMB41,000, respectively, which accounted for nil, 0.8%, 0.6% and 0.02% of our total revenue for the respective years/period, and our purchases from the Relevant Supplier amounted to RMB25.6 million, RMB11.3 million, RMB2.5 million and RMB0.8 million, respectively, which accounted for 16.5%, 5.7%, 2.1% and 1.6% of our total purchases for the respective years/period.
Business · p. 170
While we do not consider there to be any risk of violation of the U.S. export control regulations in respect of our procurement of services from the Relevant Supplier, as advised by Frost & Sullivan, even if we were to replace the Relevant Supplier, our Group would be able to procure comparable services from alternative suppliers in the PRC that are not included on the Entity List administered by BIS on comparable commercial terms.
We noted that the U.S. Department of War (DoW) included our Company on the CMC List on June 8, 2026.
Summary · p. 15
As advised by our export control and sanctions counsel, the CMC List is not an economic sanctions list and does not, in itself, restrict us from conducting business with U.S. customers absent other applicable restrictions, nor does it, in itself, restrict transacting in our securities.
Summary · p. 15
Since June 8, 2026, the date on which the DoW included our Company on the CMC List, and up to the Latest Practicable Date, we had not experienced any material cancellation, suspension, reduction or delay of customer orders, nor any termination of customer relationships.
The U.S. Department of the Treasury (“Treasury”) has implemented an Outbound Investment Program under a rule that took effect on January 2, 2025 (the “Final Rule”; and such program as in effect on the date hereof pursuant to the Final Rule, the “OIP”).
Business · p. 204
Accordingly, even if the Company were considered a “Covered Foreign Person” under the OIP, purchases of the Company’s shares by U.S. persons following the Listing would generally fall within the “excepted transaction” for publicly traded securities and, therefore, would not be subject to notification requirements or prohibitions under the OIP regulations.
Business · p. 205
Based on the foregoing, our Directors are of the view that the Final Rule does not have a material adverse effect on our business operations or financial performance.
As advised by our Sanctions Legal Advisor, based on the Final Rule currently in effect and our current business activities, we do not constitute a “covered foreign person” for purposes of the Final Rule.
Business · p. 177
As advised by our Sanctions Legal Advisor, during the Track Record Period, we are not aware of any of our customers or suppliers being identified on the SDN List, and the risk of our past transactions and business activities being subject to any primary or secondary sanctions is remote.
Business · p. 178
We have adopted measures designed to manage and mitigate the actual and potential impacts of trade measures, including: adhering to a global trade compliance policy, maintaining and enhancing restricted party screening and escalation procedures for customers and suppliers;
As advised by our Export Control and Sanctions Counsel, (i) our activities during the Track Record Period do not implicate restrictions under the EAR, including restrictions imposed on persons named on the Entity List; (ii) our dealings with our customers and suppliers also do not implicate any restrictions related to the Entity List and the NS-CMIC List; and (iii) our exposure to U.S. trade restrictions and the impact of relevant trade restrictions on our operations is not material.
Business · p. 185
U.S. persons are prohibited from making, or required to report, certain investments in Covered Foreign Persons, including certain acquisitions of equity interests, certain debt financings, joint ventures and certain investments as a limited partner in a non-U.S. person pooled investment fund.
Business · p. 186
While the United States has not issued regulations or rules that expressly clarify the application of the Publicly Traded Securities Exemption, our Export Control and Sanctions Counsel is of the view that were any H Shares to be acquired by U.S. persons in the [REDACTED], such purchase would qualify for the Publicly Traded Securities Exemption.
The revenue generated from such sales was approximately RMB33.3 million, representing approximately 4.1% of our total revenue in 2025.
Business · p. 180
After consultation with our U.S. Foreign Investment and International Sanctions Legal Advisor and taking into account its view, after performing the procedures it considers necessary, our Directors are of the view that, given the nature of the transaction involving the EL Customers, these transactions did not represent a violation of the U.S. export controls applicable to the EL Customers.
Business · p. 180
Our purchases from the EL Suppliers were approximately RMB20.9 million, RMB35.2 million, RMB175.7 million and RMB75.7 million, representing approximately 4.3%, 6.8%, 28.2% and 26.1% of our cost of sales in 2023, 2024, 2025 and the five months ended May 31, 2026, respectively.
During the Track Record Period, we made sales of CPT and toner cartridges to customers located in Iran, which is subject to comprehensive U.S. economic sanctions.
Business · p. 176
During the Track Record Period, we received 23 USD wire transfers from such Iran USD Sales, totaling in the amount of approximately US$1.3 million, representing approximately 0.1% of our aggregated revenue during the Track Record Period.
Business · p. 176
We believe the penalty amount will not materially and adversely affect our financial position, operating results, or cash flows. We have ceased all the business activities related to Iran.
We procured certain CRO/CDMO services from PRC-based affiliates of WuXi AppTec and WuXi Biologics (see “Business — Raw Materials and Suppliers — Our Suppliers”).
Summary · p. 14
We are qualifying alternative providers with comparable capabilities and broadly similar pricing, and will implement phased transitions if needed.
Summary · p. 14
As such, our Directors are of the view that the BIOSECURE Act will not materially and adversely affect our operations and financial performance.
On December 16, 2022, the U.S. Department of Commerce Bureau of Industry and Security (“BIS”) designated our wholly-owned subsidiary Hefei Core Storage Electronic Limited (合肥兆芯電子 有限公司) (“Hefei Core Storage”) on the Entity List.
Business · p. 179
During the Track Record Period, Hefei Core Storage’s revenue contribution remained immaterial to our Group.
Business · p. 180
Following the designation, Hefei Core Storage has gradually reduced its sales activities and currently sells only existing inventory.
During the Track Record Period, we procured items subject to the EAR and classified as Export Control Classification Number (ECCN) 3A999.F, 4A994.L, 5D992.C, 6A003, and EAR99 (Procured Components).
Business · p. 147
Procured Components classified as 6A003 are subject to license requirements for exports, and our suppliers have obtained the requisite licenses for the sales to us.
Business · p. 147
We have transacted with several customers designated on the Entity List (EL Customers) maintained by the Bureau of Industry and Security.
We had limited transactions with three suppliers and 27 customers designated on the Entity List (approximately 0.05% by number of suppliers and 0.56% by number of customers).
Business · p. 175
Based on the following reasons, our legal advisor as to international sanctions and export control laws is of the view that our sales activities are not subject to the EAR, and the risk of violating the EAR in connection with our sales activities is remote:
Business · p. 175
Our legal advisor as to international sanctions and export control laws is of the view that there are no primary sanctions risks and secondary sanction risks are low based on the following: