Revenue generated from sales to customers in Comprehensively Sanctioned Countries was nil, RMB283.8 thousand and RMB4.2 million, representing approximately nil, nil and 0.02% of our total revenue in 2023, 2024 and 2025, respectively.
Summary · p. 15
During the Track Record Period, we sold certain commercial products including fitness equipment, hardware tools and machinery, building decoration materials and daily household goods to Russia, which were settled through third-party payments in USD (‘‘Russian Transactions’’).
Business · p. 178
During the Track Record Period, we procured certain advertising services from a supplier that has been listed on the Entity List by the BIS since May 21, 2019 (the ‘‘EL Supplier’’).
During the Track Record Period, we had transactions with two suppliers that were designated on the Entity List (“Relevant Entities”), one of which was listed with a footnote 4 designation.
Business · p. 200
As such, our Directors are of the view that our Group’s business operations and financial performance are not materially adversely affected by the applicable International Sanctions.
Business · p. 200
During the Track Record Period, we had transactions in the Relevant Region.
The payments received during the Track Record Period for USD-denominated transactions in relation to Iran USD Sales and Syria USD Sales were in an aggregate amount of approximately US$22.75 million, approximately 0.2% of our aggregated revenue for the Track Record Period.
Summary · p. 15
After consulting with our International Sanctions Legal Advisors, we made an initial notification of VSD to OFAC on September 26, 2025 and a comprehensive VSD report to OFAC on April 29, 2026 related to the Iran USD Sales and the Syria USD Sales.
Summary · p. 15
Since September 26, 2025, we have ceased all business activities in connection with Iran and Syria, which are subject to comprehensive sanctions.
As advised by our International Sanctions Legal Advisers after performing the procedures they consider necessary, the Group’s activities with the Relevant Region and its procurement of EAR99 items did not implicate the applicable U.S. Export Controls or represent a Primary Sanctioned Activity
Business · p. 190
During the Track Record Period, the Group has also sold certain DRAM module incorporated with DRAM DIE that are non-U.S. origin and are not subject to the EAR to two customers which have been designated by the BIS to the Entity List.
During the Track Record Period, four of our customers were listed on the Entity List maintained by the U.S. Department of Commerce's Bureau of Industry and Security, with two customers designated under footnote 1 and one customer designated under footnote 4.
Business · p. 199
Our International Sanctions Legal Advisor is of the view that transactions with such customers did not violate the EAR.
Business · p. 199
During the Track Record Period, certain of our suppliers were listed on the BIS entity list, with some designated with footnote 1 and footnote 4.
We are likely a "covered foreign person," and our business likely constitutes "covered activities" under the Outbound Investment Rule.
Business · p. 191
Therefore, the Outbound Investment Rule is not expected to have a material adverse impact on our business, results of operations, financial condition or the [REDACTED].
On December 18, 2025, the U.S. legislation titled the BIOSECURE Act (the “BIOSECURE Act”) was signed by President Trump. Prohibitions in the BIOSECURE Act will not take effect until the OMB issues implementing guidance and relevant federal regulations are finalized.
Summary · p. 14
We are of the view that the BIOSECURE Act, in its current form, would not have a material adverse impact on our business, primarily because we, or any of our subsidiaries, are not a recipient of any U.S. federal government contracts, loans, grants or funding and do not anticipate applying for such contracts, loans, grants or funding in the future.
Summary · p. 14
(ii) none of WuXi AppTec, WuXi Biologic, or any of their affiliates with whom we had business relationship are listed as “biotechnology companies of concern” in the current version of the BIOSECURE Act, and (iii) we did not have business relationship with any entity included in the 1260H List.
During the Track Record Period, Supplier I, our third largest supplier in 2023, was a U.S. company that supplied integrated circuits to us that would be used in our photovoltaic inverters and energy storage inverters.
Business · p. 143
During the Track Record Period, our business involved certain overseas markets, including Iraq, Turkey, Afghanistan, Lebanon, Yemen, and Tunisia.
Business · p. 144
Having consulted with our independent sanctions and U.S. export controls legal advisor, our Directors are of the view that no violation of U.S. sanctions and embargo laws was identified based on the information reviewed, and the risk of such issues going forward remains low
During the Track Record Period, a limited number of our customers attributable to an immaterial portion (below 0.1%) of our revenue from continuing operations during the Track Record Period became designated on the Specially Designated Nationals and Blocked Persons (the “SDN List”), which is maintained by the U.S. Office of Foreign Assets Control of the U.S. Department of the Treasury.
Business · p. 141
None of the items we sold to Entity List-designated customers, which accounted for an immaterial portion (below 0.1%) of our total revenue from continuing operations during the Track Record Period involved any transfer, export or re-exports of items subject to the EAR.
Business · p. 141
We have implemented a know-your-customer process to assess the background of our counterparties.
For the sales side, based on the following, our Legal Advisor as to international regulatory matters concludes that the export control risk associated with our business is remote, as none of the products we sell are subject to the EAR.
Business · p. 173
Therefore, the Group's procurement of items from the U.S. has not been restricted by the U.S. export control regulations currently.
Business · p. 173
As advised by our Legal Advisor as to international regulatory matters, the OIR Final Rule shall be inapplicable to the Company and the [REDACTED] on the ground that (i) neither the Company nor its subsidiaries is engaging in or intends to engage in any Covered Activities as defined in OIR Final Rule, (ii) the Group has no plan to develop any business or invest in or acquire any entity that engages in any of the Covered Activities; and (iii) Dr. Zhang does not hold any position in any entity that engages in any Covered Activities.
The SDN Sales involved total payments of approximately US$75,000 during the Track Record Period.
Business · p. 131
Our Directors confirm that, as of May 2025, we ceased all transactions involving entities on the SDN List.
Business · p. 131
However, as advised by our International Sanctions Legal Advisers, as the SDN Sales were denominated in U.S. dollars and processed through U.S. financial institutions, such transactions may implicate U.S. primary sanctions restrictions applicable to U.S. persons and U.S. financial institutions, and could give rise to direct U.S. sanctions exposure if we were found to have caused a U.S. person to process a prohibited transaction or otherwise to have evaded U.S. sanctions.
Our major supplier of both cloud services ("Supplier A") and its affiliates, is on the BIS Entity List.
Business · p. 170
Our purchase amount from Supplier A for the years ended December 31, 2023, 2024 and 2025 amounted to RMB60 million, RMB30.2 million and RMB26.9 million, respectively.
Business · p. 170
We purchased certain commercial grade hardware and embedded/related software from an independent Chinese supplier ("Supplier Y") only during the period from February 2022 and March 2023, which included U.S. GPUs (the "GPU Model A, B & C").
During the Track Record Period and up to the Latest Practicable Date, we have sold our products to various non-sanctioned customers and distributors in Belarus, Democratic Republic of the Congo, Egypt, Guinea, Hong Kong, Myanmar, Russia (excluding Crimea, so-called Donetsk People’s Republic (“DPR”) and Luhansk People’s Republic (“LPR”) regions, Zaporizhzhia and Kherson regions), Turkey, Tunisia, Ukraine (excluding Crimea, DPR, LPR, Zaporizhzhia and Kherson regions) and Zimbabwe (“Relevant Regions”).
Business · p. 168
The total revenue generated from our sales to our customers in the Relevant Regions (excluding Hong Kong) was less than 10% for the three years ended December 31, 2025.
Business · p. 168
As advised by our International Sanctions Legal Advisor, given that (i) the products our Group sold to Russia and Belarus were limited to Chinese-origin self-designed construction machinery, such aerial work platform and mining equipment, which do not fall within scope of products listed on the Russia Critical Items Determination issued pursuant to subsection 11(a)(ii) of EO 14024 nor the Common High Priority List issued by the BIS on February 23, 2024; (ii) our Group did not engage in any sales to sanctioned entities in Russia or Belarus, including those listed on the SDN List at the time of transaction; and (iii) our Group’s sales to Russia and Belarus (direct and indirect) throughout the Track Record Period were immaterial (below 10%) and is declining, the risk is low that our Group’s activities with the Relevant Regions would be viewed as Secondary Sanctionable Activities that would result in the imposition of sanctions on the Relevant Persons.
The revenue generated from such sales to the Relevant Regions was approximately RMB66.7 million, RMB103.2 million and RMB149.5 million, representing approximately 3.5%, 4.5% and 4.8% of our total revenue in 2023, 2024, and 2025, respectively.
Business · p. 202
For the three China-based entities that have been designated on the BIS restricted party lists at the time of the transactions, we have identified sales of our 3D printers to these customers throughout the Track Record Period (the “Relevant Entities”).
Business · p. 202
Given the nature of our activities, as advised by our International Sanctions Legal Advisor, the risk is fairly low that OFAC would view our Group itself as “operating in” Russia’s manufacturing sector or have materially assisted, sponsored, or provide financial, material or technological support for, or goods or services to or in support of other targeted sectors of Russia’s economy under EO 14024 for its business activities with Russia by merely selling the Group’s products to Russia or that OFAC would designate us as an SDN for merely selling the Group’s products to Russia (rather than manufacturing its products in Russia, locally).
During the Track Record Period, we procured items subject to the EAR and classified as ECCN 5D002.c, 5D992.c and EAR99 (“Procured Items”).
Business · p. 167
Since we are not AT Restrictions Sanctioned Targets, we do not require a license to procure these Procured Items.
Business · p. 167
Our Directors are therefore of the view that our Group’s business operations and financial performance are not materially adversely affected by the applicable U.S. export control restrictions.
Certain of our customers have been included on the BIS Entity List. Specifically, a customer group of the Company and two customers of Source Photonics were included on the BIS Entity List.
Business · p. 180
Revenue generated from the relevant customer group of the Company in the aggregate accounted for 1.0%, 1.6% and 1.7% of our total revenue in 2023, 2024 and 2025, respectively.
Business · p. 180
We intend to continue transactions with these customers under the Group's existing compliance framework to ensure compliance with applicable export control and sanctions laws and regulations.
One of our subsidiaries, Source Photonics, designs and produces certain optical and laser-based semiconductor components, such products are discrete optoelectronic devices rather than integrated circuits for purposes of the Outbound Investment Rule and therefore do not constitute "covered activities."
Business · p. 179
As a result, as advised by our legal adviser as to international sanctions, we have concluded that we are not considered a "covered foreign person" by extension of the subsidiaries and controlled entities' activities.
Business · p. 179
Our Directors further confirm that the Outbound Investment Rule has not had any material adverse impact on our operations or financial condition, and we do not anticipate any such adverse impacts on the [REDACTED] or the [REDACTED].
During the Track Record Period, we generated revenue from a customer listed on the Entity List (the “targeted customer”), which accounted for 0.3%, 0.2% and 0.2% of our total revenue in 2023, 2024 and 2025, respectively.
Summary · p. 9
As advised by our International Sanctions Legal Advisors, during the Track Record Period and up to the Latest Practicable Date, our transaction with the targeted customer had not violated any U.S. export-control restrictions or other U.S. sanctions measures, and our exposure to U.S. export-control and related sanctions risks is remote.
Summary · p. 9
we have established internal policies on sanctions and export controls to ensure compliance with applicable relevant laws and regulations.
During the Track Record Period, we had transactions with one customer in Iran in 2024, and we received payments in USD for such transaction.
Business · p. 132
As advised by our International Sanctions Advisor and taking into account that (i) all Iran historical transactions were completed by November 2024 and only one payment was received during the Track Record Period, (ii) the Iran historical transactions only involve optical connectivity products manufactured in the PRC, (iii) the aggregate revenue derived from the Iran historical transactions represented 0.001% of our Group’s total revenue during the Track Record Period which was negligible in terms of revenue, (iv) the only Iranian customer was not designated on any sanctions list; and (v) as of the Latest Practicable Date, our Group has not been notified or received any notification from the relevant authorities or banks in connection with the Iran historical transactions, it is reasonable to conclude that sanctions risks (including designation as a Sanctioned Target) on our Group shall be relatively remote.
Business · p. 133
We have implemented a sanction-related internal policy to govern our approach to identifying, assessing, and mitigating OFAC-related risks.
The transactions with Company A for the procurement of data services and Company B for the procurement of sun sensors occurred in December 2019 and March 2023, respectively, with transaction amounts of RMB1.5 million and RMB1.0 million, respectively.
Business · p. 187
As advised by our International Sanction Counsel, considering no US nexus was involved in the aforementioned transactions and the nature of such transactions was limited to procurement from Company A and Company B, our business dealings with the Relevant Entities do not appear to violate or implicate any breaches of the applicable U.S. sanctions and U.S. export control.
Business · p. 188
While we have terminated cooperations with Company A and Company B, we are able to procure data services and sun sensors from alternative companies with comparable quality, quantity and commercially reasonable terms.