Based on its review and analysis, the International Sanctions Legal Adviser has advised us that none of our Company and our subsidiaries are a Sanctioned Target, or are incorporated in a Sanctioned Country.
Business · p. 140
As advised by our International Sanction Adviser, (i) we are a "covered foreign person" as we are incorporated in the PRC; (ii) our business activities may fall within the classification of a "covered activity" as our products may incorporate AI algorithms and/or are embedded within robotic devices; and (iii) the Outbound Investment Rules provide exemptions where investments in securities/shares that are publicly-traded on recognized exchanges (including the Stock Exchange) are generally exempt from both the prohibition and notification requirements.
During the Track Record Period, two of our customers were listed on the Entity List.
Business · p. 193
While we still manufacture certain products for the other customer (“Customer I”), as advised by our U.S. Export Control and Sanctions Counsel, the products we provided for Customer I during the Track Record Period were not subject to the EAR.
Business · p. 193
Specifically, for products manufactured for Customer I, we conduct a compliance assessment reviewing information about the counterparty, end user and end use, planned sales region, components, software, technology and equipment used, production and delivery location, logistics route, after-sales spare parts and any third-party service providers before the launch of each project.
However, during the Track Record Period, three of our customers were included on the BIS Entity List.
Business · p. 152
The revenue generated from these customers in the aggregate accounted for 0.2%, 0.4% and 0.4% of our total revenue in 2023, 2024 and 2025, respectively.
Business · p. 152
Our U.S. legal advisor has advised that based on the information we provided, the items that we sold to these customers do not involve the transfer, export or reexport of items subject to the EAR.
To maintain our competitive edge, sustainable development and regulatory compliance, we have refined our business operations by leveraging our relationship with Amlogic Holdings Ltd., a substantial Shareholder, through our Export Control Compliance Arrangement (as defined below).
Summary · p. 14
Our Directors are of the view, after consultant with our International Sanctions Legal Advisor, that our Export Control Compliance Arrangement has been and remains compliant with applicable U.S. export control regulations.
Summary · p. 14
However, we assess the likelihood of such objection to be low for the following reasons: (i) the authorized IC designer status of Authorized IC Designer Subsidiary provides foundries with enhanced compliance certainty regarding their own export control obligations; and (ii) foundries accepted the qualification of the Authorized IC Designer Subsidiary and continued to process orders as of the Latest Practicable Date.
Our sales to the SDN Customer amounted to RMB3.7 million, RMB7.5 million and nil, respectively, for each year during the Track Record Period.
Business · p. 183
Our last transaction with the SDN Customer was completed in December 2024, and since then, we have ceased all transactions with the SDN Customer.
Business · p. 183
In addition, the secondary sanction risks on our Group and Relevant Persons in connection with our business dealings with the SDN Customer is low because (i) we are not a Sanctioned Trader as the revenue derived from the Sanctioned Targets and Sanctioned Country entities or persons only accounted for 1.1% and nil of our revenue generated for the two years ended year ended December 31, 2024 and 2025; (ii) items sold to the SDN Customer were for civil-use purposes only and not for military or aerospace uses; (iii) transactions with the SDN Customer have no Russian nexus which will not deter the U.S.'s statutory objectives against Russia under the Executive Order 14024, under which the SDN Customer was designated due to its purported Russian-related activities; and (iv) our last transaction with the SDN Customer was completed in December 2024, and since then, we have ceased all transactions with the SDN Customer.
Pursuant to this rule, as advised by our International Sanctions Counsel, we will be deemed to be a “covered foreign person” because we engage in the notifiable “covered activities”.
Summary · p. 12
Therefore, the U.S. persons would not be prohibited from participating in the Global Offering.
Summary · p. 12
As such, our Directors are of the view that the Outbound Investment Review Regulation has no material adverse impact to our business operations, financial performance and the Global Offering.
During the Track Record Period, we have sold our products to a customer listed on the Entity List ("EL Customer").
Business · p. 182
Given that our last transaction with the EL Customer was in 2023 (i.e. before the Entity List designation), our activities with the EL Customer were not subject to the export controls applicable to the EL Customer as an entity designated on the Entity List.
Business · p. 182
In addition, during the Track Record Period, we had transactions with a supplier designated on OFAC's Non-SDN Chinese Military-Industrial Complex Companies List ("CMIC Supplier").
as advised by our International Sanctions Legal Advisor, given that our products and solutions include AI systems is intended for the control of robotic systems, being developed for use in advanced driving assistance systems and automated emergency braking systems, we are likely to be deemed a Covered Foreign Person engaged in "Covered Activities" referred to in the definition of "Notifiable Transactions" as set out in 31 C.F.R. § 850.217(d)(2)(iv)
Summary · p. 13
Following the completion of the [REDACTED], it is expected that U.S. persons will be able to [REDACTED] in our Company based on the publicly traded securities exception under the Final Rule, as long as the [REDACTED] made do not afford the U.S. persons rights that go beyond standard minority shareholder protections.
Summary · p. 14
Hence, the Final Rule may increase the compliance burden of U.S. [REDACTED] and may cause certain U.S. [REDACTED] to adopt a more cautious approach in their [REDACTED], which may negatively impact our ability to raise capital from U.S. [REDACTED].
In the course of enhanced diligence and screening of our historical counterparties, we identified nine counterparties (two suppliers and seven customers) that, in 2025, were designated on the OFAC’s Specially Designated Nationals and Blocked Persons List (the “SDN List”), and one additional historical customer that is a blocked person under the OFAC’s “50 Percent Rule.”
Business · p. 139
During the Track Record Period, although we engaged in sales activities related to Russia, Belarus, Venezuela and Burma, none of the counterparties involved in such sales activities are designated on any sanctions lists.
Business · p. 140
As advised by our International Sanctions Legal Adviser, during the Track Record Period, we have not engaged in any primary sanctioned activity as defined in the sanctions guidance issued by HKEX (the “HKEX Sanctions Guidance”) and no activities taken would constitute a violation of international sanctions regime.
In respect of our sales activities, we conducted limited transactions with two customers that are included on the Entity List maintained by the BIS.
Business · p. 172
Based on the advice of our international sanctions advisers, as those transactions did not involved any items subject to the EAR, such transactions did not give rise to violations of applicable U.S. export control regulations.
31, 2023, 2024 and 2025, respectively, and the revenue generated from our sales to Russia amounted to RMB1.5 million, RMB1.8 million and RMB0.2 million, representing approximately 0.4%, 0.4% and less than 0.1% of our total revenue in the years ended 31 December, 2023, 2024 and 2025.
Business · p. 157
As advised by our legal advisors as to International Sanctions, given that (i) our sales to Iran and Russia were dominated in RMB and did not involve any U.S. nexus; (ii) our sales to Iran and Russia did not involve any items that are subject to the EAR; and (iii) the humanitarian nature of the our products and the raw materials for such products, our transactions with the Relevant Regions (i) did not represent a violation of the applicable U.S. primary sanctions; and (ii) we are unlikely to be viewed as engaging in certain Iran-related activities and/or operating in certain sectors of Russia that would result in U.S. secondary sanctions designations risk during the Track Record Period.
Summary · p. 8
We undertake that the [REDACTED] from the [REDACTED] or any other funds raised through the Exchange will not be applied to finance or facilitate any sanctioned activity.
Two of our previous customers have been listed on the Entity List, one of which has been designated with Footnote 3 (the “Entity List Customer”).
Business · p. 177
our International Sanctions Legal Adviser is of the view that transactions with the Entity List Customer would not be subject to the EAR.
Business · p. 177
One of our customers and two suppliers are placed on the list of Entities Identified as Chinese Military Companies Operating in the United States under Section 1260H of the William M. Thornberry National Defense Authorization Act for Fiscal Year 2021 (the “Section 1260H List”), also known as the “Chinese Military Companies List” (the “CMC List”) by the United States Department of Defense (the “DoD”).
Accordingly, our legal advisor on international sanctions laws is of the view that we are engaged in "covered activities" that could fall within the scope of transactions subject to notification requirements under the Final Rule.
Business · p. 179
Therefore, our Directors and legal advisor on international sanctions laws are of the view that the Final Rule is not expected to have a material adverse impact on Group's business operations, financial performance, as well as the [REDACTED] of the Company's securities on the Exchange after the completion of the [REDACTED].
Certain of our AI ASIC customization services involved the use of certain U.S.-origin software tools, IP, and components, and therefore required an assessment under applicable U.S. export control laws.
Business · p. 134
For example, one of our founding partners is included on a U.S. export control list.
Business · p. 134
However, our international sanction legal advisor is of the view that our procurement of founding services and materials from it does not violate the applicable U.S. export control rules as the items involved do not fall within the jurisdictional scope of these rules.
Certain of our end customers who have purchased our products through the distributors have been placed on the Entity List.
Business · p. 173
One of our end customers was listed on the SDN List in October 2024.
Business · p. 174
All our historical dealings with that end customer occurred prior to its designation, and we ceased all transactions with that end customer upon learning of the designation.
During the Track Record Period, the percentages (based on number of units sold) of SoCs incorporated into our solution sold that were produced in mainland China were 17.1%, 19.1% and 52.1%, respectively.
Business · p. 161
Thus, as advised by our U.S. export controls counsel, taking the suppliers’ confirmations and our understanding of relevant rules, the Company is of the view that there is no license required for our procurement of those chips subject to the EAR.
Business · p. 163
Nevertheless, according to Frost & Sullivan, there are more than 25 alternative domestic suppliers who provide SoCs with comparable quality and price.
Certain SMIC affiliates have been included on (1) the Bureau of Industry and Security of the U.S. Department of Commerce (“BIS”) Entity List with Footnote 5 (FN5) designation, (2) the U.S. Department of Defense (now Department of War) List pursuant to section 1260H of the National Defense Authorization Act (the “1260H List”), and (3) the U.S. Treasury’s Non-SDN Chinese Military-Industrial Complex Companies List (the “CMIC List”), and are therefore subject to specific U.S. sanctions and export control restrictions.
Business · p. 189
The relevant transactions between us and SMIC or its affiliates, as suppliers to provide wafer to us, are not, under the current laws and regulations, prohibited, primarily because (1) such transactions do not involve U.S. Department of Defense procurement, nor do they fall under restrictions associated with the CMIC List or Section 1260H of the U.S. National Defense Authorization Act; (2) the design files (in GDSII format) provided by us were developed entirely within mainland China, without the use of U.S.-origin controlled items or software, and are therefore not considered subject to the U.S. Export Administration Regulations (“EAR”) under current interpretations; and (3) to the best of our knowledge, the resulting mature-node wafers (180nm−90nm) produced by SMIC can be classified as EAR99 and not intended for any prohibited end-users or end-uses under applicable export control laws.
During the Track Record Period, we procured certain software and services from the U.S., primarily software used in developing our AOS for automotive-grade chips. The aggregate procurement amount was RMB43.3 million, representing approximately 1.8% of our total procurement during the Track Record Period.
Business · p. 175
As advised by the U.S. Export Control Legal Advisor, a China-based company's purchase of U.S.-origin software does not, in itself, constitute an "export" under the EAR.
Business · p. 175
Nevertheless, according to CIC, there are more than 15 alternative domestic suppliers who provide such software services with comparable quality and price.
During the Track Record Period, we procured non-clinical and clinical services and raw material for AK0610 and ziresovir from WuXi AppTec through its subsidiary.
Summary · p. 16
We will continue to closely monitor and evaluate the potential impact of the BIOSECURE Act on our business and operations, including the release of forthcoming guidance and regulations, while maintaining strong business relationships with all our existing suppliers and a list of qualified alternative suppliers capable of providing equivalent services.
During the Track Record Period, we had operations in Russia, a country that has been subject to expanding sanctions since February 2022.
Business · p. 186
We have ceased all business transactions with customers in Russia since October 2025.
Business · p. 186
our Directors are of the view that the risk that our activities during the Track Record Period will cause us to be designated under secondary laws is low, primarily because our activities in Russia are unlikely to be viewed as any of the activities listed in the definition of Russian manufacturing, technology or electronics sectors which are currently subject to sectoral sanctions, as our business activities in Russia were limited to the sale of MSRs, lifts, CSRs for warehousing and logistics purposes and accounted for an insignificant portion of our overall revenues.