Exhibit 99.1
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion
and analysis of our financial condition and results of operations should be read in conjunction with our unaudited consolidated financial
statements and related notes as set forth in Exhibit 99.2 entitled “Condensed Consolidated Financial Statements for the Six Months
Ended March 31, 2026 and 2025.” Our financial statements have been prepared in accordance with U.S. Generally Accepted Accounting
Principles, or U.S. GAAP. Unless the context indicates otherwise, references to “Ostin” are to Ostin Technology Group Co.,
Ltd., a Cayman Islands exempted company and references to “we,” “us,” “our,” “our company,”
the “Company” or similar terms used in this Exhibit 99.1 are to Ostin and/or its consolidated subsidiaries.
Overview
We are a supplier of display modules and polarizers
based in China. We design, develop, and manufacture TFT-LCD modules in a wide range of sizes, including custom sizes tailored to our customers’
specifications. Our display modules are primarily used in consumer electronics, commercial LCD displays, and automotive displays. In addition
to manufacturing polarizers used in TFT-LCD display modules, we are also in the process of developing protective films for OLED display
panels. Furthermore, we distribute various sizes of display products through business-to-business (B2B) offline channels and business-to-consumer
(B2C) online channels such as Tmall flagship store, JD.com and Douyin online stores and are currently marketing Pintura, our new IoT display
products.
We were founded in 2010 by a group of industry
veterans, and have been operating our business, primarily through our wholly-owned subsidiary, Jiangsu Austin Optronics Technology Co.,
Ltd. (“Jiangsu Austin”), and its subsidiaries. We currently operate our headquarter and three manufacturing facilities across
China, collectively spanning 50,335 square meters. Our headquarter and one factory for the manufacture of display modules is located in
Jiangsu Province, one factory for the manufacture of TFT-LCD polarizers is located in Chengdu, Sichuan Province, and another factory for
the manufacture of display modules which are primarily used in display devices for education, healthcare, transportation, and commercial
offices is located in Luzhou, Sichuan Province.
Recent Developments
Business Focus
During the six months ended March 31, 2026, the Company made continuous
efforts in new product development. The new product directions fall into two categories:
| ● | Module
product shifting towards Complete Systems: Previously, we mainly focused on LCD modules (LCM), and now we focus on ARIO systems and BOX
systems. Additionally, we are entering into the sales of domestic system products in this year. |
| ● | Protective
films product (OLE): Our subsidiary company ANX (Sichuan Auniu New Materials Co., Ltd.), which has already established fully proprietary
IP rights on polyimide CPI film, is expected to commence mass production and sales in the second half of this year. |
Pintura Program
In the first half of the year, the Company’s
domestic direct-to-consumer (DTC) business continued to maintain stable performance across major online channels. Meanwhile, offline expansion
efforts progressed steadily through the ongoing development of regional distributor networks. On the B2B front, the Company initiated
several projects with retail showrooms and supermarket chains to explore diversified display and signage solutions.
In the international market, the Company officially
launched operations on the Amazon U.S. platform and established initial relationships with local resellers and channel partners. Participation
in global trade events remained consistent, including continued presence at CES. Notably, the Company made its debut at the Canton Fair
as an independent export brand, marking a milestone in its international outreach strategy.
Across both domestic and overseas markets, the
Company maintained a regular cadence of product exposure and engagement on key social media platforms. Product development efforts yielded
multiple new hardware models and feature upgrades during the period. Additionally, a dedicated content distribution system was developed
to support the specific requirements of enterprise and commercial display clients.
To support its global
expansion strategy, the Company has begun establishing sales channels in Europe, Australia, and South America, while simultaneously advancing
international trademark registrations, intellectual property protection, and related compliance processes for cross-border brand operations.
Capital Activities
On December 31, 2024, the Company completed a
stock reverse split. The Company authorized share capital of $500,000 divided into 4,991,000,000 Class A ordinary shares of a par value
of $0.0001 each, 8,000,000 Class B ordinary shares of a par value of $0.0001 each and 1,000,000 preference shares of a par value of $0.0001
each, be consolidated and divided at a share consolidation ratio of one (1)-for-ten (10), such that, the authorized share capital of $500,000
will be divided into: (i) 499,100,000 Class A ordinary shares of par value of $0.001 each, (ii) 800,000 Class B ordinary shares of par
value of $0.001 each, and (iii) 100,000 preference shares of a par value of $0.001 each. All share
information included in the consolidated financial statements and notes thereto have been retroactively adjusted as if such share
surrender occurred on the first day of the first period presented.
On February 10, 2025, the Company entered into
a securities purchase agreement (the “Purchase Agreement”) with certain individuals (collectively referred to as the “Purchasers”),
pursuant to which the Company sold an aggregate of 965,513 Class A ordinary shares, with par value of US$0.001 per share (the “Class
A Ordinary Shares”), to the purchasers through a private investment in public equity (“PIPE”) at a purchase price of
$1.45 per Class A Ordinary Share. The Company received approximately US$1.4 million in gross PIPE proceeds ((including US$1.2 million
of surrendered debt principal and US$200,000 in additional cash investments from Purchasers, before deduction of offering expenses).
On February 17, 2025, the Company consummated
the PIPE and issued an aggregate of 965,513 Class A Ordinary Shares and the warrants (the “Warrants”) to the Purchasers. The
Purchasers elected to conduct Alternate Cashless Exercise (as defined in the Warrants) and received an aggregate of 24,582,913 Class A
Ordinary Shares upon exercise.
On April 9, 2025, the Amended and Restated
2024 Equity Incentive Plan, which had been approved by the Board of Directors on March 20, 2025, became effective. The original 2024 Equity
Incentive Plan had been approved by the Board on June 7, 2024. Under the Amended and Restated 2024 Equity Incentive Plan, a total of 1,400,000
ordinary shares of the Company are available for issuance. On the same date, the Board approved the grant of an aggregate of 500,000 Class
B ordinary shares to Tao Ling, our Co-Chief Executive Officer and director. These shares vested immediately upon acceptance and are subject
to a lock-up period until October 10, 2026.
On April 14, 2025, the Company entered into a
securities purchase agreement with several investors for the sale of 9,090,908 Class A Ordinary Shares (363,636 Class A Ordinary Shares
following the 2025 Reverse Share Split), par value US$0.001 per share (par value US$0.025 following the 2025 Reverse Share Split), together
with warrants to purchase up to 90,909,080 Class A Ordinary Shares. Each Class A Ordinary Share was sold together with two associated
warrants at a combined offering price of US$0.55. The warrants had an initial exercise price of US$0.80 per share and were exercisable
immediately upon issuance. On the seventh calendar day following issuance, the exercise price was reset to US$0.16 per share and the number
of Class A Ordinary Shares issuable upon exercise was adjusted to 90,909,080. The offering closed on April 15, 2025, generating aggregate
gross proceeds of approximately US$5.0 million before deducting offering expenses. Under the exchange agreement, the holders surrendered
18,181,816 warrants for cancellation, and in exchange the Company issued an aggregate of 70,909,082 Class A ordinary shares. The exchanged
shares were issued on May 7, 2025.
On June 30, 2025, the Company entered into a securities
purchase agreement with an institutional investor in connection with a registered direct offering of 10,500,000 Class A ordinary shares
(420,000 Class A Ordinary Shares following the 2025 Reverse Share Split), par value US$0.001 per share (par value US$0.025 following the
2025 Reverse Share Split), and pre-funded warrants to purchase 31,166,667 Class A ordinary shares (1,246,667 Class A Ordinary Shares following
the 2025 Reverse Share Split). The pre-funded warrants had an exercise price of US$0.001 per share, were immediately exercisable subject
to a 9.99% beneficial ownership limitation, and may be exercised on a cashless basis at any time until exercised in full. The offering
closed on July 1, 2025, and the Company received net proceeds of approximately US$4.52 million after deducting offering expenses.
On August 5, 2025, the Company completed a twenty-five
(25) for one (1) reverse stock split of its issued and outstanding Ordinary Shares, par value $0.025 per share.
No capital activities occurred in the Company
during the period from September 30, 2025 to March 31, 2026.
Results of Operations
For the Six Months Ended March 31, 2026 and 2025
The following table summarizes
the results of our operations for the six months ended March 31, 2026 and 2025, respectively, and provides information regarding
the dollar and percentage increase or (decrease) during such periods.
(All amounts, other than percentages, are in U.S.
dollars)
| | |
For
the Six Months | | |
| |
| | |
Ended
March 31, | | |
Variance | |
| | |
2026 | | |
2025 | | |
Amount | | |
Percentage | |
| Sales | |
$ | 17,502,226 | | |
$ | 20,843,086 | | |
$ | (3,340,860 | ) | |
| (16 | )% |
| Cost of sales | |
| (16,046,660 | ) | |
| (18,941,243 | ) | |
| 2,894,583 | | |
| (15 | )% |
| Gross
profit | |
$ | 1,455,566 | | |
$ | 1,901,843 | | |
| -446,277 | | |
| (23 | )% |
| | |
| | | |
| | | |
| | | |
| | |
| Operating expenses: | |
| | | |
| | | |
| | | |
| | |
| Selling and marketing expenses | |
| (1,072,696 | ) | |
| (1,010,350 | ) | |
| (62,346 | ) | |
| 6 | % |
| General and administrative
expenses | |
| (3,036,411 | ) | |
| (4,202,385 | ) | |
| 1,165,974 | | |
| (28 | )% |
| Research and development costs | |
| (1,272,809 | ) | |
| (1,564,969 | ) | |
| 292,160 | | |
| (19 | )% |
| Total
operating expenses | |
$ | (5,381,916 | ) | |
$ | (6,777,704 | ) | |
| 1,395,788 | | |
| (21 | )% |
| | |
| | | |
| | | |
| | | |
| | |
| Operating
loss | |
$ | (3,926,350 | ) | |
$ | (4,875,861 | ) | |
$ | 949,511 | | |
| (19 | )% |
| | |
| | | |
| | | |
| | | |
| | |
| Other income (expenses): | |
| | | |
| | | |
| | | |
| | |
| Interest expense, net | |
| (960,100 | ) | |
| (1,227,192 | ) | |
| 267,092 | | |
| (22 | )% |
| Other income (expenses),
net | |
| (82,782 | ) | |
| 422,009 | | |
| (504,791 | ) | |
| (120 | )% |
| Total
other expenses, net | |
| (1,042,882 | ) | |
| (805,183 | ) | |
| (237,699 | ) | |
| 30 | % |
| | |
| | | |
| | | |
| | | |
| | |
| Loss
before income taxes | |
$ | (4,969,232 | ) | |
$ | (5,681,044 | ) | |
$ | 711,812 | | |
| (13 | )% |
| Income
tax expense | |
| - | | |
| (42 | ) | |
| 42 | | |
| (100 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Net
loss | |
$ | (4,969,232 | ) | |
$ | (5,681,086 | ) | |
$ | 711,854 | | |
| (13 | )% |
Sales
The following table presents revenue by major
product and service categories for the six months ended March 31, 2026 and 2025, respectively.
| | |
March 31, 2026 | | |
March 31, 2025 | |
| | |
Revenues
Amount | | |
As % of | | |
Revenues
Amount | | |
As % of | |
| Revenue Category | |
(In USD) | | |
Revenues | | |
(In USD) | | |
Revenues | |
| Display modules | |
$ | 6,060,052 | | |
| 35 | % | |
$ | 8,842,903 | | |
| 42 | % |
| Polarizers | |
| 8,103,207 | | |
| 46 | % | |
| 9,742,809 | | |
| 47 | % |
| Others (services and other products) | |
| 3,338,967 | | |
| 19 | % | |
| 2,257,374 | | |
| 11 | % |
| Total | |
$ | 17,502,226 | | |
| 100 | % | |
$ | 20,843,086 | | |
| 100 | % |
The following table shows our revenues by geographic region for the
six months ended March 31, 2026 and 2025. The Company has actively expanded new processing businesses in the display panel and polarizer
sectors, secured new external OEM orders, and increased the proportion of overseas sales compared with 2025.
| | |
March 31, 2026 | | |
March 31, 2025 | |
| | |
Revenues
Amount | | |
As % of | | |
Revenues
Amount | | |
As % of | |
| Country/Region | |
(In USD) | | |
Revenues | | |
(In USD) | | |
Revenues | |
| Mainland China | |
$ | 15,584,058 | | |
| 89 | % | |
$ | 19,460,598 | | |
| 93 | % |
| Hong Kong and Taiwan | |
| 1,836,116 | | |
| 10 | % | |
| 1,341,186 | | |
| 6 | % |
| Southeast Asia | |
| 82,052 | | |
| 1 | % | |
| 41,302 | | |
| 1 | % |
| Total | |
$ | 17,502,226 | | |
| 100 | % | |
$ | 20,843,086 | | |
| 100 | % |
Revenues decreased by approximately $3.34 million
or 16%, to approximately $17.50 million for the six months ended March 31, 2026 from approximately $20.84 million for the six months ended
March 31, 2025. The decrease in revenues was primarily due to: i) in order to reduce costs, improve efficiency, and optimize its production
capacity , the Company terminated some original OEM partnerships during the integration and relocation of off-site operations,
resulting in a decline in revenue; ii) affected by the strategies of our overseas customers and market, our existing customers adjusted
their cooperation model to OEM arrangements and continuously reduced order volumes, which further dragging down the overall sales scale.
Cost of sale decreased by approximately $2.89 million or 15%, to approximately
$16.0million for the six months ended March 31, 2026 from approximately $18.94 million for the six months ended March 31, 2025. The year-over-year
decrease was mainly in line with the decrease of the sales.
Gross margin was 8.3% in the six months ended March 31, 2026, compared
with 9.1% in the six months ended March 31, 2025. The decrease of the gross margin is mainly due to higher raw material costs.
Selling and marketing expenses
Selling and marketing expenses increased by approximately
$0.06 million, or 6%, to approximately $1.07 million for the six months ended March 31, 2026 as compared to approximately $1.01 million
for the six months ended March 31, 2025. The increase in selling and marketing expenses was mainly due to the increase in new product
(ARIO systems and BOX systems) market development activities.
General and administrative expenses
General and administrative (“G&A”) expenses decreased
by approximately $1.17 million, or 28%, to approximately $3.04 million for the six months ended March 31, 2026 as compared to approximately
$4.20 million for the six months ended March 31, 2025. The decrease in G&A expenses was attributable to the Company’s restructuring
of manufacturing capacity, streamlining of administrative departments, and improvement of management efficiency.
Research and development expenses
Research and development expenses decreased by approximately $0.29
million or 19%, to approximately $1.27 million for the six months ended March 31, 2026 from approximately $1.56 million for the six months
ended March 31, 2025. The decrease in research and development expenses was mainly due to the substantially completed development of the
Pintura product, resulting in a corresponding reduction in R&D investment for the current year.
Net loss
Net loss decreased by approximately $0.71 million or 13%, to approximately
$4.97 million for the six months ended March 31, 2026 from approximately $5.68 million for the six months ended March 31, 2025.
Balance Sheets
Cash and cash equivalents, short-term deposits, restricted short-term
deposits balances was $1.80 million as of March 31, 2026.
Going Concern
As of March 31, 2026, the Company had current
assets of $15.13 million and current liabilities of $40.87 million. This means that the Company’s current liabilities exceeded its
current assets, amounting to $25.74 million. Additionally, the Company incurred a net loss of $4.97 million for the half year, resulting
in an accumulated deficit of $33.30 million. This condition raises substantial doubt about the Company’s ability to continue as
a going concern. Therefore, the Company may be unable to realize its assets and discharge its liabilities in normal course of business.
In order to strengthen the Company’s liquidity
in the foreseeable future, the Company has taken the following measures. (i) Our expanded new material project for OLED — the polyimide
CPI AoNiu New Materials Project Phase I production line — has officially reached mass production capacity. We have signed non-disclosure
agreements (NDAs) with more than 10 enterprises and secured over 10 sample delivery orders. The fifth round of sample delivery cooperation
with BOE is currently in preparation. A total of 44 technical indicators need to be satisfied for the BOE project, and we are currently
focusing our efforts on space photovoltaic order fulfillment. (ii) For the Phase II production line, we have signed an investment agreement
with the Hefei Xinzhan Government, planning to locate the Phase II production line in Hefei Xinzhan High-tech Zone. The Phase II production
line is expected to achieve mass production in 2027. By then, both the Phase I and Phase II production lines are projected to secure stable
order inflows in 2027.
The management has a reasonable expectation that
the Company has adequate resources to continue in operational existence for 12 months from the filing date.
Critical Accounting Policies
We prepare our consolidated financial statements
in conformity with accounting principles generally accepted by the U.S. GAAP, which requires us to make judgments, estimates and assumptions
that affect our reported amount of assets, liabilities, revenue, costs and expenses, and any related disclosures. Although there were
no material changes made to the accounting estimates and assumptions in the past three years, we continually evaluate these estimates
and assumptions based on the most recently available information, our own historical experience and various other assumptions that we
believe to be reasonable under the circumstances. Since the use of estimates is an integral component of the financial reporting process,
actual results could differ from our expectations as a result of changes in our estimates.
We believe that the following accounting policies
involve a higher degree of judgment and complexity in their application and require us to make significant accounting estimates. Accordingly,
these are the policies we believe are the most critical to understanding and evaluating our consolidated financial condition and results
of operations.
Use of Estimates
The preparation of the consolidated financial
statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed
in the consolidated financial statements and the accompanying notes. Such estimates include, but are not limited to, allowances for credit
losses, inventory valuation, useful lives of property, plant and equipment, intangible assets, and income taxes related to realization
of deferred tax assets and uncertain tax position. Actual results could differ from those estimates.
Cash and Cash Equivalents
Cash and cash equivalents primarily consist of
cash and deposits with financial institutions which are unrestricted as to withdrawal and use. Cash equivalents consist of highly liquid
investments that are readily convertible to cash generally with original maturities of three months or less when purchased.
Revenue Recognition
We generate our revenues mainly from sales of
display modules and polarizers to third-party customers, who are mainly display manufacturers. We follow Financial Accounting Standards
Board (FASB) ASC 606 and accounting standards updates (“ASU”) 2014-09 for revenue recognition. On October 1, 2017, we have
early adopted ASU 2014-09, which is a comprehensive new revenue recognition model that requires revenue to be recognized in a manner to
depict the transfer of goods or services to a customer at an amount that reflects the consideration expected to be received in exchange
for those goods or services. We consider revenue realized or realizable and earned when all the five following criteria are met: (1) identify
the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate
the transaction price to the performance obligations in the contract, and (5) recognize revenue when (or as) the entity satisfies a performance
obligation.
We consider customer purchase orders, which in
some cases are governed by master sales agreements, to be the contracts with a customer. As part of our consideration of the contract,
we evaluate certain factors including the customer’s ability to pay (or credit risk). For each contract, we consider the promise
to transfer products, each of which is distinct, to be the identified performance obligations.
In determining the transaction price, we evaluate
whether the price is subject to refund or adjustment to determine the net consideration to which we expect to be entitled. We offer customers
warranty of six months to five years for defective products that is beyond contemplated defective rate mutually agreed in contract with
customer. We analyzed historical sales returns and concluded that they have been immaterial.
Revenues are reported net of all value added taxes.
As our standard payment terms are less than one year, we have elected the practical expedient under ASC 606-10-32-18 to not assess whether
a contract has a significant financing component. We allocate the transaction price to each distinct product based on their relative standalone
selling price.
Revenue is recognized when control of the product
is transferred to the customer (i.e., when our performance obligation is satisfied at a point in time), which typically occurs at delivery.
For international sales, we sell our products primarily under free onboard (“FOB”) shipping point term. For sales under FOB
shipping point term, we recognize revenues when products are delivered from us to the designated shipping point. Prices are determined
based on negotiations with our customers and are not subject to adjustment. As a result, we expect returns to be minimal.
Research and Development Costs
Research and development activities are directed
toward the development of new products as well as improvements in existing processes. These costs, which primarily include salaries, contract
services and supplies, are expensed as incurred.
Inventories
Inventories are stated at the lower of cost or
net realizable value. Cost is principally determined using the weighted-average method. The Company records adjustments to inventory for
excess quantities, obsolescence or impairment when appropriate to reflect inventory at net realizable value. These adjustments are based
upon a combination of factors including current sales volume, market conditions, lower of cost or market analysis and expected realizable
value of the inventory.
Shareholders’ Equity
Based on the shareholder meeting held on March
28, 2024, the Company decided to adjust its authorized share capital from 500,000,000 shares at $0.0001 per share to 5,000,000,000 shares
at $0.0001 per share. This adjustment includes 4,991,000,000 Class A ordinary shares, 8,000,000 Class B ordinary shares, and 1,000,000
preference shares.
The Company re-designated 1,771,835 issued ordinary
shares with a par value of $0.001 each into 1,771,835 Class A ordinary shares with the same par value. Furthermore, the Company issued
200,000 Class B Ordinary Shares and utilized the proceeds to repurchase 200,000 Class A Ordinary Shares held by SHYD Investment Management
Limited, at a repurchase amount equivalent to the aggregate par value of $200. Upon completion of the repurchase, these 200,000 Class
A Ordinary Shares were canceled. Following the repurchase and issuance of Class B Ordinary Shares, the Company’s total issued share
capital remained unchanged, and the authorized share capital was not reduced. There are currently 1,771,835 issued and outstanding ordinary
shares, including 1,571,835 Class A ordinary shares and 200,000 Class B ordinary shares. Mr. Tao Ling holds 13.03% of the Class A ordinary
shares and 100% of the Class B ordinary shares through his wholly owned holding company, while Mr. Xiaohong Yin holds 6.12% of the Class
A ordinary shares through his wholly owned holding company. A Class A Ordinary Share shall (in respect of such Class A Ordinary Share)
have one vote for every Class A Ordinary Share of which he is the holder. A Class B Ordinary Share shall (in respect of such Class B Ordinary
Share) have 20 votes for every Class B Ordinary Share of which he is the holder. No Dividends or other distributions shall be payable
on the Class B Ordinary Shares.
On December 31, 2024. we completed a ten (10)
for one (1) reverse stock split (the “Reverse Split”) of our issued and outstanding ordinary shares, par value $0.001 per
share.
On April 9, 2025, the Amended and Restated 2024
Equity Incentive Plan, which had been approved by the Board of Directors on March 20, 2025, became effective. The original 2024 Equity
Incentive Plan had been approved by the Board on June 7, 2024. Under the Amended and Restated 2024 Equity Incentive Plan, a total of 1,400,000
ordinary shares of the Company are available for issuance. On the same date, the Board approved the grant of an aggregate of 500,000 Class
B ordinary shares to Tao Ling, our Co-Chief Executive Officer and director. These shares vested immediately upon acceptance and are subject
to a lock-up period until October 10, 2026.
On August 5, 2025, we completed a twenty-five
(25) for one (1) reverse stock split of our issued and outstanding Ordinary Shares, par value $0.025 per share.
From the legal perspective, the Reverse Split
applied to the issued shares of the Company on the date of the Reverse Split and does not have any retroactive effect on the Company’s
shares prior that date. However, for accounting purposes only, references to our ordinary shares in this annual report are stated as having
been retroactively adjusted and restated to give effect to the Reverse Split, as if the Reverse Split had occurred by the relevant earlier
date.
Private placement
On January 31, 2024, OST entered into a Subscription
Agreement for a private placement with MIDEA INTERNATIONAL CO., LIMITED. Pursuant to the Subscription Agreement, OST has agreed to issue
and sell to the Purchaser 2,800,000 unregistered ordinary shares of the OST, at a purchase price equivalent to US$0.35 per share. OST
will receive US$ 980,000 in proceeds from the Private Placement of these unregistered Ordinary Shares.
On March 28, 2024, according to the resolution
of the shareholders’ meeting, the company issued 2 million Class B ordinary shares to SHYD Investment Management Limited at an issuance
price of $0.0001 per share. No Dividends or other distributions shall be payable on the Class B Ordinary Shares.
On November 18, 2024, the Company entered into
a securities purchase agreement with an investor, pursuant to which the Company sold 1,623,376 Class A Ordinary Shares (6,494 Class A
Ordinary Shares following the 2024 and 2025 Reverse Share Split) for a total amount of $300,000, which was determined at a 30% discount
to the average closing price of the Class A Ordinary Shares for the ten consecutive trading days immediately preceding the date of the
securities purchase agreement. The shares were registered pursuant to a prospectus supplement to the Company’s currently effective
registration statement on F-3 (File No. 333-279177) on November 19, 2024. Subsequently on November 19, 2024, the Company and the investor
entered into a supplemental agreement to the securities purchase agreement pursuant to which the shares to be sold remained at 1,623,376
(6,494 Class A Ordinary Shares following the 2024 and 2025 Reverse Share Split). The offering price for such shares varies depending on
the day that the accredited investor sells all or a portion of the Shares and, for any shares sold on a given day, is equal to 50% of
the VWAP of the trading day following such sale. The investor received the shares on December 5, 2024. However, as of the date of this
report, the Company has only received gross proceeds in the amount of approximately $60,000, prior to deducting transaction fees and estimated
expenses.
On April 14, 2025, the Company entered into a
securities purchase agreement with several investors for the sale of 9,090,908 Class A ordinary shares (363,636 Class A Ordinary Shares
following the 2025 Reverse Share Split), par value US$0.001 per share (par value US$0.025 following the 2025 Reverse Share Split), together
with warrants to purchase up to 90,909,080 Class A ordinary shares. Each Class A ordinary share was sold together with two associated
warrants at a combined offering price of US$0.55. The warrants have an initial exercise price of US$0.80 per share, are exercisable immediately
upon issuance. On the seventh calendar day following issuance, the exercise price was reset to US$0.16 per share and the number of Class
A ordinary shares issuable upon exercise was adjusted to 90,909,080. The offering closed on April 15, 2025, generating aggregate gross
proceeds of approximately US$5.0 million before deducting offering expenses. Under the exchange agreement, the holders surrendered 18,181,816
warrants for cancellation, and in exchange the Company issued an aggregate of 70,909,082 Class A ordinary shares. The exchanged shares
were issued on May 7, 2025.
June 30, 2025, the Company entered into a securities
purchase agreement with an institutional investor in connection with a registered direct offering of 10,500,000 Class A ordinary shares
(420,000 Class A Ordinary Shares following the 2025 Reverse Share Split), par value US$0.001 per share(par value US$0.025 following the
2025 Reverse Share Split), and pre-funded warrants to purchase 31,166,667 Class A ordinary shares (1,246,667 Class A Ordinary Shares following
the 2025 Reverse Share Split). The pre-funded warrants have an exercise price of US$0.001 per share, are immediately exercisable subject
to a 9.99% beneficial ownership limitation, and may be exercised on a cashless basis at any time until exercised in full. The offering
closed on July 1, 2025, and the Company received net proceeds of approximately US$4.52 million after deducting offering expenses.
Redemption Conversion Shares
On June 21, 2024, the Company entered into the
other securities purchase agreement with Streeterville Capital, LLC, relating to the issuance and sale of a senior unsecured convertible
note in the principal amount of $1,360,000, at a purchase price of $1,250,000. The Note is convertible into Class A Ordinary Shares, par
value $0.0001 per share (par value US$0.025 following the 2024 and 2025 Reverse Share Split), of the Company. Streeterville Capital, LLC
exercised the conversion right in June, August, September and November of 2024 and receiving 155,666, 229,273, 527,159 and 772,828,Class
A Ordinary Share (623, 917, 2,109 and 3,091 Class A Ordinary Share following the 2024 and 2025 Reverse Share Split) with the converting
price of $0.3212 per share, $0.2181 per share, $0.2371 per share and 0.2523 per share ($80.3 per share, $54.525 per share, $59.275 per
share and 63.075 following the 2024 and 2025 Reverse Share Split), respectively. On December 30, the Company repaid the rest of the Note.
As a result, the note was deemed paid in full, canceled and of no further force or effect.
PIPE
On February 10, 2025, the Company entered into
a securities purchase agreement with certain individual investors for the sale of an aggregate of 965,513 Class A ordinary shares (38,621
Class A Ordinary Shares following the 2025 Reverse Share Split), par value US$0.001 per share (par value US$0.025 following the 2025 Reverse
Share Split), through a private investment in public equity at a purchase price of US$1.45 per share. In connection with the PIPE, the
purchasers also received warrants to purchase an aggregate of 2,896,539 Class A ordinary shares (115,862 Class A Ordinary Shares following
the 2025 Reverse Share Split). The warrants were exercisable immediately upon issuance and, on February 17, 2025, the Company consummated
the PIPE and issued the Class A ordinary shares and warrants to the purchasers. The purchasers elected to conduct an alternate cashless
exercise of the warrants, resulting in the issuance of an aggregate of 24,582,913 Class A ordinary shares (983,317 Class A Ordinary Shares
following the 2025 Reverse Share Split). The offering generated gross proceeds of approximately US$1.4 million, before deducting estimated
offering expenses payable by the Company.
