[20-F] AsiaStrategy Files Annual Report (Foreign Issuer)
Rhea-AI Filing Summary
AsiaStrategy files its annual Form 20-F, describing a Hong Kong‑based luxury watch trading business operated mainly through Top Win Hong Kong with 24,864,000 Ordinary Shares outstanding as of December 31, 2025. The company highlights dependence on a small number of key customers and vendors, exposure to currency and interest‑rate movements, and significant credit risk where one customer has accounted for 98% of accounts receivable in certain years.
AsiaStrategy discloses holdings of bitcoin, emphasizing extreme price volatility, evolving regulation, and custody, cybersecurity and insolvency risks that could lead to partial or total loss of value. It also reports material weaknesses in internal control over financial reporting, including limited U.S. GAAP expertise, lack of an internal audit function, and deficiencies in IT and cybersecurity controls. Additional risks arise from potential PRC legal and regulatory reach into Hong Kong, possible HFCAA‑related trading prohibitions if auditors became non‑inspectable, and uncertainties under new PRC data, cybersecurity and overseas listing frameworks. The filing stresses reputational and legal exposure related to parallel imports, authenticity of luxury watches, and counterfeit or stolen goods, as well as sensitivity to macroeconomic conditions and discretionary luxury spending.
Positive
- None.
Negative
- None.
Insights
Heightened regulatory, control, and asset‑risk profile around a concentrated Hong Kong luxury watch business.
AsiaStrategy operates a focused luxury watch trading business through Hong Kong, with 24,864,000 Ordinary Shares outstanding and authorization for up to 100,000,000 shares. Revenue and purchasing are concentrated: in some years a few customers contributed around 33–40% of revenue, and a handful of vendors supplied most purchases. This raises counterparty and supply‑chain vulnerability.
The filing underscores substantial risk clusters. Financial controls are weak, with material weaknesses in U.S. GAAP expertise, absence of internal audit, and IT and cybersecurity deficiencies, heightening the chance of misstatements. Bitcoin holdings add another volatile risk: prices have traded between roughly US$65,000 and US$120,000 per coin, with no inherent yield and complex custody and insolvency exposure.
Regulatory overhang is significant. HFCAA and AHFCAA frameworks could ultimately threaten Nasdaq trading if PCAOB access to the Malaysia‑based auditor changed. Separately, evolving PRC data, cybersecurity and overseas listing regimes, and possible long‑arm reach into Hong Kong, inject uncertainty into future compliance obligations. Combined with authenticity, parallel‑import, counterfeit and macro‑sensitive luxury demand risks, the overall profile is tilted toward elevated downside exposure.
Key Figures
Key Terms
Holding Foreign Companies Accountable Act regulatory
Public Company Accounting Oversight Board regulatory
parallel imports financial
material weakness financial
investment company regulatory
Personal Information Protection Law regulatory
Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies regulatory
AI-generated analysis. How Rhea-AI works. Not financial advice.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark One)
OR
For
the year ended
OR
OR
Date of event requiring this shell company report:
For the transition period from _________ to _____________.
Commission
file number:
(Exact name of Registrant as Specified in its Charter)
(Translation of Registrant’s name into English)
(Jurisdiction of Incorporation or Organization)
(Address of Principal Executive Offices)
Telephone:
Email:
(Name, Telephone, E-mail and/or Facsimile Number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading symbol(s) | Name of each exchange on which registered | ||
The (Nasdaq Capital Market) |
Securities registered or to be registered pursuant to Section 12(g) of the Act: None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
Indicate
the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered
by the annual report:
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes
☐
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☐
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Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
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| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Emerging growth company |
If
an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant
has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided
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| † | The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012. |
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by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness
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securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
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| ☒ | ☐ International Financial Reporting Standards as issued | ☐ Other |
| by the International Accounting Standards Board |
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow: Item 17 ☐ Item 18 ☐
If
this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act). Yes ☐ No
AsiaStrategy
Annual Report on Form 20-F
For the year ended December 31, 2025
TABLE OF CONTENTS
| Page | ||
| CERTAIN TERMS AND CONVENTIONS | ii | |
| FORWARD LOOKING STATEMENTS | iv | |
| PART I | 1 | |
| Item 1. | Identity of Directors, Senior Management and Advisers | 1 |
| Item 2. | Offer Statistics and Expected Timetable | 1 |
| Item 3. | Key Information | 1 |
| Item 4. | Information on the Company | 36 |
| Item 4A. | Unresolved Staff Comments | 51 |
| Item 5. | Operating and Financial Review and Prospects | 51 |
| Item 6. | Directors, Senior Management and Employees | 68 |
| Item 7. | Major Shareholders and Related Party Transactions | 74 |
| Item 8. | Financial Information | 76 |
| Item 9. | The Offer and Listing | 77 |
| Item 10. | Additional Information | 78 |
| Item 11. | Quantitative and Qualitative Disclosures About Market Risk | 91 |
| Item 12. | Description of Securities Other Than Equity Securities | 91 |
| PART II | 92 | |
| Item 13. | Defaults, Dividend Arrearages and Delinquencies | 92 |
| Item 14. | Material Modifications to the Rights of Security Holders and Use of Proceeds | 92 |
| Item 15. | Controls and Procedures | 92 |
| Item 16. | [Reserved] | 94 |
| Item 16A. | Audit Committee Financial Expert | 94 |
| Item 16B. | Code of Ethics | 94 |
| Item 16C. | Principal Accountant Fees and Services | 94 |
| Item 16D. | Exemptions From the Listing Standards for Audit Committees | 95 |
| Item 16E. | Purchases of Equity Securities by the Issuer and Affiliated Purchasers | 95 |
| Item 16F. | Change In Registrant’s Certifying Accountant | 95 |
| Item 16G. | Corporate Governance | 96 |
| Item 16H. | Mine Safety Disclosure | 99 |
| Item 16I. | Disclosure Regarding Foreign Jurisdictions That Prevent Inspections | 99 |
| Item 16J. | Insider Trading Policies | 99 |
| Item 16K. | Cybersecurity | 99 |
| PART III | 100 | |
| Item 17. | Financial Statements | 100 |
| Item 18. | Financial Statements | 100 |
| Item 19. | Exhibits | 100 |
i
CERTAIN TERMS AND CONVENSIONS
Unless otherwise indicated, in this annual report, the following terms shall have the meaning set out below:
| ● | “Amended and Restated Memorandum and Articles of Association” refers to the amended and restated memorandum of association and the articles of association of Top Win (as defined below); |
| ● | “AsiaStrategy” and “Company” refers to AsiaStrategy, (f.k.a. Top Win International Limited) the Cayman Islands holding company, incorporated on July 27, 2024; |
| ● | “BVI” refers to the British Virgin Islands; |
| ● | “CAGR” refers to compounded annual growth rate, the year-on-year growth rate over a specific period of time; |
| ● | “Companies Act” refers to the Companies Act (as revised) of the Cayman Islands, as amended, supplemented or otherwise modified from time to time; |
| ● | “Controlling Shareholder” refers to Sora Ventures Global Limited (f.k.a. Pride River Limited), a company incorporated under the laws of the British Virgin Islands on June 4, 2024, which is controlled by Mr. Jason Fang, our co-CEO, director and chairman of the board; |
| ● | “Grand Moon” refers to Grand Moon International Limited, a company incorporated under the laws of the British Virgin Islands on June 4, 2024, an intermediate holding company directly and wholly owned by AsiaStrategy; |
| ● | “Ordinary Shares” refers to the ordinary shares of Top Win (as defined below), par value of US$0.0005 per share; |
| ● | “FY2025”, “FY2024” and “FY2023” refer to fiscal year ended December 31, 2025, 2024 and 2023, respectively; |
| ● | “Hong Kong dollar(s)”, or “HK$” refer to the legal currency of Hong Kong; |
| ● | “Hong Kong” or “HK SAR” refers to the Hong Kong Special Administrative Region of the People’s Republic of China; |
| ● | “Mainland China” refers to the mainland of the People’s Republic of China; excluding Taiwan, Hong Kong and the Macau Special Administrative Regions of the People’s Republic of China for the purposes of this annual report only; |
| ● | “Memorandum and Articles of Association” refers to the memorandum of association and the articles of association articles of association of Top Win (as defined above) adopted on June 27, 2024; |
| ● | “Operating Subsidiary” refers to Top Win Hong Kong (as defined below), the indirectly wholly-owned subsidiaries of Top Win, through Grand Moon International Limited, unless otherwise specified; |
| ● | “PRC” refer to the People’s Republic of China, including Hong Kong and the Macau Special Administrative Regions of the People’s Republic of China; |
| ● | “PRC government” or “Chinse government” are to the government and governmental authorities of Mainland China for the purposes of this annual report only; |
| ● | “SEC” refers to the United States Securities and Exchange Commission; |
| ● | “Top Win International Trading”, “Top Win Hong Kong”, “Top Win” or “Operating Subsidiary” refers to Top Win International Trading Limited, a company with limited liability under the laws of Hong Kong on June 15, 2001; |
ii
| ● | “US$”, “$”, or “U.S. dollar(s)” refer to the legal currency of the United States; |
| ● | “U.S.”, or “United States” refers to the United States of America; |
| ● | “U.S. GAAP” refers to generally accepted accounting principles in the United States; and |
| ● | “We”, “Group”, “us”, “or “our” refer to AsiaStrategy, the Cayman Islands holding company and its subsidiaries. |
This annual report contains translations of certain Hong Kong dollar amounts into US dollar amounts at specified rates solely for the convenience of the reader. All reference to “US dollars”, “USD”, “US$” or “$” are to United States dollars. All reference to “HK dollars”, “HKD”, or “HK$” are to Hong Kong dollars. The relevant exchange rates are listed below:
| For the years ended December 31, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| Average rate | 7.7956 | 7.8030 | 7.8292 | |||||||||
| As of December 31, | ||||||||
| 2025 | 2024 | |||||||
| Year-end spot rate | 7.7833 | 7.7677 | ||||||
Our year end is December 31. References to a particular “fiscal year” are to our year ended December 31 of that calendar year. Our audited consolidated financial statements (“CFS”) were prepared in accordance with the generally accepted accounting principles in the United States (the “U.S. GAAP”).
We have proprietary rights to trademarks used in this annual report that are important to our business, many of which are registered under applicable intellectual property laws. Solely for convenience, the trademarks, service marks and trade names referred to in this annual report are without the ®, ™ and other similar symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensors to these trademarks, service marks and trade names.
This annual report contains additional trademarks, service marks and trade names of others. All trademarks, service marks and trade names appearing in this annual report are, to our knowledge, the property of their respective owners. We do not intend our use or display of other companies’ trademarks, service marks or trade names to imply a relationship with, or endorsement or sponsorship of us by, any other person.
When used herein, the references to laws and regulations of “China” or the “PRC” are only to such laws and regulations of mainland China, excluding, for the purpose of this annual report only, Taiwan, Hong Kong and Macau.
iii
FORWARD-LOOKING STATEMENTS
This annual report contains forward-looking statements that involve substantial risks and uncertainties. In some cases, you can identify forward-looking statements by the words “may”, “might”, “will”, “could”, “would”, “should”, “expect”, “intend”, “plan”, “goal”, “objective”, “anticipate”, “believe”, “estimate”, “predict”, “potential”, “continue” and “ongoing”, or the negative of these terms, or other comparable terminology intended to identify statements about the future. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements. The forward-looking statements and opinions contained in this annual report are based upon information available to us as of the date of this annual report and, while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to:
| ● | future financial and operating results, including revenues, income, expenditures, cash balances and other financial items; |
| ● | our ability to execute our growth, expansion and acquisition strategies, including our ability to meet our growth strategies; |
| ● | current and future economic and political conditions; |
| ● | expected changes in our revenues, costs or expenditures; |
| ● | our expectations regarding demand for and market acceptance of our services; |
| ● | our expectations regarding our customer base; |
| ● | our ability to obtain, maintain or procure all necessary government certifications, approvals, and/or licenses to conduct our business, and in the relevant jurisdictions in which we operate; |
| ● | competition in our industry; |
| ● | relevant government policies and regulations relating to our industry; |
| ● | our capital requirements and our ability to raise any additional financing which we may require; |
| ● | our ability to hire and retain qualified management personnel and key employees in order to enable us to develop our business; |
| ● | overall industry, economic and market performance; and |
| ● | other assumptions described in this annual report underlying or relating to any forward-looking statements. |
You should refer to the section titled “Item 3. Key Information — D. Risk Factors” for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. As a result of these factors, we cannot assure you that the forward-looking statements in this annual report will prove to be accurate. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
iv
PART I
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
Not Applicable.
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
Not Applicable.
ITEM 3. KEY INFORMATION
Our Corporate Group Structure
The chart below illustrates our current corporate structure:
AsiaStrategy (f.k.a. Top Win International Limited) was incorporated as a Cayman Islands exempted company with limited liability on June 27, 2024 under the laws of the Cayman Islands, solely to serve as the holding company for our listing on Nasdaq. As of the date of this annual report, AsiaStrategy is authorized to issue a maximum of 100,000,000 Ordinary Shares of par value US$0.0005 each, of which 24,864,000 Ordinary Shares are issued and outstanding.
AsiaStrategy is a holding company and is not actively engaged in any business, and it conducts operations mainly through our Operating Subsidiary, Top Win International Trading Limited (“Top Win Hong Kong”) incorporated under the laws of Hong Kong, on June 15, 2001. Top Win Hong Kong is our operating entity engaged in the trading of luxury watches and is indirectly wholly-owned by Top Win through Grand Moon International Limited, an intermediate holding company. Grand Moon International Limited (“Grand Moon”) was incorporated on June 4, 2024 under the laws of the British Virgin Islands.
In addition, other subsidiaries within our group include AsiaStrategy Topwin SG Pte. Limited, AsiaStrategy (BVI) Limited, AsiaStrategy Topwin Limited, Top Asia Capital Limited, which are primarily investment holding companies with no substantive operations. For more details, see “Item 3. Key Information — D. Risk Factors — Risks Relating to Our Corporate Structure”.
1
The Holding Foreign Companies Accountable Act
The Holding Foreign Companies Accountable Act, or the HFCAA, was enacted on December 18, 2020. The HFCAA states if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspection by the PCAOB for three consecutive years beginning in 2021, the SEC shall prohibit our shares from being traded on a national securities exchange or in the over-the-counter trading market in the United States.
On March 24, 2021, the SEC adopted interim final rules relating to the implementation of certain disclosure and documentation requirements of the HFCA Act. A company will be required to comply with these rules if the SEC identifies it as having a “non-inspection” year under a process to be subsequently established by the SEC. The SEC is assessing how to implement other requirements of the HFCA Act, including the listing and trading prohibition requirements described above. Furthermore, on June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act (the “AHFCAA”), which was signed into law on December 29, 2022, amending the HFCAA and requiring the SEC to prohibit an issuer’s securities from trading on any U.S. stock exchange if its auditor is not subject to PCAOB inspections for two consecutive years instead of three consecutive years. On September 22, 2021, the PCAOB adopted a final rule implementing the HFCAA, which provides a framework for the PCAOB to use when determining, as contemplated under the HFCAA, whether the PCAOB is unable to inspect or investigate completely registered public accounting firms located in a foreign jurisdiction because of a position taken by one or more authorities in that jurisdiction. On December 2, 2021, the SEC issued amendments to finalize rules implementing the submission and disclosure requirements in the HFCA Act. The rules apply to registrants that the SEC identifies as having filed an annual report with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction and that PCAOB is unable to inspect or investigate completely because of a position taken by an authority in foreign jurisdictions. On December 16, 2021, the PCAOB issued a Determination Report which found that the PCAOB is unable to inspect or investigate completely registered public accounting firms headquartered in: (i) Mainland China, and (ii) Hong Kong.
On August 26, 2022, the PCAOB announced and signed a Statement of Protocol (the “Protocol”) with the China Securities Regulatory Commission and the Ministry of Finance of the PRC. The Protocol provides the PCAOB with: (1) sole discretion to select the firms, audit engagements and potential violations it inspects and investigates, without any involvement of Chinese authorities; (2) procedures for PCAOB inspectors and investigators to view complete audit work papers with all information included and for the PCAOB to retain information as needed; (3) direct access to interview and take testimony from all personnel associated with the audits the PCAOB inspects or investigates.
On December 15, 2022, the PCAOB issued a new Determination Report which: (1) vacated the December 16, 2021 Determination Report; and (2) concluded that the PCAOB has been able to conduct inspections and investigations completely in the PRC in 2022. The December 15, 2022 Determination Report cautions, however, that authorities in the PRC might take positions at any time that would prevent the PCAOB from continuing to inspect or investigate completely. As required by the HFCAA, if in the future the PCAOB determines it no longer can inspect or investigate completely because of a position taken by an authority in the PRC, the PCAOB will act expeditiously to consider whether it should issue a new determination.
Our auditor, J&S Associate PLT, the independent registered public accounting firm, as a firm headquartered in Malaysia and registered with the PCAOB, is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess our auditor’s compliance with the applicable professional standards. As of the date of this annual report, our auditor is not subject to and not affected by the PCAOB’s December 2021 Determination Report.
However, in the event it is later determined that the PCAOB is unable to inspect or investigate completely the auditor because of a position taken by an authority in a foreign jurisdiction, such as the PRC authorities, then such lack of inspection could cause trading in the Company’s securities to be prohibited under the HFCAA, and ultimately result in a determination by a securities exchange to delist the Company’s securities. Furthermore, as more stringent criteria have been imposed by the SEC and the PCAOB, recently, which would add uncertainties to our listing, and we cannot assure you whether Nasdaq or regulatory authorities would apply additional and more stringent criteria to us after considering the effectiveness of our auditor’s audit procedures and quality control procedures, adequacy of personnel and training, or sufficiency of resources, geographic reach or experience as it relates to the audit of our financial statements. See “Item 3. Key Information — D. Risk Factors — Risks Relating to our Ordinary Shares — Our Ordinary Shares may be prohibited from being traded on a national exchange under the Holding Foreign Companies Accountable Act if the PCAOB is unable to inspect our auditors. The delisting of our Ordinary Shares, or the threat of their being delisted, may materially and adversely affect the value of your investment. Furthermore, on June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act, which was signed into law on December 29, 2022, amending the HFCAA to require the SEC to prohibit an issuer’s securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three.”
3.A. [Reserved]
3.B. Capitalization and Indebtedness
Not Applicable.
2
3.C. Reasons for the Offer and Use of Proceeds
Not Applicable.
3.D. Risk Factors
Investing in our Ordinary Shares is highly speculative and involves a significant degree of risk. You should carefully consider the following risks as well as all other information contained in this annual report, including the matters discussed under the headings “Forward-Looking Statements” and “Item 5. Operating and Financial Review and Prospects” before you decide to make an investment in our Ordinary Shares. AsiaStrategy (f.k.a. Top Win International Limited) is a holding company with substantial all of its operations in China and Hong Kong and is subject to a legal and regulatory environment that in many respects differs from the United States. The risks discussed below could materially and adversely affect our business, prospects, financial condition, results of operations, cash flows, ability to pay dividends and the trading price of our Ordinary Shares. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially and adversely affect our business, prospects, financial condition, results of operations, cash flows and ability to pay dividends, and you may lose all or part of your investment.
Such risks are not exhaustive. We may face additional risks that are presently unknown to us or that we believe to be immaterial as of the date of this annual report. Known and unknown risks and uncertainties may significantly impact and impair our business operations through our subsidiaries in Hong Kong.
Risk Factors Summary
Our business is subject to numerous risks described in the section titled “Risk Factors” and elsewhere in this annual report. The main risks set forth below and others you should consider are discussed more fully in the section entitled “Risk Factors”, which you should read in its entirety.
Risks Relating to Our Business and Operations
| ● | If we fail to manage and expand our relationships with suppliers of luxury watches, or otherwise fail to procure products on favorable terms and quality, our business, financial condition, and results of operations may be materially and adversely affected. |
| ● | We do not have direct contractual or business relationships with luxury watch brand owners, and as a result we may face legal risks from potential liability for goods sold by us, outside brand owners’ authorized distribution channels and potential claims related to “parallel import” activities, and we may also face commercial risks from actions by luxury brand owners. |
| ● | We depend on a small number of clients to derive a significant portion of our revenues and the loss of any of these clients could have a material adverse effect on our business. |
| ● | We rely on a limited number of vendors for a significant portion of our purchases, and the loss of any of these vendors could have a material adverse effect on our business. |
| ● | We may be exposed to credit risks in relation to defaults from customers. |
| ● | We trade worldwide and as such are exposed to currency fluctuation risks. |
| ● | We are exposed to interest rate risks. |
| ● | If we fail to manage our inventory effectively, the results of operations, financial condition and liquidity may be materially and adversely affected. |
| ● | Any changes or disruption in our shipping arrangements or any interruptions in shipping could adversely affect our results of operations. |
| ● | We are subject to credit risk in relation to the collectability of our trade receivables from customers. |
| ● | Our holdings of bitcoin expose us to risks associated with digital assets, including price volatility, evolving regulatory and tax treatment, and risks relating to the custody and security of such assets, any of which could materially and adversely affect our financial condition and results of operations. |
3
| ● | If we or our third-party service providers experience a security breach or cyberattack and unauthorized parties obtain access to our digital assets, or if our private keys are lost or destroyed, or other similar circumstances or events occur, we may lose some or all of our digital assets and our financial condition and results of operations could be materially adversely affected. |
| ● | We face risks relating to the custody of our digital assets, including the loss or destruction of private keys required to access our digital assets and cyberattacks or other data loss relating to our digital assets. |
| ● | Regulatory change reclassifying bitcoin as a security could lead to our classification as an “investment company” under the Investment Company Act of 1940 and could adversely affect the market price of bitcoin and the market price of our listed securities. |
| ● | If we are deemed an “investment company” under the Investment Company Act of 1940, it could adversely affect the price of our shares, could constrain our future activities, and could materially and adversely affect our business, results of operations, and financial condition. |
| ● | We may incur liability or become subject to claims or penalties for counterfeit, infringing, illegal or stolen products inadvertently sold by us or through us, and our reputation and results of operations could be materially and adversely affected. |
| ● | We depend on our in-house team of trained experts, to ensure the authenticity of the luxury watches we sell. If we fail to identify counterfeit goods or it is unable to recruit and train qualified professionals for quality control and assurance, our business may be materially and adversely affected. |
| ● | Our revenue flow is subject to seasonality and a variety of factors. |
| ● | We may implement business strategies and future plans that may not be successful. |
| ● | Any harm to our brand or reputation may materially and adversely affect our business and results of operations. |
| ● | Our business depends to a significant extent upon general economic conditions, consumer demand, preferences and discretionary spending patterns, we may be adversely affected if our customers’ purchasing patterns change due to negative economic trends. |
| ● | We are affected by the macroeconomic, political, regulatory, social and other factors beyond our control mainly in Hong Kong. |
| ● | Acts of God, acts of war, epidemics and other disasters could materially and adversely affect our business. |
| ● | Any future occurrence of force majeure events, natural disasters or outbreaks of contagious diseases, including the COVID-19 outbreak, may materially and adversely affect our business, financial conditions and results of operations. |
| ● | Failure to comply with cybersecurity, data privacy, data protection, or any other laws and regulations related to data may materially and adversely affect our business, financial condition, and results of operations. |
4
| ● | We are dependent on our senior management team and other key employees, and the loss of any such personnel could materially and adversely affect our business, operating results and financial conditions. |
| ● | Our management team lacks experience in managing a U.S. public company and complying with laws applicable to such company, the failure of which may adversely affect our business, financial condition and results of operations. |
| ● | Our lack of effective internal controls over financial reporting may affect our ability to accurately report our financial results or prevent fraud which may affect the market for and price of our Ordinary Share. |
| ● | We are subject to risks relating to litigation and disputes, which could adversely affect our business, prospects, results of operations and financial conditions, and may face significant liabilities as a result. |
| ● | We may grow, in part, through acquisitions, which involve various risks, and we may not be able to identify or acquire companies consistent with our growth strategy or successfully integrate acquired businesses into our operations. |
| ● | We may not be able to obtain finance from time to time to fund our operations and maintain growth. |
Risks Related to Doing Business in Hong Kong
| ● | All of our operations are in Hong Kong. However, due to the long arm application of the current PRC laws and regulations, the PRC government may exercise significant direct oversight and discretion over the conduct of our business and may intervene or influence our operations, which could result in a material change in our operations and/or the value of our Ordinary Shares. Our Operating Subsidiary in Hong Kong may be subject to the PRC laws and regulations, which may impair our ability to operate profitably and result in a material negative impact on our operations and/or the value of our Ordinary Shares. Furthermore, the changes in the policies, regulations, rules, and the enforcement of the PRC laws and regulations may also occur quickly with little advance notice and our assertions and beliefs of the risk imposed by the PRC legal and regulatory system cannot be certain. |
| ● | There remain some uncertainties as to whether we will be required to obtain approvals from the PRC authorities to list on the U.S. exchanges and offer securities in the future, and if required, we cannot assure you that we will be able to obtain such approval. We may become subject to a variety of PRC laws and other obligations regarding data security in relation to offerings that are conducted overseas and/or foreign investment in Mainland China-based issuers, and any failure to comply with applicable laws and obligations could have a material and adverse effect on our business, financial condition and results of operations and may hinder our ability to offer or continue to offer Ordinary Shares to investors and cause the value of our Ordinary Shares to significantly decline or be worthless. |
| ● | Compliance with Hong Kong’s Personal Data (Privacy) Ordinance and any such other existing or future data privacy related laws, regulations and governmental orders may entail significant expenses and could materially affect our business. |
| ● | If the PRC government chooses to extend the oversight and control over offerings that are conducted overseas and/or foreign investment in Mainland China-based issuers to Hong Kong-based issuers, such action may significantly limit or completely hinder our ability to offer or continue to offer Ordinary Shares to investors and cause the value of our Ordinary Shares to significantly decline or be worthless. |
| ● | The enforcement of laws and rules and regulations in the PRC can change quickly with little advance notice. Additionally, the PRC laws and regulations and the enforcement of such that apply or are to be applied to Hong Kong can change quickly with little or no advance notice. As a result, the Hong Kong legal system embodies uncertainties which could limit the availability of legal protections, which could result in a material change in our Operating Subsidiary’ operations and/or the value of the securities we are offering. |
| ● | The enactment of the law of the PRC on Safeguarding National Security in the Hong Kong Special Administrative Region (the “Hong Kong National Security Law”) could impact our Hong Kong subsidiaries, which represent substantially all of our business. |
| ● | Political risks, including the potential imposition of tariffs, could have an adverse impact on our business operations in Hong Kong. |
| ● | Because our business is conducted in Hong Kong dollars and the price of our Ordinary Shares is quoted in United States dollars, changes in currency conversion rates may affect the value of your investments. |
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Risks Relating to Our Corporate Structure
| ● | Our corporate actions are substantially controlled by our controlling shareholder which will have the ability to control or exert significant influence over important corporate matters that require approval of shareholders, and which may deprive you of an opportunity to receive a premium for your Ordinary Shares and materially reduce the value of your investment. |
| ● | Our current corporate structure involves unique risks to investors. |
| ● | We rely on dividends and other distributions on equity paid by our subsidiaries to fund any cash and financing requirements we may have. In the future, funds may not be available to fund operations or for other uses outside of Hong Kong, due to interventions in, or the imposition of restrictions and limitations on, our ability or our subsidiary by the PRC government to transfer cash. Any limitation on the ability of our subsidiaries to make payments to us could have a material adverse effect on our ability to conduct our business and might materially decrease the value of our Ordinary Shares or cause them to be worthless. |
| ● | The enforcement of foreign civil liabilities in the Cayman Islands and Hong Kong is subject to certain conditions. Therefore, certain judgments obtained against us by our shareholders may be difficult or impossible to enforce in such jurisdictions. |
Risks Related to our Ordinary Shares
| ● | Our Ordinary Shares may be prohibited from being traded on a national exchange under the Holding Foreign Companies Accountable Act if the PCAOB is unable to inspect our auditors. The delisting of our Ordinary Shares, or the threat of their being delisted, may materially and adversely affect the value of your investment. Furthermore, on June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act, which was signed into law on December 29, 2022, amending the HFCAA to require the SEC to prohibit an issuer’s securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three. |
| ● | We may experience extreme stock price volatility unrelated to our actual or expected operating performance, financial condition or prospects, making it difficult for prospective investors to assess the rapidly changing value of our Ordinary Shares. |
| ● | If we cannot satisfy, or continue to satisfy, the continued listing requirements and other rules of Nasdaq Capital Market, although we are exempt from certain corporate governance standards applicable to US issuers as a Foreign Private Issuer, our Ordinary Shares may be delisted, which could negatively impact the price of our Ordinary Shares and your ability to sell them. |
| ● | As a company incorporated in the Cayman Islands, we are permitted to adopt certain Cayman Islands’ practices in relation to corporate governance matters that differ significantly from the Nasdaq listing standards; these practices afford less protection to shareholders than they would enjoy if we complied fully with the Nasdaq listing standards. |
| ● | We may lose our foreign private issuer status in the future, which could result in significant additional costs and expenses. |
| ● | We incurred increased costs as a result of being a public company, particularly after we cease to qualify as an emerging growth company. |
| ● | There can be no assurance that we will not be a passive foreign investment company, or PFIC, for United States federal income tax purposes for any taxable year, which could subject United States investors in our Ordinary Shares to significant adverse United States income tax consequences. |
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Risks Relating to Our Business and Operations
If we fail to manage and expand our relationships with suppliers of luxury watches, or otherwise fail to procure products on favorable terms and quality, our business, financial condition, and results of operations may be materially and adversely affected.
We source substantially all luxury watch items from both authorized or independent watch distributors, luxury watch wholesaler, or dealers worldwide. Maintaining stable relationships with these suppliers is important to the growth of our business. In particular, we depend on our ability to procure products on favorable pricing terms. Our current suppliers network allows us to select the best prices and quality watches for our operation. However, there is no guarantee that the volume of supplies and stability will continue in the future. If we receive fewer offers from our suppliers than in the past, we may be unable to maintain stable inventory levels, which could hinder our ability to promptly supply the watches our customers desire. This could adversely affect our business operations and financial performance.
We enter the spot purchase order with our supplier on an order-by-order basis, specifying the model, quantity, and method of payment, but do not have long-term agreements or supply arrangement with any of such suppliers. We may be subject to price fluctuations due to a lack of long-term supply arrangements, and we cannot assure you that our current suppliers will continue to supply the luxury watch products to us on commercially acceptable terms, if at all. In the event that we are not able to source luxury watches at favorable prices, our revenue and cost of revenue may be materially and adversely affected. If we are unable to develop and maintain good relationships with suppliers that would allow us to obtain a sufficient amount and variety of luxury watches on commercially acceptable terms, it may inhibit our ability to offer sufficient products sought by luxury watch buyers, or to offer these products at competitive prices. Any adverse developments in our relationships with our suppliers, as well as with merchants and individual sellers on our marketplaces, could materially and adversely affect our business and growth prospects. Even if we maintain good relations with our suppliers, their ability to supply products to us in sufficient quantity and at competitive prices may be adversely affected by changes in their relationship with brand owners of the watches, economic conditions, labor unrest, regulatory or legal decisions, natural disasters or other contingencies. Furthermore, any inability of a manufacturer or supplier to ship the time pieces in a timely manner or to meet our quality standards could result in the temporary suspension of certain model of watches we offered, refund, or loss of customers, any of which could have a material adverse effect on our revenues. Any such delay or interruption could have a material adverse effect on our business, prospects, financial condition, and results of operations.
We do not have direct contractual or business relationships with luxury watch brand owners, and as a result we may face legal risks from potential liability for goods sold by us, outside brand owners’ authorized distribution channels and potential claims related to “parallel import” activities, and we may also face commercial risks from actions by luxury brand owners.
We do not have direct contractual or business relationships with watch brand owners. Instead, we source watches primarily from authorized distributors, independent watch dealers, and watch wholesalers in various countries. The contractual arrangements between some luxury brand owners and certain of our suppliers could contain restrictions on the price, geographic region and manner in which goods may be resold. We also source luxury goods through distribution channels outside the control of brand owners, which are often referred to as “parallel imports.” We believe that the import and sale of parallel import goods is generally permitted under the laws and regulations of the primary jurisdictions in which we operate, subject to certain exceptions. Section 20(2) of the Trade Marks Ordinance (Chapter 559 of the laws of Hong Kong) (“TMO”) provides that, once a piece of goods bearing a registered trade mark has been put on the market anywhere in the world by the owner or with his consent (whether express or implied or conditional or unconditional), the registered trade mark in respect of such goods is not infringed unless (i) the condition of the goods has been changed or impaired after they have been put on the market and (ii) the use of the registered trade mark in relation to those goods is detrimental to the distinctive character or repute of the trade mark. If we fail to adequately inspect the watches for defects before sale, we may fall within the exceptions outlined above and risk infringing on the registered trade mark. Considering our strict quality control procedure, and our intention to uphold and enhance the watch brands, we do not believe that our business is likely to fall within the exceptions outlines above. However, if our sourcing from any supplier is in violation of contractual arrangements with brand owners or legal restrictions on parallel import activities, we could be subject to claims of intellectual property rights infringement, tortious interference or inducement of contract breach, among others, and face significant liabilities. Any such perception that we are a parallel importer may undermine our reputation among buyers and sellers of luxury goods.
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We are also subject to the commercial risks that brand owners may instruct our suppliers not to sell goods to us or may cease selling goods to our suppliers completely or in sufficient quantities to meet our sourcing needs. In particular, brand owners may object to our pricing practices, especially the discounts to the retail prices fixed or suggested by brand owners. If we are successful in increasing the scale of our business and become more prominent in the luxury watch industry, the risk that brand owners may take legal or commercial action against us or our suppliers may increase. Any such actions could harm our reputation and adversely impact our product offerings, which could have a material and adverse effect on our results of operations and growth prospects.
We might in the future receive claims alleging that sales of luxury goods by us are not through brand owners’ authorized distribution channels. Irrespective of the validity of such claims, we could incur significant costs and effort in either defending or settling such claims, which could divert our management’s attention from day-to-day operations. If a successful claim is made against us, we might be required to pay substantial damages or refrain from further sale of the relevant products. Regardless of whether we successfully defend against such claims, we could suffer negative publicity, our reputation could be severely damaged, and our product offerings could be significantly reduced. Any of these events could have a material and adverse effect on our business, results of operations or financial condition.
We depend on a small number of clients to derive a significant portion of our revenues and the loss of any of these clients could have a material adverse effect on our business.
We receive a significant portion of our net revenues from a limited number of major clients. For the year ended December 31, 2025, there were two customers each generating over 10% of our total revenue for the year, and they in aggregate accounted for approximately 37% of our total revenue for the year. For the year ended December 31, 2024, there were two customers each generating over 10% of our total revenue for the year, and they in aggregate accounted for approximately 33% of our total revenue for the year. For the year ended December 31, 2023, there were three customers each generating over 10% of our total revenue for the year, and they in aggregate accounted for approximately 40% of our total revenue for the year. Although our business does not heavily depend on any single client, the loss of one or more of these clients, or a significant reduction in the volume of their purchases, could materially and adversely affect our business and financial performance in the short term. This is particularly because we do not have long-term agreements with these clients; instead, sales are made on an order-by-order basis. Consequently, there is no guarantee that these clients will continue to make purchases from us at current levels, or at all. Additionally, due to the concentration of revenues from a limited number of customers, if we do not receive the payments expected from any of these clients, our revenue, financial condition and results of operations will be negatively and materially impacted in the short term.
Historically, we have been able to retain a longstanding and well-established relationship with our customers. While we are confident in our ability to continue attracting new customers and adapting to evolving market conditions, any inability to retain or replace key customers could have a material adverse effect on our business, results of operations, and financial condition.
We rely on a limited number of vendors for a significant portion of our purchases, and the loss of any of these vendors could have a material adverse effect on our business.
Although we operate as a watch trading company, we purchase a significant portion of our supplies from a few major vendors. For the year ended December 31, 2025, four vendors accounted for 10% or more of the Group’s total purchase. Total purchase from these four vendors accounted for 31%, 18%, 13% and 11% of the Group’s total purchase, respectively. For the year ended December 31, 2024, three vendors accounted for 10% or more of the Group’s total purchase. Total purchase from these three vendors accounted for 25% and 18% and 10% of the Group’s total purchase, respectively. For the year ended December 31, 2023, two vendors accounted for 10% or more of the Group’s total purchase. Total purchase from these two vendors accounted for 64% and 14% of the Group’s total purchase, respectively. While we receive numerous offers daily from authorized dealers, distributors, and brand owners worldwide, and while these offers may be comparable to those from our existing vendors, the specific terms would need to be renegotiated if we want to engage with new vendors. Although identifying alternative vendors will not pose a significant challenge, losing one or more key vendors could lead to short-term difficulties, such as negotiating favorable terms or pricing with new suppliers. We believe that over the long term, we will be able to find alternative vendors without significant disruption to our operations.
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Historically, we have been able to retain good relationships with our vendors, which has supported the stability of our supply chain. However, there is no guarantee that we will be able to maintain these relationships or secure new vendors on similarly favorable terms if one or more of these key vendors were to cease supplying to us. A loss of a major vendor could lead to higher costs in the near term, which could negatively impact our profit margins until alternative arrangements are secured.
We may be exposed to credit risks in relation to defaults from customers.
Our exposure to credit risk may be influenced mainly by the individual characteristics of each customer and may be concentrated on few numbers of customers. As of December 31, 2025, there was one customer whose receivables accounted for 10% or more of the Group’s total balances of accounts receivable and accounted for 98% of the total balances of accounts receivables. As of December 31, 2024, there was no customer whose receivables accounted for 10% or more of the Group’s total balances of accounts receivable. As of December 31, 2023, there was one customer whose receivables accounted for 10% or more of the Group’s total balances of accounts receivable and it accounted for 98% of the total balances of accounts receivables. Although we will monitor our exposure to credit risk on an ongoing basis and make periodic judgment on impairment of overdue receivables based on the likelihood of collectability, we cannot assure you that all of our customers are creditworthy and reputable and will not default on payments in the future. If we encounter significant delays or defaults in payment by our customers or are otherwise unable to recover our accounts receivables, our cash flow, liquidity and financial condition may be materially and adversely affected.
We trade worldwide and as such are exposed to currency fluctuation risks.
As a watch trading company receiving offers from all over the world, currency fluctuations play a significant role in our transactions. The exchange rate at the time of order placement directly affects the cost of our inventory. Volatile currency rates can lead to unpredictable costs and profit margins, as we must pay based on the currency rate of the day. Adverse movements in exchange rates could increase our expenses, reduce our profitability, and create financial instability. This exposure to currency risk could materially and negatively impact our business operations and financial condition.
We are exposed to interest rate risks.
As of December 31, 2025, 2024 and 2023, we had outstanding bank loans of approximately US$4.2 million, US$5.2 million and US$5.8 million, respectively. The Group is exposed to floating interest rate risk on bank borrowings, particularly during periods when the interest rate is expected to significant changes. On the other hand, the deposited cash raised by our fundraising generates interest income, and it is also exposed to floating interest rate risk. We have not been exposed to material risks due to changes in interest rates. An increase, however, may raise the cost of any debt we incur presently and, in the future, and result in an adverse impact on our income.
If we fail to manage our inventory effectively, the results of operations, financial condition and liquidity may be materially and adversely affected.
Our business often requires us to manage a high volume of valuable inventory effectively. We depend on our forecasts of demand for and popularity of our products to make purchase decisions and to manage our inventory. Demand for products, however, can change significantly between the time inventory or components are ordered and the date of sale. The demand for the watches we sell is highly dependent on the end customers’ preferences for our watches, which are beyond our control.
Demand may be affected by seasonality, new product launches, rapid changes in product cycles and pricing, product defects, changes in consumer spending patterns, changes in consumer tastes with respect to our products and other factors, and our customers may not order products in the quantities that we expect. It may be difficult to accurately forecast demand and determine the appropriate product or component to be in inventory. If we cannot manage to source appropriate products to suit the consumer preference and market trends in the future, the volume of obsolete and slow-moving inventory may increase and we may need to either sell off such inventory at a lower price or write off such inventory. If we fail to manage our inventory effectively or negotiate favorable credit terms with suppliers, we may be subject to a decline in inventory values, and significant inventory write-downs or write-offs. If we are required to lower sale prices to reduce inventory level or to pay higher prices to our suppliers in order to secure the right to return products to our suppliers, our profit margins might be negatively affected. Any of the above may materially and adversely affect the results of operations and financial condition.
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Any changes or disruption in our shipping arrangements or any interruptions in shipping could adversely affect our results of operations.
We primarily rely international and domestic courier and logistic companies for the shipping from the suppliers, DHL, FedEx, UPS, or SF Express. If we are not able to negotiate acceptable pricing and other terms with these entities, if they significantly increase their shipping charges or they experience performance difficulties, including as a result of the pandemic, natural disaster, force majeure events, or other difficulties, it could negatively impact our results of operations and our customer experience. In addition, our ability to receive inbound inventory efficiently and ship merchandise to customers may be negatively affected by the pandemic and related response measures, inclement weather, fire, flood, power loss, earthquakes, labor disputes, acts of war or terrorism, trade embargoes and similar factors. For example, strikes at major international shipping ports may in the future impact our supply of inventory from our supply partners, and the escalating trade disputes between the United States, the European Union, China and certain other regions could lead to increased tariffs on our goods and restrict the flow of the goods between the United States the European Union. We are also subject to risks of damage or loss during delivery by our shipping vendors. Any of these factors could result in reduced sales or canceled orders, which may limit our growth and damage our reputation. If our merchandise is not delivered in a timely fashion or is damaged or lost during the delivery process, our customers could become dissatisfied and cease shopping on our sites, which would have a material adverse effect on our business, financial condition, results of operations and prospects.
We are subject to credit risk in relation to the collectability of our trade receivables from customers.
We usually do not offer a credit period to our customers; customers are required to make payment in advance or pay upon delivery. Under some circumstances, customers may settle the sales proceeds after delivery, but the aging of such receivables would normally be less than 30 days. We cannot assure you that our customers will make payment in full to us on a timely basis. Delays in receiving payments from or non-payment by our customers may result in pressure on our cash flow position and our ability to meet our working capital requirements. Our liquidity and cash flows from operations may be materially and adversely affected if our collection periods lengthen further or if we encounter any material defaults of payment, or provisions for impairment, of our trade receivables from customers. Should these events occur, we may be required to obtain working capital from other sources, such as from third-party financing, in order to maintain our daily operations, and such financing from outside sources may not be available at acceptable terms or at all.
Our holdings of bitcoin expose us to risks associated with digital assets, including price volatility, evolving regulatory and tax treatment, and risks relating to the custody and security of such assets, any of which could materially and adversely affect our financial condition and results of operations.
Our digital asset holding strategy exposes us to various risks, including the following. Bitcoin is a highly volatile asset. Bitcoin is a highly volatile asset that has traded below US$65,000 per bitcoin and above US$120,000 per bitcoin on the Coinbase exchange. The trading price of bitcoin significantly decreased during prior periods, and such declines may occur again in the future. Bitcoin does not pay interest or dividends. Bitcoin does not pay interest or other returns and we can only generate cash from our bitcoin holdings if we sell our bitcoin or implement strategies to create income streams or otherwise generate cash by using our bitcoin holdings. Even if we pursue any such strategies, we may be unable to create income streams or otherwise generate cash from our bitcoin holdings, and any such strategies may subject us to additional risks.
We are subject to counterparty risks, including in particular risks relating to our custodians. Although we have implemented various measures that are designed to mitigate our counterparty risks, including by storing substantially all of the bitcoin we own in custody accounts at institutional-grade custodians, applicable insolvency law is not fully developed with respect to the holding of digital assets in custodial accounts. If our custodially-held bitcoin were nevertheless considered to be the property of our custodians’ estates in the event that any such custodians were to enter bankruptcy, receivership or similar insolvency proceedings, we could be treated as a general unsecured creditor of such custodians, inhibiting our ability to exercise ownership rights with respect to such bitcoin, or delaying or hindering our access to our bitcoin holdings, and this may ultimately result in the loss of the value related to some or all of such bitcoin, which could have a material adverse effect on our financial condition as well as the market price of our listed securities.
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The broader digital assets industry is subject to counterparty risks, which could adversely impact the adoption rate, price, and use of bitcoin. A series of high-profile bankruptcies, closures, liquidations, regulatory enforcement actions and other events relating to companies operating in the digital asset industry in recent years have highlighted the counterparty risks applicable to owning and transacting in digital assets. Although these bankruptcies, closures, liquidations and other events have not resulted in any loss or misappropriation of our bitcoin, nor have such events adversely impacted our access to our bitcoin, they have, in the short-term, likely negatively impacted the adoption rate and use of bitcoin. Additional bankruptcies, closures, liquidations, regulatory enforcement actions or other events involving participants in the digital assets industry in the future may further negatively impact the adoption rate, price, and use of bitcoin, limit the availability to us of financing collateralized or with asset coverage provided by bitcoin, or create or expose additional counterparty risks.
The broader digital assets industry, including the technology associated with digital assets, the rate of adoption and development of, and use cases for, digital assets, market perception of digital assets, and the legal, regulatory, and accounting treatment of digital assets are constantly developing and changing, and there may be additional risks in the future that are not possible to predict.
If we or our third-party service providers experience a security breach or cyberattack and unauthorized parties obtain access to our digital assets, or if our private keys are lost or destroyed, or other similar circumstances or events occur, we may lose some or all of our digital assets and our financial condition and results of operations could be materially adversely affected.
Substantially all of the digital assets we own is held in custody accounts at institutional-grade digital asset custodians. Security breaches and cyberattacks are of particular concern with respect to our digital assets. Bitcoin and other blockchain-based cryptocurrencies and the entities that provide services to participants in the bitcoin ecosystem have been, and may in the future be, subject to security breaches, cyberattacks, or other malicious activities. For example, in October 2021 it was reported that hackers exploited a flaw in the account recovery process and stole from the accounts of at least 6,000 customers of the Coinbase exchange, although the flaw was subsequently fixed and Coinbase reimbursed affected customers. Similarly, in November 2022, hackers exploited weaknesses in the security architecture of the FTX Trading digital asset exchange and reportedly stole over US$400 million in digital assets from customers. In 2025, Coinbase reported that criminals bribed certain of its non-U.S. employees to steal customer data to use in social engineering attacks. A successful security breach or cyberattack could result in:
| ● | a partial or total loss of our bitcoin in a manner that may not be covered by insurance or the liability provisions of the custody agreements with the custodians who hold our bitcoin; |
| ● | harm to our reputation and brand; |
| ● | improper disclosure of data and violations of applicable data privacy and other laws; or |
| ● | significant regulatory scrutiny, investigations, fines, penalties, and other legal, regulatory, contractual and financial exposure. |
Further, any actual or perceived data security breach or cybersecurity attack directed at other companies with digital assets or companies that operate digital asset networks, regardless of whether we are directly impacted, could lead to a general loss of confidence in the broader Bitcoin blockchain ecosystem or in the use of the Bitcoin network to conduct financial transactions, which could negatively impact us.
Attacks upon systems across a variety of industries, including industries related to bitcoin, are increasing in frequency, persistence, and sophistication, and, in many cases, are being conducted by sophisticated, well-funded and organized groups and individuals, including state actors. Emerging technologies, such as AI-driven cyberattacks and the potential for quantum computing, could introduce new vulnerabilities in our systems, potentially rendering traditional cryptographic techniques less effective and exposing us to more sophisticated forms of cyberattacks. The techniques used to obtain unauthorized, improper or illegal access to systems and information (including personal data and digital assets), disable or degrade services, or sabotage systems are constantly evolving, may be difficult to detect quickly, and often are not recognized or detected until after they have been launched against a target. Novel methods, such as those utilizing AI or quantum computing, may be even more difficult to detect and defend against. These attacks may occur on our systems or those of our third-party service providers or partners. We may experience breaches of our security measures due to human error, malfeasance, insider threats, system errors or vulnerabilities or other irregularities. In particular, unauthorized parties have attempted, and we expect that they will continue to attempt, to gain access to our systems and facilities, as well as those of our partners and third-party service providers, through various means, such as hacking, social engineering, phishing and fraud. Threats can come from a variety of sources, including criminal hackers, hacktivists, state-sponsored intrusions, industrial espionage, and insiders. In addition, certain types of attacks could harm us even if our systems are left undisturbed. For example, certain threats are designed to remain dormant or undetectable, sometimes for extended periods of time, or until launched against a target and we may not be able to implement adequate preventative measures. The risk of cyberattacks could also be increased by cyberwarfare in connection with geopolitical conflicts, such as the ongoing Russia-Ukraine conflict, including potential proliferation of malware into systems unrelated to such conflicts.
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We face risks relating to the custody of our digital assets, including the loss or destruction of private keys required to access our digital assets and cyberattacks or other data loss relating to our digital assets.
We hold our digital assets with regulated custodians that have duties to safeguard our private keys. Our digital assets holdings may be concentrated with a single custodian from time to time, which may enhance our risk of losses. If there is a decrease in the availability of digital asset custodians that we believe can safely custody our digital assets, for example, due to regulatory developments or enforcement actions that cause custodians to discontinue or limit their services in the United States, we may need to enter into agreements that are less favorable than our current agreements or take other measures to custody our digital assets, and our ability to seek a greater degree of diversification in the use of custodial services would be materially adversely affected.
The insurance policies maintained by our custodians are shared among all of such custodian’s customers and are not specific to us, and there can be no guarantee that such insurance will be maintained as part of the custodial services available to us, or that such coverage will be available or sufficient to cover losses with respect to our digital assets. Additionally, we do not maintain separate insurance to cover our potential digital assets losses. Furthermore, our custodians are not members of the Federal Deposit Insurance Corporation (“FDIC”) or Securities Investor Protection Corporation (“SIPC”) and, therefore, deposits held with or assets held by the custodians are not subject to protections available to depositors with FDIC or SIPC member institutions. Moreover, our use of custodians exposes us to the risk that the digital assets our custodians hold on our behalf could be subject to insolvency proceedings and we could be treated as a general unsecured creditor of the custodian, inhibiting our ability to exercise ownership rights with respect to such digital assets. Any loss associated with such insolvency proceedings is unlikely to be covered by the insurance coverage our custodians maintain related to our digital assets.
Bitcoin is controllable only by the possessor of both the unique public key and private key(s) relating to the local or online digital wallet in which the bitcoin is held. While the Bitcoin blockchain ledger requires a public key relating to a digital wallet to be published when used in a transaction, private keys must be safeguarded and kept private in order to prevent a third party from accessing the bitcoin held in such wallet. To the extent the private key(s) for a digital wallet are lost, destroyed, or otherwise compromised and no backup of the private key(s) is accessible, neither we nor our custodians will be able to access the bitcoin held in the related digital wallet. Furthermore, we cannot provide assurance that our digital wallets, nor the digital wallets of our custodians held on our behalf, will not be compromised as a result of a cyberattack. The bitcoin and blockchain ledger, as well as other digital assets and blockchain technologies, have been, and may in the future be, subject to security breaches, cyberattacks, or other malicious activities.
Regulatory change reclassifying bitcoin as a security could lead to our classification as an “investment company” under the Investment Company Act of 1940 and could adversely affect the market price of bitcoin and the market price of our listed securities.
We hold digital assets on our balance sheets. While senior SEC officials have stated their view that bitcoin is not a “security” for purposes of the federal securities laws, a contrary determination by the SEC could lead to our classification as an “investment company” under the Investment Company Act of 1940, as amended, which would subject us to significant additional regulatory controls that could have a material adverse effect on our ability to execute on our bitcoin strategy, and our business and operations, and may also require us to substantially change the manner in which we conduct our business. In addition, if bitcoin is determined to constitute a security for purposes of the federal securities laws, the additional regulatory restrictions imposed by such a determination could adversely affect the market price of bitcoin and in turn adversely affect the market price of our listed securities.
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If we are deemed an “investment company” under the Investment Company Act of 1940, it could adversely affect the price of our shares, could constrain our future activities, and could materially and adversely affect our business, results of operations, and financial condition.
We do not believe that we are an “investment company” and we do not intend to become registered as an “investment company” under the U.S. Investment Company Act of 1940, or the 1940 Act. Certain of our assets and other future holdings may be deemed to be “investment securities” within the meaning of the 1940 Act. Under the 1940 Act, a company is deemed to be an “investment company” if it is engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting, owning, holding, or trading in securities. We do not hold ourselves out as being primarily engaged, or proposing to engage primarily, in the business of investing, reinvesting or trading in securities.
We seek to conduct our operations so that we do not meet the definition of “investment company” under the 1940 Act. Doing so may require us to forego potential future acquisitions of interests in companies that may be deemed to be “investment securities” within the meaning of the 1940 Act. If we are unable to structure or operate our business in a manner that avoids investment company status under the 1940 Act, we may be deemed to be an investment company within the meaning of the 1940 Act. As a foreign private issuer, we would not be eligible to register under the 1940 Act unless the SEC issued an order permitting us to do so. As a result, if we are deemed to be an investment company within the meaning of the 1940 Act, we would either have to obtain exemptive relief from the SEC or dispose of investment securities in order to fall outside the definition of an investment company. Failure to avoid being deemed an investment company under the 1940 Act, coupled with our inability as a foreign private issuer to register under the 1940 Act, could make us unable to comply with our reporting obligations as a public company in the United States and lead to our being delisted from Nasdaq, which would materially and adversely affect the liquidity and value of the shares. We would also be unable to raise capital through the sale of securities in the United States. In addition, we may be subject to SEC enforcement action or purported class action lawsuits for alleged violations of U.S. securities laws. Defending ourselves against any such enforcement action or lawsuits would require significant attention from our management and divert resources from our existing businesses and could materially and adversely affect our business, results of operations, and financial condition.
We may incur liability or become subject to claims or penalties for counterfeit, infringing, illegal or stolen products inadvertently sold by us or through us, and our reputation and results of operations could be materially and adversely affected.
We purchase the luxury watches we sell from a variety of suppliers and distribution methods, so are subject to the risk that counterfeit, infringing, illegal or stolen goods could be sold through us. We have taken steps to prevent potential violation of third parties’ intellectual property rights while sourcing and selling products, as well as to confirm the authenticity of the watch sold by us and we reject items we believe to be counterfeit. We also conduct due diligence on our suppliers and have quality control procedures in place to ensure and verify that luxury watches and product sold through us are authentic. However, these measures may not always be successful. We cannot assure you that we are able to identify any and all unauthorized, counterfeit or illegal products, given the large number of luxury watches being inspected.
Manufacturers and distributors of counterfeit goods are also increasingly sophisticated, it may be increasingly difficult to identify counterfeit watches and their components, parts and accessories. To the date of this annual report, we have not encountered any issue regarding distributing counterfeit watches in the course of our business. In the event that counterfeit, unauthorized, or infringing products are sold by us or infringing content is posted by us, we could face claims that may subject us to liabilities. Any sale of counterfeit goods or the discovery of counterfeit products sold under our brand names and trademarks could significantly harm our reputation, cause existing or potential customers to refrain from making future purchases from us, which would materially and adversely affect our business operations and financial results, could result in brand owners making legal claims against us for infringement of trademark, copyright or other intellectual property rights. From time to time in the ordinary course of our business, buyers, brand owners or other third parties may allege that counterfeit products have been sold by us or through our platform. Any perception that our platform may contain counterfeit goods, even without merit, could have a material and adverse impact on our reputation.
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Furthermore, if we fail to identify any infringing or counterfeiting watches, including components and parts or accessories and such products are sold to purchasers, we risk facing infringement claims, which would also be bad for our reputation. Regardless of the truth of such accusations, we could have to spend a lot of money and time defending ourselves or settling them. We can be forced to pay significant damages if the lawsuit against us is found to be valid or stop marketing the relevant items. If we were to be held to have sold or facilitated the sale of counterfeit goods, potential legal sanctions may include injunctions to cease infringing activities, rectification, compensation, administrative penalties and even criminal liability, depending on the governing law and the seriousness of the misconduct. Moreover, such third-party claims or administrative penalties could result in negative publicity and our reputation could be severely damaged. In addition, stolen products that unknowingly sold by us could also result in negative publicity, and thus damage our reputation. Pursuant to the Hong Kong laws, we would be subject to criminal liability if we knowingly engage in any sale of stolen good that we sourced from other parties. We may implement further measures in an effort to strengthen our protection against these potential liabilities, which could require us to spend substantial resources or discontinue certain service offerings. Any costs incurred as a result of liability or asserted liability relating to the sale of unlawful goods or other infringement could harm our business.
We depend on our in-house team of trained experts, to ensure the authenticity of the luxury watches we sell. If we fail to identify counterfeit goods or it is unable to recruit and train qualified professionals for quality control and assurance, our business may be materially and adversely affected.
We believe that an important measure to maintain buyer confidence in the Top Win brand is to provide buyers with the assurance that the items they purchase are authentic. Our in-house team of appraisers and watch technicians authenticate all watches goods sold by us. Each time piece we sourced is authenticated and appraised. However, there can be no assurance that our in-house team of appraisers and watch technicians will identify all counterfeit goods and not certify such goods as genuine. Any failure by us to identify counterfeit goods could significantly harm our reputation and could result in brand owners making legal claims for infringement of trademark, copyright or other intellectual property rights, which in turn could materially and adversely affect our results of operations and prospects.
As our business grows, we may need to retain additional watch technicians, and we could experience a backlog if we are unable to increase the size and efficiency of our watch technicians team as we grow. The market competition for experienced luxury goods authentication professionals, especially watch authentication, is intense, and there is no assurance that we will be able to hire and retain a sufficient number of professionals with the required experience on acceptable terms or that our training programs for new ateliers will be effective. Furthermore, counterfeiters and the products they produce are increasingly sophisticated, such that there can be no assurance that our technicians will be able to consistently differentiate between authentic and counterfeit goods. If we are unable to grow our team of watch technicians at the rate, and with the degree of sophistication, that we expect to require as our business grows, our authentication capabilities could be impacted, which could result in counterfeit or defective products being sold through us. Any of the foregoing could have a material and adverse effect on our business, results of operations and prospects.
Our revenue flow is subject to seasonality and a variety of factors.
Revenue fluctuations throughout the year are common for the watch industry which is subject to the seasonal and festival purchase patterns of consumers. Our sales vary from month to month and we generally record higher sales revenue during major holidays and summertime, such as Chinese New Year, Valentine’s Day, PRC Labor Festival, National Day and Christmas. Further, our revenue flow and periodical financial performance are also subject to a variety of factors, including changes in our products, the effectiveness of our inventory management, timing and effectiveness of our marketing activities, actions by our existing and new competitors, and employee motivation and effectiveness, among others. Accordingly, any comparison of sales and results of operations between different periods within a single financial year is not necessarily meaningful and cannot be relied on as indicators of our Group’s performance. Any seasonal fluctuations in the future may not match the expectations of investors and could cause fluctuations in the trading price of our Shares.
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We may implement business strategies and future plans that may not be successful.
The successful implementation of our business strategies and future plans depends on a number of factors including general market conditions, government policies, the availability of funds, competition and our ability to retain and recruit competent employees. There is no assurance that our business strategies and future plans can be implemented effectively and successfully, as some of these factors are beyond our control. If any implementation of these strategies and plans fails or is delayed, we may be adversely affected by investment expenses that have not led to the anticipated results, by the distraction of management from our core business or by damage to our brand or reputation. Additionally, if we fail to secure adequate funds in a timely manner, we may also be unable to pursue opportunities to expand our business.
Any harm to our brand or reputation may materially and adversely affect our business and results of operations.
Brand recognition and reputation are invaluable assets in the luxury goods market. We believe that the recognition and reputation of our Top Win brand among our customers, in particular, the luxury watch dealers, our suppliers, merchants and individual buyers have contributed significantly to the growth and success of our business. Maintaining and enhancing such brand recognition and reputation are critical to our business and competitiveness. Many factors, including those beyond our control, are important to maintaining and enhancing our brand. These factors include our ability to:
| ● | maintain the authenticity, quality and diversity of the products we offers in sufficient quantities; |
| ● | maintain the efficiency, reliability and security of our delivery and customer services systems; |
| ● | maintain or improve buyer satisfaction with our after-sale services; |
| ● | enhance brand awareness through marketing and brand promotion activities; |
| ● | maintain positive relationships with our suppliers, marketplace merchants, individual sellers and other service providers. |
| ● | preserve our reputation and goodwill in the event of any negative publicity involving our product authenticity and quality, customer service, or other issues affecting products we sell; |
Any public perception (i) that counterfeit watches or unauthorized or stolen watches are sold by us, (ii) that we, or our third-party service providers, do not provide satisfactory customer service or (iii) that we infringe upon any brand owners’ intellectual property rights could damage our reputation, diminish our brand value, undermine our credibility and adversely impact our business. If we are unable to maintain our reputation, enhance our brand recognition or increase positive awareness of our brand, products and services, we may be difficult to maintain and grow our customer base, and our business and growth prospects may be materially and adversely affected. We cannot assure you that any allegations, complaints and claims will not be made against us in the future. Any allegations, complaints or claims against us, regardless of their validity, could cause negative publicity, give rise to potential liability and adversely affect our reputation and the price of our shares. In addition, we may have to divert management and other resources to address relevant allegations, complaints or claims which may adversely affect our business and results of operations. If any complaint escalates to become a claim against us, even unsuccessful, we may have to divert resources to address the claim. In the event that our insurance coverage is inadequate, we may have to pay out of our own resources to compensate the personnel for any damages suffered if the court does not rule in our favor based on its interpretation of the facts of such claims and we are found to be at fault.
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Our business depends to a significant extent upon general economic conditions, consumer demand, preferences and discretionary spending patterns, we may be adversely affected if our customers’ purchasing patterns change due to negative economic trends.
Since we primarily trade luxury watches, our target customers are high-end clients whose purchase patterns are sensitive to economic trends. Our business is significant exposed to the volatility of the general economic conditions and reductions in disposable income levels and discretionary consumer spending. Consumers’ willingness to purchase luxury watches may fluctuate as a result of changes in national, regional or global economic conditions, disposable income, discretionary spending, lifestyle choices, public perception of life style, publicity and image of the watch we trade. Future economic conditions such as employment levels, business conditions, housing, interest rates, inflation rates, energy and fuel costs and tax rates could reduce consumer spending or change consumer purchasing habits. The demand for luxury watches may be adversely affected from time to time by economic downturns.
During economic downturns, high-end customers may become more cautious with their discretionary spending, opting to delay or reduce purchases of luxury items, including watches. This shift in consumer behavior could result in decreased demand for our products, negatively impacting our sales and revenue. Prolonged economic instability could further exacerbate this trend, challenging our ability to maintain our market presence and profitability. If the weak economy continues for a prolonged period of time or worsens, the consumers may choose to spend discretionary money less frequently which could result in a decline in consumers’ purchases of luxury items, consequently, the businesses of our customers. If our customers’ sales decrease, our profitability could decline. Moreover, if the negative economic conditions persist for an extended period of time, consumers might ultimately make long-lasting changes to their discretionary spending behavior, including their spending on watches. Accordingly, adverse changes to consumer preferences or consumer discretionary spending, each of which could be affected by many different factors which are out of our control, could harm our business, financial condition or results of operations. Our continued success will depend in part upon our ability to anticipate, identify and respond to changing economic and other conditions and the impact that they may have on discretionary consumer spending. If we fail to successfully adapt our business strategy, brand image and product portfolio to changes in market trends or shifts in consumer preferences and spending patterns, our business, financial conditions and results of operations may be materially and adversely affected.
We are affected by the macroeconomic, political, regulatory, social and other factors beyond our control mainly in Hong Kong.
Currently, our operations are mainly conducted in Hong Kong. We are affected by macroeconomic factors, such as general economic conditions, population growth, infrastructure development, and market sentiment which are in part, influenced by government spending, infrastructure spending, unemployment rates, real disposable income, inflation, recession, stock market performance, interest rate environment, regulatory policies, foreign investment, gross domestic product growth, business sentiment and economic outlook, all of which are beyond our control. Moreover, political and social stability, taxation, price and exchange control regulations, industry laws and regulations in Hong Kong. There is no assurance that such conditions will not develop in a manner that will have an adverse effect for our operations and financial performance.
Acts of God, acts of war, epidemics and other disasters could materially and adversely affect our business.
Our business is subject to the general and social conditions in Hong Kong and other jurisdictions in or to which the watches we are trading are made, distributed or bought. Natural disasters, epidemics, acts of God and other disasters that are beyond our control could adversely affect the economy, infrastructure and livelihood of the people of such jurisdictions. Our business, results of operations and financial conditions could be adversely affected if these natural disasters occur. Moreover, political unrest, wars and terrorist attacks may cause damage or disruption to us, our employees, suppliers or customers, any of which could adversely affect our business, results of operations, financial conditions or share price. Potential war or threat of terrorist attacks may also cause uncertainty and cause our business to suffer in ways that we cannot currently predict. We cannot control the occurrence of these catastrophic events and our business operations will at the times be subject to the risks of these uncertainties.
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Any future occurrence of force majeure events, natural disasters or outbreaks of contagious diseases, including the COVID-19 outbreak, may materially and adversely affect our business, financial conditions and results of operations.
Any future occurrence of force majeure events, natural disasters or outbreaks of epidemics and contagious diseases, including avian influenza, severe acute respiratory syndrome, H1N1 influenza, Ebola virus and the COVID-19 outbreak in Hong Kong, the PRC and other jurisdictions may materially and adversely affect our business, financial conditions and results of operations. An outbreak of an epidemic or contagious disease or other adverse public health developments in the world could result in a widespread health crisis and restrict the level of business activities in affected areas, which may, in turn, materially and adversely affect our business. We cannot assure you that any future occurrence of natural disasters or outbreaks of epidemics and contagious diseases, or the measures taken by the government of different countries in response to such contagious diseases will not seriously disrupt our operations or those of our customers or suppliers, which may materially and adversely affect our business, financial conditions and results of operations.
Failure to comply with cybersecurity, data privacy, data protection, or any other laws and regulations related to data may materially and adversely affect our business, financial condition, and results of operations.
We may be subject to a variety of cybersecurity, data privacy, data protection, and other laws and regulations related to data, including those relating to the collection, use, sharing, retention, security, disclosure, and transfer of confidential and private information, such as personal information and other data. These laws and regulations, such as the Data Protection Act (As Revised) of the Cayman Islands, apply not only to third-party transactions, but also to transfers of information within our organization, which relates to our investors, employees, contractors and other counterparties. These laws and regulations may restrict our business activities and require us to incur increased costs and efforts to comply, and any breach or non-compliance may subject us to proceedings against us, damage our reputation, or result in penalties and other significant legal liabilities, and thus may materially and adversely affect our business, financial conditions, and results of operations.
We are dependent on our senior management team and other key employees, and the loss of any such personnel could materially and adversely affect our business, operating results and financial conditions.
Our success is to a large extent attributable to our executive director’ strategies and visions as well as their involvement in key aspects of our business, including but not limited to the acquisition and maintenance of new and existing customer relationships, pricing of our products, and overall management of our operations. In addition, our sales team has contributed significantly to our past success. Their sensitivity to the trends of watch trading industry is essential to our business. Further, our team of executive officers and sales possess extensive industry contacts and knowledge and are familiar with our business operations and have established good relationships with our customers.
Our success and growth therefore depend on our ability to identify, hire, train and retain suitable, skilled and qualified key personnel. The loss of service of our executive officers, sales team, or other key personnel without suitable and timely replacements or the inability to attract and retain qualified management personnel, will materially and adversely affect our operations and financial performance.
Our management team lacks experience in managing a U.S. public company and complying with laws applicable to such company, the failure of which may adversely affect our business, financial condition and results of operations.
Our current management team lacks experience in managing a U.S. publicly traded company, interacting with public company investors and complying with the increasingly complex laws pertaining to U.S. public companies. Prior to the completion of our IPO, we were a private company mainly operating our businesses in Hong Kong. As a result of the IPO, our Company became subject to significant regulatory oversight and reporting obligations under the federal securities laws and the scrutiny of securities analysts and investors, and our management currently has limited experience in complying with such laws, regulations and obligations. Our management team may not successfully or efficiently manage our transition to becoming a U.S. public company. These new obligations and constituents will require significant attention from our senior management and could divert their attention away from the day-to-day management of our business, which could adversely affect our business, financial condition and results of operations.
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Our lack of effective internal controls over financial reporting may affect our ability to accurately report our financial results or prevent fraud which may affect the market for and price of our Ordinary Share.
To implement Section 404 of the Sarbanes-Oxley Act of 2002, the SEC adopted rules requiring public companies to include a report of management on our internal control over financial reporting. Prior to the initial public filing, we were a group of private companies with limited accounting personnel and other resources for addressing our internal control over financial reporting. Our management has completed an assessment of the effectiveness of our internal control over financial reporting and our independent registered public accounting firm has not conducted an audit of our internal control over financial reporting. However, in connection with the audits of our consolidated financial statements for the years ended December 31, 2025, 2024 and 2023, we identified material weaknesses in our internal control over financial for the above mentioned periods. As defined in the standards established by the PCAOB, a “material weakness” is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
Material weaknesses that have been identified are summarized as the followings: (1) our lack of appropriate levels of accounting knowledge and experience to address complex U.S. GAAP accounting issues and related disclosures, in accordance with U.S. GAAP and SEC financial reporting requirements; (2) our lack of an internal audit function to establish formal risk assessment process and internal control framework; and (3) our lack of proper IT control environment and the deficiencies identified in control areas including Logical Assess Management, Change Management, IT operation as well as Cyber Security Management.
We intend to implement measures designed to improve our internal control over financial reporting to address the underlying causes of these material weaknesses, including: (i) recruiting additional full-time employees and external consultants with extensive knowledge of U.S. GAAP within our finance and accounting department; (ii) conducting regular and continuous U.S. GAAP training programs and webinars for our financial reporting and accounting personnel; (iii) continuously developing and enhancing our internal audit function for the financial reporting matters; and (iv) strengthening our IT control environment and procedures by engaging third party expertise in introducing and implementing the required changes to the overall IT environment and required upgrades to our systems. However, the implementation of these measures may not fully address the deficiencies in our internal control over financial reporting. We are not able to estimate with reasonable certainty the costs that we will need to incur to implement these and other measures designed to improve our internal control over financial reporting.
Pursuant to the JOBS Act, we qualify as an “emerging growth company” as we recorded revenues less than US$1.235 billion in our most recent fiscal year, which allows us to take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act, in the assessment of the emerging growth company’s internal control over financial reporting.
We will be subject to the requirement that we maintain internal controls and that management perform periodic evaluation of the effectiveness of the internal controls. Effective internal control over financial reporting is important to prevent fraud. As a result, our business, financial condition, results of operations and prospects, as well as the market for and trading price of our Ordinary Shares, may be materially and adversely affected if we do not have effective internal controls. We may not discover any problems in a timely manner and current and potential shareholders could lose confidence in our financial reporting, which would harm our business and the trading price of our Ordinary Shares. The absence of internal controls over financial reporting may inhibit investors from purchasing our Ordinary Shares and may make it more difficult for us to raise funds in a debt or equity financing. Additional material weaknesses or significant deficiencies may be identified in the future. If we identify such issues or if we are unable to produce accurate and timely financial statements, our stock price may decline, and we may be unable to maintain compliance with the Nasdaq listing rules.
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We are subject to risks relating to litigation and disputes, which could adversely affect our business, prospects, results of operations and financial conditions, and may face significant liabilities as a result.
We may be subject to litigation, disputes or claims of various types brought by our competitors, suppliers, customers, employees, business partners, lenders or other third parties. We cannot assure you that we will not be subject to disputes, complaints or legal proceedings in the future, which may damage our reputation, evolve into litigations or otherwise have a material adverse impact on our reputation and business.
Should any future claims against us fall outside the scope and/or limit of insurance coverage, our financial position may be adversely affected. Regardless of the merits, legal proceedings can be time-consuming and costly, and may divert our management’s attention away from our business operation, thereby adversely affecting our business operation and financial position. Legal proceedings which result in unfavorable judgment against us may cause financial losses and damages to our reputation, thereby materially and adversely affecting our business, financial position, results of operations and prospect.
We may grow, in part, through acquisitions, which involve various risks, and we may not be able to identify or acquire companies consistent with our growth strategy or successfully integrate acquired businesses into our operations.
We may intend to pursue opportunities to expand our business by acquiring other companies in the future. Acquisitions involve risks, including those relating to:
| ● | identification of appropriate acquisition candidates; |
| ● | negotiation of acquisitions on favorable terms and valuations; |
| ● | integration of acquired businesses and personnel; |
| ● | implementation of proper business and accounting controls; |
| ● | ability to obtain financing, at favorable terms or at all; |
| ● | diversion of management attention; |
| ● | retention of employees and customers; |
| ● | non-employee driver attrition; |
| ● | unexpected liabilities; and |
| ● | detrimental issues not discovered during due diligence. |
Acquisitions also may affect our short-term cash flow and net income as we expend funds, potentially increase indebtedness and incur additional expenses. If we are not able to identify or acquire companies consistent with our growth strategy, or if we fail to successfully integrate any acquired companies into our operations, we may not achieve anticipated increases in revenue, cost savings and economies of scale, our operating results may actually decline and acquired goodwill and intangibles may become impaired.
We may not be able to obtain finance from time to time to fund our operations and maintain growth.
In order to fund our operations and maintain our growth or expand our business beyond the scale permitted by the net proceeds from the initial public offering, we may need to obtain future funding including equity financing or banking facilities from our banks from time to time. However, we may face the limitation of not having sufficient amount of security or pledge to secure additional debt financing. Further, there may be occasions where we are unable to obtain financing at commercial terms favorable or acceptable to us or at all. If these circumstances arise, our business, results of operations, and growth could be compromised.
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Risks Relating to Doing Business in Hong Kong
All of our operations are in Hong Kong. However, due to the long arm application of the current PRC laws and regulations, the PRC government may exercise significant direct oversight and discretion over the conduct of our business and may intervene or influence our operations, which could result in a material change in our operations and/or the value of our Ordinary Shares. Our Operating Subsidiary in Hong Kong may be subject to the PRC laws and regulations, which may impair our ability to operate profitably and result in a material negative impact on our operations and/or the value of our Ordinary Shares. Furthermore, the changes in the policies, regulations, rules, and the enforcement of the PRC laws and regulations may also occur quickly with little advance notice and our assertions and beliefs of the risk imposed by the PRC legal and regulatory system cannot be certain.
We have no operations in Mainland China. Our Operating Subsidiary Top Win Hong Kong is located in and operates our business in Hong Kong, a special administrative region of the PRC. Pursuant to the Basic Law of Hong Kong (“Basic Law”), national laws of Mainland China do not apply in Hong Kong unless they are listed in Annex III of the Basic Law and applied locally by promulgation or local legislation. National laws that may be listed in Annex III are currently limited under the Basic Law to those which fall within the scope of defense and foreign affairs as well as other matters outside the limits of the autonomy of Hong Kong National laws and regulations relating to data protection, cybersecurity and the anti-monopoly have not been listed in Annex III and so do not apply directly to Hong Kong.
However, due to long-arm provisions under the current PRC laws and regulations, there remain regulatory and legal uncertainty with respect to the implementation of the PRC laws and regulations to Hong Kong. As a result, there is no guarantee that the PRC government may not choose to implement the PRC laws and regulations to Hong Kong and exercise significant direct influence and discretion over the operation of our Operating Subsidiary in the future and, it will not have a material adverse impact on our business, financial condition and results of operations, due to changes in laws, political environment or other unforeseeable reasons.
In the event that we or our Hong Kong Operating Subsidiary were to become subject to the PRC laws and regulations, it is possible that all the legal and operational risks associated with being based in and having operations in Mainland China may also apply to the operations in Hong Kong in the future, and we face the risks and uncertainties associated with the PRC legal system, complex and evolving PRC laws and regulation, and as to whether and how the recent PRC government statements and regulatory developments, such as those relating to data and cyberspace security and anti-monopoly concerns, would be applicable to a companies like our Operating Subsidiary and us, given the substantial operations of our Operating Subsidiary in Hong Kong and the Chinese government may exercise significant oversight over the conduct of business in Hong Kong.
The laws and regulations in Mainland China are evolving, and their enactment timetable, interpretation, enforcement, and implementation involve significant uncertainties and may change quickly with little advance notice, along with the risk that the PRC government may intervene or influence our Operating Subsidiary’ operations at any time could result in a material change in our operations and/or the value of our securities. Moreover, there are substantial uncertainties regarding the interpretation and application of PRC laws and regulations including, but not limited to, the laws and regulations related to our business and the enforcement and performance of our arrangements with clients in certain circumstances. The laws and regulations are sometimes vague and may be subject to future changes, and their official interpretation and enforcement may involve substantial uncertainty. The effectiveness and interpretation of newly enacted laws or regulations, including amendments to existing laws and regulations, may be delayed, and our business may be affected if we rely on laws and regulations which are subsequently adopted or interpreted in a manner different from our understanding of these laws and regulations. New laws and regulations that affect existing and proposed future businesses may also be applied retroactively. We cannot predict what effect the interpretation of existing or new PRC laws or regulations may have on our business.
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The laws, regulations, and other government directives of the PRC may also be costly to comply with, and such compliance or any associated inquiries or investigations or any other government actions may:
| ● | delay or impede our development; |
| ● | result in negative publicity or increase our operating costs; |
| ● | require significant management time and attention; |
| ● | cause devaluation of our securities or delisting; and, |
| ● | subject us to remedies, administrative penalties and even criminal liabilities that may harm our business, including fines assessed for our current or historical operations, or demands or orders that we modify or even cease our business operations. |
We are aware that recently, the PRC government initiated a series of regulatory actions and statements to regulate business operations in certain areas in Mainland China with little advance notice, including cracking down on illegal activities in the securities market, enhancing supervision over Mainland China-based companies listed overseas using a variable interest entity structure, adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement. We have no operations in Mainland China. Based on our understanding of the PRC laws and regulations currently in effect as of the date of this annual report, as our Operating Subsidiary are located in Hong Kong, we are not currently required to obtain permission from the PRC government to list on a U.S. securities exchange. However, there is no guarantee that this will continue to be the case in the future in relation to the continued listing of our securities on a securities exchange outside of the PRC, or even when such permission is obtained, it will not be subsequently denied or rescinded.
The PRC government may intervene or influence our operations at any time or may exert control over offerings conducted overseas and foreign investment in Hong Kong-based issuers, which may result in a material change in our operations and/or the value of our Ordinary Shares. For example, there is currently no restriction or limitation under the laws of Hong Kong on the conversion of HK dollar into foreign currencies and the transfer of currencies out of Hong Kong and the laws and regulations of the PRC on currency conversion control do not currently have any material impact on the transfer of cash between the ultimate holding company and the Operating Subsidiary in Hong Kong.
The PRC government may, in the future, impose restrictions or limitations on our ability to move money out of Hong Kong to distribute earnings and pay dividends to and from the other entities within our organization or to reinvest in our business outside of Hong Kong. Such restrictions and limitations, if imposed in the future, may delay or hinder the expansion of our business to the outside of Hong Kong and may affect our ability to receive funds from our Operating Subsidiary in Hong Kong. The promulgation of new laws or regulations, or the new interpretation of existing laws and regulations, in each case, that restrict or otherwise unfavorably impact the ability or way we conduct our business, could require us to change certain aspects of our business to ensure compliance, which could decrease demand for our services, reduce revenues, increase costs, require us to obtain more licenses, permits, approvals or certificates, or subject us to additional liabilities. To the extent any new or more stringent measures are required to be implemented, our business, financial condition and results of operations could be adversely affected and such measured could materially decrease the value of our Ordinary Shares, potentially rendering it worthless.
There remain some uncertainties as to whether we will be required to obtain approvals from the PRC authorities to list on the U.S. exchanges and offer securities in the future, and if required, we cannot assure you that we will be able to obtain such approval. We may become subject to a variety of PRC laws and other obligations regarding data security in relation to offerings that are conducted overseas and/or foreign investment in Mainland China-based issuers, and any failure to comply with applicable laws and obligations could have a material and adverse effect on our business, financial condition and results of operations and may hinder our ability to offer or continue to offer Ordinary Shares to investors and cause the value of our Ordinary Shares to significantly decline or be worthless.
On June 10, 2021, the Standing Committee of the National People’s Congress enacted the PRC Data Security Law, which took effect on September 1, 2021. The law requires data collection to be conducted in a legitimate and proper manner, and stipulates that, for the purpose of data protection, data processing activities must be conducted based on data classification and hierarchical protection system for data security.
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On July 6, 2021, the General Office of the Communist Party of China Central Committee and the General Office of the State Council jointly issued a document to crack down on illegal activities in the securities market and promote the high-quality development of the capital market, which, among other things, requires the relevant governmental authorities to strengthen cross-border oversight of law-enforcement and judicial cooperation, to enhance supervision over China-based companies listed overseas, and to establish and improve the system of extraterritorial application of the PRC securities laws.
On August 20, 2021, the 30th meeting of the Standing Committee of the 13th National People’s Congress voted and passed the “Personal Information Protection Law of the People’s Republic of China”, or “PRC Personal Information Protection Law (PIPL)”, which became effective on November 1, 2021. The PIPL stipulates the rules for cross-border provision of personal information and applies to the processing of personal information of natural persons within the territory of Mainland China that is carried out outside of Mainland China where (1) such processing is for the purpose of providing products or services for natural persons within Mainland China, (2) such processing is to analyze or evaluate the behavior of natural persons within Mainland China, or (3) there are any other circumstances stipulated by related laws and administrative regulations. Pursuant to the PIPL, personal data processors (“data processors”) shall meet one of the conditions in order to transmit personal information overseas for their business operations: (i) passing the security evaluation organized by the Cyberspace Administration of China (the “CAC”); (ii) acquiring personal information protection certification from the professional organizations regulated by the CAC; (iii) adopting the standard contract forms stipulated by the CAC when entering into contracts with overseas information receivers, setting forth the rights and obligations of the parties; and (iv) other conditions regulated by laws, regulations and the CAC. Prior to the cross-border provision of personal information of the natural persons, personal information processors shall obtain the approval of the corresponding natural persons and advise them of the overseas receiver’s name, contact information, processing purpose and methods, classification of personal information and information reception procedures, etc.
On December 28, 2021, the CAC jointly with the relevant authorities formally published Measures for Cybersecurity Review (2021) which took effect on February 15, 2022, and replace the former Measures for Cybersecurity Review (2020) issued on July 10, 2021. Measures for Cybersecurity Review (2021) stipulates that in addition to “operator of critical information infrastructure (the “Operator”),” any “data processor” carrying out data processing activities that affect or may affect national security should also be subject to cybersecurity review, and further elaborated the factors to be considered when assessing the national security risks of the relevant activities, including, among others, (i) the risk of core data, important data or a large amount of personal information being stolen, leaked, destroyed, and illegally used or transferred outside the country; and (ii) the risk of critical information infrastructure, core data, important data or a large amount of personal information being affected, controlled, or maliciously used by foreign governments after listing abroad. CAC has said that under the proposed rules companies holding data on more than one million users must apply for cybersecurity approval when seeking listings in other nations because of the risk that such data and personal information could be “affected, controlled, and maliciously exploited by foreign governments.” The cybersecurity review will also investigate the potential national security risks from overseas IPOs.
On December 24, 2021, the China Securities Regulatory Commission (“CSRC”), together with other relevant government authorities in China issued the Provisions of the State Council on the Administration of Overseas Securities Offering and Listing by Domestic Companies (Draft for Comments) and the Measures for the Filing of Overseas Securities Offering and Listing by Domestic Companies (Draft for Comments) (collectively to be referred as the “Draft Overseas Listing Regulations”). The Draft Overseas Listing Regulations requires that a PRC domestic enterprise seeking to issue and list its shares overseas (“Overseas Issuance and Listing”) shall complete the filing procedures of and submit the relevant information to CSRC. The Overseas Issuance and Listing includes direct and indirect issuance and listing.
Where a company whose principal business activities are conducted in Mainland China seeks to issue and list its shares in the name of an overseas enterprise (“Overseas Issuer”) on the basis of the equity, assets, income or other similar rights and interests of the relevant PRC domestic enterprise, such activities shall be deemed an indirect overseas issuance and listing (“Indirect Overseas Issuance and Listing”) under the Draft Overseas Listing Regulations.
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On February 17, 2023, the CSRC promulgated the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies (the “Trial Administrative Measures”), which came into effect on March 31, 2023. Compared to the Draft Overseas Listing Regulations, the Trial Administrative Measures further clarified and emphasized that the comprehensive determination of the “indirect overseas offering and listing by PRC domestic companies” shall comply with the principle of “substance over form” and particularly, an issuer will be required to go through the filing procedures under the Trial Administrative Measures if the following criteria are met at the same time: a) 50% or more of the issuer’s operating revenue, total profits, total assets or net assets as documented in its audited consolidated financial statements for the most recent accounting year are accounted for by PRC domestic companies, and b) the main parts of the issuer’s business activities are conducted in Mainland China, or its main places of business are located in Mainland China, or the senior managers in charge of its business operation and management are mostly Chinese citizens or domiciled in Mainland China. On the same day, the CSRC held a press conference for the release of the Trial Administrative Measures and issued the Notice on Administration for the Filing of Overseas Offering and Listing by Domestic Companies, which, among others, provided the exemption from immediate filings for issuers that a) have been listed or have been registered but not yet listed in foreign securities markets, including U.S. markets, prior to the effective date of the Trial Administrative Measures, b) are not required to re-perform the regulatory procedures with the relevant overseas regulatory authority or the overseas stock exchange, and c) will complete the overseas securities offering and listing before September 30, 2023. Nonetheless, such issuers shall carry out the filing procedures as required if they subsequently conduct refinancing or are involved in other circumstances that require filings with the CSRC. Furthermore, the Trial Administrative Measures and its supporting guidelines provide a negative list of types of issuers banned from listing overseas, the issuers’ obligation to comply with national security measures and the personal data protection laws, and certain other matters such as the requirements that an issuer (i) file with the CSRC within three business days after it submits an application for initial public offering to the competent overseas regulator and (ii) file subsequent reports with the CSRC on material events, including change of control and voluntary or forced delisting, after its overseas offering and listing.
Our Operating Subsidiary may collect and store certain data (including certain personal information) from our clients, who may be Mainland China individuals, in connection with our business and operations and for “Know Your Customers” purposes. The Measures for Cybersecurity Review (2021), PRC Data Security Law, the PIPL, and the Draft Overseas Listing Regulations currently does not have an impact on our business, operations, nor do we or our Hong Kong subsidiaries are covered by permission requirements from the CAC that is required to approve our Hong Kong subsidiaries’ operations and our Offering, as our Hong Kong subsidiaries will not be deemed to be an “Operator” or a “data processor” that required to file for cybersecurity review before listing in the United States. Because: (i) our Hong Kong subsidiaries were incorporated in Hong Kong and operate only in Hong Kong without any subsidiary or VIE structure in Mainland China and each of the Measures for Cybersecurity Review (2021), the PIPL, the Draft Overseas Listing Regulations and the Trial Administrative Measures do not clearly provide whether it shall be applied to a company based in Hong Kong; (ii) as of date of this annual report, our Operating Subsidiary has in aggregate collected and stored the personal information of less than one million users and we have acquired the clients’ separate consents for collecting and storing of their personal information and data; (iii) all of the data our Operating Subsidiary have collected is stored in servers located in Hong Kong, and we do not place any reliance on collection and processing of any personal information to maintain our business operation; (iv) as of the date of this annual report, neither of our Operating Subsidiary has been informed by any PRC governmental authority of any requirement that it files for a CSRC review, nor received any inquiry, notice, warning, or sanction in such respect initiated by the CAC or related governmental regulatory authorities; and (v) data processed in our business should not have a bearing on national security nor affect or may affect national security, and we have not been notified by any authorities of being classified as an Operator. Therefore, based on the PRC laws and regulations effective as of the date of this annual report and subject to interpretations of these laws and regulations that may be adopted by Mainland China authorities, neither we, nor our Operating Subsidiary in Hong Kong are currently required to obtain any permission or approval from any PRC government authorities, including the CSRC and CAC, to operate our business or to offer our securities to foreign investors. As of the date of this annual report, neither we nor our Operating Subsidiary have ever applied for any such permission or approval.
Furthermore, based on laws and regulations currently in effect in the PRC as of the date of this annual report, we are not required to obtain regulatory approval from the CSRC or go through the filing procedures under the Trial Administrative Measures before our Ordinary Shares can be listed or offered in the U.S since neither we, nor our subsidiaries, are “PRC domestic companies” which subject to the Trial Administrative Measure, because (i) we are headquartered in Hong Kong, with our officers and all members of the board of directors based in Hong Kong who are not Mainland China citizens; (ii) we do not, directly or indirectly, own or control any entity or subsidiary in Mainland China, nor is it controlled by any Mainland Chinese company or individual directly or indirectly; (iii) we only operate in Hong Kong, all of our revenues and profits are generated by our entities in Hong Kong, Singapore and Cayman Islands, none of our business activities are conducted in Mainland China, and we have not generated revenues or profits from Mainland China in the most recent accounting year accounts for more than 50% of the corresponding figure in our audited consolidated financial statements for the same period; (iv) we do not have or intend to set up any subsidiary or enter into any contractual arrangements to establish a variable interest entity structure with any entity in Mainland China; (v) pursuant to the Basic Law of Hong Kong, or the Basic Law, PRC laws and regulations shall not be applied in Hong Kong except for those listed in Annex III of the Basic Law (which is confined to laws relating to national defense, foreign affairs and other matters that are not within the scope of autonomy).
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However, given the uncertainties arising from the legal system in Mainland China and Hong Kong, including uncertainties regarding the interpretation and enforcement of the PRC laws and regulations and the significant authority of the PRC government to intervene or influence the offshore holding company headquartered in Hong Kong, there remains significant uncertainty in the interpretation and enforcement of Draft Overseas Listing Regulations, Trial Administrative Measures, PIPL, relevant Mainland China data privacy, cybersecurity laws and other regulations. It is highly uncertain how soon the legislative or administrative regulation-making bodies will respond and what existing or new laws or regulations or detailed implementations and interpretations will be modified or promulgated, if any. It is also highly uncertain what the potential impact such modified or new laws and regulations will have on the daily business operations of our Operating Subsidiary and the listing of our Ordinary Shares on the U.S. or other foreign exchanges.
Although we are currently not required to obtain approvals from the PRC authorities to operate our business or list on the U.S. exchanges and offer securities, specifically, we are currently not required to obtain any permission or approval from the CSRC, the CAC or any other PRC governmental authority to operate our business or to list our securities on a U.S. securities exchange or issue securities to foreign investors, we cannot assure you that PRC regulatory agencies, including the CAC, would take the same view as we do, and there is no assurance that we can fully or timely comply with such laws. There remains uncertainty as to how the Measures for Cybersecurity Review (2021) will be interpreted or implemented and the relevant PRC governmental authority may not take a view that is consistent with ours. Also, significant uncertainty exists in relation to the interpretation and enforcement of relevant PRC cybersecurity laws and regulations. If we were deemed to be an “operator of critical information infrastructure” or a “data processor” controlling personal information of no less than one million users under the Measures, or if other regulations promulgated in relation to the Measures are deemed to apply to us, our business operations and the listing of our Ordinary Shares in the U.S. could be subject to cybersecurity review by the CAC, in the future. In the event that we are subject to any mandatory cybersecurity review and other specific actions required by the CAC, we face uncertainty as to whether any clearance or other required actions can be completed in a timely fashion or at all. Given such uncertainty, we may be further required to suspend our relevant business or face other penalties which could materially and adversely affect our business, financial condition, and results of operations. Furthermore, as the Trial Administrative Measures are newly issued, there remains uncertainty as to how it will be interpreted or implemented. Therefore, we cannot assure you that when and whether we will be subject to such filing requirements or will be able to get clearance from the CSRC in a timely manner, or at all, even though we believe that none of the situations that would clearly prohibit overseas listing and offering applies to us.
Furthermore, if the Trial Administrative Measures, Measures for Cybersecurity Review (2021), the PIPL, become applicable to us or our Operating Subsidiary in Hong Kong, our operation and the listing of our Ordinary Shares in the United States could be subject to the CAC’s cybersecurity review or the CSRC Overseas Issuance and Listing review in the future. If the applicable laws, regulations, or interpretations change and our Operating Subsidiary become subject to the CAC or CSRC review, we cannot assure you that our Operating Subsidiary will be able to comply with the regulatory requirements in all respects and our current practice of collecting and processing personal information may be ordered to be rectified or terminated by regulatory authorities. Compliance with these laws and regulations could significantly increase the cost to us of providing our service offerings, require significant changes to our operations or even prevent us from providing certain service offerings in jurisdictions in which we currently operate or in which we may operate in the future.
If there is a significant change to the current political arrangements between Mainland China and Hong Kong, or the applicable laws, regulations, or interpretations change, and/or if we were required to obtain such permissions or approvals in the future in connection with the listing or continued listing of our securities on a stock exchange outside of the PRC, it is uncertain how long it will take for us to obtain such approval, and, even if we obtain such approval, the approval could be rescinded. Any failure to obtain or a delay in obtaining the necessary permissions from the PRC authorities to conduct offerings or list outside of the PRC may subject us to sanctions imposed by the CSRC, CAC, or other PRC regulatory authorities. It could include fines and penalties, proceedings against us, and other forms of sanctions, and our ability to conduct our business, invest into the Mainland China as foreign investments or accept foreign investments, ability to offer or continue to offer Ordinary Shares to investors or list on the U.S. or other overseas exchange may be restricted, and the value of our Ordinary Shares may significantly decline or be worthless, our business, reputation, financial condition, and results of operations may be materially and adversely affected. Any uncertainties and/or negative publicity regarding such an approval requirement could have a material adverse effect on the trading price of our securities.
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Compliance with Hong Kong’s Personal Data (Privacy) Ordinance and any such other existing or future data privacy related laws, regulations and governmental orders may entail significant expenses and could materially affect our business.
Although we are not subject to cybersecurity review by the CAC or CSRC nor any other PRC authorities required to obtain regulatory approval regarding the data privacy and personal information requirements from the CAC nor any other PRC authorities for ours and our Operating Subsidiary’ operations in Hong Kong, we are subject to a variety of laws and other obligations regarding data privacy and protection in Hong Kong.
In particular, the Personal Data (Privacy) Ordinance (Chapter 486 of the laws of Hong Kong) (“PDPO”) imposes a duty on any data user who, either alone or jointly with other persons, controls the collection, holding, processing or use of any personal data which relates directly or indirectly to a living individual and can be used to identify that individual. Under the PDPO, data users shall take all practicable steps to protect the personal data they hold from any unauthorized or accidental access, processing, erasure, loss, or use. Once collected, such personal data should not be kept longer than necessary for the fulfilment of the purpose for which it is or is to be used and shall be erased if it is no longer required, unless erasure is prohibited by law or is not in the public interest. The PDPO also confers on the Privacy Commissioner for Personal Data (“Privacy Commissioner”) power to conduct investigations and institute prosecutions. The data protection principles (collectively, the “DPP”), which are contained in Schedule 1 to the PDPO, outline how data users should collect, handle, and use personal data, complemented by other provisions imposing further compliance requirements. The collective objective of DPPs is to ensure that personal data is collected on a fully informed basis and in a fair manner, with due consideration towards minimizing the amount of personal data collected. Once collected, the personal data should be processed in a secure manner and should only be kept for as long as necessary for the fulfilment of the purposes of using the data. Use of the data should be limited to or related to the original collection purpose. Data subjects are given certain rights, inter alia: (a) the right to be informed by a data user whether the data user holds personal data of which the individual is the data subject; (b) if the data user holds such data, to be supplied with a copy of such data; and (c) the right to request correction of any data they consider to be inaccurate. The Commissioner may carry out criminal investigations and institute prosecution for certain offenses. Depending on the severity of the cases, the Privacy Commissioner will decide whether to prosecute or refer cases involving suspected commission to the Department of Justice of Hong Kong. Victims may also seek compensation by civil action from data users for damage caused by a contravention of the PDPO. The Commissioner may provide legal assistance to the aggrieved data subjects if the Commissioner deems fit to do so. See “Regulation”.
We believe that we have been in compliance with the data privacy and personal information requirements of the PDPO. However, if we or our Operating Subsidiary conducting business operations in Hong Kong have violated certain provisions of the PDPO, we could face significant civil penalties and/or criminal prosecution, which could adversely affect our business, financial condition, and results of operations.
If the PRC government chooses to extend the oversight and control over offerings that are conducted overseas and/or foreign investment in Mainland China-based issuers to Hong Kong-based issuers, such action may significantly limit or completely hinder our ability to offer or continue to offer Ordinary Shares to investors and cause the value of our Ordinary Shares to significantly decline or be worthless.
Recent statements, laws and regulations by the PRC government, including the Measures for Cybersecurity Review (2021), the PRC Personal Information Protection Law and the Draft Rules on Overseas Listing published by CSRC on December 24, 2021 also have indicated an intent to exert more oversight and control over offerings that are conducted overseas and/or foreign investments in Mainland China-based issuers. It remains uncertain as to the enactment, interpretation, and implementation of regulatory requirements related to overseas securities offering and other capital markets activities and due to the possibility that laws, regulations, or policies in the PRC could change rapidly in the future.
It remains uncertain whether the PRC government will adopt additional requirements or extend the existing requirements to apply to our Operating Subsidiary. It is also uncertain whether the Hong Kong government will be mandated by the PRC government, despite the constitutional constraints of the Basic Law, to control over offerings conducted overseas and/or foreign investment of entities in Hong Kong, including our Operating Subsidiary. Any actions by the PRC government to exert more oversight and control over offerings (including of businesses, like us, whose operations are entirely in Hong Kong) that are conducted overseas and/or foreign investments in Hong Kong-based issuers could significantly limit or completely hinder our ability to offer or continue to offer securities to investors. If there is a significant change to current political arrangements between Mainland China and Hong Kong, or the applicable laws, regulations, or interpretations change, and, in such event, if we are required to obtain such approvals in the future and we do not receive or maintain the approvals or is denied permission from Mainland China or Hong Kong authorities, we will not be able to list our Ordinary Shares on a U.S. exchange, or continue to offer securities to investors, which would materially affect the interests of the investors and cause significant the value of our Ordinary Shares significantly decline or be worthless.
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The enforcement of laws and rules and regulations in the PRC can change quickly with little advance notice. Additionally, the PRC laws and regulations and the enforcement of such that apply or are to be applied to Hong Kong can change quickly with little or no advance notice. As a result, the Hong Kong legal system embodies uncertainties which could limit the availability of legal protections, which could result in a material change in our Operating Subsidiary’ operations and/or the value of the securities we are offering.
As one of the conditions for the handover of the sovereignty of Hong Kong to China, China accepted conditions such as Hong Kong’s Basic Law. The Basic Law ensured Hong Kong will retain its currency (the Hong Kong Dollar), legal system, parliamentary system, and people’s rights and freedom for fifty years from 1997.
This agreement has given Hong Kong the freedom to function with a high degree of autonomy. The Special Administrative Region of Hong Kong is responsible for its domestic affairs, including, but not limited to, the judiciary and courts of last resort, immigration, and customs, public finance, currencies, and extradition. Hong Kong continues using the English common law system. However, if the PRC government attempts to alter its agreement to allow Hong Kong to function autonomously, this could potentially impact Hong Kong’s common law legal system and may in turn bring about uncertainty in, for example, the enforcement of our contractual rights. This could, in turn, materially and adversely affect our Operating Subsidiary’ business and operations. Additionally, intellectual property rights and confidentiality protections in Hong Kong may not be as effective as in the United States or other countries. Accordingly, we cannot predict the effect of future developments in the Hong Kong legal system, including the promulgation of new laws, changes to existing laws or the interpretation or enforcement thereof, or the pre-emption of local regulations by national laws. These uncertainties could limit the legal protections available to us, including the ability to enforce agreements with the customers.
The enactment of the law of the PRC on Safeguarding National Security in the Hong Kong Special Administrative Region (the “Hong Kong National Security Law”) could impact our Hong Kong subsidiaries, which represent substantially all of our business.
On June 30, 2020, the Standing Committee of the PRC National People’s Congress adopted the Hong Kong National Security Law. This law defines the duties and government bodies of the Hong Kong National Security Law for safeguarding national security and four categories of offenses — secession, subversion, terrorist activities, and collusion with a foreign country or external elements to endanger national security — and their corresponding penalties. On July 14, 2020, former U.S. President Donald Trump signed the Hong Kong Autonomy Act, or HKAA, into law, authorizing the U.S. administration to impose blocking sanctions against individuals and entities determined to have materially contributed to the erosion of Hong Kong’s autonomy. On August 7, 2020, the U.S. government imposed HKAA-authorized sanctions on eleven individuals, including former and current Chief Executives of HKSAR, Carrie Lam and John Lee, respectively. On October 14, 2020, the U.S. State Department submitted to relevant committees of Congress the report required under HKAA, identifying persons materially contributing to “the failure of the Government of China to meet its obligations under the Joint Declaration or the Basic Law.” The HKAA further authorizes secondary sanctions, including the imposition of blocking sanctions, against foreign financial institutions that knowingly conduct a significant transaction with foreign persons sanctioned under this authority. The imposition of sanctions may directly affect foreign companies, investment, or financial institutions and any third parties or customers dealing with any foreign entities that is targeted. It is difficult to predict the full impact of the Hong Kong National Security Law and HKAA on Hong Kong and companies located in Hong Kong. If our Hong Kong subsidiaries, which represent the majority of our business, are determined to be in violation of the Hong Kong National Security Law or the HKAA by competent authorities, our business operations, financial position and results of operations could be materially and adversely affected.
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Political risks, including the potential imposition of tariffs, could have an adverse impact on our business operations in Hong Kong.
Our operations are mainly in Hong Kong. Accordingly, the business operations and financial conditions of our Operating Subsidiary will be affected by the political and legal developments in Hong Kong. Any adverse economic, social and/or political conditions, material social unrest, strike, riot, civil disturbance or disobedience, as well as significant natural disasters, may affect the market and may adversely affect our operations. Given the relatively small geographical size of Hong Kong, any of such incidents may have a widespread effect on our business operations, which could in turn adversely and materially affect our business, results of operations and financial condition.
Hong Kong is a special administrative region of the PRC and the basic policies of the PRC regarding Hong Kong are reflected in the Basic Law, namely, Hong Kong’s constitutional document, which provides Hong Kong with a high degree of autonomy and executive, legislative and independent judicial powers, including that of final adjudication under the principle of “one country, two systems”. However, there is no assurance that there will not be any changes in the political arrangement between PRC and Hong Kong and the economic, political and legal environment in Hong Kong in the future. Since all of our operations are based in Hong Kong, any change of such political arrangements may pose an immediate threat to the stability of the economy in Hong Kong, thereby directly and adversely affecting our results of operations and financial positions.
Based on certain recent development including the Hong Kong National Security Law issued by the Standing Committee of the PRC National People’s Congress in June 2020, the U.S. State Department has indicated that the United States no longer considers Hong Kong to have significant autonomy from China and President Trump signed an executive order and Hong Kong Autonomy Act, or HKAA, to remove Hong Kong’s preferential trade status and to authorize the U.S. administration to impose blocking sanctions against individuals and entities who are determined to have materially contributed to the erosion of Hong Kong’s autonomy. The United States may impose the same tariffs and other trade restrictions on exports from Hong Kong that it places on goods from Mainland China. These and other recent actions may represent an escalation in political and trade tensions involving the U.S, the PRC and Hong Kong, which could potentially harm our business. It is difficult to predict the full impact of the HKAA on Hong Kong and companies with operations in Hong Kong like us. Furthermore, legislative or administrative actions in respect of China-U.S. relations could cause investor uncertainty for affected issuers, including us, and the market price of our Ordinary Shares could be adversely affected.
Tariffs restrictions imposed by the United States on Mainland China exports intensified since 2019 which resulted in a negative impact to the international trading activities globally and have attributed to the overall decrease in the cargo shipment volume of Hong Kong. Since February 2025, the U.S. government has imposed, and has proposed to impose additional, new or higher tariffs on specified products imported from China, and the Chinese government has responded by imposing, and proposing to impose additional, new or higher tariffs on specified products imported from the U.S. In April 2025, President Trump announced that the United States would impose additional tariffs on most countries, including, among others, a 34% additional tariff on goods imported from China. Following this action, China responded by imposing an additional tariff on goods imported from the United States, and the two countries sequentially further increased the additional tariff charged on each other, bringing the cumulative tariffs imposed on each other to over 100%. Other economies that are affected by increased tariffs by the United States are also considering imposing or increasing tariffs on goods from the United States, although after President Trump announced a 90-day pause on the individualized higher tariff rates for other countries, it is unclear how this situation will develop. As of the date of this annual report, there is still a high degree of uncertainty surrounding U.S. tariff policy, how it will be implemented, and how other countries will react to it. It also remains uncertain whether increased tariffs and trade tensions will create further disruptions and uncertainties to the international trade and lead to a downturn to the global economy. Additionally, the U.S. government continues to signal that it may alter trade agreements and terms between China and the United States, including limiting trade with China, and may impose additional tariffs on imports from China and other countries. In addition, any further escalation in trade tensions between PRC and the United States or a trade war, or the perception that such escalation or trade war could occur, may have materially and negatively impact on the economies of not only the two countries concerned, but the global economy as a whole.
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Our vendors are located worldwide/ The current trade tensions between United States and China, and other political events, international trade disputes, could harm or disrupt international commerce and the global economy, and they could have a material adverse effect on us and our customers, our vendors, and our other partners. In addition, political uncertainty surrounding international trade disputes and the potential of their escalation to trade war and global recession could have a negative effect on our profit margin, which could materially and adversely affect our business. We also may have access to fewer business opportunities, and our operations may be negatively impacted as a result. In addition, the current and future actions or escalations by either the United States or China that affect trade relations may cause global economic turmoil and potentially have a negative impact on trade markets, our business, or our results of operations, as well as the financial condition of our clients, and we cannot provide any assurances as to whether such actions will occur or the form that they may take.
Because our business is conducted in Hong Kong dollars and the price of our Ordinary Shares is quoted in United States dollars, changes in currency conversion rates may affect the value of your investments.
Since our business is conducted in Hong Kong, our books and records are maintained in Hong Kong dollars, which is the currency of Hong Kong, and the financial statements that we file with the SEC and provide to our shareholders are presented in United States dollars. Changes in the exchange rate between the Hong Kong dollar and U.S. dollar affect the value of our assets and the results of our operations in United States dollars. The value of the Hong Kong dollar against the United States dollar and other currencies may fluctuate and is affected by, among other things, changes in Hong Kong’s political and economic conditions and perceived changes in the economy of Hong Kong and the United States. Any significant revaluation of the Hong Kong dollar may materially and adversely affect our cash flows, revenue and financial condition. Further, our Ordinary Shares offered by this annual report are denominated in United States dollars, we will need to convert the net proceeds we receive into Hong Kong dollar in order to use the funds for our business. Changes in the conversion rate between the United States dollar and the Hong Kong dollar will affect that amount of proceeds we will have available for our business.
Since 1983, Hong Kong dollars have been pegged to U.S. dollars at the rate of approximately HK$7.80 to US$1.00. We cannot assure you that this policy will not be changed in the future. If the pegging system collapses and Hong Kong dollars suffer devaluation, the Hong Kong dollar cost of our expenditures denominated in foreign currency may increase. This would in turn adversely affect the operations and profitability of our business.
Risks Relating to Our Corporate Structure
Our corporate actions are substantially controlled by our controlling shareholder which will have the ability to control or exert significant influence over important corporate matters that require approval of shareholders, and which may deprive you of an opportunity to receive a premium for your Ordinary Shares and materially reduce the value of your investment.
Sora Ventures Global Limited (f.k.a. Pride River Limited), our Controlling Shareholder, which is controlled by Mr. Jason Fang, our co-CEO, director and chairman of the board, beneficially owns 58.1% of our total issued and outstanding Ordinary Shares, representing 58.1% of the total voting power. Accordingly, Sora Ventures Global Limited has significant influence in determining the outcome of any corporate transaction or other matter submitted to the shareholders for approval, including mergers, consolidations, election of directors and other significant corporate actions.
The interests of our Controlling Shareholder may differ from the interests of our other shareholders. The concentration of ownership may also discourage, delay or prevent a change in control of our company, which could deprive our shareholders of an opportunity to receive a premium for their shares as part of a sale of our company and might reduce the price of our Ordinary Shares. These actions may be taken even if they are opposed by other shareholders. Without the consent of our Controlling Shareholder, we may be prevented from entering into transactions that could be beneficial to us or our other shareholders. The concentration in the ownership of our shares may cause a material decline in the value of our shares.
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Under the Nasdaq listing rules, a company of which more than 50% of the voting power is held by an individual, group, or another company is a “controlled company” and is permitted to elect to rely, and may rely, on certain exemptions from the obligation to comply with certain corporate governance requirements, including:
| ● | the requirement that our director nominees must be selected or recommended solely by independent directors; and |
| ● | the requirement that we have a corporate governance and nominating committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities. |
Our current corporate structure involves unique risks to investors.
AsiaStrategy (f.k.a. Top Win International Limited) is a holding company incorporated in Cayman Islands. As a holding company with no material operations, AsiaStrategy conducts all its operations through its operating entities, including Top Win International Trading Limited, incorporated in Hong Kong. Investors in our Ordinary Shares should be aware that they will not and may never directly hold equity interests in the Operating Subsidiary, but rather purchasing the equity interests solely of AsiaStrategy, the Cayman Islands holding company. This structure involves unique risks to the investors, and the PRC regulatory authorities, through Hong Kong Government, could disallow this structure, which would likely result in a material change in AsiaStrategy’s operations and/or a material change in the value of the securities of AsiaStrategy, including that such event could cause the value of such securities to significantly decline or become worthless.
The majority of our operations are conducted by our Operating Subsidiary in Hong Kong. We do not have any operation or maintain office or personnel in Mainland China, nor currently do we have, nor intend to have, any contractual arrangements to establish a variable interest entity (“VIE”) structure with any entity in Mainland China. We are subject to certain legal and operational risks associated with our Operating Subsidiary being based in Hong Kong, having all of its operations to date in Hong Kong and having some customers who are Mainland China individuals or companies that have shareholders or directors that are Mainland China individuals. We are also subject to the risks of uncertainty about any future actions the PRC government or authorities in Hong Kong may take in this regard. Should the PRC government choose to exercise significant oversight and discretion over the conduct of our business, or in the event that we or the Operating Subsidiary were to become subject to PRC laws and regulations, we could incur material costs to ensure compliance, and we or the Operating Subsidiary might be subject to fines, experience devaluation of securities or delisting, no longer be permitted to conduct offerings to foreign investors, and/or no longer be permitted to continue business operations as presently conducted.
We rely on dividends and other distributions on equity paid by our subsidiaries to fund any cash and financing requirements we may have. In the future, funds may not be available to fund operations or for other uses outside of Hong Kong, due to interventions in, or the imposition of restrictions and limitations on, our ability or our subsidiary by the PRC government to transfer cash. Any limitation on the ability of our subsidiaries to make payments to us could have a material adverse effect on our ability to conduct our business and might materially decrease the value of our Ordinary Shares or cause them to be worthless.
AsiaStrategy is a holding company incorporated in the Cayman Islands, and we rely on dividends and other distributions on equity paid by our subsidiaries for our cash and financing requirements, including the funds necessary to pay dividends and other cash distributions to our shareholders and service any debt we may incur. We do not expect to pay cash dividends in the foreseeable future. If any of our subsidiaries incurs debt on its own behalf in the future, the instruments governing the debt may restrict its ability to pay dividends or make other distributions to us.
Under the current practice of the Inland Revenue Department of Hong Kong, no tax is payable in Hong Kong in respect of dividends paid by us. There are no restrictions or limitations under the laws of Hong Kong imposed on the conversion of Hong Kong dollar into foreign currencies and the remittance of currencies out of Hong Kong, nor is there any restriction on any foreign exchange to transfer cash between AsiaStrategy and its subsidiaries, across borders and to U.S. investors, nor there is any restrictions and limitations to distribute earnings from the subsidiaries, to AsiaStrategy and U.S. investors and amounts owed.
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Currently, the PRC law and regulations and foreign currency control in Mainland China do not currently have any material impact on the transfer of cash between AsiaStrategy and our Operating Subsidiary, or vice versa. However, the PRC government may, in the future, impose restrictions or limitations on our ability to transfer money out of Hong Kong, to distribute earnings and pay dividends to and from the other entities within our organization, or to reinvest in our business outside of Hong Kong. Such restrictions and limitations, if imposed in the future, may delay or hinder the expansion of our business to outside of Hong Kong and may affect our ability to receive funds from our Operating Subsidiary in Hong Kong. The promulgation of new laws or regulations, or the new interpretation of existing laws and regulations, in each case, that restrict or otherwise unfavorably impact the ability or way we conduct our business, could require us to change certain aspects of our business to ensure compliance, which could decrease demand for our services, reduce revenues, increase costs, require us to obtain more licenses, permits, approvals or certificates, or subject us to additional liabilities. To the extent any new or more stringent measures are required to be implemented, our business, financial condition and results of operations could be adversely affected and such measured could materially decrease the value of our Ordinary Shares, potentially rendering them worthless. Further, any limitation on the ability of our subsidiaries to pay dividends or make other distributions to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends, or otherwise fund and conduct our business.
The enforcement of foreign civil liabilities in the Cayman Islands and Hong Kong is subject to certain conditions. Therefore, certain judgments obtained against us by our shareholders may be difficult or impossible to enforce in such jurisdictions.
We are a Cayman Islands exempted company and substantially all of our assets are located outside of the United States. In addition, except for Mr. Shuo, CHEN, who is a United States resident, all of our other executive officers, directors and senior management are located in Hong Kong or other jurisdictions outside of the United States, and the substantial portion of their assets are located outside the United States. As a result, it may be difficult or impossible for a shareholder to effect service of process within the United States upon these persons or to enforce against us or them judgments obtained in United States courts, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States. Even if the shareholders are successful in bringing an action of this kind, the laws of the Cayman Islands may render the investors unable to enforce a judgment against our assets or the assets of our directors and officers. As a result of all of the above, our shareholders may have more difficulties in protecting their interests through actions against us or our officers, directors or major shareholders than would shareholders of a corporation incorporated in a jurisdiction in the United States.
Although there is no statutory enforcement in the Cayman Islands of judgments obtained in the federal or state courts of the United States (and the Cayman Islands are not a party to any treaties for the reciprocal enforcement or recognition of such judgments), the Grand Court of the Cayman Islands will at common law enforce final and conclusive in personam judgments of state and/or federal courts of the United States of America (the “Foreign Court”) of a debt or definite sum of money against the Company (other than a sum of money payable in respect of taxes or other charges of a like nature, a fine or other penalty (which may include a multiple damages judgment in an anti-trust action) or where enforcement would be contrary to public policy). The Grand Court of the Cayman Islands will also at common law enforce final and conclusive in personam judgments of the Foreign Court that are non-monetary against the Company, for example, declaratory judgments ruling upon the true legal owner of shares in a Cayman Islands company. The Grand Court of the Cayman Islands will exercise its discretion in the enforcement of non-money judgments by having regard to the circumstances, such as considering whether the principles of comity apply. To be treated as final and conclusive, any relevant judgment must be regarded as res judicata by the Foreign Court. A debt claim on a foreign judgment must be brought within six years of the date of the judgment, and arrears of interest on a judgment debt cannot be recovered after six years from the date on which the interest was due. The courts of the Cayman Islands are unlikely to enforce a judgment obtained from the Foreign Court under civil liability provisions of U.S. federal securities law if such a judgment is found by the courts of the Cayman Islands to give rise to obligations to make payments that are penal or punitive in nature. Such a determination has not yet been made by the Grand Court of the Cayman Islands. A court of the Cayman Islands may stay enforcement proceedings if concurrent proceedings are being brought elsewhere. A judgment entered in default of appearance by a defendant who has had notice of the Foreign Court’s intention to proceed may be final and conclusive notwithstanding that the Foreign Court has power to set aside its own judgment and despite the fact that it may be subject to an appeal the time-limit for which has not yet expired. The Grand Court of the Cayman Islands may safeguard the defendant’s rights by granting a stay of execution pending any such appeal and may also grant interim injunctive relief as appropriate for the purpose of enforcement.
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According to Hong Kong law, judgment of United States courts will not be directly enforced in Hong Kong. There are currently no treaties or other arrangements providing for reciprocal enforcement of foreign judgments between Hong Kong and the United States. However, the common law permits an action to be brought upon a foreign judgment. A foreign judgment itself may form the basis of a cause of action since the judgment may be regarded as creating a debt between the parties to it. In a common law action for enforcement of a foreign judgment in Hong Kong, the enforcement is subject to various conditions, including but not limited to, that the foreign judgment is a final judgment conclusive upon the merits of the claim, the judgment is for a liquidated amount in a civil matter and not in respect of taxes, fines, penalties, or similar charges, the proceedings in which the judgment was obtained were not contrary to natural justice, and the enforcement of the judgment is not contrary to public policy of Hong Kong. Such a judgment must be for a fixed sum and must also come from a “competent” court as determined by the private international law rules applied by the Hong Kong courts. The defenses that are available to a defendant in a common law action brought on the basis of a foreign judgment include lack of jurisdiction, breach of natural justice, fraud, and contrary to public policy. However, a separate legal action for debt must be commenced in Hong Kong in order to recover such debt from the judgment debtor.
Risks Relating to our Ordinary Shares
Our Ordinary Shares may be prohibited from being traded on a national exchange under the Holding Foreign Companies Accountable Act if the PCAOB is unable to inspect our auditors. The delisting of our Ordinary Shares, or the threat of their being delisted, may materially and adversely affect the value of your investment. Furthermore, on June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act, which was signed into law on December 29, 2022, amending the HFCAA to require the SEC to prohibit an issuer’s securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three.
The Holding Foreign Companies Accountable Act, or the HFCAA, was enacted on December 18, 2020. The HFCAA states if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspection by the PCAOB for three consecutive years beginning in 2021, the SEC shall prohibit our shares from being traded on a national securities exchange or in the over-the-counter trading market in the United States.
On March 24, 2021, the SEC adopted interim final rules relating to the implementation of certain disclosure and documentation requirements of the HFCA Act. A company will be required to comply with these rules if the SEC identifies it as having a “non-inspection” year under a process to be subsequently established by the SEC. The SEC is assessing how to implement other requirements of the HFCA Act, including the listing and trading prohibition requirements described above. Furthermore, on June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act (the “AHFCAA”), which was signed into law on December 29, 2022, amending the HFCAA and requiring the SEC to prohibit an issuer’s securities from trading on any U.S. stock exchange if its auditor is not subject to PCAOB inspections for two consecutive years instead of three consecutive years. On September 22, 2021, the PCAOB adopted a final rule implementing the HFCAA, which provides a framework for the PCAOB to use when determining, as contemplated under the HFCAA, whether the PCAOB is unable to inspect or investigate completely registered public accounting firms located in a foreign jurisdiction because of a position taken by one or more authorities in that jurisdiction. On December 2, 2021, the SEC issued amendments to finalize rules implementing the submission and disclosure requirements in the HFCA Act. The rules apply to registrants that the SEC identifies as having filed an annual report with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction and that PCAOB is unable to inspect or investigate completely because of a position taken by an authority in foreign jurisdictions. On December 16, 2021, the PCAOB issued a Determination Report which found that the PCAOB is unable to inspect or investigate completely registered public accounting firms headquartered in: (i) Mainland China, and (ii) Hong Kong.
On August 26, 2022, the PCAOB announced and signed a Statement of Protocol (the “Protocol”) with the China Securities Regulatory Commission and the Ministry of Finance of the PRC. The Protocol provides the PCAOB with: (1) sole discretion to select the firms, audit engagements and potential violations it inspects and investigates, without any involvement of Chinese authorities; (2) procedures for PCAOB inspectors and investigators to view complete audit work papers with all information included and for the PCAOB to retain information as needed; (3) direct access to interview and take testimony from all personnel associated with the audits the PCAOB inspects or investigates.
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On December 15, 2022, the PCAOB issued a new Determination Report which: (1) vacated the December 16, 2021 Determination Report; and (2) concluded that the PCAOB has been able to conduct inspections and investigations completely in the PRC in 2022. The December 15, 2022 Determination Report cautions, however, that authorities in the PRC might take positions at any time that would prevent the PCAOB from continuing to inspect or investigate completely. As required by the HFCAA, if in the future the PCAOB determines it no longer can inspect or investigate completely because of a position taken by an authority in the PRC, the PCAOB will act expeditiously to consider whether it should issue a new determination.
Our auditor, J&S Associate PLT, the independent registered public accounting firm that issued the audit report included in this annual report, as a firm headquartered in Malaysia and registered with the PCAOB, is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess our auditor’s compliance with the applicable professional standards, and as of the date of this annual report, our auditor is not subject to and not affected by to the PCAOB’s December 2021 Determination Report. However, in the event it is later determined that the PCAOB is unable to inspect or investigate completely the auditor because of a position taken by an authority in a foreign jurisdiction, such as the PRC authorities, then such lack of inspection could cause trading in the Company’s securities to be prohibited under the HFCAA, and ultimately result in a determination by a securities exchange to delist the Company’s securities.
The SEC may propose additional rules or guidance that could impact us if our auditor is not subject to PCAOB inspection. Further, new laws and regulations or changes in laws and regulations in both the United States and the PRC could affect our ability to list our Ordinary Shares, which could materially impair the market for and market price of our Ordinary Shares.
We may experience extreme stock price volatility unrelated to our actual or expected operating performance, financial condition or prospects, making it difficult for prospective investors to assess the rapidly changing value of our Ordinary Shares.
The trading prices of our Ordinary Shares may be highly volatile and could fluctuate widely due to factors beyond our control. This may happen due to broad market and industry factors, such as performance and fluctuation in the market prices or underperformance or deteriorating financial results of other listed companies based in Hong Kong and China. The securities of some of these companies have experienced significant volatility since their initial public offerings, including, in some cases, substantial price declines in the trading prices of their securities. The trading performances of other Hong Kong and Chinese companies’ securities after their offerings may affect the attitudes of investors towards Hong Kong-based U.S.-listed companies, which consequently may affect the trading performance of our Ordinary Shares, regardless of our actual operating performance. In addition, any negative news or perceptions about inadequate corporate governance practices or fraudulent accounting, corporate structure or matters of other Hong Kong and Mainland Chinese companies may also negatively affect the attitudes of investors towards Hong Kong and Mainland Chinese companies in general, including us, regardless of whether we have conducted any inappropriate activities. Furthermore, securities markets may from time to time experience significant price and volume fluctuations that are not related to our operating performance, which may have a material and adverse effect on the trading price of our Ordinary Shares.
In addition to the above factors, the price and trading volume of our Ordinary Shares may be highly volatile due to multiple factors, including the following:
| ● | regulatory developments affecting us or our industry; |
| ● | variations in our revenues, profit, and cash flow; |
| ● | the general market reactions and financial market fluctuation due to the continuous Russo-Ukraine conflicts; |
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| ● | changes in the economic performance or market valuations of other health and wellness services provider or pain management services providers; |
| ● | changes in the political, social and economic conditions in Mainland China and Hong Kong; |
| ● | actual or anticipated fluctuations in our financial results of operations and changes or revisions of our expected results; |
| ● | fluctuations of exchange rates among Hong Kong dollar, Renminbi, and the U.S. dollar; |
| ● | changes in financial estimates by securities research analysts; |
| ● | detrimental negative publicity about us, our services, our officers, directors, other beneficial owners, professional parties we partner with, or our industry; |
| ● | announcements by us or our competitors of new service offerings, acquisitions, strategic relationships, joint ventures, capital raisings or capital commitments; |
| ● | additions to or departures of our senior management; |
| ● | litigation or regulatory proceedings involving us, our officers, or directors; |
| ● | release or expiry of lock-up or other transfer restrictions on our outstanding Ordinary Shares; and |
| ● | sales or perceived potential sales of additional Ordinary Shares. |
Any of these factors may result in large and sudden changes in the volume and price at which our Ordinary Shares trades.
Recently, there have been instances of extreme stock price run-ups followed by rapid price declines and strong stock price volatility with several recent initial public offerings, especially among companies with relatively smaller public floats. As a relatively small-capitalization company with relatively small public float, we may experience greater stock price volatility, extreme price run-ups, lower trading volume and less liquidity than large-capitalization companies. In particular, our Ordinary Shares may be subject to rapid and substantial price volatility, low volumes of trades and large spreads in bid and ask prices. Such volatility, including any stock-run up, may be unrelated to our actual or expected operating performance, financial condition or prospects, making it difficult for prospective investors to assess the rapidly changing value of our Ordinary Shares.
In addition, if the trading volumes of our Ordinary Shares are low, persons buying or selling in relatively small quantities may easily influence prices of our Ordinary Shares. This low volume of trades could also cause the price of our Ordinary Shares to fluctuate greatly, with large percentage changes in price occurring in any trading day session. Holders of our Ordinary Shares may also not be able to readily liquidate their investment or may be forced to sell at depressed prices due to low volume trading. Broad market fluctuations and general economic and political conditions may also adversely affect the market price of our Ordinary Shares. As a result of this volatility, investors may experience losses on their investment in our Ordinary Shares. A decline in the market price of our Ordinary Shares also could adversely affect our ability to issue additional shares of Ordinary Shares or other securities and our ability to obtain additional financing in the future. No assurance can be given that an active market in our Ordinary Shares will develop or be sustained. If an active market does not develop, holders of our Ordinary Shares may be unable to readily sell the shares they hold or may not be able to sell their shares at all.
In the past, shareholders of public companies have often brought securities class action suits against those companies following periods of instability in the market price of their securities. If we were involved in a class action suit, it could divert a significant amount of our management’s attention and other resources from our business and operations and require us to incur significant expenses to defend the suit, which could harm our results of operations. Any such class action suit, whether or not successful, could harm our reputation and restrict our ability to raise capital in the future. In addition, if a claim is successfully made against us, we may be required to pay significant damages, which could have a material adverse effect on our financial condition and results of operations.
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If we cannot satisfy, or continue to satisfy, the continued listing requirements and other rules of Nasdaq Capital Market, although we are exempt from certain corporate governance standards applicable to US issuers as a Foreign Private Issuer, our Ordinary Shares may be delisted, which could negatively impact the price of our Ordinary Shares and your ability to sell them.
Our Ordinary Shares are listed on the Nasdaq Capital Market. We cannot assure you that our Ordinary Shares will continue to be listed on the Nasdaq Capital Market. In order to maintain our listing on the Nasdaq Capital Market, we are required to comply with certain rules of Nasdaq Capital Market, including those regarding minimum shareholders’ equity, minimum share price and certain corporate governance requirements. Even if we initially meet the listing requirements and other applicable rules of the Nasdaq Capital Market, we may not be able to continue to satisfy these requirements and applicable rules. If we are unable to satisfy the Nasdaq Capital Market criteria for maintaining our listing, our Ordinary Shares could be subject to delisting.
If the Nasdaq Capital Market delists our Ordinary Shares from trading, we could face significant consequences, including:
| ● | a limited availability for market quotations for our Ordinary Shares; |
| ● | reduced liquidity with respect to our Ordinary Shares; |
| ● | a determination that our Ordinary Share is a “penny stock” which will require brokers trading in our Ordinary Share to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our Ordinary Share; |
| ● | limited amount of news and analyst coverage; and |
| ● | a decreased ability to issue additional securities or obtain additional financing in the future. |
As a company incorporated in the Cayman Islands, we are permitted to adopt certain Cayman Islands’ practices in relation to corporate governance matters that differ significantly from the Nasdaq listing standards; these practices afford less protection to shareholders than they would enjoy if we complied fully with the Nasdaq listing standards.
As a Cayman Islands company listed on the Nasdaq, we are subject to the Nasdaq listing standards. However, the Nasdaq rules permit a foreign private issuer like us to follow the corporate governance practices of its home country. Certain corporate governance practices in the Cayman Islands, which is our home country, may differ significantly from the Nasdaq listing standards. Currently, we have elected to rely on certain home country practices with respect to our corporate governance. Hence, our shareholders may be afforded less protection than they would otherwise enjoy under the Nasdaq rules applicable to U.S. domestic issuers.
We may lose our foreign private issuer status in the future, which could result in significant additional costs and expenses.
We are a foreign private issuer, and therefore, we are not required to comply with all of the periodic disclosure and current reporting requirements of the Exchange Act. The determination of foreign private issuer status is made annually on the last business day of an issuer’s most recently completed second fiscal quarter. We would lose our foreign private issuer status if, for example, more than 50% of our Ordinary Shares are directly or indirectly held by residents of the United States and we fail to meet additional requirements necessary to maintain our foreign private issuer status. If we lose our foreign private issuer status on this date, we will be required to file with the SEC periodic reports and registration statements on U.S. domestic issuer forms, which are more detailed and extensive than the forms available to a foreign private issuer. We will also have to mandatorily comply with U.S. federal proxy requirements, and our officers, directors and principal shareholders will become subject to the short-swing profit recovery provisions of Section 16 of the Exchange Act. In addition, we will lose our ability to rely upon exemptions from certain corporate governance requirements under the Nasdaq rules. As a U.S. listed public company that is not a foreign private issuer, we will incur significant additional legal, accounting and other expenses that we will not incur as a foreign private issuer, and accounting, reporting and other expenses in order to maintain a listing on a U.S. securities exchange.
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We incurred increased costs as a result of being a public company, particularly after we cease to qualify as an emerging growth company.
After our IPO, we became a public company and have incurred significant legal, accounting and other expenses that we did not incur as a private company. The Sarbanes-Oxley Act of 2002 and the rules subsequently implemented by the SEC and the Nasdaq detailed requirements concerning corporate governance practices of public companies. As a company with less than US$1.235 billion in net revenues, we qualify as an “emerging growth company” pursuant to the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2012 relating to internal controls over financial reporting.
These rules and regulations has increased our legal and financial compliance costs and made some corporate activities more time-consuming and costly. After we are no longer an “emerging growth company,” we expect to incur significant expenses and devote substantial management effort toward ensuring compliance with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 and the other time and attention to our public company reporting obligations and other compliance matters. For example, as a result of becoming a public company, we need to increase the number of independent directors and adopt policies regarding internal controls and disclosure controls and procedures. Operating as a public company makes it more difficult and more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. In addition, we also incur additional costs associated with our public company reporting requirements. It may also be more difficult for us to find qualified persons to serve on our board of directors or as executive officers. We are currently evaluating and monitoring developments with respect to these rules and regulations, and we cannot predict or estimate with any degree of certainty the amount of additional costs we may incur or the timing of such costs.
There can be no assurance that we will not be a passive foreign investment company, or PFIC, for United States federal income tax purposes for any taxable year, which could subject United States investors in our Ordinary Shares to significant adverse United States income tax consequences.
We will be classified as a passive foreign investment company, or PFIC, for any taxable year if either (i) 75% or more of our gross income for such year consists of certain types of “passive” income, or (ii) 50% or more of the value of our assets (determined on the basis of a quarterly average) during such year produce or are held for the production of passive income (the “asset test”). Based upon our current and expected income and assets, including goodwill and the value of the assets held by our strategic investment business, as well as projections as to the market price of our Ordinary Shares, we do not presently expect to be classified as a PFIC for the current taxable year or the foreseeable future.
While we do not expect to be a PFIC, because the value of our assets, for purposes of the asset test, may be determined by reference to the market price of our Ordinary Shares, fluctuations in the market price of our Ordinary Shares may cause us to become a PFIC classification for the current or subsequent taxable years. The determination of whether we will be or become a PFIC will also depend, in part, on the composition and classification of our income, including the relative amounts of income generated by and the value of assets of our strategic investment business as compared to our other businesses. Because there are uncertainties in the application of the relevant rules, it is possible that the U.S. Internal Revenue Service, or IRS, may challenge our classification of certain income and assets as non-passive which may result in our being or becoming a PFIC in the current or subsequent years. In addition, the composition of our income and assets will also be affected by how, and how quickly, we use our liquid assets and the cash raised in the IPO. If we determine not to deploy significant amounts of cash for active purposes, our risk of being a PFIC may substantially increase. Because there are uncertainties in the application of the relevant rules and PFIC status is a factual determination made annually after the close of each taxable year, there can be no assurance that we will not be a PFIC for the current taxable year or any future taxable year.
If we are a PFIC in any taxable year, a U.S. Holder may incur significantly increased United States income tax on gain recognized on the sale or other disposition of our Ordinary Shares and on the receipt of distributions on our Ordinary Shares to the extent such gain or distribution is treated as an “excess distribution” under the United States federal income tax rules, and such holder may be subject to burdensome reporting requirements. Further, if we are a PFIC for any year during which a U.S. Holder holds our Ordinary Shares, we will generally continue to be treated as a PFIC for all succeeding years during which such U.S. Holder holds our Ordinary Shares.
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ITEM 4. INFORMATION ON THE COMPANY
Item 4.A. History and Development of the Company
AsiaStrategy (f.k.a. Top Win International Limited) was incorporated as a Cayman Islands exempted company with limited liability on June 27, 2024 under the laws of the Cayman Islands to serve as the holding company of our group for our listing on Nasdaq. As of the date of this annual report, AsiaStrategy is authorized to issue a maximum of 100,000,000 Ordinary Shares of par value US$0.0005 each, of which 24,864,000 Ordinary Shares are issued and outstanding. The Ordinary Shares offered in this annual report are those of AsiaStrategy.
AsiaStrategy is a holding company and is not actively engaged in any business, and it conducts operations through our main Operating Subsidiary, namely Top Win International Trading Limited (“Top Win Hong Kong”) incorporated under the laws of Hong Kong, as well as other of our holding companies. Top Win Hong Kong is our main operating entity and is indirectly wholly-owned by Top Win through Grand Moon International Limited, an intermediate holding company. Grand Moon International Limited (“Grand Moon”) was incorporated on June 4, 2024 under the laws of the British Virgin Islands.
On July 25, 2024, the Company completed the reorganization through a series of planned transactions. As a result of the Reorganization, the Company became the holding company for Grand Moon and Top Win Hong Kong.
Our Corporate Structure
The chart below summarizes our corporate structure as of the date of this annual report:
Our Initial Public Offering
On December 5, 2023, the Company closed its initial public offering of 2,664,000 Ordinary Shares at a public offering price of US$4.00 per Ordinary Share on the Nasdaq Capital Market (“Nasdaq”). The gross proceeds received from the initial public offering totaled US$10.7 million. The Company’s Ordinary Shares began trading on April 2, 2025 on the Nasdaq Capital Market under the ticker symbol “TOPW” (now trading under the symbol “SORA”).
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Together with Company’s initial public offering, Ming Yuk, NGAI, and Kelven, WONG, the existing shareholders of the Company, have registered the resale of up to 1,300,000 Ordinary Share pursuant to the registration statement on Form F-1 initially filed by the Company with the SEC on November 25, 2024 (File No. 333-283448), which was declared effective on March 27, 2025. Of which, Ming Yuk, NGAI offered to sell 650,000 Ordinary Shares, Kelven, WONG offered to sell 650,000 Ordinary Shares.
As of the date of the annual report, 24,864,000 Ordinary Shares were issued and outstanding.
Change of Directors and Officers
On April 24, 2025, the Board of Directors and Nominating Committee of the Company approved and confirmed the resignment of Ziyu ZHANG as a director and Chair of Audit Committee of the Company. Mr. ZHANG resigned for personal reasons and his decision to resign was not as a result of any disagreements with the Board of the Company on any matter.
On April 24, 2025, the Board of Directors and Nominating Committee of the Company approved and confirmed the appointment of Jung Hui YEN as a director and Chair of Audit Committee of the Company.
On May 16, 2025, the board of directors of the Company appointed Mr. Jason Kin Hoi Fang as a director to the Board and Co-Chief Executive Officer of the Company. Mr. Fang was nominated by Sora Ventures Global Limited (f.k.a. Pride River Limited), which is the majority shareholder of the Company. On May 21, 2025, the board of directors of the Company appointed Mr. Fang as the Chairman of the Board.
On August 13, 2025, the board of directors of the Company appointed Mr. Tong Liu (Luke) as the Chief Investment Officer of the Company.
On February 28, 2026, the board of directors of the Company received the resignation of Mr. Xiaojun Wang as an independent director of the Company. There were no disagreements that caused Mr. Wang’s resignation.
On February 28, 2026, the board of directors of the Company appointed Mr. Yunming Tao as an independent director of the Company. Mr. Tao was also appointed to replace Mr. Wang as a member of the audit committee, a member of the compensation committee, and chairperson of our nominating committee on our board.
Change of Name and Trading Symbol
On May 27, 2025, the Company’s trading symbol for its ordinary shares was changed to “SORA” (from “TOPW”) on Nasdaq.
On August 5, 2025, Top Win International Limited held a shareholder meeting where shareholders approved the change of the name of the Company from “Top Win International Limited” to “AsiaStrategy”.
Recent Corporate Transactions
On August 15, 2025, the Company entered into certain securities purchase agreements (the “Securities Purchase Agreements”) with certain investors to issue convertible notes with an aggregate principal amount of US$10 million, at a purchase price of 100% of such principal, a term of three years, and an interest rate of 3.0% per annum (the “Notes”). Such Notes shall be convertible into the Company’s ordinary shares at an initial conversion price of US$4.64 per share. The form of the Securities Purchase Agreements, which includes the form of the Notes, is appended to this annual report as an exhibit. The closing of the sale and purchase of such Notes was completed on October 13, 2025. Pursuant to such closing, the Company received gross proceeds of US$10 million.
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On August 27, 2025, the Company contributed $3,988,437 to a portfolio investment managed by Asia Strategy Partners LLC (“ASP LLC”), a Delaware limited liability company operating as a private equity fund. This contribution represented approximately 9.93% of the total portfolio of ASP LLC. ASP LLC is solely managed by SORA Ventures, which is ultimately controlled by Mr. Jason Kin Hoi Fang, who became the Group’s ultimate controlling shareholder in November 2025. The investment in ASP LLC is not redeemable due to its closed end structure, and transfers of interests are subject to restrictions requiring the prior written consent of the manager, which may be withheld at the manager’s sole discretion. As of December 31, 2025, the Group had no remaining unfunded commitments to ASP LLC. On September 10, 2025, ASP LLC subscribed for 46,241,995 newly issued ordinary shares of Bitplanet Co., Ltd. (“Bitplanet”) (KOSDAQ: 049470, formerly known as SGA Co., Ltd.), a company listed on the Korea Securities Dealers Automated Quotations market, and acquired an additional 11,473,850 ordinary shares from certain sellers. Upon completion of these transactions, ASP LLC held approximately 49.03% of Bitplanet’s total ordinary shares. Based on the Company’s capital contribution, the Group’s indirect attributable interest in ASP LLC’s investment in Bitplanet was 5,728,620 ordinary shares, representing approximately 4.87% of Bitplanet’s total issued ordinary shares.
On July 3, 2025, the Group, through AsiaStrategy SG, announced its intention to make a tender offer with certain other offerors to acquire all the securities of DV8 Public Company Limited (“DV8”) (SET: DV8), a public company listed on The Stock Exchange of Thailand. The offer price for the ordinary shares was THB 0.56 (fifty-six satang) per share and the offer price for the warrants was THB 0.01 (one satang) per unit. The tender offer period ended on August 20, 2025 and the tender offer was completed on August 22, 2025, whereupon AsiaStrategy SG was allocated 114,638,700 DV8 shares, representing approximately 7.07% of DV8’s total issued and paid-up share capital, for a total consideration of approximately THB 64.2 million (approximately $1,965,744). The investment in DV8 is measured at fair value because its fair value is readily determinable based on quoted market prices on the exchange. Gains and losses resulting from changes in fair value are recognized in the consolidated statements of operations and comprehensive income (loss). The investment was classified as current assets because the securities are available to be sold to meet liquidity needs when necessary.
Emerging Growth Company Status
As a company with less than US$1.235 billion in revenue, we qualify as an “emerging growth company” pursuant to the Jumpstart Our Business Startups Act of 2012, as amended, or the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other requirements compared to those that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002 in the assessment of the emerging growth company’s internal control over financial reporting. The JOBS Act also provides that an emerging growth company does not need to comply with any new or revised financial accounting standards until such date that a private company is otherwise required to comply with such new or revised accounting standards. Pursuant to the JOBS Act, we have elected to take advantage of the benefits of this extended transition period for complying with new or revised accounting standards. As a result, our operating results and financial statements may not be comparable to the operating results and financial statements of other companies who have adopted the new or revised accounting standards.
We will remain an emerging growth company until the earliest of (i) the last day of the fiscal year during which we have total annual gross revenues of at least US$1.235 billion; (ii) the last day of our fiscal year following the fifth anniversary of the completion of our IPO; (iii) the date on which we have, during the preceding three-year period, issued more than US$1.0 billion in non-convertible debt; or (iv) the date on which we are deemed to be a “large accelerated filer” under the Securities Exchange Act of 1934, as amended, or the Exchange Act, which would occur if the market value of our Ordinary Shares that are held by non-affiliates exceeds US$700 million as of the last business day of our most recently completed second fiscal quarter. Once we cease to be an emerging growth company, we will not be entitled to the exemptions provided in the JOBS Act discussed above.
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Foreign Private Issuer Status
We are incorporated in the Cayman Islands, and more than 50 percent of our outstanding voting securities are not directly or indirectly held by residents of the United States. Therefore, we are a “foreign private issuer,” as defined in Rule 405 under the Securities Act and Rule 3b-4(c) under the Exchange Act. As a result, we are not subject to the same requirements as U.S. domestic issuers. Under the Exchange Act, we will be subject to reporting obligations that, to some extent, are more lenient and less frequent than those of U.S. domestic reporting companies. For example, we will not be required to issue quarterly reports or proxy statements. We will not be required to disclose detailed individual executive compensation information. Furthermore, our major shareholders will not be required to report equity holdings under Section 16 of the Exchange Act and our directors, executive officers and major shareholders will not be subject to the insider short-swing profit disclosure and recovery regime. In addition, as a company incorporated in the Cayman Islands, we are permitted to adopt certain home country practices in relation to corporate governance matters that differ significantly from the Nasdaq Stock Market corporate governance requirements. These practices afford less protection to shareholders than they would enjoy if we complied fully with the Nasdaq Stock Market corporate governance requirements.
We have elected to follow certain Cayman Islands corporate governance practices in lieu of certain requirements of the listing rules of Nasdaq (the “Rules”) below:
| 1. | Rule 5605(b)(1), which requires that the majority of the board of directors must be comprised of independent directors. |
| 2. | Nasdaq Marketplace Rule 5605(b)(2), which requires that independent directors must have regularly scheduled meetings at which only independent directors are present. |
| 3. | Nasdaq Marketplace Rule 5620(a), which requires that each company listing common stock or voting preferred stock, and their equivalents, shall hold an annual meeting of shareholders no later than one year after the end of the company’s fiscal year-end. |
| 4. | Nasdaq Listing Rule 5620(b), which requires that each company that is not a limited partnership shall solicit proxies and provide proxy statements for all meetings of shareholders and shall provide copies of such proxy solicitation to Nasdaq. |
| 5. | Nasdaq Marketplace Rule 5635(a), which requires that shareholder approval is required prior to the issuance of securities in connection with the acquisition of the stock or assets of another company if: (1) where, due to the present or potential issuance of common stock, including shares issued pursuant to an earn-out provision or similar type of provision, or securities convertible into or exercisable for common stock, other than a public offering for cash: (A) the common stock has or will have upon issuance voting power equal to or in excess of 20% of the voting power outstanding before the issuance of stock or securities convertible into or exercisable for common stock; or (B) the number of shares of common stock to be issued is or will be equal to or in excess of 20% of the number of shares of common stock outstanding before the issuance of the stock or securities; or (2) any director, officer or substantial shareholder (as defined by Rule 5635(e)(3)) of the company has a 5% or greater interest (or such persons collectively have a 10% or greater interest), directly or indirectly, in the company or assets to be acquired or in the consideration to be paid in the transaction or series of related transactions and the present or potential issuance of common stock, or securities convertible into or exercisable for common stock, could result in an increase in outstanding common shares or voting power of 5% or more. |
| 6. | Nasdaq Marketplace Rule 5635(b), which requires that shareholder approval is required prior to the issuance of securities when the issuance or potential issuance will result in a change of control of the company. |
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| 7. | Nasdaq Marketplace Rule 5635(c), which requires that shareholder approval is required prior to the issuance of securities when a stock option or purchase plan is to be established or materially amended or other equity compensation arrangement made or materially amended, pursuant to which stock may be acquired by officers, directors, employees, or consultants, except for: (1) warrants or rights issued generally to all security holders of the company or stock purchase plans available on equal terms to all security holders of the company (such as a typical dividend reinvestment plan); (2) tax qualified, non-discriminatory employee benefit plans (e.g., plans that meet the requirements of Section 401(a) or 423 of the Internal Revenue Code) or parallel nonqualified plans, provided such plans are approved by the company’s independent compensation committee or a majority of the company’s independent directors; or plans that merely provide a convenient way to purchase shares on the open market or from the company at Market Value; (3) plans or arrangements relating to an acquisition or merger as permitted under IM-5635-1; or (4) issuances to a person not previously an employee or director of the company, or following a bona fide period of non-employment, as an inducement material to the individual’s entering into employment with the company, provided such issuances are approved by either the company’s independent compensation committee or a majority of the company’s independent directors. Promptly following an issuance of any employment inducement grant in reliance on this exception, a company must disclose in a press release the material terms of the grant, including the recipient(s) of the grant and the number of shares involved. |
| 8. | Nasdaq Marketplace Rule 5635(d), which requires that shareholder approval is required prior to a 20% Issuance at a price that is less than the Minimum Price. (A) “Minimum Price” means a price that is the lower of: (i) the Nasdaq Official Closing Price (as reflected on Nasdaq.com) immediately preceding the signing of the binding agreement; or (ii) the average Nasdaq Official Closing Price of the common stock (as reflected on Nasdaq.com) for the five trading days immediately preceding the signing of the binding agreement. (B) “20% Issuance” means a transaction, other than a public offering as defined in IM-5635-3, involving the sale, issuance or potential issuance by the Company of common stock (or securities convertible into or exercisable for common stock), which alone or together with sales by officers, directors or Substantial Shareholders of the Company, equals 20% or more of the common stock or 20% or more of the voting power outstanding before the issuance. |
| 9. | Nasdaq Marketplace Rule 5250(b)(3), which requires that companies must disclose all agreements and arrangements in accordance with this rule by no later than the date on which the company files or furnishes a proxy or information statement subject to Regulation 14A or 14C under the Securities Exchange Act of 1934 in connection with the company’s next shareholders’ meeting at which directors are elected (or, if they do not file proxy or information statements, no later than when the company files its next Form 10-K or Form 20-F). |
| 10. | Nasdaq Marketplace Rule 5250(d), which requires among others that each company (including a limited partnership) shall make available to shareholders an annual report containing audited financial statements of the company and its subsidiaries (which, for example, may be on Form 10-K, 20-F, 40-F or N-CSR) within a reasonable period of time following the filing of the annual report with the SEC; Nasdaq companies that distribute interim reports to shareholders should distribute such reports to both registered and beneficial shareholders; each company that is not a limited partnership and is subject to Rule 13a-13 under the Securities Exchange Act of 1934 shall make available copies of quarterly reports including statements of operating results to shareholders either prior to or as soon as practicable following the company’s filing of its Form 10-Q with the SEC; each company that is not a limited partnership and is not subject to Rule 13a-13 under the Securities Exchange Act of 1934 and that is required to file with the SEC, or other regulatory authority, interim reports relating primarily to operations and financial position, shall make available to shareholders reports which reflect the information contained in those interim reports. |
The Company’s practices with regard to these requirements are not prohibited under any statutory legal provision of the Cayman Islands or the amended and restated memorandum and articles of association of the Company as currently in effect.
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Corporate Information
Our principal executive office is located at 33/F, Sunshine Plaza, 353 Lockhart Road, Wan Chai, Hong Kong. The telephone number of our principal executive office is +852 28157988. Our registered office and our registered agent’s office in the Cayman Islands are both located at Harneys Fiduciary (Cayman) Limited, 4th Floor, Harbour Place, 103 South Church Street, P.O. Box 10240, Grand Cayman KY1-1002, Cayman Islands. Our agent for service of process in the United States is Cogency Global Inc., located at 122 East 42nd Street, 18th Floor, New York, NY 10168.
Investors should contact us for any inquiries through the address and telephone number of our principal executive offices. Our website is <https://asiastrategy.io/>. The information contained on our website is not a part of this annual report.
Item 4.B. Business Overview
Our Products
Through our Operating Subsidiary in Hong Kong, Top Win International Trading Limited, we are a wholesaler engaged in trading, distribution, and retail of luxury watches of international brands.
As the purveyor of fine watches, we source luxury products directly or indirectly from authorized dealers, distributors, and brand owners, located in Europe, Japan, Singapore, and other locations, and sell them to our customers, comprising independent watch dealers, watch distributors, and retail buyers within the watch industry. Our strategic location in Hong Kong positions us advantageously within the Asia-Pacific luxury market. This region has seen significant growth in demand for luxury goods, driven by rising disposable incomes and a growing appreciation for high-quality, branded products. We currently offer a selection of over 30 internationally renowned watch brands, including Blancpain, Breguet, Cartier, Chopard, Hermes, IWC, Jaeger, Rolex, Omega, and Longines. We primarily trade watches within the price range of US$1,900 to US$7,500 with our target customers being middle to high-income earners. This sector has been a significant contributor to our sales, accounting for 53.0% and 50.7% of our total sales in 2025 and 2024, respectively. Notably, Omega watches have been a major driver of our sales revenue, comprising 50.2% and 49.5% of our total sales revenue in 2025 and 2024 respectively.
Our revenue was US$11.0 million, US$17.6 million and US$18.8 million for the years ended December 31, 2025, 2024 and 2023 respectively. We recorded net income of US$12.3 million for the year ended December 2025, net loss of US$42,219 for the year ended December 2024, and net income of US$0.2 million for the year ended December 31, 2023. We pride ourselves on operational excellence, which is reflected in our streamlined logistics and distribution processes. Our commitment to maintaining high standards of service and product quality has earned us a reputation for reliability and trustworthiness among our customers and business partners. Our growth strategy includes strengthening our brand recognition and reputation in existing markets, increasing our market presence through expansion into new geographical customers, diversifying our supply network, broadening our product range to include additional luxury brands and other categories, and creating new income streams.
Our Business Operations
The following table sets out some of the international brands featured in our stores:
| Omega | Patek Philippe |
| Cartier | Blancpain |
| Rolex | Casio |
| Longines | Breguet |
| Audermars Piguet | Hublot |
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Luxury watches
As of the date of the annual report, we sell a broad portfolio of watches from over 30 international luxury brands on a non-exclusive basis, including Blancpain, Breguet, Cartier, Chopard, Hermes, IWC, Jaeger, Rolex, Omega, and Longines. The selling prices of the most watches we trade are ranging from US$1,900 to US$7,500.
The following table shows a breakdown of the company’s revenue the approximate percentage thereof in relation to the total revenue in respect of watches sold by the company for the three years ended December 31, 2025, 2024 and 2023.
| As of December 31, 2025 (US$) |
As of December 31, 2024 (US$) |
As of December 31, 2023 (US$) |
||||||||||||||||||||||
| Omega | $ | 5,509,648.20 | 50.15 | % | $ | 8,720,733.53 | 49.50 | % | $ | 15,593,916.40 | 81.10 | % | ||||||||||||
| Longines | $ | 3,986,071.89 | 36.28 | % | $ | 532,269.77 | 3.00 | % | $ | 436,964.86 | 2.30 | % | ||||||||||||
| Rolex | $ | 734,119.18 | 6.67 | % | 2,184,500.83 | 12.40 | % | $ | 666,228.77 | 3.50 | % | |||||||||||||
| BlancPain | $ | 339,388.50 | 3.09 | % | $ | 189,468.01 | 1.10 | % | $ | 232,190.89 | 1.20 | % | ||||||||||||
| Cartier | $ | 103,346.56 | 0.94 | % | $ | 595,324.62 | 3.40 | % | $ | 747,104.31 | 3.90 | % | ||||||||||||
| Patek Philippe | $ | 88,703.88 | 0.81 | % | $ | 4,016,083.56 | 22.80 | % | $ | 346,397.47 | 1.80 | % | ||||||||||||
| Chopard | $ | 75,425.37 | 0.69 | % | — | 0.00 | % | — | 0.00 | % | ||||||||||||||
| Piaget | $ | 29,503.82 | 0.27 | % | — | 0.00 | % | — | 0.00 | % | ||||||||||||||
| Vacheron Constantin | $ | 23,785.21 | 0.22 | % | $ | 133,922.85 | 0.80 | % | — | 0.00 | % | |||||||||||||
| Hublot | $ | 22,699.34 | 0.21 | % | — | 0.00 | % | $ | 73,245.34 | 0.40 | % | |||||||||||||
| Mido | $ | 16,902.48 | 0.15 | % | — | 0.00 | % | — | 0.00 | % | ||||||||||||||
| IWC | $ | 16,358.07 | 0.15 | % | — | 0.00 | % | — | 0.00 | % | ||||||||||||||
| Hermes | $ | 14,251.63 | 0.13 | % | — | 0.00 | % | — | 0.00 | % | ||||||||||||||
| Bvlgari | $ | 9,941.51 | 0.09 | % | — | 0.00 | % | — | 0.00 | % | ||||||||||||||
| Swarovski | $ | 9,401.46 | 0.09 | % | — | 0.00 | % | — | 0.00 | % | ||||||||||||||
| Mont Blanc | $ | 4,145.82 | 0.04 | % | — | 0.00 | % | — | 0.00 | % | ||||||||||||||
| Diamond | $ | 769.66 | 0.01 | % | ||||||||||||||||||||
| Coach | $ | 713.22 | 0.01 | % | — | 0.00 | % | — | 0.00 | % | ||||||||||||||
| Redline | — | 0.00 | % | — | 0.00 | % | — | 0.00 | % | |||||||||||||||
| Richard Mille | — | 0.00 | % | $ | 556,196.33 | 3.20 | % | — | 0.00 | % | ||||||||||||||
| Audemars Piguet | — | 0.00 | % | $ | 401,768.55 | 2.30 | % | $ | 348,642.51 | 1.80 | % | |||||||||||||
| Breguet | — | 0.00 | % | $ | 151,294.12 | 0.90 | % | $ | 497,010.83 | 2.60 | % | |||||||||||||
| Casio | — | 0.00 | % | — | 0.00 | % | $ | 112,545.91 | 0.60 | % | ||||||||||||||
We source luxury watches worldwide, directly authorized watcher dealers, and independent watch suppliers. Over the years, we have built stable procurement routes through consistent and reliable partnerships. We maintain close relationships with a diverse array of suppliers who provide us with daily updates on their product offerings.
As a normal market practice, we do not enter into any long-term agreement with our suppliers. We purchase from these suppliers on an order-by-order basis, from time to time based on the inventory level, customer’s demand and request, and anticipated future demand by the management. This flexible approach enables us to select suppliers based on competitive pricing, ensuring that we consistently procure high-quality timepieces at the best possible prices for our customers.
Our order management is driven by our deep understanding and sensitivity to market trends rather than solely by customer requests. This proactive approach enables us to maintain a stable inventory level. Customers place their orders through our internal platform. Upon mutual confirmation of the orders, we efficiently process and ship the products to our customers. This system ensures streamlined operations and reliable product availability.
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Our Digital Asset Business
As part of our broader corporate strategy, we hold bitcoin as a treasury reserve asset. We intend to hold bitcoin acquired by us, directly or through our subsidiaries and affiliates, on our balance sheet over time. We have not engaged in trading of digital assets, and we do not currently provide digital asset services to third parties.
Sales and Marketing
We maintain close relationships with a diverse array of suppliers who provide us with daily or weekly updates on their luxury watch offerings. Our sales and marketing team would compare prices, monitor currency rates, and select the most reliable suppliers offering the best prices. The sales team takes the initiative to visit our upstream and downstream partners regularly to gain a comprehensive understanding of what matters most to them. By maintaining close relationships and staying attuned to customer needs, Top Win operates with a high level of efficiency and effectiveness.
As a wholesaler of luxury watches of established brands, we generally leverage the marketing efforts of the brand owners in promoting the brands and focus on spreading in-depth knowledge and enhancing the perception of the specific products we sell. We accomplish these objectives through target exposure of the products, in-person customer visits, and other sales and promotional events.
Our goal and practice have been to formulate effective and tailored marketing strategies that reflect the characteristics of the products being sold and the preferences of our target customers. Depending on our arrangements with our suppliers and the status of a particular product in the market, we may conduct more focused and intensive advertising and promotional activities as necessary.
Additionally, our sales team regularly visits or meets with our customers to educate them about our products. These activities help to cultivate customers’ in-depth knowledge and discerning taste, which we believe is especially important for luxury items sales. These activities enhance our reputation, generate goodwill and loyalty, and further solidify our overall relationship with our customers. We believe that our high-quality sales staff services result in strong word-of-mouth referrals and positive customer reviews, which increase our market recognition. Through word-of-mouth referrals from our existing customers and business contacts, the customers often refer us to their customer network or return to us for their other luxury accessories or other related needs.
Customers and Suppliers
Customers
Our customers primarily consist mainly of business-to-business (B2B) customers, including distributors, independent watch dealers, and retail sellers. Currently, we have strategically focused on business-to-business sales, which would allow us access to our customers’ sales network and consumer base and help us maximize the reach of our sales swiftly and effectively. We have a physical showroom in Hong Kong, which also caters to retail customers.
No written long-term agreements were entered into with any of the business-to-business (B2B) customers. Because of the longstanding and well-established relationship with its watch dealers, we have not imposed any requirement for a minimum quantity of sales to be achieved by any of its watch dealers. All of our sales in Hong Kong are outright sales whereby titles of goods will pass to independent watch dealers upon the delivery of watches to them.
The following table sets forth information as to each customer that accounted for 10% or more of the sale of the company for the fiscal years ended December 31, 2025, 2024 and 2023. All of which are other independent watch dealers.
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For the year ended December 31, 2025, there were two customers each generating over 10% of our total revenue for the year, and they in aggregate accounted for approximately 37% of our total revenue for the year.
| For the year ended December 31, 2025 | ||||||||
| Customers | Amount | % | ||||||
| Customer A | $ | 3,007,906 | 27 | % | ||||
| Customer B | $ | 1,151,843 | 10 | % | ||||
| Total | $ | 4,159,749 | 37 | % | ||||
For the year ended December 31, 2024, there were two customers each generating over 10% of our total revenue for the year, and they in aggregate accounted for approximately 33% of our total revenue for the year.
| For the year ended December 31, 2024 | ||||||||
| Customers | Amount | % | ||||||
| Customer B | $ | 2,939,902 | 17 | % | ||||
| Customer A | $ | 2,821,634 | 16 | % | ||||
| Total | $ | 5,761,536 | 33 | % | ||||
For the year ended December 31, 2023, there were three customers each generating over 10% of our total revenue for the year, and they in aggregate accounted for approximately 40% of our total revenue for the year.
| For the year ended December 31, 2023 | ||||||||
| Customers | Amount | % | ||||||
| Customer C | $ | 3,397,499 | 18 | % | ||||
| Customer D | $ | 2,091,907 | 11 | % | ||||
| Customer E | $ | 2,004,975 | 11 | % | ||||
| Total | $ | 7,494,381 | 40 | % | ||||
Although our sales were highly concentrated on certain major customers, we did not rely on sales to any single customer. However, the loss of one or more of these clients or a significant reduction in the volume of their purchases, could materially and adversely affect our business and financial performance in the short term. Historically, we have been able to retain a longstanding and well-established relationship with our customers. While we are confident in our ability to continue attracting new customers and adapting to evolving market conditions, any inability to retain or replace key customers could have a material adverse effect on our business, results of operations, and financial condition.
Major Suppliers
We procure the luxury watches we sell from the market ad hoc based on our business objectives and the prevailing market conditions. As such, we generally do not have formal long-term supply arrangements with suppliers of the watches.
Additionally, buying the right products at the right time, such as products with a great potential for value appreciation, is akin to investing. Decisions on the timing and choice of inventory procurement require a significant level of judgment based on industry expertise and insights into the relevant market conditions and other industry factors, which is crucial to the survival and success of luxury watch traders. Top Win has been in the business of importing and selling luxury watches in Hong Kong for more than 20 years. With our long operating history, established track record, and reputation in the business, we have not experienced significant difficulties in procuring watches globally in accordance with our operational objectives and budgets. Through the volume of products, we purchased over the years, we have established stable relationships with our major suppliers. The value of our purchase from these supplies accounted for a significant portion of our total purchase.
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Our commitment to fostering strong supplier relationships is a cornerstone of our business strategy, ensuring our continued success and growth. As part of our commitment to maintaining strong supplier relationships, we regularly visit our suppliers. For new suppliers, we conduct on-site visits to familiarize ourselves with their operations and perform thorough inspections of their products. As our relationships with these suppliers become more stable and mature, and trust is established, we continue to visit them once or twice a year to maintain our relationships. By working closely with our suppliers, we can negotiate favorable terms, such as better pricing, and exclusive access to high-demand or niche products, ensuring a steady supply of the items that our customers demand.
We consider our major suppliers to be those suppliers that account for more than 10% of our overall purchases. As we procure our products from the market ad hoc based on our business objectives and the prevailing market conditions, we do not normally have long-term supply contracts with our suppliers, including our major suppliers.
As of December 31, 2025, we had three major vendors, who accounted for more than 10% of our total purchases. Their respective percentage of our total purchases are as follows:
| For the year ended December 31, 2025 | ||||||||
| Vendors | Amount | % | ||||||
| Vendor A | $ | 4,876,263 | 31 | % | ||||
| Vendor B | $ | 2,829,662 | 18 | % | ||||
| Vendor C | $ | 2,002,164 | 13 | % | ||||
| Vendor D | $ | 1,727,497 | 11 | |||||
| Total | $ | 11,435,586 | 73 | % | ||||
As of December 31, 2024, we had three major vendors, who accounted for more than 10% of our total purchases. Their respective percentage of our total purchases are as follows:
| For the year ended December 31, 2024 | ||||||||
| Vendors | Amount | % | ||||||
| Vendor B | $ | 4,126,222 | 25 | % | ||||
| Vendor A | $ | 3,017,415 | 18 | % | ||||
| Vendor E | $ | 1,713,443 | 10 | % | ||||
| Total | $ | 8,857,080 | 53 | % | ||||
As of December 31, 2023, we had two major vendors, who accounted for more than 10% of our total purchases. Their respective percentage of our total purchases are as follows:
| For the year ended December 31, 2023 | ||||||||
| Vendors | Amount | % | ||||||
| Vendor F | $ | 10,529,156 | 64 | % | ||||
| Vendor G | $ | 2,317,936 | 14 | % | ||||
| Total | $ | 12,847,092 | 78 | % | ||||
Although our supply was highly concentrated on our major vendors, we did not rely on any single vendor. While we receive numerous offers daily from authorized dealers, distributors, and brand owners worldwide, and while these offers may be comparable to those from our existing vendors, the specific terms would need to be renegotiated if we want to engage with new vendors. Although identifying alternative vendors will not pose a significant challenge, losing one or more key vendors could lead to short-term difficulties, such as negotiating favorable terms or pricing with new suppliers. We believe that over the long term, we will be able to find alternative vendors without significant disruption to our operations.
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Seasonality
Our sales follow the traditional seasonal shopping patterns in Hong Kong. A high proportion of our sales is typically recorded around the National holidays and summertime because of a concentration of promotional sales and other promotional events in the period surrounding these dates. As a result, our revenue is usually higher in the second quarter of the year.
Intellectual Property
We have registered certain trademarks and we also depend on a certain royalty free license from our affiliate for the use of our logo to represent our “AsiaStrategy” branding.
Properties
As of the date of this annual report, we entered into the following lease agreement:
| Location | Term of Lease | Usage | ||
| 33/F, Sunshine Plaza, 353 Lockhart Road, Wan Chai, Hong Kong | August 2025 to July 2029 | Office/ Showroom |
We do not own any property.
Insurance
We have taken out insurance for, among other things, the inventories which are the major assets of our business as well as the merchandise for sale in our head office and display room in Hong Kong, including insurance for the stock against robbery, burglary, shop lifting, fire, flooding, and malicious damage, and the insurance for the local transit of stocks within Hong Kong. We maintain employees’ compensation insurance for our employees at our office, which covers the liability to make payment in the case of death, injury or disability of all our employees under the Employees’ Compensation Ordinance (Chapter 282 of the Laws of Hong Kong) and at common law for injuries sustained at work. We believe that our current insurance policies are sufficient for our operations.
Legal Proceedings
We may from time to time become a party to various legal or administrative proceedings arising in the ordinary course of our business. During the years ended December 31, 2025, 2024, and 2023 and as of the latest practicable date, neither we nor any of our subsidiaries have been involved in any litigation, claim, administrative action or arbitration which had a material adverse effect on the operations or financial condition of the Company.
Regulations
Hong Kong Regulations
As we conduct business in Hong Kong through our wholly-owned subsidiary Top Win International Trading Limited, our business operation is subject to various regulations and rules promulgated by the Hong Kong government. The following is a brief summary of the Hong Kong laws and regulations that currently and materially affect our business. This section does not purport to be a comprehensive summary of all present and proposed regulations and legislation relating to the industries in which we operate.
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Hong Kong Laws and Regulations relating to Dealings in Precious Metals and Stones
The Anti-Money Laundering and Counter-Terrorist Financing Ordinance (“AMLO”) (Chapter 615 of the Laws of Hong Kong), among other things, provides the regulation of dealings in precious metals and stones and the registration of dealers in precious metals and stones.
To enhance the regulatory regime for combating money laundering and terrorist financing (“ML/TF”) in fulfilment of Hong Kong’s obligations under the Financial Action Task Force (“FATF”), the AMLO has been amended to introduce a registration regime for dealers in precious metals and stones for commencement on 1 April 2023. The Customs and Excise Department would take charge of the regime to enforce the registration requirements and supervise the anti-money laundering and counter-terrorist financing (“AML/CTF”) conduct of registrants.
There are two categories of registration with the Commissioner of Customs and Excise:
| (1) | Any dealer who intends to engage in non-cash transaction(s) with total value at or above HKD120,000 in the course of business is required to register as a Category A registrant; and |
| (2) | Any dealer who is seeking to engage in cash transactions with total value at or above HKD120,000 and non-cash transactions with total value at or above HKD120,000 (“Specified Cash Transaction”) in the course of business is required to register as a Category B registrant. |
A Category A registrant is not allowed to conduct any Specified Cash Transaction and is not required by any local laws or regulations to identify and verify the identities of its cash-settling customers whereas a Category B registrant is subject to AML/CTF supervision.
To facilitate existing dealers migration to the aforesaid registration regime, precious metals and stones dealers who have been in operation before commencement of the aforesaid registration regime are allowed to apply for registration within 9 months (“Relevant Period”) after commencement of the aforesaid registration regime (i.e. from 1 April to 31 December 2023). Any person, who would like to start up a precious metals and stones business after commencement of the Regime and plan to carry out specified transactions and/or specified cash transactions, is required to register before carrying out any specified transactions and/or specified cash transactions.
After the Relevant Period, any existing dealer that continues to deal with precious metals and stones in cash and/or non-cash transactions that exceed HKD120,000 annually without properly registration under the aforesaid registration regime will be liable on conviction to a maximum fine of HK$100,000 and imprisonment for six months.
As of the date of this annual report, our Hong Kong Operating Subsidiary has been registered as a Category B Registrant with a valid certificate of registration.
Hong Kong Laws and Regulations relating to Protection of Personal Data
The Personal Data (Privacy) Ordinance (Chapter 486 of the Laws of Hong Kong) (“PDPO”) aims to protect the privacy of individuals of their personal data. The PDPO imposes a statutory duty on data users to comply with the requirements of the six data protection principles (the “Data Protection Principles”) contained in Schedule 1 to the PDPO. The PDPO provides that a data user shall not do an act, or engage in a practice, that contravenes a Data Protection Principle unless the act or practice, as the case may be, is required or permitted under the PDPO. The six Data Protection Principles are:
| ● | Principle 1 - purpose and manner of collection of personal data; |
| ● | Principle 2 - accuracy and duration of retention of personal data; |
| ● | Principle 3 - use of personal data; |
| ● | Principle 4 - security of personal data; |
| ● | Principle 5 - information to be generally available; and |
| ● | Principle 6 - access to personal data. |
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Non-compliance with a Data Protection Principle may lead to a complaint to the Privacy Commissioner for Personal Data (the “Privacy Commissioner”). The Privacy Commissioner may serve an enforcement notice to direct the data user to remedy the contravention. A data user who contravenes an enforcement notice commits an offence which may lead to a fine and imprisonment.
The PDPO also gives data subjects certain rights, inter alia:
| ● | the right to be informed by a data user whether the data user holds personal data of which the individual is the data subject; |
| ● | if the data user holds such data, to be supplied with a copy of such data; and |
| ● | the right to request correction of any data they consider to be inaccurate. |
The PDPO criminalizes, including but not limited to, the misuse or inappropriate use of personal data in direct marketing activities, non-compliance with a data access request and the unauthorized disclosure of personal data obtained without the relevant data user’s consent.
Hong Kong Laws and Regulations relating to Trade Description
The Trade Descriptions Ordinance (Chapter 362 of the Laws of Hong Kong) (“TDO”) aims to prohibit false or misleading trade description and statements to goods and services provided by traders to the consumers during or after a commercial transaction. Pursuant to the TDO, any person in the course of any trade or business applies a false trade description to any goods and services or supply or offers to supply them commits an offence and a person also commits the same offence if he/she is in possession for sale or for any purpose of trade or manufacture of any goods with a false description. The TDO also provides that traders may commit an offence if they engage in a commercial practice that has a misleading omission of material information of the goods, an aggressive commercial practice, involves bait advertising, bait and switch or wrong acceptance of payment.
Hong Kong Laws and Regulations relating to Sales of Goods
Pursuant to the Sale of Goods Ordinance (Chapter 26 of the Laws of Hong Kong) (“SOGO”) in every contract of sale, there is an implied warranty that the goods are free, and will remain free until the time when the property is to pass, from any charge or encumbrance not disclosed or known to the buyer before the contract is made and that the buyer will enjoy quiet possession of the goods except so far as it may be disturbed by the owner or other person entitled to the benefit of any charge or encumbrance so disclosed or known. The SOGO provides that there is an implied condition that the goods shall correspond with the description where there is a contract for the sale of goods by description, and there is any implied condition or warranty as to the quality or fitness for any particular purpose of goods supplied under a contract of sale. Where the seller sells goods in the course of a business, there is an implied condition that the goods supplied under the contract are of merchantable quality.
Hong Kong Laws and Regulations relating to Exemption Clauses in a Contract
The Control of Exemption Clauses Ordinance (Chapter 71 of the Laws of Hong Kong) (“CECO”) aims to limit the scope where the seller may limit its liability via the terms of the contracts. The CECO provides that unless the concerned terms satisfy the test of reasonableness, a person dealing as consumer cannot by reference to any contract term be made to indemnify another person (whether a party to the contract or not) in respect of liability that may be incurred by the other for negligence or breach of contract.
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Hong Kong Laws and Regulations relating to Intellectual Properties Rights
The Trade Marks Ordinance (Chapter 559 of the Laws of Hong Kong) (“TMO”) provides the framework for the Hong Kong’s system of registration of trademarks and sets out the rights attached to a registered trade mark, including logo and a brand name. The TMO restricts unauthorized use of a sign which is identical or similar to the registered mark for identical and/or similar goods and/or services for which the mark was registered, where such use is likely to cause confusion on the part of the public. The TMO provides that a person may also commit a criminal offence if that person fraudulently uses a trade mark, including selling and importing goods bearing a forged trade mar, or possessing or using equipment for the purpose of forging a trade mark.
The Patents Ordinance (Chapter 514 of the Laws of Hong Kong) provides the framework for “re-registration” system of Chinese, UK and European patents in Hong Kong. Pursuant to Patents (Amendment)Ordinance 2016, which came into full effect in Hong Kong on 19 December 2019 provide a new framework for a new patent system — an “original grant patent” system, running in parallel with the “re-registration” system.
The Copyright Ordinance (Chapter 528 of the Laws of Hong Kong) (“Copyright Ordinance”) provides comprehensive protection for recognized categories of work including artistic work. The Copyright Ordinance restricts certain acts such as copying and/or issuing or making available copies to the public of a copyright work without the authorization from the copyright owner as it may constitute primary infringement. The Copyright Ordinance provides that a person may also incur liability for secondary infringement if that person possesses, sells, distributes or deals with a copy of a work which is, and which he knows or has reason to believe to be, an infringing copy of work for the purposes of or in the course of any trade or business without the consent of the copyright owner.
Hong Kong Laws and Regulations relating to Competition
The Competition Ordinance (Chapter 619 of the Laws of Hong Kong) (“Competition Ordinance”) prohibits and deters undertakings in all sectors from adopting anti-competitive conduct which has the object or effect of preventing, restricting or distorting competition in Hong Kong. The key prohibitions include (i) prohibition of agreements between businesses which have the object or effect of preventing, restricting or distorting competition in Hong Kong; and (ii) prohibiting companies with a substantial degree of market power from abusing their power by engaging in conduct that has the object or effect of preventing, restricting or distorting competition in Hong Kong. The penalties for breaches of the Competition Ordinance include, but are not limited to, financial penalties of up to 10% of the total gross revenues obtained in Hong Kong for each year of infringement, up to a maximum of three years in which the contravention occurs.
Hong Kong Laws and Regulations relating to Employment
Pursuant to the Employment Ordinance (Chapter 57 of the Laws of Hong Kong) (“EO”) all employees covered by the EO are entitled to basic protection under the EO including but not limited to payment of wages, restrictions on wages deductions and the granting of statutory holidays.
Pursuant to the Mandatory Provident Fund Schemes Ordinance (Chapter 485 of the Laws of Hong Kong) (“MPFSO”), which came into full effect in Hong Kong on December 1, 2000, every employer must take all practicable steps to ensure that the employee becomes a member of a Mandatory Provident Fund (MPF) scheme. An employer who fails to comply with such a requirement may face a fine and imprisonment. The MPFSO provides that an employer who is employing a relevant employee must, for each contribution period, from the employer’s own funds, contribute to the relevant MPF scheme the amount determined in accordance with the MPFSO.
Pursuant to the Employees’ Compensation Ordinance (Chapter 282 of the Laws of Hong Kong) (“ECO”) all employers are required to take out insurance policies to cover their liabilities under the ECO and at common law for injuries at work in respect of all of their employees. An employer failing to do so may be liable to a fine and imprisonment.
Pursuant to the Minimum Wage Ordinance (Chapter 608 of the Laws of Hong Kong) (“MWO”) an employee is entitled to be paid wages no less than the statutory minimum wage rate during the wage period. With effect from 1 May 2023, the statutory minimum hourly wage rate is HK$40. Failure to comply with MWO constitutes an offence under EO.
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Item 4.C. Organizational Structure
The following is a list of our subsidiaries as of the date of this annual report.
| Subsidiaries | Place of Incorporation | Incorporation Time | ||
| Grand Moon International Limited | British Virgin Islands | June 4, 2024 | ||
| Top Win International Trading Limited | Hong Kong SAR | June 15, 2001 | ||
| AsiaStrategy Topwin SG Pte. Limited | Singapore | May 19, 2025 | ||
| AsiaStrategy (BVI) Limited | British Virgin Islands | June 6, 2025 | ||
| AsiaStrategy Topwin Limited | Hong Kong SAR | September 30, 2025 | ||
| Top Asia Capital Limited | British Virgin Islands | October 14, 2025 |
The following diagram illustrates the corporate structure of the Company and its subsidiaries as of the date of this annual report:
Item 4.D. Property, Plants and Equipment
Properties
As of the date of this annual report, we entered into the following lease agreement:
| Location | Term of Lease | Usage | ||
| 33/F, Sunshine Plaza, 353 Lockhart Road, Wan Chai, Hong Kong | August 2025 to July 2029 | Office/ Showroom |
We do not own any property.
Intellectual Property
We have registered certain trademarks and we also depend on a certain royalty free license from our affiliate for the use of our logo to represent our “AsiaStrategy” branding.
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ITEM 4A. UNRESOLVED STAFF COMMENTS
Not Applicable.
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our consolidated financial statements and the related notes included elsewhere in this annual report. This discussion and analysis and other parts of this annual report contain forward-looking statements based upon current beliefs, plans and expectations that involve risks, uncertainties and assumptions. Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of several factors, including those set forth under “Item 3. Key Information—D. Risk Factors” and elsewhere in this annual report. You should carefully read the “Item 3. Key Information—D. Risk Factors” section of this annual report to gain an understanding of the important factors that could cause actual results to differ materially from our forward-looking statements.
Overview
We are a well-established company based in Hong Kong, primarily engaged in trading of luxury watches. We purchase the watches from distributors located in Hong Kong, South America, Europe, Singapore and Japan, and sell to our customers in Hong Kong. Our customer base mainly comprises distributors and retail sellers within the watch industry. We offer a diverse selection of watch brands, spanning from affordable sports watches to premium international luxury watches. Going forward, we intend to expand into the Web3 ecosystem, with digital assets becoming an additional focus of our future business development. As of December 31, 2025, we held digital assets with a value of US$2,702,943 and recognized an unrealized loss on digital assets of US$796,529 for the year ended December 31, 2025. We actively monitor our exposure to volatility in the cryptocurrency market.
Our revenue was approximately US$11.0 million, US$17.6 million and US$18.8 million for the years ended December 31, 2025, 2024 and 2023, respectively. We recorded net income (loss) of approximately US$12.3 million, US$(42,219) and US$0.2 million for the years ended December 31, 2025, 2024 and 2023, respectively. Our growth strategy includes strengthening our market share in existing markets, increasing our market presence through expansion into new geographical customers, diversifying our supply network, broadening our product range to include additional luxury brands and other categories. Furthermore, we intend to create new income streams by expanding into the Web3 ecosystem, with digital assets becoming an additional focus of our future business development. While pursuing these opportunities, we remain committed to actively monitoring and managing our exposure to the market volatility to ensure long-term value creation.
Factors Affecting Our Results of Operations
The watches trading business is influenced by various factors, including global economic growth, customer consumption patterns, exchange rate fluctuations, and advancements in international logistics and transportation. Furthermore, as we expand into the Web3 ecosystem, our financial performance is increasingly affected by volatility in the digital asset and securities markets and the evolving regulatory environment for digital assets. Our profits are mainly determined by several key factors, including annual sales, gross profit margin, operating cost structure, financing expenses, and changes in the fair value of our digital assets and investment securities.
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Our results of operations have been affected in the periods under review, and are expected to continue to be affected, by the following factors relating to our operations:
Customer base and customer mix
Our business growth is heavily reliant on our ability to maintain strong relationships with existing customers while attracting new ones. Our current customer base primarily consists of distributors and retail sellers in the watch industry, with all our products delivered locally in Hong Kong. The luxury watch trading market is highly competitive, with numerous players vying for market share. We face competition from other luxury watch traders, both locally and internationally. Our ability to differentiate ourselves through superior customer service, exclusive product offerings, and competitive pricing is essential to maintaining and growing our market position.
Supplier relations and cost of goods sold
The cost of acquiring luxury watches from suppliers represents a significant component of our overall cost structure. This expense is critical because it directly influences our cost of goods sold, which in turn affects our gross profit margins. To manage this effectively, we depend on maintaining strong and positive relationships with our suppliers. These relationships enable us to negotiate favorable terms, such as better pricing, extended payment terms, and exclusive access to high-quality products, ensuring a steady supply of the luxury watches that our customers demand. Any disruption in these relationships or unfavorable changes in supplier terms could adversely affect our cost of goods sold and, consequently, our gross profit margins.
Maintenance of key personnel
Our success is heavily reliant on the skills, experience, and efforts of our key personnel. The expertise and dedication of our team members are fundamental to driving our business forward, ensuring operational efficiency, and maintaining the high standards our customers expect. The ability to recruit top talent ensures that we can continuously innovate and adapt to changing market conditions. Furthermore, retaining these individuals is essential for maintaining continuity, preserving institutional knowledge, and fostering a stable work environment. This focus on human capital not only supports the execution of our business strategy but also underpins our long-term success and sustainability in the competitive luxury watch market. Attracting and retaining skilled personnel will be critical to executing our business strategy effectively.
Fluctuations in interest rates
We have funded our operations primarily through financing from banks, our 2025 initial public offering and issuance of convertible debts. As our business continues to expand, we anticipate that additional bank borrowings may be required. The financing costs associated with these bank borrowings have accounted for a significant portion of our total expenses, thus being a key factor impacting our net income. Therefore, any changes in interest rates may significantly impact our results of operations.
Fluctuations in exchange rates
Our operating activities are mainly transacted in Hong Kong Dollars, which is also our functional currency. Foreign exchange risk arises from our watch purchases. We buy watches from distributors located in Europe, Japan, Singapore, and other locations in foreign currencies, and sell them to our customers in Hong Kong Dollars. Any fluctuation in exchange rates may result in higher costs of purchases and adversely impact our results of operations.
Apart from our watch trading business, we hold digital assets and investment in equity securities, through the Company and our overseas subsidiaries. Some of these investments and assets are denominated in foreign currencies other than our reporting currency, the United States Dollar (“USD”). Any fluctuations in exchange rates may result in significant translation adjustments, which could adversely impact our financial position and results of operations.
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The volatility of digital asset and securities markets
During the year ended December 31, 2025, we invested in digital assets and equity securities related to the digital assets treasury sector. These investments are measured at fair value, and their valuation is significantly influenced by market conditions in the digital assets treasury sector, as well as the operational performance of these listed companies. Consequently, our operating results may experience significant volatility due to fluctuations in the prices of digital assets and our equity securities. We expect this market volatility to persist in future periods, which may introduce uncertainty into our financial results.
The evolving regulatory environment for digital assets
As we expand into the Web3 ecosystem, with digital assets becoming an additional focus of our future business development, our results of operations may be affected by the evolving legal and regulatory frameworks governing digital assets in Hong Kong and other international jurisdictions. Changes in tax laws, anti-money laundering regulations, or specific digital asset licensing requirements could increase our compliance costs or limit our ability to hold or trade certain digital assets, which may in turn affect our financial position and growth strategy.
Impact of Russia’s Invasion of Ukraine, Israel-Hamas War, Israel-Iran War and Related Supply Chain Issues
Russia launched a large-scale invasion of Ukraine on February 24, 2022 and an armed conflict between Israel and Hamas-led Palestinian militant groups has been taking place in the Gaza Strip since 7 October 2023. In 2026, tensions between Israel and Iran escalated into another direct military conflict. Israel, United States, and Iran commenced a series of attacks and counterattacks. The extent and duration of the military actions, resulting sanctions and resulting future market disruptions, including volatilities in stock markets, disruption to global supply chain and worsening of global inflation, are impossible to predict, but could be significant. Any such disruptions or resulting actual and threatened responses to such activity, including purchasing and financing restrictions, boycotts or changes in consumer or purchaser preferences, sanctions, tariffs or cyberattacks, may have significant collateral impact on global economy and our business model and revenue stream. Nevertheless, as of the date of this document, since (i) we principally operate in Hong Kong and do not have business presence in Russia, Ukraine and the Middle-East; (ii) our strategic investments in equity securities and digital assets are held through subsidiary and parent company in stable jurisdictions such as Singapore and the Cayman Islands; (iii) our watch trading industry has been less dependent on oil, natural resources or global supply chain which have been disrupted by these military actions; and (iv) we actively monitor our investment portfolio to manage exposure to market volatility, there is no material impact on our cash flows, liquidity, capital resources, cash requirements, financial position, or results of operations arising from, related to, or caused by the global disruption from Russia’s invasion of Ukraine and the tensions in the Middle-East.
Key Components of Results of Operations
Revenue
Our principal revenue stream is the trading of luxury watches. Our revenue represents proceeds from trading luxury watches, which are priced at a fixed amount per quantity sold in each transaction. When selling watches to our customers, sales income is recognized at a point in time upon the physical delivery of the watches to the customers. The price offered to customers varies and is influenced by the type of customer, quantity transacted, and the brand and model of the watches. For the years ended December 31, 2025, 2024 and 2023, our total revenue was approximately US$11.0 million, US$17.6 million and US$18.8 million, respectively.
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Cost of revenue
Cost of revenue mainly represents cost of luxury watches sold to the customers and other incremental costs, such as the associated delivery charges we incurred directly in relation to the sales. For the years ended December 31, 2025, 2024 and 2023, cost of revenue represented approximately 96.5%, 92.0% and 92.7% of our revenue, respectively.
We buy watches from vendors located in Hong Kong, South America, Europe, Singapore, and Japan. The following table sets forth a breakdown of our purchases from vendors by country for the years ended December 31, 2025, 2024 and 2023.
| For the years ended December 31, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| Hong Kong | 57.8 | % | 86.6 | % | 31.2 | % | ||||||
| Argentina | 12.9 | % | — | % | — | % | ||||||
| Croatia | 11.1 | % | — | % | — | % | ||||||
| Colombia | 7.6 | % | 1.0 | % | — | % | ||||||
| Uruguay | 6.0 | % | — | % | — | % | ||||||
| Switzerland | 2.8 | % | 7.3 | % | 2.6 | % | ||||||
| Singapore | 1.2 | % | 4.3 | % | 64.5 | % | ||||||
| Italy | 0.6 | % | 0.8 | % | 0.7 | % | ||||||
| France | — | % | — | % | 0.9 | % | ||||||
| Japan | — | % | — | % | 0.1 | % | ||||||
| 100 | % | 100 | % | 100 | % | |||||||
Operating expenses
Selling and marketing expenses
Selling and marketing expenses include (i) salaries and contributions to retirement benefit schemes for our sales and marketing employees; (ii) warehouse and storage expense; (iii) gift and promotion expense; (iv) advertisement expense; and (v) commission expense. Selling and marketing expenses accounted for 1.4%, 0.3% and 0.9% of our total revenue for the years ended December 31, 2025, 2024 and 2023, respectively.
General and administrative expenses
General and administrative expenses mainly comprise (i) salaries and contributions to retirement benefit schemes for our administration and operation employees; (ii) services fee for audit, company secretary, and other professional services; (iii) rental and related expenses for leasing of our office premises; (iv) insurance expenses; and (v) overseas and domestic business travelling expenses. General and administrative expenses accounted for 16.4%, 6.4% and 3.6% of our total revenue for the years ended December 31, 2025, 2024 and 2023, respectively.
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Other income (expense), net
The following table sets forth our income (expense), net, both in absolute amount and as a percentage of total revenue, for the years ended December 31, 2025, 2024 and 2023:
| For the Years Ended December 31, | ||||||||||||||||||||||||
| 2025 | 2024 | Variances | ||||||||||||||||||||||
| US$ | % of total revenue | US$ | % of total revenue | US$ | % | |||||||||||||||||||
| Other income (expense) | ||||||||||||||||||||||||
| Interest expense | (296,191 | ) | 2.7 | (283,024 | ) | 1.6 | (13,167 | ) | 4.7 | |||||||||||||||
| Interest income | 120,483 | 1.1 | 1,702 | — | 118,781 | 6978.9 | ||||||||||||||||||
| Unrealized losses on digital assets, net | (796,529 | ) | 7.3 | — | — | (796,529 | ) | 100.0 | ||||||||||||||||
| Unrealized gains on investment in equity securities, net | 15,143,639 | 137.9 | — | — | 15,143,639 | 100.0 | ||||||||||||||||||
| Other (expense) income, net | (142,560 | ) | 1.3 | 2,081 | — | (144,641 | ) | (6950.6 | ) | |||||||||||||||
| Total other income (expense), net | 14,028,842 | 127.7 | (279,241 | ) | 1.6 | 14,308,083 | 5,123.9 | |||||||||||||||||
| For the Years Ended December 31, | ||||||||||||||||||||||||
| 2024 | 2023 | Variances | ||||||||||||||||||||||
| US$ | % of total revenue | US$ | % of total revenue | US$ | % | |||||||||||||||||||
| Other income (expense) | ||||||||||||||||||||||||
| Interest expense | (283,024 | ) | 1.6 | (336,817 | ) | 1.8 | 53,793 | (16.0 | ) | |||||||||||||||
| Interest income | 1,702 | — | 488 | — | 1,214 | 248.8 | ||||||||||||||||||
| Other income, net | 2,081 | — | 22,419 | 0.1 | (20,338 | ) | (90.7 | ) | ||||||||||||||||
| Total other expense, net | (279,241 | ) | 1.6 | (313,910 | ) | 1.7 | 34,669 | (11.0 | ) | |||||||||||||||
Our interest expense primarily consists of interest incurred on bank borrowings, including revolving trade finance and installment loan facilities, as well as interest on convertible debts. Interest rates for these bank borrowings are determined by a premium over a benchmark interest rate, whereas interest rate for the convertible debts is fixed at 3%. Interest expense accounted for 2.7%, 1.6% and 1.8% of our total revenue for the years ended December 31, 2025, 2024 and 2023, respectively.
Interest income represents (i) interest earned on our cash deposits held in banks and (ii) interest income from our loans receivable at an annual interest rate of 8%. Interest income accounted for 1.1%, nil%, and nil% of our total revenue for the years ended December 31, 2025, 2024, and 2023, respectively.
During the year ended December 31, 2025, we purchased digital assets consisting of Bitcoin (BTC) and Tether USD (USDT) for investment and treasury diversification purposes. The bitcoins are remeasured at fair value, and the changes of fair value would be recognized in unrealized gains (losses) on digital assets in the consolidated statement of operations and comprehensive income (loss). Unrealized losses on digital assets, net accounted for 7.3%, nil%, and nil% of our total revenue for the years ended December 31, 2025, 2024, and 2023, respectively.
Unrealized gains on investment in equity securities, net refer to the fair value change of investment in equity securities. During the year ended December 31, 2025, we invested in DV8 Public Company Limited (“DV8”) and made a portfolio investment managed by Asia Strategy Partners LLC (“ASP LLC”). The investment in equity securities is remeasured at fair value, and the changes of fair value would be recognized in unrealized gains (losses) on investment in equity securities in the consolidated statement of operations and comprehensive income (loss). Unrealized gains on investment in equity securities, net accounted for 137.9%, nil%, and nil% of our total revenue for the years ended December 31, 2025, 2024, and 2023, respectively.
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Other expense, net was US$142,560 for the year ended December 31, 2025, and other income, net was US$2,081 and US$22,419 for the years ended December 31, 2024 and 2023, respectively. Other expense, net for the year ended December 31, 2025 was primarily attributable to management fees and administrative costs associated with our portfolio investment managed by ASP LLC.
Income tax benefits (expenses)
We operate in Hong Kong and we are subject to Hong Kong Profits Tax. Under the two-tiered profits tax rates regime, the first HK$2 million (approximately US$255,395) of a company’s assessable profits are charged at a lower profits tax rate of 8.25%, while assessable profits in excess of HK$2 million (approximately US$255,395) are charged at the profits tax rate of 16.5%. For the years ended December 31, 2025, 2024 and 2023, income tax accounted for 1.4%, nil% and 0.1% of our total revenue, respectively.
We did not have any significant unrecognized uncertain tax positions, and we did not incur any interest and penalties related to potential underpaid income taxes for the years ended December 31, 2025, 2024 and 2023. Our major tax jurisdiction is Hong Kong. Under relevant Hong Kong tax laws, tax case is normally subject to investigation by the tax authority for up to 6 years of assessment prior to the current year of assessment, unless in a case of fraud or willful evasion, then the investigation can be extended to cover 10 years of assessment.
Results of Operations
Comparison of Fiscal Years Ended December 31, 2025 and 2024
The following table sets forth a summary of our consolidated results of operations for the years ended December 31, 2025 and 2024 as indicated. The operating results in any year are not necessarily indicative of the results that may be expected for any future trends.
| For the Years Ended December 31, | ||||||||||||||||||||||||
| 2025 | 2024 | Variances | ||||||||||||||||||||||
| US$ | % of total revenue | US$ | % of total revenue | US$ | % | |||||||||||||||||||
| Revenue | 10,985,176 | 100.0 | 17,619,363 | 100.0 | (6,634,187 | ) | (37.7 | ) | ||||||||||||||||
| Cost of revenue | (10,603,520 | ) | 96.5 | (16,202,583 | ) | 92.0 | 5,599,063 | (34.6 | ) | |||||||||||||||
| Gross profit | 381,656 | 3.5 | 1,416,780 | 8.0 | (1,035,124 | ) | (73.1 | ) | ||||||||||||||||
| Operating expenses | ||||||||||||||||||||||||
| Selling and marketing | (149,033 | ) | 1.4 | (58,764 | ) | 0.3 | (90,269 | ) | 153.6 | |||||||||||||||
| General and administrative | (1,808,684 | ) | 16.4 | (1,129,609 | ) | 6.4 | (679,075 | ) | 60.1 | |||||||||||||||
| Total operating expenses | (1,957,717 | ) | 17.8 | (1,188,373 | ) | 6.7 | (769,344 | ) | 64.7 | |||||||||||||||
| (Loss) income from operations | (1,576,061 | ) | 14.3 | 228,407 | 1.3 | (1,804,468 | ) | (790.0 | ) | |||||||||||||||
| Other income (expense) | ||||||||||||||||||||||||
| Interest expense | (296,191 | ) | 2.7 | (283,024 | ) | 1.6 | (13,167 | ) | 4.7 | |||||||||||||||
| Interest income | 120,483 | 1.1 | 1,702 | — | 118,781 | 6978.9 | ||||||||||||||||||
| Unrealized losses on digital assets, net | (796,529 | ) | 7.3 | — | — | (796,529 | ) | 100.0 | ||||||||||||||||
| Unrealized gains on investment in equity securities, net | 15,143,639 | 137.9 | — | — | 15,143,639 | 100.0 | ||||||||||||||||||
| Other (expense) income, net | (142,560 | ) | 1.3 | 2,081 | — | (144,641 | ) | (6950.6 | ) | |||||||||||||||
| Total other income (expense), net | 14,028,842 | 127.7 | (279,241 | ) | 1.6 | 14,308,083 | 5,123.9 | |||||||||||||||||
| Income (loss) before income taxes | 12,452,781 | 113.4 | (50,834 | ) | 0.3 | 12,503,615 | 24,597.0 | |||||||||||||||||
| Income tax (expenses) benefits | (159,132 | ) | 1.4 | 8,615 | — | (167,747 | ) | (1,947.2 | ) | |||||||||||||||
| Net income (loss) | 12,293,649 | 112.0 | (42,219 | ) | 0.3 | 12,335,868 | 29,218.8 | |||||||||||||||||
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Year Ended December 31, 2025 Compared to Year Ended December 31, 2024
Revenue
Total revenue decreased by 37.7% from approximately US$17.6 million for the year ended December 31, 2024 to approximately US$11.0 million for the year ended December 31, 2025.
The decrease in revenue was primarily driven by 61.9% drop in the average unit price, from US$6,158 per piece for the year ended December 31, 2024 to US$2,348 per piece for the year ended December 31, 2025, which outweighed a 63.5% increase in sales volume from 2,861 units to 4,679 units.
The decrease in average unit price was largely attributable to a significant shift in the product sales mix, reflecting broader changes in consumer behavior. This shift aligned with the prevailing trend in Hong Kong’s luxury watch market, which has been notably impacted by economic headwinds in Mainland China. As economic challenges have led to a general pullback in luxury goods spending, consumer demand has moved toward more affordable options.
As a result, the sales volume of lower-priced watches (those with a unit price less than US$2,000 per piece) surged by 2,746 units, from 503 units to 3,249 units, increasing their shares of total sales volume from 17.6% for the year ended December 31, 2024 to 69.4% for the year ended December 31, 2025. In contrast, the mid-range watch sales (those with a unit price within the range from US$2,000 to US$50,000 per piece) decreased by 891 units, from 2,308 units to 1,417 units, and their share of total sales volume decreased from 80.7% for the year ended December 31, 2024 to 30.3% for the year ended December 31, 2025. Furthermore, sales of collectible watches (those with a unit price greater than US$50,000) declined from 50 units for the year ended December 31, 2024 to 13 units for the year ended December 31, 2025, further contributing to the decline in average unit price.
Cost of revenue
The cost of revenue decreased by approximately US$5.6 million, or 34.6%, from approximately US$16.2 million for the year ended December 31, 2024, to US$10.6 million for the year ended December 31, 2025. This decrease was primarily attributable to the significant shift in our product sales mix toward lower-priced watch models, which carried a substantially lower unit cost. While our total sales volume increased by 63.5% during the year, the sharp decline in the average purchase price per unit, consistent with the decrease in our average selling price, resulted in an overall reduction in the cost of revenue.
Gross profit
Our gross profit decreased by approximately US$1.0 million or 73.1%, from approximately US$1.4 million for the year ended December 31, 2024 to approximately US$0.4 million for the year ended December 31, 2025. The total gross profit margin for the year ended December 31, 2025, was approximately 3.5%, compared to approximately 8.0% for the year ended December 31, 2024.
The decrease in our gross profit margin was primarily driven by the combined impact of a significant shift in our product sales mix and unfavorable currency fluctuations. During 2025, the Group transitioned toward lower-priced watch models to capture higher sales volume. While this successfully increased total units sold by 63.5%, these models carried significantly narrower unit margins compared to the high-end collectible pieces sold in 2024.
Furthermore, profitability was pressured by the appreciation of the Swiss Franc (“CHF”) by 12.0% during the year of 2025. As a substantial portion of our luxury watch inventory is sourced from overseas suppliers and settled in CHF, this currency movement led to a direct increase in our purchase costs for the year ended December 31, 2025. Due to challenging local market conditions in Hong Kong, we were unable to fully pass these increased procurement costs onto consumers, resulting in a further compression of our overall gross profit margin.
Additionally, for the year ended December 31, 2024, we sold certain long-aging inventories that had previously been written down to their net realizable value. These sales resulted in a lower cost of revenue relative to the selling price in that period. The absence of such high-margin inventory sales in 2025, coupled with the strategic shift toward high-volume but lower-margin entry-level watches (those priced under US$2,000), resulted in a lower overall gross profit ratio for the year ended December 31, 2025, when compared to the prior year
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Operating expenses
Selling and marketing expenses increased to US$149,033 for the year ended December 31, 2025, from US$58,764 for the year ended December 31, 2024. This increase was primarily driven by (i) a US$32,190 rise in gift and promotion expenses aimed at strengthening customer relationships; (ii) staff expenses increased by US$55,905 in 2025, resulting from the hiring of two new sales employees to support business expansion amid a competitive environment. As a result, overall selling and marketing expenses increased significantly.
General and administrative expenses increased by approximately US$0.7 million to US$1.8 million for the year ended December 31, 2025, compared to US$1.1 million for the year ended December 31, 2024. The increase was primarily due to (i) an increase in professional fees of US$0.3 million for audit fee, investor relations and internal control advisory services; (ii) an increase in exchange rate loss of US$0.1 million due to adverse movements in foreign exchange rates during the year ended December 31, 2025; (iii) an increase in expected credit loss of US$96,138 related to loans receivable; (iv) an increase in staff costs of US$70,068, resulting from remuneration paid to independent directors and general salary adjustments to retain talented staff; and (v) an increase in rental expense of US$64,211 resulted from a monthly rent increase implemented by the landlord effective August 2025.
Other income (expense), net
Other income improved significantly, shifting from a net other expense of US$0.3 million for the year ended December 31, 2024 to a net other income of US$14.0 million for the year ended December 31, 2025. It was mainly due to (i) net unrealized gains on investment in equity securities of US$15.1 million, resulting from the substantial appreciation in the share price of DV8 Public Company Limited during the holding period, partially offset by losses from the investment in the Asia Strategy Partners LLC portfolio; (ii) an increase of interest income of US$0.1 million, derived from a US$1.5 million loan provided to third parties during the year. The increase was partially offset by (iii) the unrealized losses on digital asset of US$0.8 million, arising from the decrease in fair value of the 30 Bitcoins held as of December 31, 2025; and (iv) an increase in other expense by US$0.1 million, primarily attributable to management fees and administrative costs associated with our portfolio investment managed by ASP LLC.
Income (loss) before income taxes
We had a net income before income taxes of US$12.5 million for the year ended December 31, 2025, compared to a net loss before income taxes of US$50,834 for the year ended December 31, 2024. The change in net income (loss) before income taxes was primarily driven by a substantial unrealized gains on our investment in equity securities, which was partially offset by (i) the decrease in gross profit; (ii) an increase in operating expenses; and (iii) an increase in the unrealized losses on digital assets.
Income tax benefits (expenses)
For the year ended December 31, 2025, we recognized an income tax expense of US$159,132, compared with an income tax benefit of US$8,615 for the year ended December 31, 2024. Our effective tax rate was 1.3% in 2025, compared with 16.9% in 2024. Although we reported pre-tax profit of approximately US$12.5 million in 2025, that profit was primarily driven by US$15.7 million of unrealized gains on our investment in DV8, which were non-taxable. As a result, a significant portion of our accounting profit did not give rise to corresponding taxable income. Additionally, US$2.4 million of expenses, primarily comprising (i) unrealized losses on digital assets, (ii) unrealized losses on investment in ASP LLC, and (iii) professional fees and other expenses incurred by foreign entities, were non-deductible, and could not be carried forward to offset profits in subsequent periods. Furthermore, as of December 31, 2025, we recorded a full valuation allowance against deferred tax assets related to net operating losses because we do not expect to generate sufficient future taxable profits to utilize those losses. As a result, our effective tax rate decreased to 1.3% in 2025 from 16.9% in 2024.
Net income (loss)
As a result of the foregoing factors, net income (loss) changed from net loss US$42,219 for the year ended December 31, 2024, to net income US$12.3 million for the year ended December 31, 2025.
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Comparison of Fiscal Years Ended December 31, 2024 and 2023
The following table sets forth a summary of our consolidated results of operations for the years ended December 31, 2024 and 2023 as indicated. The operating results in any year are not necessarily indicative of the results that may be expected for any future trends.
| For the Years Ended December 31, | ||||||||||||||||||||||||
| 2024 | 2023 | Variances | ||||||||||||||||||||||
| US$ | % of total revenue | US$ | % of total revenue | US$ | % | |||||||||||||||||||
| Revenue | 17,619,363 | 100.0 | 18,814,420 | 100.0 | (1,195,057 | ) | (6.4 | ) | ||||||||||||||||
| Cost of revenue | (16,202,583 | ) | 92.0 | (17,442,190 | ) | 92.7 | 1,239,607 | (7.1 | ) | |||||||||||||||
| Gross profit | 1,416,780 | 8.0 | 1,372,230 | 7.3 | 44,550 | 3.2 | ||||||||||||||||||
| Operating expenses | ||||||||||||||||||||||||
| Selling and marketing | (58,764 | ) | 0.3 | (163,579 | ) | 0.9 | 104,815 | (64.1 | ) | |||||||||||||||
| General and administrative | (1,129,609 | ) | 6.4 | (681,891 | ) | 3.6 | (447,718 | ) | 65.7 | |||||||||||||||
| Total operating expenses | (1,188,373 | ) | 6.7 | (845,470 | ) | 4.5 | (342,903 | ) | 40.6 | |||||||||||||||
| Income from operations | 228,407 | 1.3 | 526,760 | 2.8 | (298,353 | ) | (56.6 | ) | ||||||||||||||||
| Other income (expenses) | ||||||||||||||||||||||||
| Interest expense | (283,024 | ) | 1.6 | (336,817 | ) | 1.8 | 53,793 | (16.0 | ) | |||||||||||||||
| Interest income | 1,702 | — | 488 | — | 1,214 | 248.8 | ||||||||||||||||||
| Other income, net | 2,081 | — | 22,419 | 0.1 | (20,338 | ) | (90.7 | ) | ||||||||||||||||
| Total other expenses, net | (279,241 | ) | 1.6 | (313,910 | ) | 1.7 | 34,669 | (11.0 | ) | |||||||||||||||
| (Loss) income before income taxes | (50,834 | ) | 0.3 | 212,850 | 1.1 | (263,684 | ) | (123.9 | ) | |||||||||||||||
| Income tax benefits (expenses) | 8,615 | — | (16,123 | ) | 0.1 | 24,738 | 153.4 | |||||||||||||||||
| Net (loss) income | (42,219 | ) | 0.3 | 196,727 | 1.0 | (238,946 | ) | (121.5 | ) | |||||||||||||||
Year Ended December 31, 2024 Compared to Year Ended December 31, 2023
Revenue
Total revenue decreased by 6.4% from US$18.8 million for the year ended December 31, 2023 to US$17.6 million for the year ended December 31, 2024.
We introduced several new watch models in 2023, with some of them being affordable sports watches, defined as those priced below US$128 per unit. These newly launched significantly contributed to the increase in the overall sales quantity. However, due to the relatively low unit price and gross profit margin of sports watches, we decided to cease their sales in July 2023.
For our regular watch brands, the slight decrease in revenue was primarily driven by a 44% reduction in sales volume, partially offset by a 69% increase in the average unit price of our products. The drop in sales volume corresponded with the overall trend in consumer spending on luxury watches in Hong Kong, which has been significantly impacted by broader economic challenges in China. These economic difficulties have led to a general reduction in consumer spending on luxury goods. According to data from the Hong Kong Census and Statistics Department, the quantity of retail sales of jewelry, watches, clocks, and valuable gifts in Hong Kong decreased by 16.3% during the year ended December 31, 2024, compared to the year ended December 31, 2023. This downturn caused our customers, primarily distributors and retail sellers, to become more cautious in maintaining their stock levels, resulting in significantly reduced purchases from us.
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Conversely, the increase in the average unit price was largely due to a shift in our sales mix towards higher-end luxury watches during the current year, which helped to partially mitigate the impact of the lower sales volume on our overall revenue.
Cost of revenue
The cost of revenue decreased by approximately US$1.2 million, or 7.1%, from approximately US$17.4 million for the year ended December 31, 2023, to US$16.2 million for the year ended December 31, 2024. This decrease was mainly due to the reduction in watch sales.
Gross profit
Our gross profit increased by US$44,550 or 3.2%, from approximately US$1.3 million for the year ended December 31, 2023 to approximately US$1.4 million for the year ended December 31, 2024. The total gross profit margin for the year ended December 31, 2024, was approximately 8.0%, compared to approximately 7.3% for the year ended December 31, 2023.
For the year ended December 31, 2023, most of our watches were purchased from Europe and settled in Swiss Franc (“CHF”). The appreciation of CHF in 2023 led to higher costs of purchases. To better manage exchange rate fluctuation risk and reduce transportation costs, we increased our local purchases during the year ended December 31, 2024, thereby better controlling the cost of purchases. Additionally, for the year ended December 31, 2024, we sold off some long-aging inventories that had previously been written down to their net realizable value, further decreasing the cost of purchases for these watches. As a result, the gross profit ratio increased for the year ended December 31, 2024.
Operating expenses
Selling and marketing expenses decreased to US$58,764 for the year ended December 31, 2024, from US$163,579 for the year ended December 31, 2023. We rented a warehouse in 2023 to store watch boxes and packaging materials, incurring an expense of US$42,150 for the year ended December 31, 2023. However, in 2024, we chose not to renew the lease contract. Instead, we now store these items in our office to control costs and improve packing efficiency. The gift and promotion expenses were better controlled and reduced by US$38,672 in 2024 compared with 2023. Additionally, the staff expense decreased by US$21,640 in 2024 due to one staff in our sales department resigned in May 2024. As a result, our selling and marketing expenses decreased.
General and administrative expenses increased by US$0.4 million to US$1.1 million for the year ended December 31, 2024, compared to US$0.7 million for the year ended December 31, 2023. The increase was primarily due to an increase in audit expense paid to our US auditor of US$0.4 million.
Other expenses, net
Other expenses decreased by US$34,669 from US$313,910 for the year ended December 31, 2023 to US$279,241 for the year ended December 31, 2024. The decrease was mainly driven by a reduction in interest expenses. We had installment loan facility and trade financing loan facility from banks, with variable interest rates based on a benchmark interest rate plus a premium. The average balance of bank borrowings decreased from US$5.8 million for the year ended December 31, 2023 to US$5.5 million for the year ended December 31, 2024, which led to a decrease in interest expense by US$53,793.
(Loss) income before income taxes
We had a loss before income taxes of US$50,834 for the year ended December 31, 2024, compared to income before income taxes of US$0.2 million for the year ended December 31, 2023. The change in (loss) income before income taxes was primarily driven by a decrease in revenue and an increase in operating expenses due to higher professional service fees related to the audit of our US GAAP consolidated financial statements.
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Income tax benefits (provision for income taxes)
Income tax benefits (provision for income taxes) changed from US$16,123 expenses for the year ended December 31, 2023 to US$8,615 benefits for the year ended December 31, 2024. The change largely corresponded with the change in (loss) income before income tax expense.
Net (loss) income
As a result of the foregoing factors, net (loss) income changed from net income US$0.2 million for the year ended December 31, 2023 to net loss US$42,219 for the year ended December 31, 2024.
Liquidity and Capital Resources
In assessing our liquidity, we monitor and analyze our cash on hand and our operating and capital expenditure commitments. Our liquidity needs are to meet our working capital requirements, operating expenses and capital expenditure obligations.
We recorded net cash outflow in operating activities of US$4.3 million and US$0.5 million for the years ended December 31, 2025 and 2024, respectively, and net cash inflow from operating activities of US$1.4 million for the year ended December 31, 2023.
On April 3, 2025, we successfully completed our initial public offering of 2,664,000 ordinary shares, which were priced at US$4.00 per share. The gross proceeds to us from the offering, before deducting commissions, expense allowance, and expenses, are approximately US$10.7 million, which have significantly helped to address our liquidity concerns.
As of December 31, 2025, we had positive working capital of US$27.2 million, US$1.5 million in cash and cash equivalents, out of which US$0.8 million was held in US$, US$0.6 million was held in HK$, and the rest was held in Japanese Yen and other currencies. As of December 31, 2024, we had positive working capital of US$3.8 million, US$2.6 million in cash and US$0.4 million in restricted cash, out of which US$2.5 million was held in HK$, and the rest was held in Japanese Yen and other currencies.
We believe that our current cash will be sufficient to meet our cash needs for general corporate purposes for at least the next 12 months. If we experience an adverse operating environment or incur unanticipated capital expenditure requirements, or if we determine to accelerate our growth, then additional financing may be required. No assurance can be given, however, that additional financing, if required, would be available at all or on favorable terms. Such financing may include the use of additional debt or the sale of additional equity securities. Any financing which involves the sale of equity securities or instruments that are convertible into equity securities could result in immediate and possibly significant dilution to our existing shareholders.
Cash Flows
The following table sets forth a summary of our cash flows for the years ended December 31, 2025, 2024 and 2023 as indicated.
| For the Years Ended December 31, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| US$ | US$ | US$ | ||||||||||
| Net cash (used in) provided by operating activities | (4,322,067 | ) | (462,995 | ) | 1,359,780 | |||||||
| Net cash used in investing activities | (14,997,998 | ) | - | - | ||||||||
| Net cash provided by (used in) financing activities | 17,785,476 | 1,966,312 | (1,045,672 | ) | ||||||||
| Exchange rate changes on cash and cash equivalents | (21,713 | ) | 19,472 | (689 | ) | |||||||
| Net (decrease) increase in cash and restricted cash | (1,556,302 | ) | 1,522,789 | 313,419 | ||||||||
| Cash and restricted cash, beginning of year | 3,020,683 | 1,497,894 | 1,184,475 | |||||||||
| Cash and restricted cash, end of year | 1,464,381 | 3,020,683 | 1,497,894 | |||||||||
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Operating activities
Net cash used in operating activities for the year ended December 31, 2025 was US$4.3 million, as compared to the net income of US$12.3 million. The variance was primarily driven by (i) non-cash adjustments of approximately US$14.3 million, largely consisting of US$15.1 million in net unrealized gains on investment in equity securities, partially offset by US$0.8 million in net unrealized losses on digital assets; (ii) an increase of US$5.0 million in inventories, reflecting strategic procurement of high-demand watch models to ensure adequate stock levels for post-period sales; (iii) an increase of US$0.9 million in advance payment for the four-year lease agreement. These outflows were partially offset by an increase of US$3.4 million in accounts payable, attributable to substantial procurement activities at year-end and a favorable six-month credit term provided by a major supplier.
Net cash used in operating activities for the year ended December 31, 2024 was US$0.5 million, as compared to the net loss of US$42,219. The difference was primarily resulted from (i) a decrease of US$0.2 million in accounts payable, mainly because we settled more accounts payable balance near the year end December 31, 2024; (ii) an increase of US$0.2 million in inventories as we hold additional inventory in anticipation of the expected revenue growth in 2025; and (iii) a decrease of US$0.1 million in accounts receivable, mainly because all accounts receivable were collected near the year end December 31, 2024.
Net cash provided by operating activities for the year ended December 31, 2023 was US$1.4 million, as compared to the net income of US$0.2 million. The difference was primarily resulted from (i) a decrease of US$1.1 million in inventories as a result of the increase in sales with strong consumer demand for our watches during the year ended December 31, 2023; (ii) a decrease of US$0.2 million in accounts receivable, mainly because we had less sales conducted near the year end December 31, 2023; and (iii) an increase of US$0.2 million in prepayments and other current assets, driven by higher trade deposit paid for securing the upcoming orders.
Investing activities
Net cash used in investing activities for the year ended December 31, 2025 was US$15.0 million. This was primarily due to (i) investment in equity securities of US$6.0 million; (ii) loan receivables of US$5.5 million; and (iii) US$3.5 million invested in digital assets for investment and treasury diversification purposes.
There were no cash inflows or outflows from investing activities for the years ended December 31, 2024, and 2023.
Financing activities
Net cash provided by financing activities for the year ended December 31, 2025 was US$17.8 million. This was primarily driven by (i) US$10 million in cash proceeds from issuance of convertible debts; (ii) US$9.3 million in net proceeds from the issuance of ordinary shares pursuant to IPO. These inflows were partially offset by a net repayment of US$1.0 million, consisting of US$6.5 million in proceeds from bank borrowings offset by US$7.5 million in repayments; and US$0.5 million in payments of offering costs related to the IPO.
Net cash provided by financing activities for the year ended December 31, 2024 was US$2.0 million. This was primarily due to (i) US$2.0 million received from shareholder’s capital contribution; (ii) US$1.2 million advances obtained from a related party; which was partially offset by (iii) net repayments of bank borrowings of US$0.6 million and (iv) US$0.6 million payments of deferred IPO costs during the year ended December 31, 2024.
Net cash used in financing activities for the year ended December 31, 2023 was US$1.0 million. This was primarily due to (i) US$1.0 million repayments of advances from a related party; and (ii) net repayments of bank borrowings of US$76,810 during the year ended December 31, 2023.
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Quantitative and Qualitative Disclosures about Market Risks
Currency risk
Our functional currency is HK$ and our consolidated financial statements are presented in US$. Our sales, operation activities and assets and liabilities are predominately denominated in the functional currency. We consider that the foreign exchange risk in relation to transactions denominated in HK$ with respect to US$ is not significant as HK$ is pegged to US$. Hong Kong Monetary Authority guarantees to exchange US$ into HK$, or vice versa, at a rate close to HK$7.80 to US$1.00.
At the same time, we buy watches from distributors located in Hong Kong, South America, Singapore, Europe and Japan, primarily using HK$ and CHF, and sell them to customers in HK$. Any fluctuation in exchange rates against HK$ may result in higher costs of purchases.
For the year ended December 31, 2025, we had US$9,389,687 purchases denominated in CHF. We estimate that any appreciation of CHF against HK$ in the future would result in an increase in our cost of purchases, and vice versa. If we cannot pass these increased costs on to our customers, it would negatively impact our gross profit margin and net income. Based on the same purchase volume as in 2025, our costs related to purchases denominated in CHF would increase by US$93,897 if there is a 1% appreciation of CHF against HK$. Conversely, our costs would decrease by US$93,897 if there is a 1% depreciation of CHF against HK$.
Concentration and credit risks
Financial instruments that potentially subject us to the credit risks consist of cash, restricted cash, accounts receivable, loans receivable, investment in equity securities, amount due from a related party and other current assets. The maximum exposures of such assets to credit risk are their carrying amounts as of the balance sheet dates.
We deposit our cash and restricted cash with reputable banks located in Hong Kong. As of December 31, 2025 and 2024, US$1,464,381 and US$3,020,683 were deposited with these banks, respectively. Balances maintained with banks in Hong Kong are insured under the Deposit Protection Scheme introduced by the Hong Kong Government for a maximum amount of HK$500,000 (equivalent to US$64,240), and further increased to HK$800,000 (US$102,784) effective on October 1, 2024, for each depositor at one bank, whilst the balances maintained by us may at times exceed the insured limits. Cash balances maintained with banks in Hong Kong are not otherwise insured by the Federal Deposit Insurance Corporation or other programs. We have not experienced any losses in these bank accounts and management believes that we are not exposed to any significant credit risk on cash.
Assets that potentially subject us to a significant credit risk primarily consist of accounts receivable and other current assets. We perform regular and ongoing credit assessments of the counterparts’ financial conditions and credit histories. We also assess historical collection, aging of receivables and general economic conditions. We consider that we have adequate controls over these receivables in order to minimize the related credit risk. As of December 31, 2025, and 2024, the balances of allowance for expected credit losses against these balances were $90,851 and $2, respectively.
For the years ended December 31, 2025 and 2024, our assets were primarily located in Hong Kong. However, we also maintain significant digital assets and equity security investments in other jurisdictions, including Singapore and the Cayman Islands. At the same time, we consider that we were exposed to the following concentrations of risk:
| (a) | Major customers |
For the year ended December 31, 2025, two customers accounted for 10% or more of our revenue. Revenue from these two customers accounted for 27% and 10% of our total revenue, respectively.
For the year ended December 31, 2024, two customers accounted for 10% or more of our revenue. Revenue from these two customers accounted for 17% and 16% of our total revenue, respectively.
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For the year ended December 31, 2023, three customers accounted for 10% or more of our revenue. Revenue from these three customers accounted for 18%, 11%, and 11% of our total revenue, respectively.
| Year ended December 31, 2025 | As of December 31, 2025 | |||||||||||||||
| Customer | Revenue | Percentage of revenue | Accounts receivables, gross | Percentage of accounts receivables, gross | ||||||||||||
| Customer A | $ | 3,007,906 | 27 | % | $ | — | — | % | ||||||||
| Customer B | 1,151,843 | 10 | % | — | — | % | ||||||||||
| Total: | $ | 4,159,749 | 37 | % | $ | — | — | % | ||||||||
| Year ended December 31, 2024 | As of December 31, 2024 | |||||||||||||||
| Customer | Revenue | Percentage of revenue | Accounts receivables, gross | Percentage of accounts receivables, gross | ||||||||||||
| Customer B | $ | 2,939,902 | 17 | % | $ | — | — | % | ||||||||
| Customer A | 2,821,635 | 16 | % | — | — | % | ||||||||||
| Total: | $ | 5,761,537 | 33 | % | $ | — | — | % | ||||||||
| Year ended December 31, 2023 | As of December 31, 2023 | |||||||||||||||
| Customer | Revenue | Percentage of revenue | Accounts receivables, gross | Percentage of accounts receivables, gross | ||||||||||||
| Customer C | $ | 3,397,499 | 18 | % | $ | 144,432 | 98 | % | ||||||||
| Customer D | 2,091,907 | 11 | % | — | — | % | ||||||||||
| Customer E | 2,004,975 | 11 | % | — | — | % | ||||||||||
| Total: | $ | 7,494,381 | 40 | % | $ | 144,432 | 98 | % | ||||||||
As of December 31, 2025, there was one customer whose receivables accounted for 10% or more of our total balances of accounts receivable and it accounted for 98% of the total balances of accounts receivable.
As of December 31, 2024, there was no accounts receivable.
All the concentration percentages of accounts receivable are calculated before allowance for expected credit losses.
| (b) | Major vendors |
For the year ended December 31, 2025, four vendors accounted for 10% or more of our total purchase. Total purchase from the vendor accounted for 31%, 18%, 13% and 11% of our purchase, respectively.
For the year ended December 31, 2024, three vendors accounted for 10% or more of our total purchase. Total purchase from these three vendors accounted for 25%, 18% and 10% of our total purchase, respectively.
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For the year ended December 31, 2023, two vendors accounted for 10% or more of our total purchase. Total purchase from these two vendors accounted for 64% and 14% of our total purchase, respectively.
| Year ended December 31, 2025 | As of December 31, 2025 | |||||||||||||||
| Vendor | Purchase | Percentage of total purchase | Accounts payable | Percentage of Accounts payable | ||||||||||||
| Vendor A | $ | 4,876,263 | 31 | % | $ | 3,416,931 | 98 | % | ||||||||
| Vendor B | 2,829,662 | 18 | % | — | — | % | ||||||||||
| Vendor C | 2,002,164 | 13 | % | — | — | % | ||||||||||
| Vendor D | 1,727,497 | 11 | % | — | — | % | ||||||||||
| Total: | $ | 11,435,586 | 73 | % | $ | 3,416,931 | 98 | % | ||||||||
| Year ended December 31, 2024 | As of December 31, 2024 | |||||||||||||||
| Vendor | Purchase | Percentage of total purchase | Accounts payable | Percentage of Accounts payable | ||||||||||||
| Vendor B | $ | 4,126,222 | 25 | % | $ | — | — | % | ||||||||
| Vendor A | 3,017,416 | 18 | % | — | — | % | ||||||||||
| Vendor E | 1,713,444 | 10 | % | — | — | % | ||||||||||
| Total: | $ | 8,857,082 | 53 | % | $ | — | — | % | ||||||||
| Year ended December 31, 2023 | As of December 31, 2023 | |||||||||||||||
| Vendor | Purchase | Percentage of total purchase | Accounts payable | Percentage of Accounts payable | ||||||||||||
| Vendor F | $ | 10,529,156 | 64 | % | $ | 277,500 | 100 | % | ||||||||
| Vendor G | 2,317,936 | 14 | % | — | — | % | ||||||||||
| Total: | $ | 12,847,092 | 78 | % | $ | 277,500 | 100 | % | ||||||||
As of December 31, 2025, there was one vendor whose payables accounted for 10% or more of our total balances of accounts payable and it accounted for 98% of the total balance of accounts payable.
As of December 31, 2024, there was one vendor whose payables accounted for 10% or more of our total balances of accounts payable and it accounted for 100% of the total balance of accounts payable.
Interest rate risk
Fluctuations in market interest rates may negatively affect our financial condition and results of operations. We are exposed to floating interest rate risk on bank deposits and bank borrowings, particularly during periods when the interest rate is expected to change significantly. Our exposure to interest rate risk is limited with respect to our outstanding convertible debts, as they bear interest at a fixed rate and are not subject to market fluctuations. Nevertheless, given the amounts of bank deposits and bank borrowings in question, we consider the related interest rate risk not material. On the other hand, as of December 31, 2025, we had outstanding bank borrowings of US$4,160,241. We estimate that a 1% increase in the Hong Kong Dollar Prime Rate against bank borrowings outstanding as of December 31, 2025 would result in an increase in interest expense of US$41,602 per annum whilst we estimate that a 1% decrease in the Hong Kong Dollar Prime Rate against bank loans outstanding on December 31, 2025 would result in a decrease in interest expense of US$41,602 per annum. We have not used any instruments or derivatives to manage or hedge our interest rate risk exposure.
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Price risk
As of December 31, 2025, we held investments in equity securities with an aggregate carrying value of approximately US$21,097,821, comprising our investment in DV8 and our portfolio investment managed by Asia Strategy Partners LLC. These investments are measured at fair value, with changes in fair value recognized in our consolidated statements of operations and comprehensive income (loss). We estimate that a 10% adverse movement in the fair value of these investments would result in a pre-tax loss of approximately US$2,109,782, vice versa. We do not currently use derivative instruments to hedge our equity price exposure.
As of December 31, 2025, we held 30 Bitcoins with an aggregate carrying value of US$2,625,574. The bitcoins are measured at fair value in accordance with ASU 2023-08, with changes in fair value recognized in our consolidated statements of operations and comprehensive income (loss). We estimate that a 10% adverse movement in the fair value of the bitcoins would result in a pre-tax loss of approximately US$262,557, vice versa. We monitor our digital asset exposure on an ongoing basis and have not entered into derivative arrangements to hedge that exposure.
Off-Balance Sheet Commitments and Arrangements
We did not have during the periods presented, and we do not currently have, any off-balance sheet financing arrangements or any relationships with unconsolidated entities or financial partnerships, including entities sometimes referred to as structured finance or special purpose entities, that were established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.
Specifically, we have not entered into any financial guarantees, commitments or other arrangements to guarantee payment obligations of any parties. In addition, we have not entered into any derivative contracts that are indexed to our shares and classified as shareholders’ equity or that are not reflected in our consolidated financial statements. Moreover, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or product development services with us.
Commitments and Contingencies
The following table summarizes our contractual obligations of bank borrowings as of December 31, 2025:
| Contractual obligations | Less than 1 year | Between 1 – 2 years | Over 2 years | Total | ||||||||||||
| US$ | US$ | US$ | US$ | |||||||||||||
| Bank borrowings | 1,339,353 | 379,218 | 3,507,767 | 5,226,338 | ||||||||||||
In addition, we entered into agreements with certain investors to issue convertible debt with an aggregate principal amount of $10,000,000, and the transaction closed on October 13, 2025. The convertible debt bears interest at 3.0% per annum, payable annually, and matures three years from the issuance date. The holders may convert the convertible debt into the Company’s ordinary shares at an initial conversion price of $4.64 per share at any time commencing six months after the issuance date and ending on the tenth trading day immediately preceding the maturity date. We may also redeem all or a portion of the outstanding convertible debt in cash at an amount equal to the principal amount redeemed plus accrued and unpaid interest.
Our contractual obligations relating to bank borrowings and convertible debts as of December 31, 2025 have been fully recognized as liabilities and disclosed in Notes 13 and 14. The rental fee for the office lease was fully paid at the commencement of the lease term, and there were no future lease commitments as of December 31, 2025. Accordingly, we have no material unrecognized financial, capital or operating commitments as of the reporting date.
As of December 31, 2025, and 2024, we were not a party to any legal or administrative proceedings. In addition, there were no legal or regulatory proceedings, either individually or in the aggregate, that could have resulted in an unfavorable outcome with a material adverse effect on our results of operations, consolidated financial condition, or cash flows.
As of the date of this annual report, we did not have any loss contingencies which require to be recognized or disclosed in our consolidated financial statements.
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Seasonality
The nature of our business does not appear to be affected by seasonal variations. We may experience fluctuations in demand due to heightened or weakened economic conditions, geopolitical events, and shifts in trade patterns in areas where we operate.
Trend Information
Other than as disclosed elsewhere in this report, we are not aware of any trends, uncertainties, demands, commitments, or events that are reasonably likely to have a material effect on our net revenue, income from continuing operations, profitability, liquidity, or capital resources, or that would cause reported financial information not necessarily to be indicative of future operating results or financial condition.
Inflation
Whilst inflation has been a global issue impacting many countries around the globe, inflation in Hong Kong has not materially affected our results of operations in recent years. According to Hong Kong Department of Statistics, core inflation of Hong Kong slightly decreased from 2.1% for the year ended December 31, 2023 to 1.4% for the year ended December 31, 2024, and remains stable at 1.4% for the year ended December 31, 2025. Although we have not been significantly affected by inflation at this point in time, we may be affected if Hong Kong and any other jurisdiction where we operate in the future experience higher rates of inflation in the future.
Critical Accounting Estimate
We prepare our consolidated financial statements in accordance with U.S. GAAP, which requires us to make judgments, estimates and assumptions that affect (i) the reported amounts of our assets and liabilities; (ii) the disclosure of our contingent assets and liabilities at the end of each reporting period; and (iii) the reported amounts of revenue and expenses during each reporting period. We continually evaluate these judgments, estimates and assumptions based on our own historical experience, knowledge and assessment of current business and other conditions and our expectations regarding the future based on available information, which together form our basis for making judgments about matters that are not readily apparent from other sources. Since the use of estimates is an integral component of the financial reporting process, our actual results could differ from those estimates. Some of our accounting policies require a higher degree of judgment than others in their application.
The management determines there are no critical accounting estimates.
Recent Accounting Pronouncements
See the discussion of the recent accounting pronouncements contained in Note 2 to the consolidated financial statements, “Recent accounting pronouncements”.
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ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
6.A. Directors, Executive Officers and Key Employees
The following table provides information regarding our executive officers and directors:
| Directors and Executive officers | Age | Position | ||
| Mr. Jason Kin Hoi, FANG | 33 | Co-Chief Executive Officer, Director and Chairman of the Board | ||
| Mr. Kwan, NGAI | 41 | Co-Chief Executive Officer and Director | ||
| Ms. Fung Yee Mary, WONG | 65 | Chief Financial Officer and Director | ||
| Ms. Man Wa Claudia, HO | 36 | Chief Operating Officer | ||
| Mr. Tong Liu | 36 | Chief Investment Officer | ||
| Mr. Yunming TAO (1)(2)(3) | 70 | Independent Non-Executive Director | ||
| Ms. Jung Hui YEN(1)(2)(3) | 39 | Independent Non-Executive Director | ||
| Mr. Shuo, CHEN(1)(2)(3) | 31 | Independent Non-Executive Director |
| (1) | Member of the Audit Committee |
| (2) | Member of the Compensation Committee |
| (3) | Member of the Nominating Committee |
Jason Kin Hoi, FANG is our co-Chief Executive Officer and Director. Mr. Fang is a pioneer in the blockchain industry. Starting his career at Fenbushi Capital in 2016, where he managed U.S. investments, Fang founded Sora Ventures in 2018. Sora Ventures has been an early investor in transformative sectors such as DeFi, GameFi, SocialFi, and NFTs, and more recently shifted its focus to DeSci and the Bitcoin ecosystem. Mr. Fang holds a Bachelor of Science from Bentley University.
Kwan, NGAI is our co-Chief Executive Officer and Director. Mr. NGAI has served as our Chief Executive Officer since November 2024. Mr. Ngai joined Top Win Hong Kong as marketing executive in 2002 and has 21 years working experience in buying and selling of luxury watches in Hong Kong watch industry. He is responsible for leading the team to implement and optimize sales strategies to penetrate and expand market shares and identifying business opportunities. He received graduation diploma from Fukien Secondary School in 2002.
Fung Yee Mary, WONG is our Chief Financial Officer and Director. She has been serving as the Chief Financial Officer of Top Win Hong Kong, our Operating Subsidiary, since 2009. Ms. Wong has been responsible for providing leadership, direction and management of the finance and accounting team, and advising on long-term business and financial planning. Ms. Wong’s focus is substantially finance, administration and human resource. Ms. Wong received the qualification of Professional Member of the Hong Kong institute of Human Resource management in 2019, Chartered Professionals in Human Resources of British Colombia and Yukon (Canada) in 2016, Chartered Professional Accountants (Canada) in 2015, FCPA (Hong Kong) from Hong Kong Institute of Certified Public Accountants in 2014, FCCA (UK) from Association of Chartered Certified Public Accountants in 2012. Ms. Wong received Master’s degree in Professional Accounting from Dongbei University of Finance and Economics in 2011, and Bachelor’s degree of Business Administration in Accounting from Hong Kong Metropolitan University in 2001.
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Man Wa Claudia, HO is our Chief Operating Officer. Ms. HO has served as our Chief Operating Officer since November 2024. She has joined Top Win Hong Kong, our Operating Subsidiary, since 2016. Ms. Ho has been responsible for overseeing the daily business and administrative operations and improving operating procedures. During 2013 to 2016, Ms. Ho works as the assistant to senior management at Tai Yang International (Holdings) Limited. She received her Bachelor’s degree of Chemistry from the University of Auckland in 2010.
Tong, LIU is our Chief Investment Officer. Mr. Liu was appointed as our CIO since August 2025. Mr. Liu is also a partner at Sora Ventures, a crypto fund focusing on investment into projects and companies with huge upsides, and now on DAT companies in Asia. Mr. Liu started his career in 2015 at UBS Singapore in derivatives sales and then equities sales and moved to wealth management in 2018. In 2019, Mr. Liu joined Equities First as an executive director, covering the Greater China sector. In 2025, Mr. Liu joined Sora Ventures as a partner. Mr. Liu graduated from University College London and holds an MEng. There are no family relationships between Mr. Liu and any other directors and officers of the Company.
Yunming, TAO is our independent director. Mr. Tao specializes in corporate law, including corporate governance, corporate finance, M&A, international transactions, labor and taxation, intellectual property rights, dispute resolution and litigation, liquidation and business restructuring. He has served as legal advisor to dozens of Japanese companies and Japanese-affiliated corporations, and his practice covers a wide range of services, including supporting investment in China, supporting Chinese companies’ investment in Japan, and various other cross-jurisdictional transactions. He is currently affiliated with Japan Alpha Partners Law Office, and has previously practiced with Mitsui Yasuda Law Office, Anderson Mori Law Office, Beijing Zhonglun Law Office, Shanghai Shenglian Law Office. Mr. Tao holds a law degree from the Hosei University Faculty of Law in Japan and a graduate degree from Waseda University.
Jung Hui, YEN is our independent director. From February 2010 to present, Ms. YEN worked at PricewaterhouseCoopers as Director, where her responsibilities include performing risk assessment to account for risk at the engagement level adequately, preparing the development and completion of audit tests for operational, compliance and financial audits. Ms. Yen obtained a bachelor’s degree in economics in September 2009 from National Taiwan University, an MBA degree in August 2024 from National Taiwan University. She has 12 years of auditing experience serving leading industrial companies in the automobile, semiconductor, media, and retailing industries. Ms. Yen is also licensed with AICPA and Taiwan CPA.
Shuo, CHEN is our independent director. Since January 2024, Mr. Chen has been working at Law Office of Heng A Chen PLLC as counsel with a specialization in real estate, commercial and corporate transactions. Prior to that, Mr. Chen worked as an associate at Ortoli Rosenstadt LLP from May 2021 to December 2023. Mr. Chen worked as a legal fellow at MTA Construction and Development Company from November 2020 to May 2021. Mr. Chen received his Bachelor’s degree in Biology and Society from Cornell University and received J.D. degree from Boston University School of Law.
Family Relationships
There are no family relationships, or other arrangements or understandings between or among any of the directors, executive officers or other person pursuant to which such person was selected to serve as a director or officer.
Involvement in Certain Legal Proceedings
To the best of our knowledge, none of our directors, director appointees or executive officers has, during the past ten years, been involved in any legal proceedings described in subparagraph (f) of Item 401 of Regulation S-K.
Item 6.B. Compensation
Employment Agreements
We have entered into employment agreements with each of our executive officers pursuant to which such individuals agreed to serve as our executive officers. Pursuant to these agreements, we are entitled to terminate an executive officer’s employment for cause upon a notice period of one month or an equivalent amount of wages for the notice period. Each executive officer agreed not to, directly or indirectly, provide the same or substantially the same services that he/she provides to the Company to any other business in certain area.
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Agreements with independent directors
We have entered into director offer letters with each of our independent directors which agreements set forth the terms and provisions of their engagement.
On February 28, 2026, the Company entered into offer letters with Yunming Tao as our Independent Non-Executive Director, which took effect on February 28, 2026. Mr. Tao is entitled to an annual compensation of HK$144,000.
On November 22, 2024, the Company entered into director offer letters with Xiaojun Wang as our Independent Director, which took effect on March 27, 2025. Mr. Wang is entitled to an annual compensation of HK$144,000. On February 28, 2026, the Company received the resignation of Mr. Xiaojun Wang as an independent director. There were no disagreements that caused Mr. Wang’s resignation.
On November 22, 2024, the Company entered into director offer letters with Shuo Chen as our Independent Director, which took effect on March 27, 2025. Mr. Chen is entitled to an annual compensation of HK$144,000.
On April 24, 2025, the Company accepted the resignation of Mr. Ziyu ZHANG as our independent director, which came into effect the same day. Mr. ZHANG is resigning for personal reasons and his decision to resign was not as a result of any disagreements with the Board of the Company on any matter.
On April 24, 2025, the Company entered into director offer letters with Jung Hui YEN as our Independent Director, which took effect on April 24, 2025. Ms. Yen is entitled to an annual compensation of HK$144,000.
The Company will also reimburse all directors for any out-of-pocket expenses incurred by them in connection with their services provided in such capacity.
Director and Officer Compensation
During the year ended December 31, 2025, we paid an aggregate of US$313,429 as compensation to our directors and executive officers, including Mr. Fang, Mr. Ngai, Ms. Wong, and Ms. Ho, as well as an aggregate of US$6,859 contributions to the Mandatory Provident Fund (“MPF”), a statutory retirement scheme introduced by the Mandatory Provident Fund Schemes Ordinance in Hong Kong.
During the year ended December 31, 2024, we paid an aggregate of US$247,469 as compensation to our directors and executive officers, including Mr. Ngai, Ms. Wong, and Ms. Ho, as well as an aggregate of US$6,690 contributions to MPF.
As of December 31, 2023, by our Operating Subsidiary, we paid an aggregate of US$230,143 as compensation to our directors and executive officers, including Mr. Ngai, Ms. Wong, and Ms. Ho, as well as an aggregate of US$6,830 contributions to MPF.
Except our contribution to the MPF, we have not set aside or accrued any amount to provide pension, retirement, or other similar benefits to our directors and executive officers. We do not have any equity incentive plan in place as of the date of this annual report.
Equity Compensation Plan Information
We have not adopted any equity compensation plans.
Outstanding Equity Awards at Fiscal Year-End
As of December 31, 2025 and 2024, we had no outstanding equity awards.
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Compensation Recovery Policy
On November 25, 2024, our board of directors adopted an executive compensation recovery policy (the “Compensation Recovery Policy”), providing for the recovery of certain incentive-based compensation from current and former executive officers of the Company in the event the Company is required to restate any of its financial statements filed with the SEC under the Exchange Act in order to correct an error that is material to the previously-issued financial statements, or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period. Adoption of the Clawback Policy was mandated by new Nasdaq listing standards introduced pursuant to Exchange Act Rule 10D-1. The Clawback Policy is in addition to Section 304 of the Sarbanes-Oxley Act of 2002 which permits the SEC to order the disgorgement of bonuses and incentive-based compensation earned by a registrant issuer’s chief executive officer and chief financial officer in the year following the filing of any financial statement that the issuer is required to restate because of misconduct, and the reimbursement of those funds to the issuer. A copy of the Compensation Recovery Policy has been filed herewith as Exhibit 97.1.
Item 6.C. Board Practices
Our board of directors consists of six directors, including three executive directors and three independent directors. We have also established an Audit Committee, a Nominating and Corporate Governance Committee and a Compensation Committee. We have adopted a charter for each of the three committees. Each of the committees of our board of directors shall have the composition and responsibilities described below.
Audit Committee. Our audit committee consists of Yunming TAO, Jung Hui YEN, and Shuo, CHEN. Jung Hui YEN is the chair of our audit committee. The audit committee oversees our accounting and financial reporting processes and the audits of the financial statements of our company. The audit committee is responsible for, among other things:
| ● | appointing the independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by the independent auditors; |
| ● | reviewing with the independent auditors any audit problems or difficulties and management’s response; |
| ● | discussing the annual audited financial statements with management and the independent auditors; |
| ● | reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any steps taken to monitor and control major financial risk exposures; |
| ● | reviewing and approving all proposed related party transactions; |
| ● | meeting separately and periodically with management and the independent auditors; and |
| ● | monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance. |
Compensation Committee. Our compensation committee consists of Yunming TAO, Jung Hui YEN and Shuo, CHEN. Shuo, CHEN is the chair of our compensation committee. The compensation committee is responsible for, among other things:
| ● | reviewing and approving, or recommending to the board for its approval, the compensation for our chief executive officer and other executive officers; |
| ● | reviewing and recommending to the shareholders for determination with respect to the compensation of our directors; |
| ● | reviewing periodically and approving any incentive compensation or equity plans, programs or similar arrangements; and |
| ● | selecting compensation consultant, legal counsel or other adviser only after taking into consideration all factors relevant to that person’s independence from management. |
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Nominating Committee. Our nominating committee consists of Yunming TAO, Jung Hui YEN and Shuo, CHEN. Yunming TAO is the chair of our nominating committee. We have determined that Yunming TAO, Jung Hui YEN and Shuo, CHEN satisfy the “independence” requirements under Nasdaq Rule 5605. The nominating committee assists the board of directors in selecting individuals qualified to become our directors and in determining the composition of the board and its committees. The nominating committee is responsible for, among other things
| ● | selecting and recommending to the board nominees for election by the shareholders or appointment by the board; |
| ● | reviewing annually with the board the current composition of the board with regards to characteristics such as independence, knowledge, skills, experience and diversity; |
| ● | making recommendations on the frequency and structure of board meetings and monitoring the functioning of the committees of the board; and |
| ● | advising the board periodically with regards to significant developments in the law and practice of corporate governance as well as our compliance with applicable laws and regulations, and making recommendations to the board on all matters of corporate governance and on any remedial action to be taken. |
Duties of Directors
Under Cayman Islands law, our directors owe fiduciary duties to our company, including a duty of loyalty, a duty to act honestly and a duty to act in what they consider in good faith to be in our best interests. Our directors must also exercise their powers only for a proper purpose. Our directors also owe to our company a duty to exercise the skill they actually possess and such care and diligence that a reasonably prudent person would exercise in comparable circumstances. Our directors also have a duty to exercise the skill they actually possess and such care and diligence that a reasonably prudent person would exercise in comparable circumstances. In fulfilling their duty of care to us, our directors must ensure compliance with our memorandum and articles of association, as amended and restated from time to time, and the class rights vested thereunder in the holders of the shares. In certain limited exceptional circumstances, a shareholder may have the right to seek damages in our name if a duty owed by our directors is breached.
Terms of Directors and Officers
Our directors shall be appointed by ordinary resolution or by a resolution of the directors and may be removed by ordinary resolution. Each director holds office for the term, if any, fixed by the terms of his appointment or until his earlier death, bankruptcy, insanity, resignation or removal. If no term is fixed on the appointment of a director, the director serves indefinitely until his earlier death, bankruptcy, insanity, resignation or removal. In addition, the office of a director shall be vacated if: (i) he gives notice in writing to our company that he resigns the office of director; (ii) he absents himself (without being represented by an alternate director appointed by him) from three consecutive meetings of the board of directors without special leave of absence from the directors, and they pass a resolution that he has by reason of such absence vacated office, (iii) he dies, becomes bankrupt or makes any arrangement or composition with his creditors generally, (iv) he is found to be or becomes of unsound mind, or (v) all the other directors (being not less than two in number) resolve that he should be removed as a director.
The directors may appoint officers as they consider necessary on such terms, at such remuneration and to perform such duties, and subject to such provisions as to disqualification and removal as the directors may think fit. Unless otherwise specified in the terms of his appointment an officer may be removed by the directors.
Item 6.D. Employees
We had seven full-time employees as of December 31, 2025. All of our employees are stationed in Hong Kong. The following table sets forth the number of our full-time employees categorized by function of the date of the annual report.
We consider that we have maintained a good relationship with our employees and have not experienced any significant disputes with our employees or any disruption to our operations due to any labor disputes. In addition, we have not experienced any difficulties in the recruitment and retention of experienced core staff or skilled personnel.
Our remuneration package includes salary and discretionary bonuses. In general, we determine employees’ salaries based on their qualifications, position and seniority. In order to attract and retain valuable employees, we review the performance of our employees annually which will be taken into account in annual salary review and promotion appraisal. We provide a defined contribution to the Mandatory Provident Fund as required under the Mandatory Provident Fund Schemes Ordinance (Chapter 485 of the Laws of Hong Kong) for our eligible employees in Hong Kong.
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Item 6.E. Share Ownership
The following table sets forth information regarding the beneficial ownership of our Ordinary Shares as of April 30, 2026, the latest practicable date prior to the date of this annual report by our officers, directors and 5% or greater beneficial owners of Ordinary Shares.
We have determined beneficial ownership in accordance with the rules of the SEC. These rules generally attribute beneficial ownership of securities to persons who possess sole or shared voting power or investment power with respect to those securities. The person is also deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within 60 days. Unless otherwise indicated, the person identified in this table has sole voting and investment power with respect to all shares shown as beneficially owned by him, subject to applicable community property laws.
As of April 30, 2026, we had 24,864,000 Ordinary Shares. Each Ordinary Share shall entitle the holder thereof to one (1) vote on all matters subject to vote at general meetings of our company.
Other than disclosed above, none of our shareholders has informed us that it is affiliated with a registered broker-dealer or is in the business of underwriting securities. The number of individual holders of record is based exclusively upon our share register and does not address whether a share or shares may be held by the holder of record on behalf of more than one person or institution who may be deemed to be the beneficial owner of a share or shares in our company.
| Ordinary Shares beneficially owned | ||||||||
| Name of Beneficial Owner | Number of Ordinary Shares | Approximate percentage of outstanding Ordinary Shares | ||||||
| Directors and Named Executive Officers: | ||||||||
| Jason Kin Hoi, FANG(1) | 14,450,000 | 58.1 | % | |||||
| Kwan, NGAI(1) | — | — | ||||||
| Fung Yee Mary, WONG | — | — | ||||||
| Man Wa Claudia, HO | — | — | ||||||
| Tong Liu | — | — | ||||||
| Yunming TAO | — | — | ||||||
| Jung Hui YEN | — | — | ||||||
| Shuo, CHEN | — | — | ||||||
| Directors and executive officers as a group | 14,450,000 | 58.1 | % | |||||
| 5% or Greater Shareholders: | ||||||||
| Sora Ventures Global Limited (1) | 14,450,000 | 58.1 | % | |||||
| (1) | Sora Ventures Global Limited (formerly known as Pride River Limited) is a British Virgin Islands business company. Jason Kin Hoi, FANG controls Sora Ventures Global Limited through his directorship and ownership of intermediary entities Sora Vision Limited, a British Virgin Islands business company and Sora Ventures II Master Fund, a Cayman Islands exempted company, and may be deemed to beneficially own 14,450,000 ordinary shares of AsiaStrategy currently held of record by Sora Ventures Global Limited. Kwan, NGAI is a minority shareholder of Sora Ventures Global Limited. The registered address of Sora Ventures Global Limited is Craigmuir Chambers, Road Town, Tortola, VG 1110, British Virgin Islands. |
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None of our major shareholders have differing voting rights. To our knowledge, we are not directly owned or controlled by any other corporation other than the entities stated above, any foreign government, or any other natural or legal person(s) other than the natural or legal persons stated above, whether severally or jointly. We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our company.
Item 6.F. Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation.
Not applicable.
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
Item 7.A. Major Shareholders
See “Item 6. Directors, Senior Management and Employees — E. Share Ownership” for a description of our major shareholders.
Item 7.B. Related Party Transactions
Set forth below are the related party transactions of our company that occurred since the beginning of the last year up to the date of this annual report.
Transactions with Certain Related Parties
We adopted an audit committee charter, which requires the committee to review all related party transactions on an ongoing basis and all such transactions be approved by the audit committee. In determining whether to approve a related party transaction, the audit committee shall consider, among other factors, the following factors to the extent relevant to the related party transaction:
| ● | whether the terms of the related party transaction are fair to the Company and on the same basis as would apply if the transaction did not involve a related party; |
| ● | whether there are business reasons for the Company to enter into the related party transaction; |
| ● | whether the related party transaction would impair the independence of an outside director; |
| ● | whether the related party transaction would present an improper conflict of interest for any director or executive officer of the Company, taking into account the size of the transaction, the overall financial position of the director, executive officer or the related party, the direct or indirect nature of the director’s, executive officer’s or the related party’s interest in the transaction and the ongoing nature of any proposed relationship, and any other factors the audit committee deems relevant; and |
| ● | any pre-existing contractual obligations. |
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Set forth below are the related party transactions of our company that occurred during the past three years ended December 31, 2025.
| For the Years Ended December 31, | ||||||||||||||
| Name | Nature | 2025 | 2024 | 2023 | ||||||||||
| New Harvest Investment Holdings Limited(1) | Lease expense of the office premise | $ | — | $ | 64,078 | $ | 76,636 | |||||||
| Top Pride International Limited(2) | Lease expense of the warehouse | — | — | 42,150 | ||||||||||
| Mr. Sit Hon(3) | Transfer of life insurance policies | — | 817,470 | — | ||||||||||
| ASP LLC (4) | Investment in equity securities | 3,988,437 | — | — | ||||||||||
| ASP LLC (4) | Unrealized losses on investment in equity securities | 510,537 | — | — | ||||||||||
| (1) | The amount for the years ended December 31, 2024 and 2023, represented the lease expense charged by New Harvest for the lease of office premise at 33/F, Sunshine Plaza, 353 Lockhart Road, Wan Chai, Hong Kong. The amount for the year ended December 31, 2024 represented the lease expense from January 1, 2024 to October 29, 2024, the date that New Harvest ceased to be a related party of the Group. |
| (2) | The amount for the years ended December 31, 2023 represented the lease expense charged by Top Pride for the lease of warehouse at Unit1208 on 12/F, Riley House, No. 88 Lei Muk Road, Kwai Chung, New Territories, Hong Kong. The Group chose not to renew the lease contract in 2024. |
| (3) | On May 31, 2024, the Group resolved to dispose of the investments in of Sun Life Insurance policy and BOC Life Insurance policy to Mr. Sit Hon at a consideration of $817,470. No gain or loss was recognized upon the disposal. |
| (4) | On August 27, 2025, the Company had made a portfolio investment amount of approximately $3,988,437 to ASP LLC, which represents around 9.93% of total portfolio in ASP LLC. ASP LLC is a Delaware limited liability company solely managed by SORA Ventures. For the year ended December 31, 2025, unrealized losses on investment in equity securities were $510,537 and were reported as “unrealized gains on investment in equity securities, net” in the consolidated statements of operations and comprehensive income (loss). |
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Balances with related parties
| As of December 31, | ||||||||||
| Name | Nature | 2025 | 2024 | |||||||
| Sora Venture Global Limited (formerly known as Pride River Limited)(5) | Amount due from a related party | $ | 2,110 | $ | — | |||||
| Mr. Ngai Kwan(6) | Amount due from a related party | — | 10,000 | |||||||
| ASP LLC (7) | Investment in equity securities, non-current | 3,477,900 | — | |||||||
| (5) | The outstanding balance as of December 31, 2025, represented the general and administrative expenses paid by the Group on behalf of Sora Venture Global Limited (formerly known as Pride River Limited). The balance was interest-free, unsecured, and repayable on demand. |
| (6) | The outstanding balance as of December 31, 2024, represented advances made to Mr. Ngai Kwan by the Group to facilitate his personal needs. The balance was interest-free, unsecured, and repayable on demand, and has been fully settled as of the date of this report. |
| (7) | The outstanding balance as of December 31, 2025, represented the Group’s capital contribution of $3,988,437 to ASP LLC, adjusted for a subsequent fair value loss of $510,537 recognized during the year. ASP LLC is solely managed by SORA Ventures. |
Item 7.C. Interests of Experts and Counsel
Not applicable.
ITEM 8. FINANCIAL INFORMATION
Consolidated Statements and Other Financial Information
The financial statements required by this item may be found at the end of this annual report, beginning on page F-1.
Legal Proceedings
See “Item 4.B. Business Overview — Legal Proceedings” for a description of our currently involved legal proceedings.
Dividends
AsiaStrategy has not made any dividends or distributions to its shareholders, including U.S. investors, as of the date of this annual report. During the fiscal years ended December 31, 2025, 2024 and 2023, no dividends or distribution have been made to date by our subsidiaries.
We anticipate that we will retain any earnings to support operations and to finance the growth and development of our business. Therefore, we do not expect to pay cash dividends in the foreseeable future.
AsiaStrategy has no operations of its own. It conducts its luxury watch trading business mainly in Hong Kong through our Hong Kong Operating Subsidiary, and other of our investment holding businesses through our other subsidiaries. AsiaStrategy may rely on dividends or payments to be paid by our subsidiaries to fund its cash and financing requirements, including the funds necessary to pay dividends and other cash distributions to our shareholders and U.S. investors, to service any debt we may incur and to pay our operating expenses. If our operating subsidiaries incur debt on their own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends or make other distributions to us. Cash is transferred through our organization in the following manner: (i) funds are transferred from AsiaStrategy, our holding company incorporated in Cayman Islands, to our Operating Subsidiary in Hong Kong or other of our subsidiaries directly or indirectly through our intermediate holding companies, in the form of capital contributions or loans, as the case may be; and (ii) dividends or other distributions or loans may be paid by our Operating Subsidiary in Hong Kong or other of our subsidiaries to AsiaStrategy directly or indirectly through our intermediate holding companies.
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There are no restrictions or limitations on our ability to distribute earnings from our operating subsidiaries, including our subsidiary in Hong Kong, to AsiaStrategy and shareholders and the U.S. investors, provided that the entity remains solvent after such distribution. Subject to the Cayman Islands law and our Amended and Restated Memorandum and Articles of Association, our board of directors may authorize and declare a dividend to shareholders at such time and of such an amount as it thinks fit, if it is satisfied, on reasonable grounds, that immediately following the dividend payment the value of our assets will exceed our liabilities and AsiaStrategy will be able to pay our debts as they become due.
For the cash transfers between AsiaStrategy and our operating subsidiaries, and according to the Companies Act, a Cayman Islands company may make dividends distribution to the extent that immediately after the distribution, the value of the assets of such company will not be less than the sum of its total liabilities, other than deferred taxes, as shown in the books of account, and its capital and that such company is able to satisfy its liabilities as they fall due in the ordinary course of its business. According to the Companies Ordinance of Hong Kong, a Hong Kong company may only make a distribution out of profits available for distribution. If any of AsiaStrategy’s subsidiaries incur debt on its own behalf in the future, the instruments governing such debt may restrict their ability to pay dividends to AsiaStrategy. Other than the above, we have not adopted, nor do we maintain, any cash management policies and procedures as of the date of this annual report. Additionally, as of the date of this annual report, there are no further Cayman Islands or Hong Kong statutory restrictions on the amount of funds which may be distributed by us by dividend. However, in the future, funds may not be available to fund operations or for other use outside of Hong Kong, due to interventions in, or the imposition of restrictions and limitations on, our ability or on our subsidiaries’ ability by the PRC government to transfer cash. Any limitation on the ability of our subsidiary to make payments to us could have a material adverse effect on our ability to conduct our business and might materially decrease the value of our Ordinary Shares or cause them to be worthless.
Furthermore, as of the date of this annual report, there are no restrictions or limitations under the laws of Hong Kong imposed on the conversion of Hong Kong dollar into foreign currencies and the remittance of currencies out of Hong Kong, nor there is any restriction on foreign exchange to transfer cash between AsiaStrategy and its subsidiaries, across borders and to U.S investors, nor there is any restrictions and limitations to distribute earnings from our business and subsidiaries, to AsiaStrategy and U.S. investors and amounts owed. The laws and regulations of the PRC do not currently have any material impact on the transfer of cash from AsiaStrategy to our operating subsidiaries or from our operating subsidiaries to AsiaStrategy, our shareholders and the U.S. investors. However, the PRC government may, in the future, impose restrictions or limitations on our ability to transfer money out of Hong Kong, to distribute earnings and pay dividends to and from the other entities within our organization, or to reinvest in our business outside of Hong Kong. Such restrictions and limitations, if imposed in the future, may delay or hinder the expansion of our business to outside of Hong Kong and may affect our ability to receive funds from our operating subsidiaries in Hong Kong. The promulgation of new laws or regulations, or the new interpretation of existing laws and regulations, in each case, that restrict or otherwise unfavorably impact the ability or way we conduct our business, could require us to change certain aspects of our business to ensure compliance, which could decrease demand for our services, reduce revenues, increase costs, require us to obtain more licenses, permits, approvals or certificates, or subject us to additional liabilities. To the extent any new or more stringent measures are required to be implemented, our business, financial condition and results of operations could be adversely affected and such measured could materially decrease the value of our Ordinary Shares, potentially rendering it worthless.
No Significant Changes
No significant changes to our financial condition have occurred since the date of the annual financial statements contained herein.
ITEM 9. THE OFFER AND LISTING
Item 9.A. Offer and Listing Details
Not Applicable.
Item 9.B. Plan of Distribution
Not Applicable.
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Item 9.C. Markets
Our Ordinary Shares are currently traded on the Nasdaq Capital Market under the symbol “SORA”.
Item 9.D. Selling Shareholders
Not Applicable.
Item 9.E. Dilution
Not Applicable.
Item 9.F. Expenses of the Issuer
Not Applicable.
ITEM 10. ADDITIONAL INFORMATION
Item 10.A. Share Capital
Not Applicable.
Item 10.B. Memorandum and Articles of Association
The following are summaries of the material provisions of our amended and restated memorandum and articles of association and the Companies Act, insofar as they relate to the material terms of our Ordinary Shares. They do not purport to be complete. Reference is made to our amended and restated memorandum and articles of association, a copy of which is filed as an exhibit to the annual report.
Objectives of Our Company. Under our Amended and Restated Memorandum and Articles of Association, the objects of our Company are unrestricted and we have the full power and authority to carry out any object not prohibited by the law of the Cayman Islands.
Ordinary Shares. Our Ordinary Shares are issued in registered form and are issued when registered in our register of members. We may not issue shares to bearer. Our shareholders who are non-residents of the Cayman Islands may freely hold and vote their shares.
Dividends. The holders of our Ordinary Shares are entitled to such dividends as may be declared by our board of directors. In addition, our shareholders may declare dividends by ordinary resolution, but no dividend shall exceed the amount recommended by our directors. Our Amended and Restated Memorandum and Articles of Association provide that the directors may, before recommending or declaring any dividend, set aside out of the funds legally available for distribution such sums as they think proper as a reserve or reserves which shall, in the absolute discretion of the directors, be applicable for meeting contingencies or for equalizing dividends or for any other purpose to which those funds may be properly applied. Under the laws of the Cayman Islands, our Company may pay a dividend out of either profit or the credit standing in our Company’s share premium account or as otherwise permitted by the Companies Act, provided that in no circumstances may a dividend be paid if this would result in our Company being unable to pay its debts as they fall due in the ordinary course of business immediately following the date on which the distribution or dividend is paid.
Voting Rights. Subject to any rights and restrictions attached to any shares, on a show of hands every shareholder present in person and every person representing a shareholder by proxy shall, at a general meeting of the Company, each have one vote and on a poll every shareholder and every person representing a shareholder by proxy shall have one vote for each Ordinary Share of which he or the person represented by proxy is the holder. At any general meeting a resolution put to the vote of the meeting shall be decided by a poll.
An ordinary resolution to be passed at a meeting by the shareholders requires the affirmative vote of a simple majority of the votes attaching to the Ordinary Shares cast at a meeting, while a special resolution requires the affirmative vote of no less than two-thirds of the votes cast attaching to the outstanding Ordinary Shares at a meeting. A special resolution will be required for important matters such as a change of name or making changes to our Amended and Restated Memorandum and Articles of Association. Holders of the Ordinary Shares may, among other things, divide or combine their shares by ordinary resolution.
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General Meetings of Shareholders. As a Cayman Islands exempted company, we are not obliged by the Companies Act to call shareholders’ annual general meetings. Our Amended and Restated Memorandum and Articles of Association provide that we may (but are not obliged to) in each calendar year hold a general meeting as our annual general meeting in which case we shall specify the meeting as such in the notices calling it, and the annual general meeting shall be held at such time and place as may be determined by our directors.
Shareholders’ general meetings may be convened by a majority of our board of directors. Advance notice of at least seven calendar days is required for the convening of our annual general shareholders’ meeting (if any) and any other general meeting of our shareholders. A quorum required for any general meeting of shareholders consists of at least one shareholder present or by proxy, representing not less than one-third of all votes attaching to all of our shares in issue and entitled to vote.
The Companies Act provides shareholders with only limited rights to requisition a general meeting, and does not provide shareholders with any right to put any proposal before a general meeting. However, these rights may be provided in a company’s articles of association. Our Amended and Restated Memorandum and Articles of Association provide that upon the requisition of shareholders representing, as at the date of the deposit of the requisition, in aggregate not less than one-third of the votes attaching to the issued and outstanding shares of our Company that as at the date of the deposit entitled to vote at general meetings, our chairman or board will convene an extraordinary general meeting and put the resolutions so requisitioned to a vote at such meeting.
Transfer of Ordinary Shares. Subject to the restrictions set out below, any of our shareholders may transfer all or any of his or her Ordinary Shares by an instrument of transfer in the usual or common form or any other form approved by our board of directors.
Liquidation. On the winding up of our Company, if the assets available for distribution amongst our shareholders shall be more than sufficient to repay the whole of the share capital at the commencement of the winding up, the surplus shall be distributed amongst our shareholders in proportion to the par value of the shares held by them at the commencement of the winding up, subject to a deduction from those shares in respect of which there are monies due, of all monies payable to our Company for unpaid calls or otherwise. If our assets available for distribution are insufficient to repay the whole of the share capital, the assets will be distributed so that the losses are borne by our shareholders in proportion to the par value of the shares held by them.
Calls on Shares and Forfeiture of Shares. Our board of directors may from time to time make calls upon shareholders for any amounts unpaid on their shares in a notice served to such shareholders at least 14 calendar days prior to the specified time or times of payment. The shares that have been called upon and remain unpaid are subject to forfeiture.
Redemption, Repurchase and Surrender of Shares. We may issue shares on terms that such shares are subject to redemption, at our option or at the option of the holders of these shares, on such terms and in such manner as may be determined by our board of directors. We may also repurchase any of our shares on such terms and in such manner as have been approved by our board of directors or by an ordinary resolution of our shareholders. Under the Companies Act, the redemption or repurchase of any share may be paid out of our profits, out of the share premium account, or out of the proceeds of a new issue of shares made for the purpose of such redemption or repurchase, or out of capital (including share premium account and capital redemption reserve) if our Company can, immediately following such payment, pay its debts as they fall due in the ordinary course of business. In addition, under the Companies Act no such share may be redeemed or repurchased (a) unless it is fully paid up, (b) if such redemption or repurchase would result in there being no shares outstanding or (c) if the company has commenced liquidation. In addition, our Company may accept the surrender of any fully paid share for no consideration.
Variations of Rights of Shares. If at any time our share capital is divided into different classes or series of shares, the rights attached to any class or series of shares (unless otherwise provided by the terms of issue of the shares of that class or series), whether or not our Company is being wound-up, may be varied with the consent in writing of the holders of majority of the issued shares of that class or series or with the sanction of an ordinary resolution passed at a separate meeting of the holders of the shares of the class or series. The rights conferred upon the holders of the shares of any class issued shall not, unless otherwise expressly provided by the terms of issue of the shares of that class, be deemed to be varied by the creation, allotment or issue of further shares ranking pari passu with such existing class of shares.
Issuance of Additional Shares. Our amended and restated memorandum of association authorizes our board of directors to issue additional Ordinary Shares from time to time as our board of directors shall determine, to the extent of available authorized but unissued shares.
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Declaration of Interest. Pursuant to our Amended and Restated Memorandum and Articles of Association, a director who is in any way, whether directly or indirectly, interested in a contract or transaction or proposed contract or transaction with the Company shall declare the nature of his interest at a meeting of the directors. A general notice given to the directors by any director to the effect that he is a member of any specified company or firm and is to be regarded as interested in any contract or transaction which may thereafter be made with that company or firm shall be deemed a sufficient declaration of interest in regard to any contract so made or transaction so consummated. Subject to the listing rules of the designated stock exchange and disqualification by the chairman of the relevant board meeting, a director may vote in respect of any contract or transaction or proposed contract or transaction notwithstanding that he may be interested therein and if he does so his vote shall be counted and he may be counted in the quorum at any meeting of the directors at which any such contract or transaction or proposed contract or transaction shall come before the meeting for consideration.
Compensation. Under Amended and Restated Memorandum and Articles of Association, the remuneration of the directors may be determined by our directors.
Borrowing Powers. Our directors may from time to time at their discretion exercise all the powers of the Company to raise or borrow money and to mortgage or charge its undertaking, property and assets (present and future) and uncalled capital or any part thereof, to issue debentures, debenture stock, bonds and other securities, whether outright or as collateral security for any debt, liability or obligation of the Company or of any third party.
Qualification of directors. There is no shareholding qualification for directors nor is there any specified age limit for directors.
Inspection of Books and Records. Holders of our Ordinary Shares will have no general right under Cayman Islands law to inspect or obtain copies of our corporate records (except for the Amended and Restated Memorandum and Articles of Association of our Company, any special resolutions passed by our Company and the register of mortgages and charges of our Company). However, we will provide our shareholders with annual audited financial statements.
Anti-Takeover Provisions. Some provisions of our Amended and Restated Memorandum and Articles of Association may discourage, delay or prevent a change of control of our Company or management that shareholders may consider favorable, including provisions that:
| ● | authorize our board of directors to issue preference shares in one or more series and to designate the price, rights, preferences, privileges and restrictions of such preference shares without any further vote or action by our shareholders; and |
| ● | limit the ability of shareholders to requisition and convene general meetings of shareholders. |
However, under Cayman Islands law, our directors may only exercise the rights and powers granted to them under our Amended and Restated Memorandum and Articles of Association for a proper purpose and for what they believe in good faith to be in the best interests of our Company.
Exempted Company. We are an exempted company with limited liability under the Companies Act. The Companies Act distinguishes between ordinary resident companies and exempted companies. Any company that is registered in the Cayman Islands but conducts business mainly outside of the Cayman Islands may apply to be registered as an exempted company. The requirements for an exempted company are essentially the same as for an ordinary company except that an exempted company:
| ● | does not have to file an annual return of its shareholders with the Registrar of Companies; |
| ● | is not required to open its register of members for inspection; |
| ● | does not have to hold an annual general meeting; |
| ● | may issue negotiable or bearer shares or shares with no par value; |
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| ● | may obtain an undertaking against the imposition of any future taxation (such undertakings are usually given for 20 years in the first instance); |
| ● | may register by way of continuation in another jurisdiction and be deregistered in the Cayman Islands; |
| ● | may register as an exempted limited duration company; and |
| ● | may register as a segregated portfolio company. |
“Limited liability” means that the liability of each shareholder is limited to the amount unpaid by the shareholder on the shares of the company (except in exceptional circumstances, such as involving fraud, the establishment of an agency relationship or an illegal or improper purpose or other circumstances in which a court may be prepared to pierce or lift the corporate veil).
Differences in Corporate Law
The Companies Act is derived, to a large extent, from the older Companies Acts of England but does not follow recent English statutory enactments and accordingly there are significant differences between the Companies Act and the current Companies Act of England. In addition, the Companies Act differs from laws applicable to U.S. corporations and their shareholders. Set forth below is a summary of certain significant differences between the provisions of the Companies Act applicable to us and the laws applicable to companies incorporated in the United States and their shareholders.
Mergers and Similar Arrangements. The Companies Act permits mergers and consolidations between Cayman Islands companies and between Cayman Islands companies and non-Cayman Islands companies. For these purposes, (i) “merger” means the merging of two or more constituent companies and the vesting of their undertaking, property and liabilities in one of such companies as the surviving company, and (ii) a “consolidation” means the combination of two or more constituent companies into a consolidated company and the vesting of the undertaking, property and liabilities of such companies to the consolidated company. In order to effect such a merger or consolidation, the directors of each constituent company must approve a written plan of merger or consolidation, which must then be authorized by (a) a special resolution of the shareholders of each constituent company, and (b) such other authorization, if any, as may be specified in such constituent company’s articles of association. The written plan of merger or consolidation must be filed with the Registrar of Companies of the Cayman Islands together with a declaration as to the solvency of the consolidated or surviving company, a list of the assets and liabilities of each constituent company and an undertaking that a copy of the certificate of merger or consolidation will be given to the members and creditors of each constituent company and that notification of the merger or consolidation will be published in the Cayman Islands Gazette. Court approval is not required for a merger or consolidation which is effected in compliance with these statutory procedures.
A merger between a Cayman parent company and its Cayman subsidiary or subsidiaries does not require authorization by a resolution of shareholders of that Cayman subsidiary if a copy of the plan of merger is given to every member of that Cayman subsidiary to be merged unless that member agrees otherwise. For this purpose a company is a “parent” of a subsidiary if it holds issued shares that together represent at least ninety percent (90%) of the votes at a general meeting of the subsidiary.
The consent of each holder of a fixed or floating security interest over a constituent company is required unless this requirement is waived by a court in the Cayman Islands.
Save in certain limited circumstances, a shareholder of a Cayman constituent company who dissents from the merger or consolidation is entitled to payment of the fair value of his shares (which, if not agreed between the parties, will be determined by the Cayman Islands court) upon dissenting to the merger or consolidation, provide the dissenting shareholder complies strictly with the procedures set out in the Companies Act. The exercise of dissenter rights will preclude the exercise by the dissenting shareholder of any other rights to which he or she might otherwise be entitled by virtue of holding shares, save for the right to seek relief on the grounds that the merger or consolidation is void or unlawful.
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Separate from the statutory provisions relating to mergers and consolidations, the Companies Act also contains statutory provisions that facilitate the reconstruction and amalgamation of companies by way of schemes of arrangement, provided that the arrangement is approved by a majority in number representing seventy-five per cent in value of the creditors or class of creditors, or is approved by seventy-five per cent in value of the shareholders or class of shareholders, as the case may be, that are present and voting either in person or by proxy at a meeting, or meetings, convened for that purpose. The convening of the meetings and subsequently the arrangement must be sanctioned by the Grand Court of the Cayman Islands. While a dissenting shareholder has the right to express to the court the view that the transaction ought not to be approved, the court can be expected to approve the arrangement if it determines that:
| ● | the statutory provisions as to the required majority vote have been met; |
| ● | the shareholders have been fairly represented at the meeting in question and the statutory majority are acting bona fide without coercion of the minority to promote interests adverse to those of the class; |
| ● | the arrangement is such that may be reasonably approved by an intelligent and honest man of that class acting in respect of his interest; and |
| ● | the arrangement is not one that would more properly be sanctioned under some other provision of the Companies Act. |
The Companies Act also contains a statutory power of compulsory acquisition which may facilitate the “squeeze out” of dissentient minority shareholder upon a tender offer. When a tender offer is made and accepted by holders of not less than 90.0% in value of the shares affected within four months, the offeror may, within a two-month period commencing on the expiration of such four-month period, require the holders of the remaining shares to transfer such shares to the offeror on the terms of the offer. An objection can be made to the Grand Court of the Cayman Islands but this is unlikely to succeed in the case of an offer which has been so approved unless there is evidence of fraud, bad faith or collusion.
If an arrangement and reconstruction by way of scheme of arrangement is thus approved and sanctioned, or if a tender offer is made and accepted, a dissenting shareholder would have no rights comparable to appraisal rights, which would otherwise ordinarily be available to dissenting shareholders of Delaware corporations, providing rights to receive payment in cash for the judicially determined value of the shares.
Shareholders’ Suits. In principle, we will normally be the proper plaintiff to sue for a wrong done to us as a company, and as a general rule a derivative action may not be brought by a minority shareholder. However, based on English authorities, which would in all likelihood be of persuasive authority in the Cayman Islands, the Cayman Islands court can be expected to follow and apply the common law principles (namely the rule in Foss v. Harbottle and the exceptions thereto) so that a non-controlling shareholder may be permitted to commence a class action against or derivative actions in the name of the company to challenge actions where:
| ● | a company acts or proposes to act illegally or ultra vires; |
| ● | the act complained of, although not ultra vires, could only be effected duly if authorized by more than a simple majority vote that has not been obtained; and |
| ● | those who control the company are perpetrating a “fraud on the minority.” |
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Indemnification of Directors and Executive Officers and Limitation of Liability. Cayman Islands law does not limit the extent to which a company’s memorandum and articles of association may provide for indemnification of officers and directors, except to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification against civil fraud or the consequences of committing a crime. Our Amended and Restated Memorandum and Articles of Association provide that we shall indemnify our officers and directors against all actions, proceedings, costs, charges, expenses, losses, damages or liabilities incurred or sustained by such directors or officer, other than by reason of such person’s dishonesty, willful default or fraud, in or about the conduct of our Company’s business or affairs (including as a result of any mistake of judgment) or in the execution or discharge of his duties, powers, authorities or discretions, including without prejudice to the generality of the foregoing, any costs, expenses, losses or liabilities incurred by such director or officer in defending (whether successfully or otherwise) any civil proceedings concerning our Company or its affairs in any court whether in the Cayman Islands or elsewhere. This standard of conduct is generally the same as permitted under the Delaware General Corporation Law for a Delaware corporation.
In addition, we have entered into indemnification agreements with our directors and executive officers, that provide such persons with additional indemnification beyond that provided in our Amended and Restated Memorandum and Articles of Association.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers or persons controlling us under the foregoing provisions, we have been informed that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
Directors’ Fiduciary Duties. Under Delaware corporate law, a director of a Delaware corporation has a fiduciary duty to the corporation and its shareholders. This duty has two components: the duty of care and the duty of loyalty. The duty of care requires that a director act in good faith, with the care that an ordinarily prudent person would exercise under similar circumstances. Under this duty, a director must inform himself of, and disclose to shareholders, all material information reasonably available regarding a significant transaction. The duty of loyalty requires that a director acts in a manner he reasonably believes to be in the best interests of the corporation. He must not use his corporate position for personal gain or advantage. This duty prohibits self-dealing by a director and mandates that the best interest of the corporation and its shareholders take precedence over any interest possessed by a director, officer or controlling shareholder and not shared by the shareholders generally. In general, actions of a director are presumed to have been made on an informed basis, in good faith and in the honest belief that the action taken was in the best interests of the corporation. However, this presumption may be rebutted by evidence of a breach of one of the fiduciary duties. Should such evidence be presented concerning a transaction by a director, the director must prove the procedural fairness of the transaction, and that the transaction was of fair value to the corporation.
As a matter of Cayman Islands law, a director of a Cayman Islands company is in the position of a fiduciary with respect to the company and therefore it is considered that he owes the following duties to the company — a duty to act bona fide in the best interests of the company, a duty not to make a profit based on his position as director (unless the company permits him to do so), a duty not to put himself in a position where the interests of the company conflict with his personal interest or his duty to a third party, and a duty to exercise powers for the purpose for which such powers were intended. A director of a Cayman Islands company owes to the company a duty to act with skill and care. It was previously considered that a director need not exhibit in the performance of his duties a greater degree of skill than may reasonably be expected from a person of his knowledge and experience. However, English and Commonwealth courts have moved towards an objective standard with regard to the required skill and care and these authorities are likely to be followed in the Cayman Islands.
Shareholder Action by Written Resolution. Under the Delaware General Corporation Law, a corporation may eliminate the right of shareholders to act by written consent by amendment to its certificate of incorporation. Our articles of association provide that any ordinary or special resolution of shareholders and any other action that may be taken by the shareholders at a meeting may also be taken by a resolution consented to in writing, without the need for any notice, by all shareholders who would have been entitled to attend and vote at a meeting called for the purpose of passing such a resolution or taking any other action.
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Shareholder Proposals. Under the Delaware General Corporation Law, a shareholder has the right to put any proposal before the annual meeting of shareholders, provided it complies with the notice provisions in the governing documents. A special meeting may be called by the board of directors or any other person authorized to do so in the governing documents, but shareholders may be precluded from calling special meetings.
The Companies Act provides shareholders with only limited rights to requisition a general meeting. However, these rights may be provided in a company’s articles of association. Our articles of association allow our shareholders holding at the date of deposit of requisition shares which carry in aggregate not less than one-third of all votes attaching to the issued and outstanding shares of our Company that as at the date of the deposit entitled to vote at general meetings to requisition an extraordinary general meeting of our shareholders, in which case our chairman or board is obliged to convene an extraordinary general meeting and to put the resolutions so requisitioned to a vote at such meeting. As an exempted Cayman Islands company, we may but are not obliged by law to call shareholders’ annual general meetings. See “Our Amended and Restated Memorandum and Articles of Association-General Meetings of Shareholders.” for more information on the rights of our shareholders’ rights to put proposals before the annual general meeting.
Cumulative Voting. Under the Delaware General Corporation Law, cumulative voting for elections of directors is not permitted unless the corporation’s certificate of incorporation specifically provides for it. Cumulative voting potentially facilitates the representation of minority shareholders on a board of directors since it permits the minority shareholder to cast all the votes to which the shareholder is entitled for a single director, which increases the shareholder’s voting power with respect to electing such director. There are no prohibitions in relation to cumulative voting under the laws of the Cayman Islands but our articles of association do not provide for cumulative voting. As a result, our shareholders are not afforded any less protections or rights on this issue than shareholders of a Delaware corporation.
Removal of Directors. Under the Delaware General Corporation Law, a director of a corporation with a classified board may be removed only for cause with the approval of a majority of the outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise. Under our articles of association, directors may be removed by the affirmative vote of two-thirds of the directors then in office (except with regard to the removal of the chairman, who may be removed from office by the affirmative vote of all directors) or by an ordinary resolution (except with regard to the removal of the chairman, who may be removed from office by special resolution) of our shareholders. In addition, a director’s office shall be vacated if the director (i) becomes bankrupt or makes any arrangement or composition with his creditors; (ii) is found to be or becomes of unsound mind or dies; (iii) resigns his office by notice in writing to the Company; or (iv) is removed from office pursuant to any other provisions of our Amended and Restated Memorandum and Articles of Association.
Transactions with Interested Shareholders. The Delaware General Corporation Law contains a business combination statute applicable to Delaware corporations whereby, unless the corporation has specifically elected not to be governed by such statute by amendment to its certificate of incorporation, it is prohibited from engaging in certain business combinations with an “interested shareholder” for three years following the date that such person becomes an interested shareholder. An interested shareholder generally is a person or a group who or which owns or owned 15% or more of the target’s outstanding voting share within the past three years. This has the effect of limiting the ability of a potential acquirer to make a two-tiered bid for the target in which all shareholders would not be treated equally. The statute does not apply if, among other things, prior to the date on which such shareholder becomes an interested shareholder, the board of directors approves either the business combination or the transaction which resulted in the person becoming an interested shareholder. This encourages any potential acquirer of a Delaware corporation to negotiate the terms of any acquisition transaction with the target’s board of directors.
Cayman Islands law has no comparable statute. As a result, we cannot avail ourselves of the types of protections afforded by the Delaware business combination statute. However, although Cayman Islands law does not regulate transactions between a company and its significant shareholders, it does provide that such transactions must be entered into bona fide in the best interests of the company and not with the effect of constituting a fraud on the minority shareholders.
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Dissolution; Winding up. Under the Delaware General Corporation Law, unless the board of directors approves the proposal to dissolve, dissolution must be approved by shareholders holding 100% of the total voting power of the corporation. Only if the dissolution is initiated by the board of directors may it be approved by a simple majority of the corporation’s outstanding shares. Delaware law allows a Delaware corporation to include in its certificate of incorporation a supermajority voting requirement in connection with dissolutions initiated by the board.
Under Cayman Islands law, a company may be wound up by either an order of the courts of the Cayman Islands or by a special resolution of its members or, if the company is unable to pay its debts as they fall due, by an ordinary resolution of its members. The court has authority to order winding up in a number of specified circumstances including where it is, in the opinion of the court, just and equitable to do so. Under the Companies Act and our articles of association, our Company may be dissolved, liquidated or wound up by a special resolution of our shareholders.
Variation of Rights of Shares. Under the Delaware General Corporation Law, a corporation may vary the rights of a class of shares with the approval of a majority of the outstanding shares of such class, unless the certificate of incorporation provides otherwise. Under Cayman Islands law and our articles of association, if our share capital is divided into more than one class of shares, we may vary the rights attached to any class with the written consent of the holders of majority of the issued shares of that class or with the sanction of an ordinary resolution passed at a general meeting of the holders of the shares of that class.
Amendment of Governing Documents. Under the Delaware General Corporation Law, a corporation’s governing documents may be amended with the approval of a majority of the outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise. Under the Companies Act and our Amended and Restated Memorandum and Articles of Association, our memorandum and articles of association may only be amended by a special resolution of our shareholders.
Rights of Non-resident or Foreign Shareholders. There are no limitations imposed by our Amended and Restated Memorandum and Articles of Association on the rights of non-resident or foreign shareholders to hold or exercise voting rights on our shares. In addition, there are no provisions in our Amended and Restated Memorandum and Articles of Association governing the ownership threshold above which shareholder ownership must be disclosed.
Item 10.C. Material Contracts
We have not entered into any material contracts other than in the ordinary course of business and other than those described in “Item 4. Information on the Company” or elsewhere in this annual report.
Item 10.D. Exchange Controls
Cayman Islands
There are currently no exchange control regulations in the Cayman Islands or Hong Kong applicable to us or our shareholders.
Item 10.E. Taxation
The following sets forth the material Cayman Islands, Hong Kong and U.S. federal income tax consequences related to an investment in our Ordinary Shares. It is directed to U.S. Holders (as defined below) of our Ordinary Shares and is based upon laws and relevant interpretations thereof in effect as of the date of this annual report, all of which are subject to change. This description does not deal with all possible tax consequences relating to an investment in our Ordinary Shares, such as the tax consequences under state, local and other tax laws.
WE URGE POTENTIAL PURCHASERS OF OUR SHARES TO CONSULT THEIR OWN TAX ADVISORS CONCERNING THE U.S. FEDERAL, STATE, LOCAL AND NON-U.S. TAX CONSEQUENCES OF PURCHASING, OWNING AND DISPOSING OF OUR SHARES.
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United States Federal Income Tax Considerations
The following discussion is a summary of U.S. federal income tax considerations generally applicable to the ownership and disposition of our Ordinary Shares by a U.S. Holder (as defined below) that acquires our Ordinary Shares in the IPO and holds our Ordinary Shares as “capital assets” (generally, property held for investment) under the U.S. Internal Revenue Code of 1986, as amended, or the Code. This discussion is based upon existing U.S. federal tax law, which is subject to differing interpretations or change, possibly with retroactive effect. No ruling has been sought from the Internal Revenue Service, or the IRS, with respect to any U.S. federal income tax considerations described below, and there can be no assurance that the IRS or a court will not take a contrary position. This discussion, moreover, does not address the U.S. federal estate, gift, and alternative minimum tax considerations, the Medicare tax on certain net investment income, information reporting or backup withholding or any state, local, and non-U.S. tax considerations, relating to the ownership or disposition of our Ordinary Shares. The following summary does not address all aspects of U.S. federal income taxation that may be important to particular investors in light of their individual circumstances or to persons in special tax situations such as:
| ● | banks and other financial institutions; |
| ● | insurance companies; |
| ● | pension plans; |
| ● | cooperatives; |
| ● | regulated investment companies; |
| ● | real estate investment trusts; |
| ● | broker-dealers; |
| ● | traders that elect to use a mark-to-market method of accounting; |
| ● | certain former U.S. citizens or long-term residents; |
| ● | tax-exempt entities (including private foundations); |
| ● | individual retirement accounts or other tax-deferred accounts; |
| ● | persons liable for alternative minimum tax; |
| ● | persons who acquire their Ordinary Shares pursuant to any employee share option or otherwise as compensation; |
| ● | investors that will hold their Ordinary Shares as part of a straddle, hedge, conversion, constructive sale or other integrated transaction for U.S. federal income tax purposes; |
| ● | investors that have a functional currency other than the U.S. dollar; |
| ● | persons that actually or constructively own 10% or more of our Ordinary Shares (by vote or value); or |
| ● | partnerships or other entities taxable as partnerships for U.S. federal income tax purposes, or persons holding the Ordinary Shares through such entities, |
all of whom may be subject to tax rules that differ significantly from those discussed below.
Each U.S. Holder is urged to consult its tax advisor regarding the application of U.S. federal taxation to its particular circumstances, and the state, local, non-U.S., and other tax considerations of the ownership and disposition of our Ordinary Shares.
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General
For purposes of this discussion, a “U.S. Holder” is a beneficial owner of our Ordinary Shares that is, for U.S. federal income tax purposes:
| ● | an individual who is a citizen or resident of the United States; |
| ● | a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created in, or organized under the laws of the United States or any state thereof or the District of Columbia; |
| ● | an estate the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source; or |
| ● | a trust (i) the administration of which is subject to the primary supervision of a U.S. court and which has one or more U.S. persons who have the authority to control all substantial decisions of the trust, or (ii) that has otherwise validly elected to be treated as a U.S. person under the Code. |
| ● | If a partnership (or other entity treated as a partnership for U.S. federal income tax purposes) is a beneficial owner of our Ordinary Shares, the tax treatment of a partner in the partnership will generally depend upon the status of the partner and the activities of the partnership. Partnerships holding our Ordinary Shares and their partners are urged to consult their tax advisors regarding an investment in our Ordinary Shares. |
Passive Foreign Investment Company Considerations
A non-U.S. corporation, such as our company, will be classified as a PFIC for U.S. federal income tax purposes for any taxable year if either (i) 75% or more of its gross income for such year consists of certain types of “passive” income or (ii) 50% or more of the value of its assets (determined on the basis of a quarterly average) during such year is attributable to assets that produce or are held for the production of passive income, or the asset test. Passive income generally includes, among other things, dividends, interest, rents, royalties, and gains from the disposition of passive assets. Passive assets are those which give rise to passive income, and include assets held for investment, as well as cash, assets readily convertible into cash, and working capital. The company’s goodwill and other unbooked intangibles are taken into account and may be classified as active or passive depending upon the relative amounts of income generated by the company in each category. We will be treated as owning a proportionate share of the assets and earning a proportionate share of the income of any other corporation in which we own, directly or indirectly, 25% or more (by value) of the stock.
Based upon our current and projected income and assets, we do not expect to be a PFIC for the current taxable year or the foreseeable future. However, no assurance can be given in this regard because the determination of whether we are or will become a PFIC is a factual determination made annually that will depend, in part, upon the composition and classification of our income and assets, including the relative amounts of income generated by our strategic investment business as compared to our other businesses, and the value of the assets held by our strategic investment business as compared to our other businesses. Because there are uncertainties in the application of the relevant rules, it is possible that the IRS may challenge our classification of certain income and assets as non-passive, which may result in our being or becoming classified as a PFIC in the current or subsequent years. Furthermore, fluctuations in the market price of our Ordinary Shares may cause us to be a PFIC for the current or future taxable years because the value of our assets for purposes of the asset test, including the value of our goodwill and unbooked intangibles, may be determined by reference to the market price of our Ordinary Shares from time to time (which may be volatile). In estimating the value of our goodwill and other unbooked intangibles, we have taken into account our anticipated market capitalization. Among other matters, if our market capitalization is less than anticipated or subsequently declines, we may be or become a PFIC for the current or future taxable years. The composition of our income and assets may also be affected by how, and how quickly, we use our liquid assets and the cash raised in fundraising. Under circumstances where our revenues from activities that produce passive income significantly increases relative to our revenues from activities that produce non-passive income, or where we determine not to deploy significant amounts of cash for active purposes, our risk of becoming a PFIC may substantially increase.
If we are a PFIC for any year during which a U.S. Holder holds our Ordinary Shares, we generally will continue to be treated as a PFIC for all succeeding years during which such U.S. Holder holds our Ordinary Shares unless, in such case, we cease to be treated as a PFIC and such U.S. Holder makes a deemed sole election.
The discussion below under “— Dividends” and “— Sale or Other Disposition” is written on the basis that we will not be or become classified as a PFIC for U.S. federal income tax purposes. The U.S. federal income tax rules that apply generally if we are treated as a PFIC are discussed below under “— Passive Foreign Investment Company Rules” beginning on page 88.
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Dividends
Any cash distributions paid on our Ordinary Shares out of our current or accumulated earnings and profits, as determined under U.S. federal income tax principles, will generally be includible in the gross income of a U.S. Holder as dividend income on the day actually or constructively received by the U.S. Holder. Because we do not intend to determine our earnings and profits on the basis of U.S. federal income tax principles, any distribution we pay will generally be treated as a “dividend” for U.S. federal income tax purposes. Dividends received on our Ordinary Shares will not be eligible for the dividends received deduction allowed to corporations in respect of dividends-received from U.S. corporations.
Individuals and other non-corporate U.S. Holders may be subject to tax on any such dividends at the lower capital gain tax rate applicable to “qualified dividend income,” provided that certain conditions are satisfied, including that (i) our Ordinary Shares on which the dividends are paid are readily tradable on an established securities market in the United States, (ii) we are neither a PFIC nor treated as such with respect to a U.S. Holder for the taxable year in which the dividend is paid and the preceding taxable year, and (iii) certain holding period requirements are met. We have listed the Ordinary Shares on Nasdaq under “TOPW”. The Ordinary Share are generally considered to be tradeable on an established securities market in the United States. There can be no assurance that the Ordinary Shares will continue to be considered tradable on an established securities market in later years. U.S. Holders are urged to consult their tax advisors regarding the availability of the lower rate for dividends paid with respect to the Ordinary Shares.
For U.S. foreign tax credit purposes, dividends paid on our Ordinary Shares will generally be treated as income from foreign sources and will generally constitute passive category income. The rules governing the foreign tax credit are complex and U.S. Holders are urged to consult their tax advisors regarding the availability of the foreign tax credit under their particular circumstances.
Sale or Other Disposition
A U.S. Holder will generally recognize gain or loss upon the sale or other disposition of Ordinary Shares in an amount equal to the difference between the amount realized upon the disposition and the holder’s adjusted tax basis in such Ordinary Shares. Such gain or loss will generally be capital gain or loss. Any such capital gain or loss will be long term if the Ordinary Shares have been held for more than one year. Non-corporate U.S. Holders (including individuals) generally will be subject to United States federal income tax on long-term capital gain at preferential rates. The deductibility of a capital loss may be subject to limitations. Any such gain or loss that the U.S. Holder recognizes will generally be treated as U.S. source income or loss for foreign tax credit limitation purposes, which could limit the availability of foreign tax credits. Each U.S. Holder is advised to consult its tax advisor regarding the tax consequences if a foreign tax is imposed on a disposition of our Ordinary Shares, including the applicability of any tax treaty and the availability of the foreign tax credit under its particular circumstances.
Passive Foreign Investment Company Rules
If we are classified as a PFIC for any taxable year during which a U.S. Holder holds our Ordinary Shares, and unless the U.S. Holder makes a mark-to-market election (as described below), the U.S. Holder will generally be subject to special tax rules on (i) any excess distribution that we make to the U.S. Holder (which generally means any distribution paid during a taxable year to a U.S. Holder that is greater than 125 percent of the average annual distributions paid in the three preceding taxable years or, if shorter, the U.S. Holder’s holding period for the Ordinary Shares), and (ii) any gain realized on the sale or other disposition, including, under certain circumstances, a pledge, Ordinary Shares. Under the PFIC rules:
| ● | the excess distribution or gain will be allocated ratably over the U.S. Holder’s holding period for the Ordinary Shares; |
| ● | the amount allocated to the current taxable year and any taxable years in the U.S. Holder’s holding period prior to the first taxable year in which we are classified as a PFIC (each, a “pre-PFIC year”), will be taxable as ordinary income; and |
| ● | the amount allocated to each prior taxable year, other than a pre-PFIC year, will be subject to tax at the highest tax rate in effect for individuals or corporations, as appropriate, for that year, increased by an additional tax equal to the interest on the resulting tax deemed deferred with respect to each such taxable year. |
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As an alternative to the foregoing rules, a U.S. Holder of “marketable stock” (as defined below) in a PFIC may make a mark-to-market election with respect to such stock. If a U.S. Holder makes this election with respect to our Ordinary Shares, the holder will generally(i) include as ordinary income for each taxable year that we are a PFIC the excess, if any, of the fair market value of Ordinary Shares held at the end of the taxable year over the adjusted tax basis of such Ordinary Shares and (ii) deduct as an ordinary loss the excess, if any, of the adjusted tax basis of the Ordinary Shares over the fair market value of such Ordinary Shares held at the end of the taxable year, but such deduction will only be allowed to the extent of the net amount previously included in income as a result of the mark-to-market election. The U.S. Holder’s adjusted tax basis in the Ordinary Shares would be adjusted to reflect any income or loss resulting from the mark-to-market election. If a U.S. Holder makes a mark-to-market election in respect of our Ordinary Shares and we cease to be classified as a PFIC, the holder will not be required to take into account the gain or loss described above during any period that we are not classified as a PFIC. If a U.S. Holder makes a mark-to-market election, any gain such U.S. Holder recognizes upon the sale or other disposition of our Ordinary Shares in a year when we are a PFIC will be treated as ordinary income and any loss will be treated as ordinary loss, but such loss will only be treated as ordinary loss to the extent of the net amount previously included in income as a result of the mark-to-market election.
The mark-to-market election is available only for “marketable stock,” which is stock that is traded in other than de minimis quantities on at least 15 days during each calendar quarter, or regularly traded, on a qualified exchange or other market, as defined in applicable United States Treasury regulations. Our Ordinary Shares will be treated as marketable stock upon their listing on Nasdaq. We anticipate that our Ordinary Shares should qualify as being regularly traded, but no assurances may be given in this regard.
Because a mark-to-market election cannot technically be made for any lower-tier PFICs that we may own, a U.S. Holder may continue to be subject to the PFIC rules with respect to such U.S. Holder’s indirect interest in any investments held by us that are treated as an equity interest in a PFIC for U.S. federal income tax purposes.
We do not intend to provide information necessary for U.S. Holders to make qualified electing fund elections which, if available, would result in tax treatment different from (and generally less adverse than) the general tax treatment for PFICs described above.
If a U.S. Holder owns our Ordinary Shares during any taxable year that we are a PFIC, the holder must generally file an annual IRS Form 8621. You should consult your tax advisor regarding the U.S. federal income tax.
Hong Kong Taxation
The following summary of certain relevant taxation provisions under the laws of Hong Kong is based on current law and practice and is subject to changes therein. This summary does not purport to address all possible tax consequences relating to purchasing, holding or selling our Ordinary Shares, and does not take into account the specific circumstances of any particular investors, some of whom may be subject to special rules. Accordingly, holders or prospective purchasers (particularly those subject to special tax rules, such as banks, dealers, insurance companies and tax-exempt entities) should consult their own tax advisers regarding the tax consequences of purchasing, holding or selling our Ordinary Shares. Under the current laws of Hong Kong:
| ● | No profit tax is imposed in Hong Kong in respect of capital gains from the sale of the Ordinary Shares. |
| ● | Revenues gains from the sale of our Ordinary Shares by persons carrying on a trade, profession or business in Hong Kong where the gains are derived from or arise in Hong Kong from the trade, profession or business will be subject to Hong Kong profits tax, which is currently imposed at the rate of 16.5% and 15% on corporations and unincorporated businesses, respectively, and at a maximum rate of 15% on individuals. A two-tiered profits tax rates regime applies: 8.25% for corporation and 7.5% for unincorporated businesses and individuals on the first HK$2 million of assessable profit, and 16.5% for corporation and 15% for unincorporated businesses and individuals on the remainder of assessable profits. |
| ● | Gains arising from the sale of Ordinary Shares, where the purchases and sales of the Ordinary Shares are effected outside of Hong Kong such as, for example, on Cayman Islands, should not be subject to Hong Kong profits tax. |
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According to the current tax practice of the Hong Kong Inland Revenue Department, dividends paid on the Ordinary Shares would not be subject to any Hong Kong tax.
No Hong Kong stamp duty is payable on the purchase and sale of the Ordinary Shares.
Cayman Islands Tax Considerations
The Cayman Islands currently levies no taxes on individuals or corporations based upon profits, income, gains or appreciation, and there is no taxation in the nature of inheritance tax or estate duty. There are no other taxes likely to be material to our Company levied by the Government of the Cayman Islands save for certain stamp duties which may be applicable, from time to time, on certain instruments.
No stamp duty is payable in the Cayman Islands on transfer of shares of Cayman Islands companies except for those which hold interests in land in the Cayman Islands.
The Cayman Islands enacted the International Tax Co-operation (Economic Substance) Act (as amended from time to time), or the Substance Act, together with the Guidance Notes published by the Cayman Islands Tax Information Authority from time to time. Under the Substance Act, if a company is considered to be a “relevant entity” and is conducting one or more of the nine “relevant activities” then that company will be required to comply with the economic substance requirements in relation to the relevant activity from 1 July 2019. All companies whether a relevant entity or not is required to file an annual report in the Cayman Islands with the Companies Registry confirming whether or not it is carrying on any relevant activities and if it is, it must satisfy an economic substance test.
Item 10.F. Dividends and Paying Agents
Not Applicable.
Item 10.G. Statement by Experts
Not Applicable.
Item 10.H. Documents on Display
The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended, and will file reports, registration statements and other information with the SEC. The Company’s reports, registration statements and other information can be found on the SEC’s website at www.sec.gov. You may also visit us on website at <https://asiastrategy.io/>. However, information contained on our website does not constitute a part of this annual report.
Item 10.I. Subsidiary Information
Not Applicable.
Item 10.J. Annual Report to Security Holders
Not Applicable.
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ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Please refer to the section “Item 5. Operating and Financial Review and Prospects — Quantitative and Qualitative Disclosures about Market Risks”, which is incorporated herein by reference.
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
Item 12.A. Debt Securities
Not applicable.
Item 12.B. Warrants and Rights
Not applicable.
Item 12.C. Other Securities
Not applicable.
Item 12.D. American Depositary Shares
Not applicable.
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PART II
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
We do not have any material defaults, dividend arrearages or delinquencies.
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
Item 14.A — D. Material Modifications to the Rights of Security Holders
There have been no material modifications to the rights of our shareholders.
Item 14.E. Use of Proceeds
The following “Use of Proceeds” information relates to our registration statement on Form F-1, as amended (File Number: 333-283448), declared effective on March 27, 2025, in relation to our initial public offering of 2,664,000 Ordinary Shares at an offering price of US$4.00 per share. Such registration statement also registered for resale 1,300,000 Ordinary Shares by certain selling shareholders named therein. Our initial public offering closed on April 3, 2025. Dominari Securities LLC was the representatives of the underwriters for our initial public offering.
The total expenses incurred for our company’s account in connection with our initial public offering were US$2,222,387, including underwriting discounts of US$745,920, underwriters’ non-accountable expense of US$106,560, and other expenses of US$1,369,907. None of the fees and expenses were directly or indirectly paid to the directors, officers of our company or their associates, persons owning 10% or more of our Ordinary Shares, or our affiliates.
After deducting the total expenses, we received net proceeds of approximately US$8.4 million from our initial public offering.
As of the latest practicable date prior to this annual report, we applied approximately US$3.5 million of such proceeds to the purchase of digital assets, US$4.3 million in our operating activities, and approximately US$1.5 million of such proceeds remain available for deployment.
None of the net proceeds from our initial public offering were directly or indirectly paid to the directors, officers of our company or their associates, persons owning 10% or more of our Ordinary Shares, or our affiliates.
ITEM 15. CONTROLS AND PROCEDURES
| (a) | Disclosure Controls and Procedures |
Under the supervision and with the participation of our management, including our principal executive officer and our principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended. Our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this annual report.
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| (b) | Management’s Report on Internal Control Over Financial Reporting |
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP and includes those policies and procedures that (1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets, (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors, and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. As required by Section 404 of the Sarbanes-Oxley Act and related rules as promulgated by the SEC, our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2025 using criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).
Based on this assessment, our management, with the participation of our chief executive officer and chief financial officer, concluded that our internal control over financial reporting was not effective as of December 31, 2025 due to the material weakness identified in our internal control over financial reporting as described below.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness of our internal control over financial reporting to future periods are subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Material weaknesses that have been identified are summarized as the followings: (1) our lack of appropriate levels of accounting knowledge and experience to address complex U.S. GAAP accounting issues and related disclosures, in accordance with U.S. GAAP and SEC financial reporting requirements; (2) our lack of an internal audit function to establish formal risk assessment process and internal control framework; and (3) our lack of proper IT control environment and the deficiencies identified in control areas including Logical Assess Management, Change Management, IT operation as well as Cyber Security Management.
We intend to implement measures designed to improve our internal control over financial reporting to address the underlying causes of these material weaknesses, including: (i) recruiting additional full-time employees and external consultants with extensive knowledge of U.S. GAAP within our finance and accounting department; (ii) conducting regular and continuous U.S. GAAP training programs and webinars for our financial reporting and accounting personnel; (iii) continuously developing and enhancing our internal audit function for the financial reporting matters; and (iv) strengthening our IT control environment and procedures by engaging third party expertise in introducing and implementing the required changes to the overall IT environment and required upgrades to our systems. However, the implementation of these measures may not fully address the deficiencies in our internal control over financial reporting. We are not able to estimate with reasonable certainty the costs that we will need to incur to implement these and other measures designed to improve our internal control over financial reporting.
| (c) | Attestation Report of the Company’s Registered Public Accounting Firm |
This annual report on Form 20-F does not include an attestation report of our registered public accounting firm because we qualified as an “emerging growth company” as defined under the JOBS Act.
| (d) | Changes in Internal Control over Financial Reporting |
Other than those disclosed above, there were no changes in our internal controls over financial reporting during our year ended December 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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ITEM 16. RESERVED
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
Our audit committee consists of Yunming TAO, Shuo, CHEN and Jung Hui, YEN. Our board of directors has determined that Jung Hui, YEN possesses accounting or related financial management experience that qualifies her as an “audit committee financial expert” as defined by the rules and regulations of the SEC.
ITEM 16B. CODE OF ETHICS
We have a code of ethics and business conduct that applies to all of our executive officers, directors and employees in accordance with the rules of the Nasdaq and the SEC. The code of ethics codifies the business and ethical principles that govern all aspects of our business. Any amendment to or waivers of the code of ethics for members of our board of directors and our executive officers that are required to be disclosed by the rules of the SEC or Nasdaq will be disclosed on our website at within four business days following the amendment or waiver. During the year 2025, no amendments to or waivers from the code were made or given to any of our executive officers.
Our code of ethics is publicly available on our website at <https://asiastrategy.io/>.
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The following table sets forth the aggregate fees by categories specified below in connection with certain professional services rendered by our principal external auditors, for the periods indicated.
| For the year ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| (In US$ Thousands) | ||||||||
| Audit fees | $ | 350 | $ | 213 | ||||
| Audit-related fees | — | — | ||||||
| Tax fees | — | — | ||||||
| All other fees | — | — | ||||||
| Total | $ | 350 | $ | 213 | ||||
“Audit fees” means the aggregate fees billed for professional services rendered by our principal auditors for the audit of our annual financial statements and the review of our comparative interim financial statements.
“Audit-related fees” means the aggregate fees billed for professional services rendered by our principal auditors for the assurance and related services, which mainly included the audit and review of financial statements and are not reported under “Audit fees” above.
“Tax fees” means the aggregate fees billed for professional services rendered by our principal auditors for tax compliance, tax advice and tax planning.
“All other fees” means the aggregate fees billed for professional services rendered by our principal auditors other than the professional services reported under “audit fees”, “audit-related fees” and “tax fees”.
The policy of our audit committee and our board of directors is to pre-approve all audit and non-audit services provided by our principal auditors, including audit services, audit-related services, and other services as described above, other than those for de minimis services which are approved by the audit committee or our board of directors prior to the completion of the services. All services provided by the principal auditors for the years ended December 31, 2025 and 2024 were approved by the audit committee pursuant to the pre-approval policy.
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ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
Not Applicable.
ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
None.
ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
The Company appointed J&S Associate PLT as its independent registered public accounting firm, effective on November 6, 2025. The appointment of J&S Associate PLT was made after a careful evaluation process by the Company and has been approved by the audit committee and the board of directors of the Company. J&S Associate PLT is engaged to audit and report on the consolidated financial statements of the Company for the fiscal year ending December 31, 2025, and review the consolidated financial statements of the Company for the six months ended June 30, 2025.
During the Company’s fiscal years ended December 31, 2023 and 2024 and until the engagement of J&S Associate PLT, neither the Company nor anyone on its behalf has consulted with J&S Associate PLT on either (a) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s consolidated financial statements, and neither a written report nor oral advice was provided to the Company by J&S Associate PLT which J&S Associate PLT concluded as an important factor considered by the Company in reaching a decision as to any accounting, auditing or financial reporting issue, or (b) any matter that was the subject of a disagreement, as that term is defined in Item 16F(a)(1)(iv) of Form 20-F (and the related instructions thereto) or a reportable event as set forth in Item 16F(a)(1)(v)(A) through (D) of Form 20-F.
The audit committee and the board of directors of the Company have also approved the dismissal of Marcum Asia CPAs LLP as the independent accountant of the Company on October 31, 2025. The audit report of Marcum Asia CPAs LLP on the consolidated financial statements of the Company dated May 12, 2025 did not contain any adverse opinion or disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope, or accounting principles. During the fiscal years ended December 31, 2023 and 2024, and the subsequent interim period preceding such dismissal, there were no: (1) “disagreements” (as that term is defined in 16F (a)(1)(iv) of Form 20-F and the related instructions) between the Company and Marcum Asia CPAs LLP on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Marcum Asia CPAs LLP, would have caused Marcum Asia CPAs LLP to make reference in connection with their opinion to the subject matter of the disagreement, or (2) reportable events as set forth in Item 16F(a)(1)(v)(A) through (D) of Form 20-F, other than the material weaknesses reported by management in the annual report on Form 20-F filed with the U.S. Securities and Exchange Commission (the “Commission”) on May 12, 2025, including (a) our lack of appropriate levels of accounting knowledge and experience to address complex U.S. GAAP accounting issues and related disclosures, in accordance with U.S. GAAP and SEC financial reporting requirements; (b) our lack of an internal audit function to establish formal risk assessment process and internal control framework; and (c) our lack of proper IT control environment and the deficiencies identified in control areas including Logical Assess Management, Change Management, IT operation as well as Cyber Security Management.
The Company provided Marcum Asia CPAs LLP with a copy of the disclosures it is making and requested that Marcum Asia CPAs LLP furnish a letter addressed to the SEC stating whether it agrees with the statements made herein and, if not, stating the respects in which it does not agree. A copy of such letter from Marcum Asia CPAs LLP was appended to the Company’s current report on Form 6-K dated November 7, 2025 as Exhibit 99.1.
The changes abovementioned were reported in the current report on Form 6-K of the Company dated November 7, 2025, in accordance with instruction 2 to item 16F of Form 20-F.
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ITEM 16G. CORPORATE GOVERNANCE
The business and affairs of the Company are managed under the direction of our board of directors. We have conducted board meetings regularly since inception. Each of our directors has attended all meetings either in person, via telephone conference, or the directors have passed resolutions through written consent. In addition to the contact information in this annual report, the board has adopted procedures for communication with the officers and directors as the date hereof. Each shareholder will be given specific information on how he/she can direct communications to the officers and directors of the Company at our annual shareholders’ meetings. All communications from shareholders are relayed to the members of our board of directors.
Foreign Private Issuer Exemption
We are a “foreign private issuer”, as defined by the SEC. As a result, in accordance with the rules and regulations of Nasdaq, we may choose to comply with home country governance requirements and certain exemptions thereunder rather than complying with Nasdaq corporate governance standards. We may choose to take advantage of the following exemptions afforded to foreign private issuers:
| ● | Exemption from filing quarterly reports on Form 10-Q, from filing proxy solicitation materials on Schedule 14A or 14C in connection with annual or special meetings of shareholders, from providing current reports on Form 8-K disclosing significant events within four days of their occurrence, and from the disclosure requirements of Regulation FD. |
| ● | Exemption from Section 16 rules regarding sales of Ordinary Shares by major shareholders, which will provide less data in this regard than shareholders of U.S. companies that are subject to the Exchange Act. |
| ● | Exemption from the Nasdaq rules applicable to domestic issuers requiring disclosure within four business days of any determination to grant a waiver of the code of business conduct and ethics to directors and officers. Although we will require board approval of any such waiver, we may choose not to disclose the waiver in the manner set forth in the Nasdaq rules, as permitted by the foreign private issuer exemption. |
| ● | Exemption from the requirement that our board of directors have a compensation committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities. |
| ● | Exemption from the requirements that director nominees are selected, or recommended for selection by our board of directors, either by (1) independent directors constituting a majority of our board of directors’ independent directors in a vote in which only independent directors participate, or (2) a committee comprised solely of independent directors, and that a formal written charter or board resolution, as applicable, addressing the nominations process is adopted. |
Furthermore, Nasdaq Rule 5615(a)(3) provides that a foreign private issuer, such as us, may rely on our home country corporate governance practices in lieu of certain of the rules in the Nasdaq Rule 5600 Series and Rule 5250(d), provided that we nevertheless comply with Nasdaq’s Notification of Noncompliance requirement (Rule 5625), the Voting Rights requirement (Rule 5640) and that we have an audit committee that satisfies Rule 5605(c)(3), consisting of committee members that meet the independence requirements of Rule 5605(c)(2)(A)(ii).
96
We have elected to follow certain Cayman Islands corporate governance practices in lieu of certain requirements of the listing rules of Nasdaq (the “Rules”) below:
| 1. | Rule 5605(b)(1), which requires that the majority of the board of directors must be comprised of independent directors. |
| 2. | Nasdaq Marketplace Rule 5605(b)(2), which requires that independent directors must have regularly scheduled meetings at which only independent directors are present. |
| 3. | Nasdaq Marketplace Rule 5620(a), which requires that each company listing common stock or voting preferred stock, and their equivalents, shall hold an annual meeting of shareholders no later than one year after the end of the company’s fiscal year-end. |
| 4. | Nasdaq Listing Rule 5620(b), which requires that each company that is not a limited partnership shall solicit proxies and provide proxy statements for all meetings of shareholders and shall provide copies of such proxy solicitation to Nasdaq. |
| 5. | Nasdaq Marketplace Rule 5635(a), which requires that shareholder approval is required prior to the issuance of securities in connection with the acquisition of the stock or assets of another company if: (1) where, due to the present or potential issuance of common stock, including shares issued pursuant to an earn-out provision or similar type of provision, or securities convertible into or exercisable for common stock, other than a public offering for cash: (A) the common stock has or will have upon issuance voting power equal to or in excess of 20% of the voting power outstanding before the issuance of stock or securities convertible into or exercisable for common stock; or (B) the number of shares of common stock to be issued is or will be equal to or in excess of 20% of the number of shares of common stock outstanding before the issuance of the stock or securities; or (2) any director, officer or substantial shareholder (as defined by Rule 5635(e)(3)) of the company has a 5% or greater interest (or such persons collectively have a 10% or greater interest), directly or indirectly, in the company or assets to be acquired or in the consideration to be paid in the transaction or series of related transactions and the present or potential issuance of common stock, or securities convertible into or exercisable for common stock, could result in an increase in outstanding common shares or voting power of 5% or more. |
| 6. | Nasdaq Marketplace Rule 5635(b), which requires that shareholder approval is required prior to the issuance of securities when the issuance or potential issuance will result in a change of control of the company. |
| 7. | Nasdaq Marketplace Rule 5635(c), which requires that shareholder approval is required prior to the issuance of securities when a stock option or purchase plan is to be established or materially amended or other equity compensation arrangement made or materially amended, pursuant to which stock may be acquired by officers, directors, employees, or consultants, except for: (1) warrants or rights issued generally to all security holders of the company or stock purchase plans available on equal terms to all security holders of the company (such as a typical dividend reinvestment plan); (2) tax qualified, non-discriminatory employee benefit plans (e.g., plans that meet the requirements of Section 401(a) or 423 of the Internal Revenue Code) or parallel nonqualified plans, provided such plans are approved by the company’s independent compensation committee or a majority of the company’s independent directors; or plans that merely provide a convenient way to purchase shares on the open market or from the company at Market Value; (3) plans or arrangements relating to an acquisition or merger as permitted under IM-5635-1; or (4) issuances to a person not previously an employee or director of the company, or following a bona fide period of non-employment, as an inducement material to the individual’s entering into employment with the company, provided such issuances are approved by either the company’s independent compensation committee or a majority of the company’s independent directors. Promptly following an issuance of any employment inducement grant in reliance on this exception, a company must disclose in a press release the material terms of the grant, including the recipient(s) of the grant and the number of shares involved. |
97
| 8. | Nasdaq Marketplace Rule 5635(d), which requires that shareholder approval is required prior to a 20% Issuance at a price that is less than the Minimum Price. (A) “Minimum Price” means a price that is the lower of: (i) the Nasdaq Official Closing Price (as reflected on Nasdaq.com) immediately preceding the signing of the binding agreement; or (ii) the average Nasdaq Official Closing Price of the common stock (as reflected on Nasdaq.com) for the five trading days immediately preceding the signing of the binding agreement. (B) “20% Issuance” means a transaction, other than a public offering as defined in IM-5635-3, involving the sale, issuance or potential issuance by the Company of common stock (or securities convertible into or exercisable for common stock), which alone or together with sales by officers, directors or Substantial Shareholders of the Company, equals 20% or more of the common stock or 20% or more of the voting power outstanding before the issuance. |
| 9. | Nasdaq Marketplace Rule 5250(b)(3), which requires that companies must disclose all agreements and arrangements in accordance with this rule by no later than the date on which the company files or furnishes a proxy or information statement subject to Regulation 14A or 14C under the Securities Exchange Act of 1934 in connection with the company’s next shareholders’ meeting at which directors are elected (or, if they do not file proxy or information statements, no later than when the company files its next Form 10-K or Form 20-F). |
| 10. | Nasdaq Marketplace Rule 5250(d), which requires among others that each company (including a limited partnership) shall make available to shareholders an annual report containing audited financial statements of the company and its subsidiaries (which, for example, may be on Form 10-K, 20-F, 40-F or N-CSR) within a reasonable period of time following the filing of the annual report with the SEC; Nasdaq companies that distribute interim reports to shareholders should distribute such reports to both registered and beneficial shareholders; each company that is not a limited partnership and is subject to Rule 13a-13 under the Securities Exchange Act of 1934 shall make available copies of quarterly reports including statements of operating results to shareholders either prior to or as soon as practicable following the company’s filing of its Form 10-Q with the SEC; each company that is not a limited partnership and is not subject to Rule 13a-13 under the Securities Exchange Act of 1934 and that is required to file with the SEC, or other regulatory authority, interim reports relating primarily to operations and financial position, shall make available to shareholders reports which reflect the information contained in those interim reports. |
The Company’s practices with regard to these requirements are not prohibited under any statutory legal provision of the Cayman Islands or the amended and restated memorandum and articles of association of the Company as currently in effect.
98
ITEM 16H. MINE SAFETY DISCLOSURE
Not applicable.
ITEM 16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
ITEM 16J. INSIDER TRADING POLICIES
We
have an insider trading policy to promote compliance with applicable securities laws and regulations, including those that
A copy of the insider trading policies is attached as an exhibit to this annual report.
ITEM 16K. CYBERSECURITY
Following these risk assessments, we evaluate whether and how to re-design, implement, and maintain reasonable safeguards to mitigate identified risks and reasonably address any identified gaps in existing safeguards. We monitor and test our safeguards and regularly conduct training for our employees on these safeguards in collaboration with the administrative department and management. We are committed to promoting a company-wide culture of cybersecurity risk management.
We
have
99
PART III
ITEM 17. FINANCIAL STATEMENTS
Not applicable.
ITEM 18. FINANCIAL STATEMENTS
Our consolidated financial statements are included at the end of this annual report, beginning with page F-1.
ITEM 19. EXHIBITS
| Exhibit Number |
Description of Documents | |
| 1.1 | Amended and Restated Memorandum and Articles of Association (incorporated by reference to Exhibit 3.1 to the Company’s current report on Form 6-K dated August 6, 2025). | |
| 2.1 | Description of Securities (incorporated by reference to Exhibit 2.1 of the Company’s annual report on Form 20-F filed on May 12, 2025). | |
| 4.1 | Employment Agreement between Top Win International Limited and Kwan, NGAI (incorporated by reference to Exhibit 10.1 to Company’s Amendment No.3 to the Registration Statement on Form F-1 (File No. 333-283448), as amended initially filed with the SEC on November 25, 2024). | |
| 4.2 | Employment Agreement between Top Win International Limited and Fung Yee Mary, WONG (incorporated by reference to Exhibit 10.2 to Company’s Amendment No.3 to the Registration Statement on Form F-1 (File No. 333-283448), as amended initially filed with the SEC on November 25, 2024). | |
| 4.3 | Employment Agreement between Top Win International Limited and Man Wa Claudia, HO (incorporated by reference to Exhibit 10.3 to Company’s Amendment No.3 to the Registration Statement on Form F-1 (File No. 333-283448), as amended initially filed with the SEC on November 25, 2024). | |
| 4.4 | Form of the Independent Non-Executive Director Offer Letter (incorporated by reference to Exhibit 10.5 to Company’s Amendment No.3 to the Registration Statement on Form F-1 (File No. 333-283448), as amended initially filed with the SEC on November 25, 2024). | |
| 4.5 | Lease Agreement for 33/F Sunshine Plaza, 353 Lockhart Road, Wan Chai, Hong Kong (incorporated by reference to Exhibit 10.4 to Company’s Amendment No.3 to the Registration Statement on Form F-1 (File No. 333-283448), as amended initially filed with the SEC on November 25, 2024). | |
| 4.6 | Private Placement Subscription Agreement between Top Win International Limited and Ming Yuk, NGAI (incorporated by reference to Exhibit 10.6 to Company’s Amendment No.3 to the Registration Statement on Form F-1 (File No. 333-283448), as amended initially filed with the SEC on November 25, 2024). | |
| 4.7 | Private Placement Subscription Agreement between Top Win International Limited and Kelven, WONG (incorporated by reference to Exhibit 10.7 to Company’s Amendment No.3 to the Registration Statement on Form F-1 (File No. 333-283448), as amended initially filed with the SEC on November 25, 2024). | |
| 4.8 | Registration Rights Agreement between Top Win International Limited and Ming Yuk, NGAI (incorporated by reference to Exhibit 10.8 Company’s Amendment No.3 to the Registration Statement on Form F-1 (File No. 333-283448), as amended initially filed with the SEC on November 25, 2024). | |
| 4.9 | Registration Rights Agreement between Top Win International Limited and Kelven, WONG (incorporated by reference to Exhibit 10.9 to Company’s Amendment No.3 to the Registration Statement on Form F-1 (File No. 333-283448), as amended initially filed with the SEC on November 25, 2024). | |
| 4.10 | Securities Purchase Agreement dated August 15, 2025 (form of) including the Form of Convertible Note (incorporated by reference to Exhibit 99.1 of the Company’s current report on Form 6-K furnished August 15, 2025) | |
| 8.1 | List of Subsidiaries* | |
| 11.1 | Code of Business Conduct and Ethics of the Registrant (incorporated by reference to Exhibit 14.1 to Company’s Amendment No.3 to the Registration Statement on Form F-1 (File No. 333-283448), as amended initially filed with the SEC on November 25, 2024). | |
| 11.2 | Insider Trading Policies (incorporated by reference to Exhibit 14.3 to Company’s Amendment No.3 to the Registration Statement on Form F-1 (File No. 333-283448), as amended initially filed with the SEC on November 25, 2024). | |
| 12.1 | Certificate of Principal Executive Officer pursuant to Rule 13a-14(a) of the Exchange Act* | |
| 12.2 | Certificate of Principal Financial Officer pursuant to Rule 13a-14(a) of the Exchange Act* | |
| 13.1 | Certificate of Principal Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002* | |
| 13.2 | Certificate of Principal Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002* | |
| 97.1 | Clawback Policy of the Company | |
| 101.INS | Inline XBRL Instance Document* | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document* | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document* | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document* | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document* | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document* | |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)* |
| * | Filed herewith. |
100
SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.
| AsiaStrategy | ||
| /s/ Jason Kin Hoi FANG | ||
| Name: | Jason Kin Hoi FANG | |
| Title: | Co-Chief Executive Officer | |
| /s/ Kwan NGAI | ||
| Name: | Kwan NGAI | |
| Title: | Co-Chief Executive Officer | |
| /s/ Mary Fung Yee WONG | ||
| Name: | Mary Fung Yee WONG | |
| Title: | Chief Financial Officer | |
| Date: April 30, 2026 | ||
101
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AsiaStrategy
For the year ended December 31, 2025
TABLE OF CONTENTS
| Page | ||
| Consolidated Financial Statements for the Years Ended December 31, 2025, 2024 and 2023 | ||
| Report of Independent Registered Public Accounting Firm (PCAOB ID: | F-2 | |
| Report of Independent Registered Public Accounting Firm (PCAOB ID: 5395) | F-3 | |
| Consolidated Balance Sheets as of December 31, 2025 and 2024 | F-4 | |
| Consolidated Statements of Operations and Comprehensive Income (Loss) for the Years Ended December 31, 2025, 2024 and 2023 | F-5 | |
| Consolidated Statements of Changes in Shareholders’ Equity (Deficit) for the Years Ended December 31, 2025, 2024 and 2023 | F-6 | |
| Consolidated Statements of Cash Flows for the Years Ended December 31, 2025, 2024 and 2023 | F-7 | |
| Notes to Consolidated Financial Statements | F-8 – F-36 |
F-1
 |
J&S ASSOCIATE PLT | |
| 202206000037 (LLP0033395-LCA) & AF002380 | ||
| (Registered with PCAOB and MIA) | Tel: +603-4813 9469 | |
| B-11-14, Megan Avenue II | Email: info@jns-associate.com | |
| 12, Jalan Yap Kwan Seng, 50450, Kuala Lumpur, Malaysia | Website: jns-associate.com |
Report of Independent Registered Public Accounting Firm
To: The Board of Directors and Shareholders of AsiaStrategy.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of AsiaStrategy and its subsidiaries (the “Company”) as of December 31, 2025, and the related consolidated statements of operations and comprehensive income, consolidated statement of changes in shareholders’ equity, and consolidated statements of cash flows for the years ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025, and the results of its operations and its cash flows for the years ended December 31, 2025 in conformity with accounting principles generally accepted in the United States of America.
We also have audited the adjustments described in Note 16, that were applied to the 2024 and 2023 financial statements to retrospectively reflect the Company’s adoption of ASU2023-09 “Income Taxes (Topic 740)”. In our opinion, such adjustments are appropriate and have been properly applied. We were not engaged to audit, review, or apply any procedures to the 2024 and 2023 financial statements of the Company other than with respect to the adjustments and, accordingly, we do not express an opinion or any other form of assurance on the 2024 and 2023 financial statements taken as a whole.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
/s/ J&S Associate PLT
Certified Public Accountants
Firm ID: 6743
We have served as the Company’s auditor since 2025.
April 30, 2026
F-2
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of
AsiaStrategy (formerly known as Top Win International Limited)
Opinion on the Financial Statements
We have audited, before the effects of the adjustments to retrospectively apply the change in accounting described in Note 16, the accompanying consolidated balance sheets of AsiaStrategy (formerly known as Top Win International Limited) (the “Company”) as of December 31, 2024, the related consolidated statements of operations and comprehensive (loss) income, changes in shareholders’ equity (deficit) and cash flows for each of the two years in the period ended December 31, 2024, and the related notes (collectively referred to as the “financial statements” before the effects of the adjustments discussed in Note 16 are not presented herein).
In our opinion, the financial statements, before the effects of the adjustments to retrospectively apply the change in accounting described in Note 16, present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.
We were not engaged to audit, review, or apply any procedures to adjustments to retrospectively apply the change in accounting described in Note 16, accordingly, we do not express an opinion or any other form of assurance about whether such retrospective adjustments are appropriate and have been properly applied. Those adjustments were audited by other auditors.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Marcum Asia CPAs LLP
Marcum Asia CPAs LLP
We served as the Company’s auditor from 2024 to 2025.
New York, New York
May 12, 2025
NEW YORK OFFICE • 7 Penn Plaza • Suite 830 • New York, New York • 10001
Phone 646.442.4845 • Fax 646.349.5200 • www.marcumasia.com
F-3
AsiaStrategy
Consolidated Balance Sheets
(Expressed in U.S. Dollars, except for the number of shares)
| As of December 31, | ||||||||
| 2025 | 2024 | |||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| Accounts receivable, net | ||||||||
| Inventories, net | ||||||||
| Investment in equity securities, current | ||||||||
| Amount due from a related party | ||||||||
| Loans receivable, net | ||||||||
| Prepaid expenses, current | ||||||||
| Deposits and other current assets, net | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Digital assets | ||||||||
| Investment in equity securities, non-current | ||||||||
| Operating lease right-of-use asset, net | ||||||||
| Deferred initial public offering (“IPO”) costs | ||||||||
| Prepaid expenses, non-current | ||||||||
| Deferred tax assets, net | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities and shareholders’ equity | ||||||||
| Liabilities | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Bank borrowings, current | ||||||||
| Contract liabilities | ||||||||
| Accrued expenses and other current liabilities | ||||||||
| Total current liabilities | ||||||||
| Bank borrowings, non-current | ||||||||
| Convertible debts | ||||||||
| Total liabilities | $ | $ | ||||||
| Commitments and contingencies | ||||||||
| Shareholders’ equity | ||||||||
| Ordinary shares ($ | $ | $ | ||||||
| Additional paid-in capital | ||||||||
| Retained earnings (accumulated deficit) | ( | ) | ||||||
| Accumulated other comprehensive (loss) income | ( | ) | ||||||
| Total shareholders’ equity | $ | $ | ||||||
| Total liabilities and shareholders’ equity | $ | $ | ||||||
| * |
The accompanying notes are an integral part of these consolidated financial statements.
F-4
AsiaStrategy
Consolidated Statements of Operations and Comprehensive Income (Loss)
(Expressed in U.S. dollar, except for the number of shares)
| For the Years Ended December 31, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| Revenue | $ | $ | $ | |||||||||
| Cost of revenue | ( | ) | ( | ) | ( | ) | ||||||
| Gross profit | ||||||||||||
| Operating expenses | ||||||||||||
| Selling and marketing | ( | ) | ( | ) | ( | ) | ||||||
| General and administrative | ( | ) | ( | ) | ( | ) | ||||||
| Total operating expenses | ( | ) | ( | ) | ( | ) | ||||||
| (Loss) income from operations | ( | ) | ||||||||||
| Other income (expense) | ||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ||||||
| Interest income | ||||||||||||
| Unrealized losses on digital assets, net | ( | ) | ||||||||||
| Unrealized gains on investment in equity securities, net | ||||||||||||
| Other (expense) income, net | ( | ) | ||||||||||
| Total other income (expense), net | ( | ) | ( | ) | ||||||||
| Income (loss) before income taxes | ( | ) | ||||||||||
| Income tax (expenses) benefits | ( | ) | ( | ) | ||||||||
| Net income (loss) | ( | ) | ||||||||||
| Foreign currency translation adjustments | ( | ) | ( | ) | ||||||||
| Total comprehensive income (loss) | $ | ( | ) | $ | ||||||||
| Net income (loss) for basic earnings (loss) per share purposes | ( | ) | ||||||||||
| Add: interest expense of convertible debts | ||||||||||||
| Net income (loss) for diluted earnings (loss) per share purposes | $ | ( | ) | |||||||||
| Weighted average shares outstanding used in calculating basic earnings (loss) per share* | ||||||||||||
| Effect of dilutive securities: convertible debts | ||||||||||||
| Weighted average shares outstanding used in calculating diluted earnings (loss) per share* | ||||||||||||
| Earnings (loss) per share* | ||||||||||||
| Ordinary shares – basic | $ | ( | ) | $ | ||||||||
| Ordinary shares – diluted | $ | ( | ) | $ | ||||||||
| * |
The accompanying notes are an integral part of these consolidated financial statements.
F-5
AsiaStrategy
Consolidated Statements of Changes in Shareholders’ Equity (Deficit)
(Expressed in U.S. dollar, except for the number of shares)
| Additional | (Accumulated deficit) | Accumulated other | ||||||||||||||||||||||||||
| Ordinary shares* | Subscription | paid-in | retained | comprehensive | ||||||||||||||||||||||||
| Shares | Amount | receivable | capital | earnings | income (loss) | Total | ||||||||||||||||||||||
| Balance as of December 31, 2022 | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||
| Net income | — | |||||||||||||||||||||||||||
| Foreign currency translation adjustment | — | |||||||||||||||||||||||||||
| Balance as of December 31, 2023 | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||
| Issuance of ordinary shares | ||||||||||||||||||||||||||||
| Settlement of subscription receivable | — | |||||||||||||||||||||||||||
| Net loss | — | ( | ) | ( | ) | |||||||||||||||||||||||
| Foreign currency translation adjustment | — | ( | ) | ( | ) | |||||||||||||||||||||||
| Balance as of December 31, 2024 | $ | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||||||
| Issuance of ordinary shares pursuant to initial public offering (“IPO”), net of offering cost | ||||||||||||||||||||||||||||
| Net income | — | |||||||||||||||||||||||||||
| Foreign currency translation adjustment | — | ( | ) | ( | ) | |||||||||||||||||||||||
| Balance as of December 31, 2025 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
| * |
The accompanying notes are an integral part of these consolidated financial statements.
F-6
AsiaStrategy
Consolidated Statements of Cash Flows
(Expressed in U.S. dollar)
| For the Years Ended December 31, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| Cash flows from operating activities: | ||||||||||||
| Net income (loss) | $ | $ | ( | ) | $ | |||||||
| Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: | ||||||||||||
| Depreciation | ||||||||||||
| Amortization of operating lease right-of-use asset | ||||||||||||
| Allowance (recovery) of expected credit losses | ( | ) | ( | ) | ||||||||
| Change in cash surrender value of investments in life insurance policies | ( | ) | ||||||||||
| Unrealized losses on digital assets, net | ||||||||||||
| Unrealized gains on investment in equity securities, net | ( | ) | ||||||||||
| Deferred tax expenses (benefits) | ( | ) | ( | ) | ||||||||
| Changes in operating assets and liabilities: | ||||||||||||
| Accounts receivable | ( | ) | ||||||||||
| Inventories | ( | ) | ( | ) | ||||||||
| Prepaid expenses | ( | ) | ( | ) | ||||||||
| Deposits and other current assets | ( | ) | ( | ) | ||||||||
| Operating lease assets | ( | ) | ||||||||||
| Accounts payable | ( | ) | ||||||||||
| Contract liabilities | ( | ) | ( | ) | ||||||||
| Accrued expenses and other current liabilities | ( | ) | ||||||||||
| Income tax payables | ( | ) | ||||||||||
| Net cash (used in) provided by operating activities | ( | ) | ( | ) | ||||||||
| Cash flows from investing activities: | ||||||||||||
| Purchase of property and equipment | ( | ) | ||||||||||
| Purchase of digital assets | ( | ) | ||||||||||
| Advances of loans receivable | ( | ) | ||||||||||
| Investment in equity securities | ( | ) | ||||||||||
| Net cash used in investing activities | ( | ) | ||||||||||
| Cash flows from financing activities: | ||||||||||||
| Proceeds from issuance of ordinary shares pursuant to Initial Public Offering (“IPO”), net of issuance cost | ||||||||||||
| Proceeds from issuance of ordinary shares | ||||||||||||
| Payments of offering costs related to Initial Public Offering (“IPO”) | ( | ) | ( | ) | ||||||||
| Proceeds from bank borrowings | ||||||||||||
| Repayments of bank borrowings | ( | ) | ( | ) | ( | ) | ||||||
| Proceeds from issuance of convertible debts | ||||||||||||
| Repayments to a related party | ( | ) | ||||||||||
| Repayments from related parties | ||||||||||||
| Net cash provided by (used in) financing activities | ( | ) | ||||||||||
| Effect of exchange rate changes on cash and restricted cash | ( | ) | ( | ) | ||||||||
| Net (decrease) increase in cash and restricted cash | ( | ) | ||||||||||
| Cash and restricted cash, beginning of the year | ||||||||||||
| Cash and restricted cash, end of the year | $ | $ | $ | |||||||||
| Reconciliation of cash and restricted cash to the consolidated balance sheets | ||||||||||||
| Cash | $ | $ | $ | |||||||||
| Restricted cash | ||||||||||||
| Total cash and restricted cash | $ | $ | $ | |||||||||
| Supplemental disclosures of cash flow information: | ||||||||||||
| Income tax paid (refund) | $ | $ | $ | ( | ) | |||||||
| Interest paid | ||||||||||||
| Supplemental disclosure of non-cash investing and financing activities: | ||||||||||||
| Deferred IPO cost charged to additional paid-in capital | ||||||||||||
| Settlement of the sale proceeds of life insurance policies with amount due to a related party | ||||||||||||
| Settlement of dividend distribution with amount due from a related party | ||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-7
AsiaStrategy
Notes to Consolidated Financial Statements
1. Organization and Description of Business
AsiaStrategy (formerly known as Top Win International Limited) (“AsiaStrategy” or “the Company”) is a company incorporated in the Cayman Islands with limited liability on June 27, 2024. AsiaStrategy is a parent holding company with no operations. On August 5, 2025, the Company changed its legal name from Top Win International Limited to AsiaStrategy.
Grand Moon International Limited (“Grand
Moon”), a wholly-owned subsidiary of the Company, is a company incorporated in the British Virgin Islands (“B.V.I”)
with limited liability on June 4, 2024. Grand Moon has
Top Win International Trading Limited (“Top
Win Hong Kong”), a wholly-owned subsidiary of Grand Moon, is a private company limited by shares incorporated in Hong Kong
on June 15, 2001. Top Win Hong Kong had a share capital of HK$
AsiaStrategy Topwin SG Pte. Limited (“AsiaStrategy
SG”), a wholly-owned subsidiary of the Company, is a private company limited by shares incorporated in Singapore on May 19, 2025.
AsiaStrategy SG has
AsiaStrategy (BVI) Limited (“AsiaStrategy
BVI”), a wholly-owned subsidiary of the Company, is a company incorporated in the British Virgin Islands (“B.V.I”) with
limited liability on June 6, 2025. AsiaStrategy BVI has
AsiaStrategy Topwin Limited (“AsiaStrategy
Topwin”), a wholly-owned subsidiary of Top Win Hong Kong, is a private company limited by shares incorporated in Hong Kong on September
30, 2025. AsiaStrategy Topwin had a share capital of HK$
Top Asia Capital Limited (“Top Asia”),
a wholly-owned subsidiary of Top Win Hong Kong, is a company incorporated in the British Virgin Islands (“B.V.I”) with limited
liability on October 14, 2025. Top Asia has
The Company, together with its subsidiaries (collectively,
the “Group”), primarily operates in Hong Kong, and its principal business activity is the trading of luxury watches. The Group
primarily sources its luxury watches from Hong Kong, South America, Singapore, Europe, and Japan, and sells these goods to retailers and
other distributors in the watch industry. Going forward, AsiaStrategy intends to expand into the Web3 ecosystem, with digital assets becoming
an additional focus of its future business development. As of December 31, 2025, the Group held digital assets with a value of $
The Company completed its initial public offering
on the NASDAQ in April 2025, issuing
The accompanying consolidated financial statements reflect the activities of the Company, and each of the following entities as of December 31, 2025:
| Name of Company | Place of Incorporation | Attributable equity interest % | Issued share capital | |||||||
| Grand Moon | % | |||||||||
| Top Win Hong Kong | % | HK$ | ||||||||
| AsiaStrategy BVI | % | US$ | ||||||||
| AsiaStrategy SG | % | US$ | ||||||||
| AsiaStrategy Topwin | % | HK$ | ||||||||
| Top Asia | % | US$ | ||||||||
F-8
AsiaStrategy
Notes to Consolidated Financial Statements
1. Organization and Description of Business (cont.)
Reorganization
Reorganization was completed on July 25, 2024 through a series of planned transactions. As a result of the Reorganization, the Company has become the holding company for the subsidiaries of its group.
Immediately before the Reorganization, Top Win
Hong Kong was wholly owned and controlled by Mr. Sit Hon and functioned as the sole operational entity. AsiaStrategy was established on
June 27, 2024, by a registered agent in the Cayman Islands, with the sole purpose of acting as holding company for the Group. On the same
day of its incorporation,
Grand Moon was established on June 4, 2024, by
a registered agent in the B.V.I. On July 9, 2024,
Immediately before and after the Reorganization, AsiaStrategy, Grand Moon, and Top Win Hong Kong remained under the complete ownership and control of Mr. Sit Hon. Consequently, the Reorganization is classified as a common control transaction under ASC 805-50.
Following this, the consolidation of the Company and its subsidiaries has been accounted for at historical cost and prepared on the basis as if the aforementioned transactions had become effective as of the beginning of the first period presented in these consolidated financial statements. Results of operations for the periods presented comprise those of the previously separate entities combined from the beginning of the period to the end of the period, eliminating the effects of intra-entity transactions.
Subsequent to the re-organization, Mr. Sit Hon was divested from his interest in the Company on October 29, 2024.
2. Summary of Significant Accounting Policies
Basis of presentation and principle of consolidation
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities Exchange Commission (“SEC”).
These consolidated financial statements include the financial statements of the Company and its subsidiaries. All intercompany transactions and balances among the Company and its subsidiaries have been eliminated upon consolidation.
A subsidiary is an entity in which the Company, directly or indirectly, controls more than one half of the voting power; or has the power to govern the financial and operating policies, to appoint or remove the majority of the members of the board of directors, or to cast a majority of votes at the meeting of directors.
Use of estimates and assumptions
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. These estimates and judgments are based on historical information, information that is currently available to the Group and on various other assumptions that the Group believes to be reasonable under the circumstances. Significant estimates required to be made by management include, but not limited to, allowance for expected credit losses against financial assets, write-down of inventories and allowance for deferred tax assets, accounting of operating lease right-of-use assets, and valuation of investment in equity securities, non-current. Actual results could differ from the estimates, and as such, differences could be material to consolidated financial statements.
Cash and cash equivalents
Cash includes balances maintained with banks which are unrestricted and immediately available for withdrawal and use, as well as cash on hand. Cash equivalents include short-term, highly liquid deposits held in the securities trading account, which are readily convertible to known amounts of cash and could be withdrawn without limitation.
F-9
AsiaStrategy
Notes to Consolidated Financial Statements
2. Summary of Significant Accounting Policies (cont.)
Restricted cash
Restricted cash consists of bank deposits and
together with all interest accrued that are pledged to the bank as security for bank borrowings. On November 18, 2025, DBS Bank (Hong
Kong) Limited released its charge over HK$
Digital assets
The Group accounts for digital assets in accordance with the applicable provisions of U.S. GAAP. Digital assets that meet the scope criteria of ASU 2023-08, Intangibles—Goodwill and Other—Crypto Assets (Subtopic 350-60), are initially recorded at cost, including transaction fees directly attributable to the acquisition, and are subsequently measured at fair value at each reporting date in accordance with ASC 820, Fair Value Measurement. Fair value is determined based on quoted prices in active markets, which are generally classified within Level 1 of the fair value hierarchy. Changes in fair value are recognized in net income and presented in unrealized gains (losses) on digital assets in the consolidated statement of operations and comprehensive income (loss).
As of December 31, 2025, the Group held digital assets consisting of Bitcoin (“BTC”) and Tether USD (“USDT”) for investment and treasury diversification purposes.
Bitcoin (BTC) meets all criteria in Subtopic 350-60, and is measured at fair value. Tether USD (USDT) does not meet the scope criteria of Subtopic 350-60 because it provides an enforceable redemption right for U.S. dollars at a 1:1 ratio, constituting a claim on an underlying fiat currency. Accordingly, USDT is scoped out of the fair value guidance under ASC 350-60. The Group accounts for USDT as an intangible asset using the cost method — initially recorded at cost, subsequently carried at cost less accumulated impairment losses. An annual impairment test is performed, and an impairment loss is recognized when carrying amount exceeds realizable value (e.g., redemption value or observable market price).
All digital assets are held with a third-party qualified custodian and are not subject to contractual sale restrictions. The Group does not engage in staking, lending, or mining activities.
Investment in equity securities
The Group accounts for its investment in equity securities in accordance with ASC 321, Investments—Equity Securities. Investment in equity securities comprise the following:
(i) investment in equity securities, current
Investment in equity securities, current, represents publicly traded equity securities measured at fair value. Fair value is determined in accordance with ASC 820, Fair Value Measurement (“ASC 820”), based on quoted prices in active markets for identical assets, which are classified as Level 1 inputs. Changes in fair value, including unrealized holding gains and losses and realized gains and losses upon sale, are recognized in the consolidated statements of operations and comprehensive income (loss) as a component of other income (expense). These investments are classified as current assets because the securities are readily marketable and may be sold to meet liquidity needs, if necessary.
(ii) investment in equity securities, non-current
Investment in equity securities, non-current, represents investments in private equity funds. The Group does not have the ability to exercise significant influence over these private equity funds. Accordingly, the Group estimates the fair value of these investments using the net asset value per share, or its equivalent, as a practical expedient in accordance with ASC 820 (the “NAV practical expedient”). Changes in fair value, including unrealized holding gains and losses and realized gains and losses upon sale, are recognized in the consolidated statements of operations and comprehensive income (loss) as a component of other income (expense).
The Group evaluates its investments in equity securities at each reporting date. If facts and circumstances indicate that the fair value of an investment in a private equity fund is less than the value determined using the NAV practical expedient, the investment is adjusted to its estimated fair value, with the change in fair value recognized in net income and presented in the consolidated statements of operations and comprehensive income (loss).
The Group evaluates each individual investment periodically for indicators of changes in fair value and appropriate classification and presentation.
F-10
AsiaStrategy
Notes to Consolidated Financial Statements
2. Summary of Significant Accounting Policies (cont.)
Accounts receivable, net
Accounts receivable are recognized and carried at the original invoiced amount less an allowance for credit losses and do not bear interest. The Group adopted ASU No.2016-13 Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASC 326”) on its accounts receivable and records the allowance for credit losses as an offset to accounts receivable, and the estimated credit losses charged to the allowance is recognized under “general and administrative” in the consolidated statements of operations and comprehensive income (loss). The Group assesses collectability by reviewing accounts receivable on a collective basis where similar characteristics exist, primarily based on similar business line or product offered and on an individual basis when the Group identifies specific customers with known disputes or collectability issues. In determining the amount of the allowance for expected credit losses, the Group considers historical collectability based on past due status, the age of the accounts receivable balances, credit quality of the Group’s customers based on ongoing credit evaluations, current economic conditions, reasonable and supportable forecasts of future economic conditions, and other factors that may affect the Group’s ability to collect from customers. Under this accounting guidance, the Group measures credit losses on its accounts receivable using the current expected credit loss model under ASC 326. As of December 31, 2025 and 2024, the Group provided allowance for expected credit losses against accounts receivable of $ and $, respectively.
Inventories, net
Inventories are stated at the lower of cost or
net realizable value. Cost of inventories are determined using the first in first out method. Management reviews inventories for obsolescence
and slow-moving inventories periodically and records an allowance against the inventories when the carrying value exceeds net realizable
value. For the years ended December 31, 2025, 2024 and 2023, the write-downs of inventories were $
Loans receivable, net
Loans receivable are initially recognized at the
amount of cash advanced, net of any origination fees received and direct transaction costs incurred, if any. They are subsequently measured
at amortized cost using the effective interest method. The amortized cost basis represents the unpaid principal balance, adjusted for
unamortized premiums or discounts, deferred loan fees and costs, if any. Loans receivable are classified as current asset since the loans
are scheduled to mature within
The Group assesses credit risk and evaluates collectability
of loans receivable on an ongoing basis in accordance with ASC 326, Financial Instruments – Credit Losses. The Group reviews loans
receivable on a regular basis and makes allowance for expected credit losses if there is evidence indicating that loans receivable may
be unrecoverable based on the Group’s historical losses, specific circumstances, and general economic conditions. As of December
31, 2025 and 2024, the balances of allowance for expected credit loss against loans receivable were $
Prepaid expenses
Prepaid expenses are comprised of prepaid consultancy fees, professional fees and office supplies. These amounts are recognized as expenses on a straight-line basis over the relevant non-cancellable contract term or expected benefit period, so the balances are realized over the life of the underlying arrangements, with the portion expected to be expensed within the next twelve months classified as current and the remainder as non-current. Prepaid expenses are not subject to expected credit loss assessment, as they represent advance payments for goods or services to be received from counterparties rather than contractual rights to receive cash.
Deposits and other current assets, net
Deposits and other current assets are comprised
of other receivables and deposits, including rental deposits and interest receivables. The Group adopted ASC 326 on its other current
assets. The new credit losses guidance replaces the old model for measuring the allowance for credit losses with a model that is based
on the expected losses. Under this accounting guidance, the Group measures expected credit losses on its other current assets using the
current expected credit loss model under ASC 326. As of December 31, 2025 and 2024, the balances of allowance for expected credit
loss against other current assets were $
F-11
AsiaStrategy
Notes to Consolidated Financial Statements
2. Summary of Significant Accounting Policies (cont.)
Leases
The Group adopted ASU No. 2016-02, Leases (“Topic 842”), which generally requires lessees to recognize operating and financing lease liabilities and corresponding right-of-use assets on the balance sheet and to provide enhanced disclosures surrounding the amount, timing and uncertainty of cash flows arising from leasing arrangements.
The Group is the lessee of non-cancellable operating leases for corporate office premise and warehouse. The Group determines if the arrangements are lease at inception. A lease for which substantially all the benefits and risks incidental to ownership remain with the lessor is classified by the lessee as an operating lease. All leases of the Group are currently classified as operating leases.
Operating lease ROU assets and lease liabilities are recognized at the commencement date based on the present value of future lease payments over the lease term. ROU assets represent the Group’s right to use an underlying asset for the lease term and operating lease liabilities represent its obligation to make lease payments arising from the lease.
When determining the lease term, at lease commencement date, the Group considers options to extend or terminate the lease when it is reasonably certain that it will exercise or not exercise that option. The interest rate used to determine the present value of future lease payments is the Group’s incremental borrowing rate based on the information available at the lease commencement date.
The lease standard (ASC 842) provides practical
expedients for an entity’s ongoing accounting. The Group elects to apply short-term lease exception for leases with a lease term
of
The Group evaluates the impairment of its ROU assets consistently with the approach applied for its other long-lived assets. The Group reviews the recoverability of its long-lived assets when events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. The assessment of possible impairment is based on its ability to recover the carrying value of the assets from the expected undiscounted future pre-tax cash flows of the related operations. As of December 31, 2025 and 2024, the Group did not recognize any impairment loss against its ROU assets.
Property and equipment, net
Property and equipment are stated at cost less
accumulated depreciation and impairment losses.
| Office equipment | ||
| Furniture and fixture | ||
| Motor vehicle |
Expenditures for repairs and maintenance, which do not materially extend the useful lives of the assets, are expensed as incurred. Expenditures for major renewals and betterments which substantially extend the useful lives of assets are capitalized. The cost and related accumulated depreciation of assets disposed of or retired are removed from the accounts, and any resulting gain or loss is reflected in the consolidated statements of operations and comprehensive income (loss) under other income or expenses.
Impairment of long-lived assets
The Group reviews long-lived assets, including property and equipment, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the undiscounted future pre-tax cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Fair value is generally determined by discounting the cash flows expected to be generated by the asset (asset group), when the market prices are not readily available. The adjusted carrying amount of the asset is the new cost basis and is depreciated over the asset’s remaining useful life. Long-lived assets are grouped with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. As of December 31, 2025 and 2024, no impairment of long-lived assets was recognized.
F-12
AsiaStrategy
Notes to Consolidated Financial Statements
2. Summary of Significant Accounting Policies (cont.)
Deferred IPO costs
Deferred IPO costs consist of underwriting, legal,
accounting and other expenses incurred through the balance sheet date that are directly related to the Initial Public Offering and that
were charged to shareholders’ equity upon the completion of the Initial Public Offering. As of December 31, 2025 and 2024, the Company
had deferred IPO costs of and $
Revenue recognition
The Group follows the rules and guidance set out under ASC 606, Revenue from Contracts with Customers (“ASC 606”), when recognizing revenue from contracts with customers. The core principle of ASC 606 requires an entity to recognize revenues to depict the transfer of goods to customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange for those goods recognized as performance obligations are satisfied. In accordance with ASC 606, revenues are recognized when the Group satisfies the performance obligations by delivering the promised goods to the customers, in an amount that reflects the consideration the Group expects to be entitled to in exchange for those goods. The following five steps are applied to achieve that core principle:
| Step 1: | Identify the contract with the customer | |
| Step 2: | Identify the performance obligations in the contract | |
| Step 3: | Determine the transaction price | |
| Step 4: | Allocate the transaction price to the performance obligations in the contract | |
| Step 5: | Recognize revenue when the company satisfies a performance obligation. |
The Group identifies each distinct sales transaction
as a performance obligation. The recognition and measurement of revenues is based on the assessment of individual contract terms. The
Group applies a practical expedient to expense costs as incurred for those suffered in order to obtain a contract with a customer when
the amortization period would have been
The Group has only one principal revenue stream, which is the trading of luxury watches. The Group carried out all its business activities and operations in Hong Kong. All transactions are concluded and completed in Hong Kong with similar terms and conditions.
The Group enters into a distinct agreement with its customers, through sales order and sales invoice, to sell luxury watches in exchange for sales proceeds. The Group’s promise to sell watches to its customers is considered distinct and is identified as one performance obligation. The shipping term is local delivery in Hong Kong. The Group charges its customers sales proceeds at a fixed amount, which is explicitly stated in the sales order and sales invoice and is based on the unit price and quantity supplied to the customer. The Group usually does not offer a credit period to its customers; customers are required to make payment in advance or pay upon delivery. Under some circumstances, customers may settle the sales proceeds after delivery, but the aging of such receivables would normally be less than 30 days.
Customers’ obligation to make payment upon or before delivery, and physical possession of watches indicates that control over the assets is transferred to the customer upon delivery. Furthermore, upon delivery, customers take on the risks and rewards associated with ownership of the luxury watches and are ready to derive benefits from the assets. Consequently, revenue from the sales of luxury watches is recognized at a point in time when the transaction and the Group’s performance obligation are completed, as evidenced by the delivery of watches.
F-13
AsiaStrategy
Notes to Consolidated Financial Statements
2. Summary of Significant Accounting Policies (cont.)
Warranty
Under ASC 460, Guarantees, at the time a sale is recognized, the Group shall record estimated future warranty costs. These estimated costs for warranties are determined at completion and are not for warranties separately sold by the Group. Generally, the estimated claim rates of warranties are based on actual warranty experience or the Group’s best estimate. There were no such reserves for the years ended December 31, 2025, 2024 and 2023, because the Group considered that the claim rates of warranties had been immaterial historically and are expected to remain immaterial for the years in question.
Contract assets and contract liabilities
The Group classifies its right to consideration in exchange for goods transferred to a customer as either a receivable or a contract asset. A receivable is a right to consideration that is unconditional as compared to a contract asset which is a right to consideration that is conditional upon factors other than the passage of time. The Group recognizes accounts receivable in its consolidated balance sheets when it transfers the goods in advance of receiving consideration and it has the unconditional right to receive consideration. A contract asset is recorded when the Group has transferred the goods to the customer before payment is received or is due, and the Group’s right to consideration is conditional on future performance or other factors in the contract. As of December 31, 2025 and 2024, the Group did not have any contract assets.
Contract liabilities are recognized if the Group
receives consideration prior to satisfying the performance obligations, which include customer advances and deferred revenue under sales
arrangements. The revenue recognized for years ended December 31, 2025 and 2024 that was previously included in the contract liabilities
as of December 31, 2024 and 2023 was $ and $
As of December 31, 2025 and 2024, the balances
of contract liabilities were $
Cost of revenue
Cost of revenue primarily consists of the cost of luxury watches and incremental transportation expenses incurred for the sales and delivery of watches.
Employee benefit plan
Employees of the Group located in Hong Kong
participate in a compulsory retirement benefit scheme as required by the local laws in Hong Kong. Contributions are required by both
the Group and its employees at a rate of
Borrowing costs
All borrowing costs are recognized as finance expense in the consolidated statements of operations and comprehensive income (loss) in the period in which they are incurred.
F-14
AsiaStrategy
Notes to Consolidated Financial Statements
2. Summary of Significant Accounting Policies (cont.)
Convertible debts
The Group accounts for its convertible debt instruments in accordance with ASC 470-20, Debt with Conversion and Other Options. Upon initial recognition, convertible debts are recorded as liabilities at the proceeds received, net of unamortized debt issuance costs, discounts, or premiums, as applicable. Debt issuance costs are presented as a direct deduction from the carrying amount of the related debt liability and are amortized to interest expense using the effective interest method.
The Group did not elect the fair value option for its convertible debt instruments. The Group evaluates the embedded conversion feature and any other embedded features in such instruments under ASC 815-15, Derivatives and Hedging—Embedded Derivatives, to determine whether bifurcation is required. The Group concluded that the embedded conversion feature in its convertible debt instruments is not required to be separately accounted for as a derivative. Accordingly, the convertible debt instruments are accounted for wholly as debt and are subsequently measured at amortized cost.
Income taxes
The Group accounts for income taxes under ASC 740, Income Taxes. Provision for income taxes consists of current taxes and deferred taxes.
Current tax is recognized based on the results for the year as adjusted for items which are non-assessable or disallowed. It is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.
Deferred tax is recognized in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the consolidated financial statements and the corresponding tax basis. Deferred tax is calculated using tax rates that are expected to apply to the period when the asset is realized, or the liability is settled. Deferred tax is charged or credited in the consolidated statements of operations and comprehensive income (loss), except when it is related to items credited or charged directly to equity. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.
An uncertain tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred. The Group did not have any significant uncertain tax positions nor interest and penalty associated with tax positions as of December 31, 2025 and 2024.
Segment reporting
The Group determines its operating segments in accordance with ASC 280, Segment Reporting, using the management approach. Under this approach, operating segments are identified based on the internal reports regularly reviewed by the Group’s chief operating decision maker (the “CODM”) for purposes of allocating resources and assessing performance. The Group’s CODM is its Chief Executive Officer.
The CODM reviews and evaluates the Group’s operating results, allocates resources, and assesses performance on a consolidated basis. The CODM uses segment net income (loss), which is consistent with consolidated net income (loss) as reported in the consolidated statements of operations and comprehensive income (loss), as the primary measure of segment performance and resources allocation. The CODM also reviews total consolidated assets as the measure of segment assets. In addition, the CODM reviews consolidated functional expense information, including selling and marketing expenses and general and administrative expenses, together with other consolidated income and expense items, including interest expense, other income, net, and income tax benefit (provision for income taxes).
During the years ended December 31, 2025 and 2024, the Group had one principal revenue generating activity, namely the trading of luxury watches. The Group conducts its business activities and operations in Hong Kong, and substantially all transactions are concluded and completed in Hong Kong under similar economic characteristics and conditions. The Group does not have separate operating divisions for which discrete financial information is regularly reviewed by the CODM. Accordingly, the Group has determined that it operates as a single operating segment and a single reportable segment.
Comprehensive Income (Loss)
Comprehensive income (loss) is defined as the changes in equity of the Group during a period from transactions and other events and circumstances excluding transactions resulting from investments by owners and distributions to owners. Comprehensive income (loss) consists of two components, net income (loss) and other comprehensive income (loss). Other comprehensive income (loss) refers to revenue, expenses, gains and losses that under U.S. GAAP are recorded as an element of shareholders’ equity but are excluded from net income. Other comprehensive income (loss) consists of a foreign currency translation adjustment resulting from the Group not using the U.S. Dollars as its functional currency.
F-15
AsiaStrategy
Notes to Consolidated Financial Statements
2. Summary of Significant Accounting Policies (cont.)
Earnings (loss) per share
Earnings (loss) per share is calculated in accordance with ASC 260, Earnings Per Share. Basic earnings (loss) per share is computed by dividing net income attributable to each class of ordinary shareholders by the weighted average number of shares of that particular class outstanding during the year.
Diluted earnings (loss) per share is calculated by dividing net income attributable to each class of ordinary shareholders, as adjusted for the effect of dilutive ordinary equivalent shares of that class, if any, by the weighted average number of that particular class of ordinary and dilutive ordinary equivalent shares outstanding during the period. Ordinary share equivalents are excluded from the computation of diluted earnings (loss) per share if their effects would be anti-dilutive. Basic and diluted earnings (loss) per ordinary share are presented in the Group’s consolidated statements of operations and comprehensive income (loss).
ASC 260 considers all convertible securities, including convertible debt, which by their terms may be converted into common stock of the reporting entity, as potential common shares. Share-settled convertible debt is generally included in diluted earnings (loss) per share using the if-converted method, a method of computing earnings (loss) per share data that assumes conversion of convertible securities at the beginning of the reporting period (or at time of issuance, if later).
During the year ended December 31, 2025, the Company
issued convertible debts with an aggregate principal amount of $
Diluted earnings (loss) per share for the years
ended December 31, 2025, 2024, and 2023 were $
Translation of foreign currencies
The Group’s principal place of operations is Hong Kong. The financial position and results of its operations are determined using Hong Kong Dollars (“HKD” or “HK$”), as the functional currency. The Group’s consolidated financial statements are presented in U.S. Dollars (“US$” or “$”). The results of operations and the consolidated statements of cash flows, denominated in the functional currency, are translated to US$ at the average rate of exchange during the reporting period. Assets and liabilities denominated in the functional currency at the balance sheet dates are translated to US$ at the applicable rates of exchange in effect at those dates. The equity, denominated in the functional currency, is translated to US$ at the historical rate of exchange at the time of the transaction. Because cash flows are translated based on the average translation rate, amounts related to assets and liabilities reported on the consolidated statements of cash flows will not necessarily agree with changes in the corresponding balances on the consolidated balance sheets. Translation adjustments arising from the use of different exchange rates from period to period are included as a separate component of accumulated other comprehensive income or loss in the consolidated statements of changes in shareholders’ equity. Gains and losses from foreign currency transactions are included in the Group’s consolidated statements of operations and comprehensive income (loss).
The following table outlines the exchange rates between HK$ and US$ that are used in preparing these consolidated financial statements:
| As of December 31, | ||||||||
| 2025 | 2024 | |||||||
| Year-end spot rate | ||||||||
| For the Years Ended December 31, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| Average rate | ||||||||||||
F-16
AsiaStrategy
Notes to Consolidated Financial Statements
2. Summary of Significant Accounting Policies (cont.)
Fair value of financial instruments
The fair value of a financial instrument is defined as the exchange price that would be received from an asset or paid to transfer a liability (as exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:
| Level 1 | — | Quoted prices in active markets for identical assets and liabilities. | |||
| Level 2 | — | Quoted prices in active markets for similar assets and liabilities, or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. | |||
| Level 3 | — | Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. |
As of December 31, 2025 and 2024, the Group’s financial instruments comprised primarily cash, restricted cash, accounts receivable, digital assets, investment in equity securities, other current assets, loans receivable, accounts payable, bank borrowings, convertible debts, amount due from a related party, accrued expenses and other current liabilities.
For publicly traded equity securities, the Group concludes the fair value of its investments is determined based on quoted prices in active markets for identical assets (Level 1 inputs). For investments in private equity funds, as a practical expedient, the Group uses NAV or its equivalent to measure the fair value of its investments which the Group does not have the ability to exercise significant influence.
Additionally, the Group concludes that the fair value of the Group’s bank borrowings approximates their carrying value as the bank borrowings are subject to floating rates that are close to the market interest rate. For the other financial instruments, the carrying amounts approximate their fair values due to the short-term nature of these instruments.
As of December 31, 2025, the Group held certain assets that are required to be measured at fair value on a recurring basis:
| Financial assets | Fair value hierarchy | Fair value as of December 31, 2025 | ||||
| Digital assets - Bitcoin | Level 1 | $ | ||||
| Investment in equity securities, current - DV8 Public Company Limited | Level 1 | $ | ||||
| Investment in equity securities, current - ASP LLC portfolio | Net asset value as a practical expedient | $ | ||||
As of December 31, 2024, the Group did not have any assets or liabilities measured at fair value on a recurring basis.
Related parties
Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control or significant influence of the same party, such as a family member or relative, shareholder, or a related corporation.
Commitments and contingencies
In the normal course of business, the Group is subject to contingencies, such as legal proceedings and claims arising out of its business, which cover a wide range of matters. Liabilities for contingencies are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated.
F-17
AsiaStrategy
Notes to Consolidated Financial Statements
2. Summary of Significant Accounting Policies (cont.)
If the assessment of a contingency indicates that it is probable that a material loss is incurred and the amount of the liability can be estimated, then the estimated liability is accrued in the Group’s consolidated financial statements. If the assessment indicates that a potentially material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss, if determinable and material, would be disclosed.
Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the nature of the guarantee would be disclosed.
Recent accounting pronouncements
The Group considers the applicability and impact of all accounting standards updates (“ASUs”). Management periodically reviews new accounting standards that are issued. Under the Jumpstart Our Business Startups Act of 2012, as amended (the “JOBS Act”), the Group meets the definition of an emerging growth company, or EGC, and has elected the extended transition period for complying with new or revised accounting standards, which delays the adoption of these accounting standards until they would apply to private companies.
Recently issued accounting pronouncements adopted
In December 2023, the FASB issued ASU 2023-09, Improvement to Income Tax Disclosure. This standard requires more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. This standard also includes certain other amendments to improve the effectiveness of income tax disclosures. ASU 2023-09 is effective for public business entities, for annual periods beginning after December 15, 2024. For entities other than public business entities, the amendments are effective for annual periods beginning after December 15, 2025. The Group adopted this accounting guidance in 2025. The adoption of the standard did not have a material impact on the Group’s consolidated financial statement.
In July 2025, the FASB issued ASU 2025-05, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets (“ASU 2025-05”). ASU 2025-05 provides a practical expedient that all entities can use when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under ASC 606. Under this practical expedient, an entity is allowed to assume that the current conditions it has applied in determining credit loss allowances for current accounts receivable remain unchanged for the remaining life of those assets. ASU 2025-05 is effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods, with early adoption permitted. ASU 2025-05 should be applied on a prospective basis. The Group adopted this accounting guidance in 2025. The adoption of the standard did not have a material impact on the Group’s consolidated financial statement.
F-18
AsiaStrategy
Notes to Consolidated Financial Statements
2. Summary of Significant Accounting Policies (cont.)
Recent accounting pronouncements not yet adopted
In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. This update requires that at each interim and annual reporting period public entities disclose (1) the amounts of purchases of inventory, employee compensation, depreciation, amortization, and depletion) in commonly presented expense captions; (2) certain amounts that are already required to be disclosed under current GAAP in the same disclosure as the other disaggregation requirements; (3) a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively; and (4) the total amount of selling expenses and, in annual reporting periods, the definition of selling expenses. In January 2025, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date. This update clarifies that ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Group is currently evaluating the impact on its financial statements of adopting this guidance.
The Group does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the consolidated financial position, statements of operations and comprehensive income (loss) and statements of cash flows.
3. Significant Risks
Currency risk
The functional currency of the Group is HK$ and
these consolidated financial statements are presented in US$. The Group’s sales, operation activities and assets and liabilities
are predominately denominated in the functional currency. The Group considers the foreign exchange risk in relation to transactions denominated
in HK$ with respect to US$ is not significant as HK$ is pegged to US$. Hong Kong Monetary Authority guarantees to exchange US$ into
HK$, or vice versa, at a rate close to HK$
At the same time, the Group buys watches from distributors located in Hong Kong, South America, Singapore, Europe and Japan for the years ended December 31, 2025, 2024 and 2023, primarily using HK$ and Swiss Franc (“CHF”), and sell them to customers in HK$. Any fluctuation in exchange rates against HK$ may result in higher costs of purchases.
For the year ended December 31, 2025, the Group
had $
The Group has not used any instruments or derivatives to manage or hedge its currency risk exposure.
Concentration and credit risks
Financial instruments that potentially subject the Group to the credit risks consist of cash, restricted cash, accounts receivable, loans receivable, investment in equity securities, amount due from a related party and other current assets. The maximum exposures of such assets to credit risk are their carrying amounts as of the balance sheet dates.
The Group deposits its cash and restricted cash
with reputable banks located in Hong Kong. As of December 31, 2025 and 2024, $
F-19
AsiaStrategy
Notes to Consolidated Financial Statements
3. Significant Risks (cont.)
Assets that potentially subject the Group to significant
credit risks primarily consist of accounts receivable and other current assets. The Group performs regular and ongoing credit assessments
of the counterparts’ financial conditions and credit histories. The Group also assesses historical collection trends, aging of receivables
and general economic conditions. The Group considers that it has adequate controls over these receivables in order to minimize the related
credit risk. As of December 31, 2025 and 2024, the balances of allowance for expected credit losses against these balances were $
For the years ended December 31, 2025, 2024 and 2023, the Group’s assets were primarily located in Hong Kong. However, the Group also maintains significant digital assets and equity security investments in other jurisdictions, including Singapore and the Cayman Islands. At the same time, the Group considers that it is exposed to the following concentrations of risk:
(a) Major customers
For the year ended December 31,
2025, two customers accounted for 10% or more of the Group’s revenue. Revenue from these two customers accounted for
For the year ended December 31,
2024, two customers accounted for 10% or more of the Group’s revenue. Revenue from these two customers accounted for
For the year ended December 31,
2023, three customers accounted for 10% or more of the Group’s revenue. Revenue from these three customers accounted for
| Year ended December 31, 2025 | As of December 31, 2025 | |||||||||||||||
| Customer | Revenue | Percentage of revenue | Accounts receivables, gross | Percentage of accounts receivables, gross | ||||||||||||
| Customer A | $ | % | $ | % | ||||||||||||
| Customer B | % | % | ||||||||||||||
| Total: | $ | % | $ | % | ||||||||||||
| Year ended December 31, 2024 | As of December 31, 2024 | |||||||||||||||
| Customer | Revenue | Percentage of revenue | Accounts receivables, gross | Percentage of accounts receivables, gross | ||||||||||||
| Customer B | $ | % | $ | % | ||||||||||||
| Customer A | % | % | ||||||||||||||
| Total: | $ | % | $ | % | ||||||||||||
| Year ended December 31, 2023 | As of December 31, 2023 | |||||||||||||||
| Customer | Revenue | Percentage of revenue | Accounts receivables, gross | Percentage of accounts receivables, gross | ||||||||||||
| Customer C | $ | % | $ | % | ||||||||||||
| Customer D | % | % | ||||||||||||||
| Customer E | % | % | ||||||||||||||
| Total: | $ | % | $ | % | ||||||||||||
F-20
AsiaStrategy
Notes to Consolidated Financial Statements
3. Significant Risks (cont.)
As of December 31, 2025, there
was one customer whose receivables accounted for 10% or more of the Group’s total balances of accounts receivable and it accounted
for
As of December 31, 2024, there was no accounts receivable.
All the concentration percentages of accounts receivable are calculated before allowance for expected credit losses.
(b) Major vendors
For the year ended December 31,
2025, four vendors accounted for 10% or more of the Group’s total purchase. Total purchase from these four vendors accounted for
For the year ended December 31,
2024, three vendors accounted for 10% or more of the Group’s total purchase. Total purchase from these three vendors accounted for
For the year ended December 31,
2023, two vendors accounted for 10% or more of the Group’s total purchase. Total purchase from these two vendors accounted for
| Year ended December 31, 2025 | As of December 31, 2025 | |||||||||||||||
| Vendor | Purchase | Percentage of total purchase | Accounts payable | Percentage of Accounts payable | ||||||||||||
| Vendor A | $ | % | $ | % | ||||||||||||
| Vendor B | % | % | ||||||||||||||
| Vendor C | % | % | ||||||||||||||
| Vendor D | % | % | ||||||||||||||
| Total: | $ | % | $ | % | ||||||||||||
| Year ended December 31, 2024 | As of December 31, 2024 | |||||||||||||||
| Vendor | Purchase | Percentage of total purchase | Accounts payable | Percentage of Accounts payable | ||||||||||||
| Vendor B | $ | % | $ | % | ||||||||||||
| Vendor A | % | % | ||||||||||||||
| Vendor E | % | % | ||||||||||||||
| Total: | $ | % | $ | % | ||||||||||||
F-21
AsiaStrategy
Notes to Consolidated Financial Statements
3. Significant Risks (cont.)
| Year ended December 31, 2023 | As of December 31, 2023 | |||||||||||||||
| Vendor | Purchase | Percentage of total purchase | Accounts payable | Percentage of Accounts payable | ||||||||||||
| Vendor F | $ | % | $ | % | ||||||||||||
| Vendor G | % | % | ||||||||||||||
| Total: | $ | % | $ | % | ||||||||||||
As of December 31, 2025, there
was one vendor whose payables accounted for 10% or more of the Group’s total balances of accounts payable and it accounted for
As of December 31, 2024, there
was one vendor whose payables accounted for 10% or more of the Group’s total balances of accounts payable and it accounted for
Interest rate risk
Fluctuations in market interest rates may negatively
affect the Group’s financial condition and results of operations. The Group is exposed to floating interest rate risk on bank deposits
and bank borrowings, particularly during periods when the interest rate is expected to significant changes. The outstanding convertible
debt is not exposed to floating interest rate risk as it bears interest at a fixed rate. Nevertheless, given the amounts of bank deposits
in question, the Group considers the related interest rate risk not material. On the other hand, as of December 31, 2025, the Group
had the outstanding bank borrowings of $
Price risk
As of December 31, 2025, the Group held investments
in equity securities with an aggregate carrying value of approximately US$
As of December 31, 2025, the Group held
4. Accounts Receivable, Net
As of December 31, 2025 and 2024, accounts receivable consisted of the following balances:
| As of December 31, | ||||||||
| 2025 | 2024 | |||||||
| Accounts receivable | $ | $ | ||||||
| Less: allowance for expected credit losses | ||||||||
| Accounts receivable, net | $ | $ | ||||||
F-22
AsiaStrategy
Notes to Consolidated Financial Statements
4. Accounts Receivable, Net (cont.)
The movement of allowance for expected credit losses is as follow:
| As of December 31, | ||||||||
| 2025 | 2024 | |||||||
| Balance at January 1 | $ | $ | ||||||
| Recovery of expected credit losses | ( | ) | ||||||
| Exchange rate differences | ||||||||
| Balance at December 31 | $ | $ | ||||||
5. Inventories, Net
As of December 31, 2025 and 2024, inventories consisted of the following balances:
| As of December 31, | ||||||||
| 2025 | 2024 | |||||||
| Inventories, net | $ | $ | ||||||
6. Investment in Equity Securities
As of December 31, 2025 and 2024, investment in equity securities consisted of the following balances:
| As of December 31, | ||||||||
| 2025 | 2024 | |||||||
| Investment in equity securities, current | ||||||||
| DV8 Public Company Limited(1) | $ | $ | ||||||
| Investment in equity securities, non-current | ||||||||
| ASP LLC portfolio(2) | $ | $ | ||||||
| (1) |
| (2) |
On September 10, 2025, ASP LLC subscribed for
The Group classifies its interest in ASP LLC as an investment in a private equity fund over which it does not have the ability to exercise significant influence. Accordingly, the Group uses net asset value as a practical expedient to estimate the fair value of the investment in accordance with ASC 820. There is no indication that the investment will be sold at an amount different from net asset value per share. Gains and losses resulting from changes in fair value are recognized in the consolidated statements of operations and comprehensive income (loss). The investment was classified as a non-current asset because the Group intends to hold the investment on a long term basis, and the interests are subject to restrictions on redemption and transfer.
F-23
AsiaStrategy
Notes to Consolidated Financial Statements
6. Investment in Equity Securities (cont.)
The following table is a roll-forward of the investment in equity securities for the years ended December 31, 2025, 2024 and 2023.
| For the Years Ended December 31, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| Balance at January 1 | $ | $ | $ | |||||||||
| Investment in equity securities | ||||||||||||
| Unrealized gains on investment in equity securities, net | ||||||||||||
| Balance at December 31 | ||||||||||||
7. Leases
For the years ended December 31, 2025, 2024 and 2023, the Group subsisted of the following non-cancellable lease arrangements.
| Description of lease | Lease term | |
| Office premise at 33/F of Sunshine Plaza, Hong Kong | 1-year fixed term lease from January 1, 2023 to December 31, 2023(1) 1-year fixed term lease from January 1, 2024 to December 31, 2024(1) 1-year fixed term lease from January 1, 2025 to December 31, 2025, and further replaced by a 4-year fixed term leases from August 1, 2025 to July 31, 2029 since August 1, 2025(2) | |
| Warehouse at Unit 1209 of Riley House, Hong Kong | |
| (1) |
| (2) |
| (3) |
The following table summarizes the classification of operating lease right-of-use asset and operating lease liabilities in the Group’s consolidated balance sheets:
| As of December 31, | ||||||||
| 2025 | 2024 | |||||||
| Assets | ||||||||
| Operating lease right-of-use asset, net | $ | $ | ||||||
| Liabilities | ||||||||
| Operating lease liabilities | ||||||||
Information related to operating lease activities during the years ended December 31, 2025, 2024 and 2023 are as follows:
| For the Years Ended December 31, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| Amortization of operating lease right-of-use asset | $ | $ | $ | |||||||||
| Accretion of interest on operating lease liabilities | ||||||||||||
| Total operating lease expenses | ||||||||||||
F-24
AsiaStrategy
Notes to Consolidated Financial Statements
7. Leases (cont.)
The rental fee for the office lease was fully paid at the commencement of the lease term, and there were no future lease commitments as of December 31, 2025.
As of December 31, 2025 and 2024, the weighted
average discount rate of was
For the years ended December 31, 2025,
2024 and 2023, the short-term lease expenses were $
8. Property and Equipment, Net
As of December 31, 2025 and 2024, property and equipment, net, consisted of the following:
| As of December 31, | ||||||||
| 2025 | 2024 | |||||||
| Furniture and fixture | $ | $ | ||||||
| Office equipment | ||||||||
| Motor vehicle | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Total property and equipment, net | $ | $ | ||||||
Depreciation expenses were $
9. Digital assets
For the year ended December 31, 2025, the Group purchased digital assets consisting of Bitcoin (BTC) and Tether USD (USDT) for investment and treasury diversification purposes. As of December 31, 2024, the Group did not have any investments in digital assets.
The following table summarizes the Group’s digital asset holdings as of December 31, 2025:
| As of December 31, 2025 | ||||||||||||||
| Digital Assets | Valuation method | Holdings | Cost Basis | Fair value | ||||||||||
| BTC* | $ | $ | ||||||||||||
| USDT | ||||||||||||||
| Total digital assets | $ | $ | ||||||||||||
| * |
The following table presents the movement for the digital assets of the Group for the years ended December 31, 2025, 2024 and 2023:
| BTC | USDT | Total | ||||||||||
| Balance as of December 31, 2023 and 2024, and January 1, 2025 | $ | $ | $ | |||||||||
| Purchase of digital assets | ||||||||||||
| Unrealized losses on digital assets, net | ( | ) | ( | ) | ||||||||
| Balance as of December 31, 2025 | ||||||||||||
F-25
AsiaStrategy
Notes to Consolidated Financial Statements
10. Loans Receivable, Net
As of December 31, 2025 and 2024, loans receivable, net consisted of the following balances:
| As of December 31, | ||||||||
| 2025 | 2024 | |||||||
| Loans receivable(1) (2) (3) | $ | $ | ||||||
| Less: allowance for expected credit losses | ( | ) | ||||||
| Loans receivable, net | $ | $ | ||||||
| (1) |
| (2) |
| (3) |
The movement of allowance for expected credit losses is as follow:
| As of December 31, | ||||||||
| 2025 | 2024 | |||||||
| Balance at January 1 | $ | $ | ||||||
| Provision of expected credit losses | ||||||||
| Exchange rate differences | ||||||||
| Balance at December 31 | $ | $ | ||||||
11. Prepaid Expenses
As of December 31, 2025 and 2024, prepaid expenses consisted of the following balances:
| As of December 31, | ||||||||
| 2025 | 2024 | |||||||
| Prepaid expenses | $ | $ | ||||||
| Less: amounts classified as non-current assets | ( | ) | ||||||
| Amounts classified as current assets | $ | $ | ||||||
F-26
AsiaStrategy
Notes to Consolidated Financial Statements
11. Prepaid Expenses (Cont.)
Prepaid expenses primarily consist of prepaid
administrative expenses and professional fees. As of December 31, 2025, the balance mainly comprised a prepaid professional fee of $
The estimated aggregate expense for the next four fiscal years is as follows:
| As of December 31, | Estimated Expense | |||
| 2026 | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| $ | ||||
12. Deposits and Other Current Assets, Net
As of December 31, 2025 and 2024, deposits and other current assets, net consisted of the following balances:
| As of December 31, | ||||||||
| 2025 | 2024 | |||||||
| Trade deposits | $ | $ | ||||||
| Interest receivable | ||||||||
| Tax recoverable | ||||||||
| Other assets | ||||||||
| Less: allowance for expected credit losses | ( | ) | ( | ) | ||||
| Deposits and other current assets, net | $ | $ | ||||||
The movement of allowances for expected credit losses is as follow:
| As of December 31, | ||||||||
| 2025 | 2024 | |||||||
| Balance at January 1 | $ | $ | ||||||
| Provision for expected credit losses | ||||||||
| Balance at December 31 | $ | $ | ||||||
F-27
AsiaStrategy
Notes to Consolidated Financial Statements
13. Bank Borrowings
As of December 31, 2025 and 2024, bank borrowings consisted of the following:
| Outstanding | ||||||||||||||
| Nature of | principal amount | |||||||||||||
| banking | Amount of | as of December 31, | ||||||||||||
| Bank facility Provider | facility | Tenor | banking facility | 2025 | 2024 | |||||||||
| Shanghai Commercial Bank (“SCB”) | HK$ | $ | $ | |||||||||||
| SCB | HK$ | |||||||||||||
| DBS Bank (Hong Kong) Limited (“DBS”) | HK$ | |||||||||||||
| Less: non-current portion | ( | ) | ( | ) | ||||||||||
| Bank borrowings, current | $ | $ | ||||||||||||
These bank borrowings were primarily obtained for general working capital.
SCB banking facility
Under the banking facility letter dated May 5, 2020 and subsequent amendments made on October 21, 2021, Shanghai Commercial Bank Limited (“SCB”), a bank in Hong Kong, extended a banking facility to Top Win Hong Kong and Top Pride International Ltd. (“Top Pride”). Top Pride was a related party of the Company until October 29, 2024, as it was controlled by Mr. Sit Hon, who served as the former controlling shareholder and director of Top Win Hong Kong until that date. The facility comprises:
| (i) | trade
financing of HK$ |
| (ii) | instalment
loan of HK$ |
The securities provided under the SCB banking
facility include (i) a pledge of the property located at 33/F, Sunshine Plaza, 353 Lockhart Road, Hong Kong, which is owned
by New Harvest Investment Holding Ltd (“New Harvest”), a company controlled by Mr. Sit Hon; (ii) a personal guarantee
given by Mr. Sit Hon in the amount of HK$
On June 25, 2025, SCB amended certain security
terms of its banking facility. The amendment added a new security term: a personal guarantee provided by Mr. Ngai Kwan in the amount of
HK$
Although Mr. Sit Hon, New Harvest, and Top Pride ceased to be related parties of the Group as of October 29, 2024, these parties have remained committed to providing the aforementioned securities to secure the Group’s banking facility. The terms of the existing banking facility remain in full force and effect.
F-28
AsiaStrategy
Notes to Consolidated Financial Statements
13. Bank Borrowings (cont.)
As of December 31, 2025 and 2024, the Group
utilized revolving trade financing in the amounts of $
DBS banking facility
On November 30, 2021, DBS Bank (Hong Kong)
Limited extended a banking facility to the Group and its related party, Top Pride. The facility comprises account payable financing HK$
The securities provided under the DBS banking
facility include: (i) a cash deposit of HK$
On September 24, 2024, DBS amended certain terms
of its banking facility. The interest rate for account payable financing in currencies other than Hong Kong Dollars was adjusted to
Further on January 14, 2025, DBS amended certain
terms of its banking facility. The facility limit for Accounts Payable Financing was adjusted from HK$
Although Mr. Sit Hon, New Harvest, and Top Pride ceased to be related parties of the Group as of October 29, 2024, these parties have remained committed to providing the aforementioned securities to secure the Group’s banking facility. The terms of the existing banking facility remain in full force and effect.
On November 18, 2025, DBS released its charge
over a cash deposit of HK$
For the years ended December 31, 2025,
2024 and 2023, the weighted average annual interest rates for the bank loans were approximately
The table below summarizes the remaining contractual maturities of the bank borrowings as of December 31, 2025. The bank borrowings are categorized by the years in which repayments are due:
| During the years ended December 31, | ||||
| 2026 | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 and after | ||||
| Total repayments of bank loans | ||||
| Less: imputed interest | ( | ) | ||
| Balance recognized as at December 31, 2025 | $ | |||
As of the date of this report, a total of $
F-29
AsiaStrategy
Notes to Consolidated Financial Statements
14. Convertible debts
On August 15, 2025, the Company entered into agreements
with certain investors to issue convertible debt with an aggregate principal amount of $
The holders may convert the convertible debt into
the Company’s ordinary shares at an initial conversion price of $
The Company concluded that bifurcation of the embedded features was not required. Accordingly, the convertible debt is accounted for wholly as debt and is subsequently measured at amortized cost using the effective interest method.
As of December 31, 2025, the fair value of the convertible debt was:
| Fair value hierarchy | Valuation method | Fair value as of December 31, 2025 | ||||||
| Fair value of convertible debts | Level 3 | $ | ||||||
For the years ended December 31, 2025, the interest
expense related to the convertible debts were $
15. Shareholders’ Equity
Ordinary shares
The Company was established under the laws of
Cayman Islands on June 27, 2024. The authorized number of ordinary shares was
The issuance of these shares is considered as a part of the reorganization of the Company, and is retroactively applied as if the transaction occurred at the beginning of the period presented.
On September 16, 2024, two investors, Mr. Kelven
Wong and Mr. Ngai Ming Yuk, separately entered into a private placement subscription agreement and a registration rights agreement with
the Company. Under these agreements, Mr. Kelven Wong and Mr. Ngai Ming Yuk subscribed for
F-30
AsiaStrategy
Notes to Consolidated Financial Statements
15. Shareholders’ Equity (cont.)
On November 20, 2024, the Company effected a
On April 1, 2025, the Company entered into an
underwriting agreement with Dominari Securities LLC, as representative of the underwriters named therein (the “Underwriters”),
pursuant to which the Company agreed to sell, in a firm commitment underwritten public offering (the “Offering”), an aggregate
of
On April 2, 2025, the Company’s Ordinary
Shares commenced trading on the Nasdaq Capital Market under the trading symbol “TOPW.” On April 3, 2025, the Company closed
the Offering of
Upon the completion of IPO of the Company, IPO
costs capitalized as of December 31, 2024 amounted to $
As of December 31, 2025, a total of
16. Income Taxes
Upon adoption of ASU 2023-09 on January 1, 2025, below disclosure and presentation have been retrospectively amended.
Cayman Islands and British Virgin Islands
Under the current and applicable laws of Cayman Islands and British Virgin Islands, the Company, Grand Moon, AsiaStrategy BVI, and Top Asia, are not subject to tax on income or capital gains under these jurisdictions.
Hong Kong
Top Win Hong Kong and AsiaStrategy Topwin are
incorporated in Hong Kong and are subject to Hong Kong Profits Tax on the taxable income as reported in their respective statutory
financial statements adjusted in accordance with relevant Hong Kong tax laws. For the years ended December 31, 2025, 2024
and 2023, Hong Kong Profits Tax is calculated in accordance with the two-tiered profits tax rates regime. The applicable income tax
rate for the first HK$
Singapore
AsiaStrategy SG is subject to Singapore Profits
Tax on the taxable income as reported in its statutory financial statements adjusted in accordance with relevant Singapore tax laws. The
applicable corporate income tax rate is
The current and deferred portions of the income tax expense included in the consolidated Statements of Operations and comprehensive income (loss) as determined in accordance with ASC 740 are as follows:
| For the Years Ended December 31, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| Current income tax expenses | ||||||||||||
| Hong Kong | $ | $ | $ | |||||||||
| Foreign | ||||||||||||
| Deferred income tax expenses (benefits) | ||||||||||||
| Hong Kong | ( | ) | ( | ) | ||||||||
| Foreign | ||||||||||||
| ( | ) | ( | ) | |||||||||
| Total income tax expenses (benefits) | $ | $ | ( | ) | $ | |||||||
F-31
AsiaStrategy
Notes to Consolidated Financial Statements
16. Income Taxes (cont.)
A reconciliation of the difference between the
expected income tax expenses computed at Hong Kong income tax rate of
| For the Years Ended December 31, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| Income (loss) before income tax expense | $ | $ | ( | ) | $ | |||||||
| Income tax (benefits) expenses at foreign taxes | ||||||||||||
| Hong Kong statutory income tax rate | % | % | % | |||||||||
| Computed income tax expense (benefit) with Hong Kong statutory income tax rate | $ | $ | ( | ) | $ | |||||||
| Tax effects by locations: | ||||||||||||
| Hong Kong | ||||||||||||
| Non-taxable income | ( | ) | ( | ) | ( | ) | ||||||
| Non-deductible expenses | ||||||||||||
| Singapore | ||||||||||||
| Non-taxable income(1) | ( | ) | ||||||||||
| Non-deductible expenses | ||||||||||||
| Cayman Island | ||||||||||||
| Non-deductible expenses(2) | ||||||||||||
| BVI | ||||||||||||
| Non-deductible expenses | ||||||||||||
| Effect of tax concession | ( | ) | ||||||||||
| Effect of preferential tax rates in Hong Kong | ( | ) | ||||||||||
| Changes in valuation allowance | ||||||||||||
| Income tax expenses (benefits) | $ | $ | ( | ) | $ | |||||||
| (1) |
| (2) |
The following table reconciles the statutory tax rate to the Group’s effective tax rate for the years ended December 31, 2025, 2024 and 2023:
| For the Years Ended December 31, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| Foreign taxes | % | % | % | |||||||||
| Hong Kong statutory income tax rate | % | % | % | |||||||||
| Non-taxable income | ( | )% | % | % | ||||||||
| Non-deductible expenses | % | % | % | |||||||||
| Effect of tax concession | % | % | ( | )% | ||||||||
| Effect of preferential tax rates in Hong Kong | ( | )% | ||||||||||
| Changes in valuation allowance | % | % | % | |||||||||
| Income tax expenses (benefits) | % | % | % | |||||||||
F-32
AsiaStrategy
Notes to Consolidated Financial Statements
16. Income Taxes (cont.)
Deferred taxes
The Group measures deferred tax assets and liabilities
based on the difference between the financial statement and tax bases of assets and liabilities at the applicable tax rates.
| As of December 31, | ||||||||
| 2025 | 2024 | |||||||
| Deferred tax assets: | ||||||||
| Allowance for credit loss | $ | $ | ||||||
| Depreciation of property and equipment | ||||||||
| Write-downs of inventories | ||||||||
| Net operating losses carry forwards* | ||||||||
| Total deferred tax assets | $ | $ | ||||||
| Less: deferred tax assets valuation allowance | ( | ) | ||||||
| Total deferred tax assets, net | ||||||||
| * |
Movement of the Group’s deferred tax assets during the years is as follows:
| 2025 | 2024 | |||||||
| Balance at January 1 | $ | $ | ||||||
| Deferred income tax benefit recognized during the year | ||||||||
| Deferred tax assets valuation allowance | ( | ) | ||||||
| Exchange rate differences | ( | ) | ||||||
| Balance at December 31 | $ | $ | ||||||
Uncertain tax positions
The Group evaluates each uncertain tax position (including the potential application of interest and penalties) based on the technical merits, and measure the unrecognized benefits associated with the tax positions. As of December 31, 2025 and 2024, the Group did not have any significant unrecognized uncertain tax positions and the Group does not believe that its unrecognized tax benefits will change over the next twelve months. For the years ended December 31, 2025, 2024 and 2023, the Group did not have any significant interest or penalties related to potential underpaid income tax expenses. The Group’s major tax jurisdiction is Hong Kong. Under relevant Hong Kong tax laws, tax case is normally subject to investigation by the tax authority for up to 6 years of assessment prior to the current year of assessment, if in a case of fraud or willful evasion, then the investigation can be extended to cover 10 years of assessment.
F-33
AsiaStrategy
Notes to Consolidated Financial Statements
17. Related Party Transactions and Balances
a.
| Name | Relationship with the Group | |
| New Harvest Investment Holdings Limited | ||
| Top Pride International Limited | ||
| Mr. Sit Hon | ||
| Mr. Ngai Kwan | ||
| Sora Venture Global Limited (formerly known as Pride River Limited) | ||
| SORA Ventures | ||
| Asia Strategy Partners LLC (“ASP LLC”) |
b.
| For the Years Ended December 31, | ||||||||||||||
| Name | Nature | 2025 | 2024 | 2023 | ||||||||||
| New Harvest Investment Holdings Limited(1) | $ | $ | $ | |||||||||||
| Top Pride International Limited(2) | ||||||||||||||
| Mr. Sit Hon(3) | ||||||||||||||
| ASP LLC (4) | ||||||||||||||
| ASP LLC (4) | ||||||||||||||
| (1) |
| (2) |
| (3) |
| (4) |
F-34
AsiaStrategy
Notes to Consolidated Financial Statements
17. Related Party Transactions and Balances (cont.)
c.
| As of December 31, | ||||||||||
| Name | Nature | 2025 | 2024 | |||||||
| Sora Venture Global Limited (formerly known as Pride River Limited)(5) | $ | $ | ||||||||
| Mr. Ngai Kwan(6) | ||||||||||
| ASP LLC (7) | ||||||||||
| (5) |
| (6) |
| (7) |
18. Commitments and Contingencies
Commitments
The Group’s contractual obligations relating to bank borrowings and convertible debts as of December 31, 2025 have been fully recognized as liabilities and disclosed in Notes 13 and 14. Accordingly, the Group has no material unrecognized financial or capital commitments as of the reporting date.
Contingencies
As of December 31, 2025 and 2024, the Group was not a party to any legal or administrative proceedings. The Group further concludes that there were no legal or regulatory proceedings, either individually or in the aggregate, that could have resulted in an unfavorable outcome with a material adverse effect on the Group’s results of operations, consolidated financial condition, or cash flows.
F-35
AsiaStrategy
Notes to Consolidated Financial Statements
19. Segment information
The Group has
The following table presents selected financial information for the Group’s single reportable segment:
| For the Years Ended December 31, | ||||||||||||
| 2025 | 2024 | 2023 | ||||||||||
| Revenue | $ | $ | $ | |||||||||
| Cost of revenue | ( | ) | ( | ) | ( | ) | ||||||
| Selling and marketing expenses | ( | ) | ( | ) | ( | ) | ||||||
| General and administrative expenses | ( | ) | ( | ) | ( | ) | ||||||
| Unrealized losses on digital assets, net | ( | ) | ||||||||||
| Unrealized gains on investment in equity securities, net | ||||||||||||
| Other segment items | ( | ) | ( | ) | ( | ) | ||||||
| Net income (loss) of single operating segment | $ | $ | ( | ) | $ | |||||||
The measure of segment assets is total consolidated
assets as reported in the consolidated balance sheets. Total segment assets were $
20. Subsequent Events
The Group evaluated all events and transactions that occurred after December 31, 2025, other than the event disclosed elsewhere in these consolidated financial statements, there is no other subsequent event occurred that would require recognition or disclosure in the Group’s consolidated financial statements.
F-36