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</div><!-- Field: Rule-Page --><div style="margin-top: 0pt; margin-bottom: 0pt; width: 100%"><div style="font-size: 1pt; border-top: Black 2pt solid; border-bottom: Black 1pt solid">&#160;</div></div><!-- Field: /Rule-Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 10pt"><b>UNITED STATES</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 10pt"><b>SECURITIES AND
EXCHANGE COMMISSION</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 10pt"><b>Washington, D.C.
20549</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 10pt"><b>FORM&#160;<ix:nonNumeric contextRef="c0" name="dei:DocumentType">20-F</ix:nonNumeric></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 10pt">(Mark One)</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 10pt"><ix:nonNumeric contextRef="c0" format="ixt:fixed-false" name="dei:DocumentRegistrationStatement">&#9744;</ix:nonNumeric>&#160;<b>REGISTRATION
STATEMENT PURSUANT TO SECTION&#160;12(b)&#160;OR (g)&#160;OF THE SECURITIES EXCHANGE ACT OF 1934</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 10pt"><b>OR</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 10pt"><ix:nonNumeric contextRef="c0" format="ixt:fixed-true" name="dei:DocumentAnnualReport">&#9746;</ix:nonNumeric>&#160;<b>ANNUAL
REPORT PURSUANT TO SECTION&#160;13 OR 15(d)&#160;OF THE SECURITIES EXCHANGE ACT OF 1934</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 10pt"><b>for the fiscal&#160;year
ended <ix:nonNumeric contextRef="c0" format="ixt:date-monthname-day-year-en" name="dei:DocumentPeriodEndDate"><ix:nonNumeric contextRef="c0" format="ixt:date-monthname-day-en" name="dei:CurrentFiscalYearEndDate">December&#160;31</ix:nonNumeric>, <ix:nonNumeric contextRef="c0" name="dei:DocumentFiscalYearFocus">2022</ix:nonNumeric></ix:nonNumeric></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 10pt"><b>OR</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 10pt"><ix:nonNumeric contextRef="c0" format="ixt:fixed-false" name="dei:DocumentTransitionReport">&#9744;</ix:nonNumeric>&#160;<b>TRANSITION
REPORT PURSUANT TO SECTION&#160;13 OR 15(d)&#160;OF THE SECURITIES EXCHANGE ACT OF 1934 </b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 10pt"><b>For the transition
period from ________________ to ________________</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 10pt"><b>OR</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 10pt"><ix:nonNumeric contextRef="c0" format="ixt:fixed-false" name="dei:DocumentShellCompanyReport">&#9744;</ix:nonNumeric>&#160;<b>SHELL
COMPANY REPORT PURSUANT TO SECTION&#160;13 OR 15(d)&#160;OF THE SECURITIES EXCHANGE ACT OF 1934</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 10pt">Date of event requiring
this shell company report</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 10pt">Commission file
number: <ix:nonNumeric contextRef="c0" name="dei:EntityFileNumber">001-39337</ix:nonNumeric></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><ix:nonNumeric contextRef="c0" name="dei:EntityRegistrantName"><span style="font-size: 10pt"><b>EBANG INTERNATIONAL
HOLDINGS INC.</b></span></ix:nonNumeric></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 10pt"><i>(Exact name of
Registrant as specified in its charter)</i></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><ix:nonNumeric contextRef="c0" format="ixt-sec:edgarprovcountryen" name="dei:EntityIncorporationStateCountryCode"><span style="font-size: 10pt"><b>Cayman Islands</b></span></ix:nonNumeric></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 10pt"><i>(Jurisdiction
of incorporation or organization)</i></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 10pt"><b><ix:nonNumeric contextRef="c0" name="dei:EntityAddressAddressLine1">12 Marina View</ix:nonNumeric>,
<ix:nonNumeric contextRef="c0" name="dei:EntityAddressAddressLine2">#20-02B</ix:nonNumeric>, <ix:nonNumeric contextRef="c0" name="dei:EntityAddressCityOrTown">Asia Square Tower 2</ix:nonNumeric>, <ix:nonNumeric contextRef="c0" format="ixt-sec:countrynameen" name="dei:EntityAddressCountry">Singapore</ix:nonNumeric>, <ix:nonNumeric contextRef="c0" name="dei:EntityAddressPostalZipCode">018961</ix:nonNumeric></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 10pt"><i>(Address of principal
executive offices)</i></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b><ix:nonNumeric contextRef="c1" name="dei:ContactPersonnelName"><ix:nonNumeric contextRef="c0" name="dei:ContactPersonnelName"><span style="font-size: 10pt">Mr. Dong Hu</span></ix:nonNumeric></ix:nonNumeric></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 10pt"><b>Chief Executive
Officer</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 10pt"><b><ix:nonNumeric contextRef="c1" name="dei:EntityAddressAddressLine1">12 Marina View</ix:nonNumeric>,
<ix:nonNumeric contextRef="c1" name="dei:EntityAddressAddressLine2">#20-02B</ix:nonNumeric>, <ix:nonNumeric contextRef="c1" name="dei:EntityAddressCityOrTown">Asia Square Tower 2</ix:nonNumeric>, <ix:nonNumeric contextRef="c1" format="ixt-sec:countrynameen" name="dei:EntityAddressCountry">Singapore</ix:nonNumeric>, <ix:nonNumeric contextRef="c1" name="dei:EntityAddressPostalZipCode">018961</ix:nonNumeric></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 10pt"><b>Tel: <ix:nonNumeric contextRef="c1" name="dei:CityAreaCode">+86 571</ix:nonNumeric>-<ix:nonNumeric contextRef="c1" name="dei:LocalPhoneNumber">8817-6197</ix:nonNumeric></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 10pt"><b>Email: <ix:nonNumeric contextRef="c1" name="dei:ContactPersonnelEmailAddress">ir@ebang.com</ix:nonNumeric></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 10pt"><i>(Name, Telephone,
E-mail and/or Facsimile number and Address of Company Contact Person)</i></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 10pt"><b>Securities registered
or to be registered pursuant to Section&#160;12(b)&#160;of the Act:</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr> <td style="vertical-align: bottom; width: 32%"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; border-bottom: black 1.5pt solid"><span style="font-size: 10pt"><b>Title of each class</b></span></p></td> <td style="vertical-align: top; width: 2%; font-size: 10pt"><span style="font-size: 10pt">&#160;</span></td> <td style="vertical-align: bottom; width: 32%"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; border-bottom: black 1.5pt solid"><span style="font-size: 10pt"><b>Trading Symbol(s)</b></span></p></td> <td style="vertical-align: top; width: 2%; font-size: 10pt"><span style="font-size: 10pt">&#160;</span></td> <td style="vertical-align: bottom; width: 32%"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; border-bottom: black 1.5pt solid"><span style="font-size: 10pt"><b>Name of each exchange on which registered</b></span></p></td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: center; font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonNumeric contextRef="c0" name="dei:Security12bTitle">Class A ordinary shares, par value HK$0.03 per share</ix:nonNumeric> </span></td> <td style="font-size: 10pt"><span style="font-size: 10pt">&#160;</span></td> <td style="vertical-align: top; text-align: center; font-size: 10pt"><ix:nonNumeric contextRef="c0" name="dei:TradingSymbol"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">EBON</span></ix:nonNumeric></td> <td style="font-size: 10pt"><span style="font-size: 10pt">&#160;</span></td> <td style="vertical-align: top; text-align: center; font-size: 10pt"><ix:nonNumeric contextRef="c0" format="ixt-sec:exchnameen" name="dei:SecurityExchangeName"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Nasdaq Global Select Market</span></ix:nonNumeric></td></tr> </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 10pt"><b>Securities registered
or to be registered pursuant to Section&#160;12(g)&#160;of the Act:</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 10pt">None</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 10pt"><b>(Title of Class)</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 10pt"><b>Securities for
which there is a reporting obligation pursuant to Section&#160;15(d)&#160;of the Act:</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 10pt">None</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 10pt"><b>(Title of Class)</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>

</div><!-- Field: Page; Sequence: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="margin: 0pt">&#160;</p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">Indicate the number
of outstanding shares of each of the issuer&#8217;s classes of capital stock or common stock as of the close of business covered by the
annual report.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 9pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">An aggregate of
6,543,938.22 ordinary shares, representing <ix:nonFraction contextRef="c2" decimals="INF" format="ixt:num-dot-decimal" name="dei:EntityCommonStockSharesOutstanding" scale="0" unitRef="shares">4,989,746.22</ix:nonFraction> Class A ordinary shares, par value HK$0.03 per share, and <ix:nonFraction contextRef="c3" decimals="INF" format="ixt:num-dot-decimal" name="dei:EntityCommonStockSharesOutstanding" scale="0" unitRef="shares">1,554,192</ix:nonFraction> Class B ordinary
Shares, par value HK$0.03 per share, as of April 27, 2023.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 9pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">Indicate by check
mark if the registrant is a well-known seasoned issuer, as defined in Rule&#160;405 of the Securities Act.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 10pt">&#9744;&#160;&#160;
Yes&#160;&#160;&#160;&#160;&#160;&#160;&#9746;&#160;&#160;<ix:nonNumeric contextRef="c0" name="dei:EntityWellKnownSeasonedIssuer">No</ix:nonNumeric></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 9pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">If this report
is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section&#160;13
or 15(d)&#160;of the Securities Exchange Act&#160;of&#160;1934.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 10pt">&#9744;&#160;&#160;
Yes&#160;&#160;&#160;&#160;&#160;&#9746;&#160;&#160; <ix:nonNumeric contextRef="c0" name="dei:EntityVoluntaryFilers">No</ix:nonNumeric></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 9pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">Indicate by check
mark whether the registrant (1)&#160;has filed all reports required to be filed by Section&#160;13 or 15(d)&#160;of the Securities Exchange
Act of 1934 during the preceding 12&#160;months (or for such shorter period that the registrant was required to file such reports), and
(2)&#160;has been subject to such filing requirements for the past 90&#160;days.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 9pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 10pt">&#9746;&#160;&#160;
<ix:nonNumeric contextRef="c0" name="dei:EntityCurrentReportingStatus">Yes</ix:nonNumeric>&#160;&#160;&#160;&#160;&#160;&#160;&#9744;&#160;&#160; No</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 9pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">Indicate by check
mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule&#160;405
of Regulation S-T during the preceding 12&#160;months (or for such shorter period that the registrant was required to submit such files).</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 9pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 10pt">&#9746;&#160;&#160;
<ix:nonNumeric contextRef="c0" name="dei:EntityInteractiveDataCurrent">Yes</ix:nonNumeric>&#160;&#160;&#160;&#160;&#160;&#160;&#9744;&#160;&#160; No</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 9pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">Indicate by check
mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company.
See definition of &#8220;large accelerated filer&#8221;, &#8220;accelerated filer&#8221;, and &#8220;emerging growth company&#8221; in
Rule&#160;12b-2 of the Exchange Act.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 9pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: top"> <td style="white-space: nowrap; width: 18%; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Large accelerated filer</span></td> <td style="white-space: nowrap; width: 7%; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9744;</span></td> <td style="white-space: nowrap; width: 15%; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Accelerated filer</span></td> <td style="white-space: nowrap; width: 7%; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9744;</span></td> <td style="white-space: nowrap; width: 18%; text-align: justify"><ix:nonNumeric contextRef="c0" format="ixt-sec:entityfilercategoryen" name="dei:EntityFilerCategory"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Non-accelerated filer</span></ix:nonNumeric></td> <td style="white-space: nowrap; width: 7%; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9746;</span></td> <td style="white-space: nowrap; width: 21%; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Emerging growth company</span></td> <td style="white-space: nowrap; width: 7%; text-align: justify"><ix:nonNumeric contextRef="c0" format="ixt:fixed-true" name="dei:EntityEmergingGrowthCompany"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9746;</span></ix:nonNumeric></td></tr> </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 9pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">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&#8224; provided pursuant
to Section&#160;13(a)&#160;of the Exchange Act. <ix:nonNumeric contextRef="c0" format="ixt:fixed-true" name="dei:EntityExTransitionPeriod">&#9746;</ix:nonNumeric></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 9pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#8224; The term
&#8220;new or revised financial accounting standard&#8221; refers to any update issued by the Financial Accounting Standards Board to
its Accounting Standards Codification after April&#160;5, 2012.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 9pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">Indicate by check
mark whether the registrant has filed a report on and attestation to its management&#8217;s assessment of the effectiveness of its internal
control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting
firm that prepared or issued its audit report.&#160;<ix:nonNumeric contextRef="c0" format="ixt:fixed-false" name="dei:IcfrAuditorAttestationFlag">&#9744;</ix:nonNumeric></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 9pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">If securities are registered pursuant to Section
12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction
of an error to previously issued financial statements.&#160;&#9744;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 9pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Indicate by check mark whether any of those error
corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant&#8217;s executive
officers during the relevant recovery period pursuant to &#167;240.10D-1(b).&#160;&#9744;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 9pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">Indicate by check
mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 9pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: top"> <td style="width: 15%; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span style="-sec-ix-hidden: hidden-fact-0">US GAAP</span>&#160;&#160;<b>&#9746;</b></span></td> <td style="width: 70%"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 10pt">International Financial Reporting Standards</span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 10pt">as issued by the International Accounting</span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 10pt">Standards Board&#160;&#160;<b>&#9744;</b></span></p></td> <td style="width: 15%; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Other&#160;&#160;<b>&#9744;</b></span></td></tr> </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 9pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">If &#8220;Other&#8221;
has been checked in response to the previous question indicate by check mark which financial statement item the registrant has elected
to follow.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 9pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 10pt">&#9744;&#160;&#160;
Item&#160;17&#160;&#160;&#160;&#160;&#160;&#160;&#9744;&#160;&#160; Item&#160;18</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 9pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">If this is an annual
report, indicate by check mark whether the registrant is a shell company (as defined in Rule&#160;12b-2 of the Exchange Act).</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 9pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 10pt">&#9744;&#160;&#160;
Yes&#160;&#160;&#160;&#160;&#160;&#160;<ix:nonNumeric contextRef="c0" format="ixt:fixed-false" name="dei:EntityShellCompany">&#9746;</ix:nonNumeric>&#160;&#160; No</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 9pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">(APPLICABLE ONLY
TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE&#160;YEARS)</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 9pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">Indicate by check
mark whether the registrant has filed all documents and reports required to be filed by Sections&#160;12, 13 or&#160;15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a&#160;court.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 9pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 10pt">&#9744;&#160;&#160;
Yes&#160;&#160;&#160;&#160;&#160;&#160;&#9744;&#160;&#160; No</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Rule-Page --><div style="margin-top: 0pt; margin-bottom: 0pt; width: 100%"><div style="font-size: 1pt; border-top: Black 1pt solid; border-bottom: Black 2pt solid">&#160;</div></div><!-- Field: /Rule-Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><!-- Field: Page; Sequence: 2 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="margin: 0pt">&#160;</p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 10pt"><b>&#160;</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 10pt"><b>EBANG INTERNATIONAL
HOLDINGS INC.</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 10pt"><b>TABLE OF CONTENTS</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>



</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr>
    <td colspan="3" style="vertical-align: top; text-align: justify"><span style="font-size: 10pt">&#160;</span></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; border-bottom: black 1.5pt solid; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Page</b>&#160;</span><span style="font-size: 10pt">&#160;</span></td></tr>
  <tr>
    <td colspan="3" style="vertical-align: top; text-align: justify"><span style="font-size: 10pt">&#160;</span></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">&#160;</span></td></tr>
  <tr style="background-color: #CCEEFF">
    <td colspan="3" style="vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#a_001">INTRODUCTION</a></span></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">iii</span></td></tr>
  <tr>
    <td colspan="3" style="vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#a_002">ENFORCEABILITY OF CIVIL LIABILITIES</a></span></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">v</span></td></tr>
  <tr style="background-color: #CCEEFF">
    <td colspan="3" style="vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#a_003">FORWARD-LOOKING STATEMENTS</a></span></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">vii</span></td></tr>
  <tr>
    <td colspan="3" style="vertical-align: top"><span style="font-size: 10pt">&#160;</span></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">&#160;</span></td></tr>
  <tr style="background-color: #CCEEFF">
    <td colspan="3" style="vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#a_004">PART&#160;I</a></span></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">1</span></td></tr>
  <tr>
    <td colspan="3" style="vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#a_005">ITEM&#160;1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS</a></span></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">1</span></td></tr>
  <tr style="background-color: #CCEEFF">
    <td style="vertical-align: top; width: 8%; text-align: right"><a href="#a_006"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A.</span></a></td>
    <td style="width: 1%"><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: top; width: 81%; text-align: justify"><a href="#a_006"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Directors and senior management</span></a></td>
    <td style="width: 1%"><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; width: 9%; text-align: center"><span style="font-size: 10pt">1</span></td></tr>
  <tr>
    <td style="vertical-align: top; text-align: right"><a href="#a_007"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">B.</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_007"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Advisers</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">1</span></td></tr>
  <tr style="background-color: #CCEEFF">
    <td style="vertical-align: top; text-align: right"><a href="#a_008"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">C.</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_008"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Auditors</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">1</span></td></tr>
  <tr>
    <td colspan="3" style="vertical-align: top; text-align: justify"><a href="#a_009"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM&#160;2. OFFER STATISTICS AND EXPECTED TIMETABLE</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">1</span></td></tr>
  <tr style="background-color: #CCEEFF">
    <td style="vertical-align: top; text-align: right"><a href="#a_010"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A.</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_010"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Offer statistics</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">1</span></td></tr>
  <tr>
    <td style="vertical-align: top; text-align: right"><a href="#a_011"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">B.</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_011"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Method and expected timetable</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">1</span></td></tr>
  <tr style="background-color: #CCEEFF">
    <td colspan="3" style="vertical-align: top; text-align: justify"><a href="#a_012"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM&#160;3. KEY INFORMATION</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">1</span></td></tr>
  <tr>
    <td style="vertical-align: top; text-align: right"><a href="#a_013"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A.</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_013"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">[Reserved]</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">3</span></td></tr>
  <tr style="background-color: #CCEEFF">
    <td style="vertical-align: top; text-align: right"><a href="#a_014"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">B.</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_014"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Capitalization and indebtedness</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">3</span></td></tr>
  <tr>
    <td style="vertical-align: top; text-align: right"><a href="#a_015"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">C.</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_015"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Reasons for the offer and use of proceeds</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">3</span></td></tr>
  <tr style="background-color: #CCEEFF">
    <td style="vertical-align: top; text-align: right"><a href="#a_016"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">D.</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_016"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Risk factors</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">3</span></td></tr>
  <tr>
    <td colspan="3" style="vertical-align: top; text-align: justify"><a href="#a_017"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM&#160;4.
    INFORMATION ON THE COMPANY</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">59</span></td></tr>
  <tr style="background-color: #CCEEFF">
    <td style="vertical-align: top; text-align: right"><a href="#a_018"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A.</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_018"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">History
    and development of the company</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">59</span></td></tr>
  <tr>
    <td style="vertical-align: top; text-align: right"><a href="#a_019"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">B.</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_019"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Business
    overview</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center">59</td></tr>
  <tr style="background-color: #CCEEFF">
    <td style="vertical-align: top; text-align: right"><a href="#a_020"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">C.</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_020"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Organizational
    structure</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">87</span></td></tr>
  <tr>
    <td style="vertical-align: top; text-align: right"><a href="#a_021"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">D.</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_021"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Property,
    plants and equipment</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">89</span></td></tr>
  <tr style="background-color: #CCEEFF">
    <td colspan="3" style="vertical-align: top; text-align: justify"><a href="#a_022"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM&#160;4A.
    UNRESOLVED STAFF COMMENTS</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">89</span></td></tr>
  <tr>
    <td colspan="3" style="vertical-align: top; text-align: justify"><a href="#a_023"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM&#160;5.
    OPERATING AND FINANCIAL REVIEW AND PROSPECTS</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">89</span></td></tr>
  <tr style="background-color: #CCEEFF">
    <td style="vertical-align: top; text-align: right"><a href="#a_024"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A.</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_024"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Operating
    results</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">90</span></td></tr>
  <tr>
    <td style="vertical-align: top; text-align: right"><a href="#a_025"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">B.</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_025"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Liquidity
    and capital resources</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center">104</td></tr>
  <tr style="background-color: #CCEEFF">
    <td style="vertical-align: top; text-align: right"><a href="#a_026"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">C.</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_026"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Research
    and development, patents and licenses, etc.</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center">106</td></tr>
  <tr>
    <td style="vertical-align: top; text-align: right"><a href="#a_027"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">D.</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_027"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Trend
    information</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">106</span></td></tr>
  <tr style="background-color: #CCEEFF">
    <td style="vertical-align: top; text-align: right"><a href="#a_028"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">E.</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_028"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Critical
    Accounting Policies and Estimates</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">106</span></td></tr>
  <tr>
    <td colspan="3" style="vertical-align: top; text-align: justify"><a href="#a_029"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM&#160;6.
    DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">107</span></td></tr>
  <tr style="background-color: #CCEEFF">
    <td style="vertical-align: top; text-align: right"><a href="#a_030"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A.</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_030"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Directors
    and senior management</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">107</span></td></tr>
  <tr>
    <td style="vertical-align: top; text-align: right"><a href="#a_031"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">B.</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_031"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Compensation</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">108</span></td></tr>
  <tr style="background-color: #CCEEFF">
    <td style="vertical-align: top; text-align: right"><a href="#a_032"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">C.</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_032"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Board
    practices</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">110</span></td></tr>
  <tr>
    <td style="vertical-align: top; text-align: right"><a href="#a_033"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">D.</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_033"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Employees</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">114</span></td></tr>
  <tr style="background-color: #CCEEFF">
    <td style="vertical-align: top; text-align: right"><a href="#a_034"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">E.</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_034"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Share
    ownership</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">114</span></td></tr>
  <tr>
    <td colspan="3" style="vertical-align: top; text-align: justify"><a href="#a_035"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM&#160;7.
    MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">116</span></td></tr>
  <tr style="background-color: #CCEEFF">
    <td style="vertical-align: top; text-align: right"><a href="#a_036"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A.</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_036"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Major
    shareholders</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">116</span></td></tr>
  <tr>
    <td style="vertical-align: top; text-align: right"><a href="#a_037"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">B.</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_037"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Related
    party transactions</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">116</span></td></tr>
  <tr style="background-color: #CCEEFF">
    <td style="vertical-align: top; text-align: right"><a href="#a_038"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">C.</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_038"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Interests
    of experts and counsel</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center">117</td></tr>
  <tr>
    <td colspan="3" style="vertical-align: top; text-align: justify"><a href="#a_039"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM&#160;8.
    FINANCIAL INFORMATION</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">117</span></td></tr>
  <tr style="background-color: #CCEEFF">
    <td style="vertical-align: top; text-align: right"><a href="#a_040"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A.</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_040"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Consolidated
    statements and other financial information</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">117</span></td></tr>
  <tr>
    <td style="vertical-align: top; text-align: right"><a href="#a_041"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">B.</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_041"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Significant
    changes</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center">118</td></tr>
  <tr style="background-color: #CCEEFF">
    <td colspan="3" style="vertical-align: top; text-align: justify"><a href="#a_042"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM&#160;9.
    THE OFFER AND LISTING</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">118</span></td></tr>
  <tr>
    <td style="vertical-align: top; text-align: right"><a href="#a_042"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A.</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_043"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Offer and listing details</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">118</span></td></tr>
  <tr style="background-color: #CCEEFF">
    <td style="vertical-align: top; text-align: right"><a href="#a_044"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">B.</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_044"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Plan
    of distribution</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">118</span></td></tr>
  <tr>
    <td style="vertical-align: top; text-align: right"><a href="#a_045"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">C.</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_045"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Markets</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">118</span></td></tr>
  <tr style="background-color: #CCEEFF">
    <td style="vertical-align: top; text-align: right"><a href="#a_046"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">D.</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_046"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Selling
    shareholders</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">118</span></td></tr>
  <tr>
    <td style="vertical-align: top; text-align: right"><a href="#a_047"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">E.</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_047"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Dilution</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">118</span></td></tr>
  <tr style="background-color: #CCEEFF">
    <td style="vertical-align: top; text-align: right"><a href="#a_048"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F.</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_048"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Expenses
    of the issue</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">118</span></td></tr>
  </table><div>



</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><!-- Field: Page; Sequence: 3; Options: NewSection; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: LowerRoman; Name: PageNo -->i<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="background-color: rgb(204,238,255)">
    <td colspan="3" style="vertical-align: top; text-align: justify"><a href="#a_049"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM&#160;10.
    ADDITIONAL INFORMATION</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">118</span></td></tr>
  <tr style="background-color: White">
    <td style="vertical-align: top; width: 6%; text-align: right"><a href="#a_050"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A.</span></a></td>
    <td style="width: 1%"><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: top; width: 83%; text-align: justify"><a href="#a_050"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Share
    capital</span></a></td>
    <td style="width: 1%"><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; width: 9%; text-align: center"><span style="font-size: 10pt">118</span></td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top; text-align: right"><a href="#a_051"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">B.</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_051"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Memorandum
    and articles of association </span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">118</span></td></tr>
  <tr style="background-color: White">
    <td style="vertical-align: top; text-align: right"><a href="#a_052"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">C.</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_052"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Material
    contracts</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">123</span></td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top; text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">D.</span></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#a_053">Exchange controls</a></span></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">123</span></td></tr>
  <tr style="background-color: White">
    <td style="vertical-align: top; text-align: right"><a href="#a_054"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">E.</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_054"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Taxation</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">123</span></td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top; text-align: right"><a href="#a_055"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F.</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_055"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Dividends
    and paying agents</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">131</span></td></tr>
  <tr style="background-color: White">
    <td style="vertical-align: top; text-align: right"><a href="#a_056"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">G.</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_056"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Statement
    by experts</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">132</span></td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top; text-align: right"><a href="#a_057"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">H.</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_057"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Documents
    on display</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">132</span></td></tr>
  <tr style="background-color: White">
    <td style="vertical-align: top; text-align: right"><a href="#a_058"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">I.</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_058"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Subsidiary
    information</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">132</span></td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td colspan="3" style="vertical-align: top; text-align: justify"><a href="#a_059"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM&#160;11.
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">132</span></td></tr>
  <tr style="background-color: White">
    <td colspan="3" style="vertical-align: top; text-align: justify"><a href="#a_060"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM&#160;12.
    DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">133</span></td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top; text-align: right"><a href="#a_061"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A.</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_061"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Debt
    securities</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">133</span></td></tr>
  <tr style="background-color: White">
    <td style="vertical-align: top; text-align: right"><a href="#a_062"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">B.</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_062"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Warrants
    and rights</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">133</span></td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top; text-align: right"><a href="#a_063"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">C.</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_063"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Other
    securities</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">133</span></td></tr>
  <tr style="background-color: White">
    <td style="vertical-align: top; text-align: right"><a href="#a_064"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">D.</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_064"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">American
    Depositary Shares</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">133</span></td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top; text-align: right"><span style="font-size: 10pt">&#160;</span></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: justify"><span style="font-size: 10pt">&#160;</span></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">&#160;</span></td></tr>
  <tr style="background-color: White">
    <td colspan="3" style="vertical-align: top"><a href="#a_065"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">PART&#160;II</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">134</span></td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td colspan="3" style="vertical-align: top; text-align: justify"><a href="#a_066"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM&#160;13.
    DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">134</span></td></tr>
  <tr style="background-color: White">
    <td style="vertical-align: top; text-align: right"><a href="#a_067"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A.</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_067"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Defaults</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">134</span></td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top; text-align: right"><a href="#a_068"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">B.</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_068"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Arrears
    and delinquencies</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">134</span></td></tr>
  <tr style="background-color: White">
    <td colspan="3" style="vertical-align: top; text-align: justify"><a href="#a_069"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM&#160;14.
    MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">134</span></td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td colspan="3" style="vertical-align: top; text-align: justify"><a href="#a_070"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM&#160;15.
    CONTROLS AND PROCEDURES</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">135</span></td></tr>
  <tr style="background-color: White">
    <td style="vertical-align: top; text-align: right"><a href="#a_071"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A.</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_071"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Disclosure
    controls and procedures</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">135</span></td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top; text-align: right"><a href="#a_072"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">B.</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_072"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Management&#8217;s
    annual report on internal control over financial reporting</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">135</span></td></tr>
  <tr style="background-color: White">
    <td style="vertical-align: top; text-align: right"><a href="#a_073"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">C.</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_073"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Attestation
    report of the registered public accounting firm</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">136</span></td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top; text-align: right"><a href="#a_074"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">D.</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: top; text-align: justify"><a href="#a_074"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Changes
    in internal control over financial reporting</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">136</span></td></tr>
  <tr style="background-color: White">
    <td colspan="3" style="vertical-align: top; text-align: justify"><a href="#a_075"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM&#160;16.
    [RESERVED]</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">136</span></td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td colspan="3" style="vertical-align: top; text-align: justify"><a href="#a_076"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM&#160;16A.
    Audit committee financial expert</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">136</span></td></tr>
  <tr style="background-color: White">
    <td colspan="3" style="vertical-align: top; text-align: justify"><a href="#a_077"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM&#160;16B.
    Code of ethics</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">137</span></td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td colspan="3" style="vertical-align: top; text-align: justify"><a href="#a_078"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM&#160;16C.
    Principal accountant fees and services</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">137</span></td></tr>
  <tr style="background-color: White">
    <td colspan="3" style="vertical-align: top; text-align: justify"><a href="#a_079"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM&#160;16D.
    Exemptions from the listing standards for audit committees</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">138</span></td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td colspan="3" style="vertical-align: top; text-align: justify"><a href="#a_080"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM&#160;16E.
    Purchases of equity securities by the issuer and affiliated purchasers</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">138</span></td></tr>
  <tr style="background-color: White">
    <td colspan="3" style="vertical-align: top; text-align: justify"><a href="#a_081"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM&#160;16F.
    Change in registrant&#8217;s certifying accountant</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">138</span></td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td colspan="3" style="vertical-align: top; text-align: justify"><a href="#a_082"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM&#160;16G.
    Corporate governance</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">138</span></td></tr>
  <tr style="background-color: White">
    <td colspan="3" style="vertical-align: top; text-align: justify"><a href="#a_083"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM&#160;16H.
    Mine safety disclosure</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">138</span></td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td colspan="3" style="vertical-align: top; text-align: justify"><a href="#a_084"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM
    16I. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">138</span></td></tr>
  <tr style="background-color: White">
    <td colspan="3" style="vertical-align: top; text-align: justify"><span style="font-size: 10pt">&#160;</span></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">&#160;</span></td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td colspan="3" style="vertical-align: top"><a href="#a_085"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">PART&#160;III</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">139</span></td></tr>
  <tr style="background-color: White">
    <td colspan="3" style="vertical-align: top; text-align: justify"><a href="#a_086"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM&#160;17.
    Financial statements</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">139</span></td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td colspan="3" style="vertical-align: top; text-align: justify"><a href="#a_087"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM&#160;18.
    Financial statements</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">139</span></td></tr>
  <tr style="background-color: White">
    <td colspan="3" style="vertical-align: top; text-align: justify"><a href="#a_088"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM&#160;19.
    Exhibits</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-size: 10pt">139</span></td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td colspan="3" style="vertical-align: top; text-align: justify"><a href="#a_089"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Index
    to Consolidated Financial Statements</span></a></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-1</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 4; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: LowerRoman; Name: PageNo -->ii<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><div><a id="a_001"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 10pt"><b>INTRODUCTION</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><span style="font-size: 10pt">In this annual report,
otherwise indicated or unless the context otherwise requires,</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8220;ASICs&#8221; are
    to application-specific ICs, meaning ICs designed for a specific application;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8220;China&#8221; and
    the &#8220;PRC&#8221; are to the People&#8217;s Republic of China, excluding, for the purposes of this annual report only, Taiwan,
    the Hong Kong Special Administrative Region and the Macao Special Administrative Region;</span></td></tr>
  <tr style="vertical-align: top">
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">&#160;</span></td></tr>
  <tr style="vertical-align: top">
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8220;Fintech&#8221; means
    financial technology;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8220;ICs&#8221; or &#8220;chips&#8221;
    are to integrated circuits;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8220;PRC operating subsidiaries&#8221;
    are to, for the purpose of this annual report, primarily, Zhejiang Ebang Communication Technology Co., Ltd. (&#8220;Zhejiang Ebang&#8221;),
    Zhejiang Ebang Information Technology Co., Ltd. (&#8220;Ebang IT&#8221;), Hangzhou Dewang Information Technology Co., Ltd. (&#8220;Hangzhou
    Dewang&#8221;), Hangzhou Yibang Botong Technology Co., Ltd. (&#8220;Hangzhou Yibang Botong&#8221;), Shanghai Yijiaxin IC Design
    Co., Ltd. (&#8220;Shanghai Yijiaxin&#8221;) and Hangzhou Zhenghao Information Technology Co., Ltd.;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify">&#8220;PRC subsidiaries&#8221; are to, for the purpose of this annual
report, primarily, PRC operating subsidiaries, Hangzhou Ebang Hongfa Technology Co., Ltd. (&#8220;Ebang Hongfa&#8221;), Hangzhou Bangyun
Information Technology Co., Ltd. (formerly known as Yunnan Ebang Information Technology Co., Ltd.) (&#8220;Hangzhou Bangyun&#8221;), and
Hangzhou Ebang Shuotai Technology Co., Ltd. (&#8220;Hangzhou Ebang Shuotai&#8221;) ;</td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8220;operating
    subsidiaries&#8221; are to, for the purpose of this annual report, primarily, PRC operating subsidiaries, Ebonex Australia Pty Ltd
    (&#8220;Ebonex Australia&#8221;), Ebon Management Australia Pty Limited (&#8220;Ebon Management Australia&#8221;), Compass Global
    Holdings Pty Ltd (&#8220;Compass Global&#8221;), Ebang Communications (HK) Technology Limited (formerly known as Hong Kong Bite Co.,
    Limited) (&#8220;HK Ebang Communications&#8221;), HongKong Ebang Digital Technology Limited (&#8220;HK Ebang Digital&#8221;) and
    Ebon Management Pte. Ltd.;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8220;shares&#8221; or
    &#8220;Class A ordinary shares&#8221; refer to our Class A ordinary shares, par value HK$0.03 per share;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8220;US$,&#8221; &#8220;U.S.
    Dollars,&#8221; &#8220;$&#8221; and &#8220;dollars&#8221; refer to the legal currency of the United States; and</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8220;we,&#8221; &#8220;us,&#8221;
    &#8220;our company,&#8221; the &#8220;Company,&#8221; &#8220;Ebang&#8221; and &#8220;our&#8221; refer to Ebang International Holdings
    Inc., our Cayman Islands holding company and from time to time, in the context of describing our business, our operations and consolidated
    financial information, Ebang International Holdings Inc. and its subsidiaries.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">We
are a Cayman Islands holding company and conduct all of our operations through our operating subsidiaries. Investors in our shares are
not purchasing equity securities of our operating subsidiaries but instead are purchasing equity securities of a Cayman Islands holding
company. Ebang does not conduct its business through the variable interest entity (&#8220;VIE&#8221;) structure. As most of our operations
are conducted through our PRC operating subsidiaries, we face various legal and operational risks and uncertainties related to doing
business in China. Since the PRC legal system continues to evolve, there are risks arising from the legal system in China, which include
uncertainties regarding new legislation, regulations or interpretations governing our business activities, which may be promulgated or
adopted; there is a risk that the Chinese government may intervene or influence our operations at any time, or may exert more control
over offerings conducted in Hong Kong and overseas, which could result in a material change in our operations and/or the value of our
securities; we also face risks associated with regulatory approvals on offerings conducted overseas and foreign investment in China-based
issuers, anti-monopoly regulatory actions, and oversight on cybersecurity and data privacy, which may negatively impact our ability to
conduct certain businesses, access foreign investments, or list on a foreign stock exchange. In particular, it is now illegal to engage
in digital asset transactions including Bitcoin mining operations in China, the ruling of which may adversely affect us.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">In
addition, in connection with our previous issuance of securities to foreign investors, under current PRC laws, regulations and regulatory
rules, as of the date of this annual report, we and our PRC subsidiaries, (i) are not required to obtain permissions from the China Securities
Regulatory Commission (the &#8220;CSRC&#8221;), (ii) are not required to go through cybersecurity review by the Cyberspace Administration
of China, or the CAC, and (iii) have not been asked to obtain or were denied such permissions by any PRC authority. However, the PRC
government has recently indicated an intent to exert more oversight and control over offerings that are conducted overseas and/or foreign
investment in China-based issuers. For more detailed information, see &#8220;Item 3.D. Key Information&#8212;Risk Factors&#8212;Risks
Relating to Conducting Business in China&#8212;We may be required to obtain approval or subject to filings or other requirements from
the CSRC or other PRC regulatory authorities in connection with our offshore offerings under PRC law, and we cannot predict whether or
for how long we will be able to complete such filing.&#8221;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>



</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Furthermore, as more stringent
criteria have been imposed by the U.S. Securities and Exchange Commission (the &#8220;SEC&#8221;) and the Public Company Accounting Oversight
Board (the &#8220;PCAOB&#8221;) recently, our securities may be prohibited from trading on a national exchange or over-the-counter under
the Holding Foreign Companies Accountable Act (the &#8220;HFCAA&#8221;) and related regulations, if the PCAOB is unable to inspect our
auditors for two consecutive years beginning in 2022. As a result, an exchange may determine to delist our securities. The PCAOB issued
a Determination Report on December 16, 2021 which found that the PCAOB was unable to inspect or investigate completely registered public
accounting firms headquartered in: (1) mainland China of the People&#8217;s Republic of China because of a position taken by one or more
authorities in mainland China; and (2) Hong Kong, a Special Administrative Region and dependency of the PRC, because of a position taken
by one or more authorities in Hong Kong. Furthermore, the PCAOB&#8217;s report identified the specific registered public accounting firms
which were subject to these determinations. On December 29, 2022, legislation entitled &#8220;Consolidated Appropriations Act, 2023&#8221;
(the &#8220;Consolidated Appropriations Act&#8221;), was signed into law, which reduces the number of consecutive non- inspection years
required for triggering the prohibitions under the Holding Foreign Companies Accountable Act from three years to two. On August 26, 2022,
the CSRC, the Ministry of Finance of the PRC (the &#8220;MOF&#8221;), and the PCAOB signed a Statement of Protocol (the &#8220;Protocol&#8221;)
governing inspections and investigations of audit firms based in mainland China and Hong Kong, taking the first step toward opening access
for the PCAOB to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong. Pursuant to
the fact sheet with respect to the Protocol disclosed by the SEC, the PCAOB shall have independent discretion to select any issuer audits
for inspection or investigation and has the unfettered ability to transfer information to the SEC. On December 15, 2022, the PCAOB determined
that it was able to secure complete access to inspect and investigate registered public accounting firms headquartered in mainland China
and Hong Kong and voted to vacate its previous determinations to the contrary. However, should PRC authorities obstruct or otherwise fail
to facilitate the PCAOB&#8217;s access in the future, the PCAOB Board will consider the need to issue a new determination. Our financial
statements have been audited by an independent registered public accounting firm that is headquartered in the United States who is subject
to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess an auditor&#8217;s compliance with the
applicable professional standards, and has been inspected by the PCAOB on a regular basis. Our auditor is not among the PCAOB-registered
public accounting firms headquartered in the PRC or Hong Kong that are subject to PCAOB&#8217;s determination on December 16, 2021 of
having been unable to inspect or investigate completely. As of the date of this annual report, we have not been identified by the SEC
as a commission-identified issuer under the HFCAA. However, there is a risk that our auditor cannot be inspected by the PCAOB in the future.
The lack of inspection could cause trading in our securities to be prohibited under the HFCAA, and, as a result, The Nasdaq Stock Market
LLC (&#8220;Nasdaq&#8221;) may determine to delist our securities, which may cause the value of our securities to decline or become worthless.
See risks disclosed under &#8220;Item 3.D. Key Information&#8212;Risk Factors&#8212;Risks Relating to Conducting Business in China&#8212;
The recent joint statement by the SEC and the PCAOB, rule changes by Nasdaq, and the Holding Foreign Companies Accountable Act all call
for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors,
especially the non-U.S. auditors who are not inspected by the PCAOB. These developments could add uncertainties to our continued listing
or future offerings of our securities in the U.S.&#8221;</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><div><a id="a_002"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 10pt"><b>ENFORCEABILITY
OF CIVIL LIABILITIES</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">We
are incorporated under the laws of the Cayman Islands to take advantage of certain benefits associated with being a Cayman Islands exempted
company:</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">political and economic
    stability;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">an effective judicial system;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">a favorable tax system;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the absence of exchange
    control or currency restrictions; and</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the availability of professional
    and support services.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">However,
certain disadvantages accompany incorporation in the Cayman Islands. These disadvantages include, but are not limited to, the following:</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the Cayman Islands has
    a less exhaustive body of securities laws than the United States and these securities laws provide significantly less protection
    to investors; and</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Cayman Islands companies
    may not have standing to sue before the federal courts of the United States.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">Our
constitutional documents do not contain provisions requiring that disputes, including those arising under the securities laws of the
United States, between us, our officers, directors and shareholders, be arbitrated.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">To
date, we have conducted a majority of our operations outside the United States, and a majority of our assets are located outside the
United States. Substantially all of our officers are nationals or residents of jurisdictions other than the United States and a 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 us or 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.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">We
have appointed Cogency Global Inc., located at 122 East, 42nd Street, 18th Floor, New York, NY 10168, as our agent upon whom process
may be served in any action brought against us under the securities laws of the United States.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt"><b>Cayman Islands</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">There
is uncertainty as to whether the courts in the Cayman Islands would (1) recognize or enforce judgments of United States courts obtained
against us or our directors or officers to impose liabilities against us predicated upon the civil liability provisions of the securities
laws of the United States or any state in the United States; or (2) entertain original actions brought in each respective jurisdiction
against us or our directors or officers predicated upon the federal securities laws of the United States or the securities laws of any
state in the United States.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">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 courts of the
Cayman Islands would recognize as a valid judgment, a final and conclusive judgment <i>in personam</i> obtained in the federal or state
courts in the United States under which a sum of money is payable (other than a sum of money payable in respect of multiple damages,
taxes or other charges of a like nature or in respect of a fine or other penalty) or, in certain circumstances, an <i>in personam</i>
judgment for non-monetary relief, and would give a judgment based thereon provided that (a) such courts had proper jurisdiction over
the parties subject to such judgment, (b) such courts did not contravene the rules of natural justice of the Cayman Islands, (c) such
judgment was not obtained by fraud, (d) the enforcement of the judgment would not be contrary to the public policy of the Cayman Islands,
(e) no new admissible evidence relevant to the action is submitted prior to the rendering of the judgment by the courts of the Cayman
Islands, and (f) there is due compliance with the correct procedures under the laws of the Cayman Islands. However, the Cayman Islands
courts are unlikely to enforce a punitive judgment of a United States court predicated upon the civil liability provisions of the federal
securities laws in the United States without retrial on the merits if such judgment is determined by the courts of the Cayman Islands
to give rise to obligations to make payments that may be regarded as fines, penalties or punitive in nature. Because such a determination
has not yet been made by a court of the Cayman Islands, it is uncertain whether such civil liability judgments from United States courts
would be enforceable in the Cayman Islands. A Cayman Islands court may stay enforcement proceedings if concurrent proceedings are being
brought elsewhere.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 10pt"><b>The PRC</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">The
PRC Civil Procedures Law governs the recognition and enforcement of foreign judgments. PRC courts may recognize and enforce foreign judgments
in accordance with the PRC Civil Procedures Law based either on treaties between China and the country where the judgment is made or
on principles of reciprocity between jurisdictions.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">The
PRC does not have any treaties or other agreements with the United States or the Cayman Islands that provide for the reciprocal recognition
and enforcement of foreign judgments. In addition, according to the PRC Civil Procedures Law, courts in the PRC will not enforce a foreign
judgment against us or our directors and officers if they determine that the judgment violates the basic principles of PRC law or national
sovereignty, security or public interest. As a result, it is uncertain whether a PRC court would enforce a judgment rendered by a court
in the United States or the Cayman Islands. Under the PRC Civil Procedures Law, foreign shareholders may originate actions based on PRC
law against us in the PRC, if they can establish sufficient nexus to the PRC for a PRC court to have jurisdiction, and meet other procedural
requirements, including, among others, the plaintiff must have a direct interest in the case, and there must be a concrete claim, a factual
basis and a cause for the suit.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">In
addition, it will be difficult for U.S. shareholders to originate actions against us in China in accordance with PRC laws because we
are incorporated under the laws of the Cayman Islands and it will be difficult for U.S. shareholders, by virtue only of holding our ordinary
shares, to establish a connection to China for a PRC court to have jurisdiction as required under the PRC Civil Procedures Law.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">For
a detailed description of risks related to enforceability of civil liabilities, please refer to risks disclosed under &#8220;Item 3.D.
Key Information&#8212;Risk Factors&#8212;Other Risks Relating to Our Business Operations&#8212;Certain judgments obtained against us
by our shareholders may not be enforceable&#8221; and &#8220;&#8212;You may face difficulties in protecting your interests, and your
ability to protect your rights through U.S. courts may be limited, because we are incorporated under Cayman Islands law and conduct our
operations primarily in emerging markets.&#8221;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>

</div><!-- Field: Page; Sequence: 8; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: LowerRoman; Name: PageNo -->vi<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 10pt">&#160;</span></p><div>

</div><div><a id="a_003"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 10pt"><b>FORWARD-LOOKING
STATEMENTS</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">This
annual report on Form 20-F contains &#8220;forward-looking statements&#8221; within the meaning of Section 27A of the Securities Act
of 1933, as amended (the &#8220;Securities Act&#8221;), and Section 21E of the Securities Exchange Act of 1934, as amended (the &#8220;Exchange
Act&#8221;). Many of the forward-looking statements contained in this annual report can be identified by the use of forward-looking words
such as &#8220;anticipate,&#8221; &#8220;believe,&#8221; &#8220;could,&#8221; &#8220;expect,&#8221; &#8220;should,&#8221; &#8220;plan,&#8221;
&#8220;intend,&#8221; &#8220;will,&#8221; &#8220;estimate&#8221; and &#8220;potential,&#8221; among others.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">Forward-looking
statements appear in a number of places in this annual report and include, but are not limited to, statements regarding Ebang International
Holdings Inc. and its subsidiaries&#8217; intent, belief or current expectations. Forward-looking statements are based on our management&#8217;s
beliefs and assumptions and on information currently available to our management. Such statements are subject to risks and uncertainties,
and actual results may differ materially from those expressed or implied in the forward-looking statements due to various factors, including,
but not limited to, those identified under the section &#8220;Item&#160;3. Key Information&#8212;D. Risk factors&#8221; in this annual
report. These risks and uncertainties include factors relating to:&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">our goals and strategies;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">our business and operating
    strategies and plans for the development of existing and new businesses, ability to implement such strategies and plans and expected
    time;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">our future business development,
    financial condition and results of operations;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">expected changes in our
    revenues, costs or expenditures;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">our dividend policy;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">our expectations regarding
    demand for and market acceptance of our products and services;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">our expectations regarding
    our relationships with customers and business partners;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the trends in, expected growth in and market size of the blockchain
and Fintech industries in the markets we have business and globally;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">our ability to maintain
    and enhance our market position;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">our ability to continue
    to develop new technologies and/or upgrade our existing technologies;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">developments in, or changes to, laws, regulations, governmental policies,
incentives and taxation affecting our operations, in particular in the blockchain and Fintech industries;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">relevant governmental policies
    and regulations relating to our businesses and industry;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">competitive environment,
    competitive landscape and potential competitor behavior in our industry; overall industry outlook in our industry;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">our ability to attract,
    train and retain executives and other employees;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-align: justify; text-indent: -0.25in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the development of the
    global financial and capital markets;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">fluctuations in inflation,
    interest rates and exchange rates;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">general business, political,
    social and economic conditions in the markets we have business;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">assumptions underlying
    or related to any of the foregoing; and </span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify"><span style="font-size: 10pt">&#160;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">&#160;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">&#160;</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify"><span style="font-size: 10pt">&#160;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">other factors discussed
    under &#8220;Item&#160;3. Key Information&#8212;D. Risk factors&#8221; in this annual report.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">Forward-looking
statements speak only as of the date they are made, and we do not undertake any obligation to update them in light of new information
or future developments or to release publicly any revisions to these statements in order to reflect later events or circumstances or
to reflect the occurrence of unanticipated events.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"></p><div>

</div><!-- Field: Page; Sequence: 9; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: LowerRoman; Name: PageNo -->vii<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><div><a id="a_004"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 10pt"><b>PART&#160;I</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><div><a id="a_005"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt"><b>ITEM&#160;1.
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><div><a id="a_006"></a></div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>A.</b></span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Directors and senior
    management</b></span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">Not
applicable.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><div><a id="a_007"></a></div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>B.</b></span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Advisers</b></span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">Not
applicable.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><div><a id="a_008"></a></div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>C.</b></span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Auditors</b></span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">Not
applicable.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><div><a id="a_009"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt"><b>ITEM&#160;2.
OFFER STATISTICS AND EXPECTED TIMETABLE</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><div><a id="a_010"></a></div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>A.</b></span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Offer statistics</b></span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">Not
applicable.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><div><a id="a_011"></a></div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>B.</b></span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Method and expected
    timetable</b></span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">Not
applicable.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><div><a id="a_012"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt"><b>ITEM&#160;3.
KEY INFORMATION</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt"><b>&#160;</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">As
a Cayman Islands holding company, Ebang relies on dividends and other distributions on equity paid by its operating subsidiaries for
cash and financing requirements, including the funds necessary to pay dividends and other cash distributions to its shareholders or to
service any expenses it may incur. Our subsidiaries&#8217;, including PRC subsidiaries&#8217;, ability to distribute dividends is based
upon their distributable earnings. Current PRC regulations permit our PRC subsidiaries to pay dividends to their respective shareholders
only out of their accumulated profits, if any, as determined in accordance with PRC accounting standards and regulations. In addition,
under PRC law, our PRC subsidiaries are required to set aside at least 10% of its after-tax profits each year, if any, to fund certain
statutory reserve funds until such reserve funds reach 50% of its registered capital. And the after-tax profits shall be used to cover
the loss that the PRC subsidiaries made in previous financial year before any statutory reserve is drawn therefrom, if the statutory
reserve is insufficient to cover such loss. These reserves are not distributable as cash dividends. If each of our PRC subsidiaries incurs
debt on its own behalf in the future, the instruments governing such debt may restrict its ability to pay dividends to Ebang. According
to the relevant PRC regulations on Foreign Exchange Administration of the Overseas Direct Investment of Domestic Institutions, the operating
subsidiaries of Ebang who remit dividends to Ebang shall, on the basis of the approval document issued by the competent administrative
department of overseas direct investment (SAFE and its branch offices) and the foreign exchange registration certificate for overseas
direct investment, handle the formalities for the outward remittance of funds for overseas direct investment at a designated foreign
exchange bank. The designated foreign exchange bank shall handle the formalities for the domestic institution after an authenticity check.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">To
date, there have not been any such dividends or other distributions from our PRC subsidiaries to our subsidiaries located outside of
China. In addition, as of the date of this annual report, PRC subsidiaries have never issued any dividends or distributions to Ebang
or its shareholders outside of China. Furthermore, as of the date of this annual report, neither Ebang nor any of its subsidiaries have
ever paid dividends or made distributions to U.S. investors. For risks relating to the fund flows of our operations in China, see &#8220;Item
3. Key Information&#8212;D. Risk Factors&#8212;Risks Relating to Our Business and Industry&#8212;Our corporate structure may restrict
our ability to receive dividends from, and transfer funds to, our PRC operating subsidiaries, which could restrict our ability to act
in response to changing market conditions in a timely manner.&#8221;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 10; Options: NewSection; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->1<!-- Field: /Sequence --></span></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">Ebang
is permitted under PRC laws and regulations as an offshore holding company to provide funding to its PRC subsidiaries in China through
shareholder loans or capital contributions, subject to satisfaction of applicable government registration, approval and filing requirements.
According to the relevant PRC regulations on foreign-invested enterprises in China, there are no quantity limits on Ebang&#8217;s ability
to make capital contributions to its PRC subsidiaries. However, our PRC subsidiaries may not procure loans which exceed one of the following
criteria: (i) the difference between their respective registered capital and total investment amount as recorded in the Foreign Investment
Comprehensive Management Information System; or (ii) the upper limit of risk-weighted outstanding cross-border financings, which equals
to the capital or net assets multiplied by the cross-border financing leverage ratio multiplied by the macro-prudential adjustment parameter.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">The
following table presents the cash flows from Ebang to its subsidiaries for the periods indicated:</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="10" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Years Ended December 31,</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2020</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2021</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2022</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">US$</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">US$</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">US$</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="10" style="font-weight: bold; text-align: center">(in thousands)</td><td style="font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 64%; text-align: left; text-indent: -9pt; padding-left: 9pt">Transfers from Ebang to its subsidiaries</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">49,241</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">196,985</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">-</td><td style="width: 1%; text-align: left">&#160;</td></tr>
  </table><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span>&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">Cash
flows are principally transferred between Ebang and its subsidiaries as operating cash support, of which neither entity demands repayment.
To date, Ebang has not provided any loan to its subsidiaries.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">Cash
transfers between the subsidiaries are managed by our management, who decides how cash is allocated among subsidiaries based on the subsidiaries&#8217;
business development and operational needs. To date, no transfer of assets other than cash has occurred between the Company and its subsidiaries.
We do not anticipate that our subsidiaries will pay cash dividends in the foreseeable future.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">As
of date of this annual report, we have never faced difficulties or limitations on our ability to transfer cash to our subsidiaries, across
borders and to U.S. investors. Currently, there are no restrictions on the ability of our subsidiaries to distribute earnings or pay
dividends subject to there being sufficient distributable reserves and having relevant foreign exchange registration certificate obtained,
as applicable. In the future, cash proceeds raised from overseas financing activities may continue to be transferred by Ebang to the
subsidiaries via capital contribution or shareholder loans, as the case may be. We intend to retain most, if not all, of our available
funds and any future earnings for the development and growth of our business overseas. We do not expect to pay dividends in the foreseeable
future.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">All
share and price per share information in this annual report has been adjusted to reflect our one-for-thirty reverse stock split of our
issued and outstanding ordinary shares, which became effective upon shareholder approval at the Company&#8217;s extraordinary general
meeting on November 20, 2022 at 8:00 a.m. (Singapore Time).</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 11; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->2<!-- Field: /Sequence --></span></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><div><a id="a_013"></a></div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>A.</b></span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>[Reserved]</b></span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><div><a id="a_014"></a></div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>B.</b></span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Capitalization and indebtedness</b></span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">Not
applicable.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><div><a id="a_015"></a></div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>C.</b></span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Reasons for the offer
    and use of proceeds</b></span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">Not
applicable.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><div><a id="a_016"></a></div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>D.</b></span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Risk factors</b></span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt"><i>Our
business, financial condition and results of operations could be materially and adversely affected if any of the risks described below
occur. As a result, the market price of our Class A ordinary shares, par value HK$0.03 per share (the &#8220;Class A Ordinary Shares&#8221;)
could decline, and you could lose all or part of your investment. This annual report also contains forward-looking statements that involve
risks and uncertainties. See &#8220;Forward-Looking Statements.&#8221; The risks below are not the only ones facing the Company. Additional
risks not currently known to us or that we currently deem immaterial may also adversely affect us. </i>The following risk factors have
been grouped as follows:</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify"><span style="font-size: 10pt">&#160;</span></td>
    <td style="white-space: nowrap; width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">a)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Risks relating to conducting
    business in China; </span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify"><span style="font-size: 10pt">&#160;</span></td>
    <td style="white-space: nowrap; text-align: justify"><span style="font-size: 10pt">&#160;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">&#160;</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify"><span style="font-size: 10pt">&#160;</span></td>
    <td style="white-space: nowrap; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">b)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Risks relating to our Fintech
    and blockchain product businesses; </span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify"><span style="font-size: 10pt">&#160;</span></td>
    <td style="white-space: nowrap; text-align: justify"><span style="font-size: 10pt">&#160;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">&#160;</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify"><span style="font-size: 10pt">&#160;</span></td>
    <td style="white-space: nowrap; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">c)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Risks relating to our business
    operations; </span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify"><span style="font-size: 10pt">&#160;</span></td>
    <td style="white-space: nowrap; width: 25px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">d)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Risks relating to our securities;
    and</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify"><span style="font-size: 10pt">&#160;</span></td>
    <td style="white-space: nowrap; text-align: justify"><span style="font-size: 10pt">&#160;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">&#160;</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify"><span style="font-size: 10pt">&#160;</span></td>
    <td style="white-space: nowrap; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">e)
    </span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">General risks.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt"><b>Summary of Key
Risks</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">Our
business is subject to numerous risks and uncertainties, discussed in more detail below. These risks include, among others, the following
key risks:</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">It is now illegal to engage
    in digital asset transactions including Bitcoin mining operations in China, the ruling of which may adversely affect us</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Changes in China&#8217;s
    economic, political or social conditions or government policies could have a material adverse effect on our business, results of
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px"><span style="font-size: 10pt">&#160;</span></td>
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    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Uncertainties in the interpretation
    and enforcement of PRC laws and regulations could limit the legal protections available to you and us</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px"><span style="font-size: 10pt">&#160;</span></td>
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    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our corporate structure
    may restrict our ability to receive dividends from, and transfer funds to, our PRC operating subsidiaries, which could restrict our
    ability to act in response to changing market conditions in a timely manner</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="width: 48px"><span style="font-size: 10pt">&#160;</span></td>
<td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
<td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We may be subject to the PRC
Enterprise Income Tax Law and dividends payable to our foreign investors and gains on the sale of our Class A ordinary shares by our
foreign investors may become subject to PRC tax</span></td></tr>
<tr style="vertical-align: top">
<td><span style="font-size: 10pt">&#160;</span></td>
<td><span style="font-size: 10pt">&#160;</span></td>
<td style="text-align: justify"><span style="font-size: 10pt">&#160;</span></td></tr>
<tr style="vertical-align: top">
<td><span style="font-size: 10pt">&#160;</span></td>
<td><span style="font-size: 10pt">&#9679;</span></td>
<td style="text-align: justify"><span style="font-size: 10pt">We may be required to obtain approval or subject to filings or other requirements from the CSRC or
other PRC regulatory authorities in connection with our offshore offerings under PRC law, and we cannot predict whether or for how long
we will be able to complete such filing</span></td></tr>
</table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 12; Value: 1 --><div>
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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We are subject to risks
    associated with legal, political or other conditions or developments regarding holding, using or mining of Bitcoins, which could
    negatively affect our business, results of operations and financial position</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The current regulatory
    environment in foreign markets, and any adverse changes in those environments, could have material adverse impacts on our blockchain
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The future development
    and growth of cryptocurrency is subject to a variety of factors that are difficult to predict and evaluate. If cryptocurrency does
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  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td>&#9679;</td>
    <td style="text-align: justify">We may face challenges in regard to stringent licensing and regulatory
requirements in the money services business we operate</td></tr>
  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td>&#160;</td>
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  <tr style="vertical-align: top">
    <td>&#160;</td>
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    <td style="text-align: justify"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We are also exposed to financial and technological
risks in the money service business which calls for a high and strict standard of compliance in managing such risks and adequate infrastructures
in place in which failure of managing these risks will be adverse to our business</p></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our results of operations
    have been and are expected to continue to be significantly impacted by the fluctuation of cryptocurrency prices, especially the price
    of Bitcoin</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We have derived and may
    continue to derive a significant portion of our revenues from our Bitcoin mining machines business. If the market for Bitcoin mining
    machines ceases to exist or diminishes significantly, our business, results of operations and financial condition would be materially
    and adversely affected</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px"><span style="font-size: 10pt">&#160;</span></td>
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    we operate and which we intend to operate in the future are characterized by constant changes. If we fail to continuously innovate
    and to provide products that meet the expectations of our customers, we may be unable to attract new customers or retain existing
    customers, and hence our business and results of operations may be adversely affected</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We face risks associated
    with the expansion of our blockchain products and Fintech business operations overseas and if we are unable to effectively manage
    such risks, our business growth and profitability may be negatively affected</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We may not successfully
    develop, market or launch any future Fintech businesses or continue operating our existing Fintech businesses</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in"><span style="font-size: 10pt">&#160;&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our intellectual property
    rights are valuable, and any inability to protect them could adversely impact our business, operating results, and financial condition</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We rely on a limited number
    of third parties to fabricate our ASIC chips, and IC packaging and testing services</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We have been involved,
    and may continue to be involved, in disputes, claims or proceedings arising from our operations or class actions from time to time,
    which could result in significant liabilities and reputational harm and could materially and adversely affect our business, financial
    condition and results of operations</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We have and may increasingly
    become a target for public scrutiny, including complaints to regulatory agencies, negative media coverage, and malicious allegations,
    all of which could severely damage our reputation and materially and adversely affect our business and prospects</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The recent joint statement
    by the SEC and the PCAOB, rule changes by Nasdaq, and the HFCAA and related regulations, all call for additional and more stringent
    criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors
    who are not inspected by the PCAOB. These developments could add uncertainties to our continued listing or future offerings of our
    securities in the U.S.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Because we do not expect
    to pay dividends in the foreseeable future, you must rely on price appreciation of our Class A ordinary shares for return on your
    investment</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in"></p><div>

</div><!-- Field: Page; Sequence: 13; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->4<!-- Field: /Sequence --></span></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">You may face difficulties
    in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because we are incorporated
    under Cayman Islands law and conduct our operations primarily in emerging markets</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our dual-class voting structure
    will limit your ability to influence corporate matters and could discourage others from pursuing any change of control transactions
    that holders of our Class A ordinary shares may view as beneficial</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We are a &#8220;controlled
    company&#8221; within the meaning of the Nasdaq Rules, and, as a result, can rely on exemptions from certain corporate governance
    requirements that provide protection to shareholders of other companies</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We are an emerging growth
    company within the meaning of the Securities Act and may take advantage of certain reduced reporting requirements</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We are a foreign private
    issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions applicable to United
    States domestic public companies</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We have in the past incurred
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt"><b>Risks Relating
to Conducting Business in China </b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt"><b><i>It is now
illegal to engage in digital asset transactions including Bitcoin mining operations in China, the ruling of which may adversely affect
us</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">China
has now taken harsh regulatory action to ban cryptocurrency mining operations and to severely restrict the right to acquire, own, hold,
sell or use these Bitcoin assets or to exchange them for fiat currency. Such restrictions may adversely affect us as the large-scale
use of digital assets as a means of exchange is presently confined to certain regions globally. Ongoing and future regulatory actions
may impact our ability to continue to operate, and such actions could affect our ability to continue as a going concern or to pursue
our business strategy at all, which could have a material adverse effect on our business, prospects or operations.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">On
May 21, 2021, the Financial Stability and Development Committee of the State Council in China proposed to &#8220;crack down on Bitcoin
mining and trading.&#8221; However, it was not until September 15, 2021, as described below, that all digital asset transactions were
banned in China. In May 2021, local governments began to issue corresponding measures in succession to respond to the central government,
including Xinjiang Changji Hui Autonomous Prefecture Development and Reform Commission issuing a notice on the immediate shutdown of
enterprises engaged in cryptocurrency mining on June 9, 2021. On June 18, 2021, according to the public media report - Sichuan Provincial
Development and Reform Commission and Sichuan Energy Bureau issued a notice on the shutdown of cryptocurrency mining projects with the
deadline of June 25, 2021. On September 3, 2021, the newly issued Notification of Overhauling the Mining Activity of Cryptocurrency (or
the Notification No. 1283) banned all new cryptocurrency operations in China and set forth penalties on a going forward basis for all
of the PRC. On September 15, 2021, the People&#8217;s Bank of China, the Office of the Central Cyberspace Affairs Commission, the Supreme
People&#8217;s Court, the Supreme People&#8217;s Procuratorate, the Ministry of Industry and Information Technology, the Ministry of
Public Security, the State Administration for Market Regulation, the China Banking and Insurance Regulatory Commission, the China Securities
Regulatory Commission, and the State Administration of Foreign Exchange jointly issued the Circular on Further Preventing and Disposing
of Risks in Virtual Currency Trading and Speculation (Yin Fa [2021] No.237), which clarified that virtual currency-related business activities
in China and the provision of services by an overseas virtual currency exchange to a Chinese resident via the Internet will be considered
as illegal financial activities.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">In
consideration of the PRC government&#8217;s attitude and our intentional business plan, we will not conduct any cryptocurrency mining
operations or cryptocurrency trading operations in mainland PRC. We do not have any mining operation in the PRC and have halted all mining
machine custody business in China in April 2021. While we do not believe the PRC governmental authorities will seek to impose retroactive
fines, penalties or sanctions, there can be no assurance they may not seek to do so. Any such regulations, if implemented, will cause
us to incur additional compliance costs and have a material adverse effect on our future business operations.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt"><b><i>&#160;</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt"><b><i>&#160;</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt"><b><i>There are
risks to foreign investors in Chinese companies</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">The
Chinese government implements the management systems of pre-establishment national treatment and negative list for foreign investment.
Pre-establishment national treatment refers to the treatment given to foreign investors and their investments during the investment access
stage, which is not lower than that given to their domestic counterparts; negative list for foreign investment refers to special administrative
measures for the restricted or prohibited access of foreign investment in specific fields as stipulated by the Chinese government.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">Pursuant
to the Special Administrative Measures for Foreign Investment Access (2021 Edition), or the 2021 Edition Negative List, issued by The
Ministry of Commerce of the PRC (the &#8220;MOFCOM&#8221;) and the National Development and Reform Commission (the &#8220;NDRC&#8221;)
on December 27, 2021, which came into effect on January 1, 2022, our business does not fall into the Negative List. However, the 2021
Edition Negative List regulates that &#8220;Fields not mentioned in the Negative List for Foreign Investment Access shall be subject
to administration under the principle of consistency for domestic and foreign investments. The relevant provisions of the Negative List
for Market Access shall apply to domestic and foreign investors on a unified basis.&#8221;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">In
addition, based on the Negative List for Market Access (2022) which became effective on March 12, 2022, &#8220;the Catalogue for Guidance
on Industrial Restructuring shall be included in the Negative List for Market Access&#8221;; plus, according to the Decision of the State
Council on Promulgating and Implementing the &#8220;Temporary Provisions on Promoting Industrial Structure Adjustment,&#8221; valid from
December 2, 2005,&#160;&#8220;In principle, the &#8216;Guidance Catalogue for the Industrial Structure Adjustment &#8220;shall apply
to various types of enterprises inside China.&#8221; &#8220;The industries of the eliminated category under the &#8216;Guidance Catalogue
for the Industrial Structure Adjustment&#8217; shall apply to the foreign investment enterprises.&#8221; and &#8220;Investments are prohibited
from being contributed to projects under the eliminated category.&#8221; Furthermore, the NDRC released on December 30, 2021 its No.
49 Decree, announcing that the Decision of the National Development and Reform Commission on Amending the Guiding Catalog for Industrial
Restructuring (2019 Version) (the &#8220;Amended Catalog&#8221;). The Amended Catalog added &#8216;virtual currency mining activities&#8217;
to the eliminated category of &#8217;1. outdated production processing and equipment&#8217; under the original Catalog. Therefore, the
foreign investment enterprises are prohibited from virtual currency activities and our mining machine custody business are banned in
China as well.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt"><b><i>&#160;&#160;</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt"><b><i>Changes in
China&#8217;s economic, political or social conditions or government policies could have a material adverse effect on our business, results
of operations and financial condition</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Most of our revenues were
and, a lot of revenues, in the foreseeable future, are expected to be derived in China, and a lot of our operations, including most of
our manufacturing, is conducted in China. Accordingly, our business, prospects, results of operations and financial condition may be influenced
to a significant degree by political, economic and social conditions in China generally and by continued economic growth in China as a
whole. The Chinese economy differs from the economies of most developed countries in many respects, including the degree of government
involvement, level of development, growth rate, control of foreign exchange and allocation of resources. Although the PRC government has
implemented measures emphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive
assets and the establishment of improved corporate governance in business enterprises, a substantial portion of productive assets in China
is still owned by the government. In addition, the Chinese government continues to play a significant role in regulating industry development
by imposing industrial policies. The Chinese government also exercises significant control over China&#8217;s economic growth through
strategically allocating resources, controlling the payment of foreign currency-denominated obligations, setting monetary policy and providing
preferential treatment to particular industries or companies.</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">While
the Chinese economy has experienced significant growth over the past decades, growth has been uneven, both geographically and among various
sectors of the economy, and the rate of growth has been slowing since 2012. The Chinese government has implemented various measures to
encourage economic growth and guide the allocation of resources. Some of these measures may benefit the overall Chinese economy but may
have a negative effect on us. For example, our financial condition and results of operations may be adversely affected by government
control over capital investments or changes in tax regulations. In addition, in the past the Chinese government has implemented certain
measures, including interest rate increases, to control the pace of economic growth. These measures may cause decreased economic activity
in China, and since 2012, and in particular in 2020 as a result of COVID-19, China&#8217;s economic growth slowed down. Any prolonged
slowdown in the Chinese economy may reduce the demand for our products and services and materially and adversely affect our business
and results of operations.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt"><b><i>Uncertainties
in the interpretation and enforcement of PRC laws and regulations could limit the legal protections available to you and us</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">The
PRC legal system is a civil law system based on written statutes. Unlike the common law system, prior court decisions may be cited for
reference but have limited precedential value. The PRC legal system is evolving rapidly, but its current slate of laws may not be sufficient
to cover all aspects of the economic activities in China, including such activities that relate to or have an impact on our business.
Implementation and interpretations of laws, regulations and rules are not always undertaken in a uniform matter (some of which can change
rapidly with little advance notice) and enforcement of these laws, regulations and rules involves uncertainties.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">From
time to time, we may have to resort to administrative and court proceedings to enforce our legal rights. However, since PRC administrative
and court authorities have significant discretion in interpreting and implementing statutory and contractual terms, it may be more difficult
to evaluate the outcome of administrative and court proceedings and the level of protection we enjoy than in more developed legal systems.
Furthermore, the PRC legal system is based in part on government policies and internal rules (some of which are not published in a timely
manner or at all) that may have a retroactive effect. As a result, we may not always be aware of any potential violation of these policies
and rules until sometime after the violation. Such uncertainties, including unpredictability towards the scope and effect of our contractual,
property (including intellectual property) and procedural rights, and any failure to respond to changes in the regulatory environment
in China could materially and adversely affect our business and impede our ability to continue our operations.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">In
addition, the PRC governmental authorities may intervene or influence our operations at any time, or may exert more control over offerings
conducted overseas and/or foreign investment in China-based issuers, which could significantly limit or completely hinder our ability
to offer or continue to offer Class A ordinary shares to investors and cause the value of such shares to significant decline or be worthless.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt"><b><i>&#160;</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt"><b><i>A severe
or prolonged downturn in the global or Chinese economy could materially and adversely affect our business and our financial condition</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">Although
the Chinese economy has grown steadily in the past decade, there is considerable uncertainty over the long-term effects of the expansionary
monetary and fiscal policies adopted by the People&#8217;s Bank of China and financial authorities of some of the world&#8217;s leading
economies, including the United States and China. The proposed tariffs by the U.S. government and the potential of a trade war between
the U.S. and China could dampen the growth prospects of the Chinese and global economy. There have been concerns over unrest and terrorist
threats in the Middle East, Europe and Africa, which have resulted in volatility in oil and other markets. There have also been concerns
on the relationship among China and other Asian countries, which may result in or intensify potential conflicts in relation to territorial
disputes. The ongoing war between Russian and Ukraine has escalated global geopolitical tensions when Russia launched a large-scale land
invasion into Ukraine in February 2022. Economic conditions in China are sensitive to global economic conditions, as well as changes
in domestic economic and political policies and the expected or perceived overall economic growth rate in China. Any severe or prolonged
slowdown in the global or Chinese economy may materially and adversely affect our business, results of operations and financial condition.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt"><b><i>&#160;</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt"><b><i>Increases
in labor costs and enforcement of stricter labor laws and regulations in the PRC and our PRC subsidiaries&#8217; additional payments
of statutory employee benefits may adversely affect our business and profitability</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">The
average wage in China has increased in recent years and is expected to continue to grow. The average wage level for our PRC subsidiaries&#8217;
employees has also increased in recent years. We expect that our PRC subsidiaries&#8217; labor costs, including wages and employee benefits,
will continue to increase. Unless we are able to pass on these increased labor costs to our customers, our profitability and results
of operations may be materially and adversely affected.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">In
addition, our PRC subsidiaries have been subject to stricter regulatory requirements in terms of entering into labor contracts with our
employees and paying various statutory employee benefits, including pensions, housing funds, medical insurance, work-related injury insurance,
unemployment insurance and maternity insurance to designated government agencies for the benefit of our PRC subsidiaries&#8217; employees.
Pursuant to the PRC Labor Contract Law and its implementation rules, employers are subject to stricter requirements in terms of signing
labor contracts, minimum wages, paying remuneration, determining the term of employee&#8217;s probation and unilaterally terminating
labor contracts. In the event that our PRC subsidiaries decide to terminate some of our PRC subsidiaries&#8217; employees or otherwise
change their employment or labor practices, the PRC Labor Contract Law and its implementation rules may limit their ability to effect
those changes in a desirable or cost-effective manner, which could adversely affect our business and results of operations.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">Pursuant
to PRC laws and regulations, companies registered and operating in China are required to apply for social insurance registration and
housing fund deposit registration within 30 days of their establishment and to pay for their employees different social insurance including
pension insurance, medical insurance, work-related injury insurance, unemployment insurance and maternity insurance to the extent required
by law. Our PRC subsidiaries have not fully paid social insurance and housing provident funds for all of their employees due to inconsistency
in implementation or interpretation of the relevant PRC laws and regulations among government authorities in the PRC and, in some cases,
voluntary decisions by the relevant employees. As the PRC government may enhance its enforcement measures relating to social insurance
and housing fund deposit collection, our PRC subsidiaries may be required to make up the contributions for their employees, and may be
further subjected to late fees payment and administrative fines, which may materially and adversely affect our financial condition and
results of operations. As the interpretation and implementation of labor-related laws and regulations are still evolving, we cannot assure
you that our PRC subsidiaries&#8217; current employment practices do not and will not violate labor-related laws and regulations in China,
which may subject us to labor disputes or government investigations. In addition, we may incur additional expenses in order to comply
with such laws and regulations, which may adversely affect our business and profitability.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt"><b><i>&#160;</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt"><b><i>We may be
adversely affected by inflation or labor shortage in China</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">In
recent years, the PRC economy has experienced periods of rapid expansion and highly fluctuating rates of inflation. According to the
National Bureau of Statistics of China, the year-over-year percent changes in the consumer price index for December 2020, 2021 and 2022
were increases of 0.2%, 1.5% and 1.8%, respectively. Although we have not been materially affected by inflation in the past, we may be
affected if PRC experiences higher rates of inflation in the future. It is uncertain when the general price level may increase or decrease
sharply in the future. Moreover, the significant economic growth in China has resulted in a general increase in labor costs and shortage
of low-cost labor. Inflation may cause our production cost to continue to increase. If we are unable to pass on the increase in production
cost to our customers, we may suffer a decrease in profitability and a loss of customers and our results of operations could be materially
and adversely affected.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt"><b><i>Our corporate
structure may restrict our ability to receive dividends from, and transfer funds to, our PRC operating subsidiaries, which could restrict
our ability to act in response to changing market conditions in a timely manner</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">We
are a Cayman Islands holding company and a certain portion of our operations are conducted through our operating subsidiaries. The ability
of our operating subsidiaries to make dividend and other payments to us may be restricted by factors that include changes in applicable
foreign exchange and other laws and regulations.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">In
particular, under the PRC law, each of our PRC operating subsidiaries may only pay dividends after 10% of its net profit has been set
aside as reserve funds, unless such reserves have reached at least 50% of its registered capital. In addition, the profit available for
distribution from our PRC operating subsidiaries is determined in accordance with generally accepted accounting principles in the PRC.
This calculation may differ if it were performed in accordance with U.S. GAAP. As a result, we may not have sufficient distributions
from our PRC operating subsidiaries to enable necessary profit distributions to our shareholders in the future, which would be based
upon our financial statements prepared under U.S. GAAP.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24.5pt"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">Distributions
by our PRC operating subsidiaries to us other than as dividends may be subject to governmental approval and taxation. Any transfer of
funds from our company to our PRC operating subsidiaries, either as a shareholder loan or as an increase in registered capital, is subject
to registration or approval of PRC governmental authorities, including the relevant administration of foreign exchange and/or the relevant
examining and approval authority. These limitations on the free flow of funds between us and our PRC subsidiaries could restrict our
ability to act in response to changing market conditions in a timely manner.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt"><b><i>&#160;</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt"><b><i>&#160;</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt"><b><i>We may be
subject to EIT on our worldwide income if our company or any of our subsidiaries were considered a PRC &#8220;resident enterprise&#8221;
under the PRC Enterprise Income Tax Law, or the EIT Law</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">Under
the EIT Law and its implementation rules, enterprises established outside of the PRC with &#8220;de facto management bodies&#8221; within
the PRC are considered a &#8220;resident enterprise&#8221; and will be subject to EIT at a rate of 25% on their worldwide income. The
implementation rules under EIT define the term &#8220;de facto management bodies&#8221; as &#8220;establishments that carry out substantial
and overall management and control over the production, operation, personnel, accounting, properties, etc. of an enterprise.&#8221; The
State Administration of Taxation of the PRC, or the SAT promulgated the Notice Regarding the Determination of Chinese-Controlled Offshore
Incorporated Enterprises as PRC Tax Resident Enterprises on the Basis of De Facto Management Bodies, or Circular 82, on April&#160;22,
2009, as amended on November 8, 2013, provides certain specific criteria for determining whether the &#8220;de facto management body&#8221;
of a Chinese-controlled offshore incorporated enterprise is located in the PRC. On July&#160;27, 2011, the SAT issued the Measures for
Administration of Income Tax of Chinese Controlled Resident Enterprises Incorporated Overseas (Trial), or Circular 45, as amended on
June 15, 2018, to supplement Circular 82 and other tax laws and regulations. Circular 45 clarifies certain issues relating to resident
status determination. Although Circular 82 and Circular 45 apply only to offshore enterprises controlled by PRC enterprises or PRC group
companies and not those controlled by PRC individuals or foreigners, the determining criteria set forth in Circular 82 and Circular 45
may reflect the SAT&#8217;s general position on how the &#8220;de facto management body&#8221; test should be applied in determining
the tax resident status of offshore enterprises, regardless of whether they are controlled by PRC enterprises or individuals or foreign
enterprises. A substantial majority of our senior management team is located in China. If our company or any of our subsidiaries were
considered to be a PRC &#8220;resident enterprise,&#8221; we would be subject to EIT at a rate of 25% on our worldwide income, which
could materially reduce our net income.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt"><b><i>Dividends
payable to our foreign investors and gains on the sale of our Class A ordinary shares by our foreign investors may become subject to
PRC tax</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">Under
the EIT Law and its implementation regulations issued by the State Council, a 10% PRC withholding tax is applicable to dividends payable
to investors that are non-resident enterprises, which do not have an establishment or place of business in the PRC or which have such
establishment or place of business but the dividends are not effectively connected with such establishment or place of business, to the
extent such dividends are derived from sources within the PRC. Similarly, any gain realized on the transfer of our Class A ordinary shares
by such investors is also subject to PRC tax at a current rate of 10%, subject to any reduction or exemption set forth in applicable
tax treaties or under applicable tax arrangements between jurisdictions, if such gain is regarded as income derived from sources within
the PRC. If we are deemed a PRC resident enterprise, dividends paid on our Class A ordinary shares, and any gain realized from the transfer
of our Class A ordinary shares, would be treated as income derived from sources within the PRC and would as a result be subject to PRC
taxation. Furthermore, if we are deemed a PRC resident enterprise, dividends payable to individual investors who are non-PRC residents
and any gain realized on the transfer of our Class A ordinary shares by such investors may be subject to PRC tax at a current rate of
20%, subject to any reduction or exemption set forth in applicable tax treaties or under applicable tax arrangements between jurisdictions.
If we or any of our subsidiaries established outside China are considered a PRC resident enterprise, it is unclear whether holders of
our Class A ordinary shares would be able to claim the benefit of income tax treaties or agreements entered into between China and other
countries or areas. If dividends payable to our non-PRC investors, or gains from the transfer of our Class A ordinary shares by such
investors, are deemed as income derived from sources within the PRC and thus are subject to PRC tax, the value of your investment in
our Class A ordinary shares may decline significantly.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Any adverse changes of any preferential
tax treatments and government grants that may be available to us in the future could materially and adversely affect our business, financial
condition and results of operations.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have benefited from preferential
tax treatments from the government and government grants, such as &#8220;high-tech enterprise&#8221; tax status and VAT tax refund. We
cannot assure you that we are able to meet the relevant requirements and be re-granted the preferential tax treatments and government
grants upon their expiration, or to apply for other preferential tax treatments or government grants. The policies regarding the preferential
tax treatments and government grants are subject to change and termination. The government authorities may decide to reduce, eliminate
or cancel our tax preferences at any time. Therefore, we cannot assure you of the continued availability of such tax preferences or government
grants which we currently enjoy. The discontinuation, reduction or delay of the preferential tax treatments and government grants could
adversely affect our financial condition and results of operations. For more detailed information, see &#8220;Item 5. Operating and Financial
Review and Prospects&#8212;Operating Results&#8212;Key Components of Results of Operations&#8212;Taxation&#8221;.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt"><b><i>PRC regulations
relating to investments in offshore companies by PRC residents may subject our PRC-resident beneficial owners or our PRC subsidiaries
to liability or penalties, limit our ability to inject capital into our PRC subsidiaries or limit our PRC subsidiaries&#8217; ability
to increase their registered capital or distribute profits</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">In
July 2014, the State Administration of Foreign Exchange of the PRC, or SAFE, promulgated the Circular on Relevant Issues Concerning Foreign
Exchange Control on Domestic Residents&#8217; Offshore Investment and Financing and Roundtrip Investment through Special Purpose Vehicles,
or SAFE Circular 37, which replaces the previous SAFE Circular 75. SAFE Circular 37 requires PRC residents, including PRC individuals
and PRC corporate entities, to register with SAFE or its local branches in connection with their direct or indirect offshore investment
activities. SAFE Circular 37 is applicable to our shareholders who are PRC residents and may be applicable to any offshore acquisitions
that we may make in the future.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">Under
SAFE Circular 37, PRC residents who make, or have prior to the implementation of SAFE Circular 37 made, direct or indirect investments
in offshore special purpose vehicles, or SPVs, are required to register such investments with SAFE or its local branches. In addition,
any PRC resident who is a direct or indirect shareholder of an SPV, is required to update its registration with the local branch of SAFE
with respect to that SPV, to reflect any material change. Moreover, any subsidiary of such SPV in China is required to urge the PRC resident
shareholders to update their registration with the local branch of SAFE to reflect any material change. If any PRC resident shareholder
of such SPV fails to make the required registration or to update the registration, the subsidiary of such SPV in China may be prohibited
from distributing its profits or the proceeds from any capital reduction, share transfer or liquidation to the SPV, and the SPV may also
be prohibited from making additional capital contributions into its subsidiaries in China. In February 2015, SAFE promulgated a Notice
on Further Simplifying and Improving Foreign Exchange Administration Policy on Direct Investment, or SAFE Notice 13. Under SAFE Notice
13, applications for foreign exchange registration of inbound foreign direct investments and outbound direct investments, including those
required under SAFE Circular 37, must be filed with qualified banks instead of SAFE. Qualified banks should examine the applications
and accept registrations under the supervision of SAFE. We have used commercially reasonable efforts to notify PRC residents or entities
who directly or indirectly hold shares in our Cayman Islands holding company and who are known to us as being PRC residents to complete
the foreign exchange registrations. However, we may not be informed of the identities of all the PRC residents or entities holding direct
or indirect interest in our company, nor can we compel our beneficial owners to comply with SAFE registration requirements. We cannot
assure you that all other shareholders or beneficial owners of ours who are PRC residents or entities have complied with, and will in
the future make, obtain or update any applicable registrations or approvals required by, SAFE regulations. Failure by such shareholders
or beneficial owners to comply with SAFE regulations, or failure by us to amend the foreign exchange registrations of our PRC subsidiaries,
could subject us to fines or legal sanctions, restrict our overseas or cross-border investment activities, limit our PRC subsidiaries&#8217;
ability to make distributions or pay dividends to us or affect our ownership structure, which could adversely affect our business and
prospects.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">Furthermore,
as these foreign exchange and outbound investment related regulations are relatively new and their interpretation and implementation
has been constantly evolving, it is unclear how these regulations, and any future regulation concerning offshore or cross-border investments
and transactions, will be interpreted, amended and implemented by the relevant government authorities. For example, we may be subject
to a more stringent review and approval process with respect to our foreign exchange activities, such as remittance of dividends and
foreign-currency-denominated borrowings, which may adversely affect our financial condition and results of operations. We cannot assure
you that we have complied or will be able to comply with all applicable foreign exchange and outbound investment related regulations.
In addition, if we decide to acquire a PRC domestic company, we cannot assure you that we or the owners of such company, as the case
may be, will be able to obtain the necessary approvals or complete the necessary filings and registrations required by the foreign exchange
regulations. This may restrict our ability to implement our acquisition strategy and could adversely affect our business and prospects.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt"><b><i>We and our
shareholders face uncertainties with respect to indirect transfers of equity interests in PRC resident enterprises or other assets attributed
to a Chinese establishment of a non-Chinese company, or immovable properties located in China owned by non-Chinese companies</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">In
February 2015, SAT issued a Public Notice Regarding Certain Corporate Income Tax Matters on Indirect Transfer of Properties by Non-Tax
Resident Enterprises, or SAT Public Notice 7. SAT Public Notice 7 extends its tax jurisdiction to transactions involving transfer of
other taxable assets through offshore transfer of a foreign intermediate holding company. In addition, SAT Public Notice 7 provides clear
criteria for assessment of reasonable commercial purposes and has introduced safe harbors for internal group restructurings and the purchase
and sale of equity through a public securities market. SAT Public Notice 7 also brings challenges to both foreign transferor and transferee
(or other person who is obligated to pay for the transfer) of taxable assets. In October 2017, SAT issued the Announcement of the State
Administration of Taxation on Issues Concerning the Withholding of Non-resident Enterprise Income Tax at Source, or SAT Bulletin 37,
which came into effect on December&#160;1, 2017. The SAT Bulletin 37 further clarifies the practice and procedure of the withholding
of non-resident EIT. Where a non-resident enterprise transfers taxable assets indirectly by disposing of the equity interests of an overseas
holding company, which is an indirect transfer, the non-resident enterprise as either transferor or transferee, or the PRC entity that
directly owns the taxable assets, may report such Indirect Transfer to the relevant tax authority. Using a &#8220;substance over form&#8221;
principle, the PRC tax authority may disregard the existence of the overseas holding company if it lacks a reasonable commercial purpose
and was established for the purpose of reducing, avoiding or deferring PRC tax. As a result, gains derived from such indirect transfer
other than transfer of shares acquired and sold on public markets may be subject to EIT, and the transferee or other person who is obligated
to pay for the transfer is obligated to withhold the applicable taxes, currently at a rate of 10%. Both the transferor and the transferee
may be subject to penalties under PRC tax laws if the transferee fails to withhold the taxes and the transferor fails to pay the taxes.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">We
face uncertainties as to the reporting and other implications of certain past and future transactions that involve PRC taxable assets,
such as offshore restructuring, sale of the shares in our offshore subsidiaries and investments. Our company may be subject to filing
obligations or taxed if our company is transferor in such transactions and may be subject to withholding obligations if our company is
transferee in such transactions, under SAT Public Notice 7 or SAT Bulletin 37, or both.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt"><b><i>We are subject
to PRC restrictions on currency exchange</i></b></span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">Some
of our revenues and expenses are denominated in Renminbi. The Renminbi is currently convertible under the &#8220;current account,&#8221;
which includes dividends, trade and service-related foreign exchange transactions, but not under the &#8220;capital account,&#8221; which
includes foreign direct investment and loans, including loans we may secure from our onshore subsidiaries. Currently, certain of our
PRC subsidiaries may purchase foreign currency for settlement of &#8220;current account transactions,&#8221; including payment of dividends
to us, without the approval of the SAFE by complying with certain procedural requirements. However, the relevant PRC governmental authorities
may limit or eliminate our ability to purchase foreign currencies in the future for current account transactions. Foreign exchange transactions
under the capital account remain subject to limitations and require approvals from, or registration with, the SAFE and other relevant
PRC governmental authorities. Since a part of our future net income and cash flow will be denominated in Renminbi, any existing and future
restrictions on currency exchange may limit our ability to utilize cash generated in Renminbi to fund our business activities outside
of the PRC or pay dividends in foreign currencies to our shareholders, including holders of our Class A ordinary shares, and may limit
our ability to obtain foreign currency through debt or equity financing for our subsidiaries.&#160;</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt"><b><i>If the custodians
or authorized users of our controlling non-tangible assets, including chops and seals, fail to fulfill their responsibilities, or misappropriate
or misuse these assets, our business and operations may be materially and adversely affected</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">Under
PRC law, legal documents for corporate transactions, including agreements and contracts such as the leases and sales contracts that our
business relies on, are executed using the chop or seal of the signing entity or with the signature of a legal representative whose designation
is registered and filed with the relevant local branch of the market supervision administration.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">In
order to maintain the physical security of our chops and the chops of our PRC subsidiaries, we generally store these items in secured
locations accessible only by the authorized personnel of each of our PRC subsidiaries and consolidated entities. Although we monitor
such authorized personnel, there is no assurance such procedures will prevent all instances of abuse or negligence. Accordingly, if any
of our authorized personnel misuse or misappropriate our corporate chops or seals, we could encounter difficulties in maintaining control
over the relevant entities and experience significant disruption to our operations. If a designated legal representative obtains control
of the chops in an effort to obtain control over any of our PRC subsidiaries or consolidated entities, we, our PRC subsidiaries or consolidated
entities would need to pass a new shareholder or board resolution to designate a new legal representative and we would need to take legal
action to seek the return of the chops, apply for new chops with the relevant authorities, or otherwise seek legal redress for the violation
of the representative&#8217;s fiduciary duties to us, which could involve significant time and resources and divert management attention
away from our regular business. In addition, the affected entity may not be able to recover corporate assets that are sold or transferred
out of our control in the event of such a misappropriation if a transferee relies on the apparent authority of the representative and
acts in good faith.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt"><b><i>The M&amp;A
Rules and certain other PRC regulations establish complex procedures for some acquisitions of Chinese companies by foreign investors,
which could make it more difficult for us to pursue growth through acquisitions in China</i></b></span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">The
Regulations on Mergers and Acquisitions of Domestic Companies by Foreign Investors, or the M&amp;A Rules, adopted by six PRC regulatory
agencies in August 2006 and amended in June 2009, and some other regulations and rules concerning mergers and acquisitions established
additional procedures and requirements that could make merger and acquisition activities by foreign investors more time consuming and
complex, including requirements in some instances that shall obtained an approval from the Ministry of Commerce, or the MOFCOM, in advance
of any change-of-control transaction in which a foreign investor takes control of a PRC domestic enterprise. Moreover, the Anti-Monopoly
Law requires that the MOFCOM shall be notified in advance of any concentration of undertaking if certain thresholds are triggered. In
addition, the Safety Review System for Merger and Acquisition of Domestic Companies by Foreign Investors issued by the MOFCOM that became
effective in September 2011 specify that mergers and acquisitions by foreign investors that raise &#8220;national defense and security&#8221;
concerns and mergers and acquisitions through which foreign investors may acquire de facto control over domestic enterprises that raise
&#8220;national security&#8221; concerns are subject to strict review by the MOFCOM, and the rules prohibit any activities attempting
to bypass a security review, including by structuring the transaction through a proxy or contractual control arrangement. In the future,
we may grow our business by acquiring complementary businesses. Complying with the requirements of the above-mentioned regulations and
other relevant rules to complete such transactions could be time consuming, and any required approval processes, including obtaining
approval from the MOFCOM or its local counterparts may delay or inhibit our ability to complete such transactions, which could affect
our ability to expand our business or maintain our market share.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt"><b><i>We may be
required to obtain approval or subject to filings or other requirements from the CSRC or other PRC regulatory authorities in&#160;connection&#160;with&#160;our&#160;offshore&#160;offerings&#160;under&#160;PRC&#160;law,
and we cannot predict whether or for how long we will be able to complete such filing</i></b></span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">On
July 6, 2021, the relevant PRC government authorities issued the Opinions on Strictly Scrutinizing Illegal Securities Activities in Accordance
with the Law. These opinions emphasized the need to strengthen the administration over illegal securities activities and the supervision
on overseas listings by China-based companies, to improve relevant laws and regulations on data security, cross-border data transmission,
and confidential information management, and provided that efforts will be made to revise the regulations on strengthening the confidentiality
and file management relating to the offering and listing of securities overseas, and proposed to take effective measures, such as promoting
the construction of relevant regulatory systems to deal with the risks and incidents faced by China-based overseas-listed companies.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">On
February 17, 2023, the CSRC promulgated Trial Administrative Measures of the Overseas Securities Offering and Listing by Domestic Companies
(the &#8220;Overseas Listing Trial Measures&#8221;) and five related guidelines, which became effective on March 31, 2023. The Overseas
Listing Trial Measures comprehensively improve and reform the existing regulatory regime for overseas offering and listing of PRC domestic
companies&#8217; securities and will regulate both direct and indirect overseas offering and listing of PRC domestic companies&#8217;
securities through a filing-based regulatory regime.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">Pursuant
to the Overseas Listing Trial Measures, PRC domestic companies that seek to offer and list securities in overseas markets, either through
direct or indirect means, are required to go through the filing procedure with the CSRC and report relevant information. The Overseas
Listing Trial Measures provides that if the issuer meets both of the following criteria, the overseas securities offering and listing
conducted by such issuer will be deemed as an indirect overseas listing by PRC domestic companies: (i) 50% or more of any of the issuer&#8217;s
operating revenue, total profit, total assets or net assets as documented in its audited consolidated financial statements for the most
recent fiscal year is accounted for by domestic companies; and (ii) the main parts of the issuer&#8217;s business activities are conducted
in mainland China, or its main place(s) of business are located in mainland China, or the majority of senior management staff in charge
of its business operations and management are PRC citizens or have their usual place(s) of residence located in mainland China. Besides,
the determination as to indirect overseas listing by PRC domestic companies, shall be made on a substance over form basis. Subsequent
securities offerings of an issuer in the same overseas market where it has previously offered and listed securities shall be filed with
the CSRC within 3 working days after the offering is completed, and Subsequent securities offerings and listings of an issuer in other
overseas markets than where it has offered and listed shall be filed with the CSRC within 3 working days after the relevant application
is submitted overseas. If a domestic company fails to fulfill the filing procedure, the CSRC shall order rectification, issue warnings
to such domestic company, and impose a fine; directly liable persons-in-charge and other directly liable persons shall be warned and
each imposed a fine. According to Circular on the Arrangements for the Filing-based Administration of Overseas Securities Offering and
Listing by Domestic Companies issued by the CSRC on February 17, 2023, from the implementation date of the Overseas Listing Trial Measures,
domestic enterprises subject to the scope of filing that have offered shares or been listed overseas, or have met the following conditions
shall be deemed as &#8220;existing enterprises&#8221;, which are not required to go through the filing immediately but shall be required
to do so if they involve in re-financing and other filing matters in the future.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">Based
on the aforementioned criteria, we may be deemed as a PRC domestic company and our offshore offerings may be deemed as an indirect overseas
listing by PRC domestic companies. Since we had already completed overseas offering prior to the effective date of the Overseas Listing
Trial Measures, we should be deemed as an &#8220;existing enterprise&#8221; and not be required to go through the filing immediately.
Only when we involve in re-financing and other filing matters will we be required to complete such filling with the CSRC. If so, we cannot
assure you that we could meet such requirements or complete such filing in a timely manner. Any failure may restrict our ability to complete
the proposed offshore offerings, which would have a material adverse effect on our business and financial positions. Further, as the
Overseas Listing Trial Measures was recently promulgated, there remains substantial uncertainties as to its interpretation and implementation
and how it may impact our ability to raise or utilize fund for business operation.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">On
December 28, 2021, the CAC, the NDRC, the MIIT, and several other administrations jointly promulgated the Cybersecurity Review Measures
( the &#8220;Cybersecurity Measures&#8221;), which became effective on February 15, 2022. The Cybersecurity Measures has replaced its
previous version promulgated on April 13, 2020. According to the Cybersecurity Measures, among others, (i) an application for cybersecurity
review shall be made by an issuer who is a network platform operator holding personal information of more than one million users before
such issuer applies to list securities on a foreign stock exchange; and (ii) the relevant PRC governmental authorities may initiate cybersecurity
review if such governmental authorities determine that the issuer&#8217;s network products or services, or data processing activities
affect or may affect national security. On the bases that (i) the Cybersecurity Measures was promulgated recently, (ii) the exact scope
of &#8220;network platform operator&#8221; under the Cybersecurity Measures remains unclear, and (iii) there are substantial uncertainties
on the interpretation and application of the Cybersecurity Measures, there can be no assurance that we would be required to apply for
such cybersecurity review for our offshore offerings. Any failure in completion of a cybersecurity review may result in administrative
penalties, including fines, a shut-down of our business, revocation of requisite licenses, as well as reputational damage or legal proceedings
or actions against us, which may have material adverse effects on our business, financial condition and results of operations. As of
the date of this annual report, we have not been involved in any formal investigations on cybersecurity review made by the CAC on such
basis.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">In
addition, we cannot assure you that any new rules or regulations promulgated in the future will not impose additional requirements on
us. If it is determined in the future that approval and filing from the CSRC or other regulatory authorities or other procedures, including
the cybersecurity review under the enacted version of the revised Measures for Cybersecurity Review and the draft of Regulations on the
Network Data Security, are required for our offshore offerings, it is uncertain whether we can or how long it will take us to obtain
such approval or complete such filing procedures and any such approval or filing could be rescinded or rejected. Any failure to obtain
or delay in obtaining such approval or completing such filing procedures for our offshore offerings, or a rescission of any such approval
or filing if obtained by us, would subject us to sanctions by the CSRC or other PRC regulatory authorities for failure to seek CSRC approval
or filing or other government authorization for our offshore offerings. These regulatory authorities may impose fines and penalties on
our operations in China, limit our ability to pay dividends outside of China, limit our operating privileges in China, delay or restrict
the repatriation of the proceeds from our offshore offerings into China or take other actions that could materially and adversely affect
our business, financial condition, results of operations, and prospects, as well as the trading price of our listed securities. The CSRC
or other PRC regulatory authorities also may take actions requiring us, or making it advisable for us, to halt our offshore offerings
before settlement and delivery of the shares offered. Consequently, if investors engage in market trading or other activities in anticipation
of and prior to settlement and delivery, they do so at the risk that settlement and delivery may not occur. In addition, if the CSRC
or other regulatory authorities later promulgate new rules or explanations requiring that we obtain their approvals or accomplish the
required filing or other regulatory procedures for our prior offshore offerings, we may be unable to obtain a waiver of such approval
requirements, if and when procedures are established to obtain such a waiver. Any uncertainties or negative publicity regarding such
approval requirement could materially and adversely affect our business, prospects, financial condition, reputation, and the trading
price of our listed securities.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt"><b><i>We face regulatory
uncertainties in China that could restrict our ability to grant share incentive awards to our employees or consultants who are PRC citizens</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">Pursuant
to the Notices on Issues concerning the Foreign Exchange Administration for Domestic Individuals Participating in a Stock Incentive Plan
of an Overseas Publicly-Listed Company issued by SAFE on February 15, 2012, or Circular 7, a qualified PRC agent (which could be the
PRC subsidiary of the overseas-listed company) is required to file, on behalf of &#8220;domestic individuals&#8221; (both PRC residents
and non-PRC residents who reside in China for a continuous period of not less than one year, excluding the foreign diplomatic personnel
and representatives of international organizations) who are granted shares or share options by the overseas-listed company according
to its share incentive plan, an application with SAFE to conduct SAFE registration with respect to such share incentive plan, and obtain
approval for an annual allowance with respect to the purchase of foreign exchange in connection with the share purchase or share option
exercise. Such PRC individuals&#8217; foreign exchange income received from the sale of shares and dividends distributed by the overseas
listed company and any other income shall be fully remitted into a collective foreign currency account in China, which is opened and
managed by the PRC domestic agent before distribution to such individuals. In addition, such domestic individuals must also retain an
overseas entrusted institution to handle matters in connection with their exercise of share options and their purchase and sale of shares.
The PRC domestic agent also needs to update registration with SAFE within three months after the overseas-listed company materially changes
its share incentive plan or make any new share incentive plans.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">We
have adopted our Amended and Restated 2020 Share Incentive Plan (the &#8220;2020 Plan&#8221;), effective upon the completion of our initial
public offering, and our 2021 Share Incentive Plan (the &#8220;2021 Plan&#8221;), effective upon shareholder approval at the 2021 annual
general meeting of shareholders held on December 15, 2021. As of the date of this annual report, we have granted 189,066 restricted share
awards under the 2020 Plan and we did not grant any awards under the 2021 Plan. We may grant share incentive awards under both or either
plan in the future. When we do, from time to time, we need to apply for or update our registration with SAFE or its local branches on
behalf of our employees or consultants who receive options or other equity-based incentive grants under the 2020 Plan, 2021 Plan or future
share incentive plans we may adopt or material changes in such plan(s). However, we may not always be able to make applications or update
our registration on behalf of our employees or consultants who hold any type of share incentive awards in compliance with Circular 7,
nor can we ensure you that such applications or update of registration will be successful. If we or the participants of our share incentive
plan(s) who are PRC citizens fail to comply with Circular 7, we and/or such participants of our share incentive plan(s) may be subject
to fines and legal sanctions, there may be additional restrictions on the ability of such participants to exercise their share options
or remit proceeds gained from sale of their shares into China, and we may be prevented from further granting share incentive awards under
our share incentive plan(s) to our employees or consultants who are PRC citizens.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt"><b><i>Our Hong
Kong subsidiaries could become subject to the direct oversight of the PRC government at any time if the National laws of mainland China
are applied to Hong Kong</i></b></span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">The
national laws of the PRC (the &#8220;National Laws&#8221;), including, but not limited to (i) the Cybersecurity Review Measures which
became effective on February 15, 2022; and (ii) approval by the CSRC or any other Chinese regulatory authority to approve or permit our
offering of securities in the U.S., do not currently apply to our Hong Kong subsidiaries, except for those set forth below. However,
due to the uncertainty of the PRC legal system and changes in laws, regulations or policies, including how these laws, regulations or
policies would be interpreted or implemented, and the national laws applicable in Hong Kong, the Basic Law might be revised in the future.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">Pursuant
to Article 18 of the Basic Law of the Hong Kong Special Administrative Region of the PRC (the &#8220;Basic Law&#8221;), &#8220;The laws
in force in the Hong Kong Special Administrative Region shall be the Basic Law, the laws previously in force in Hong Kong as provided
for in Article 8 of this Law, and the laws enacted by the legislature of the Region. National laws shall not be applied in the Hong Kong
Special Administrative Region except for those listed in Annex III to the Basic Law. The laws listed therein shall be applied locally
by way of promulgation or legislation by the Region. Also, regarding the Annex III and several Instruments of the Basic Law, National
Laws, which have applied in Hong Kong until now are as following:</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">Resolution
on the Capital, Calendar, National Anthem and National Flag of the PRC; Resolution on the National Day of the PRC; Declaration of the
Government of the PRC on the Territorial Sea; Nationality Law of the PRC; Regulations of the PRC Concerning Diplomatic Privileges and
Immunities; Law of the PRC on the National Flag; Regulations of the PRC Concerning Consular Privileges and Immunities; Law of the PRC
on the National Emblem; Law of the PRC on the Territorial Sea and the Contiguous Zone; Law of the PRC on Garrisoning the Hong Kong Special
Administrative Region; Law of the PRC on the Exclusive Economic Zone and the Continental Shelf; Law of the PRC on Judicial Immunity from
Compulsory Measures Concerning the Property of Foreign Central Banks; and Law of the PRC on the National Anthem; Law of the PRC on Safeguarding
National Security in the Hong Kong Special Administrative Region.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">The
CSRC released, on December 24, 2021, the Provisions of the State Council on the Administration of Domestic Companies Offering Securities
for Overseas Listing (Revision Draft for Comments) (the &#8220;Provisions&#8221;) and the Administrative Measures for the Filing of Domestic
Companies Seeking Overseas Securities Offering and Listing (the &#8220;Measures&#8221;) for public comment. According to the Provisions
and Measures, &#8220;Domestic companies that seek to offer and list securities in overseas markets shall fulfill the filing procedure
with the securities regulatory agency under the State Council and report relevant information;&#8221; and &#8220;An overseas offering
and listing is prohibited under any of the following circumstances: (1) if the intended securities offering and listing falls under specific
clauses in national laws and regulations and relevant provisions prohibiting such financing activities.&#8221; Furthermore, the Cybersecurity
Review Measures (2021) was officially released to the public on December 28, 2021 and became effective on February 15, 2022. According
to the Cybersecurity Review Measures (2021), &#8220;To go public abroad, an online platform operator who possesses the personal information
of more than 1 million users shall declare to the Office of Cybersecurity Review for cybersecurity review.&#8221;<b><i>&#160;</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">As
of the date of this annual report, we have two wholly-owned subsidiaries and operating entities established in Hong Kong, Ebang Communications
(HK) Technology Limited, or HK Ebang Communications, principally for the trading of blockchain chips; and HongKong Ebang Digital Technology
Limited, or HK Ebang Digital, principally for cryptocurrency exchange businesses. Neither entities have established any subsidiary or
branch in PRC or have committed any business operations in PRC. For additional information, see &#8220;Item 4. Information of the Company
&#8211; C. Organizational Structure.&#8221;</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">Based
on the aforementioned Basic Law, our Hong Kong subsidiaries are not subject to the Cybersecurity Measures and the Provisions and the
Measures. However, due to the uncertainty of the PRC legal system and changes in laws, regulations or policies, including how these laws,
regulations or policies would be interpreted or implemented, the national laws applicable in Hong Kong in the Basic Law might be revised
in the future. Therefore, we cannot assure you that we will not be affected by the foregoing or relevant laws, regulations or policies
in the future. If there are any changes to the foregoing laws, regulations and policies, or if any new laws, regulations, and policies,
etc., would be published, we would manage to comply with the changed laws, regulations and policies. However, we could not guarantee
that the relevant laws, regulations, or policies would not be applied retroactively, so we might face penalties, and our reputation and
results of operations could be materially and adversely affected.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt"><b>Risks Relating
to Our Fintech and Blockchain Product Businesses</b></span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt"><b><i>We are subject
to risks associated with legal, political or other conditions or developments regarding holding, using or mining of Bitcoin, which could
negatively affect our business, results of operations and financial position</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">Our
customers are based globally. As such, changes in government policies, taxes, general economic and fiscal conditions, as well as political,
diplomatic or social events, expose us to financial and business risks. In particular, changes in domestic or overseas policies and laws
regarding holding, using and/or mining of Bitcoin could result in an adverse effect on our business operations and results of operations.
Moreover, if any domestic or international jurisdiction where we operate or sell our Bitcoin mining machines prohibits or restricts Bitcoin
mining activities, we may face legal and other liabilities and will experience a material loss of revenue.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">There
are significant uncertainties regarding future regulations pertaining to the holding, using or mining of Bitcoin, which may adversely
affect our results of operations. While Bitcoin has gradually gained more market acceptance and attention, it is anonymous and may be
used for black market transactions, money laundering, illegal activities or tax evasion. As a result, governments may seek to regulate,
restrict, control or ban the holding, use mining holding of Bitcoin. In addition, due to compliance risk, cost, government regulation
or public pressure, banks and financial institutions may not provide banking services, or may cut off services, to businesses that provide
cryptocurrency-related services or that accept cryptocurrencies, including Bitcoin, as payment. Our existing policies and procedures
for the detection and prevention of money laundering and terrorism-funding activities through our business activities have only been
adopted in recent years and may not completely eliminate instances in which we or our products may be used by other parties to engage
in money laundering and other illegal or improper activities. We cannot assure you that there will not be a failure in detecting money
laundering or other illegal or improper activities which may adversely affect our reputation, business, financial condition and results
of operations.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">With
advances in technology, cryptocurrencies are likely to undergo significant changes in the future. It remains uncertain whether Bitcoin
will be able to cope with, or benefit from, those changes. In addition, as Bitcoin mining employs sophisticated and high computing power
devices that need to consume large amounts of electricity to operate, future developments in the regulation of energy consumption, including
possible restrictions on energy usage in the jurisdictions where we sell our products, may also affect our business operations and the
demand for our current Bitcoin mining machines. There has been negative public reaction to the environmental impact of Bitcoin mining,
particularly the large consumption of electricity, and governments of various jurisdictions have responded. For example, pursuant to
the Notification No. 1283, new virtual currency mining projects are forbidden to apply for electricity facility installation, and the
electricity facility installation shall be strictly reviewed. It is not permissible to supply power to virtual currency mining enterprises
in any name, and all applications for electricity facility installation projects in progress shall be stopped. In the United States,
certain local governments of the state of Washington have discussed measures to address the environmental impacts of Bitcoin-related
operations, such as the high electricity consumption of Bitcoin mining activities. Any legislation and increased regulation regarding
climate change could impose significant costs on us and our suppliers, including costs related to increased energy requirements, capital
equipment, environmental monitoring and reporting, and other costs to comply with such regulations. Specifically, imposition of a carbon
tax or other regulatory fee in a jurisdiction where we operate or on electricity that we purchase could result in substantially higher
energy costs, and due to the significant amount of electrical power required to operate cryptocurrency mining machines, could in turn
put our facilities at a competitive disadvantage. Any future climate change regulations could also negatively impact our ability to compete
with companies situated in areas not subject to such limitations. Given the political significance and uncertainty around the impact
of climate change and how it should be addressed, we cannot predict how legislation and regulation will affect our financial condition,
operating performance and ability to compete. Furthermore, even without such regulation, increased awareness and any adverse publicity
in the global marketplace about potential impacts on climate change by us or other companies in our industry could harm our reputation.
Any of the foregoing could have a material adverse effect on our financial position, results of operations and cash flows.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt"><b><i>The further
development and acceptance of digital asset networks and other digital assets, which represent a new and rapidly changing industry, are
subject to a variety of factors that are difficult to evaluate. The slowing or stopping of the development or acceptance of digital asset
systems may adversely affect an investment in us</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 27.75pt; background-color: white"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 27.75pt; background-color: white"><span style="font-size: 10pt">The
use of cryptocurrencies to, among other things, buy and sell goods and services and complete transactions, is part of a new and rapidly
evolving industry that employs cryptocurrency assets, including Bitcoin, based upon a computer-generated mathematical or cryptographic
protocol. Large-scale acceptance of Bitcoin as a means of payment has not, and may never, occur. The growth of this industry in general,
and the use of Bitcoin in particular, is subject to a high degree of uncertainty, and the slowing or stopping of the development or acceptance
of developing protocols may occur unpredictably.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 27.75pt; background-color: white"><span style="font-size: 10pt">Recent
events in the industry, such as filing for and seeking protection of Chapter 11 proceedings by major market participants, may have significant
impact on further development and acceptance of digital asset networks and digital assets as they exposed how unpredictable and turbulent
the digital assets industry can be. Specifically, the Chapter 11 Bankruptcy filings of digital asset exchanges FTX Trading Ltd., et al.
(&#8220;FTX&#8221;) (including its affiliated hedge fund, Alameda Research LLC) was unexpected and significantly reduced confidence in
the digital assets industry as it was one of the largest and considered among safest digital asset trading platforms. Furthermore, it
also revealed potential systemic risks and industry contagion as a significant number of other major market participants were affected
by FTX&#8217;s Chapter 11 filing &#8211; namely, among others, BlockFi Inc., et al. (&#8220;BlockFi&#8221;), as one of the largest digital
asset lending companies. At this time, we believe that there are no significant exposures of our business to any of the industry participants
who have filed for Chapter 11 bankruptcy to date; however, such failure of key institutions in the cryptocurrency asset industry highlights
the risk of systemic interconnectedness between major market participants and the effect it could have on the industry as a whole.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 27.75pt; background-color: white"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 27.75pt; background-color: white"><span style="font-size: 10pt">The
closure and temporary shutdown of major digital asset exchanges and trading platforms, such as FTX, due to fraud or business failure,
has disrupted investor confidence in cryptocurrencies and led to a rapid escalation of enforcement action taken by various regulatory
authorities against participants in the digital asset industry. Thus, the failures of key market participants and systemic contagion
risk are expected to, as a consequence, invite more intense and frequent regulatory scrutiny. All of this could have a negative impact
on further development, confidence in, and acceptance of digital asset networks and digital assets, including Bitcoin.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27.75pt; background-color: white"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27.75pt; background-color: white"><span style="font-size: 10pt">Other
factors that could affect further development and acceptance of digital asset networks and other digital assets include, but are not
limited to:</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; background-color: white"><tr style="vertical-align: top">
<td style="width: 0.5in"></td><td style="width: 0.25in"><span style="font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">increased
                                            universal adoption and use of Bitcoin as a medium of exchange;</span></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; background-color: white"><tr style="vertical-align: top">
<td style="width: 0.5in"></td><td style="width: 0.25in"><span style="font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">governmental
                                            and quasi-governmental regulation of Bitcoin and its use, or restrictions on or regulation
                                            of access to and operation of the Bitcoin network or similar cryptocurrency systems and platforms;</span></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; background-color: white"><tr style="vertical-align: top">
<td style="width: 0.5in"></td><td style="width: 0.25in"><span style="font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">changes
                                            in consumer demographics and public tastes and preferences;</span></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; background-color: white"><tr style="vertical-align: top">
<td style="width: 0.5in"></td><td style="width: 0.25in"><span style="font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the
                                            maintenance and development of the open-source software protocol of the Bitcoin network;</span></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; background-color: white"><tr style="vertical-align: top">
<td style="width: 0.5in"></td><td style="width: 0.25in"><span style="font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the
                                            increased consolidation of contributors to the Bitcoin blockchain through Bitcoin mining
                                            pools;</span></td></tr></table><div>

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<td style="width: 0.5in"></td><td style="width: 0.25in"><span style="font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the
                                            availability and popularity of other cryptocurrencies and other forms or methods of buying
                                            and selling goods and services, including new means of using fiat currencies;</span></td></tr></table><div>

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</div><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; background-color: white"><tr style="vertical-align: top">
<td style="width: 0.5in"></td><td style="width: 0.25in"><span style="font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the
                                            use of the networks supporting cryptocurrencies for developing smart contracts and distributed
                                            applications;</span></td></tr></table><div>

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</div><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; background-color: white"><tr style="vertical-align: top">
<td style="width: 0.5in"></td><td style="width: 0.25in"><span style="font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">general
                                            economic conditions and the regulatory environment relating to cryptocurrencies and other
                                            digital assets;</span></td></tr></table><div>

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<td style="width: 0.5in"></td><td style="width: 0.25in"><span style="font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">environmental
                                            or tax restrictions, excise taxes or other additional costs on the use of electricity to
                                            mine bitcoin;</span></td></tr></table><div>

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</div><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; background-color: white"><tr style="vertical-align: top">
<td style="width: 0.5in"></td><td style="width: 0.25in"><span style="font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">an
                                            increase in Bitcoin transaction costs and any related reduction in the use of and demand
                                            for Bitcoin; and</span></td></tr></table><div>

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</div><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; background-color: white"><tr style="vertical-align: top">
<td style="width: 0.5in"></td><td style="width: 0.25in"><span style="font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">negative
                                            consumer sentiment and perception of bitcoin specifically or cryptocurrencies generally.</span></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-size: 10pt"><b><i>&#160;</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="font-size: 10pt"><b><i>We
may face several risks due to disruptions in the digital asset markets, including but not limited to, the risk from depreciation in our
stock price, financing risk, risk of increased losses or impairments in our investments or other assets, risks of legal proceedings and
government investigations, and risks from price declines or price volatility of digital assets</i></b></span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 27.75pt; background-color: white"><span style="font-size: 10pt">In
the second half of 2022 and beginning of 2023, some well-known digital asset market participants, including digital asset lenders Celsius
Network LLC, et al. (&#8220;Celsius&#8221;), Voyager Digital Ltd., et al. (&#8220;Voyager&#8221;), Three Arrows Capital (&#8220;Three
Arrows&#8221;) and Genesis Global Holdco, LLC, et al. (&#8220;Genesis&#8221;) declared bankruptcy, resulting in a loss of confidence
in participants of the digital asset ecosystem and negative publicity surrounding digital assets more broadly. In November 2022, FTX,
the third largest digital asset exchange by volume at the time, halted customer withdrawals and shortly thereafter, FTX and its subsidiaries
filed for bankruptcy.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 27.75pt; background-color: white"><span style="font-size: 10pt">In
addition, in February 2023, the SEC entered into a settlement agreement with cryptocurrency exchange Payward Ventures, Inc. and Payward
Trading Ltd. (doing business as, and hereinafter, &#8220;Kraken&#8221;) for failing to register its &#8220;staking-as-a-service&#8221;
program as a securities offering in violation of Section 5 of the Securities Act. Pursuant to the settlement agreement, Kraken agreed
to cease operations of its staking program in the U.S. and pay the SEC $30 million in fines.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 27.75pt; background-color: white"><span style="font-size: 10pt">In
response to these events, the digital asset markets, including the market for Bitcoin specifically, have experienced extreme price volatility
and several other entities in the digital asset industry have been, and may continue to be, negatively affected, further undermining
confidence in the digital asset market and in Bitcoin. These events have also negatively impacted the liquidity of the digital asset
market as certain entities affiliated with FTX engaged in significant trading activity. If the liquidity of the digital asset market
continues to be negatively impacted by these events, digital asset prices (including the price of Bitcoin) may continue to experience
significant volatility and confidence in the digital asset market may be further undermined. These events are continuing to develop and
it is not possible to predict at this time all of the risks that they may pose to us, our service providers or the digital asset industry
as a whole.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 27.75pt; background-color: white"><span style="font-size: 10pt">Although
we had not been materially and adversely affected by the downfall of FTX or any of the above-mentioned cryptocurrency companies, nor
have we had any material assets that may not be recovered or may otherwise be lost or misappropriated due to the bankruptcies, the failure
or insolvency of large exchanges like FTX have caused and ma continue to cause the price of Bitcoin to fall and decrease confidence in
the ecosystem, which could adversely affect an investment in us. Such market volatility and decrease in Bitcoin price have had a material
and adverse effect on our results of operations and financial condition and we expect our results of operations to continue to be affected
by the Bitcoin price as the results of our operations are significantly tied to the price of Bitcoin. If we do not continue adjusting
our short-term strategy to optimize our operating efficiency in the current dynamic market conditions, such market conditions could have
a further negative result on our business, prospects or operations.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 27.75pt; background-color: white"><span style="font-size: 10pt"><b><i>&#160;</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt"><b><i>The current
regulatory environment in foreign markets, and any adverse changes in those environments, could have material adverse impacts on our
blockchain products business and our Fintech business</i></b></span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">We currently export our products to various overseas markets, have
established two cryptocurrency exchange platforms and one cross-border payment and foreign exchange platform, and we intend to further
develop our business and operations in the future to provide Fintech businesses in overseas jurisdictions, including, but not limited
to, Singapore, Hong Kong, Australia, New Zealand, the Bahamas, the United States and Malaysia. Our blockchain products business and Fintech
businesses could therefore be significantly affected by regulatory developments in jurisdictions outside the PRC, including the United
States and other jurisdictions.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">Certain
aspects of our business are subject to extensive laws, rules, regulations, policies and legal and regulatory guidance, including those
governing securities, commodities, cryptocurrency asset custody,&#160;exchange&#160;and transfer, data governance, data protection, cybersecurity
and tax. Many of these legal and regulatory regimes were adopted prior to the advent of the Internet, mobile technologies, cryptocurrency
assets and related technologies. As a result, they do not contemplate or address unique issues associated with the crypto economy, are
subject to significant uncertainty, and vary widely across federal, state and local laws, including the PRC and international jurisdictions.
These legal and regulatory regimes, including the laws, rules and regulations thereunder, evolve frequently and may be modified, interpreted
and applied in an inconsistent manner from one jurisdiction to another, and may conflict with one another. Moreover, the complexity and
evolving nature of certain aspects of our business and the significant uncertainty surrounding the regulation of the crypto economy require
us to exercise our judgement as to whether certain laws, rules and regulations apply to us, and it is possible that governmental bodies
and regulators may disagree with our conclusions. In addition, governmental authorities that oversee certain aspects of the cryptocurrency
markets, including those in the United States and other jurisdictions, have taken actions based on current laws and regulations, and
are likely to continue to issue new laws, rules and regulations governing the cryptocurrency industry in which we currently operate and
may operate in the future. As a result, and as discussed further in &#8220;- We are subject to risks associated with legal, political
or other conditions or developments regarding holding, using or mining of Bitcoin, which could negatively affect our business, results
of operations and financial position,&#8221; existing and future regulations affecting the mining, holding, using, or transferring of
cryptocurrencies may adversely affect our future business operations and results of operations, could subject us to significant fines
and other regulatory consequences, and could result in our or our customers&#8217; liability for activities conducted by our customers.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">As
described under &#8220;Item 4. Information on the Company&#8212;B. Business Overview&#8212;Regulation&#8212;Regulatory Overview of United
States,&#8221; United States federal and state securities laws may specifically limit our ability and the ability of our customers to
use our blockchain and telecommunications products where these operations are conducted in connection with cryptocurrencies that are
considered &#8220;securities&#8221; for purposes of United States laws. We have designed new chips for mining cryptocurrencies other
than Bitcoin, and the likely status of these cryptocurrencies as securities could limit distributions, transfers, or other actions involving
such cryptocurrencies, including mining, in the United States. For example, the distribution of cryptocurrencies to miners through the
mining process could be deemed to involve an illegal offering or distribution of securities subject to United States federal or state
laws. In addition, miners on cryptocurrency networks could, under certain circumstances, be viewed as statutory underwriters or as &#8220;brokers&#8221;
subject to regulation under the Securities Exchange Act of 1934. This could require us or our customers to change, limit, or cease their
mining operations, register as broker-dealers and comply with applicable laws, or be subject to penalties, including fines, or other
regulatory consequences. In addition, we could face liability for facilitating their illegal activities.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">Further,
if Bitcoin, Ethereum, or any other supported cryptocurrency or other digital asset is deemed to be a security under any United States
federal, state, or foreign jurisdiction, or in a proceeding in a court of law or otherwise, it may have adverse consequences for such
supported cryptocurrency or other digital asset, which could adversely affect our business, prospects, operations or financial condition.
For instance, all transactions in such supported cryptocurrency or other digital asset would have to be registered with the SEC or other
foreign authority, or conducted in accordance with an exemption from registration, which could severely limit its liquidity, usability
and transactability. Moreover, the networks on which such supported cryptocurrency or digital assets are utilized may be required to
be regulated as securities intermediaries, and subject to applicable rules, which could effectively render the network impracticable
for its existing purposes. Further, it could draw negative publicity and a decline in the general acceptance of the cryptocurrency or
other digital asset. Also, it may make it difficult for such supported cryptocurrency or other digital asset to be traded, cleared, and
custodied as compared to other cryptocurrency or other digital assets that are not considered to be securities. Specifically, even if
transactions in a cryptocurrency or other digital asset were registered with the SEC or conducted in accordance with an exemption from
registration, the current intermediary-based framework for securities trading, clearances and settlements is not consistent with the
operations of the digital asset market. For example, under current SEC guidance, cryptocurrency and other digital asset securities cannot
be held on behalf of customers by broker-dealers that also support custody of traditional securities; and the SEC has not permitted public
permissionless blockchain-based clearance and settlement systems for securities.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">In
addition, cryptocurrencies and other digital assets are, in certain instances, subject to additional U.S. laws and regulations related
to transactions in commodities as enforced by the Commodity Futures Trading Commission, or CFTC, and to money transmission, money service
business, anti-money laundering, and know-your-customer activities as enforced by the Department of the Treasury&#8217;s Financial Crimes
Enforcement Network, or FinCEN, and by state governments. We or our customers could be subject to regulatory restrictions or regulatory
actions based on these laws and regulations.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">Under
the Investment Company Act of 1940, as amended, a company may fall within the definition of an investment company under section 3(c)(1)(A)
thereof if it is or holds itself out as being engaged primarily, or proposes to engage primarily in the business of investing, reinvesting
or trading in securities, or under section 3(a)(1)(C) thereof if it is engaged or proposes to engage in business of investing, reinvesting,
owning, holding, or trading in securities, and owns or proposes to acquire &#8220;investment securities&#8221; (as defined) having a
value exceeding 40% of its total assets (exclusive of government securities and cash items) on an unconsolidated basis. There is no authoritative
law, rule or binding guidance published by the SEC regarding the status of digital assets as &#8220;securities&#8221; or &#8220;investment
securities&#8221; under the Investment Company Act. Although we believe that we are not engaged in the business of investing, reinvesting,
or trading in investment securities, and 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, to the extent the digital assets which we own or otherwise acquire may
be deemed &#8220;securities&#8221; or &#8220;investment securities&#8221; by the SEC or a court of competent jurisdiction, we may meet
the definition of an investment company. If we fall within the definition of an investment company under the Investment Company Act,
we would be required to register with the SEC. If an investment company fails to register, it likely would have to stop doing almost
all business, and its contracts would become voidable. Generally non-U.S. issuers may not register as an investment company without an
SEC order.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">Cryptocurrencies
and digital assets are recent technological innovations, and the regulatory schemes to which digital assets and their related exchanges
may be subject have not been fully explored or developed by foreign jurisdictions. Thus, cryptocurrencies and other digital assets face
an uncertain regulatory landscape in many foreign jurisdictions. Various foreign jurisdictions may from time to time adopt laws, regulations
or directives that affect our cryptocurrency businesses. Due in part to its international nature and the nascent stage of regulation,
along with the limited experience with cryptocurrencies and digital assets, and language barriers between international journalists,
translators and regulators, information regarding the regulation of cryptocurrencies and other digital assets in various jurisdictions
may be incomplete, inaccurate or unreliable. As both the regulatory landscape develops and journalistic familiarity with cryptocurrencies
and other digital assets increase, mainstream media&#8217;s understanding of cryptocurrencies, digital assets, and the regulation thereof
may improve. As we enter into the markets in Australia, Singapore, the Bahamas, Hong Kong, New Zealand and the United States, we have
retained local regulatory counsel and expect to continue to monitor the local regulations regarding cryptocurrencies, digital assets,
and financial service platforms.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">We
expect that regulations governing our current and planned business operations will vary from country to country as well as within countries.
We cannot assure you that we will be familiar with local laws and regulations at all times when we establish digital asset and financial
services platform businesses or develop any other business and operations in a foreign country. An increase in the regulation of such
operations may affect our proposed businesses by increasing compliance costs or prohibiting certain or all of our proposed activities.
In addition, existing and proposed laws and regulations can delay or impede the development of new products, result in negative publicity,
decrease demand for our products, require significant management time and attention, and subject us to claims or other remedies, including
fines or demands that we modify or cease existing business practices.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">Furthermore,
any action brought against us or our customers by a foreign regulator, or by an individual in a private action, based on foreign law
could cause us or our customers to incur significant legal expenses and divert our management&#8217;s attention from the operation of
the business. If our or our customers&#8217; operations are found to be in violation of any laws and regulations, we or they may be subject
to penalties associated with the violation, including civil and criminal penalties, damages and fines. This could in turn require us
to curtail or cease all or some operations. Regulatory action or regulatory change could also decrease demand for our products and services,
which would be harmful to the success of our business.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt"><b><i>&#160;</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt"><b><i>The future
development and growth of the cryptocurrency and digital assets industry is subject to a variety of factors that are difficult to predict
and evaluate. If the cryptocurrency and digital assets industry does not grow as we expect, our business, operating results, and financial
condition could be adversely affected</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">Cryptocurrency
assets built on blockchain technology were only introduced in 2008 and remain in the early stages of development. In addition, different
digital assets are designed for different purposes. Bitcoin, for instance, was designed to serve as a peer-to-peer electronic cash system,
while Ethereum was designed to be a smart contract and decentralized application platform. Many other digital asset networks, ranging
from cloud computing to tokenized securities networks, have only recently been established. The further growth and development of any
digital assets and their underlying networks and other cryptographic and algorithmic protocols governing the creation, transfer, and
usage of digital assets represent a new and evolving paradigm that is subject to a variety of factors that are difficult to evaluate,
including:</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">many digital asset networks
    have limited operating histories, have not been validated in production, and are still in the process of developing and making significant
    decisions that will affect the design, supply, issuance, functionality, and governance of their respective digital assets and underlying
    blockchain networks, any of which could adversely affect their respective digital assets;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in"><span style="font-size: 10pt">&#160;&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">many digital asset networks
    are in the process of implementing software upgrades and other changes to their protocols, which could introduce bugs, security risks,
    or adversely affect the respective digital asset networks;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">several large and prominent
    networks, including Bitcoin and Ethereum, are developing new features to address fundamental speed, scalability, and energy usage
    issues. If these issues are not successfully addressed, or are unable to receive widespread adoption, it could adversely affect the
    underlying cryptocurrency and other digital assets;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: top">
    <td style="width: 48px"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">security issues, bugs,
    and software errors have been identified with many digital assets and their underlying blockchain networks, some of which have been
    exploited by malicious actors. There are also inherent security weaknesses in some digital assets, such as when creators of certain
    digital asset networks use procedures that could allow hackers to counterfeit tokens. Any weaknesses identified with a digital asset
    could adversely affect its price, security, liquidity, and adoption. If a malicious actor or botnet (a volunteer or hacked collection
    of computers controlled by networked software coordinating the actions of the computers) obtains a majority of the compute or staking
    power on a digital asset network, as has happened in the past, it may be able to manipulate transactions, which could cause financial
    losses to holders, damage the network&#8217;s reputation and security, and adversely affect its value;</span></td></tr>
<tr style="vertical-align: top">
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
<tr style="vertical-align: top">
    <td><span style="font-size: 10pt">&#160;</span></td>
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the development of new
    technologies for mining, such as improved ASICs, or changes in industry patterns, such as the consolidation of mining power in a
    small number of large mining farms, could reduce the security of blockchain networks, lead to increased liquid supply of digital
    assets, and reduce a digital asset&#8217;s price and attractiveness;</span></td></tr>
</table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in"></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in"></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">if rewards and transaction
    fees for miners or validators are not sufficiently high to attract and retain miners, a digital asset network&#8217;s security and
    speed may be adversely affected, increasing the likelihood of a malicious attack;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in"><span style="font-size: 10pt">&#160;&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the governance of many
    decentralized blockchain networks is by voluntary consensus and open competition, and many developers are not directly compensated
    for their contributions. As a result, there may be a lack of consensus or clarity on the governance of any particular cryptocurrency
    network, a lack of incentives for developers to maintain or develop the network, and other unforeseen issues, any of which could
    result in unexpected or undesirable errors, bugs, or changes, or stymie such network&#8217;s utility and ability to respond to challenges
    and grow; and</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in"></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">many digital asset networks
    are in the early stages of developing partnerships and collaborations, all of which may not succeed and adversely affect the usability
    and adoption of the respective digital assets.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in"><span style="font-size: 10pt">&#160;</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in"><span style="font-size: 10pt">&#160;&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">Various
other technical issues have also been uncovered from time to time that resulted in disabled functionalities, exposure of certain users&#8217;
personal information, theft of users&#8217; assets, and other negative consequences, and which required resolution with the attention
and efforts of their global miner, user, and development communities. If any such risks or other risks materialize, and in particular
if they are not resolved, the development and growth of the digital asset space may be significantly affected and, as a result, our business,
operating results, and financial condition could be adversely affected.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt"><b><i>&#160;</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We may face challenges in regard to stringent
licensing and regulatory requirements in the money services business we operate</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The money services business
industry is relatively competitive in the jurisdictions we carry out or intend to carry out such businesses. Apart from the fierce competition
we may face in this area, we may also face difficulty in penetrating the market. Regulators in various countries are imposing stricter
licensing requirements towards new entrants. For instance, the Malaysian regulatory body is not only taking into consideration the aspect
of compliance in granting the relevant licenses but also the value proposition of a business plan. The same is observed in Hong Kong and
Australia, in which the relevant regulator requires a business plan as a prerequisite of granting a license. The Australian regulatory
body imposes strict and ongoing obligations upon licensees of AFS licenses, including, among others, the requirement to report transfer
instructions by users and the business&#8217; compliance with its obligations under anti-money laundering laws.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Given the current approach
by those countries that we conduct or intend to conduct business in, we might face uncertainty in connection with obtaining necessary
licenses and approval before carrying out our money services business. The procedures and processes of obtaining such licenses and approval
requires financial, human, and infrastructural resources. In the event that such licenses and approval are not granted by the relevant
bodies, we might suffer from a loss even before the commencement of money services business in jurisdictions in which we intend to carry
out such business. The risk disclosed herein is not abrogated upon the obtainment of requisite licenses and approval. As various countries
seek to regulate the industry in a more comprehensive manner, more legal requirements may be put in place to maintain licenses and approval.
The uncertainty of such future regulations also poses a substantial risk to us, which may adversely affect our business operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We are also exposed to financial and technological
risks in the money service business which calls for a high and strict standard of compliance in managing such risks and adequate infrastructures
in place in which failure of managing these risks will be adverse to our business</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In light of the various regulatory
and compliance requirements in place with regards to money services businesses, we are expected to prepare and provide all mechanisms
and infrastructures in order to meet such requirements. The provision of these mechanisms and infrastructures must be done even in the
license application stage, which include, <i>inter alia, </i>safekeeping users&#8217; funds, data protection, anti-money laundering, consumer
protection and preventing cyber and financial crimes. The need of these infrastructures connotes to having policies in place, which may
include Know-Your-Customer (KYC) procedures and a robust technological system which can aid the identification, prevention and mitigation
of such risks in the carrying out of money services businesses.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As discussed, the risks of
running a money services business are multifaceted. The failure to provide and maintain such infrastructure could mean two things; <i>firstly</i>,
we may face the risk of failing to obtain the relevant approval and license from the regulators, in countries where we intend to obtain
such licenses such as Malaysia; and <i>secondly</i>, even if license and approval have been obtained previously, for example, we have
obtained relevant licenses in Hong Kong and Australia, we may face penalties imposed by regulators which may include but are not limited
to suspension, revocation, and termination of such licenses and approval should we breach any regulatory and compliance requirements.
In addition to any threat to our licenses in the event of a breach, regulators also have the power to enforce pecuniary measures, including
but not limited to significant fines and the commencement of legal proceedings. The possibility of such actions presents a financial,
commercial, human resources and reputational risk to money services businesses, which must be mitigated by adequate funding, operational
infrastructure and strict compliance controls. Failure to manage such risks may result in an adverse effect to our business operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Any decrease in our receipt of fees and
charges, or limitations on our fees and charges, could adversely affect our business, results of operations and financial condition</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 36pt">Our cross-border payment solutions
include a variety of fees and charges associated with transactions. If the users of our products and services decrease their transaction
activities, or the extent to which they use alternative services, our revenue in connection with the cross border payment business could
be materially adversely affected. In addition, several market factors can affect the amount of our fees and charges, including the market
for similar charges for competitive products. Furthermore, regulators in relevant jurisdictions in which we conduct or intend to conduct
our cross-border payment business have scrutinized the electronic payments industry&#8217;s pricing, charges and other practices related
to its customers. Any restrictions on our ability to price our products and services could materially and adversely affect our revenue.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>In order to remain competitive and to continue
to increase our revenues and earnings, we must continually and quickly update our services, a process that could result in higher costs
and the loss of revenues, earnings and customers if the new services do not perform as intended or are not accepted in the marketplace</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 36pt">The payments technology industry
in which we compete is characterized by rapid technological change, new product introductions, evolving industry standards and changing
customer needs. In order to remain competitive, we are continually involved in a number of projects, including the development of new
platforms, mobile payment applications, e-commerce services and other new offerings emerging in the payments technology industry. These
projects carry the risks associated with any development effort, including cost overruns, delays in delivery and performance problems.
In the payments technology markets, these risks are even more acute. Any delay in the delivery of new services or the failure to differentiate
our services could render our services less desirable to customers, or possibly even obsolete.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 36pt"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Our cross-border payment business depends
on our relationships with banks and other financial institutions around the world, which may impose fees, restrictions and compliance
burdens on us that make our operations more difficult or expensive</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 36pt">Our cross-border payment business includes facilitation of payment
and foreign exchange solutions, primarily cross-border, cross-currency transactions, for small and medium size enterprises and other organizations.
Increased regulation and compliance requirements are impacting these businesses by making it more costly for us to provide our solutions
or by making it more cumbersome for businesses to do business with us. Any factors that increase the cost of cross-border trade for us
or our customers or that restrict, delay, or make cross-border trade more difficult or impractical, such as trade policy (including restrictions
arising out of the Russian and Ukrainian conflict) or higher tariffs, could negatively impact our revenues and harm our business. We may
also have difficulty establishing or maintaining banking relationships needed to conduct our services due to banks&#8217; policies.</p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt"><b><i>Future developments
regarding the treatment of digital assets for U.S. and foreign tax purposes could adversely impact our business</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">Due
to the new and evolving nature of digital assets and the absence of comprehensive legal and tax guidance with respect to digital asset
products, services and transactions, many significant aspects of the U.S. and foreign tax treatment of transactions involving digital
assets, such as the purchase and sale of cryptocurrency assets on our platform, as well as the provision of staking rewards and other
cryptocurrency asset incentives, are uncertain, and it is unclear whether, when and what guidance may be issued in the future on the
treatment of cryptocurrency asset transactions for U.S. and foreign income tax purposes.</span></p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">In
2014, the IRS released Notice 2014-21, discussing certain aspects of &#8220;virtual currency&#8221; for U.S. federal income tax purposes
and, in particular, stating that such virtual currency (i) is &#8220;property,&#8221; (ii) is not &#8220;currency&#8221; for purposes
of the rules relating to foreign currency gain or loss, and (iii) may be held as a capital asset. In 2019, the IRS released Revenue Ruling
2019-24 and a set of &#8220;Frequently Asked Questions&#8221; (which have been periodically updated), that provide additional guidance,
including guidance to the effect that, under certain circumstances, hard forks of digital currencies are taxable events giving rise to
ordinary income and guidance with respect to the determination of the tax basis of virtual currency. However, this guidance does not
address other significant aspects of the U.S. federal income tax treatment of digital assets and related transactions.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">There
continues to be uncertainty with respect to the timing, character and amount of income inclusions for various digital asset transactions
including, but not limited to lending and borrowing digital assets, staking rewards and other digital asset incentives that we offer.
Although we believe our treatment of digital asset transactions for federal income tax purposes is consistent with existing guidance
provided by the IRS and existing U.S. federal income tax principles, because of the rapidly evolving nature of digital asset innovations
and the increasing variety and complexity of digital asset transactions and products, it is possible the IRS and various U.S. states
may disagree with our treatment of certain digital asset offerings for U.S. tax purposes, which could adversely affect our customers
and the vitality of our business and platforms.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">There
can be no assurance that the IRS, the U.S. state revenue agencies or other foreign tax authorities, will not alter their respective positions
with respect to digital assets in the future or that a court would uphold the treatment set forth in existing guidance. It also is unclear
what additional guidance may be issued in the future on the treatment of existing digital asset transactions and future digital asset
innovations for purposes of U.S. tax or other foreign tax regulations. Any such alteration of existing IRS, U.S. state and foreign tax
authority positions or additional guidance regarding digital asset products and transactions could result in adverse tax consequences
for holders of digital assets and could have an adverse effect on the value of digital assets and the broader digital asset markets.
Future technological and operational developments that may arise with respect to digital assets may increase the uncertainty with respect
to the treatment of digital assets for U.S. and foreign tax purposes. The uncertainty regarding tax treatment of digital asset transactions
impacts our customers, and could impact our business, both domestically and abroad.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt"><b><i>&#160;</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt"><b><i>Our results
of operations have been and are expected to continue to be significantly impacted by the fluctuation of cryptocurrency prices, especially
the price of Bitcoin</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 36pt">Our mining machines are currently
designed primarily for Bitcoin mining. The demand for, and pricing of, our mining machines are therefore affected by the expected economic
returns of Bitcoin mining activities, which in turn are primarily driven by, among other factors, the Bitcoin price. The price of Bitcoin
has experienced significant fluctuations over its short existence and may continue to fluctuate significantly in the future.</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 36pt">We expect our results of operations
to continue to be affected by cryptocurrency prices and global cryptocurrency market environment and development trends, as we generated
42.3%, 77.3% and 79.8% of our revenue from sales of our Bitcoin mining machines and related accessories in 2020, 2021 and 2022, respectively,
and 48.1%, 5.5% and nil from provision of mining machine hosting services in the same periods, respectively. We have halted all mining
machine custody services in the PRC at the end of April 2021. With the launch of our two cryptocurrency exchange platforms, and our plan
to develop and operate future cryptocurrency exchange platforms, we anticipate that we will generate an increasing amount of our total
revenue from transaction fees on our platforms in connection with the purchase, sale, and trading of cryptocurrency assets by our customers.
Due to the continued decline in cryptocurrency prices and major cryptocurrency exchange platforms declaring bankruptcy in 2022, which
negatively impacted the crypto currency trading market, we have not generated material revenue from our cryptocurrency exchange products
and services. As such, any declines in the volume of cryptocurrency assets transactions, the price of cryptocurrency assets, or market
liquidity for cryptocurrency assets generally will likely have a material and adverse effect on our results of operations and financial
condition. We cannot assure you that the Bitcoin price or Bitcoin network transaction fees will remain high enough to sustain the demand
for our Bitcoin mining machines or that cryptocurrency prices will not decline significantly in the future. At the same time, if transaction
fees increase to such an extent as to discourage users from using cryptocurrency as a medium of exchange, it may decrease the transaction
volume of the digital assets and may affect the demand for our Bitcoin mining machines and cryptocurrency exchange businesses. Furthermore,
fluctuations in cryptocurrency prices, especially in Bitcoin price, can have an immediate impact on the trading price of our Class A ordinary
shares even before our financial performance is affected, if at all.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">In
addition to the market volatility, various other factors, mostly beyond our control, could impact cryptocurrency prices. For example,
the usage of cryptocurrency in the retail and commercial marketplace is relatively low in comparison with the usage for speculation,
which contributes to cryptocurrency price volatility. Renowned persons, including social media influencers, may also publicly discuss
their holdings (or the holdings of companies with which they are affiliated) of cryptocurrency or their intent to buy or sell large quantities
of cryptocurrency. At a minimum, these public statements delivered through social media, such as Twitter, may cause cryptocurrency prices
to experience significant volatility.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">In
addition, any shortage of power supply due to government control measures or other reasons, and any increase in energy costs, would raise
the costs of Bitcoin mining. This in turn could affect our customers&#8217; expected economic return for mining activities and the demand
for and pricing of our current Bitcoin mining machines and future hosting services.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Furthermore, fluctuations
in the Bitcoin price may affect the value of our inventory as well as the provision we make to the inventory as we manage our inventory
based on, among others, the sales forecast of our Bitcoin mining machines. As we generally increase our procurement volume and stock up
finished goods for the launch of new products or we expect a surge of demand of Bitcoin mining machines, a significant drop in the Bitcoin
price can lead to a lower expected sales price and excessive inventory, which in turn will lead to impairment losses with respect to such
inventory. For example, in 2020, 2021 and 2022, as a result of the significant fluctuation of the Bitcoin price, we recorded write-downs
for the potentially obsolete, slow-moving inventory and lower of cost or market adjustment of US$3.6 million, US$2.2 million and US$6.5
million and in cost of revenues, respectively, which in turn had a significant negative impact on our profitability. If the Bitcoin price
drops significantly in the future, we may need to make similar write-downs again. To the extent that we are able to sell such inventory
above its carrying value, our gross profit may also be inflated by such write down.</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 36pt">The Bitcoin price drop also
adversely impacted the ability of our customers who purchased our Bitcoin mining products to make payments. We offered sales on credit
to some of our customers in response to the Bitcoin price drop in 2020, 2021 and 2022 and may continue to offer credit sales when the
Bitcoin price drops significantly. Additionally, if the Bitcoin price drops significantly in the future, we may need to offer to certain
of our customers price concession, even if we generally do not offer price concessions to customers. We did not provide price concessions
to customers in 2020, 2021 and 2022. However, we cannot assure you that we will not provide such price concession in the future. If we
provide any price concession to our customers in the future, our revenues and results of operations may be adversely affected.</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt"><b><i>We have derived
and may continue to derive a significant portion of our revenues from our Bitcoin mining machines business. If the market for Bitcoin
mining machines ceases to exist or diminishes significantly, our business, results of operations and financial condition would be materially
and adversely affected</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">We
have generated, and expect to generate in the foreseeable future, a significant portion of our revenues from sales of our Bitcoin mining
machines. Sales of our Bitcoin mining machines and related accessories accounted for 42.3%, 77.3% and 79.8% of our revenues in 2020,
2021 and 2022, respectively. Revenues from provision of mining machine hosting services accounted for 48.1%, 5.5% and nil of our revenues
in 2020, 2021 and 2022, respectively, as we have halted all mining machine custody services in the PRC at the end of April 2021. If the
market for Bitcoin mining machines ceases to exist or diminishes significantly, we would experience a significant loss of sales, cancelation
of orders, or loss of customers for our Bitcoin mining machines. Adverse factors that may affect the market for Bitcoin mining machines
include:</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Another cryptocurrency,
    especially one that is not created using the same mining processes as Bitcoin, displaces Bitcoin as the mainstream cryptocurrency,
    thereby causing Bitcoin to lose value or become worthless, which could adversely affect the sustainability of our business.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Bitcoin fails to gain wide
    market acceptance and fails to become a generally accepted medium of exchange in the global economy due to certain inherent limitations
    to cryptocurrencies.</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify"><span style="font-size: 10pt">&#160;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">&#160;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">&#160;</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify"><span style="font-size: 10pt">&#160;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Over time, the reward for
    Bitcoin mining will decline in terms of the amount of Bitcoin awarded, which may reduce the incentive to mine Bitcoin. Specifically,
    a recent halving event occurred in May 2020, and Bitcoins are expected to be fully mined out by the year of 2140. Therefore, Bitcoin
    mining machines may become less productive as the available rewards for Bitcoin mining continue to decrease.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">If
we cannot maintain the scale and profitability of the sales of our Bitcoin mining machines and, at the same time, successfully expand
our business in other application markets, our business, results of operations, financial condition and prospects will suffer. Furthermore,
excess inventory, inventory markdowns, brand image deterioration and margin squeeze caused by declining economic returns for miners or
pricing competition for our Bitcoin mining machines could all have a material and adverse effect on our business, results of operations
and financial condition.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">Further,
while historically, China was a location of significant digital asset mining at low electric power rates, China&#8217;s and other foreign
countries&#8217; governments have taken action to prohibit or significantly restrict digital asset mining. For example, in May and June
of 2021, in their efforts to curb digital asset trading and mining, regulators in several Chinese Provinces, including Qinghai, Inner
Mongolia and Sichuan, announced policies to curb or ban local digital asset mining operations. Within a month following the ban announcement,
the price of Bitcoin experienced a drop of over 30%. Additionally, in January 2022, the Central Bank of Russia called for a ban on cryptocurrency
activities ranging from mining to trading. Whether or not the lack of mining activity domestically or internationally will negatively
impact miner manufacturing and the development, price, availability of new and enhanced mining equipment is unknown. Should China or
other countries that currently restrict digital asset mining eliminate such restrictions or actually seek to enhance such mining activity,
or should other jurisdictions follow suit, the likely decrease in mining activity would likely reduce our revenue and profitability,
and it is possible that our industry may not be able to withstand the sudden and extreme loss of mining power.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt"><b><i>&#160;</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt"><b><i>The industries
in which we operate and which we intend to operate in the future are characterized by constant changes. If we fail to continuously innovate
and to provide products that meet the expectations of our customers, we may be unable to attract new customers or retain existing customers,
and hence our business and results of operations may be adversely affected</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">The
industries in which we operate and intend to operate in the future are characterized by constant changes, including rapid technological
evolution, continual shifts in customer demands, frequent introductions of new products and solutions and constant emergence of new industry
standards and practices. Thus, our success will depend, in part, on our ability to respond to these changes in a cost-effective and timely
manner. To maintain the relevancy of our products and to continue to broaden and enhance our product portfolio for delivering the most
effective products to our customers, we have actively invested in product planning and research and development. The process of developing
and marketing new products is inherently complex and involves significant uncertainties, including the following:</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">our product planning efforts
    may fail resulting in the development or commercialization of new technologies or ideas;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">our research and development
    efforts may fail to translate new product plans into commercially feasible products;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">our new technologies or
    new products may not be well received by consumers;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">we may not have adequate
    funding and resources necessary for continual investments in product planning and research and development;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">our products may become
    obsolete due to rapid advancements in technology and changes in consumer preferences; and</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">our newly developed technologies
    may not be protected as proprietary intellectual property rights.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">Any
failure to anticipate the next-generation technology roadmap or changes in customer preferences or to timely develop new or enhanced
products in response could result in decreased revenue and market share. In particular, we may experience difficulties with product design,
product development, marketing or certification, which could result in excessive research and development expenses and capital expenditure,
delays or prevent our introduction of new or enhanced products. Furthermore, our research and development efforts may not yield the expected
results, or may prove to be futile due to the lack of market demand.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt"><b><i>&#160;</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt"><b><i>&#160;</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt"><b><i>Increasing
mining difficulty and decreasing mining rewards could result in downward pressure on the expected economic returns on Bitcoin mining</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">The
difficulty of Bitcoin mining, or the amount of computational resources required for a set amount of reward for recording a new block,
directly affects the expected economic returns for Bitcoin miners, which in turn affects the demand for our Bitcoin mining machines.
Bitcoin mining difficulty is a measure of how much computing power is required to record a new block, and it is affected by the total
amount of computing power in the Bitcoin network. The Bitcoin algorithm is designed so that one block is generated, on average, every
ten minutes, no matter how much computing power is in the network. Thus, as more computing power joins the network, and assuming the
rate of block creation does not change (remaining at one block generated every ten minutes), the amount of computing power required to
generate each block and hence the mining difficulty increases. In other words, based on the current design of the Bitcoin network, Bitcoin
mining difficulty would increase together with the total computing power available in the Bitcoin network, which is in turn affected
by the number of Bitcoin mining machines in operation. For example, Bitcoin mining difficulty would increase based on increases in the
total computing power available in the Bitcoin network, which is in turn affected by the number of Bitcoin mining machines in operation.
From January 2017 to December 2022, Bitcoin mining difficulty increased by approximately 105 times, according to BTC.com. As a result,
a strong growth in sales of our Bitcoin mining machines can contribute to further growth in the total computing power in the network,
thereby driving up the difficulty of Bitcoin mining and resulting in downward pressure on the expected economic return of Bitcoin mining
and the demand for, and pricing of, our products.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">In
addition, the number of Bitcoin awarded for solving a block in the blockchain halves approximately every four years until the estimated
complete depletion of Bitcoin by around the year 2140. In each of 2013, 2014 and 2015, approximately 25 Bitcoin were awarded for each
block solved. The number of Bitcoin awarded for solving a block halved in 2016 to 12.5 Bitcoin per block, and halved again in May 2020
to 6.25 Bitcoin per block. We have experienced declined demand for Bitcoin mining machines since the Bitcoin halving event in May 2020
as the mining rewards were slashed and the expected economic returns on Bitcoin mining was adversely affected.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">Aside
from mining rewards, transaction fees are another form of incentive for participation in Bitcoin verification processes. Bitcoin users
may offer to pay a discretionary Bitcoin transaction fee to the network member who solves the block and adds that user&#8217;s transaction
to the blockchain to incentivize prioritizing that user&#8217;s transaction. Transaction fees are discretionary, so if the transaction
fees were to become the only or primary income for Bitcoin mining activities in the future, the expected economic returns from Bitcoin
mining and therefore the demand for our products will decrease significantly, which will result in a significant negative impact on our
business and results of operations.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt"><b><i>Our business
growth is dependent on the development of blockchain technology and applications, particularly in the field of Bitcoin </i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">We
derive our revenue predominantly from our blockchain products business. The development of blockchain technology is still in a relatively
early stage, and there can be no assurance that blockchain applications, including those in the fields of cryptocurrencies and other
areas such as artificial intelligence, will gain wide market acceptance. Any blockchain application may become redundant or obsolete
with the introduction of new competing technologies or products. If market acceptance or confidence in blockchain technology is lost
or reduced for any reason, such as due to cybersecurity issues, the demand for our existing or future blockchain products may decline.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">Our
blockchain products business depends significantly on the development of cryptocurrency applications, in particular, Bitcoin applications,
as all of our mining machines are currently designed for Bitcoin mining. The cryptocurrency market is rapidly and continuously evolving.
Any actual or perceived adverse development in Bitcoin or other cryptocurrencies can significantly affect market demand for mining activities,
mining machines and cryptocurrency transactions. In addition, any event or rumor that generates negative publicity for the cryptocurrency
market could hinder the development and reduce market acceptance of cryptocurrency applications. Under such circumstances, our business,
results of operations and financial condition could be materially and adversely affected.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt"><b><i>If we are
unable to manage our growth or execute our strategies effectively, our business, results of operations and financial condition may be
materially and adversely affected</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are in the process of developing
integrated circuits (the &#8220;ICs&#8221;) for mining other cryptocurrencies in order to adapt our future models of mining machines to
other cryptocurrencies promptly and efficiently when all the Bitcoins have been discovered or Bitcoin is replaced by other cryptocurrencies
as mainstream cryptocurrencies. We began to provide mining machine hosting services in 2017 and intend to leverage our experience in the
mining machine industry to establish mining farms and provide cryptocurrency exchange services to the cryptocurrency community in order
to diversify our offerings. We have halted all mining machine custody services in the PRC at the end of April 2021, and we are in the
process of locating and/or constructing compliant mining farms in North America. As of the date of this annual report, we have established
two cryptocurrency exchange platforms and one cross-border payment and foreign exchange platform outside the PRC; have received the Money
Services Business (MSB) License in Canada; received registration approval as digital currency exchange, acquired a company with an Australian
Financial Services License (AFSL) and registration approval as an independent remittance dealer in Australia; received the Money Service
Operator (MSO) License, Type 4 and 9 licenses, the Trust or Company Service Provider (TCSP) license and registration approval as a Trust
Company in Hong Kong, and received registration as a Digital Asset Business and a Firm Dealing in Securities as Agent or Principal, Arranging
Deals, Managing Securities and Advising on Securities in the Bahamas; and we are in the process of obtaining relevant licenses and approvals
for our subsidiaries in Singapore, Hong Kong, Australia, New Zealand and Malaysia to engage in additional Fintech businesses. We may fail
to successfully execute our expansion plan due to our limited resources and other reasons beyond our control. For example, the gain we
obtain from running mining farms may not cover their operating expenses due to a prolonged depression of cryptocurrency prices, and our
Fintech related services may be unable to compete effectively with other similar services already available to the Fintech community.
Should we fail to successfully manage our growth or implement our strategies, the resources we allocate to the new business lines will
be wasted, and our business, results of operations and financial condition could be materially and adversely affected.</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Each of our subsidiaries in Hong Kong, Canada,
Australia, Singapore, the Bahamas, New Zealand, the United States and Malaysia have a limited operating history, which makes it hard for
us to evaluate their abilities to generate revenue through operations, and to date, each of them has not generated material revenue from
any commercially available blockchain products or Fintech services</i></b></p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">Our
subsidiaries in Hong Kong, Canada, Australia, Singapore, the Bahamas, New Zealand, the United States and Malaysia were recently formed
between August 2020 and February 2023 for the purpose of establishing our blockchain and Fintech businesses. Their limited operating
history and the relative immaturity of the blockchain and Fintech industry make it difficult for us to evaluate their current business
and future prospects. They have encountered, and will continue to encounter, risks and difficulties frequently experienced by growing
companies in rapidly developing and changing industries, including challenges in forecasting accuracy, determining appropriate uses of
their limited resources, gaining market acceptance, managing a complex and evolving regulatory landscape and developing new products.
These subsidiaries&#8217; current or future operating model may require changes in order for them to scale their operations efficiently
and be successful. Investors in our securities should consider the business and prospects of our overseas subsidiaries in these countries
in light of the risks and difficulties they face as early-stage companies focused on developing products in the field of financial technology.&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt"><b><i>We may not
successfully develop, market or launch any future Fintech businesses or continue operating our existing Fintech businesses</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In April 2021, we launched
our first self-developed proprietary cryptocurrency exchange platform Ebonex and another self-developed proprietary cryptocurrency exchange
platform in February 2022, we also branded Ebonex in Australia. In March 2022, we established a cross-border payment and foreign exchange
business, through the acquisition of a company with an AFSL for engaging in financial services in Australia. As of the date of this annual
report, these businesses have only been accessed and/or utilized by a small number of users and have not generated material revenue. In
September 2020, we received the MSB License from the Financial Transactions and Reports Analysis Centre of Canada, which allows us to
engage in foreign exchange dealing, money transferring and dealing in virtual currencies in Canada. In December 2021 and March 2022, we
received registration approval from the AUSTRAC as a digital currency exchange and acquired a company with an AFSL for engaging in financial
services in Australia. In September and December 2021, we received the TCSP Licenses from the Companies Registry of Hong Kong, which allows
us to carry on a trust or company service business in Hong Kong. In January 2022, we have received registration approval as a Trust Company
by the Companies Registry of Hong Kong, which allows us to engage in trust related business in Hong Kong. In September 2022, we received
the Type 4 and 9 licenses from the Securities and Futures Commission in Hong Kong, which allows us to carry on advising on securities
and asset management service. In November 2022, we received registration as a Firm Dealing in Securities as Agent or Principal, Arranging
Deals, Managing Securities and Advising on Securities from Securities Commission of The Bahamas, which allows us to carry on securities
activities in and from the Commonwealth of The Bahamas. In January 2023, we received registration as a Digital Asset Business from Securities
Commission of The Bahamas, which allows us to carry on digital asset business activities in and from the Commonwealth of The Bahamas.
In March 2023, we received the MSO license from Customs and Excise Department in Hong Kong, which allows us to operate money changing
and remittance services. In April 2023, we received another registration approval from the AUSTRAC as a digital currency exchange and
registration approval as an independent remittance dealer on the AUSTRAC Remittance Sector Register. We are in the process of obtaining
relevant licenses and approvals for our subsidiaries in Singapore, Hong Kong, Australia, New Zealand and Malaysia to engage in additional
Fintech businesses and we are at an initial preparatory stage of the construction of regulatory compliant mining farms in North America.
There is no guarantee that we will receive any additional required approvals and licenses for our proposed businesses in such jurisdictions
in a timely manner or on commercially reasonable terms, or at all, or that we will commence the proposed businesses as planned, if at
all. Additionally, as we have limited experience in operating the proposed business, we will need to obtain additional management, regulatory
compliance technical expertise and devote substantial time and effort to these initiatives, which may not be as profitable as we expected
or at all. We will also need to obtain additional capital resources to pursue development of Fintech businesses, and we may not be successful
in raising that capital. In addition, we may face relevant restrictions from existing and future regulations in connection with our expansion
into this line of business. While we have been closely monitoring the development of the relevant regulations and have been in communication
with regulatory authorities, this business initiative may not be viable due to regulatory concerns. Our plan to develop, market or launch
any future cryptocurrency exchanges or to continue operating our existing cryptocurrency exchanges may suffer significant delays in our
efforts and may ultimately not be successful. It is possible that the launch of our future Fintech businesses may never occur, and even
if the proposed business is successfully developed, it is possible that it will not be accessed or utilized by a sufficient number of
users or will otherwise not achieve a viable business scale or market acceptance.</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt"><b><i>&#160;</i></b>&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt"><b><i>We depend
on major mobile operating systems and third-party platforms for the distribution of certain products and services. If Google Play, the
Apple App Store, or other platforms prevent customers from downloading our apps, our ability to grow may be adversely affected</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">We
rely upon third-party platforms for the distribution of certain products and services. Our Ebonex apps are provided to eligible users
as free applications through both the Apple App Store and the Google Play Store, and are also accessible via mobile and traditional websites.
The Google Play Store and Apple App Store are global application distribution platforms and the main distribution channels for our apps.
As such, the promotion, distribution, and operation of our apps are subject to the respective platforms&#8217; terms and policies for
application developers, which are very broad and subject to frequent changes and re-interpretation. Further, these distribution platforms
often contain restrictions related to cryptocurrency assets that are uncertain, broadly construed, and can limit the nature and scope
of services that can be offered. If our products are found to be in violation of any such terms and conditions, we may no longer be able
to offer our products through such third-party platforms. There can be no guarantee that third-party platforms will continue to support
our product offerings, or that customers will be able to continue to use our products. Any changes, bugs, technical or regulatory issues
with third-party platforms, our relationships with mobile manufacturers and carriers, or changes to their terms of service or policies
could degrade our products&#8217; functionalities, reduce or eliminate our ability to distribute our products, give preferential treatment
to competitive products, limit our ability to deliver high quality offerings, or impose fees or other charges, any of which could affect
our product usage and harm our business.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt"><b><i>Our intellectual
property rights are valuable, and any inability to protect them could adversely impact our business, operating results, and financial
condition</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">Our
business depends in large part on our proprietary technology and our brand. We rely on, and expect to continue to rely on, a combination
of patent, trademark, trade dress, domain name, copyright, and trade secrets, as well as confidentiality and license agreements with
our employees, contractors, consultants, and third parties with whom we have relationships, to establish and protect our brand and other
intellectual property rights. However, our efforts to protect our intellectual property rights may not be sufficient or effective. Our
proprietary technology and trade secrets could be lost through misappropriation or breach of our confidentiality and license agreements,
and any of our intellectual property rights may be challenged, which could result in them being narrowed in scope or declared invalid
or unenforceable. There can be no assurance that our intellectual property rights will be sufficient to protect against others offering
products, services, or technologies that are substantially similar to ours and that compete with our business. As a result, we may be
forced into an adverse price competition that reduces our profit margin.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">Our
ability to successfully defend intellectual property challenges from competitors and other parties may depend, in part, on our ability
to counter-assert our patents defensively. Effective protection of our intellectual property may be expensive and difficult to maintain,
both in terms of application and registration costs as well as the costs of defending and enforcing those rights. As we have grown, we
have sought to obtain and protect our intellectual property rights in an increasing number of countries, a process that can be expensive
and may not always be successful. In some instances, patent applications or patents may be abandoned or allowed to lapse, resulting in
partial or complete loss of patent rights in a relevant jurisdiction. Further, intellectual property protection may not be available
to us in every country in which our products and services are available. For example, some foreign countries have compulsory licensing
laws under which a patent owner must grant licenses to third parties. In addition, many countries limit the enforceability of patents
against certain third parties, including government agencies or government contractors. In these countries, patents may provide limited
or no benefit. We may also agree to license our patents to third parties as part of various patent pools and open patent projects. Those
licenses may diminish our ability, though, to counter-assert our patents against certain parties that may bring claims against us. Even
when we are able to obtain intellectual property rights protections, there is no guarantee that we will be able to effectively enforce
our rights. In this respect, we may incur expenses and efforts to monitor and enforce our intellectual property rights. Infringement
of our intellectual property rights and the resulting diversion of resources to protect such rights through litigation or other means
could also adversely affect our profitability.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt"><b><i>If Bitcoin
is replaced by other cryptocurrencies as the mainstream cryptocurrency, we will lose the market for our current mining machines and our
results of operations will be materially and adversely affected</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">Although
we have begun to develop new chips for mining other cryptocurrencies, all of our revenue from sales of cryptocurrency mining machines
was generated from the sale of mining machines designed for Bitcoin mining in 2020, 2021 and 2022. We face the risk that other cryptocurrencies
could replace Bitcoin as the largest cryptocurrency, which may in turn negatively impact the value of Bitcoin and diminish interest in
mining Bitcoin. Acceptance of Bitcoin may decline due to various reasons such as the following:</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">potential changes in Bitcoin&#8217;s
    algorithms or source code that may negatively impact user acceptance;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">patches, upgrades, attacks
    or hacking of Bitcoin&#8217;s infrastructure that may undermine user interest or confidence;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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    <td style="width: 48px; text-align: justify"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">usage of Bitcoin for illicit
    or illegal activities by bad actors that may erode public perception of Bitcoin; or</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 10pt">&#160;</span></p><div>

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    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">hacking, fraud or other
    problems with Bitcoin exchanges, wallets or other related infrastructure, that may negatively impact user confidence.</span></td></tr>
  </table><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">If
fewer people accept Bitcoin currency or fewer merchants accept Bitcoin as a payment method, Bitcoin may decline in value. Although Bitcoin
is currently the largest cryptocurrency by market capitalization, a substantial amount of Bitcoin-related transactions may be speculation-related
and a technological breakthrough in the form of a preferred cryptocurrency is a continuous threat. Digital asset technology is rapidly
advancing and changing and new digital assets are created regularly. New digital assets competing with the digital assets we specialize
in (such as Bitcoin) may increase in popularity and in turn cause a decline in the value of Bitcoin, which may in turn lead to a decline
in the Bitcoin network and our ability to generate revenue from our current mining activities. This may include the development of so-called
central bank digital currencies (CBCDs). Many governments around the world, and central banks are reportedly considering or studying
the potential for CBCDs, including the Australian federal government and the Reserve Bank of Australia and the United States Federal
Reserve. Other cryptocurrencies may be designed with algorithms that are not compatible with the kind of computing done by ASIC chip
mining machines. If such a cryptocurrency were to become dominant, our existing technological know-how may not be applicable in creating
hardware for participants in that cryptocurrency network, and we may face greater competition from new players. In addition, since the
value of and support for Bitcoin depend entirely on the community using it, any disagreement between the users may result in the splitting
of the network to support other cryptocurrencies and the users may sell all their Bitcoin and switch to other cryptocurrencies. As a
result, our mining machines and our results of operations would be materially and adversely affected.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt"><b><i>We rely on
a limited number of third parties to fabricate our ASIC chips, which are the core technology used in our mining machines</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">The
ASIC chip is the key component of a mining machine as it determines the efficiency of the device. Currently, only a small number of wafer
foundries in the world are capable of producing the highly sophisticated silicon wafers used for ASIC chips. Therefore, the ability to
source high-quality wafers is a major barrier to entry for new entrants and has provided us with a great competitive advantage in the
market.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">In
2020, 2021 and 2022, all of our ASIC wafers were fabricated by Samsung. We principally purchased ASIC chips either directly from Samsung
or through intermediaries that purchased from Samsung. However, this arrangement does not guarantee that Samsung will reserve foundry
capacity for us, which we believe is in line with market arrangements with other wafer foundries. &#160;&#160;As such, there are risks
that Samsung may be unable to accept our purchase orders or continue their supply of ASIC wafers to us. Such changes may result in delays
to our production, which could negatively affect our reputation and results of operations.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">In
order to diversify our ASIC chips suppliers, we have established working relations with Taiwan Semiconductor Manufacturing Company, Limited,
or TSMC, since November 2017. However, we cannot guarantee that we will be able to continue to source ASIC wafers from Samsung or TSMC
on the same or similar terms or in a timely manner, or start to source ASIC wafers from other suppliers. In addition, replacing a supplier
may require that we divert attention and resources away from our business. We may also suffer lower gross profit margins if we fail to
pass on any additional costs to our customers. As a result, a change in our relationship with Samsung or TSMC could have a significant
negative impact on our business, financial condition and results of operation.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We depend on a limited number
of suppliers to allocate to us a portion of their manufacturing capacity sufficient to meet our needs, to produce products of acceptable
quality and at acceptable final test yields, and to deliver those products to us on a timely basis and at acceptable prices. These suppliers
may raise prices or may be unable to meet our required capacity for any reason, such as shortages or delays in the shipment of semiconductor
equipment or raw materials required to manufacture our ICs. In particular, we have experienced a global shortage in semiconductors from
2021 to the first half of 2022, which has and may continue to adversely impact the production activity and capacity of our third-party
foundry partners. If these third-party foundry partners fail to succeed in their technology migration or secure enough semiconductors,
they will not be able to deliver to us qualified ICs in a sufficient amount, which will significantly affect our technological advancement
and shipment of Bitcoin mining machines. This could in turn result in lost sales and have a material adverse effect on our relationships
with our customers and on our business and financial condition. In addition, our business relationships with the suppliers may deteriorate.
For example, in November 2019, we brought a legal action against a then-major supplier for breach of contract for delivering defective
products. Under such circumstances, we may not be able to obtain the required capacity and would have to seek alternative suppliers, which
may not be available on commercially reasonable terms, or at all. Moreover, it is possible that other customers of these suppliers that
are larger and/or better financed than we are, or that have long-term contracts with them, may receive preferential treatment in terms
of capacity allocation or pricing. In addition, if we do not accurately forecast our capacity needs, these suppliers may not have available
capacity to meet our immediate needs or we may be required to pay higher costs to fulfill those needs, either of which could materially
and adversely affect our business, financial condition and results of operations.</p><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">In
particular, the production of our ASICs may require advanced IC fabrication technologies. Foundries other than Samsung or TSMC, however,
might not have sufficient production capacity for such technologies, or at all, to meet our requirements. This may expose us to risks
associated with engaging new foundries. For example, using foundries with which we have not established relationships could expose us
to potentially unfavorable pricing, unsatisfactory quality or insufficient capacity allocation.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">Other
risks associated with the concentration of third-party foundry suppliers include limited control over delivery schedules and quality
assurance, lack of capacity in periods of excess demand, unauthorized use of our intellectual property and limited ability to manage
inventory and parts. In particular, although we have entered into confidentiality agreements with our third-party foundry suppliers for
the protection of our intellectual property, it may not protect our intellectual property with the same degree of care as we use to protect
our intellectual property. If we fail to properly manage any of these risks, our business and results of operations may be materially
and adversely affected. Moreover, if Samsung or TSMC suffers any damage to its facilities, suspends manufacturing operations, loses benefits
under material agreements, experiences power outages or computer virus attacks, lacks sufficient capacity to manufacture our products,
encounters financial difficulties, is unable to secure necessary raw materials from its suppliers or suffers any other disruption or
reduction in efficiency, we may encounter supply delays or disruptions.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt"><b><i>We rely on
a limited number of third parties for IC packaging and testing services</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">Fabrication
of IC chips requires specialized services to process the silicon wafers into IC chips by packaging them and to test their proper functioning.
We rely on a limited number of production partners for such packaging and testing services. We have worked closely with world-class outsourced
semiconductor assembly and test, or OSAT, companies on a limited number of specialized production partners exposes us to a number of
risks, including difficulties in finding alternate suppliers, capacity shortages or delays, lack of control or oversight in timing, quality
or costs, and misuse of our intellectual property. If any such problems arise with our OSAT partners, we may experience delays in our
production and delivery timeline, inadequate quality control of our products or excessive costs and expenses. As a result, our financial
condition, results of operation, reputation and business may be adversely affected.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt"><b><i>Failure at
tape-out or failure to achieve the expected final test yields for our ASIC chips could negatively impact our results of operations</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">The
tape-out process is a critical milestone in our business. A successful tape-out means all the stages in the design and verification process
of our ASIC chips have been completed, and the chip design is ready to be sent for manufacturing. The tape-out process requires considerable
investment in time and resources and close cooperation with the wafer foundry, and repeated failures can significantly increase our costs,
lengthen our product development period and delay our product launch. If the tape-out or testing of a new ASIC chip design fails, either
as a result of design flaws by our research and development team or problems with production or the testing process by the wafer foundry,
we may incur considerable costs and expenses to fix or restart the design process. Such obstacles may decrease our profitability or delay
the launch of new products.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">Once
tape-out is successful, the ASIC design is sent for manufacturing, and the final test yield is a measurement of the production success
rate. The final test yield is a function of both product design, which is developed by us, and process technology, which typically belongs
to a third-party foundry, such as Samsung and TSMC in our case. Low final test yields can result from a product design deficiency or
a process technology failure or a combination of both. As such, we may not be able to identify problems causing low final test yields
until our product designs go to the manufacturing stage, which may substantially increase our per unit costs and delay the launch of
new products.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">For
example, if either Samsung or TSMC experiences manufacturing inefficiencies or encounters disruptions, errors or difficulties during
production, we may fail to achieve acceptable final test yields or experience product delivery delays. We cannot guarantee that Samsung
and TSMC will be able to develop, obtain or successfully implement process technologies needed to manufacture future generations of our
mining machines on a timely basis. Moreover, during the periods in which foundries are implementing new process technologies, their manufacturing
facilities may not be fully productive. A substantial delay in the technology transitions to smaller geometry process technologies could
have a material and adverse effect on us, particularly if our competitors transition to such technologies before us.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">In
addition, resolution of yield problems requires cooperation among us, Samsung or TSMC, and packaging and testing partners. We cannot
assure you that the cooperation will be successful and that any yield problem can be fixed.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt"><b><i>If any person,
institution or a pool of them acting in concert obtains control of more than 50% of the processing power active on the Bitcoin network,
such person, institution or a pool of them could prevent new transactions from gaining confirmations, halt payments between users, and
reverse previously completed transactions, which would erode user confidence in Bitcoin</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">If
the awards of Bitcoin for solving blocks and transaction fees for recording transactions are not sufficiently high to incentivize miners,
miners may cease expending processing power to solve blocks. Miners ceasing operations would reduce the collective processing power on
the Bitcoin network, which would adversely affect the confirmation process for transactions and make the Bitcoin network more vulnerable
to any person, institution or a pool of them which has obtained over 50% control over the computing power on the Bitcoin network. In
such event, such person, institution or a pool of them could prevent new transactions from gaining confirmation, halt payments between
users, and reverse previously completed transactions. Such changes or any reduction in confidence in the confirmation process or processing
power of the Bitcoin network may erode user confidence in Bitcoin, which would decrease the demand for our products.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt"><b><i>The decentralized
nature of cryptocurrency may be subject to challenges, which could negatively affect our results of operations</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">A
key reason for Bitcoin and other cryptocurrencies to have attracted many new and committed users in a short period of time is its decentralized
nature, or the lack of control by a central authority. However, there are divergent views on the decentralized nature of cryptocurrencies.
For example, there are claims that most of the actual services and businesses built within the cryptocurrency ecosystem are in fact centralized
since they are run by specific people, in specific locations, with specific computer systems, and that they are susceptible to specific
regulations. Individuals, companies or groups, as well as cryptocurrency exchanges that control vast amounts of cryptocurrency can affect
cryptocurrency&#8217;s market prices. Furthermore, mining equipment production and mining pool locations may become centralized. The
concerns or skepticism about the decentralized nature of Bitcoin may cause customers to lose confidence in the cryptocurrency industry&#8217;s
prospects. This in turn could adversely affect the market demand for our mining machines, the operation of our cryptocurrency exchanges
and our business. Furthermore, the possibility that a person or a coordinated group of people may gain more than 50% control of the process
power active on Bitcoin and be able to manipulate transactions, despite the intended decentralized structure, may also erode confidence
in Bitcoin. Our business, prospects and results of operations therefore may adversely be affected by the divergent views on the decentralized
nature of Bitcoin.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt"><b><i>Change of
Bitcoin algorithms and mining mechanisms may materially and adversely affect our business and results of operations</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">Our
ASIC chips are designed for proof-of-work, or POW, mechanism, which the Bitcoin network uses to validate Bitcoin transactions. Many within
the Bitcoin community believe that POW is a foundation within Bitcoin&#8217;s code that would not be changed. However, there have been
debates on mechanism change to avoid the &#8220;de facto control&#8221; by a great majority of the network computing power. POW validation
consumes large amounts of computing power and electricity. Proof-of-stake validation is a more recent development, which involves the
validator losing part of its cryptocurrency holdings if it fails to correctly validate a block. While there are some drawbacks to proof-of-stake,
it requires far less energy than proof-of-work. Cryptocurrencies whose transactions are validated on a proof-of-stake basis do not require
miners. Future cryptocurrencies may utilize proof-of-stake rather than proof-of work, meaning that there will be less opportunity for
miners to earn rewards. With the possibility of a change in rule or protocol of the Bitcoin network, if our Bitcoin mining machines cannot
be modified to accommodate any such changes, our mining machines will not be able to meet customer demand, and the results of our operations
will be significantly affected. For more details, see &#8220;Item 3. Key Information&#8212;D. Risk Factors&#8212;Risks Relating to Our
Cryptocurrency, Blockchain and Mining Related Businesses&#8212;The administrators of the Bitcoin network&#8217;s source code could propose
amendments to the Bitcoin network&#8217;s protocols and software that, if accepted and authorized by the Bitcoin network&#8217;s community,
could adversely affect our business, results of operations and financial condition&#8221; and &#8220;Item 3. Key Information&#8212;D.
Risk Factors&#8212;Risks Relating to Our Cryptocurrency, Blockchain and Mining Related Businesses&#8212;The acceptance of Bitcoin network
software patches or upgrades by a significant, but not overwhelming, percentage of the users and miners in the Bitcoin network could
result in a &#8220;fork&#8221; in the blockchain, resulting in the operation of two separate networks that cannot be merged. The existence
of forked blockchains could erode user confidence in Bitcoin and could adversely impact our business, results of operations and financial
condition.&#8221;</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We face risks associated with the expansion
of our blockchain products and Fintech business operations overseas and if we are unable to effectively manage such risks, our business
growth and profitability may be negatively affected</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We intend to grow our blockchain products and Fintech businesses in
part by expanding our sales network and operations internationally. Currently, we mainly rely on our production partners in South Korea
and Taiwan, including Samsung and TSMC, for the fabrication, testing and packaging of our ASICs. Any significant deterioration in the
cross-strait relationship may have a negative impact on the ability of our production partners in Taiwan to fulfill their contractual
obligations and ship the ASICs to us, which could have a material and adverse effect on our business, financial condition and results
of operations. Our expansion plans also include possibly establishing an assembly facility and offices for sales, research and development
and other operations in the United States; and we are at an initial preparatory stage of establishing other cryptocurrency exchange platforms
in Hong Kong and overseas. Any significant deterioration in the relationship between China and any of these countries and region may have
a material and adverse effect on our proposed business operations in these jurisdictions. However, there are risks associated with such
global expansion plans, including:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">high costs of investment
    to establish a presence in a new market and manage international operations;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">competition in unfamiliar
    markets;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">foreign currency exchange
    rate fluctuations;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 10pt">&#160;&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">regulatory differences
    and difficulties in ensuring compliance with multi-national legal requirements and multi-national operations;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">changes in economic, legal,
    political or other local conditions in new markets;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">our limited customer base
    and limited sales and relationships with international customers;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">competitors in the overseas
    markets may be more dominant and have stronger ties with customers and greater financial and other resources;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 10pt">&#160;</span></p><div>

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  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">challenges in managing
    our international sales channels effectively;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">difficulties in and costs
    of exporting products overseas while complying with the different commercial, legal and regulatory requirements of the overseas markets
    in which we offer our products;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">difficulty in ensuring
    that our customers comply with the sanctions imposed by the Office of Foreign Assets Control, or OFAC, on various foreign states,
    organizations and individuals;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 10pt">&#160;</span></p><div>

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  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">inability to obtain, maintain
    or enforce intellectual property rights;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">inability to effectively
    enforce contractual or legal rights or intellectual property rights in certain jurisdictions under which we operate; and</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 10pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify"><span style="font-size: 10pt">&#160;</span></td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">governmental policies favoring
    domestic companies in certain foreign markets or trade barriers including export requirements, tariffs, taxes and other restrictions
    and charges. In particular, a worldwide trend in favor of nationalism and protectionist trade policy and the ongoing trade dispute
    between the United States and China as well as other potential international trade disputes could cause turbulence in international
    markets. These government policies or trade barriers could increase the prices of our products and make us less competitive in such
    countries.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">If
we are unable to effectively manage such risks, we may encounter difficulties in our overseas expansion plans and our business, reputation,
results of operations and financial condition may be impaired.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt"><b><i>We plan to
increase our export of mining machines to the United States and the European Union in the future, which may be subject to high tariff
rates resulting from protectionism trade policies, and as a result, our future sales volumes, profitability and results of operations
will be materially and adversely affected</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">Historically,
only a small portion of our mining machines were exported to the United States. Going forward we plan to increase our export of mining
machines to the U.S. market. However, the United States and China have recently been involved in controversy over trade barriers in China
that have threatened a trade war between these two countries, and have implemented or proposed to implement tariffs on certain imported
products. Although the United States had not announced any trade policies that may directly impact the export of our mining machines
as of the date of this annual report, we cannot accurately predict whether any anti-dumping duties, tariffs or quota fees will be imposed
on our mining machines by the United States in the future. Any export requirements, tariffs, taxes and other restrictions and charges
imposed by the United States on our mining machines could significantly increase our customers&#8217; purchase costs of our mining machines
and make our mining machines less competitive in the U.S. market. As a result, our future sales volumes, profitability and results of
operations could be adversely affected.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">In
addition, we also intend to increase our export of mining machines to the European Union in the future. However, the worldwide populism
trend that calls for protectionism trade policy and potential international trade disputes could cause turbulence in the international
markets. These government policies or trade barriers could increase the prices of our mining machines and cause us to lose our sales
and market share to our competitors in these countries.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt"><b><i>Our blockchain
customers rely on a steady and inexpensive power supply for operating mining farms and running mining hardware. Failure to access a large
quantity of power at reasonable costs could significantly increase their operating expenses and adversely affect their demand for our
mining machines</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">Many
of our blockchain customers engage in the cryptocurrency mining business. Cryptocurrency mining consumes a significant amount of energy
power to process the computations and cool down the mining hardware. Therefore, a steady and inexpensive power supply is critical to
cryptocurrency mining. There can be no assurance that the operations of our blockchain customers will not be affected by power shortages
or an increase in energy prices in the future. In particular, the power supply could be disrupted by natural disasters, such as floods,
mudslides and earthquakes, or other similar events beyond the control of our customers. Further, certain of our customers may experience
power shortages due to seasonal variations in the supply of certain types of power such as hydroelectricity. Power shortages, power outages
or increased power prices could adversely affect mining farm businesses of our blockchain customers and reduce the expected market demand
for our mining machines significantly. Under such circumstances, our business, results of operations and financial condition could be
materially and adversely affected.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">In
addition, as we intend to establish and operate mining farms to provide hosting services for third parties and engage in proprietary
Bitcoin and other cryptocurrency mining activities to mine cryptocurrencies for ourselves in the near future, any increase in energy
prices or a shortage in power supply in locations where our future mining farms are located may increase our potential mining costs and
reduce the expected economic returns from our proprietary mining operation significantly.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt"><b><i>The average
selling prices of certain products may decrease from time to time due to technological advancement and we may not be able to pass onto
our suppliers such decreases, which may in turn adversely affect our profitability</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>



</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The IC design industry is
characterized by rapid launches of new products, continuous technological advancements and changing market trends and customer preferences,
all of which translate to a shorter life cycle and a decrease in the average selling prices of products over time. Because we compete
in the environment of rapidly-evolving technology advancement and market trends and developments of the IC design industry, we cannot
assume that we will be able to pass on any decrease in average selling prices of our products to our suppliers. If the average selling
prices of our products unusually or significantly decrease and such decreases cannot be offset by a corresponding decrease in the prices
of the principal components of our products, our gross profit margins may be materially and adversely affected, which in turn, may adversely
affect our profitability.</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">

</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt"><b><i>We may not
be able to price our products at our desired margins as a result of any decrease in our bargaining power or changes in market conditions</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">We
set prices for our mining machines and telecommunication products based on a number of internal and external factors, such as the cost
of production, the technological contents of our products, market conditions, and competition we face. Our ability to set favorable prices
at our desired margins and to accurately estimate costs, among other factors, has a significant impact on our profitability. We cannot
assure you that we will be able to maintain our pricing or bargaining power or that our gross profit margin will not be driven down by
market conditions or other factors. If we see higher pricing pressure due to intensified competition from other manufacturers as our
competitors&#8217; products may be more technologically advanced or energy-efficient, decreases in prices to our customers in the end
market or any other reasons, or if we otherwise lose bargaining power due to weaker demand for our products, we may need to reduce the
prices and lower the margins of our products and we may even be unable to continue to market our products at all. Moreover, we may not
be able to accurately estimate our costs or pass on all or part of any increase in our costs of production, in particular the costs of
raw materials, components and parts, to our customers.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt"><b><i>&#160;</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt"><b><i>&#160;</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt"><b><i>Shortages
in, or rises in the prices of, the components of our mining machines may adversely affect our business</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">Given
the long production period to manufacture, assemble, and deliver certain components and products, problems could arise in planning production
and managing inventory levels that could seriously interrupt our operations, including the possibility of defective parts, an increase
in component costs, delays in delivery schedules, and shortages of components. In addition to ASIC chips, the components we use for our
mining machines include printed circuit boards, or PCBs, other electronic components, fans, and aluminum casings. The production of our
mining machines also requires certain ancillary equipment and components such as controllers, power adaptors, and connectors. The production
of our current products depends on obtaining adequate supplies of these components on a timely basis and at competitive prices. We do
not typically maintain large inventory of the components, and rather purchase them on an &#8220;as-needed&#8221; basis from various third-party
component manufacturers that satisfy our quality standards and meet our production requirements. We may have to turn to less reputable
suppliers if we cannot source adequate components from our regular suppliers. Under such circumstances, the quality of the components
may suffer and could cause performance issues in our mining machines.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">Shortages
of components could result in reduced production or delays in production, as well as an increase in production costs, which may negatively
affect our ability to fulfill orders or make timely shipments to blockchain customers, as well as our customer relationships and profitability.
Component shortages may also increase our costs of goods sold because we may be required to pay higher prices for components in short
supply, or redesign or reconfigure products to accommodate for the substitute components, without being able to pass such cost to our
blockchain customers. As a result, our business, results of operations and reputation could be materially and adversely affected by any
product defects.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt"><b><i>&#160;</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt"><b><i>Cryptocurrency
exchanges and wallets, and to a lesser extent, cryptocurrency blockchains themselves, may be susceptible to hacking and fraud risks,
which may adversely erode user confidence in cryptocurrencies, and adversely impact our brand and reputation and our business, operating
results, and financial condition</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">Cryptocurrency
transactions are entirely digital and, as with any virtual system, face risk from hackers, malware and operational glitches. For example,
hackers can target cryptocurrency exchanges, wallets, and custodians to gain unauthorized access to the private keys associated with
the wallet addresses where cryptocurrencies are stored. Cryptocurrency transactions and accounts are not insured by any type of government
program and cryptocurrency transactions generally are immutable by design. Certain features of cryptocurrency networks, such as decentralization,
open source protocols, and reliance on peer-to-peer connectivity, may increase the risk of fraud or cyber attack by potentially reducing
the likelihood of a coordinated response. Cryptocurrencies have been susceptible to hacking and several cryptocurrency exchanges and
miners have reported cryptocurrency losses, which highlights concern over the security of cryptocurrencies and in turn affect the demand
and the market price of cryptocurrencies. In addition, while cryptocurrencies use private key encryption to verify owners and register
transactions, scammers and other bad actors may attempt to sell fraudulent digital assets. The techniques used to obtain unauthorized,
improper, or illegal access to systems and information (including customers&#8217; 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. Additionally, certain threats are designed to remain dormant or undetectable until launched
against a target and we may not be able to implement adequate preventative or protective measures. These risks may adversely affect the
operation of the cryptocurrency network which would erode user confidence in digital assets, or in the use of technology to conduct financial
transactions, which could negatively impact us, including the market perception of the effectiveness of our security measures, the technology
infrastructure of our exchange platforms, and the demand for our mining machines.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In particular, our cryptocurrency
exchange business involves the collection, storage, processing, and transmission of confidential information, customer, employee, service
provider, and other personal data, as well as information required to access customer assets. We have built our reputation on the premise
that our platforms offer customers a secure way to purchase, store, and transact in digital assets. As a result, any actual or perceived
security breach of our exchange platforms or our third-party partners may:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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    <td style="font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">harm our reputation and brand;</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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    <td style="font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">result in our systems or services being unavailable and interrupt our operations;</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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    <td style="width: 0.5in">&#160;</td>
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    <td style="font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">result in improper disclosure of data and violations of applicable privacy and data protection laws;</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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    <td style="text-align: justify; font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">result in significant regulatory scrutiny, investigations, fines, penalties, and other legal, regulatory, and financial exposure;</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
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    <td style="font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">lead to theft or irretrievable loss of our or our customers&#8217; fiat currencies or digital assets;</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in; font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">divert the attention of management from the operation of our business;</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
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    <td style="text-align: justify; font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">result in significant compensation or contractual penalties from us to our customers or third parties as a result of losses to them or claims by them; and</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in; font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Although we have developed
systems and processes designed to protect the data we manage, prevent data loss and other security breaches, effectively respond to known
and potential risks, and expect to continue to expend significant resources to bolster these protections, there can be no assurance that
these security measures will provide absolute security or prevent breaches or attacks. As of the date of this annual report, we have not
experienced breaches of our security measures, however, we may experience in the future, breaches of our security measures due to human
error, malfeasance, insider threats, system errors, vulnerabilities, or other irregularities. Certain types of cyberattacks could harm
us even if our systems are left undisturbed. Unauthorized parties may attempt to gain access to our systems and facilities, as well as
those of our customers, partners, and third-party service providers, through various means, including hacking, social engineering, phishing,
and attempting to fraudulently induce individuals (including employees, service providers, and customers) into disclosing usernames, passwords,
payment card information, digital wallet information or other sensitive information, which may in turn be used to access our information
technology systems and customers&#8217; digital assets. Threats can come from a variety of sources, including criminal hackers, hacktivists,
state-sponsored intrusions, industrial espionage, and insiders. Certain threat actors may be supported by significant financial and technological
resources, making them even more sophisticated and difficult to detect. We may also acquire other companies that expose us to unexpected
security risks or increase costs to improve the security posture of the acquired company. As a result, our costs and the resources we
devote to protecting against these advanced threats and their consequences may continue to increase over time.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>From time to time, we may encounter technical
issues in connection with the integration of supported digital assets and changes and upgrades to their underlying networks, which could
adversely affect our business</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">A variety of front and back-end
technical and development work is required to implement our wallet, custody, trading, staking and other solutions for our customers, and
to integrate our supported digital assets with our existing technical infrastructure. For certain digital assets, a significant amount
of development work is required and there is no guarantee that we will be able to successfully integrate any existing or future digital
assets. In addition, such integration may introduce software errors or weaknesses into our platforms, including into our existing infrastructure.
Even if such integration is initially successful, any number of technical changes, software upgrades, soft or hard forks, cybersecurity
incidents, or other changes to the underlying blockchain network may occur from time to time, causing incompatibility, technical issues,
disruptions, or security weaknesses to our platforms. If we are unable to identify, troubleshoot and resolve any such issues successfully,
we may no longer be able to support such digital assets, our customers&#8217; assets may be frozen or lost, the security of our hot, warm,
or cold wallets may be compromised, and our platforms and technical infrastructure may be affected, all of which could adversely impact
our business.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Failure to comply with anti-corruption and
anti-money laundering laws, including the Foreign Corrupt Practices Act (the &#8220;FCPA&#8221;) and similar laws associated with our
activities outside of the United States, could subject us to penalties and other adverse consequences</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We operate an international
business and may have direct or indirect interactions with officials and employees of government agencies or state-owned or affiliated
entities. We are subject to the FCPA, and other applicable anti-corruption and anti-money laundering laws in certain countries in which
we conduct activities. The FCPA prohibits providing, offering, promising, or authorizing, directly or indirectly, anything of value to
government officials, political parties, or political candidates for the purpose of obtaining or retaining business or securing any improper
business advantage. In addition, U.S. public companies are required to maintain records that accurately and fairly represent their transactions
and have an adequate system of internal accounting controls.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In many foreign countries,
including countries in which we may conduct business, it may be a local custom that businesses engage in practices that are prohibited
by the FCPA, or other applicable laws and regulations. We face significant risks if we or any of our directors, officers, employees, contractors,
agents or other partners or representatives fail to comply with these laws and governmental authorities in the United States and elsewhere
could seek to impose substantial civil and/or criminal fines and penalties which could have a material adverse effect on our business,
reputation, operating results, prospects and financial condition.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Any violation of the FCPA,
other applicable anti-corruption laws, or anti-money laundering laws could result in whistleblower complaints, adverse media coverage,
investigations, loss of export privileges, severe criminal or civil sanctions and, in the case of the FCPA, suspension or debarment from
U.S. government contracts, any of which could have a materially adverse effect on our reputation, business, operating results, prospects
and financial condition. In addition, responding to any enforcement action or internal investigation related to alleged misconduct may
result in a significant diversion of management&#8217;s attention and resources and significant defense costs and other professional fees.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>There is a lack of liquid markets for cryptocurrencies,
and blockchain-based assets are susceptible to potential manipulation</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Cryptocurrencies and other
digital assets that are represented and trade on a ledger-based platform may not necessarily benefit from viable trading markets. Stock
exchanges have listing requirements and vet issuers, requiring them to be subjected to rigorous listing standards and rules; and monitor
investors transacting on such platform for fraud and other improprieties. These conditions may not necessarily be replicated on a distributed
ledger platform, depending on the platform&#8217;s controls and other policies. The more lax a distributed ledger platform is about vetting
issuers of cryptocurrency and other digital assets or users that transact on the platform, the higher the potential risk for fraud or
the manipulation of the ledger due to a control event. These factors may decrease liquidity or volume or may otherwise increase volatility
of investment securities or other assets trading on a ledger-based system, which may adversely affect us. Such circumstances could have
a material adverse effect on our ability to continue as a going concern or to pursue our business strategy at all, which could have a
material adverse effect on our business, prospects or operations, and potentially the value of any Bitcoin or other cryptocurrencies or
digital assets we acquire or hold for our own account, and so could harm investors.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Cryptocurrencies face significant scaling
obstacles that can lead to high fees or delayed transaction settlement times, and attempts to increase transaction processing capacity
may not be effective</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Many cryptocurrency networks
face significant scaling challenges. As the Bitcoin network continues to develop and grow, certain technical issues might be uncovered,
and the troubleshooting and resolution of such issues requires the attention and efforts of Bitcoin&#8217;s global development community.
A number of second layer technology solutions have been recently promoted to resolve this problem by, among other things, enabling faster
transactions: in August 2017, the Bitcoin network underwent a hard fork that resulted in the creation of a new digital asset network called
Bitcoin Cash. This hard fork was contentious, and as a result some users of the Bitcoin Cash network may harbor ill will toward the Bitcoin
network. These users may attempt to negatively impact the use or adoption of the Bitcoin network. Also in August 2017, the Bitcoin network
was upgraded with a technical feature known as &#8220;Segregated Witness&#8221; that, among other things, potentially doubles the transactions
per second that can be handled on-chain and enables so-called second layer solutions, such as the Lightning Network or payment channels,
that have the potential to substantially increase transaction throughput (i.e., millions of transactions per second). As of the date of
this annual report, digital wallets and intermediaries that support Segregated Witness or Lightning Network-like technologies do not yet
have material adoption. In 2021, the Bitcoin protocol implemented the Taproot upgrade to add enhanced support for complex transactions
on the network such as multi-signature transactions, which require two or more parties to execute a transaction on the Bitcoin network.
Prior to the upgrade, multi-signature transactions were historically slow, expensive, and easily identifiable. Taproot is intended to
reduce the amount of data written to a block and makes multi-signature transactions indistinguishable from regular transactions, adding
an enhanced layer of privacy. This upgrade may fail to work as expected, which could lead to a decline in support and price of Bitcoin.
Unfortunately, there is no assurance that the digital asset community will accept these solutions or that these solutions will work as
expected or effectively resolve these problems.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As the use of digital asset
networks increases without a corresponding increase in throughput of the networks, average fees and settlement times can increase significantly.
Bitcoin&#8217;s network, for example, has been, at times, at capacity, which has led to very high transaction fees. Increased fees and
decreased settlement speeds could preclude certain use cases for Bitcoin (e.g., micropayments), and can reduce demand for and the market
price of Bitcoin, which could adversely affect the market demand for our mining machines. There is no guarantee that any of the mechanisms
already in place or being explored for increasing the scale of settlement of Bitcoin transactions will be effective, or how long they
will take to become effective, which could adversely affect the market demand for our mining machines.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

</div><!-- Field: Page; Sequence: 46; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->37<!-- Field: /Sequence --></span></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>The administrators of the Bitcoin network&#8217;s
source code could propose amendments to the Bitcoin network&#8217;s protocols and software that, if accepted and authorized by the Bitcoin
network&#8217;s community, could adversely affect our business, results of operations and financial condition</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Bitcoin network is based
on a cryptographic, algorithmic protocol that governs the end-user-to-end-user interactions between computers connected to the Bitcoin
network. A loosely organized group can propose amendments to the Bitcoin network&#8217;s source code through one or more software upgrades
that alter the protocols and software that govern the Bitcoin network and the properties of Bitcoin, including the irreversibility of
transactions and limitations on the mining of new Bitcoin. To the extent a significant majority of the users and miners on the Bitcoin
network accept and authorize such software upgrade(s), the Bitcoin network would be subject to new protocols and software that may render
our mining machines less desirable, which in turn may adversely affect our business, results of operations and financial condition. If
less than a significant majority of the users and miners on the Bitcoin network install any such software upgrade(s), the Bitcoin network
could fork.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>The acceptance of Bitcoin network software
patches or upgrades by a significant, but not overwhelming, percentage of the users and miners in the Bitcoin network could result in
a &#8220;fork&#8221; in the blockchain, resulting in the operation of two separate networks that cannot be merged. The existence of forked
blockchains could erode user confidence in Bitcoin and could adversely impact our business, results of operations and financial condition</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Bitcoin is based on open source
software and has no official developer or group of developers that formally controls the Bitcoin network. Any individual can download
the Bitcoin network software and make any desired modifications, which are proposed to users and miners on the Bitcoin network through
software downloads and upgrades. However, miners and users must consent to those software modifications by downloading the altered software
or upgrade implementing the changes; otherwise, the changes do not become part of the Bitcoin network. Since the Bitcoin network&#8217;s
inception, changes to the Bitcoin network have been accepted by the vast majority of users and miners, ensuring that the Bitcoin network
remains a coherent economic system. However, a developer or group of developers could potentially propose a modification to the Bitcoin
network that is not accepted by a vast majority of miners and users, but that is nonetheless accepted by a substantial population of participants
in the Bitcoin network. In such a case, a &#8220;fork&#8221; in the blockchain could develop and two separate Bitcoin networks could result,
one running the pre-modification software program and the other running the modified version. An example is the introduction of Bitcoin
Cash in mid-2017. This hard fork was contentious, and as a result some users of the Bitcoin Cash network may harbor ill will toward the
Bitcoin Network. These users may attempt to negatively impact the use or adoption of the Bitcoin Network. This kind of hard fork split
in the Bitcoin network was contentious, and as a result may erode user confidence in the stability of the Bitcoin network, may cause some
Bitcoin Network users to negatively affect the use or adoption, and could negatively affect the demand for our mining machines.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Our Bitcoin mining machines use open source
software and hardware as their basic controller system, which may subject us to certain risks</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We use open source software
and hardware in our Bitcoin mining machines. For example, our mining machine controller open source software needs to be installed on
open source, which serves as the basic controller system for our mining machines, and we expect to continue to use open source software
and hardware in the future. Open source software is generally freely accessible, usable and modifiable, and is made available to the general
public on an &#8220;as-is&#8221; basis under the terms of a non-negotiable license. As a result, we may from time to time face claims
from others claiming ownership of, or seeking to enforce the terms of, an open source license, including by demanding the release of the
open source software, derivative works or our proprietary source code that was developed using such software. These claims could also
result in litigation, requiring us to purchase a costly license or to devote additional research and development resources to change our
technologies, either of which would have a negative effect on our business and operating results. In addition, if the license terms for
the open source software we utilize change, we may be forced to&#160;re-engineer&#160;or discontinue our solutions or incur additional
costs.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Bitcoin mining activities are energy-intensive,
which may restrict the geographic locations of miners and have a negative environmental impact </i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Bitcoin mining activities
are inherently energy-intensive and electricity costs account for a significant portion of the overall mining costs. The availability
and cost of electricity will restrict the geographic locations of mining activities. Any shortage of electricity supply or increase in
electricity cost in a jurisdiction may negatively impact the viability and the expected economic return for Bitcoin mining activities
in that jurisdiction, which may in turn decrease the sales of our Bitcoin mining machines in that jurisdiction.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Further, our mining equipment
will only be valuable and so our business model can only be successful if the costs, including electrical power costs, associated with
Bitcoin mining are lower than the price of Bitcoin itself. As a result, mining operations can only be successful if miners can obtain
sufficient electrical power for their geographical sites on a cost-effective basis, and the establishment of new mining data centers and
demand for our mining equipment requires miners to find sites where that is the case. Even if our electrical power costs do not increase,
significant fluctuations in, and any prolonged periods of, low Bitcoin prices may also cause the electrical supply to no longer be cost-effective.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Because there has been limited precedent
set for financial accounting of Bitcoin and other Bitcoin assets, the determination that we have made for how to account for Bitcoin assets
transactions may be subject to change</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Because there has been limited
precedent set for the financial accounting of cryptocurrencies and related revenue recognition and no official guidance has yet been provided
by the Financial Accounting Standards Board, the PCAOB or the SEC, it is unclear how companies may in the future be required to account
for Bitcoin transactions and assets and related revenue recognition. A change in regulatory or financial accounting standards could result
in the necessity to change our accounting methods and restate our financial statements. Such a restatement could negatively impact our
business, prospects, financial condition and results of operation. Such circumstances would also have a material adverse effect on our
ability to continue as a going concern or to pursue our business strategy at all, which would potentially have a material adverse effect
on the value of any cryptocurrencies we hold or expects to acquire for our own account and harm investors.</p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We have an evolving business model and strategy</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our business model has significantly
evolved since our incorporation and we expect it to continue to do so in the future. As blockchain and Fintech businesses become more
widely available, we expect their services and products to evolve. In order to stay current with our industry, our business model will
also need to evolve. As a result, from time to time, we may modify aspects of our business model relating to our strategy, including pursuing
business opportunities outside of the blockchain and Fintech industry, including the sustainable energy industry. We cannot offer any
assurance that these or any other modifications will be successful or will not result in harm to our business. These modifications may
increase the complexity of our business and place significant strain on our management, personnel, operations, systems, technical performance,
financial resources and internal financial control and reporting functions. We may not be able to manage growth effectively, which could
damage our reputation, limit our growth and adversely affect our operating results. Further, we cannot provide any assurance that we will
successfully identify all emerging trends and growth opportunities within the blockchain and Fintech industry or the industry sectors
into which we will venture and we may lose out on such opportunities. Such circumstances could have a material adverse effect on our business,
prospects, financial condition and operating results.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Significant disruptions of information technology
systems or security breaches could materially adversely affect our business</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 36pt">We are increasingly dependent
upon information technology systems, infrastructure, and data to operate our business. In the ordinary course of business, we collect,
store, and transmit large amounts of confidential information (including, among other things, trade secrets or other intellectual property,
proprietary business information and personal information). It is critical that we do so in a secure manner to maintain the confidentiality
and integrity of such confidential information. We also have outsourced elements of our operations to third parties, and as a result,
we manage a number of third-party vendors who may or could have access to our confidential information. Attacks on information technology
systems are increasing in their frequency, levels of persistence, sophistication, and intensity, and they are being conducted by increasingly
sophisticated and organized groups and individuals with a wide range of motives and expertise. The size and complexity of our information
technology systems, and those of third-party vendors with whom we contract, and the large amounts of confidential information stored on
those systems, make such systems vulnerable to service interruptions or to security breaches from inadvertent or intentional actions by
our employees, third-party vendors, and/or business partners, or from cyber-attacks by malicious third parties. Cyber-attacks could include
the deployment of harmful malware, ransomware, denial-of-service attacks, social engineering, and other means to affect service reliability
and threaten the confidentiality, integrity and availability of information.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 36pt">Significant disruptions of
our information technology systems, or those of our third-party vendors, or security breaches could materially adversely affect our business
operations and/or result in the loss, misappropriation and/or unauthorized access, use or disclosure of, or the prevention of access to,
confidential information, including, among other things, trade secrets or other intellectual property, proprietary business information
and personal information, and could result in financial, legal, business and reputational harm to us. The Company continually assesses
these threats and makes investments to increase internal protection, detection, and response capabilities, as well as ensure the Company&#8217;s
third-party providers have required capabilities and controls, to address this risk.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 36pt">Any failure or perceived failure
by us or any third-party collaborators, service providers, contractors or consultants to comply with our privacy, confidentiality, data
security or similar obligations to third parties, or any data security incidents or other security breaches that result in the unauthorized
access, release or transfer of sensitive information, including personally identifiable information, may result in governmental investigations,
enforcement actions, regulatory fines, litigation or public statements against us, could cause third parties to lose trust in us or could
result in claims by third parties asserting that we have breached our privacy, confidentiality, data security or similar obligations,
any of which could have a material adverse effect on our reputation, business, financial condition or results of operations. Moreover,
data security incidents and other security breaches can be difficult to detect, and any delay in identifying them may lead to increased
harm. To date, the Company has not experienced any material impact to the business or operations resulting from information or cybersecurity
attacks; however, because of the frequently changing attack techniques, along with the increased volume and sophistication of the attacks,
there is the potential for the Company to be adversely impacted. While we have implemented data security measures intended to protect
our information technology systems and infrastructure, there can be no assurance that such measures will successfully prevent service
interruptions or data security incidents<span style="background-color: white">.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Other Risks Relating to Our Business Operations</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We face risks related to health epidemics,
such as the COVID-19 pandemic, which could disrupt our operations and adversely affect our business, financial condition and results of
operations</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our business could be materially
and adversely affected by health epidemics such as the COVID-19 pandemic originated in Wuhan city at the end of 2019 and other outbreaks
affecting the jurisdictions in which we operate. Health epidemics may cause market panics, which materially and negatively affected the
global financial markets. Such disruption and the potential slowdown of the world&#8217;s economy in 2023 and beyond could have a material
adverse effect on our results of operations and financial condition. We and our customers experienced and may continue to experience significant
business disruptions and suspension of operations due to various government restrictions put in place to attempt to stop the spread of
the COVID-19 pandemic, especially the large-scale lock-downs implemented during fiscal year 2022, which have caused and may continue to
cause shortages in the supply of raw materials, reduction in our production capacity, increase in the likelihood of default from our customers
and product delivery delays. The pandemic has also led to great volatility in the Bitcoin price, which has adversely affected and may
continue to negatively affect the demand for our mining machines both in terms of the price and the quantity.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our third-party manufacturers,
suppliers, sub-contractors and customers have been and will continue to be disrupted by worker absenteeism, quarantines, restrictions
on employees&#8217; ability to work, office and factory closures, disruptions to ports and other shipping infrastructure, border closures,
or other travel or health-related restrictions. Depending on the magnitude of such effects on our supply chain, shipments of parts from
our manufacturers and suppliers, have been and may continue to be delayed. Supply chain disruptions could therefore negatively impact
our operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The effectiveness of the COVID-19
vaccine and vaccination programs remains to be verified worldwide, including against variants of the virus. The sweeping nature of the
COVID-19 pandemic makes it extremely difficult to predict how the company&#8217;s business and operations will be affected in the longer
run. So far, the likely overall economic impact of the pandemic is widely viewed as highly negative to the global economy.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>High customer concentration exposes us to
all of the risks faced by our major customers and may subject us to significant fluctuations or declines in revenues</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our customers include both
enterprises and individuals. A limited number of our major customers, however, have contributed a significant portion of our revenues
in the past. Our revenue from the top ten largest customers accounted for approximately 91%, 81% and 88% of our total revenues in 2020,
2021 and 2022. Although we continually seek to diversify our customer base, we cannot assure you that the proportion of the revenue contribution
from these customers to our total revenues will decrease in the near future. We offer credit sales to our major, long-term customers.
Dependence on a limited number of major customers will expose us to the risks of substantial losses and may increase our account receivables
and extend its turn over days if any of them reduces or even ceases business collaborations with us. Specifically, any one of the following
events, among others, may cause material fluctuations or declines in our revenues and have a material and adverse effect on our business,
financial condition, results of operations and prospects:</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">

</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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    <td style="text-align: justify; font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">an overall decline in the business of one or more of our significant customers;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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    <td style="text-align: justify; font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the decision by one or more of our significant customers to switch to our competitors;</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If we fail to maintain relationships
with these major customers, and if we are unable to find replacement customers on commercially desirable terms or in a timely manner or
at all, our business, financial condition, results of operations and prospects may be materially and adversely affected.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We have been involved, and may continue
to be involved, in disputes, claims or proceedings arising from our operations or class actions from time to time, which could result
in significant liabilities and reputational harm and could materially and adversely affect our business, financial condition and results
of operations</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have been, and in the future
may continue to be, involved in disputes, claims or proceedings arising out of our operations. For example, we are currently involved
in several ongoing civil actions in relation to our sales of mining machines, among others, to a customer and our procurement of ASIC
wafers from a supplier. &#160;See &#8220;Item 4. Information on the Company&#8212;B. Business Overview &#8212;Legal Proceedings.&#8221;
In addition, we may have disagreements with regulatory bodies in the course of our operations, which may subject us to administrative
proceedings and unfavorable orders, directives or decrees that may result in financial losses. Ongoing disputes, claims or proceedings
may divert our management&#8217;s attention and consume their time and our other resources.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In the past, shareholders
of public companies have often brought securities class action suits against an issuer following periods of instability in the market
price of an issuer&#8217;s securities, or after the publication of third-party research reports. As of the date of this annual report,
we are not aware of any lawsuits threatened or filed against us based on any alleged violation of securities laws. We cannot assure you
that there would not be any future claims against us or that we would successfully defend against them. Any such suit, whether or not
successful, could harm our reputation, result in share price volatility and a loss of customers, and restrict our ability to raise capital
in the future. Even if claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary
to resolve them, could divert the resources of our management and require significant expenditures, which could prevent us from competing
effectively and could have an adverse effect on our business, operating results, and financial condition. 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. Furthermore, any disputes, claims or proceedings which are initially not of material importance may escalate
and become important to us, due to a variety of factors, such as the facts and circumstances of the cases, the likelihood of loss, the
monetary amount at stake and the parties involved. As of the date of this annual report, we are not able to quantify the likelihood or
amount of exposure from any of these potential actions.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Negative publicity arising
from disputes, claims or proceedings may damage our reputation and adversely affect the image of our brands and products. In addition,
if any verdict or award is rendered against us, we could be required to pay significant monetary damages, assume other liabilities and
even to suspend or terminate the related business ventures or projects. Consequently, our business, results of operations and financial
condition may be materially and adversely affected.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We are exposed to credit risks and concentration
of credit risks in relation to defaults from counterparties</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">There are credit risks associated with our business. In particular,
a drop in the Bitcoin price may also result in lower economic returns for mining activities of our blockchain customers and adversely
affect their businesses and financial conditions, which may further affect their credit profiles and their ability to settle our accounts
receivables. Although we generally require our blockchain customers to make full payment for our mining machines before delivery of products,
we provide credit sales to customers when the market is sluggish. As for our telecommunication product sales, we always use credit sales.
As of December&#160;31, 2021 and 2022, our net accounts receivable US$9.9 million and US$3.3 million, respectively, and we recorded allowance
for doubtful accounts of US$4.6 million and US$3.5 million, as of the same dates.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, we also face concentration of credit risks associated
with our business. Our exposure to credit risk is influenced mainly by the individual characteristics of each customer as well as the
industry or country in which the customers operate and is concentrated on a few customers. As of December 31, 2021 and 2022, 13% and 20%
of our total accounts receivables were due from one of our customers, respectively.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">

</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Although we 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 counterparties 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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>The businesses that we are pursuing through
certain of our subsidiaries&#8217; initiatives are novel and subject to technical, operational, financial, regulatory, legal, reputational
and marketing risks and we cannot assure you that such acquisitions or strategic alliances may be successfully implemented</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have and may continue to
acquire interests in various businesses, including financial technology companies, broker-dealers, and digital currency transfer and payment
businesses. We have limited experience with the operation of such businesses. In some countries the licensing requirements and regulations
expressly cover companies engaged in digital currency activities; in others it is not clear whether or how the existing laws and regulations
apply to digital currency activities. Licenses and registrations that we may be required to obtain may subject us to various anti-money
laundering, know-your-customer, record-keeping, reporting and capital and bonding requirements, limitations on the investment of customer
funds, and inspection by regulatory agencies. These are areas in which we do not have substantial experience and which are subject to
the risks of new and novel businesses, including technical, operational, financial, regulatory, legal and reputational risks, as well
as the risk that we may be unable to market, license or sell our technology successfully or profitably. The occurrence of any such risks,
any such penalties, or even allegations of criminal or civil misconduct, could have a material adverse effect on us and on our financial
results and business.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We may look for other potential
acquisitions or strategic alliances in the future to expand our business. However, we may not be able to find suitable acquisition candidates,
complete acquisitions on favorable terms, if at all, or integrate any acquired business, products or technologies into our operations.
If we do complete acquisitions, they may be viewed negatively by customers or investors and they may not enable us to strengthen our competitive
position or achieve our goals. In addition, any acquisitions that we make could lead to difficulties in integrating personnel, technologies
and operations from the acquired businesses and in retaining and motivating key personnel from these businesses. Moreover, acquisitions
may disrupt our ongoing operations, divert management from&#160;day-to-day&#160;responsibilities and increase our expenses. Future acquisitions
may reduce our cash available for operations and other uses, and could result in increases in amortization expenses related to identifiable
intangible assets acquired, potentially dilutive issuances of equity securities or the incurrence of debt. We cannot predict the number,
timing or size of future acquisitions, or the effect that any such acquisitions might have on our operating results.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Our prepayments to suppliers may subject
us to counterparty risk associated with such suppliers and negatively affect our liquidity</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are required to prepay some of our suppliers before the service
is provided to secure the supplier&#8217;s production capacity. As of December 31, 2021 and 2022, the outstanding balance of prepayments
we made to our third-party foundry partners amounted to US$1.1 million and US$1.2 million, respectively. The amount of our prepayments
may significantly increase as we continue to pursue technological advancement. We are subject to counterparty risk exposure to our suppliers.
Any failure by our suppliers to perform their contract obligations on a timely manner and/or with our requested quality may result in
us not being able to fulfill customers&#8217; orders accordingly. In such event, we may not be able to regain the prepayment in a timely
manner or in full, even though our suppliers are obligated to return such prepayments under specified circumstances as previously agreed
upon. Furthermore, if the cash outflows for the prepayments significantly exceed the cash inflows during any period, our future liquidity
position will be adversely affected.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>If we experience difficulty in collecting
our trade receivables, our liquidity, financial condition and results of operations would be negatively impacted.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We derive our revenues from the sale of products and are subject to
counterparty risks such as our customer&#8217;s inability to pay. As of December&#160;31, 2021 and 2022, our trade receivables amounted
to US$9.9 million and US$3.3 million, respectively. There can be no assurance that we will be able to collect our trade receivables on
a timely basis, and our trade receivable turnover days may increase, which in turn could materially and adversely affect our liquidity,
financial condition and results of operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>If we fail to maintain appropriate inventory
levels in line with the approximate level of demand for our products, we could lose sales or face excessive inventory risks and holding
costs</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">To operate our business successfully
and meet our customers&#8217; demands and expectations, we must maintain a certain level of finished goods inventory to ensure immediate
delivery when required. We are also required to maintain an appropriate level of raw materials for our production. However, forecasts
are inherently uncertain. If our forecasted demand is lower than what eventually transpires, we may not be able to maintain an adequate
inventory level of our finished goods or produce our products in a timely manner, and we may lose sales and market share to our competitors.
On the other hand, we may also be exposed to increased inventory risks due to accumulated excess inventory of our products or raw materials,
parts and components for our products. Excess inventory levels may lead to increases in inventory holding costs, risks of inventory obsolescence
and provisions for write-downs, which will materially and adversely affect our business, financial condition and results of operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In order to maintain an appropriate
inventory level of finished goods and raw materials to meet market demand, we adjust our procurement amount and production schedule from
time to time based on customers&#8217; orders and anticipated demand. We also carry out an inventory review and an aging analysis on a
regular basis. We make provision for obsolete and slow-moving inventory of raw materials and finished goods that are no longer suitable
for use in production or sale. However, we cannot guarantee that these measures will always be effective and that we will be able to maintain
an appropriate inventory level. We may also be exposed to the risk of holding excessive inventory, including older generation mining machines
that are less marketable as well as older ASIC chips which may increase our inventory holding costs and subject us to the risk of inventory
obsolescence or write-offs, which could have a material adverse effect on our business, results of operations and financial condition.
For example, we recorded write-down for the potentially obsolete, slow-moving inventory and lower of cost or market adjustment of US$3.6
million, US$2.2 million and US$6.5 million in 2020, 2021 and 2022, respectively. If we cannot maintain an appropriate inventory level,
we may lose sales and market share to our competitors.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We require various approvals, licenses,
permits and certifications to operate our business. If we fail to obtain or renew any of these approvals, licenses, permits or certifications,
it could materially and adversely affect our business and results of operations</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In accordance with the laws
and regulations in the jurisdictions in which we operate, we are required to maintain various approvals, licenses, permits and certifications
in order to operate our business or engage in the business we plan to enter into. Complying with such laws and regulations may require
substantial expenses, any non-compliance may expose us to liability. In the event of that government authorities consider us to be in
non-compliance, we may have to incur significant expenses and divert substantial management time to rectify the incidents. If we fail
to obtain all the necessary approvals, licenses, permits and certifications, we may be subject to fines, sanctions, revocation of licenses
or permits to operate our business, or the suspension of operations of the facilities that do not have the requisite approvals, licenses,
permits or certifications, which would adversely affect our reputation, business and results of operations. See &#8220;Regulation&#8221;
for further details on the requisite approvals license permits and certifications.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We have previously made sales to Iran, which
is subject to sanctions, and our interactions with a blockchain may expose us to SDN and other regulations administered by the United
States</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Iran is subject to a comprehensive
sanctions program administered by the Office of Foreign Assets Control, or OFAC, and shipments of products subject to the Export Administration
Regulations promulgated by the Bureau of Industry and Security, or BIS, in the Commerce Department are also subject to restrictions. In
2016 and 2017, we engaged in transactions that included the sale and/or delivery of our products to Iran under circumstances that may
involve breaches of U.S. sanctions and export control laws. On August 2, 2018, we disclosed these transactions to both OFAC and BIS by
our submission of Voluntary Self Disclosures, or VSDs. On January 25, 2019, BIS closed the VSD with a Warning Letter and no penalty. On
March 4, 2019, OFAC closed the VSD with a Cautionary Letter and no penalty.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">OFAC requires us to not conduct
business with persons named on its specially designated nationals (&#8220;SDN&#8221;) list. However, because of the pseudonymous nature
of blockchain transactions we may inadvertently and without our knowledge engage in transactions with persons named on OFAC&#8217;s SDN
list or from countries on OFAC&#8217;s sanctioned countries&#8217; list. While we have implemented internal control measures to mitigate
our risk exposure to international sanctions, sanctions laws and regulations are constantly evolving, new persons and entities are regularly
added to the list of SDN list, and we may not be adequately capable of determining the ultimate identity of the individual with whom we
transact with respect to selling cryptocurrency assets. Further, new requirements or restrictions could come into effect which might increase
the scrutiny on our business or result in one or more of our business activities being deemed to have violated sanctions. To the extent
government enforcement authorities enforce these and other laws and regulations that are impacted by decentralized distributed ledger
technology, or if they were to determine that any of our future activities constitutes a violation of the sanctions they impose or provides
a basis for a sanctions designation of us, we may be subject to investigation, administrative or court proceedings, and civil or criminal
monetary fines and penalties, all of which could harm our reputation and affect the value of our ordinary shares.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We had historically experienced a decrease
in our telecommunications business and if we are unable to continue to operate our telecommunications business successfully, we may suspend
or cease our telecommunication business entirely</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Revenues from our telecommunications
business were US$1.6 million, US$8.6 million and US$3.7 million, for the years ended December 31, 2020, 2021 and 2022, respectively. In
December 2020, we sold all our equity ownership in Hangzhou Yiquansheng Communication Technology Co., Ltd., which provided technology
services in the telecommunication sector and had incurred losses since its incorporation, to an affiliate controlled by Mr. Dong Hu, our
chairman of the board of directors and Chief Executive Officer. Our telecommunications business will likely continue to be driven by the
development of the communications industry in China, government policies, technological changes, user preference, and many other factors
beyond our control. There is no guarantee that we will be able to maintain the competitiveness of our products or continue to operate
our telecommunications business successfully as a key source of revenue. If we fail to grow our telecommunications business organically,
we may suspend or cease such business line entirely.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Any disruption in our business relationship
with our major telecommunications products customers as a result of market consolidation or otherwise will adversely affect our sales
and market share in the telecommunications market</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The telecommunications industry
has experienced and may continue to experience significant consolidation. The merger and expansion of participants will enable them to
maximize their economies of scale to provide more competitive prices and invest a larger amount of resources into research and development.
Our telecommunication products are primarily sold to major telecommunications service providers and institutional customers in China.
Consolidation of our customers may mean that we could lose out in price and non-price competition and lead to a significant reduction
of market share. As a result, our business and results of operations in the telecommunications market could be materially and adversely
affected.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We typically engage third-party
agents to manage certain aspects of our business dealings with telecommunications products customers, and our business relationship with
them may be adversely affected by any actual or perceived misconduct of our agents, over whom we have limited control. For example, in
2018, a local court in China convicted an employee of a major telecommunications products customer for taking bribes from a group of business
partners, including our agents, and as a result, we have been blacklisted by such customer until the end of 2020. Although we are no longer
blacklisted by such customer due to lapse of time, any future disruption of our business relationship with major telecommunications products
customers could materially and adversely affect our business and results of operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>The telecommunications industry is subject
to extensive and evolving laws and regulations</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We may be directly or indirectly
affected by changes in government regulations relating to the telecommunications and broadcast industries in the PRC or the U.S. Failure
to comply with the relevant laws and regulations could subject us to severe penalties, which could have a significant impact on our cash
flow. Moreover, the change of laws and regulations may render our current products illegal and require us to invest additional resources
into the research and development of new products in compliance with the laws. As a result, our business and results of operations may
be adversely affected. For example, in January 2021 the New York Stock Exchange LLC, or NYSE announced to delist three Chinese telecommunication
companies based on guidance that the U.S. Department of Treasury&#8217;s Office of Foreign Assets Control provided to the NYSE. We are
uncertain whether such actions will have further impact on our business or the Chinese telecommunication industry in general.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our customers are also subject
to laws and regulations applicable to the telecommunications and broadcast industries in the PRC. As they change their products to adapt
to any change of telecommunications and broadcast laws, this may also require us to modify our products to fit their new products. Such
modified or newly adopted laws and regulations could, directly or indirectly, affect the pricing, distribution and required standards
of our telecommunications products and services and may have a material adverse impact on our business.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>If we fail to maintain an effective quality
control system, our business could be materially and adversely affected</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We place great emphasis on
product quality and adhere to stringent quality control measures and have obtained quality control certifications for our products. To
meet our customers&#8217; requirements and expectations for the quality and safety of our products, we have adopted a stringent quality
control system to ensure that every step of the production process is strictly monitored and managed. Failure to maintain an effective
quality control system or to obtain or renew our quality standards certifications may result in a decrease in demand for our products
or cancellation or loss of purchase orders from our customers. Moreover, our reputation could be impaired. As a result, our business and
results of operations could be materially and adversely affected.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>The quality of our products and services
relies on third party suppliers and service providers we engage. If we fail to provide satisfactory services or maintain their service
levels, it could materially and adversely affect our business, reputation, financial condition and results of operations</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We rely on third-party suppliers
and service providers to provide quality products and services to customers, and our brand and reputation may be harmed by actions taken
by them that are beyond our control. Despite the measures we have taken to ensure the quality of products and services provided by third-party
suppliers and service providers, to the extent that there are manufacturing defects beyond our control, or our third-party suppliers and
service providers are unable to maintain the efficiency of their production facilities, supply sufficient components or raw materials
in a timely manner, or provide satisfactory services to our customers, we may suffer reputational damage, and our brand image, business
and results of operations may be materially and adversely affected.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Our production facilities may be unable
to maintain efficiency, encounter problems in ramping up production or otherwise have difficulty meeting our production requirements</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our future growth will depend
upon our ability to maintain efficient operations at our existing production facilities and our ability to expand our production capacity
as needed. The average utilization rate of our surface mount technology (SMT) production lines was 40.1%, 34.7% and 26.5% for 2020, 2021
and 2022, respectively. The utilization rate of our production facilities depends primarily on the demand for our products and the availability
and maintenance of our equipment but may also be affected by other factors, such as the availability of employees, a stable supply of
electricity, seasonal factors and changes in environmental laws and regulations. In order to meet our customers&#8217; demands and advancements
in technology, we maintain and upgrade our equipment periodically. The COVID-19 pandemic in 2022 continued to negatively affect our production
facilities and the utilization rate of our production facilities in 2022. If the pandemic continues or we are unable to maintain our production
facilities&#8217; efficiency, we may be unable to fulfill our purchase orders in a timely manner, or at all. This would negatively impact
our reputation, business and results of operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As we continue to grow and
expand our business, we expect to acquire additional production lines and possibly a new production facility to increase our production
capacity. If we are unable to acquire the necessary equipment or production facility at an acceptable price, or at all, we may not be
successful in achieving our business expansion plans.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We rely on third-party logistics service
providers to deliver our products. Disruption in logistics may prevent us from meeting customer demand and our business, results of operations
and financial condition may suffer as a result</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We engage third-party logistics
service providers to deliver the ICs from our production partners to our assembly plant and our products from our warehouses to our customers.
Disputes with or termination of our contractual relationships with one or more of our logistics service providers could result in delayed
delivery of products or increased costs. There can be no assurance that we can continue or extend relationships with our current logistics
service providers on terms acceptable to us, or that we will be able to establish relationships with new logistics service providers to
ensure accurate, timely and cost-efficient delivery services. If we are unable to maintain or develop good relationships with our preferred
logistics service providers, it may inhibit our ability to offer products in sufficient quantities, on a timely basis, or at prices acceptable
to our consumers. If there is any breakdown in our relationships with our preferred logistics service providers, we cannot assure you
that no interruptions in our product delivery would occur or that they would not materially and adversely affect our business, prospects
and results of operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As we do not have any direct
control over these logistics service providers, we cannot guarantee their quality of service. In addition, services provided by these
logistics service providers could be interrupted by unforeseen events beyond our control, such as poor handling provided by these logistics
service providers, natural disasters, pandemics, adverse weather conditions, riots and labor strikes. If there is any delay in delivery,
damage to products or any other issue, we may lose customers and sales and our brand image may be tarnished.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We face intense industry competition</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As a blockchain and Fintech
technology company, we operate in a highly competitive environment. Our competitors include companies that may have a larger market share,
greater brand recognition, broader international customer base, greater financial resources or other competitive advantages. We anticipate
that competition will increase as blockchain and Fintech gain greater acceptance and more players join the market. Furthermore, we anticipate
encountering new competition as we expand our sales and operations to new locations geographically and into wider applications of cryptocurrency
mining and mining farm operations, blockchain and Fintech businesses. We also compete in the communication network devices industry in
China with respect to our telecommunications business. Some of our competitors in this industry include larger, more well-established
companies with greater economies of scale and more bargaining power with suppliers.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Strong competition in the
market may require us to lower our prices, increase our sales and marketing expenses or otherwise invest greater resources to maintain
or gain market share as needed to adequately compete. Such efforts may negatively impact our profitability. If we are unable to effectively
adapt to changes or developments in the competitive landscape, our business, financial conditions and results of operations may be adversely
affected.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><b><i>Competition from
central bank digital currencies (&#8220;CBDCs&#8221;) could adversely affect the value of Bitcoin and other digital assets </i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 27.75pt; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 27.75pt; background-color: white">Central
banks in some countries have started to introduce digital forms of legal tender. For example, China&#8217;s CBDC project was made available
to consumers in January 2022, and governments from Russia to the European Union have been discussing potential creation of new digital
currencies. A 2021 survey of central banks by the Bank for International Settlements found that 86% are actively researching the potential
for CBDCs, 60% were experimenting with the technology and 14% were deploying pilot projects. Whether or not they incorporate blockchain
or similar technology, CBDCs, as legal tender in the issuing jurisdiction, could have an advantage in competing with, or replace, Bitcoin
and other cryptocurrencies as a medium of exchange or store of value. As a result, the value of Bitcoin could decrease, which could have
a material adverse effect on our business, prospects, financial condition, and operating results.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We have and may increasingly become a target
for public scrutiny, including complaints to regulatory agencies, negative media coverage, and malicious allegations, all of which could
severely damage our reputation and materially and adversely affect our business and prospects</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have been and may continue
to be a target for public scrutiny, including complaints to regulatory agencies, negative media coverage, and malicious allegations, which
had adversely affected and may adversely affect our reputation. Certain features of cryptocurrency networks, such as decentralization,
independence from sovereignty and anonymity of transactions, create the possibility of heightened attention from the public, regulators
and the media. Heightened regulatory and public concerns over us and cryptocurrency-related issues may subject us to additional legal
and social responsibilities and increased scrutiny and negative publicity over these issues, due to our leading position in the industry.
From time to time, these allegations, regardless of their veracity, may result in consumer dissatisfaction, public protests or negative
publicity, which could result in government inquiry or substantial harm to our brand, reputation and operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Moreover, as our business
expands and grows, both organically and through acquisitions of and investments in other businesses, domestically and internationally,
we may be exposed to heightened public scrutiny in jurisdictions where we already operate as well as in new jurisdictions where we may
operate. U.S. public companies that have substantially all of their operations in China have been the subject of intense scrutiny, criticism
and negative publicity by investors, financial commentators and regulatory agencies, such as the SEC. Much of the scrutiny, criticism
and negative publicity has centered on financial and accounting irregularities and mistakes, a lack of effective internal controls over
financial accounting, inadequate corporate governance policies or a lack of adherence thereto and, in many cases, allegations of fraud.
As a result of the scrutiny, criticism and negative publicity, the publicly traded stock of many U.S. listed Chinese companies sharply
decreased in value and, in some cases, has become virtually worthless. Many of these companies are now subject to shareholder lawsuits
and SEC enforcement actions and are conducting internal and external investigations into the allegations. It is not clear what effect
this sector-wide scrutiny, criticism and negative publicity will have on us, our business and our stock price. There is no assurance that
we would not become a target for regulatory or public scrutiny in the future or that scrutiny and public exposure would not severely damage
our reputation as well as our business and prospects. If we become the subject of any unfavorable allegations, whether such allegations
are proven to be true or untrue, we will have to expend significant resources to investigate such allegations and/or defend our Company.
This situation will be costly and time consuming and distract our management from growing our business. If such allegations are not proven
to be groundless, we and our business operations will be severely affected and you could sustain a significant decline in the value of
our stock.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, cryptocurrency
asset platforms are relatively new. Many of our cryptocurrency exchange competitors are unlicensed, unregulated, operate without supervision
by any governmental authorities, and do not provide the public with significant information regarding their ownership structure, management
team, corporate practices, cybersecurity, and regulatory compliance. Since the inception of the crypto economy, numerous cryptocurrency
assets platforms have also been sued, investigated, or shut down due to fraud, manipulative practices, business failure, security breaches
and government mandated regulation. In many of these instances, customers of these platforms were not compensated or made whole for their
losses. In addition, there have been reports that a significant amount of cryptocurrency asset trading volume on cryptocurrency asset
platforms is fabricated and false in nature, with a specific focus on unregulated platforms located outside the United States. Such reports
may indicate that the market for cryptocurrency asset platform activities is significantly smaller than otherwise understood.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">For example, in the second
half of 2022 and beginning of 2023, each of Celsius Network, Voyager Digital Ltd., Three Arrows Capital and Genesis declared bankruptcy,
resulting in a loss of confidence in participants of the digital asset ecosystem and negative publicity surrounding digital assets more
broadly. In November 2022, FTX, the third largest digital asset exchange by volume at the time, halted customer withdrawals and shortly
thereafter, FTX and its subsidiaries filed for bankruptcy.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In response to these events,
the digital asset markets, including the market for Bitcoin specifically, have experienced extreme price volatility and several other
entities in the digital asset industry have been, and may continue to be, negatively affected, further undermining confidence in the digital
assets markets and in bitcoin. These events have also negatively impacted the liquidity of the digital assets markets as certain entities
affiliated with FTX engaged in significant trading activity. If the liquidity of the digital assets markets continues to be negatively
impacted by these events, digital asset prices (including the price of Bitcoin) may continue to experience significant volatility and
confidence in the digital asset markets may be further undermined. These events are continuing to develop and it is not possible to predict
at this time all of the risks that they may pose to us, our service providers or on the digital asset industry as a whole.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Negative perception, a lack
of stability and standardized regulation in the crypto economy, and the closure or temporary shutdown of cryptocurrency asset platforms,
and associated losses suffered by customers may reduce confidence in the crypto economy and result in greater volatility of the prices
of assets, including significant depreciation in value. Any of these events could harm an adverse impact on our business.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Product defects resulting in a large-scale
product recall or product liability claims against us could materially and adversely affect our business, results of operations and reputation</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We manufacture products in
accordance with internationally accepted quality standards and specifications provided by our customers. However, we cannot assure you
that all products produced by us are free of defects. Consequently, any product defects identified by our customers or end users might
erode our reputation and negatively affect our customer relationships and future business. Product defects may also result in product
returns and large-scale product recalls or product liability claims against us for substantial damages. Such claims, irrespective of the
outcomes or the merits, would likely be time-consuming and costly to defend and could divert significant resources and management attention.
Furthermore, even if we are able to defend any such claim successfully, we cannot assure you that our customers will not lose confidence
in our products or that our future relationships with our customers will not be damaged. As a result, our business, results of operations,
reputation and brand image could be materially and adversely affected by any product defects.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Power shortages, labor disputes and other
factors may result in constraints on our production activities</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Historically, we have not
experienced constraints on our production activities, including at our assembly plant, due to power shortages, labor disputes or other
factors. However, there can be no assurance that our operations will not be affected by power shortages, labor disputes or other factors
in the future, thereby causing material production disruptions and delays in our delivery schedule. In such event, our business, results
of operations and financial condition could be materially and adversely affected.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Cyber-security incidents, including data
security breaches or computer viruses, could harm our business by disrupting our delivery of services, damaging our reputation or exposing
us to liability</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We receive, process, store
and transmit, often electronically, the data of our customers and others, much of which is confidential. Unauthorized access to our computer
systems or stored data could result in the theft, including cyber-theft, or improper disclosure of confidential information, and the deletion
or modification of records could cause interruptions in our operations. These cyber-security risks increase when we transmit information
from one location to another, including over the Internet or other electronic networks. Despite the security measures we have implemented,
our facilities, systems and procedures, and those of our third-party service providers, may be vulnerable to security breaches, acts of
vandalism, software viruses, misplaced or lost data, programming or human errors or other similar events which may disrupt our delivery
of services or expose the confidential information of our customers and others. Any security breach involving the misappropriation, loss
or other unauthorized disclosure or use of confidential information of our customers or others, whether by us or a third party, could
subject us to civil and criminal penalties, have a negative impact on our reputation, or expose us to liability to our customers, third
parties or government authorities. We are not aware of such breaches to date. Any of these developments could have a material adverse
effect on our business, financial condition and results of operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>If we suffer failure or disruption in our
information systems, our ability to effectively manage our business operations could be adversely affected</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We use information systems
to obtain, process, analyze and manage data crucial to our business such as our enterprise resource planning system. We use these systems
to, among other things, monitor the daily operations of our business, maintain operating and financial data, manage our distribution network
as well as manage our research and development activities, production operations and quality control systems. Any system damage or failure
that interrupts data input, retrieval or transmission or increases service time could disrupt our normal operations. In particular, our
operations could be disrupted if such damage or failure includes any security breach caused by hacking or cyber-security incidents, involves
efforts to gain unauthorized access to our information or systems, or causes intentional malfunctions, loss or corruption of data, software
or hardware, the intentional or inadvertent transmission of computer viruses and similar events or third-party actions. There can be no
assurance that we will be able to effectively handle a failure of our information systems, or that we will be able to restore our operational
capacity in a timely manner to avoid disruption to our business. The occurrence of any of these events could adversely affect our ability
to effectively manage our business operations and negatively impact our reputation.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We may be subject to liability in connection
with industrial accidents at our manufacturing facilities</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Due to the nature of our operations,
we are subject to the risks of potential liability associated with industrial accidents at our production facilities. We cannot assure
you that industrial accidents, whether due to malfunction of equipment or other reasons, will not occur in the future at our production
facilities. Under such circumstances, we may be subject to employee claims for compensation or penalties imposed by relevant government
authorities and may suffer damage to our reputation. In addition, we may experience interruptions in our operations or may be required
to change the manner in which we operate, as a result of governmental investigations or the implementation of safety measures due to accidents.
Any of the foregoing events could materially and adversely affect our business, financial condition and results of operations.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We currently do not have insurance coverage
covering all risks related to our business and operations</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We do not maintain insurance
policies covering all of our business risks, such as risks relating to properties, receivables, goods in transit and public liability.
There is no assurance that the insurance coverage we do have would be sufficient to cover our potential losses. See the section&#160;headed
&#8220;Item 4. Information on the Company&#8212;B. Business Overview&#8212;&#8212;Insurance&#8221; for more information on the insurance
policies maintained by us. In the event there is any damage to these items, we would have to pay for the difference ourselves where our
cash flow and liquidity could be negatively affected.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>If we fail to comply with labor, work safety
or environmental regulations, we could be exposed to penalties, fines, suspensions or action in other forms</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our operations are subject
to the labor, work safety and environmental protection laws and regulations promulgated by the PRC government. These laws and regulations
require us to pay social insurance, maintain safe working conditions and adopt effective measures to control and properly dispose of solid
waste and other environmental pollutants. We could be exposed to penalties, fines, suspensions or actions in other forms if we fail to
comply with these laws and regulations. The laws and regulations in the PRC may be amended from time to time and changes in those laws
and regulations may cause us to incur additional costs in order to comply with the more stringent rules. In the event that changes to
existing laws and regulations require us to incur additional compliance costs or require costly changes to our production process, our
costs could increase and we may suffer a decline in sales for certain products, as a result of which our business, financial conditions
and results of operations could be materially and adversely affected.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>The determination of the fair value changes
of our financial assets measured at fair value through profit or loss requires the use of estimates that are based on unobservable inputs,
and therefore inherently involves a certain degree of uncertainty</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We use significant unobservable
inputs, such as discount rate, expected rate of return, expected volatility and risk-free interest rate, in valuing our financial assets
measured at fair value through profit or loss including bank wealth management products. The fair value change of financial assets at
fair value through profit or loss may affect our financial position and results of operations. Accordingly, such determination requires
us to make significant estimates, which may be subject to material changes, and therefore inherently involves a certain degree of uncertainty.
Factors beyond our control such as general economic condition and changes in market interest rates may influence and cause adverse changes
to the estimates we use and thereby affect the fair value of our financial assets measured at fair value through profit or loss, which
in return may adversely affect our results of operation and financial condition.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>The loss of any member of our senior management
team, or our failure to attract, train and retain qualified personnel, especially our design and technical personnel, could impair our
ability to grow our business and effectively execute our business strategy.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Since our inception, the growth
and expansion of our business operations have been dependent upon the business strategies and foresight of our senior management. Our
future success depends, in large part, on the continued contributions of our senior management team, specifically Mr.&#160;Dong Hu.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, our future success
depends on our ability to retain, attract and incentivize qualified personnel, including our management, sales, marketing, finance and
especially research and development personnel. As the driver of our technological and product innovations, our research and development
personnel represent a very significant asset of ours. As the technology in the semiconductor and blockchain industries are advancing at
a quick pace, there is an increasing need for skilled engineers. Many companies across the world are struggling to find suitable candidates
for their research and development positions. The process of hiring employees with the combination of skills and characteristics required
to implement our strategy can be extremely competitive and time-consuming. We cannot assure you that we will be able to attract adequate
personnel as we continue to pursue our business strategies.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Moreover, we cannot assure
you that we will be able to retain key existing employees. The loss of any of our&#160;founder,&#160;senior management or research and
development team members could harm our ability to implement our business strategies and respond to the rapidly changing market conditions
in which we operate, or could result in other operating risks. The loss of one or more of our key employees, especially our key design
and technical personnel,&#160;or our inability to retain, attract and motivate qualified design and technical personnel, could have a
material adverse effect on our business, financial condition and results of operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Our corporate actions are significantly
influenced by our principal shareholders, including Dong Hu, our chairman of the board of director, chief executive officer and chief
financial officer, who have the ability to exert significant influence over important corporate matters that require approval of shareholders
while their interests may differ from those of the other shareholders. This may deprive you of the opportunity to receive a premium for
your Class A Ordinary Shares and materially reduce the value of your investment.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24.5pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our share capital is designated into Class&#160;A ordinary shares and
Class&#160;B ordinary shares, par value HK$0.03 per share (&#8220;Class B ordinary shares&#8221;). Each Class&#160;A ordinary share is
entitled to one vote and each Class&#160;B ordinary share is entitled to twenty (20) votes at general meetings of our shareholders. Dong
Hu, our chairman of the board of directors, chief executive officer and chief financial officer, beneficially owns 100% of our Class&#160;B
ordinary shares, representing approximately 86.8% of the aggregate voting power of our issued and outstanding share capital as of December&#160;31,
2022. However, the interests of our chairman of the board of directors, chief executive officer and chief financial officer may differ
from the interests of other shareholders. This concentration of ownership and the protective provisions in our second amended and restated
articles of association (the &#8220;Articles&#8221;) may discourage, delay or prevent a change in control of our company, which could
have the dual effect of depriving our shareholders of an opportunity to receive a premium for their shares as part of a sale of our company
and reducing the price of our Class A ordinary shares. We may not be able to enter into other transactions that could be beneficial to
us without the consent of our chairman of the board of directors, chief executive officer and chief financial officer. As a result of
the foregoing, the value of your investment could be materially reduced.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24.5pt">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Any change or discontinuation of preferential
tax treatment we currently enjoy would increase our tax charge</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our PRC subsidiaries are subject to the PRC corporate income tax at
a standard rate of 25% on their taxable income, but in 2020, 2021 and 2022, preferential tax treatment was available to three (3) of our
PRC subsidiaries. Zhejiang Ebang obtained the &#8220;high-tech enterprise&#8221; tax status in November 2017, which reduced its statutory
income tax rate to 15% from November 2017 to November 2020. Zhejiang Ebang further re-applied and obtained the &#8220;high-tech enterprise&#8221;
tax status for three years from December 2020. Hangzhou Dewang Information Technology Co., Ltd., or Hangzhou Dewang, obtained the &#8220;high-tech
enterprise&#8221; tax status in November 2018, which reduced its statutory income tax rate to 15% from November 2018 to November 2021.
Hangzhou Dewang further re-applied and obtained the tax status &#8220;high-tech enterprise&#8221; tax for the three-year period start
from December 2021. In addition, Zhejiang Ebang Information Technology Co., Ltd., or Ebang IT, obtained the &#8220;high-tech enterprise&#8221;
tax status in December 2021, which reduced its statutory income tax rate to 15% from December 2021 to December 2023.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We cannot assure you that
the PRC policies on preferential tax treatments will not change or that the current preferential tax treatments we enjoy or will be entitled
to enjoy will not be canceled. Moreover, we cannot assure you that our PRC subsidiaries will be able to renew the same preferential tax
treatments upon expiration. If any such change, cancelation or discontinuation of preferential tax treatment occurs, the relevant PRC
subsidiaries will be subject to the PRC enterprise income tax, or EIT, at a rate of 25% on taxable income. As a result, the increase in
our tax charge could materially and adversely affect our results of operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>The recent joint statement by the SEC and
the PCAOB, rule changes by Nasdaq, and the HFCAA and related regulations, all call for additional and more stringent criteria to be applied
to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected
by the PCAOB. These developments could add uncertainties to our continued listing or future offerings of our securities in the U.S.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On April 21, 2020, SEC Chairman
Jay Clayton and PCAOB Chairman William D. Duhnke III, along with other senior SEC staff, released a joint statement highlighting the risks
associated with investing in companies based in or have substantial operations in emerging markets including China. The joint statement
emphasized the risks associated with lack of access for the PCAOB to inspect auditors and audit work papers in China and higher risks
of fraud in emerging markets.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On May 18, 2020, Nasdaq filed
three proposals with the SEC to (i) apply a minimum offering size requirement for companies primarily operating in a &#8220;Restrictive
Market,&#8221; (ii) adopt a new requirement relating to the qualification of management or the board of directors for Restrictive Market
companies, and (iii) apply additional and more stringent criteria to an applicant or listed company based on the qualifications of the
company&#8217;s auditor. On October 4, 2021, the SEC approved Nasdaq&#8217;s revised proposal for the rule changes.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On May 20, 2020, the U.S.
Senate passed the HFCAA requiring a foreign company to certify it is not owned or controlled by a foreign government if the PCAOB is unable
to audit specified reports because the company uses a foreign auditor not subject to PCAOB inspection. If the PCAOB is unable to inspect
the company&#8217;s auditors for three consecutive years, the issuer&#8217;s securities are prohibited to trade on a national exchange.
On December 2, 2020, the U.S. House of Representatives approved the HFCAA. On December 18, 2020, the HFCAA was signed into law.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On March 24, 2021, the SEC
adopted interim final rules relating to the implementation of certain disclosure and documentation requirements of the HFCAA.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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 board of directors of a company 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.</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On December 2, 2021, the SEC
adopted amendments to finalize rules implementing the submission and disclosure requirements in the HFCAA.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On December 16, 2021, the
PCAOB issued a report on its determinations that it was unable to inspect or investigate completely PCAOB-registered public accounting
firms headquartered in the PRC and in Hong Kong because of positions taken by the PRC and Hong Kong authorities in those jurisdictions.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On August 26, 2022, the CSRC,
MOF, and the PCAOB signed the Protocol, governing inspections and investigations of audit firms based in China and Hong Kong, taking the
first step toward opening access for the PCAOB to inspect and investigate registered public accounting firms headquartered in the PRC
and Hong Kong. Pursuant to the fact sheet with respect to the Protocol disclosed by the SEC, the PCAOB shall have independent discretion
to select any issuer audits for inspection or investigation and has the unfettered ability to transfer information to the SEC.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On December 15, 2022, the
PCAOB determined that it was able to secure complete access to inspect and investigate registered public accounting firms headquartered
in mainland China and Hong Kong and vacated its previous determinations to the contrary. However, should PRC authorities obstruct or otherwise
fail to facilitate the PCAOB&#8217;s access in the future, the PCAOB may consider the need to issue a new determination.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On June 22, 2021, the U.S.
Senate passed the Accelerating Holding Foreign Companies Accountable Act, and on December 29, 2022, the Consolidated Appropriations Act
2023 was signed into law, which contained, among other things, an identical provision to the Accelerating Holding Foreign Companies Accountable
Act, which reduces the number of consecutive non-inspection years required for triggering the prohibitions under the HFCAA from three
years to two.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our financial statements contained in this annual report on Form 20-F
for the year ended December 31, 2022 have been audited by our U.S.-based auditor, MaloneBailey, LLP, an independent registered public
accounting firm that is headquartered in the United States with offices in Beijing and Shenzhen. MaloneBailey, LLP is not among the PCAOB-registered
public accounting firms headquartered in the PRC or Hong Kong that are subject to PCAOB&#8217;s determination on December 16, 2021 of
having been unable to inspect or investigate completely. As of the date of this annual report, we have not been identified by the SEC
as a commission-identified issuer under the HFCAA. However, 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&#8217;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. Furthermore, the HFCAA and related laws, which now require the SEC to prohibit an issuer&#8217;s securities
from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years, may result in the
delisting of our Class A ordinary shares or the prohibition of trading in our securities in the future if the PCAOB is unable to inspect
our auditor at such future time. Delisting may cause a significant decrease in or a total loss of the value of our securities. Although
a shareholder&#8217;s ownership of our Company may not decrease directly from delisting, the ownership may become worth much less, or,
in some cases, lose its entire value.</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We incur significant costs and demands upon management and accounting and finance resources as a result of complying with the laws and
regulations affecting public companies; if we fail to maintain proper and effective internal controls, our ability to produce accurate
and timely financial statements and otherwise make timely and accurate public disclosure could be impaired, which could harm our operating
results, our ability to operate our business and our reputation.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As a public reporting company, we are required to, among other things,
maintain a system of effective internal control over financial reporting. Ensuring that we have adequate internal financial and accounting
controls and procedures in place so that we can produce accurate financial statements on a timely basis is a costly and time-consuming
effort that needs to be re-evaluated frequently. Substantial work will continue to be required to further implement, document, assess,
test and remediate our system of internal controls. As of December 31, 2022, our disclosure controls and procedures were not effective
and management determined that we did not maintain effective internal control over financial reporting due to a material weakness. Management
is undertaking actions to remediate the material weaknesses, but there is no assurance they will be remediated this year. See &#8220;Item
15. Control and Procedures&#8212;Internal Control Over Financial Reporting.&#8221;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If our internal control over
financial reporting or our disclosure controls are not effective, we may be unable to issue our financial statements in a timely manner,
we may be unable to obtain the required audit or review of our financial statements by our independent registered public accounting firm
in a timely manner or we may be otherwise unable to comply with the periodic reporting requirements of the SEC, our ordinary shares listing
on Nasdaq could be suspended or terminated and our share price could materially suffer. In addition, we or members of our management could
be subject to investigation and sanction by the SEC and other regulatory authorities and to shareholder lawsuits, which could impose significant
additional costs on us and divert management attention.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Fluctuations in exchange rates could affect
our results of operations and reduce the value of your investment</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We primarily operate in China.
Our reporting currency is denominated in U.S. dollars. We are exposed to currency risks primarily through sales and purchases which give
rise to receivables, payables and cash balances that are denominated in a currency other than the functional currency of the operations
to which the transaction relates. We are therefore subject to the risk of fluctuations in the exchange rate of U.S. dollars against Australian
dollars, Hong Kong dollars, Renminbi, South Korean won and Euros. The value of U.S.&#160;dollars against Australian dollars, Hong Kong
dollars, Renminbi, South Korean won and Euros fluctuates and is subject to changes resulting from the PRC government&#8217;s policies
and depends to a large extent on domestic and international economic and political developments, as well as supply and demand in the local
market. With the development of the foreign exchange market and progress toward interest rate liberalization and Renminbi internationalization,
the PRC government may in the future announce further changes to the exchange rate system, and we cannot assure you that Renminbi will
not appreciate or depreciate significantly in value against Australian dollars, Hong Kong dollars, South Korean won, U.S dollars or Euros
in the future.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We incurred a foreign exchange gain of US$1.8 million in 2021, and
a foreign exchange loss of US$0.3 million and US$2.2 million in 2020 and 2022, respectively. We had currency translation gains of US$2.0
million and US$1.0 million in 2020 and 2021, respectively, recognized in other comprehensive gain, and currency transaction loss of US$5.3
million in 2022, which is recognized in other comprehensive loss. Such currency translation gains or losses resulted from exchange differences
on translation of financial statements of our entities using currencies other than U.S. dollars as their functional currencies, net of
nil tax.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, should Renminbi
appreciate against other currencies, the value of the proceeds from any future financings, which are to be converted from U.S. dollars
or other currencies into Renminbi, would be reduced and might accordingly hinder our business development due to the reduced amount of
funds raised. On the other hand, in the event of devaluation of Renminbi, the dividend payments of our company, which are to be paid in
U.S. dollars after conversion of the distributable profit denominated in Renminbi, would be reduced. Hence, substantial fluctuation in
the currency exchange rate of Renminbi may have a material adverse effect on our business, results of operations and financial condition
and the value of your investment in our Class A ordinary shares.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Risks Relating to Our Securities</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Because we do not expect to pay dividends
in the foreseeable future, you must rely on price appreciation of our Class A ordinary shares for return on your investment</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We currently intend to retain
most, if not all, of our available funds and any future earnings to fund the development and growth of our business. As a result, we do
not expect to pay any cash dividends in the foreseeable future. Therefore, you should not rely on an investment in the Class A ordinary
shares as a source for any future dividend income.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our board of directors has
complete discretion as to whether to distribute dividends. Even if our board of directors decides to declare and pay dividends, the timing,
amount and form of future dividends, if any, will depend on, among other things, our future results of operations and cash flow, our capital
requirements and surplus, the amount of distributions, if any, received by us from our subsidiary, our financial condition, contractual
restrictions and other factors deemed relevant by our board of directors. Accordingly, the return on your investment in our Class A ordinary
shares will likely depend entirely upon any future price appreciation of the Class A ordinary shares. There is no guarantee that the Class
A ordinary shares will appreciate in value or even maintain the price at which you purchased the Class A ordinary shares. You may not
realize a return on your investment in our Class A ordinary shares and you may even lose your entire investment in our Class A ordinary
shares.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>There can be no assurance that we will not
be classified as a passive foreign investment company, or PFIC, for U.S. federal income tax purposes for any taxable year, which could
result in adverse U.S. federal income tax consequences to U.S. Holders of our Class A ordinary shares and related warrants</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">A non-U.S. corporation, such
as our company, will be classified as a &#8220;passive foreign investment company,&#8221; or PFIC, for U.S. federal income tax purposes
for any taxable year if either (1)&#160;at least 75% of its gross income for such year consists of certain types of &#8220;passive&#8221;
income or the &#8220;income test&#8221;; or (2)&#160;at least 50% of the value of its assets (generally based on an average of the quarterly
values of the assets) during such year is attributable to assets that produce passive income or are held for the production of passive
income, or the &#8220;asset test.&#8221; Based on the current and expected composition of our income and assets and value of our assets
and projections as to the value of our Class A ordinary shares, we do not presently expect to be a PFIC for the current taxable year.
However, no assurance can be given in this regard because the determination of whether we are or will become a PFIC for any taxable year
is a fact-intensive inquiry made on an annual basis that depends, in part, upon the composition of our income and assets, which may change
over time if we expand and diversify our product offerings. Fluctuations in the market price of our Class A ordinary shares may cause
us to be or become a PFIC for the current or subsequent taxable years because the value of our assets for the purpose of the asset test
may be determined by reference to the market price of our Class A ordinary shares (which has been and may continue to be volatile). The
composition of our income and assets may also be affected by how, and how quickly, we use our liquid assets and the cash.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If we were to be or become
a PFIC for any taxable year during which a U.S. Holder (as defined in &#8220;Item 10. Additional Information&#8212;E. Taxation&#8212;Material
U.S. Federal Income Tax Considerations&#8221;) holds our Class A ordinary shares or warrants, certain adverse U.S. federal income tax
consequences could apply to such U.S. Holder. See &#8220;Item 10. Additional Information&#8212;E. Taxation&#8212;Material U.S. Federal
Income Tax Considerations&#8212;Passive Foreign Investment Company Rules.&#8221;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Our Articles contain anti-takeover provisions
that could have a material adverse effect on the rights of holders of our Class A ordinary shares</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our Articles contain provisions
to limit the ability of others to acquire control of our company or cause us to engage in change-of-control transactions. These provisions
could have the effect of depriving our shareholders of an opportunity to sell their shares at a premium over prevailing market prices
by discouraging third parties from seeking to obtain control of our company in a tender offer or similar transaction. Our board of directors
has the authority, without further action by our shareholders, to issue preferred shares in one or more series and to fix their designations,
powers, preferences, privileges, and relative participating, optional or special rights and the qualifications, limitations or restrictions,
including dividend rights, conversion rights, voting rights, terms of redemption and liquidation preferences, any or all of which may
be greater than the rights associated with our ordinary shares. Preferred shares could be issued quickly with terms calculated to delay
or prevent a change in control of our company or make removal of management more difficult. If our board of directors decides to issue
preferred shares, the price of our Class A ordinary shares may fall and the voting and other rights of the holders of our Class A ordinary
shares may be materially and adversely affected.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>You may face difficulties in protecting
your interests, and your ability to protect your rights through U.S. courts may be limited, because we are incorporated under Cayman Islands
law and conduct our operations primarily in emerging markets</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are an exempted company
incorporated under the laws of the Cayman Islands. Our corporate affairs are governed by our Articles, the Companies Act (Revised) of
the Cayman Islands and the common law of the Cayman Islands. The rights of shareholders to take action against the directors, actions
by minority shareholders and the fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent governed
by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent
in the Cayman Islands as well as from the common law of England, the decisions of whose courts are of persuasive authority, but are not
binding, on a court in the Cayman Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under Cayman
Islands law are not as clearly established as they would be under statutes or judicial precedent in some jurisdictions in the United States.
In particular, the Cayman Islands have a less developed body of securities laws than the United States. Some U.S. states, such as Delaware,
have more fully developed and judicially interpreted bodies of corporate law than the Cayman Islands. In addition, Cayman Islands companies
may not have standing to initiate a shareholder derivative action in a federal court of the United States.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Shareholders of Cayman Islands
exempted companies like us have no general rights under Cayman Islands law to inspect corporate records or to obtain copies of lists of
shareholders of these companies. Our directors have discretion under our Articles to determine whether or not, and under what conditions,
our corporate records may be inspected by our shareholders, but are not obliged to make them available to our shareholders. This may make
it more difficult for you to obtain the information needed to establish any facts necessary for a shareholder motion or to solicit proxies
from other shareholders in connection with a proxy contest.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Certain corporate governance
practices in the Cayman Islands, which is our home country, differ significantly from requirements for companies incorporated in other
jurisdictions such as the United States. If we choose to follow home country practice in the future, our shareholders may be afforded
less protection than they otherwise would under rules and regulations applicable to U.S. domestic issuers.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, we conduct substantially
all of our business operations in emerging markets, including China, and substantially all of our directors and senior management are
based in China. The SEC, U.S. Department of Justice, or the DOJ, and other authorities often have substantial difficulties in bringing
and enforcing actions against non-U.S. companies and non-U.S. persons, including company directors and officers, in certain emerging markets,
including China. Additionally, our public shareholders may have limited rights and few practical remedies in emerging markets where we
operate, as shareholder claims that are common in the United States, including class action securities law and fraud claims, generally
are difficult or impossible to pursue as a matter of law or practicality in many emerging markets, including China. For example, in China,
there are significant legal and other obstacles for the SEC, the DOJ and other U.S. authorities to obtaining information needed for shareholder
investigations or litigation. Although the competent authorities in China may establish a regulatory cooperation mechanism with the securities
regulatory authorities of another country or region to implement cross-border supervision and administration, the regulatory cooperation
with the securities regulatory authorities in the United States has not been efficient in the absence of a mutual and practical cooperation
mechanism. According to Article 177 of the PRC Securities Law which became effective in March 2020, no foreign securities regulator is
allowed to directly conduct investigation or evidence collection activities within the territory of the PRC. Accordingly, without the
consent of the competent PRC securities regulators and relevant authorities, no organization or individual may provide the documents and
materials relating to securities business activities to foreign securities regulators.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As a result of all of the
above, our public shareholders may have more difficulty in protecting their interests in the face of actions taken by management, members
of the board of directors or controlling shareholders than they would as public shareholders of a company incorporated in the United States.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>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 Nasdaq listing standards; these practices may afford less protection to shareholders than they would enjoy if we complied fully with
the relevant listing standards</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As a Cayman Islands company
listed on the Nasdaq Global Select Market, we are subject to the Nasdaq Stock Market listing standards (&#8220;Nasdaq Rules&#8221;). 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 Rules. We currently follow
home country practice in lieu of the requirements under the Nasdaq Rules with respect to certain corporate governance standards. For example,
based on home country practice, we are not required to seek shareholder approval for issuance of 20% or more of our outstanding ordinary
shares or voting power in a private offering (as defined by Nasdaq Rules) and we are not required to host an annual general meeting of
shareholders each year. Accordingly, our shareholders may not be provided with the benefits of certain corporate governance requirements
of the Nasdaq Rules.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Cayman Islands economic substance requirements
may have an effect on our business and operations</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Cayman Islands, together
with several other non-European Union jurisdictions, have introduced legislation aimed at addressing concerns raised by the Council of
the European Union as to offshore structures engaged in certain activities which attract profits without real economic activity. With
effect from January 1, 2019, the International Tax Co-operation (Economic Substance) Act (As Revised) (the &#8220;<b>Substance Act</b>&#8221;)
came into force in the Cayman Islands introducing certain economic substance requirements for in-scope Cayman Islands entities which are
engaged in certain &#8220;relevant activities,&#8221; which in the case of exempted companies incorporated before January 1, 2019, will
apply in respect of financial years commencing July 1, 2019, onwards. As our company, Ebang International Holdings Inc., is a Cayman Islands
company, compliance obligations include filing annual notifications, which need to state whether our company is carrying out any relevant
activities and if so, whether our company has satisfied economic substance tests to the extent required under the Substance Act. As it
is a new regime, it is anticipated that the Substance Act will evolve and be subject to further clarification and amendments. We may need
to allocate additional resources to keep updated with these developments, and may have to make changes to our operations in order to comply
with all requirements under the Substance Act. Failure to satisfy these requirements may subject us to penalties under the Substance Act.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Our dual-class voting structure will limit
your ability to influence corporate matters and could discourage others from pursuing any change of control transactions that holders
of our Class&#160;A ordinary shares may view as beneficial</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have a dual-class share
structure such that our ordinary shares consist of Class A ordinary shares and Class B ordinary shares. Holders of Class A ordinary shares
are entitled to one vote per share, while the sole holder of Class B ordinary shares is entitled to&#160;20&#160;votes per share. Each
Class B ordinary share is convertible into one Class A ordinary share at any time by the holder thereof, while Class A ordinary shares
are not convertible into Class B ordinary shares under any circumstances. Upon any sale, transfer, assignment or disposition of any Class
B ordinary shares by a holder thereof to any non-affiliate of such holder, each of such Class B ordinary shares will be automatically
and immediately converted into one Class A ordinary share.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Mr. Dong Hu, our founder,
chairman of the board of directors, chief executive officer and chief financial officer, beneficially owns all of our issued Class B ordinary
shares. These Class&#160;B ordinary shares constituted approximately 23.8% of our total issued and outstanding share capital and 86.2%
of the aggregate voting power of our total issued and outstanding share capital as of April 27, 2023. As a result of the dual-class share
structure and the concentration of ownership, Mr. Dong Hu has a considerable influence over matters such as decisions regarding mergers
and consolidations, election of directors and other significant corporate actions. He may take actions that are not in the best interest
of us or our other shareholders. This concentration of ownership may discourage, delay or prevent a change in control of our company,
which could have the effect of depriving our other shareholders of the opportunity to receive a premium for their shares as part of a
sale of our company and may reduce the price of our Class A ordinary shares. This concentrated control will limit your ability to influence
corporate matters and could discourage others from pursuing any potential merger, takeover or other change of control transactions that
holders of Class A ordinary shares may view as beneficial.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, certain shareholder
advisory firms have announced changes to their eligibility criteria for inclusion of shares of public companies on certain indices, including
the S&amp;P 500, to exclude companies with multiple classes of shares and companies whose public shareholders hold no more than 5% of
total voting power from being added to such indices. Several shareholder advisory firms have also announced their opposition to the use
of multiple class structures. As a result, the dual-class structure of our ordinary shares may prevent the inclusion of our Class A ordinary
shares in such indices and may cause shareholder advisory firms to publish negative commentary about our corporate governance practices
or otherwise seek to cause us to change our capital structure. Any such exclusion from indices could result in a less active trading market
for our Class A ordinary shares. Any actions or publications by shareholder advisory firms critical of our corporate governance practices
or capital structure could also adversely affect the value of our Class A ordinary shares.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We are a &#8220;controlled company&#8221;
within the meaning of the Nasdaq Rules, and, as a result, can rely on exemptions from certain corporate governance requirements that provide
protection to shareholders of other companies </i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are a &#8220;controlled
company&#8221; as defined under the Nasdaq Rules as Mr. Dong Hu, our founder, chairman of the board of directors, chief executive officer
and chief financial officer, owns more than 50% of our total voting power. For so long as we remain a controlled company under that definition,
we are permitted to elect to rely, and may rely, on certain exemptions from corporate governance rules. As a result, you may not have
the same protection afforded to shareholders of companies that are subject to these corporate governance requirements.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Certain judgments obtained against us by
our shareholders may not be enforceable</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are a Cayman Islands company
and the majority of our assets are located outside of the United States. The most significant portion of our operations is conducted in
China. In addition, a majority of our current directors and officers are nationals and residents of countries other than the United States.
Substantially all of the assets of these persons may be located outside the United States. As a result, it may be difficult or impossible
for you to bring an action against us or against these individuals in the United States in the event that you believe that your rights
have been infringed under the U.S. federal securities laws or otherwise. Even if you are successful in bringing an action of this kind,
the laws of the Cayman Islands and of China may render you unable to enforce a judgment against our assets or the assets of our directors
and officers.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We are an emerging growth company within
the meaning of the Jumpstart Our Business Startups Act (the &#8220;JOBS Act&#8221;) and may take advantage of certain reduced reporting
requirements</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are an &#8220;emerging
growth company,&#8221; as defined in the JOBS Act, and we may take advantage of certain exemptions from requirements applicable to other
public companies that are not emerging growth companies including, most significantly, not being required to comply with the auditor attestation
requirements of Section&#160;404 for so long as we are an emerging growth company until the fifth anniversary from the date of our initial
listing.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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. However, we have elected to &#8220;opt
out&#8221; of this provision and, as a result, we will comply with new or revised accounting standards as required when they are adopted
for public companies. This decision to opt out of the extended transition period under the JOBS Act is irrevocable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We are a foreign private issuer within the
meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions applicable to United States domestic public
companies</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Because we are a foreign private
issuer under the Exchange Act, we are exempt from certain provisions of the securities rules and regulations in the United States that
are applicable to U.S. domestic issuers, including:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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    <td style="text-align: justify; font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the rules under the Exchange Act requiring the filing of quarterly reports on Form&#160;10-Q or current reports on Form&#160;8-K with the SEC;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
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    <td style="text-align: justify; font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in; text-align: justify; font-size: 10pt">&#160;</td>
    <td style="width: 0.25in; text-align: justify; font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have and plan to continue
to file an annual report on Form&#160;20-F within four months of the end of each fiscal year. In addition, we publish our results on a
semi-annual basis through press releases, distributed pursuant to the rules and regulations of the Nasdaq Global Select Market. Press
releases relating to financial results and material events will also be furnished to the SEC on Form&#160;6-K. However, the information
we are required to file with or furnish to the&#160;SEC will be less extensive and less timely than that required to be filed with the
SEC by U.S. domestic issuers. As a result, you may not be afforded the same protections or information that would be made available to
you were you investing in a U.S. domestic issuer.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Certain data and information in this annual
report were obtained from third-party sources and were not independently verified by us</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">This annual report contains
certain data and information that have been derived from third-party reports, either commissioned by us or publicly accessible, and other
publicly available sources. Statistical data in these sources of information also include projections based on a number of assumptions.
The countries where we operate property markets may not grow at the rate projected by such statistical data, or at all. The failure of
our industry to grow at the projected rate may have a material adverse effect on our business. In addition, the complex and changing nature
of the broad macroeconomic factors discussed in this annual report may result in significant uncertainties for any projections or estimates
relating to the growth prospects or future condition of our market. Furthermore, if any one or more of the assumptions underlying the
market data is later found to be incorrect, actual results may differ from the projections based on these assumptions.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;We have not independently
verified the data and information contained in such third-party publications and reports. Data and information contained in such third-party
publications and reports may be collected using third-party methodologies, which may differ from the data collection methods used by us.
In addition, these industry publications and reports generally indicate that the information contained therein was believed to be reliable,
but do not guarantee the accuracy and completeness of such information. You should therefore not place undue reliance on such information.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>General Risk Factors</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We have in the past incurred and continue
to incur losses and negative cash flows from operating activities, and we may not achieve or sustain profitability</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We incurred a loss from operations
of US$26.6 million and US$48.0 million in 2020 and 2022, respectively, while we generated an income from operations of US$2.0 million
in 2021. We incurred a gross loss of US$2.9 million in 2020, and generated gross profit of US$29.2 million and US$15.4 million in 2021
and 2022, respectively. We had negative cash flows from operating activities of US$15.8 million and US$14.1 million for 2020 and 2021,
respectively and positive cash flows from operating activities of US$2.1 million for 2022. In addition, we have received significant non-recurring
tax rebates from local governments in the past, but we cannot assure you that we will continue to receive significant tax rebates or other
discretionary government grants in the future. Even if we are eligible for any additional tax rebates or other government grants, we cannot
assure you of the timing and the amount of any such rebates or other grants. To the extent that&#160;we do not receive any additional
tax rebates or other government grants, our financial condition could be materially and adversely affected. We cannot assure you that
we will be able to generate net profit or positive cash flow from operating activities in the future. Our ability to achieve profitability
will depend in large part on our ability to control expenses and manage our growth effectively, to achieve a more stable performance given
the significant fluctuation and volatility of the Bitcoin price and Bitcoin mining machine business, and to maintain our competitive advantage
in the Bitcoin markets. We expect to continue to make investments in the development and expansion of our business, which will place significant
demands on our management and our operational and financial resources. Continuous expansion may increase the complexity of our business,
and we may encounter various difficulties. We may fail to develop and improve our operational, financial and management controls, enhance
our financial reporting systems and procedures, recruit, train and retain highly skilled personnel, or maintain customer satisfaction
to effectively support and manage our growth. If we invest substantial time and resources to expand our operations but fail to manage
the growth of our business and capitalize on our growth opportunities effectively, we may not be able to achieve profitability, and our
business, results of operations and financial condition would be materially and adversely affected.&#160;</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">

</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Our limited operating history and our volatile
historical results of operations could make it difficult for us to forecast our business and assess the seasonality and volatility in
our business</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We began producing and selling
our own brand mining machines in December&#160;2016. We generated US$19.0 million, US$51.5 million and US$32.3 million, in revenue in
2020, 2021 and 2022, respectively. As we have suffered from the significant drop in the average Bitcoin price historically, we cannot
assure you that we will be able to gain revenue growth or that we will not experience another significant decline.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As the market for Bitcoin
mining machines is relatively nascent and still rapidly evolving, we cannot forecast longer-term demand or order patterns for our products.
Because of our limited operating history and historical data, as well as the limited visibility into future demand trends for our products,
we may not be able to accurately forecast our future total revenue and budget our operating expenses accordingly. As most of our expenses
are fixed in the short-term or incurred in advance of anticipated total revenue, we may not be able to adjust our expenses in a timely
manner in order to offset any shortfall in revenue.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our business is subject to
the varying order patterns of the Bitcoin mining machine market. In addition, many of the regions in which our products are purchased
have varying holiday seasons that differ from traditional patterns observed by other semiconductor suppliers and these seasonal buying
patterns can impact our sales. We have experienced fluctuations in orders during our limited operating history, and we expect such volatility
to occur in the future. Our volatile historical results of operations could make it difficult to assess the impact of seasonal factors
on our business. If we or any of our third-party manufacturing service providers are unable to increase production of new or existing
products to meet any increases in demand due to seasonality or other factors, our total revenue would be adversely affected and our reputation
with our customers may be damaged. Conversely, if we overestimate customer demand, we may reduce our orders or delay shipments of our
products from units forecasted, and our total revenue in a particular period could be lower than expected.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

</div><!-- Field: Page; Sequence: 64; Value: 1 --><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Our business requires significant financial
resources and we may need additional capital but may not be able to obtain it in a timely manner and on favorable terms or at all</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We had negative cash flows
from operating activities of US$15.8 million and US$14.1 million for 2020 and 2021, respectively and positive cash flows from operating
activities of US$2.1 million for 2022. We have in the past financed our working capital needs primarily with our net cash from operating
activities, capital contributions by shareholders and bank borrowings.</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">

</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We may require additional
cash resources due to the future growth, development and expansion of our business. Our future capital requirements may be substantial
as we seek to expand our operations, diversify our product offering, and pursue acquisitions and equity investments. In addition, we incurred
accrued payables of US$11.5 million and accounts payable of US$1.5 million as of December 31, 2022. If our cash resources are insufficient
to satisfy our cash requirements, we may be required to seek to issue additional equity or debt securities or obtain new or expanded credit
facilities or enter into additional factoring arrangements.</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">

</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our ability to obtain external
financing in the future is subject to a variety of uncertainties, including our future financial condition, results of operations and
cash flows and the liquidity of international capital and lending markets. In addition, our loan agreements may contain financial covenants
that restrict our ability to incur additional indebtedness or to distribute dividends. Any indebtedness that we may incur in the future
may also contain operating and financial covenants that could further restrict our operations. There can be no assurance that financing
will be available in a timely manner or in amounts or on terms acceptable to us, or at all. A large amount of bank borrowings and other
debt may result in a significant increase in interest expense while at the same time exposing us to increased interest rate risks. Equity
financings could result in dilution to our shareholders, and the securities issued in future financings may have rights, preferences and
privileges that are senior to those of our ordinary shares. Any failure to raise needed funds on terms favorable to us, or at all, could
severely restrict our liquidity as well as have a material adverse effect on our business, results of operations and financial condition.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Third parties have claimed and may, from
time to time, assert or claim that we infringed their intellectual property rights and any failure to protect our intellectual property
rights could have a material adverse impact on our business</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We operate in an industry
where participants own a large number of patents and other intellectual property rights that are material to operations and will vigorously
pursue, protect and defend these rights. Our competitors or other third parties may allege to own intellectual property rights and interests
that could potentially conflict with our own. It is difficult to monitor all of the patent applications and other intellectual property
rights protection registrations or applications that may be filed in the PRC or in other relevant jurisdictions. If we offer products
that may potentially infringe on such pending applications and the applications are granted, third parties may initiate intellectual infringement
claims against us. For example, we are currently involved in an ongoing civil litigation claim against us and four other defendants in
relation to potential infringement of intellectual property rights.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24.5pt">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As we expand our operations
with new products and into new markets, the chances of encountering infringement claims by third parties will increase. We may incur substantial
costs in defending or settling such disputes and such actions could divert significant resources and management attention. In addition,
some of our customer agreements in the future may require us to indemnify and defend our customers from third-party infringement claims
and to pay damages in the case of adverse rulings. As such, claims of this sort also could harm our relationships with our customers and
may deter future customers from doing business with us. If securities analysts and investors regard these announcements as negative, the
market price of our Class A ordinary shares may decline. We do not know whether we could prevail in any such proceeding given the complex
technical issues and inherent uncertainties involved in IP litigation. If any pending or future proceedings result in an adverse outcome,
we could be required to:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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    <td style="width: 0.5in; font-size: 10pt">&#160;</td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
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    <td style="width: 0.25in; font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">license technology from the third-party claiming infringement, which license may not be available on commercially reasonable terms, or at all;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">pay substantial damages to our customers to discontinue their use of or replace infringing products sold to them with non-infringing products.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 65; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->56<!-- Field: /Sequence --></span></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Even if intellectual property
claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could
divert the resources of our management and require significant expenditures. Moreover, such claims, whether successful or not, may cause
significant damage to our reputation and a loss of customers. Any of the foregoing could prevent us from competing effectively and could
have an adverse effect on our business, operating results, and financial condition.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>If we are unable to maintain or enhance
our brand recognition, our business, results of operations and financial condition may be materially and adversely affected</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Maintaining and enhancing
the recognition, image and acceptance of our brand are important to our ability to differentiate our products from and to compete effectively
with our peers. Our brand image, however, could be jeopardized if we fail to maintain high product quality, pioneer and keep pace with
evolving technology trends, or timely fulfill the orders for our products. If we fail to promote our brand or to maintain or enhance our
brand recognition and awareness among our customers, or if we are subject to events or negative allegations affecting our brand image
or the publicly perceived position of our brand, our business, operating results and financial condition could be adversely affected.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>If counterfeit products are sold under our
brand names and trademarks, our reputation and financial results could be materially and adversely affected.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24.5pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24.5pt">Third-party merchants and
dealers are separately responsible for sourcing counterfeit products that are sold under our brand names and trademarks. Counterfeit products
may be defective or inferior in quality as compared to authentic products. If our customers are not satisfied by counterfeit products
sold under our brand names and trademarks, we may be subject to reputational damage. We believe our brand and reputation are important
to our success and our competitive position. The discovery of counterfeit products sold under our brand names and trademarks may severally
damage our reputation and cause customers to refrain from making future purchases from us, which would materially and adversely affect
our business operations and financial results.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We face risks of unexpected events, including
natural disasters, acts of God and occurrence of epidemics, which could severely disrupt our business operations</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Natural disasters, epidemics
and other acts of God which are beyond our control may adversely affect the economy, infrastructure and livelihood of the people in China
and in other territories in which we operate and may materially and adversely affect our operations, as our primary facilities and offices
are located in China and we have other facilities and offices outside of China. Material damage to, or the loss of, such facilities due
to fire, severe weather, flood, earthquake, or other acts of God or cause may not be adequately covered by proceeds of our insurance coverage
and could materially and adversely affect our business and results of operations. Any outbreaks of contagious disease, acts of war or
terrorist attacks may cause damage or disruption to our business, our employees and our markets, any of which could adversely impact our
business and results of operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>The trading price of our Class A ordinary
shares may be volatile, which could result in substantial losses to investors</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The trading price of our Class
A ordinary shares has been volatile since our Class A ordinary shares began to trade on the Nasdaq Global Select Market on June 26, 2020.
The trading price of our Class A ordinary shares has previously and may in the future fluctuate widely due to factors beyond our control.
This volatility may occur because of broad market and industry factors, like the performance and fluctuation of the market prices of other
companies with business operations located mainly in China that have listed their securities in the United States as well as factors related
to the cryptocurrency industry and pricing of cryptocurrencies generally. A number of Chinese companies have listed or are in the process
of listing (or attempting to list) their securities on U.S. stock markets. The securities of some of these companies have experienced
significant volatility, including price declines in connection with their initial public offerings. The trading performances of these
Chinese companies&#8217; securities after their offerings may affect the attitudes of investors toward Chinese companies listed in the
United States in general and consequently may impact the trading performance of the Class A ordinary shares, regardless of our actual
operating performance.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

</div><!-- Field: Page; Sequence: 66; Value: 1 --><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition to market and
industry factors, the price and trading volume for the Class A ordinary shares may be highly volatile for factors specific to our own
operations, including the following:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in; text-align: justify">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-align: justify; text-indent: -0.25in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
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  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Any of these factors may result
in large and sudden changes in the volume and price at which the Class A ordinary shares will trade.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Additionally, any negative
news or perceptions about inadequate corporate governance practices or fraudulent accounting, corporate structure or other matters of
other Chinese companies may also negatively affect the attitudes of investors towards Chinese companies in general, including us, regardless
of whether we have engaged in any inappropriate activities. In particular, the global financial crisis and the ensuing economic recessions
in many countries have contributed and may continue to contribute to extreme volatility in the global stock markets. These broad market
and industry fluctuations may adversely affect the market price of our Class A ordinary shares. Volatility or a lack of positive performance
in our Class A ordinary shares price may also adversely affect our ability to retain key employees, most of whom may be granted options
or other equity incentives in the future.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>If securities or industry analysts do not
publish research or reports about our business, or if they adversely change their recommendations regarding our Class A ordinary shares,
the market price for the Class A ordinary shares and trading volume could decline</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The trading market for our
Class A ordinary shares will be influenced by research or reports that industry or securities analysts publish about our business. If
one or more analysts who cover us downgrade our Class A ordinary shares, the market price for our Class A ordinary shares would likely
decline. If one or more of these analysts cease to cover us or fail to regularly publish reports on us, we could lose visibility in the
financial markets, which in turn could cause the market price or trading volume for our Class A ordinary shares to decline.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We will continue to incur increased costs
as a public company, which could lower our profits or make it more difficult to run a business</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As a public company, we have
incurred significant legal, accounting and other expenses that we did not incur as a private company to ensure that we comply with the
various requirements on corporate governance practices imposed by the Sarbanes-Oxley Act of 2002, as well as rules subsequently implemented
by the SEC and Nasdaq Global Select Market. For example, we have increased the number of independent directors and adopt policies regarding
internal controls and disclosure controls and procedures. We have also incurred additional costs associated with our public company reporting
requirements. We expect that these rules and regulations will continue to cause us to incur elevated legal and financial compliance costs,
devote substantial management effort to ensure compliance and make some corporate activities more time-consuming and costly. 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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><div><a id="a_017"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>ITEM&#160;4. INFORMATION ON THE COMPANY</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><div><a id="a_018"></a></div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>A.</b></span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>History and development of the company</b></span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In January 2010, Mr. Dong
Hu, our founder, chairman of the board of directors, chief executive officer and chief financial officer, founded Zhejiang Ebang Communication
Technology Co., Ltd., or Zhejiang Ebang, which established Ebang IT in August 2010, to conduct development and sales of communications
network access devices and related equipment. In early 2014, in view of the burgeoning opportunities in the blockchain industry, we began
to conduct research and feasibility studies on the blockchain business and develop blockchain computing equipment. In August 2015, Zhejiang
Ebang was listed in China on the National Equities Exchange and Quotations Co., Ltd., or the NEEQ. In August 2016, we acquired 51.05%
of the equity interest in Hangzhou Dewang through our capital injection in Hangzhou Dewang. In March 2018, Zhejiang Ebang was delisted
from the NEEQ in preparation for the reorganization.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On May 17, 2018, we incorporated
Ebang International Holdings Inc., our holding company, as an exempted company with limited liability in the Cayman Islands. In 2018,
we underwent a series of corporate reorganizations for our initial public offering, including the incorporation of our company as the
listing vehicle, incorporation of our oversea holding companies and issuance of shares to shareholders of Ebang Hongfa to reflect their
respective shareholdings before the reorganization. We completed the reorganization in May 2018.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On June 26, 2020, our Class
A ordinary shares commenced trading on the Nasdaq Global Select Market under the symbol &#8220;EBON.&#8221; We raised approximately US$91.7
million in net proceeds after deducting underwriting commissions and the offering expenses payable by us from our initial public offering.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">From August 2020 to April
2023, to expand our Fintech businesses globally, we established our subsidiaries in Canada, Australia, Singapore, Hong Kong, the Bahamas,
New Zealand and Malaysia. As of the date of this annual report, we have established two cryptocurrency exchange platforms and one cross-border
payment and foreign exchange platform outside the PRC, received the MSB License in Canada, registration approval as digital currency exchange,
acquired a company with an AFSL and registration approval as an independent remittance dealer in Australia, the MSO License, Type 4 and
9 licenses, TCSP license and registration approval as a Trust Company in Hong Kong, registration as a Digital Asset Business and a Firm
Dealing in Securities as Agent or Principal, Arranging Deals, Managing Securities and Advising on Securities in the Bahamas.</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Corporate Information</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our principal executive offices
are located at 12 Marina View, #20-02B, Asia Square Tower 2, Singapore, 018961. Our telephone number at this address is +86 571-8817-6197.
Our registered office in the Cayman Islands is located at Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman KY1-1111.</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Investors should submit any
inquiries to the address and telephone number of our principal executive offices. Our corporate website is <i>http://www.ebang.com</i>.
Our agent for service of process in the United States is located at 122 East 42nd Street, 18th Floor, New York, N.Y. 10168, United States.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><div><a id="a_019"></a></div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>B.</b></span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Business Overview</b></span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As a global blockchain technology
and Fintech company, we have strong application-specific integrated circuit (ASIC) chip design capability. With years of industry experience
and expertise, we have become a global Bitcoin mining machine producer. Based on our deep understanding of the Fintech industry and compliance
with laws and regulations in various jurisdictions, we have launched professional, convenient and innovative Fintech service platforms.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We
strive to expand into the upstream and downstream markets of the blockchain and Fintech industry value chain to diversify our offerings
and achieve a more stable financial performance, by starting with the cryptocurrency mining and farming business, and expanding into
further Fintech businesses. As of the date of this annual report, we have established two cryptocurrency exchange platforms and one cross-border
payment and foreign exchange platform.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We believe our extensive experience
in the blockchain and Fintech industry positions us well in our future endeavors. We intend to continue to concentrate our efforts in
our blockchain and Fintech related businesses in 2023, specifically in Singapore, Hong Kong, Australia, New Zealand, the United States
and Malaysia. Although we have not generated substantial revenue from such businesses to date, we carefully selected these countries and/or
regions because of what we believe to be a Fintech-friendly regulatory environment.&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Overseas Expansion</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">From August 2020 to February
2023, we established our wholly-owned subsidiaries in Canada, Australia, Singapore, Hong Kong, the Bahamas, New Zealand and Malaysia to
apply for Fintech business related licenses and wholly-owned subsidiaries in the United States in accelerating the construction of compliant
mining farms in North America. We carefully selected these countries and/or regions because of what we believe to be a Fintech-friendly
regulatory environment. We are at an initial stage of executing our plan to launch Fintech businesses to capture the growth opportunity
along the value chain of the blockchain and Fintech industry. As of the date of this annual report, we have received the MSB License from
the Financial Transactions and Reports Analysis Centre of Canada, which allows us to engage in foreign exchange dealing, money transferring
and dealing in virtual currencies in Canada; registration approval from AUSTRAC as digital currency exchange, which allows us to provide
cryptocurrency exchange services in Australia; acquired a company with an AFSL for engaging in financial services in Australia; registration
approval as an independent remittance dealer on the AUSTRAC Remittance Sector Register, which allows us to provide remittance services
in Australia; the TCSP license and registration approval as a Trust Company from the Company Registry in Hong Kong, which allows us to
carry on a trust or company service business; the MSO license from the Customs and Excise Department in Hong Kong, which allows us to
operate money changing and remittance services; the Type 4 and 9 licenses from the Securities and Futures Commission in Hong Kong, which
allows us to carry on advising on securities and asset management service; registered as a Digital Asset Business and a Firm Dealing in
Securities as Agent or Principal, Arranging Deals, Managing Securities and Advising on Securities from the Securities Commission of the
Bahamas, which allows us to carry on digital asset business activities and securities activities in and from the Commonwealth of the Bahamas.
In April 2021, we launched our first self-developed proprietary cryptocurrency exchange platform Ebonex and in February 2022, we launched
another self-developed proprietary cryptocurrency exchange platform, also branded Ebonex, in Australia. On top of that, in March 2022,
we established a cross-border payment and foreign exchange business in Australia, through the acquisition of an Australian company with
an AFSL, and in the fourth quarter of 2022, we launched our self-developed proprietary cross-border payment and foreign exchange platform,
EbonFX, targeting qualified investors subject to compliance with applicable laws in the jurisdictions EbonFX operates. We are also in
the process of obtaining additional and/or relevant licenses and approvals for our subsidiaries in Singapore, Hong Kong, Australia, New
Zealand and Malaysia. If and once obtained, the licenses will allow us to operate additional Fintech businesses in such countries and
regions. Meanwhile, we are focused on application development, regulatory compliance and talent recruitment to ramp up execution of our
new business plans for the expansion in these countries. We expect such ramp-up will support our future operations and our compliance
with local rules and regulations. Our expenses to date to implement our new business plans, including establishing in Canada, Australia,
Singapore, Hong Kong, the Bahamas, New Zealand, the United States and Malaysia, have been mainly on server rentals, application development,
regulatory compliance, talent acquisition and offices rentals to set up blockchain and Fintech businesses in the abovementioned countries
and regions. There is no guarantee that we will receive any additional required approvals and licenses for our proposed business in these
jurisdictions in a timely manner or on commercially reasonable terms, or at all, or that we will commence the proposed business as planned,
or at all. If our operations at these jurisdictions or our execution of business plan proves incorrect, we may incur additional expenses
or losses.</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">

</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Any restrictions imposed by
a foreign government could force us to restructure operations, perhaps significantly, which could result in significant costs and inefficiencies
that harm our profitability, or even cause us to cease operations in the applicable jurisdiction. Fintech is a recent technological innovation
and the regulatory schemes to which Fintech businesses may be subject have not been fully explored or developed by foreign jurisdictions.
Thus, Fintech faces an uncertain regulatory landscape in many foreign jurisdictions. Various foreign jurisdictions may from time to time
adopt laws, regulations or directives that affect our Fintech businesses. Due in part to its international nature and the nascent stage
of regulation, along with the limited experience with Fintech, and language barriers between international journalists, translators and
regulators, information regarding the regulation of Fintech in various jurisdictions may be incomplete, inaccurate or unreliable. As both
the regulatory landscape develops and journalistic familiarity with Fintech increases, mainstream media&#8217;s understanding of Fintech
and the regulation thereof may improve. As we enter into the markets in Australia, Singapore, Hong Kong, the Bahamas, New Zealand, the
United States and Malaysia, we expect to continue to monitor the local regulations regarding Fintech service platforms and retain local
regulatory counsels. See &#8220;Item&#160;3. Key Information&#8212;D. Risk Factors&#8212;Risks Relating to Our Cryptocurrency, Blockchain
and Mining Related Businesses&#8212;The current regulatory environment in foreign markets, and any adverse changes in those environments,
could have material adverse impacts on our blockchain products business and our Fintech business,&#8221; &#8220;Item&#160;3. Key Information&#8212;D.
Risk Factors&#8212;If we are unable to manage our growth or execute our strategies effectively, our business, results of operations and
financial condition may be materially and adversely affected&#8221; and &#8220;Item 3. Key Information&#8212;D. Risk Factors&#8212; We
may not successfully develop, market or launch any future Fintech businesses or continue operating our existing Fintech businesses&#8221;
for details of the associated risks.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Our Value Proposition</b>&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We design fabless ICs in the
front-end and back-end, which are the major components of the IC product development chain. We currently dedicate our technology and expertise
in IC design for our blockchain products business and telecommunication products business.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following diagram illustrates
the general process of IC design and production for our blockchain and telecommunications products businesses:<b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><img alt="" src="image_002.jpg"/></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We independently design and
develop our blockchain and telecommunications products in-house, including the design of proprietary ASIC chips for our cryptocurrency
mining machines. Front-end IC design and back-end IC design are the key parts of the IC design process. We determine the parameters of
the IC chip, establish the basic logic of the design, map out the initial plan for the physical layout, and conduct back-end verification
on the design. Our strong design capability has ensured that we have achieved a 100%&#160;tape-out&#160;success rate to date. We then
closely partner with industry-leading third-party suppliers to fabricate, test and package the IC products we design.&#160;Leveraging
our long-established experience and know-how in producing telecommunications products, we have also established in-house production capabilities
to conduct PCB assembly and system assembly for both mining machines and a wide range of telecommunications products. We believe our outstanding
technical expertise and production experience in IC development chain enables us to continuously introduce ICs of higher performance and
power efficiency for application in both the blockchain and telecommunications fields.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Currently, we have two self-developed cryptocurrency exchange platforms
operating under the brand name Ebonex, and we support users to buy and/or sell digital assets through Ebonex. Our customers include retail
users and institutions. We aim to establish a global blockchain financial service platform, with services to be provided to each countries
and regions in which we operate under their respective laws and regulations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Ebonex is based on our self-developed
trading system, which provides a highly available, high-concurrency trade match service system. We have embedded robust anti-money laundering
(&#8220;AML&#8221;), Know Your Customer (&#8220;KYC&#8221;), Know Your Transaction (&#8220;KYT&#8221;) and asset custody third-party services
in Ebonex to protect user assets and ensure that users&#8217; access meets regulatory standards. We believe users can experience stable
system services, convenient deposits and withdrawals, smooth trading and diversified digital asset services on Ebonex. We are committed
to building a world-leading comprehensive digital asset service platform to meet the asset service needs of cryptocurrency asset users
worldwide while complying with the current laws, regulations, and legal standards to which we are subject, as well as additional laws,
regulations and legal standards that may be introduced in the future.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="border-bottom: Black 1.5pt solid; margin-top: 12pt; margin-bottom: 6pt"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->61<!-- Field: /Sequence --></span></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As part of our growth
                                                                                                                  and diversification strategy, we acquired an Australian company which owned financial services business with an ASFL in March 2022.
                                                                                                                  The strategic acquisition provides immediate scale, capability and expertise to facilitate us into entering the global financial
                                                                                                                  markets, and together with our strong internal technological capabilities, we have successfully launched a self-developed
                                                                                                                  proprietary cross-border payment and foreign exchange platform, EbonFX. The cross-border payment and foreign exchange business
                                                                                                                  offers a comprehensive range of cost-effective payment and risk management solutions to businesses looking to manage their currency
                                                                                                                  exposure and streamline their international payments, whilst satisfying local regulatory and compliance requirements. Backed by our
                                                                                                                  network of established partnerships with banks and government regulated financial institutions around the world, EbonFX is a ASIC-licensed and regulated platform that enables its customers to transact safely and securely with confidence at any time in 39
                                                                                                                  currencies across the world.

</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 30pt">Our approach to international
payments is centered around providing our customers with reliable, convenient and cost-effective ways to transact from anywhere, at anytime,
and on any device. We strive to make international payments simple and easy for our customers, offering personalized service and tailored
solutions to meet the unique needs of each customer. Our team of experienced foreign exchange specialists provide guidance and support
on navigating the complexities of the currency markets. We continuously monitor the currency markets to stay up to date on the latest
trends and ensure our rates are competitive and give us the edge to help clients make informed decisions about their currency transactions
and save money when sending and receiving foreign currencies. Our multi-currency balance capability enables our customers to hold and
manage multiple currencies in a single account, which makes it easier for them to receive, send and manage their global currency needs
and reduces the need for multiple bank accounts. In addition, we help manage foreign exchange (FX) risks for our customers through a range
of tailored hedging strategies (e.g., forwards and options) to help them manage their foreign currency exposures. When developing a risk
management strategy, our team of experts take the time to identify the specific risks clients face by understanding their business operations,
cash flows, and exposures to foreign currency risks.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 30pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The customers are at the heart
of our business. We understand the first-hand impact of high FX margin, fees and banking costs on customers&#8217; profit margins, and
seek out to build a better solution for businesses and individuals operating across borders, improving on the constraints of the current
global financial system.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Our Blockchain Products Business</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our blockchain products business
consists primarily of Bitcoin mining machine sales.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Bitcoin Mining Machine Products</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our technology and expertise
in ASIC applications is primarily dedicated to our blockchain products business, which consists predominantly of the design, development,
production and sales of our proprietary ASIC-based Bitcoin mining machines under the Ebit brand. Our Ebit Bitcoin mining machines feature
our proprietary ASICs, and the ASICs are integrated with components procured by us.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Since the beginning of our
ASIC designing business, we have successfully and independently completed the design of 14nm, 12nm, 10nm, 8nm, 7nm and 6nm ASIC chips.
Our existing ASIC chips are targeted at solving Bitcoin&#8217;s cryptographic algorithms incorporating the latest technology. Since the
launch of our first mining machine with 10nm ASIC chips in 2017, we have introduced mining machines with second generation 10nm ASIC chips
in 2019 and mining machines with 8nm ASIC chips in 2020; and we have successfully and independently completed the design of 6nm ASIC chips
and the design of a chip for simultaneous Litecoin and Dogecoin mining in 2021. We currently focus on developing our proprietary 5nm-optimized
ASIC chips and optimized mining machines for non-Bitcoin cryptocurrencies such as Litecoin. We will continue to devote significant resources
to new innovations applying blockchain technology and further determine the timeline for launching these products based on market demands
and conditions.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have also designed our
hardware architecture to optimize the computing power of our ASIC chips while efficiently consuming energy. This includes incorporating
heat dissipation technology, such as high-grade aluminum cases and customized heat sinks and fans. All of our mining machine products
incorporate built-in controllers so they can operate as standalone devices. Our products utilize automatic cluster management software
system for intelligent tracking and monitoring of the operation status of the device, which provides convenience for large-scale set-ups
with multiple devices. Our products are also configured to allow for simplified software and internet connection setup, thereby reducing
installation and configuration time.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We continuously introduce
new series of Bitcoin mining machines incorporating the latest development of ASIC design and process technology. We also produce and
sell Bitcoin mining machine accessories and offer ancillary service to our customers to assist their operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Our Fintech businesses</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our Fintech businesses is
primarily comprised of cryptocurrency exchange and cross-border payment businesses.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Our Cryptocurrency Exchange Business</i></b>&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 40pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In April 2021, we launched our first self-developed proprietary cryptocurrency
exchange platform Ebonex and in February 2022, we launched another self-developed proprietary cryptocurrency exchange platform, also branded
Ebonex, in Australia. We plan to launch additional trading platforms in the jurisdictions into which we are expanding. All core technologies
of Ebonex are independently and completely developed by us with our own independent intellectual property rights. Ebonex strictly prohibits
domestic resident users in China, as well as individuals and institutions in sanctioned countries, to open accounts and trade. As of December
31, 2022, immaterial revenue has been generated from the operations of Ebonex.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We invest heavily in compliance
tools. In addition to robust AML, KYC, and KYT programs, we have introduced professional service providers, such as real-time account
reconciliation platforms, digital asset custodians, biometric digital KYC platforms, financial market data and infrastructure providers,
and liquidity providers, in Ebonex to meet regulatory requirements, protect user assets and ensure smooth trading experience. These features
also allow us to quickly adapt to emerging threats in the crypto economy, build scenarios and typologies around specific transaction types,
and gives us the flexibility to support new products and services.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 32pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our ultimate objective through
our Ebonex platform is to provide secure, fast, efficient and stable multi-currency and multi-mode trading services to a global audience.
We have increased our investment in marketing and sales, and have assembled a dedicated marketing and growth team in our regions of operation.
We expect that we will obtain more cryptocurrency exchange users and institutional users in the countries and/or regions where we operate
in the future. With the expansion of our operations and marketing activities, we have begun to attract users and generate revenue from
user transactions.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Our Cross-Border Payment and Foreign Exchange
Business</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In March 2022, we established
our cross-border payment and foreign exchange business. This was achieved through acquiring an established specialist cross-border payment
company that has been successfully running for over 10 years in Australia. Since the acquisition, we have successfully launched our self-developed
proprietary cross-border payment and foreign exchange platform, EbonFX, and fostered strong collaborative relationships with prominent
international banks. This enables us to offer our clients a comprehensive, one-stop service, from website registration to safe and secure
cross-border payment in multiple currencies. These transformational efforts have been instrumental in propelling us forward within the
increasingly competitive Fintech market space. Our new, modern, and robust platform, designed with reliability and scalability in mind,
positions us perfectly for growth.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Through EbonFX, clients can
access competitive foreign exchange rates, fees and services in the market. On top of this, our dedicated service team, comprised of FX
market specialists and experienced professionals, offers tailored solutions to mitigate FX risks for our customers and help protect their
profitability. Our customers are able to access our cross-border payment services across multiple currencies that can be sent to over
180 countries and territories. Some of the key benefits of using EbonFX to transact cross-border payment include that it is a simple
and intuitive online portal available 24/7, its access to competitive FX rates in real-time, FX professionals on-call and hedging &amp;
FX risk management.</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">

</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We understand the impact of foreign exchange fluctuations that may
have on the profitability of our customers&#8217; businesses. Our range of solutions includes (but is not limited to) the following:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"><tr style="font-family: Times New Roman, Times, Serif; vertical-align: top">
<td style="font-family: Times New Roman, Times, Serif; width: 0.5in"></td><td style="font-family: Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif">&#9679;</span></td><td style="font-family: Times New Roman, Times, Serif; text-align: justify">Spot: A spot transaction is an FX transaction where the value date is
2 business days after the trade date or T+2. The spot solution of the EbonFX platform allows our customer to exchange currencies for immediate
use.</td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"><tr style="font-family: Times New Roman, Times, Serif; vertical-align: top">
<td style="font-family: Times New Roman, Times, Serif; width: 0.5in"></td><td style="font-family: Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif">&#9679;</span></td><td style="font-family: Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">Forwards:
                                            An FX forward is a transaction where the value date is more than 2 business days after the
                                            trade date. Forwards provide a way for our customer to hedge against future currency fluctuations,
                                            which can help to reduce risk.</span></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"><tr style="font-family: Times New Roman, Times, Serif; vertical-align: top">
<td style="font-family: Times New Roman, Times, Serif; width: 0.5in"></td><td style="font-family: Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif">&#9679;</span></td><td style="font-family: Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">Options:
                                            EbonFX offers wholesale clients option contracts in foreign exchange. These options are derivatives
                                            and they give the buyer of the contract the right (but not the obligation) to buy or sell
                                            a currency at a pre-agreed exchange rate on a predetermined date in the future.</span></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"><tr style="font-family: Times New Roman, Times, Serif; vertical-align: top">
<td style="font-family: Times New Roman, Times, Serif; width: 0.5in"></td><td style="font-family: Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif">&#9679;</span></td><td style="font-family: Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">Market
                                            orders: EbonFX provides a facility for where our customer may place an order at a rate nominated
                                            by the customer, which may or may not be filled depending on prevailing market conditions
                                            and will include a margin determined by EbonFX.</span></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We monitor rates across all
international time zones and once the customer&#8217;s target FX rate is reached, the order is automatically executed. This eliminates
the need for any customers to continually watch the currency exchange rates 24/7. In essence, EbonFX provides customer-centric cross-border
payment services.</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">

</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Our Telecommunications Business</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We entered the telecommunications
business in 2010. Our communications network devices mainly focus on the access layer, which is the entry point for providing access to
the telecommunications network for end users. Our products are broadly grouped under the following product lines, as well as related parts
and accessories:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in; text-align: justify">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>&#9679;</i></span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Fiber-Optic
    Communication Access Devices. </i>Our fiber-optic communication access devices are mainly used by network server rooms for telecommunication operators. Our
    fiber-optic communication access devices are also designed to address the shortage of Fibre-Optic cables in metropolitan areas and
    to meet the high bandwidth interconnection needs of data centers for the clients. The main products we offer under our fiber-optic
    communication access devices product line include multiprotocol label switching (MPLS) fiber-optic access network devices,
    multi-service access platform (MSAP) integrated business access devices and wavelength-division multiplexing (WDM/DCI) fiber-optic
    devices.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in; text-align: justify">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>&#9679;</i></span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Enterprise Convergent Terminals. </i>Our enterprise convergent terminal products are designed to provide complete informatization service for enterprises and are used to meet the gigabit broadband development needs for government and enterprises and household clients. The main products we offer under our enterprise convergent terminal product line include gigabit passive optical network (GPON), Fiber to the Room (FTTR), passive optical network converged gateway, enterprise cloud gateway devices, Industrial Internet of Things (IoT) access devices and business enterprise smart wireless access devices.</span></td></tr>
  </table><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Our Customers</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Blockchain Products Business </i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our customer base for sales
of our Ebit mining machines is comprised of both enterprises and individual buyers. We generally do not enter into long term agreements
with our mining machine customers. Sales are typically made on one-off sales contract or purchase order bases. Generally, we either require
prepayment in full or offer alternate payment plans for customers to prepay a certain percentage with the remainder to be settled after
delivery of the products and we have extended credit sales to certain customers since 2018. Substantially all of the customers of our
mining machine hosting services before we halted such services in the PRC were customers who have purchased our mining machines.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In 2020, 2021 and 2022, a
significant portion of our mining machine customers were located in China. All of our mining machines are distributed through direct sales.
Nevertheless, we do not restrict resales of our mining machine products by our customers, so some of our customers in China may resell
purchased products to end users or other buyers located in overseas markets. Our revenues generated from sales to customers in China represent
99.8%, 100.0% and 91.6% of our total revenues in 2020, 2021 and 2022, respectively.</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">
</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">

</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Cryptocurrency Exchange Business</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our target users mainly include
retail users as well as institutions. By providing them with digital asset services and infrastructure, we generate revenue through fees
and commissions including transaction commissions, handling fees, transaction spreads, system implementation fees, revenue sharing, and
service fees.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Since our cryptocurrency exchange is in the early stages of operation
and has only had a short history, as of December 31, 2022, we have generated immaterial revenue from such operations. However, we believe
that with our experience in the blockchain and cryptocurrency industry, continuous research and development, and technology accumulation,
as well as the expansion of our marketing and operation activities, we will further drive our competitive position and obtain relevant
operating revenue in the near future.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Cross-Border Payment and Foreign Exchange
Business</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Tapping into the existing client base of our acquired Australian cross-border
payment and foreign exchange business and aiming to expand beyond the existing client pool, we are mainly targeting retailers, wholesalers,
small businesses, importers and exporters. Most importers and exporters are aware of the effects that fluctuations in exchange rates can
have on the profitability of their businesses. Currency movements are also important to individuals such as expatriates and high net worth
individuals, and those looking to make international investments. With our global business network, we are continuously looking to serve
customers in Australia and beyond.
</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Telecommunications Business </i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our telecommunications products
are mainly sold in China under the brand name &#8220;EBANG&#8221; through direct sales. Our customer base for our telecommunications products
primarily includes major telecommunications service providers in China.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We do not have any long-term
or exclusive agreement with our telecommunications product customers. Sales to our enterprises customers are generally made on one-off
sales contract or purchase order bases with a credit period of one to nine months. We generally enter into framework agreement with the
major telecommunications service providers in China with a credit period up to one year. We typically require payments to be made in installments
upon delivery of the products. We encourage our sales representatives to negotiate shorter credit periods to reduce our credit risk.</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Research and Development</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have historically and continue
to place strong emphasis on research and development. We consider research and development capability as a crucial factor to our success
and our ability to develop innovative and competitive products to meet the technological requirements of customers. As of December 31,
2022, our research and development team comprised of 126 employees, or approximately 42.4% of our total number of employees. Our research
and development expenses were US$5.1 million in 2022.</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">

</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our research and development
team is overseen by our Chairman, CEO and CFO, Mr. Dong Hu. Within our research and development team, we have a specialized ASIC chip
design team focused on designing ASIC chips for the development of cutting-edge mining machine products and for other blockchain research
and development projects that utilize ASIC chips. The other members of our research and development team focus on non-ASIC aspects of
mining machine products, telecommunications products and new applications for blockchain technology.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our organization demonstrates strong research and development capabilities
in the Fintech sector, with a focus on cryptocurrency and cross-border payment. Our highly skilled R&amp;D team excels in monitoring and
assessing user needs, market trends, and industry advancements, guiding the direction of our projects and product roadmaps while identifying
growth opportunities and potential challenges in the rapidly evolving Fintech landscape. With an unwavering commitment to innovation,
we stay ahead of the curve, transforming our technological expertise in payment technology, cryptocurrencies, and regulatory frameworks
into competitive products and services. Furthermore, our expert team of market analysts in the cross-border payment domain employs a comprehensive
research approach, merging valuable market intelligence with thorough analysis, ensuring our clients have access to first-rate information
and well-informed investment decisions.
</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Production</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Our Fabless Model</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We do not directly manufacture
ICs used for our products. Instead, we utilize what is known as a fabless model, whereby we conduct front-end and back-end designs of
our IC chips, which are then manufactured, packaged and tested by world-class wafer foundry and OSAT partners we cooperate with. Under
the fabless model, we are able to leverage the expertise of industry leaders that are certified by the ISO in such areas as fabrication,
assembly, quality control and assurance, reliability and testing. In addition, the fabless model allows us to avoid many of the significant
costs and risks associated with owning and operating various fabrication and packaging and testing facilities. Our fabrication partner
is responsible for procurement of the majority of the raw materials used in the production of our ICs. As a result, we can focus our resources
on research and development, product design and additional quality assurances.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Wafer Fabrication</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We primarily work with an
IC fabrication partner to ascertain their production resource that can be allocated to us before we place an order according to our business
need. After we place our orders, and once they accept our orders, we are required to prepay in full in order to secure production capacity.
Subject to sufficient production capacity, wafers were delivered in an average of approximately three to four months from the time we
placed our order prior to the global outbreak of COVID-19; however, since such outbreak, we have experienced production capacity shortages
and shipment delays from the IC fabrication partner.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We principally purchased wafers
for our ASIC chips from Samsung, and also began to work with TSMC in 2017 on the development of a new ASIC chip and established a relationship
and are in discussions with two other major wafer foundries in order to diversify our supplier sources and to gain access to additional
capacity for future ASIC chips. We will seek to procure wafers from either or both of these two wafer foundries in the event that our
current suppliers are unable to accept or fulfil our purchase orders or otherwise continue supply us wafers. While we continue to seek
opportunities to improve our supply chain, we face concentration risks, as we currently depend on two suppliers for our wafers. See &#8220;Item
3. Key Information&#8212;D. Risk Factors&#8212;Risks Relating to Our Business and Industry&#8212;we rely on a limited number of third
parties to fabricate our ASIC chips, which are the core technology used in our mining machines.&#8221;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Packaging and Testing</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">After the wafers are manufactured,
they are shipped to an OSAT company for packaging into IC chips, which are then tested to ensure the required quality assurance procedures
are all met. Properly tested IC chips are then delivered to our production facilities for mounting and assembly.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We procure IC packaging and
testing services from leading OSAT companies, including STATS ChipPAC. In 2018, in order to keep up with our increasing production demand,
we began working with PTI. STATS ChipPAC is controlled by Jiangsu Changjiang Electronics Technology Co., Ltd. and its various subsidiaries,
or JCET, which along with PTI are among the largest OSAT companies in the world.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Assembly Plant </i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have in-house capabilities
to produce our blockchain and telecommunications products at our production facilities. These include PCB assembly to create the mounted
circuit boards once the IC chips have been manufactured, and general assembly to integrate the circuit boards with other components and
parts for assembling the final products.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We procure certain raw materials,
components and parts, such as electronic components, metal cases, cables, antennae and packaging materials, which are used by us for the
assembly of PCBs and our final products. We typically maintain three or four different suppliers for most of our raw materials, components
and parts. We generally place purchase orders with our suppliers based on our estimated purchase orders and production schedule. The lead
time for procurement was generally one to four months prior to the global outbreak of COVID-19; however, since such outbreak, we have
experienced raw material shortages and shipment delays from our suppliers. &#160;We are typically required to pay our suppliers before
or upon delivery of the raw materials, components and parts. We closely monitor the quality of all raw materials provided by our suppliers
to ensure that all raw materials comply with the stringent requirements of our customers. For more information, see &#8220;Item 4. Information
on the Company&#8212;B. Business Overview&#8212;Quality Control.&#8221;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We outsource some of our production
to third-party subcontractors in order to meet additional capacity needs. We currently maintain a working relationship with approximately
four to five third-party subcontractors for PCB and general system assembly. The terms of our subcontracting arrangement are set out in
individual written work orders, and the amount of work outsourced is determined on an as-needed basis. To maintain our product standards,
we institute strict quality control measures with our third-party subcontractors. These measures include requiring product testing at
various stages of production and utilizing our proprietary software to record and report the quality testing results.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Production Facilities</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We operate one production
facility in Hangzhou, Zhejiang, which houses three SMT production lines and three general assembly lines, as of December 31, 2022.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">SMT production lines are responsible
for PCB assembly, which is a key process for both our mining machine and telecommunications products. The maximum output volume of our
in-house production facilities is largely dictated by the production capacity of our SMT production lines in Hangzhou. The average utilization
rate of our SMT production lines was 40.1%, 34.7% and 26.5% for 2020, 2021 and 2022, respectively.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Historically, we outsourced
some of our SMT production activities to third-party subcontractors in order to meet additional capacity needs. For the years ended December
31, 2020, 2021 and 2022, our outsourced productive SMT production volume amounted to approximately 8.4%, 27.4% and nil of our total in-house
and outsourced productive SMT production volume, respectively.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Quality Control</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We place great emphasis on
the importance of quality control in every aspect of our business. We produce our products in accordance with our strict quality control
system and quality standards. We obtained all the material quality control certifications in the PRC for our products or production facilities.
From sourcing of raw materials, production, delivery and installation, each stage of the production process is subject to our quality
control procedures for both in-house production and outsourced third-party production.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have implemented various
quality-control checks into our production process and the IC fabrication process by our production partners. In addition, we provide
timely and effective after-sales services and support to our users. We have quality control personnel based at each of our production
facilities. They are part of our production department and are led by our quality control supervisor. The quality control team is primarily
responsible for monitoring the quality of procurement raw materials, production process and finished products and supervising the product
testing. We have our own on-site quality control staff to inspect each stage of the production process. The quality control staff inspects
semi-finished products at various stages of the production process to ensure their compliance with our internal quality control standards
and measures. This helps us detect defects during the production process and take steps to rectify those defects, where appropriate. For
outsourced production, we require that all third-party contractors utilize a software system we provide to track, test and record each
product made for us using unique identifying barcodes on the products so that we can review the testing results of their products. Our
third-party contractors also agree to allow us to conduct sample testing of their products and random spot checks of their facilities.
We require final testing on the products before their delivery to our customers to ensure the products meet the specifications and requirements
of its customers.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>After-Sales Services and Warranties</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We provide installation services
of communication network devices to our customers depending upon the products purchased and the type of customer. Our mining machines
are configured by the end-users using our instruction manual.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">For our mining machines, we
provide a six-month warranty for the overall machine and a one-year warranty for the power supplies. During the warranty period, we provide
maintenance and after-sale services, which include technical support, equipment repair and maintenance. In connection with warranty service,
the customer will courier the hardware to us, and we will ship the machine back to the customer once repairs are completed. Our service
hotline is available seven days a week between 8:30 a.m. to 10:30 p.m. and we offer on-site maintenance services as needed.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">For our telecommunications
products, we typically provide a 12 to 36-month warranty depending on the type of customer and product. During the warranty period, we
provide maintenance and after-sale services, which include technical support, system and network resting, equipment repair and maintenance.
Our service hotline is available seven days a week between 8:30 a.m. to 11:00 p.m. and we offer on-site maintenance services as needed.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Sales and Marketing</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Historically, the marketing
of our blockchain and Fintech products was done through word of mouth, press releases of our product launches and exhibitions when we
launch a new product. Certain of our available products are also advertised on our website which is updated periodically. From time to
time, we maintain a presence on social media in order to raise awareness of our brand.</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">

</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">For our telecommunications
products, we obtain supplier contracts through bidding processes held by the major telecommunications service providers in China, in order
to become an approved supplier. We set up sales offices in the provinces with large distribution scale according to the winning bids.
Our sales offices also serve the surrounding provinces to form an effective sales network.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Competition</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our company operates in multiple
vertical business areas, including integrated circuits (IC), mining machine production, and Fintech, which encompasses both cryptocurrency
and cross-border payment sectors. The competitive landscape in each of these verticals is characterized by various challenges and opportunities.</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">

</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In the vertical field of integrated
circuit (IC), we face competition from both more mature companies and new entrants. Some of these competitors may possess advantages such
as stronger brand recognition, greater access to capital, longer industry tenure, more established relationships with suppliers or customers,
and more extensive resources. Our competitive strategy in this domain focuses on continuous innovation, cutting-edge technology, and high-quality
products.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In the vertical field of mining
machine production,, we primarily compete with other leading manufacturers, as well as any potential new entrants capable of overcoming
the significant barriers to entry, particularly in technology and access to wafer foundry capacity. Our approach to competition in this
sector emphasizes on technology and service quality, ensuring our products remain at the forefront of the market.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In
the vertical field of Fintech, including cryptocurrency and cross-border payment, a diversified and dynamic competitive landscape has
emerged since the late 2000s. We face competition from numerous well-known participants, ranging from large, established financial incumbents
to smaller early-stage Fintech providers and companies native to the crypto economy, such as decentralized exchanges. In the cross-border
payment business, we encounter competition from various entities, including traditional banks, payment processing companies, and Fintech
startups that offer diverse payment solutions and services for seamless cross-border transactions and international payment processing.
Despite this competitive landscape, our strengths in innovation, technology, and adaptability have positioned us as a formidable player
in this field.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We anticipate that the intensity
of competition across all verticals will persist, driven by rapid technological advancements and the emergence of new market entrants.
By maintaining a focus on innovation, research and development, and strategic partnerships, we aim to navigate the dynamic competitive
landscapes in the integrated circuits, mining machine production, and Fintech industries. Our ability to adapt and commitment to delivering
high-quality technology and services will be crucial in differentiating ourselves from competitors and ensuring sustainable growth across
all our business verticals.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Intellectual Property</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We rely on a combination of
copyright, trademark, patent and other proprietary technology and contractual restrictions on disclosure to protect our intellectual property
rights. We enter into relevant confidentiality agreements or provisions with our employees and certain customers and suppliers and rely
on such confidentiality agreements or provisions and other protection of our technical know-how to maintain our technical advantages in
our products and design.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As of the date of this annual
report, we have registered 58 patents, 10 IC layout designs and 65 software copyrights, with an additional 33 patent applications in the
PRC.</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On November 27, 2020, we obtained
an exclusive license of a key patent in the Bitcoin mining industry, which license granted us with the exclusive right to use the patent
in South Korea and export the product from South Korea to other countries. On January 1, 2022, we obtained another license which granted
us with the right to use the patent in the United States and export the product from the United States to other countries. The core of
this patent is AsicBoost, a method that can increase performance of Bitcoin mining by about 20%. The performance gain is achieved through
a high-level optimization of the Bitcoin mining algorithm which allows for drastic reduction in gate count on the mining chip. &#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Despite our efforts to protect
our proprietary rights, unauthorized parties may attempt to copy or otherwise obtain and use our technology. Monitoring unauthorized use
of our technology is difficult and costly, and we cannot be certain that the steps we have taken will prevent misappropriation of our
technology. From time to time, we may have to resort to litigation to enforce our intellectual property rights, which could result in
substantial costs and diversion of our resources.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Through the use of licensing
arrangements, we utilize various technologies, software and other intellectual property that were developed by third parties. During the
course of product design and manufacturing, we incorporate certain third-party technologies or implement technical or commercial standards,
practices or intellectual property which require licenses from wafer foundries. These licenses allow us to use or access the wafer foundries&#8217;
technologies and intellectual property rights in connection with the making of photomask for our ASIC chips. We have also purchased licenses
for various design software from third parties to conduct our IC chip design. These license grants were usually perpetual and irrevocable
on a project-by-project basis. Third parties may initiate litigation against us alleging infringement of their proprietary rights or breach
of a licensing agreement or declaring their non-infringement of our intellectual property rights. If third parties prevail on such claims,
and if we fail to develop non-infringing technology or license the infringed or similar technology or cure the breach on a timely basis,
our business could be harmed. Moreover, even if we are able to license the infringed or similar technology, license fees could be substantial
and may adversely affect our results of operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">See &#8220;Item 3. Key Information&#8212;D.
Risk Factors&#8212;Risks Relating to Our Business and Industry&#8212;We may face difficulties in protecting our intellectual property
rights&#8221; and &#8220;Item 3. Key Information&#8212;D. Risk Factors&#8212;Risks Relating to Our Business and Industry&#8212;Third parties
have claimed and may, from time to time, assert or claim that we infringed their intellectual property rights and any failure to protect
our intellectual property rights could have a material adverse impact on our business.&#8221;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Insurance</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Besides the PRC government-mandated
social insurance and housing provident fund schemes and motor vehicle insurance, we do not maintain any insurance covering our properties,
equipment, inventory or employees, and we do not carry any business interruption or product liability insurance or any third-party liability
insurance to cover claims in respect of personal injuries or any damages arising from accidents on our properties or in relation to our
operations. We believe that our insurance coverage is adequate and is in line with industry practice.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Environmental Matters </b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have received GB/T24001-2016/ISO
14001:2015 environmental management system certification, which is valid until September 11, 2024 and subject to renewal. Due to the nature
of our business, our operational activities do not directly generate industrial pollutants, and we did not incur significant cost for
compliance with applicable environmental protection laws and regulations in 2020, 2021 and 2022.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Legal Proceedings </b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We may from time to time be
subject to various legal, arbitration or administrative proceedings arising in the ordinary course of business, such as proceedings in
respect of disputes with suppliers or customers and labor disputes. As of the date of this annual report, we are party to the following
legal, arbitration or administrative proceedings, regulatory inquiries or investigations made or pending that we believe are material
to our business and results:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On November 19, 2019, we filed
a civil action in the High Court of the Hong Kong Special Administrative Region, Court of First Instance against a then-major supplier,
alleging breach of contract for delivering defective products and seeking damages in the sum of US$25.1 million plus interest and costs.
As of the date of this annual report, the case is still under review by the court.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="text-transform: uppercase"><b>REGULATION</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Regulatory Overview of the PRC</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are engaged in the research
and development, production and sales of blockchain and telecommunications products in the PRC. The following sets forth a summary, which
does not purport to be complete, of the relevant PRC regulatory authorities and PRC laws, regulations and government policies that are
applicable to our business operations in the PRC.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Competent Regulatory Authorities</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Ministry of Industry and
Information Technology of the PRC, or the MIIT, and its departments are in charge of the industrial and information technology sectors
at the national level. The MIIT formulates and directs the implementation of industrial sector planning, industrial policies and standards;
monitors the daily operations of industrial sector; promotes the development and independent innovation of major technical equipment;
manages the communications industry, guiding and advancing the construction of information technology infrastructures; and coordinates
the safeguarding of national information technology security, while in charging of the approval of network access licenses (including
trial), telecommunications business operation licenses, specifications and standards for organizational implementation software and system
integration services, and radio transmission equipment type approval certificates. The local Commissions of Economy and Information Technology
are the competent authorities in charge of the industrial and information technology sectors at the local level.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The General Administration
of Quality Supervision, Inspection and Quarantine of the PRC is in charge of mandatory product certification activities, and the Certification
and Accreditation Administration of the PRC, or the CNCA, is in charge of the organization, implementation, supervision, management and
overall coordination of mandatory product certification activities at the national level. The local Quality and Technology Supervision
Bureaus and various Entry and Exit Inspection and Quarantine Offices are responsible for the supervision, management and enforcement of
mandatory product certification activities in their relevant local areas.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The National Copyright Administration
of the PRC is in charge of the management of software copyright registration. The Copyright Protection Center of China and its local software
registration offices are responsible for software registration.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The MOFCOM and its local bureaus
are responsible for supervising and managing the establishment of overseas companies for foreign investment.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The NDRC and its local bureaus
are responsible for providing macro guidance, comprehensive services and overall supervision over outbound investments.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The General Administration
of Customs of the PRC, or the PRC Customs, and its local bureaus are responsible for the supervision of import and export trade, registration
of customs declaration enterprises, approvals of bonded premises, and other relevant matters.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">SAFE and its local bureaus
are responsible for the supervision and management of foreign exchange receipts and payments or foreign exchange operational activities
carried out by PRC institutions and individuals, and foreign exchange receipts and payments or foreign exchange operational activities
carried out in the PRC by foreign institutions and individuals.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The State Administration of
Work Safety and its local bureaus are responsible for the supervision and management of work safety activities.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Ministry of Ecology and
Environment of the PRC and its local bureaus are responsible for the management of environmental protection activities, while the local
bureaus also supervise and manage the protection of resources, prevention of pollution and other matters on environmental protection in
the local areas.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The China Semiconductor Industry
Association is a national industrial and non-profit social organization, consisting of entities, experts and other related enterprises
and institutions engaged in the manufacturing, design, scientific research, development, operation, application and education of integrated
circuits, semiconductor discrete devices, semiconductor materials and equipment.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Regulations and Government Policies Relating
to the IC and Blockchain Industries</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the Circular on
Prevention of Risks Associated with Bitcoin, or the Circular, jointly promulgated by the People&#8217;s Bank Of China, or the PBOC, the MIIT,
the China Banking Regulatory Commission, the CSRC and the China Insurance Regulatory Commission on December 3, 2013, Bitcoin shall be
considered a kind of virtual commodity in nature, which does not have the same legal status with fiat currencies and shall not be used
and circulated in the market as currency. This circular also provides that financial institutions and payment institutions shall not engage
in businesses related to Bitcoin.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the Announcement
on Prevention of Risks from Offering and Financing of Cryptocurrencies promulgated by seven PRC governmental authorities including the
PBOC on September 4, 2017, illegal activities in offering and financing of cryptocurrencies, including initial coin offerings (ICOs),
are forbidden in the PRC because such activities may be considered to constitute illegal offering of securities or illegal fundraising.
This announcement further provides that financial institutions and payment institutions shall not engage in businesses related to cryptocurrency
offering or financing transactions.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">There is no prohibition under
PRC laws and regulations currently in effect on the possession of Bitcoin by PRC citizens and organizations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Purchase and running of computing
hardware by PRC citizens or organizations for the purpose of Bitcoin mining in China do not violate any PRC laws and regulations currently
in effect. PRC citizens and organizations are not prohibited from engaging in Bitcoin mining activities in China. Design, production,
sale (including both wholesale and retail) of computing hardware used for Bitcoin mining, including BPUs, in China, or sale (including
both wholesale and retail) or export of such computing hardware from China, do not violate any provisions of any PRC laws and regulations
currently in effect, provided that such activities shall comply with the general regulatory rules in relation to the administration of
industry and commerce registration, taxation, fire control and environmental protection and the relevant policies and requirements imposed
by any PRC governmental authorities.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As demonstrated by the Circular
of the State Council on Printing and Distributing Policies for Encouraging the Development of the Software and IC Industries issued on
June 24, 2000, the PRC continues to enact policies encouraging new and advanced technology and supporting the software and IC industries.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On January 28, 2011, the State
Council issued the Circular of the State Council on Printing and Distributing Policies for Further Encouraging the Development of the
Software Industry and the Integrated Circuit Industry, or the Circular, which aims to formulate a series of policies for the purposes
of further optimizing development environment for the software industry and integrated circuit industry, increasing the quality and the
level of industry development and cultivating a number of influential and strong leading enterprises in these industries. The Circular
addresses topics including fiscal tax policies, investment and financing policies, research and development policies, import and export
policies, talent policies, intellectual property policies and market policies.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On June 24, 2014, the State
Council&#8239;issued the Outline for Promoting the Development of the National Integrated Circuit Industry, which highlights that great
efforts shall be put on the development of the IC design industry. By focusing on the industrial chain of key areas and strengthening
IC design, software development, system integration, collaborative innovation in contents and services, the goal is to drive the development
of the manufacturing industry through the rapid growth of the design industry.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On June 8, 2015, the NDRC
issued the Notice on Implementing Major Engineering Packages in Emerging Industries. The Notice highlights the efforts in developing IC
construction infrastructures, focusing on enhancing the level of advanced technology, design industry concentration ratio and industrial
chain supporting ability, selecting areas with more mature technology, good industrial base and wide application potential, and accelerating
the industrialization of high performance IC products.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On May 4, 2016, the Ministry
of Finance of the PRC, the SAT, NDRC and the MIIT, jointly released the Notice on Enterprise Income Tax Preferential Policies for Software
and IC Enterprises. This Notice specifically stipulates the preferential policies on EIT related to IC manufacturing enterprises, IC design
enterprises, software enterprises, key software enterprises within the national planning layout and IC design enterprises.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On December 15, 2016, the
State Council issued the Notice of the 13th Five-Year Plan for National Informatization. This notice highlights the need to strengthen
the layout of strategic innovative technologies, including blockchain technology, as well as others such as enhanced quantum communications,
future networks, brain-like computing, artificial intelligence, holographic display, virtual display, big data cognitive analysis, new
nonvolatile storage, driverless vehicles and gene editing.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On July 8, 2017, the State
Council issued the Notice on Issuing New Generation AI Development Plan. This notice points out that advancing the integration of blockchain
technology and artificial intelligence and establishing a new social credit system will significantly minimize the cost and risk of interpersonal
communications.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In August 2017, the State
Council issued the Guidance on Further Expanding and Upgrading Information Consumption Potential for Sustained Release of Domestic Demand,
which highlights and encourages the use of open source code to develop personalized software and the launch of trial applications using
new technologies such as blockchain and artificial intelligence.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In October 2017, the General
Office of the State Council issued the Guiding Opinions on Actively Promoting Supply Chain Innovation and Application, which highlights
and promotes the research of using emerging technologies such as blockchain and artificial intelligence to establish a credit evaluation
mechanism based on supply chain.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In November 2017, the State
Council issued the Guiding Opinions on Deepening Internet + Advanced Manufacturing Industry to Develop Industrial Internet which promotes
the research and exploration of applications of emerging technologies in industrial Internet, such as edge computing, artificial intelligence,
augmented reality, virtual reality, and blockchain technology.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On May 21, 2021, the Financial
Stability and Development Committee of the State Council in China proposed to &#8220;crack down on Bitcoin mining and trading.&#8221;
However, it was not until September 15, 2021, as described below, that all digital asset transactions were banned in China.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In May 2021, local governments
began to issue corresponding measures in succession to respond to the central government, including Xinjiang Changji Hui Autonomous Prefecture
Development and Reform Commission issuing a notice on the immediate shutdown of enterprises engaged in cryptocurrency mining on June 9,
2021.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On June 18, 2021, according
to the public media report - Sichuan Provincial Development and Reform Commission and Sichuan Energy Bureau issued a notice on the shutdown
of cryptocurrency mining projects with the deadline of June 25, 2021. On September 3, 2021, the newly issued Notification of Overhauling
the Mining Activity of Cryptocurrency (or the Notification No. 1283) banned all new cryptocurrency operations in China and set forth penalties
on a going forward basis for all of the PRC.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the Circular on
Further Preventing and Disposing of Risks in Virtual Currency Trading and Speculation (Yin Fa [2021] No.237) promulgated by ten PRC governmental
authorities including the PBOC on September 15, 2021, virtual currency-related business activities in China and the provision of services
by an overseas virtual currency exchange to a Chinese resident via the Internet will be considered as illegal financial activities.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Laws and Regulations Relating to Industry
Qualifications</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the Telecommunications
Regulations of the PRC issued on September 25, 2000 and last amended on February 6, 2016 and the Administrative Measures for the Network
Access of Telecommunications Equipment issued on May 10, 2001 and last amended on September 23, 2014, the State implements a network access
system that covers telecommunications terminal equipment, wireless communications equipment and network interconnection equipment connected
to public telecommunications networks. A network access license issued by the MIIT shall be obtained for telecommunications equipment
implementing network access. Without a network access license, such equipment is not allowed to be connected to a public telecommunications
network for use nor to be sold domestically.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the Regulations
on Administration of Mandatory Product Certification issued on July 3, 2009 and effected on September 1, 2009, producers, sellers or importers
of products included in the product catalog shall entrust a certification agency designated by the CNCA to certify the products produced,
sold or imported thereby.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the Regulations
of the PRC for the Administration of Radio Operation promulgated on September 11, 1993, last amended on November 11, 2016 and effected
on December 1, 2016, in addition to micro-power short-range radio transmitting equipment, any other radio transmitting equipment that
is manufactured or imported for sale or use domestically shall apply to the state authority in charge of radio regulation for approval.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Laws and Regulations Relating to Work Safety</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Work Safety Law of the
PRC, issued on June 29, 2002, last amended on June 10, 2021, and effective September 1, 2021, provides that production and operation entity
must comply with the Work Safety Law and other laws and regulations related to work safety, strengthen work safety management, establish
and improve a work safety responsibility system and work safety rules and systems for all employees, increase efforts to guarantee the
input of funds, materials, technology, and personnel in work safety, improve work safety conditions, strengthen standardization and informatization
of work safety, construct a dual prevention mechanism consisting of graded management and control of safety risks and examination and
control of potential risks, improve the risk prevention and resolution mechanism, raise work safety levels, and ensure work safety. Production
and business operation entities shall have the conditions for work safety as specified in this law and relevant laws, regulations, national
standards or industrial specifications. Production and business operation entities that do not have such conditions are not allowed to
engage in production or operation activities. Breach of the Work Safety Law of the PRC will incur various penalties, according to the
specific circumstances.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Laws and Regulations Relating to Product
Quality</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the Product Quality
Law of the PRC (2018 Version), issued and promulgated on February 22, 1993, last amended on and effective December 29, 2018, producers
shall be responsible for the quality of their products. Product quality shall satisfy the following requirements: no unreasonable danger
to personal safety and the safety of property shall exist; where there are national or industry standards for protection of health, personal
safety and the safety of property, such standards shall be complied with. If the products of a producer or seller do not comply with the
national or industry standards for protection of health or personal safety or the safety of property, orders shall be issued to cease
their production or sale and products that have been illegally produced or sold shall be confiscated. A fine shall be imposed equal to
an amount greater than the value of the products that have been illegally produced or sold (hereafter including products already sold
and goods not yet sold) but less than three times the value of the products; where there is illegal income, the illegal income shall be
confiscated; where the circumstances are serious, the business license shall be revoked; where the case constitutes a crime, criminal
liability shall be pursued in accordance with law. If a producer or a seller is found to mix impurities or imitations into products, or
to pass fake goods off as genuine ones or shoddy products as good ones or sub-standard products as standard ones, such producer or seller
shall be ordered to stop production or selling; the products illegally produced or sold shall be confiscated and a fine not less than
50% of but not more than three times the value of the products illegally produced or sold shall be imposed concurrently; if there are
illegal proceeds, such proceeds shall be confiscated concurrently; if the circumstances are serious, the business license shall be revoked;
if the case constitutes a crime, criminal liability shall be investigated in accordance with the law.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the PRC Regulations
on Administration of Radio Operation, issued on September 11, 1993, last amended on November 11, 2016 and effective December 1, 2016,
the manufacture or import of radio transmission devices that are required to obtain approval must meet the provisions of the relevant
laws, national standards and relevant regulations of the state authority in charge of radio regulation and comply with the technical standards
regarding approved radio transmission devices. The approval number shall be labeled on the devices. The competent authorities for radio
regulation may order anyone who violates this regulation by manufacturing or importing radio transmission devices to be sold or used domestically
without obtaining the requisite approval to rectify and may impose a fine between RMB50,000 and RMB200,000; for those refusing to rectify,
authorities may confiscate the radio transmission devices that have not obtained approval and impose a fine between RMB200,000 and RMB1,000,000.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the Regulation
of Telecommunications of the PRC (2016 Version) (issued and effective on February 6, 2016), anyone who violates the provisions of this
regulation in lowering product quality or performance after obtaining the telecommunications equipment network access license shall be
subject to punishment by the product quality supervision authorities pursuant to the provisions of the relevant laws and administrative
regulations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Laws and Regulations Relating to Industry
Standards</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Measures on Administration
of Information System Integration and Service Qualification Identification (Interim) is the industrial regulation as recognized by the
China Information Technology Industry Federation, targeting information systems integration and service qualification identification.
In particular, information system integration qualification is the objective evaluation standard for enterprises engaged in information
systems integration and service comprehensive ability and level. According to the Notice on the Management of Computer Information System
Integration Industry issued by the MIIT on December 29, 2018 and became effective on the same day, information system integration qualification
was expressly cancelled by the State Council in 2014.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Technical Requirements
for Access Network Multi-service Access Platform, or MSAP, is a communications industrial standard on access network multi-service access
platform, stipulating MSAP system&#8217;s requirements in network location and function model. In addition, the Safety of Information
Technology Equipment (Part 1) and the Radio Disturbance Limits and Measurement Methods for Information Technology Equipment is the national
standard of information technology equipment.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->73<!-- Field: /Sequence --></span></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Technical Requirements
and Test Methods of Lightning Resistibility for Telecommunications Terminal Equipment is the industry standard for telecommunications
equipment.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Laws and Regulations Relating to Other Business
Areas</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Trade</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the Foreign Trade
Law of the PRC, issued on May 12, 1994, last amended on and effective November 7, 2016, foreign trade operators engaged in import or export
of goods or technologies shall file records with the foreign trade department of the State Council or its authorized agencies, unless
otherwise stipulated by the laws, administrative regulations or the foreign trade department of the State Council. Specific measures for
record filing shall be stipulated by the foreign trade department of the State Council. PRC Customs shall not process import and export
declaration and clearance formalities for foreign trade operators who have not filed records in accordance with the provisions.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Foreign Exchange</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the Regulation
on Administration of Foreign Exchange of the PRC promulgated by the State Council on January 29, 1996 and last amended on and effective
August 5, 2008, other regulations issued by SAFE and other relevant government authorities, Renminbi is freely convertible into other
currencies for current account items such as trade related receipts and payments, interest payments and dividends; as for capital account
items such as direct investment, loans and portfolio investment, the prior approval of SAFE is required to convert Renminbi into other
currencies and transfer the converted currencies out of the PRC. Transactions in the PRC are subject to payment in Renminbi. Pursuant
to relevant regulations and laws, after a domestic company gets listed overseas, if any of its domestic shareholders intends to increase
or decrease overseas shares, the domestic shareholder shall handle overseas shareholding registration formalities with the local foreign
exchange authority within twenty working days prior to the intended share increase or decrease.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the Notice on
Administration of Foreign Exchange Involved in Offshore Investment, Financing and Round-Trip Investment Conducted by Domestic Residents
Through Special Purpose Vehicles, which was promulgated by SAFE and went into effect on July 4, 2014, prior to making capital contribution
in a special purpose vehicle by a PRC resident using its legitimate assets or interests in the PRC or overseas, the PRC resident shall
apply to the foreign exchange bureau for completion of foreign exchange registration formalities for overseas investments. A &#8220;domestic
entity&#8221; referred to in this notice shall mean enterprise and institutional legal persons and any other economic organizations established
in the PRC pursuant to the law; a &#8220;PRC resident individual&#8221; shall mean a PRC citizen holding a PRC resident identity document,
military personnel identity document or armed police personnel identity document, and any foreign individual who does not hold a PRC identity
document but normally resides in the PRC due to economic reasons.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the Notice on
Further Simplification and Improvement of Foreign Exchange Administration Policies for Direct Investment, promulgated by SAFE on February
13, 2015 and effective June 1, 2015, two administrative approval matters, including foreign exchange registration approval under domestic
direct investment and foreign exchange registration approval under overseas direct investment, shall be reviewed and processed directly
by banks. SAFE and its local bureaus shall implement indirect supervision through the foreign exchange registration with banks for direct
investment.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the Notice of
SAFE on Reforming the Mode of Management of Settlement of Foreign Exchange Capital of Foreign-Funded Investment Enterprises promulgated
on March 30, 2015 and effective June 1, 2015, and the Notice of SAFE on Reforming and Regulating the Policies for Administration of Foreign
Exchange Settlement under the Capital Account promulgated on and effective June 9, 2016, the system of voluntary foreign exchange settlement
is implemented for the foreign exchange earnings of foreign exchange capital of foreign-invested enterprises. Foreign exchange capital
in a foreign-invested enterprise capital account, for which the monetary contribution has been confirmed by SAFE (or for which the monetary
contribution has been registered for account entry), may be settled at a bank as required by the actual management needs of the enterprise.
The voluntary settlement ratio of foreign-invested enterprise foreign exchange capital projects has been temporarily set at 100%. SAFE
may make adjustments to the said ratio at appropriate times based on the status of the international balance of payments. In addition,
foreign exchange earnings under capital projects and the Renminbi funds obtained from the exchange settlements thereof shall not be used
by foreign-invested enterprises for the following purposes: (1) direct or indirect payments of expenditures exceeding its business scope
or those being prohibited by the laws and regulations of the PRC; (2) direct or indirect uses in securities investments or investments
other than capital-protected banking products (except as otherwise expressly provided); (3) issuance of loans to non-affiliated enterprises
(excluding those that are expressly permitted within their business scope); and (4) construction or purchase of real estate not for personal
use (except for real estate enterprises).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Foreign Investment</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In March 2019, the Standing
Committee of the National People&#8217;s Congress of the PRC passed the Foreign Investment Law of the People&#8217;s Republic of China,
or the Foreign Investment Law. Among other things, the Foreign Investment Law defines the &#8220;foreign investment&#8221; as the investment
activities in China conducted by foreign individuals, enterprises and other organizations, or the Foreign Investors, in a direct or indirect
manner. The PRC governmental authorities will administrate foreign investment by applying the principal of pre-entry national treatment
together with a negative list, to be specific, the Foreign Investors are prohibited from making any investments in the fields catalogued
into prohibited industries for foreign investment based on the negative list, while they are allowed to make investments in the restricted
industries provided that all the requirements and conditions as set forth in the negative list have been satisfied; when the Foreign Investors
make investments in the fields other than those included in the negative list, the national treatment principle shall apply.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the Special Administrative
Measures for Foreign Investment Access (2021 Edition), or the 2021 Edition Negative List, issued by the MOFCOM and the NDRC on December
27, 2021 which came into effect on January 1, 2022, our business does not fall into the negative list and is permitted for foreign investment.<i>&#160;</i>However,
the 2021 Edition Negative List regulates that &#8220;Fields not mentioned in the Negative List for Foreign Investment Access shall be
subject to administration under the principle of consistency for domestic and foreign investments. The relevant provisions of the Negative
List for Market Access shall apply to domestic and foreign investors on a unified basis.&#8221;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, based on the
Negative List for Market Access (2022), &#8220;the Catalogue for Guidance on Industrial Restructuring shall be included in the Negative
List for Market Access&#8221;; plus, according to the Decision of the State Council on Promulgating and Implementing the &#8220;Temporary
Provisions on Promoting Industrial Structure Adjustment,&#8221; valid from December 2, 2005,&#160;&#8220;In principle, the &#8216;Guidance
Catalogue for the Industrial Structure Adjustment &#8220;shall apply to various types of enterprises inside China.&#8221; &#8220;The industries
of the eliminated category under the &#8216;Guidance Catalogue for the Industrial Structure Adjustment&#8217; shall apply to the foreign
investment enterprises.&#8221; and &#8220;Investments are prohibited from being contributed to projects under the eliminated category.&#8221;
What&#8217;s more, the NDRC released on December 30, 2021 its No. 49 Decree, announcing that the Decision of the National Development
and Reform Commission on Amending the Guiding Catalog for Industrial Restructuring (2019 Version) (the &#8220;Amended Catalog&#8221;).
The Amended Catalog added &#8216;virtual currency mining activities&#8217; to the eliminated category of &#8217;1. outdated production
processing and equipment &#8216;under the original Catalog.&#8221;. Therefore, the foreign investment enterprises are prohibited from
virtual currency activities and our Bitcoin mining business are banned in China as well.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Outbound Investment</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the Measures for
Administration of Overseas Investment of Enterprises promulgated by the NDRC on December 26, 2017 and effective March 1, 2018, investors
shall perform procedures such as overseas investment project approval and filing, report relevant information, and cooperate in supervision
and inspections when they conduct overseas investments. Projects subject to approval by the NDRC are sensitive projects developed by investors,
either directly or through their control of overseas enterprises. Projects subject to filing are non-sensitive projects directly developed
by investors, in which the investors directly invest assets or equities, or provide financing or guarantees.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the Measures for
Administration of Overseas Investment Management promulgated on September 6, 2014 and effective October 6, 2014, filing and approval are
managed by the MOFCOM and its provincial bureaus in light of the different circumstances of overseas investments of enterprises. Approval
is required for enterprises conducting overseas investments involving sensitive countries and regions or sensitive industries. Filing
will be administered for enterprises conducting overseas investments in other circumstances.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Laws and Regulations Relating to Environmental
Protection</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the Environmental
Protection Law of the PRC issued on December 26, 1989, amended on April 24, 2014 and effective January 1, 2015, entities that cause environmental
pollution and other public nuisances shall adopt effective measures to prevent the pollution of and hazards caused to the environment.
Construction projects shall be equipped with constructional environmental protection facilities, which must be simultaneously designed,
built and put into operation with the main part of the construction. Enterprises discharging pollutants must report to and register with
the relevant authorities in accordance with the provisions of the competent environmental protection authority under the State Council.
The competent environmental protection authority shall record unlawful environmental acts of enterprises in the social credit file, and
disclose information in a timely manner. Enterprises and other producers and operators unlawfully discharging pollutants shall be fined
and ordered to take corrective measures. For those refusing to make corrections, the competent authority may, starting from the day after
the date of ordering correction, continuously impose daily fines based on the sum of the original fine. Enterprises and other producers
and operators, which discharge pollutants exceeding the pollutant discharge standard or key pollutant gross discharge control thresholds,
may be ordered by the competent environmental protection authority above the provincial level to take measures such as restricting production,
suspending production and rectification. Serious cases may be reported to and approved by the competent government authority, resulting
in orders of suspension or shutdown of operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the Environmental
Impact Assessment Law of the PRC issued on October 28, 2002, amended on and effective December 29, 2018, the PRC government implemented
an environmental impact evaluation system, which classifies and manages the environmental impact evaluation of construction projects based
on the degree of environmental impact caused by construction projects.</p><div>

</div><p style="margin: 0">&#160;</p><div>

</div><p style="margin: 0"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
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</div><p style="margin: 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the Administrative
Regulations on Environmental Protection in Construction Projects promulgated on November 11, 1998 and amended on July 16, 2017, construction
projects are classified and environmental impact reports, environmental impact statements or environmental impact registration forms
shall be compiled based on the extent of environmental impact of construction projects. For a construction project for which an environmental
impact report or environmental impact statement is prepared, its matching environmental protection facilities may go into production
or be delivered for use only after they pass the acceptance check; and they may not go into production or be delivered for use if no
acceptance check is made for them or they fail to pass the acceptance check. Where a construction project goes into production or is
delivered for use without the completion of construction of matching environmental protection facilities required for the construction
project, without going through acceptance checks or without passing the acceptance checks in violation of the provisions hereof, or fraud
is committed in the acceptance check of the environmental protection facilities, the competent administrative department of environmental
protection at or above the county level shall order the construction unit to effect rectification within a specified time limit and impose
a fine of more than RMB 200,000 but less than RMB 1 million against it; if it fails to effect rectification within the time limit, a
fine of more than RMB 1 million but less than RMB 2 million shall be imposed; the person in charge who is held directly liable and other
liable persons shall be subject to a fine of more than RMB 50,000 but less than RMB 200,000; if material environmental pollution or ecological
damage is caused, the construction unit will be ordered to stop production or use of the construction project, or be ordered to close
down upon approval by the people&#8217;s government with the authority of approval.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Laws and Regulations Relating to Taxation</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Enterprise Income Tax</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the EIT Law promulgated
on March 16, 2007, amended on and effective December 29, 2018, and the Regulation on Implementation of the Enterprise Income Tax Law
of the PRC, or the EIT Implementation Rules, issued on December 6, 2007 and amended on and effective April 23, 2019, EIT shall be applicable
at a uniform rate of 25% to all resident or non-resident enterprises. EIT shall be payable by a resident enterprise for income sourced
within or outside the PRC. EIT shall be payable by a non-resident enterprise, for income sourced within the PRC by its institutions or
premises established in the PRC, and for income sourced outside the PRC for which the institutions or premises established in the PRC
have a de facto relationship. Where the non-resident enterprise has no institutions or premises established in the PRC or has income
bearing no de facto relationship with the institution or premises established, EIT shall be payable by the non-resident enterprise only
for income sourced within the PRC.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the Administrative
Measures on the Accreditation of High and New Technology Enterprises accredited high and new technology may make declarations under and
benefit from tax concession policies in accordance with relevant regulations including the EIT Law and the EIT Implementation Rules,
the Law of the PRC on Administration of Levying and Collection of Taxes and the Regulation of Implementation of the Law of the PRC on
Administration of Levying and Collection of Taxes.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the Notice on
Enterprise Income Tax Policies for Further Encouraging the Development of Software and Integrated Circuit Industries, IC production enterprises
with an IC production line below 0.8 micrometer (inclusive), after accreditation, shall be entitled to a tax concession period beginning
in the profit-making year that is prior to December 31, 2017, for which EIT shall be exempted for the first and second years and be reduced
by 50% in the third to fifth years. In addition, IC production enterprises with an IC production line below 0.25 micrometer or an investment
of over RMB8 billion, after accreditation, shall be entitled to a reduced EIT tax rate at 15%, and, for those with an operation period
of over 15 years, the tax concession period shall be deemed to start from the profit-making year prior to December 31, 2017, for which
EIT shall be exempted in the first to fifth years and be reduced by 50% in the sixth to tenth years. As for IC design enterprises newly
established within the PRC and eligible software enterprises, upon accreditation, the tax concession period shall be deemed to start
from the profit-making year prior to December 31, 2017, for which EIT shall be exempted for the first and second years and be reduced
by 50% in the third to fifth years.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>


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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Value-Added Tax</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the Provisional
Regulation on Value-Added Tax of the PRC (&#8220;VAT Provisional Regulation&#8221;) promulgated by the State Council, as amended on November
10, 2008, February 6, 2016 and November 19, 2017 and effective November 19, 2017, all entities and individuals in the PRC engaging in
the sales of goods, provision of processing services, repairs and replacement services, sales services, intangible assets, real estate
and the importation of goods are required to pay value added tax, or VAT. According to VAT Provisional Regulation, taxpayers that sell
goods, labor services or tangible personal property leasing services or import goods and do not fall within the scope as specified in
Item 2, Item 4 and Item 5 of Article 2 of VAT Provisional Regulation shall be subject to a 17% tax rate; taxpayers that sell transport
services, postal services, basic telecommunications services, construction services, or real property leasing services, sell real property,
transfer the land use right, or sell or import the goods listed below shall be subject to an 11% tax rate: (1) such agricultural products
as grain, edible vegetable oil, and common salt; (2) tap water, heat supply, air-conditioning, hot water, gas, liquefied petroleum gas,
natural gas, dimethyl ether, methane and civil-use coal products; (3) books, newspapers, magazines, audio-visual products, and electronic
publications; (4) feeds, chemical fertilizers, pesticides, agricultural machineries and mulching films; and (5) other goods specified
by the State Council; taxpayers that sell services or intangible assets and do not fall within the scope as specified in Item1, Item
2 and Item 5 of Article 2 of VAT Provisional Regulation shall be subject to a 6% tax rate.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the Notice on
Value-Added Tax Policies of Software Products released by the Ministry of Finance and the SAT on October 13, 2011, a general taxpayer
who sells self-developed and self-produced software products, VAT shall be collected at a tax rate of 17% and the refund-upon-collection
policy shall be applied to the part VAT in excess of 3% of their actual tax burden.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">According to the Circular
of the Ministry of Finance and the SAT on Adjusting Value-added Tax Rates promulgated on April 4, 2018, and effective May 1, 2018, where
a taxpayer engages in a taxable sales activity for the value-added tax purpose or imports goods, the previous applicable 17% and 11%
tax rates are lowered to 16% and 10% respectively.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">According to the Circular
on Policies to Deepen Value-added Tax Reform promulgated by the Ministry of Finance, the SAT, and the General Administration of Customs
on March 20, 2019, and effective April 1, 2019, where a taxpayer engages in a taxable sales activity for the value-added tax purpose
or imports goods, the previous applicable 16% and 10% tax rates are lowered to 13% and 9% respectively.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">According to Announcement
of the Ministry of Finance and the State Taxation Administration to Further Step up the Application of End-of-Period Excess Input Value-Added
Tax Credit Refund Policies issued by the Ministry of Finance and the SAT on March 21, 2022 and effective on April 1, 2022, Starting from
the tax filing period of April 2022, an eligible enterprise in the manufacturing and other sectors may apply to the competent tax authority
for a refund of its incremental VAT credit amount; starting from the tax filing period of July 2022, an eligible medium-sized enterprise
in the manufacturing and other sectors may apply to the competent tax authority for a lump-sum refund of its existing VAT credit amount;
and starting from the tax filing period of October 2022, an eligible large enterprise in the manufacturing and other sectors may apply
to the competent tax authority for a lump-sum refund of its existing VAT credit amount.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Tax on Dividends</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the EIT Law and
the EIT Implementation Rules, except as otherwise provided by relevant tax treaties with the PRC government, dividends paid by foreign-invested
investment enterprises to foreign investors which are non-resident enterprises and which have not established or operated premises in
the PRC, or which have established or operated premises but where their income has no de facto relationship with such establishment or
operation of premises shall be subject to a withholding tax of 10%. Pursuant to the Arrangement between Mainland China and the Hong Kong
Special Administrative Region for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income
entered into between the PRC government and the Hong Kong Special Administrative Region, where the beneficial owner is a company directly
holding at least 25% of the equity interest of the company paying the dividends, the tax charged shall not exceed 5% of the distributed
dividends. In any other case, the tax charged shall not exceed 10% of the distributed dividends.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the Announcement
on Issues Relating to &#8220;Beneficial Owner&#8221; in Tax Treaties promulgated by the SAT on February 3, 2018 and came effective April
1, 2018, a &#8220;beneficial owner&#8221; shall mean a person who has ownership and control over the income, and the rights and property
from which the income is derived. Upon the determination of the &#8220;beneficial owner&#8221; status of a resident of the treaty counterparty
who needs to enjoy the tax treaty benefits (hereinafter referred to as the &#8220;applicant&#8221;), a comprehensive analysis shall be
conducted taking into account the actual conditions of the specific case. In general, the following factors are unfavorable for the determination
of &#8220;beneficial owner&#8221; status of an applicant: (1) the applicant is obligated to pay 50% or more of the income, within 12
months from its receipt, to a resident of a third country (region), where the term &#8220;obligated&#8221; includes agreed obligations
and de facto payment for which there is no agreed obligation; (2) the business activities undertaken by the applicant do not constitute
substantive business activities, where substantive business activities shall include manufacturing, distribution and management activities
of a substantive nature, the determination of whether the business activities undertaken by the applicant are of a substantive nature
shall be based on the functions actually performed and the risks borne, and investment holding management activities of a substantive
nature undertaken by the applicant may constitute substantive business activities (where the applicant undertakes investment holding
management activities which do not constitute substantive business activities, and simultaneously undertakes other business activities,
if such other business activities are not sufficiently significant, these shall not constitute substantive business activities); (3)
the treaty counterparty country (region) does not levy, or exempts tax on the relevant income, or levies tax but with a very low actual
tax rate; (4) in addition to the loan contract based on which interest is derived and paid, there exists other loans or deposit contracts
between the creditor and the third party, of which factors such as the amount, interest rate and date of execution are similar; and (5)
in addition to the transfer contract for rights to use such as copyright, patent, technology, from which the royalties are derived and
paid, there exists other transfer contracts for rights to use or ownership in relation to copyright, patent, technology between the applicant
and a third party.</p><div>




</div><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the Notice of
the SAT on the Relevant Issues Concerning the Implementation of Dividend Clauses in Tax Treaties promulgated by the SAT and effective
February 20, 2009, all of the following conditions shall be satisfied before the concession tax rate in a tax treaty can be enjoyed:
(1) the tax resident obtaining dividends shall be restricted to the company as provided in the tax treaty; (2) among all the ownership
equity interests and voting shares of the PRC resident company, the proportion directly owned by the tax resident complies with the prescribed
proportions under the tax treaty; and (3) the proportion of the equity interests of the PRC resident company directly owned by such tax
resident complies with, at all times within the twelve months before obtaining the dividends, the proportions specified in the tax treaty.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the Announcement
of the State Taxation Administration on Issuing the Administrative Measures for Entitlement to Treaty Benefits for Non-resident Taxpayers
promulgated by the SAT on October 14, 2019 and effective January 1, 2020, entitlement to treaty benefits for non-resident taxpayers shall
be handled by means of &#8220;self-judgment of eligibility, declaration of entitlement, and retention of relevant materials for future
reference&#8221;. Where non-resident taxpayers judge by themselves that they meet the conditions for entitlement to treaty benefits,
they may obtain such entitlement themselves at the time of making tax declarations, or at the time of making withholding declarations
via withholding agents. At the same time, they shall collect, gather and retain relevant materials for future reference in accordance
with the provisions of these Measures, and shall accept the follow-up administration of tax authorities. Relevant information proving
the status of &#8220;beneficial owner&#8221; shall be retained in the case of entitlement to dividends, interest and treaty benefits
of royalty clauses.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Laws and Regulations Relating to Labor
and Social Security</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the Labor Law
of the PRC promulgated on July 5, 1994 and amended on and effective December 29, 2018, companies must negotiate and enter into employment
contracts with their employees based on the principle of fairness. Companies must establish and strengthen an employment hygiene system,
strictly implement the national labor safety and health rules and standards, deliver occupational health and safety education to employees,
prevent work-related accidents, and reduce occupational hazards. In addition, employers and employees shall purchase social insurances
and pay for social insurance fees in compliance with applicable PRC laws.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Labor Contracts</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Labor Contract Law of
the PRC, which was promulgated on June 29, 2007 and subsequently amended on December 28, 2012 and effective July 1, 2013, serves as the
primary law regulating the labor contract relationship between companies and employees. Pursuant to this law, an employment relationship
is established between the employer and the worker since the day of employment. The employer shall execute a written employment contract
with the worker. Furthermore, to safeguard the legal rights and interests of workers, the way to calculate compensation for the probation
period and for damages shall be subject to the provisions of the law.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Social Security and Housing
Provident Fund</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As required under the Social
Insurance Law of the PRC promulgated on October 28, 2010, and amended on and effective December 29, 2018, the Regulation on Work-Related
Injury Insurance promulgated on April 27, 2003, amended on December 20, 2010 and effective January 1, 2011, the Provisional Measures
on Insurance for Maternity of Employees promulgated on and effective December 14, 1994 and implemented on January 1, 1995, and the Regulation
on Administration of Housing Provident Funds promulgated on April 3, 1994 and last amended on and effective March 24, 2019, employers
and employees within the PRC shall pay for social insurance fees and housing provident funds in compliance with applicable PRC laws.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Laws and Regulations Relating to Intellectual
Property</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Trademarks</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the Trademark
Law of the PRC promulgated on August 23, 1982, amended on April 23, 2019 and effective November 1, 2019 and the Regulation on Implementation
of the Trademark Law of the PRC promulgated on August 3, 2002, amended on April 29, 2014 and effective May 1, 2014, the right to the
exclusive use of a registered trademark is limited to the approved trademark registration, and to goods for which the use of the trademark
has been approved. The period of validity of registered trademarks lasts for ten years from the day of registration approval. Absent
the authorization by the owner of the registered trademark, the use of the registered trademark or a similar trademark on the same category
of goods or similar goods constitutes an infringement of the right to exclusive use of the registered trademark. The infringer shall,
in accordance with the relevant regulations, cease the infringement activities, take correction actions, and compensate for losses.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Patents</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the Patent Law
of the PRC promulgated on March 12, 1984, last amended on December 27, 2008 and effective October 1, 2009, and the Rules for the Implementation
of the Patent Law of the PRC amended on January 9, 2010 and effective February 1, 2010, after the grant of the patent right for inventions
and utility models, except otherwise regulated under the Patent Law, no entity or individual may, without the authorization of the patent
owner, exploit such patent, that is to manufacture, use, offer to sell, sell or import the patented product, or use the patented process,
and use, offer to sell, sell or import products directly obtained from such patented process, for production or business purposes. After
the patent right is granted for a design, no unit or individual shall, without the authorization of the patent owner, exploit such patent,
that is to manufacture, offer to sell, sell, or import any product containing such patented design for production or business purposes.
Where infringement has been established, the infringer shall, in accordance with the relevant regulations, be ordered to cease the infringement
activities, take corrective actions, and compensate for losses.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Copyrights</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the Copyright
Law of the PRC promulgated on September 7, 1990, last amended on November 11, 2020, and effective June 1, 2021, works of PRC citizens,
legal persons or unincorporated organizations shall, regardless of whether they have been published, be entitled to the copyright pursuant
to this law. Works include written works; oral works; musical, dramatic, opera, dance, acrobatic and artistic works; visual arts, architectural
works; photographic works; audiovisual works; graphical works and modeling works such as engineering design graphs, product design graphs,
maps and schematic diagrams; computer software; and other intellectual achievements that meet the characteristics of works.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the Regulation
on Protection of Computer Software promulgated on December 20, 2001, last amended on January 30, 2013 and effective date on March 1,
2013, software copyright is conferred on the software development completion date. The protection period for a software copyright of
a legal person or other organizations lasts for 50 years, concluding on the day of December 31 in the 50th year after the initial release
of the software. However, in the case where the software has not been released within 50 years from its development completion date,
protection shall no longer be offered by these regulations. A software copyright holder may register with competent software registration
authority under the State Council Copyright Administrative Department. Registration certification documents issued by the competent software
registration authority serve as the prima facie proof of such registration.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>IC Layout Designs</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the Regulation
on the Protection of Integrated Circuit Layout Designs promulgated on April 2, 2001 and implemented on October 1, 2001, and the Protection
of Integrated Circuit Layout Designs Regulations Implementing Rules promulgated on September 18, 2001 and effective October 1, 2001,
layout design proprietary right holders enjoy the following proprietary rights: to duplicate the whole or any part of the protected layout
designs that is original; to make commercial use of the protected layout designs, ICs containing such layout designs, or items containing
such ICs.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Regulatory Overview of Australia</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are engaged in cryptocurrencies
and foreign exchange business in Australia. Our corporate entities engaged in these businesses were established and registered in Australia
and have adopted measures to ensure compliance with its regulatory obligations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Existing regulatory framework on foreign
exchange and crypto assets</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">While the regulation of foreign
exchange business has long been settled in Australia, the same cannot be said for cryptocurrency. In any event, cryptocurrencies or digital
currencies, and cryptocurrency exchanges are legal in Australia.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Financial products and services
offered in Australia are generally regulated by imposing obligations on the sellers or distributors of the product. The Australian Securities
and Investments Commission (ASIC) and the Australian Transaction Reports and Analysis Centre (AUSTRAC) oversee different aspects of the
foreign exchange and crypto asset ecosystem of Australia and at this stage, there is currently no clear, holistic policy that directly
regulates crypto assets (cryptocurrencies/digital currencies) or Crypto Asset Secondary Service Providers (<b>CASSP</b>) in Australia.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">It can be said at this stage
that the existing regulatory framework for crypto assets is composed of a patchwork of obligations drawn from various parts of Australian
laws, including the <i>Corporations Act 2001 (Corporations Act)</i>, <i>Anti-Money Laundering and Counter-Terrorism Financing Act 2006
(AML/CTF Act)</i>, and the <i>Competition and Consumer Act 2010</i>.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In essence, if the crypto
asset is a financial product and a designated service, it will fall within the ambit of the Corporations Act and the AML/CTF Act, but
if it is not a financial product, then it is considered a consumer product subject to the Australian Consumer Law under the Australian
Competition and Consumer Commission (ACCC).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Government bodies and laws on foreign exchange
and crypto assets and exchanges</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Australian Securities
and Investments Commission (ASIC) and the Australian Transaction Reports and Analysis Centre (AUSTRAC) are the two (2) primary regulators
of foreign exchange contracts and crypto assets and exchanges.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>ASIC and the Corporations Act and the ASIC
Act</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">ASIC is the government regulator
for among others, corporations, financial markets, and the financial services industry of Australia and administers the Corporations
Act and the <i>Australian Securities and Investments Commission Act 2001 </i>(ASIC Act), which embody the regulatory obligations on the
industry it supervises. ASIC imposes the requirement to hold an Australian Financial Services License (AFSL) before engaging in financial
services (in relation to financial products) in Australia.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We hold an AFSL that authorizes
us to deal in and provide general financial product advice in relation to among others, <b>foreign exchange contracts</b> <i>e.g., FX
Forward and Options Contracts, </i>and <b>non-cash payment products</b> (NCP).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">While there have been no
changes recently to the laws governing foreign exchange contracts, NCP products have received some attention in relation to crypto or
digital assets. An NCP is described as an arrangement through which a party makes payments, or causes payments to be made, other than
by the physical delivery of Australian or foreign currency. Examples include stored value cards, electronic cash and direct debit services.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">An intermediary that arranges
for the issue of an NCP facility may need an AFS License or be a Representative of an AFS licensee. However, just because a crypto asset
is what is used to complete a transaction does not necessarily mean that the crypto asset is an NCP facility as it will depend on the
rights and obligations associated with the asset.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">According to ASIC&#8217;s
INFO 225, if the asset provides the holder with a right to use the asset to make a payment, it is likely to be an NCP facility. An arrangement
is also likely to be an NCP if for example a person offers an arrangement where payments can be made using a crypto asset but fiat currency
is sent to recipients.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 90; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->81<!-- Field: /Sequence --></span></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Australian Financial Services License (AFSL)</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As an AFS Licensee engaged
in financial services in Australia, in particular, advising and dealing in foreign exchange contracts and non-cash payment products,
we are subject to general obligations under the Corporations Act, including among others, providing financial services efficiently, honestly
and fairly; having in place adequate arrangements for the management of conflicts of interest; complying with our license conditions
and financial services laws; having adequate human, financial and technological resources; maintaining a dispute resolution system for
retail clients; and ensuring that our representatives are adequately trained and competent. Additionally, we must have adequate risk
management systems in place. ASIC requires all AFS Licensees to have their compliance arrangements in relation to these obligations to
be audited on an annual basis.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>ASIC initiatives concerning crypto assets</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Australian government
has publicly stated that it is committed to ensuring that consumers can buy, sell, and store crypto assets using Australian crypto asset
secondary service providers.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In October 2021, ASIC amended
Information Sheet (INFO 225) in relation to crypto assets to help understand the obligations under the Corporations Act and the ASIC
Act.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Based on INFO 225, Australian
laws apply where the crypto asset is promoted or sold in Australia, including from offshore. As such, the use of offshore or decentralized
structures does not mean that Australian laws do not apply or can be ignored and encourages entities to build their products and services
in a way that complies with the intention of the laws in place to safeguard consumers and the integrity of financial markets in Australia.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Furthermore, INFO 225 provides
that it is incumbent on issuers to determine if issuing the crypto asset falls within the definition of a &#8216;financial product&#8217;
under the Corporations Act and if so, the need to hold an AFSL or to obtain authorization will apply and the product will be regulated
by ASIC, failure to do so may trigger legal action from ASIC against those companies without AFSL or authorization.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Whether a crypto asset is
considered a financial product depends on its use, as primarily defined in section 763A of the Corporations Act.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">With regards to the ASIC
Act, it prohibits engagement in misleading or deceptive conduct in the course of operating a crypto asset business whether a financial
product is involved or not.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>AUSTRAC and the AML/CTF Act </i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">AUSTRAC is the Australian
Government agency responsible for preventing, detecting, and responding to criminal abuse of the financial system to protect the Australian
community from serious and organized crime. AUSTRAC also regulates certain business activities in the financial, bullion and gambling
sectors. These business activities are called designated services and have been identified because they pose a risk for money laundering
and terrorism financing.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Presently, Australia&#8217;s
cryptocurrency regulations under the AML/CTF Act and regulations, require digital currency exchanges (DCE) to register with AUSTRAC.
The regulations require entities acting as exchanges, or providing registrable exchange type services, to identify and verify their users,
maintain records, and comply with government AML/CTF reporting obligations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">One of our business entities
in Australia has been registered as a Digital Currency Exchange Provider with AUSTRAC and complies with the regulatory obligations imposed
by AUSTRAC under the Anti Money-Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act), including among others, having an
AML/CTF Program; identifying the types of money laundering and terrorist financing risks that may be faced by the business and the consequences
of non-compliance; reporting on suspicious matters; and keeping records for the prescribed period.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Australian Government recent regulatory objectives
for crypto assets</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Australian Government
is committed to ensuring that consumers can engage (buy, sell, and store) crypto assets using Australian CASSP with confidence and has
announced in October 2021 that it intends to regulate the digital asset market by imposing a licensing (marketing and financial services)
regime.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As articulated by the Australian
Government, the proposed licensing regime is designed to provide a framework for minimum standards of conduct, including for custody
of private keys and the suitability of key persons to be operating secondary service provider businesses (through fit and proper person
tests).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">These changes will provide
regulatory clarity and give confidence to both consumers and businesses.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On March 21, 2022, the Australian
Government issued a &#8220;policy paper&#8221; advising that it intends to:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; font-size: 10pt">&#160;</td>
    <td style="width: 24px; text-align: justify; font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">1.</span></td>
    <td style="text-align: justify; font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Establish a market licensing regime for crypto exchanges &#8211; aimed to ensure that consumers can trust the exchanges they use to buy cryptocurrencies; and</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 54pt; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="text-align: justify; width: 0.5in"></td><td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">2.</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Introduce
                                            custody arrangements for cryptocurrency exchanges &#8211; aimed to ensure that crypto investors
                                            who hold their crypto on exchange can always access their money by introducing custody requirements
                                            for crypto assets.</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The policy paper named the
following existing Government initiatives, all drawing on benefits of innovation in Australia.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="text-align: justify; width: 0.5in"></td><td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
                                            Government Digital Economy Strategy is designed to position Australia to be a top 10 digital
                                            economy and society by 2030 through AUD1.2 billion of strategic investment.</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="text-align: justify; width: 0.5in"></td><td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
                                            National Blockchain Roadmap 2020-2025 highlights the potential of blockchain technology across
                                            the Australian economy.</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="text-align: justify; width: 0.5in"></td><td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">AUD60
                                            million in funding to the Digital Finance Cooperative Research Centre (DFCRC) to bring together
                                            fintech, industry, research, regulatory stakeholders to capitalize on the financial sector
                                            transformation arising from the digitization of assets.</span></td>
</tr></table><div>
</div><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="text-align: justify; width: 0.5in"></td><td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
                                            Blockchain Pilot Grants program provided AUD5.6 million to two blockchain projects.</span></td>
</tr></table><div>
</div><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="text-align: justify; width: 0.5in"></td><td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
                                            Australian Border Force has undertaken a successful blockchain trial to digitize trade processes.</span></td>
</tr></table><div>

</div><p style="margin-top: 0; margin-bottom: 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="text-align: justify; width: 0.5in"></td><td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Implemented
                                            an anti-money laundering and counter-terrorism financing framework for crypto asset secondary
                                            service providers via AUSTRAC&#8217;s digital currency exchange register.</span></td>
</tr></table><div>
</div><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="text-align: justify; width: 0.5in"></td><td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Commitment
                                            to investigating the feasibility of a central bank digital currency, the potential of Decentralised
                                            Autonomous Organisations and reviewing the taxation of digital transactions and assets.</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Following an announcement
by the Australian Government in August 2022 that it will be commencing consultation with stakeholders on a new regulatory regime for
the cryptocurrency/digital assets sector, the Department of the Treasury (the &#8220;Treasury&#8221;) released its &#8216;Token Mapping
Consultation Paper&#8217; (Consultation Paper) in February 2023. The Consultation Paper invited feedback from the industry on how to
address matters such as the existing gaps in regulatory framework and to inform future licensing and policy decisions in the cryptocurrency
sector. Following the Token Mapping exercise, the Treasury is expected to release a consultation paper on the design of a licensing and
custody framework for CASSP in mid-2023.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 40pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 40pt"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 40pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>The Australian Competition and Consumer Commission
(ACCC) </b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The ACCC is an independent
Commonwealth statutory authority whose role is to enforce the <i>Competition and Consumer Act 2010</i>. The ACCC provides guidance to
consumers about buying and sending fiat and crypto currencies and can intervene in cases involving misleading and deceptive conduct.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>The Australian Taxation Office and taxation
laws on crypto or digital currencies</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">While the Australian Taxation
Office (ATO) has provided some guidance on the income tax treatment of crypto and digital assets and has adopted some legislative reform
with regards to Goods and Services Tax, this has been limited to crypto ownership in Australia.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The inability of the ATO
to provide comprehensive binding guidance is due, in part, to the fact that crypto includes a broad range of tokens and other &#8220;things&#8221;
with different rights, entitlement and obligations. As such, without a specific crypto regime it is difficult for the ATO to administer
the law in a consistent and sensible way.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Board of Taxation review</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In March 2022, the Board
of Taxation (the &#8220;Board&#8221;) commenced a review into the appropriate policy framework for the taxation of digital transactions
and digital assets, including cryptocurrency and non-fungible tokens (NFTs). The Board was required to report back to the Government
by December 31, 2022 in accordance with the Consultation Guide. However, according to the latest announcement by the Board on its official
website, the Board is now asked to report back to the Government by September 30, 2023. Whilst the outcome of the final report released
to the public, the terms of reference for the review requires the Board to, among others, consider whether or not any changes to Australia&#8217;s
taxation laws and/or their administration are warranted in the context of digital assets and transactions, both for retail and wholesale
investors.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">It is said that the review
signals an increasing desire for Australia to be at the forefront of technology and innovation. Meanwhile, in considering the tax and
accounting process of these digital assets, the industry is expected to have recourse to the guidelines provided by the ATO.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>The Australian Sanctions Office (ASO)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following is a brief
summary of the sanctions regime imposed by the Australian Government. This summary does not intend to set out the laws and regulations
relating to Australia&#8217;s sanctions regime in their entirety.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">ASO is the Australian Government&#8217;s
sanctions regulator and it operates under Australia&#8217;s Department of Foreign Affairs and Trade (DFAT). ASO is tasked with, among
others, providing guidance on Australian sanctions law and works with other government agencies to monitor compliance with sanctions
legislation. Australia adopts both the United Nations Security Council (UNSC) sanctions regimes and the Australian autonomous sanctions
regimes as a matter of international law as well as a matter of Australian foreign policy. Penalties for breaching sanctions laws include
up to ten years in prison and substantial fines.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Australia has in March and
April 2022 extended its autonomous sanctions in relation to Russia. These sanctions measures are aimed at restrictions on exports and
commercial activities, including providing and dealing with assets of designated persons or entities, and restrictions on certain imports
including arms material, energy products such as oil, and gold. However, Sanctions Permits may be issued, subject to certain criteria.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Regulatory Overview of United States</b>&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following sets forth
a description of certain laws, regulations and government policies relating to cryptocurrencies and cryptocurrency mining in the United
States, which we consider a key market for our overseas business.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are not aware of any law
that currently makes it per se illegal for a natural person or entity simply to possess, sell, or trade Bitcoin on its own behalf in
connection with lawful transactions in the United States, provided that any transaction complies generally with applicable law. We are
also not aware of any United States federal law that currently prohibits any legal entity or natural person from importing blockchain
processing units, or BPUs, into the United States or manufacturing or selling BPUs within the United States. Nonetheless, in the United
States, both the federal government and individual states have regulations in place that govern the offer, sale, and transmission of
various types of cryptocurrency, including but not limited to Bitcoin, and the legal status of Bitcoin and other cryptocurrencies and
digital assets continues to evolve. Nevertheless, the United States currently hosts a complex and rapidly evolving regulatory environment
and we are subject to a wide range of laws and regulations enacted by U.S. federal, state and local governments, governmental agencies
and regulatory authorities, including the Commodity Futures Trading Commission, the SEC, the Federal Trade Commission, or the FTC, and
the Financial Crimes Enforcement Network of the U.S. Department of the Treasury, or FinCEN. Other regulatory bodies, governmental or
semi-governmental, have shown an interest in regulating or investigating companies engaged in the blockchain or cryptocurrency businesses.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The United States Commodity
Futures Trading Commission, or CFTC, has taken the position that cryptocurrencies, such as Bitcoin, are &#8220;commodities&#8221; covered
by the Commodity Exchange Act and subject to regulation by the CFTC. In March 2018, a United States federal court affirmed the CFTC&#8217;s
authority to regulate cryptocurrencies. This means that the CFTC has jurisdiction over any futures, options or derivatives contracts
involving cryptocurrencies as well as any fraud or manipulation involving cryptocurrencies in the spot market. Our products are not intended
to be used either for any futures, options or derivatives trading or to enable fraud or manipulation. However, to the extent that any
mining activity using our products were to be deemed a form of fraud or manipulation, or our products were otherwise used for fraud or
manipulation, we could potentially be subject to regulatory or private actions related to those uses.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, while the SEC
has taken the position that Bitcoin, Ether, and certain cryptocurrencies subject to significant operational restrictions are not &#8220;securities&#8221;
regulated by the federal securities laws, it is likely that the SEC would view almost all other cryptocurrencies (other than Bitcoin
and Ether) that can be mined to be &#8220;securities,&#8221; based on their status as &#8220;investment contracts&#8221; under the guidance
provided by the SEC &#8220;Framework for &#8216;Investment Contract&#8217; Analysis of Digital Assets,&#8221; and the application of
the test under&#160;<i>SEC v. W. J. Howey Co.,</i> 328 U.S. 293 (1946)&#160;(the &#8220;<i>Howey</i>&#160;test&#8221;) to cryptocurrencies.
It is similarly likely that these other cryptocurrencies will be treated as securities under the laws of the individual states.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The status of most currently-existing
cryptocurrencies and other digital assets as securities could impose significant restrictions on us or our customers with operations
that are located in the United States or involve United States residents. Typically, offerings and distributions of securities in the
United States are required to register with the SEC under the Securities Act and, in compliance with state law, with applicable state
regulators. If the offering of a cryptocurrency or digital asset that can be mined using our products is deemed a security, miners may
be required to cease mining that cryptocurrency or digital asset, which would negatively affect our business. In addition, if the Company
were viewed as facilitating an illegal distribution of a cryptocurrency or digital asset, the Company could have liability associated
with its product sales. Further, even if a cryptocurrency or digital asset that is considered to be a security is legally distributed
under the U.S. federal and state securities laws, the miners of that cryptocurrency or digital asset could be viewed as statutory underwriters
or as &#8220;brokers&#8221; subject to regulation under the Exchange Act because they are effecting transactions in those securities
for a fee (i.e., mining rewards). This outcome would again potentially reduce the viability of our product sales and could also result
in the Company incurring liability. Any of these developments could limit the future development of our business. See &#8220;Item 3.
Key Information&#8212;D. Risk Factors&#8212;Risks Relating to Our Business and Industry&#8212;Risks Relating to Our Cryptocurrency, Blockchain
and Mining Related Businesses&#8212; The current regulatory environment in foreign markets, and any adverse changes in those environments,
could have material adverse impacts on our blockchain products business and our Fintech business.&#8221;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Under Section 5 of the Federal
Trade Commission Act of 1914, which currently prohibits &#8220;unfair methods of competition in or affecting commerce, and unfair or
deceptive acts or practices in or affecting commerce,&#8221; the FTC is authorized to &#8220;prevent persons, partnerships, or corporations,
except banks [and certain other entities] from using unfair methods of competition in or affecting commerce and unfair or deceptive acts
or practices in or affecting commerce.&#8221; Based upon a new &#8220;Policy Statement Regarding the Scope of Unfair Methods of Competition
Under Section 5 of the Federal Trade Commission Act&#8221; issued on November 10, 2022, the FTC may now use Section 5 of the FTC Act
to regulate &#8220;conduct that tends to cause potential harm similar to an antitrust violation, but that may or may not be covered by
the literal language of the antitrust laws or that may or may not fall into a &#8216;gap&#8217; in those laws.&#8221; In response, the
FTC has been increasing its scrutiny of the digital assets sector, and has initiated various investigations into certain acts and practices
of entities participating in the digital assets sector.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Further, FinCEN regulates
&#8220;money transmitters,&#8221; including certain administrators and exchangers of cryptocurrencies, and state laws also regulate money
transmission; more generally, cryptocurrency transactions may implicate a variety of federal and state laws designed to counter money
laundering. In that regard it should be noted that U.S. Secretary of the Treasury Steven Mnuchin has indicated that federal regulators
are specifically looking for potential money laundering activities involving cryptocurrency.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, since there
has been limited precedent set for the financial accounting of digital assets, it is unclear how we will be required to account for digital
asset transactions (i.e. receiving or selling Bitcoin) or digital assets themselves. Internal Revenue Service Notice 2014-21 states that
at federal level, &#8220;the sale or exchange of convertible virtual currency, or the use of convertible virtual currency to pay for
goods or services in a real-world economy transaction, has tax consequences that may result in a tax liability.&#8221; Under Notice 2014-21,
cryptocurrencies and other digital assets are treated as &#8220;property&#8221; for U.S. federal tax purposes and this position was reaffirmed
by the IRS in a reminder issued in March 2018 (IR-2018-71). In 2019, the IRS further released Revenue Ruling 2019-24 and a set of &#8220;Frequently
Asked Questions&#8221; (which have been periodically updated), that provide additional guidance, including guidance to the effect that,
under certain circumstances, hard forks of digital currencies are taxable events giving rise to ordinary income and guidance with respect
to the determination of the tax basis of virtual currency. However, this guidance does not address other significant aspects of the U.S.
federal income tax treatment of cryptocurrency assets and related transactions. Mining, selling, and transacting in cryptocurrencies
and other digital assets are all potentially taxable events for U.S. federal income tax purposes. United States state taxing authorities
may adopt similar views on the taxability of cryptocurrencies and other digital assets.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Even considering the foregoing,
regulations may substantially change in the future and it is presently not possible to know how regulations will apply to our businesses,
or when they will be effective. As the regulatory and legal environment evolves, we may become subject to new laws and further regulation
by the SEC and other agencies, which may affect our mining and other activities. For instance, various bills have been proposed in the
U.S. Congress related to our business, which may be adopted and have an impact on us. Additionally, governmental agencies and regulatory
authorities, such as the SEC, the CFTC, the FTC and the FinCEN may also enact regulations related to our business, which may have an
impact on us. For example, the U.S. Department of the Treasury is expected to announce regulations pursuant to the Infrastructure Investment
and Jobs Act passed in November 2021, which requires digital-asset brokers to turn over information on their clients&#8217; transactions
to the U.S. Internal Revenue Service. For example, if the Treasury Department were to classify Bitcoin miners as brokers for purposes
of these rules, or impose an excise tax on electricity usage by digital asset miners, as described in General Explanations of the Administration&#8217;s
Fiscal Year 2024 Revenue Proposals released by the Department of the Treasury on March 9, 2023, those actions would have an adverse impact
on our business.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Sanctions Laws and Regulations </b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Following is a summary of
the sanctions regime imposed by the United States. This summary does not intend to set out the laws and regulations relating to the United
States sanctions in their entirety.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Trade Controls</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our business activities are subject to various restrictions under U.S.
export and similar laws and regulations, as well as various economic and trade sanctions administered by OFAC. Further, various countries
regulate the import of certain technology and have enacted or could enact laws that could limit our ability to provide customers with
our products in those countries.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>


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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="background-color: white">Economic sanction laws in the
U.S. and other jurisdictions prohibit or otherwise restrict us and our officers, directors, and employees from engaging in transactions
in, or relating to, certain countries, territories, individuals, and entities. In the U.S., OFAC, the U.S. Department of State, and the
U.S. Department of Commerce administer and enforce laws, executive orders, and regulations establishing U.S. economic and trade sanctions.
Such sanctions prohibit, among other things, transactions with, and the provision of services to, certain countries, territories, individuals,
and entities. These persons and entities include specially designated nationals and other persons and entities targeted by OFAC sanctions
programs. The lists of OFAC-restricted countries, territories, individuals, and entities, including the List of Specially Designated Nationals
and Blocked Persons, as such list may be amended from time to time, can be found on the OFAC website at https://ofac.treasury.gov/. In
addition, certain programs administered by OFAC prohibit dealing with individuals or entities in certain countries regardless of whether
such individuals or entities appear on the lists maintained by OFAC. These types of sanctions and similar laws and regulations in&#160;non-U.S.&#160;jurisdictions
may significantly restrict our business activities in certain countries or territories. The economic sanctions and related laws of different
jurisdictions in which we conduct business also may conflict with one another, such that compliance with all applicable laws may be difficult.
Failure to comply with OFAC or other relevant sanctions could have serious legal and reputational consequences, including civil and criminal
penalties.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Export Control Regulations</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The purpose of the export
control regulations is to control exports and re-exports for purposes of national security, foreign policy, short supply, reduction of
nuclear proliferation, limitation of chemical or biological warfare, antiterrorism, crime control, enforcement of economic embargoes,
compliance with United Nations resolutions and other purposes. These laws apply to both the export of tangible products as well as the
export of technology, technical data, software, trade secrets and similar types of information. These programs are administered by various
U.S. agencies. Sanctions for violations of these regulations include civil and criminal penalties &#8212; criminal sanctions are often
imposed on both corporate defendants and officers, directors and employees of the corporation in their personal capacities.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Export Administration Regulations</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In the United States, the
principal program for the federal regulation of exports is under the U.S. Export Administration Regulations, or the EAR. The EAR controls
the export and re-export of U.S.-origin products and technologies from the United States. The EAR prohibits the export of certain goods,
software and technologies identified therein to specific foreign countries or require exporters to obtain export licenses for the export
of such items. The EAR incorporate the Commerce Control List, a list of approximately 3,000 items, which are subject to export restrictions.
Items on the Commerce Control List are prohibited from export to certain destinations unless an export license is issued by the U.S.
Department of Commerce. Items on the Commerce Control List include products, software and technology. Examples of products that are subject
to export licensing include electronic navigation control systems, computer aided design devices (CAD-CAM), high performance computers,
network components (routers, hubs, servers), computerized telecommunications switches and high performance composite materials. The EAR
also control the &#8220;re-export&#8221; of products manufactured in foreign countries which incorporate more than a de minimis amount
of U.S. content or which are based on certain U.S. &#8211;origin technologies. Finally, the EAR also prohibit the export of any item
that will be used in any prohibited end-use.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><div><a id="a_020"></a></div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="text-align: justify; width: 0px">&#160;</td>
    <td style="text-align: justify; width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>C.</b></span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Organizational structure</b></span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are an exempted company
incorporated pursuant to the laws of Cayman Islands. We operate and own our assets directly and indirectly through a number of subsidiaries.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Ebang International Holdings
Inc. is a holding company incorporated in Cayman Islands which does not have substantive operations. We conduct our businesses through
our subsidiaries. Our principal subsidiaries consist of the following entities (in chronological order based on their dates of incorporation):</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="text-align: justify; width: 0.5in"></td><td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Zhejiang
                                            Ebang Communication Technology Co., Ltd., or Zhejiang Ebang, our majority-owned subsidiary
                                            and an onshore holding company established in the PRC on January 21, 2010, principally for
                                            holding our businesses in the design, manufacture and sale of telecommunications and blockchain
                                            processing equipment;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="text-align: justify; width: 0.5in"></td><td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Zhejiang
                                            Ebang Information Technology Co., Ltd., or Ebang IT, our majority-owned subsidiary and an
                                            operating entity established in the PRC on August 11, 2010, principally for the design, manufacture
                                            and sale of telecommunications and blockchain processing equipment;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><!-- Field: Page; Sequence: 96; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->87<!-- Field: /Sequence --></span></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Hangzhou
                                            Dewang Information Technology Co., Ltd., or Hangzhou Dewang, our majority-owned subsidiary
                                            and an operating entity established in the PRC on December 31, 2015, principally for the
                                            design and manufacture of blockchain chips;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0.5in; text-align: justify">&#160;</td>
    <td style="width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Ebang Communications (HK) Technology Limited, or HK Ebang Communications, formerly known as Hong Kong Bite Co., Ltd., our wholly-owned subsidiary and an operating entity established in Hong Kong on February 12, 2016, principally for the trading of blockchain chips;</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Ebonex Australia Pty Ltd, or Ebonex Australia, our wholly-owned subsidiary and an operating entity established in Australia on April 22, 2021, principally for operating the cryptocurrency exchange platform Ebonex; and</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify">Compass Global Holdings Pty Ltd, or Compass Global, which became our
wholly-owned subsidiary in Australia through acquisition on March 21, 2022, principally for the cross-border payment and foreign exchange
business.</td></tr>
  </table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The chart below summarizes
our corporate structure and identifies the principal subsidiaries described above as of the date of this annual report:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><img alt="" src="image_001.jpg"/>&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(1)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The remaining 48.95% equity
    interests are owned by Huzhou Meiman Investment Management LLP, an unaffiliated third party.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(2)</span></td>
    <td style="text-align: justify"><p style="margin: 0pt 0; font: 10pt Times New Roman, Times, Serif">On December 16, 2020, an affiliate controlled by Mr. Dong Hu, our chairman
of the board of directors, chief executive officer and chief financial officer, acquired 0.0036% of the equity interests in Zhejiang Ebang
Communication Technology Co., Ltd.</p></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(3)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">There is another Hong Kong
    entity within the Group named Ebang Trust Limited, whose ultimate parent is Ebang International Holdings Inc.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><!-- Field: Page; Sequence: 97; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->88<!-- Field: /Sequence --></span></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><div><a id="a_021"></a></div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>D.</b></span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Property, plants and
    equipment</b></span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our business operation is
headquartered in Hangzhou, Zhejiang. We currently occupy properties in other locations in China, including (1) other research and development
bases in Shanghai and Wuhan, (2) one production facility in Hangzhou and (3) sales offices in Hangzhou, Shijiazhuang, Changsha, Guangzhou,
Taizhou and Shenyang.&#160;We also currently occupy properties in other locations outside of China primarily in Singapore, Hong Kong,
Australia and the Bahamas to operate and expand the Fintech businesses.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, we are constructing
our new headquarters in Linping District, Hangzhou which will comprise expanded production, research and development and office space,
among other uses, in order to support our business growth. For more information on our expansion plan and the related properties, see
&#8220;&#8212;Owned Properties.&#8221;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Leased Properties </i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The total gross floor area, or GFA, of our leased properties is approximately
9,043 square meters, or sq.m, our of which, approximately 1,391 sq.m are leased outside of China primarily in Singapore, Hong Kong, Australia
and the Bahamas. These leased properties are used for research and development, sales and other offices. Our lease agreements mainly have
a term of one to four years.&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Owned Properties</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As of December 31, 2022,
we owned properties in two locations in China with a total GFA of approximately 33,888.08 sq.m. The following table sets forth the GFA
of all properties owned by us:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="font-weight: bold; border-bottom: Black 1.5pt solid">Location</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Approximate GFA</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center">(sq.m.)</td><td style="font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td>&#160;</td>
    <td colspan="2">&#160;</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 88%; text-align: left; padding-left: 9pt">Wuhan, Hubei (research and development center)</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">390.68</td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 1.5pt; padding-left: 9pt">Hangzhou, Zhejiang (Linping District)</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; padding-bottom: 4pt">Total</td><td style="font-weight: bold; padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">33,888.08</td><td style="padding-bottom: 4pt; font-weight: bold; text-align: left">&#160;</td></tr>
  </table><div>




</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We believe that we have adequate
facilities, through a combination of leased and owned properties, to accommodate our business operations and future expansion plans.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><div><a id="a_022"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>ITEM 4A. UNRESOLVED STAFF COMMENTS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Not applicable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><div><a id="a_023"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>ITEM 5. OPERATING AND FINANCIAL REVIEW AND
PROSPECTS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Unless otherwise stated,
the discussion and analysis of our financial condition and results of operation in this section apply to our financial information as
prepared according to U.S. GAAP. You should read the following discussion and analysis of our financial condition and operating results
in conjunction with our consolidated financial statements and the related notes included elsewhere in this annual report. The following
discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results
and the timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of various
factors, including those set forth under &#8220;Item 3. Key Information&#8212;D. Risk Factors.&#8221;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><div><a id="a_024"></a></div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>A.</b></span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Operating results</b></span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Overview</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As a global blockchain technology
and Fintech company, we have strong application-specific integrated circuit (ASIC) chip design capability. With years of industry experience
and expertise, we have become a global Bitcoin mining machine producer. Based on our deep understanding of the Fintech industry and compliance
with laws and regulations in various jurisdictions, we have launched professional, convenient and innovative Fintech service platforms.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We strive to expand into the
upstream and downstream markets of the blockchain and Fintech industry value chain to diversify our offerings and achieve a more stable
financial performance, by starting with the cryptocurrency mining and farming business, and expanding into further Fintech businesses.
As of the date of this annual report, we have established two cryptocurrency exchange platforms and one cross-border payment and foreign
exchange platform.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We believe our extensive experience in the blockchain and Fintech industry
positions us well in our future endeavors. We intend to continue to concentrate our efforts in our blockchain and Fintech related businesses
in 2023, specifically in Singapore, Hong Kong, Australia, New Zealand, the United States and Malaysia. Although we have not generated
substantial revenue from such businesses to date, we carefully selected these countries and/or regions because of what we believe to be
a Fintech-friendly regulatory environment.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Key Factors Affecting Our Results of Operations</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition to the general
factors affecting the Chinese and global economy and our industry, our results of operations and financial condition are affected by
a number of industry- and company-specific factors, including those set out below:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Expected economic returns on Bitcoin mining
activities and fluctuation of Bitcoin price especially</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our revenues primarily consist
of proceeds of sales of Bitcoin mining machines, which are, in general, determined by the demand and pricing of our Bitcoin mining machines.
An increase in the economic return of Bitcoin mining activities would generally stimulate the demand and average selling price for our
Bitcoin mining machines, and vice versa. An increase in the Bitcoin price is the most significant factor that could increase the expected
economic returns generated by Bitcoin mining activities. Other factors that may increase the economic return of Bitcoin mining activities
include, among others, increase in transaction fees, decrease in electricity costs or other operating costs, increase in computing power
and efficiency of mining machines, reduction of difficulties of mining activities and increase in number of Bitcoin awarded for mining
activities.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Historically, fluctuation
of the Bitcoin price significantly affected our results of operations and financial condition; in particular, a significant drop in Bitcoin
price resulted in a material negative effect on the global financial market and our results of operation. Due to the COVID-19 pandemic
and the Bitcoin halving event that occurred in 2020, the economic return of Bitcoin mining activities was further reduced as awards from
solving a block was halved, which also affected the demand for our Bitcoin mining machines. As a result, our revenues from our blockchain
products business decreased significantly to US$8.0 million in 2020. In 2021, the sustained outbreak of COVID-19 continued to disrupt
our raw material supplies. Notwithstanding the foregoing, the price of Bitcoin has maintained at a high level with volatility, and investors
returned to cryptocurrency and blockchain investment, which had a positive impact on the market. As a result, we generated revenues of
US$39.8 million from our blockchain products business in 2021. With the continuous decline in Bitcoin prices in 2022, continuation of
the COVID-19 pandemic and large cryptocurrency exchanges declaring bankruptcy starting the second half of 2022, investors have once again
begun to invest cautiously. The shortage of overseas raw material supply has not improved, leading to a decline in our blockchain product
revenue to US$25.8 million. We expect the volatility of the Bitcoin price to continue, which may significantly affect our business of
operations and financial condition. See &#8220;Item 3. Key Information&#8212;D. Risk Factors&#8212;Risks Relating to Our Business and
Industry&#8212;Our results of operations have been and are expected to continue to be significantly impacted by the fluctuation of cryptocurrency
prices, especially the price of Bitcoin&#8221;.&#160; We expect our business and results of operations may be materially and adversely
affected by the global market panics in the near term. See &#8220;Item 3. Key Information&#8212;D. Risk Factors&#8212;Risks Relating to
Our Business and Industry&#8212;The global coronavirus COVID-19 outbreak has caused significant disruptions in our business, which we
expect may continue to materially and adversely affect our results of operations and financial condition.&#8221;</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">

</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">A decrease in the expected
economic returns of Bitcoin mining activities and the Bitcoin price may also lead to increase in inventory write-down and credit sales
as a result of stagnant demand and decrease in average selling price for our Bitcoin mining machines, which may significantly affect our
gross margin and extend the billing cycle of our products. The pandemic, the halving event in 2020 and trade sanctions from various countries
led some investors to exercise caution. For example, we recorded write-down for the potentially obsolete, slow-moving inventory and lower
of cost or market adjustment of US$3.6 million, US$2.2 million and US$6.5 million in 2020, 2021 and 2022, respectively. If we cannot maintain
an appropriate inventory level, we may lose sales and market share to our competitors.&#160;&#160;</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">

</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Bitcoin price fluctuated
significantly in the past few years and resulted in a corresponding fluctuation in our sale of Bitcoin mining machines. We expect that
the Bitcoin price may continue to fluctuate in the future, and as such, we would expect to continue to experience a significant corresponding
fluctuation in both sales volumes and average selling prices of Bitcoin mining machines, as well as write-down of inventory, which may
erode our profitability in the case of a significant Bitcoin price drop.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Market demand for our mining machines and
development of blockchain technology and cryptocurrency markets, especially Bitcoin market</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our current blockchain product
is designed for Bitcoin mining. According to the F&amp;S report, sales of Bitcoin computing hardware, the majority of which comprise
sales of Bitcoin mining machines, have surged at a CAGR of 61.3% from approximately US$0.2 billion in 2015 to approximately US$1.4 billion
in 2019 and are expected to further increase at a CAGR of 24.8% to approximately US$4.3 billion in 2024. Because market demand is dependent
on the development of the blockchain technology, as well as innovations in cryptocurrency applications, our results of operations will
significantly depend on our ability to keep pace with market demand to attract new customers or retain existing customers as well as
to maintain or increase our market share. Our results of operations will also be significantly affected by developments in overall blockchain
technology and cryptocurrency markets, and in particular, the Bitcoin market. The Bitcoin market may be affected by various factors,
including, among others the Bitcoin price and expected return on Bitcoin related activities such as mining and trading, different views
regarding the decentralized nature of cryptocurrencies, acceptance of cryptocurrencies as an investment instrument as well as a currency
for payment, competing cryptocurrencies to Bitcoin, and changes in the Bitcoin algorithm and the mechanism of mining.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Performance and cost of our products </i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The pricing of and demand
for our Bitcoin mining machines are closely related to their performance. In general, more advanced process technologies, such as the
7 nm and 8 nm process technology we designed, can accommodate designs that produce ASICs with higher power efficiency. The introduction
of new process and design technologies also enables us to gradually lower the production costs of ASICs with comparable computing power.
However, the application of such process technologies also commands high initial setup costs, particularly when the new production techniques
first become available, which translates to higher per unit costs. We have successfully and independently completed the design of 6nm
ASIC chips and the design of a chip for simultaneous Litecoin and Dogecoin mining in 2021. We currently focus on developing our proprietary
5nm-optimized ASIC chips and optimized mining machines for non-Bitcoin cryptocurrencies such as Litecoin. As a result, our new generation
ASICs using the most advanced process technologies will need to achieve strong sales in order to justify the initial setup costs of the
new production techniques and maintain our profitability. At the same time, as the most advanced production capabilities of IC foundries
ramp up, the initial high unit cost for IC fabrication may also decrease, which will likely translate to lower fabrication costs and
a positive effect on our business, results of operations and financial condition.</p><div>




</div><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Competitiveness in research and development</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are a blockchain technology
company with strong application-specific integrated circuit (ASIC) chip design capability, and research and development is key to the
success of our blockchain and telecommunications products. Our research and development expenses were US$8.5 million, US$6.6 million and
US$5.1 million in 2020, 2021 and 2022, respectively. The research and development expenses decreased due to the global outbreak of COVID-19,
which resulted in, among others, travel restrictions, mandatory quarantines to our professional staff, and raw materials supply shortages
from our overseas suppliers for research and development, which in turn resulted in lower research and development expenses. Notwithstanding
COVID-19, we have resumed our research and development activities in the second half of 2020, and through unremitting efforts, we launched
our first self-developed proprietary cryptocurrency exchange platform Ebonex in April 2021 and another self-developed proprietary cryptocurrency
exchange platform, also branded Ebonex, in Australia in February 2022. Our exchange is designed to provide users with secure, fast, efficient,
and stable trading services in multiple currencies and modes. In order to coordinate the development of our cross-border payment business,
we launched our independently developed platform EbonFX in 2022. We will continue to focus on enhancing our product planning and research
and development capabilities to enable us to introduce or improve products that can well address evolving customer needs in a timely manner.
As existing competitors may introduce new technologies or provide more competitive offerings and more companies may enter the market to
compete with us, competition may intensify in the future and consequently our competitiveness and market share may be affected. As a result,
our ability to continue offering new and enhanced ASIC chips for Bitcoin mining as well as competitive products and technologies will
have a significant impact on our results of operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Regulatory environment</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We sell mining machines to
customers in China and overseas markets. We have historically generated most of our revenues in our blockchain products business from
customers in China. We intend to grow our overseas sales in the future. In addition, we also intend to expand into certain new business,
such as cryptocurrency mining business and cryptocurrency exchange business. As such, we need to make efforts and incur costs to comply
with laws and regulations relating to our business in various jurisdictions. We are subject to certain regulatory uncertainties. See
&#8220;Item 3. Key Information&#8212;D. Risk Factors&#8212;Risks Relating to Our Business and Industry&#8212; It is now illegal to engage
in digital asset transactions including Bitcoin mining operations in China, the ruling of which may adversely affect us&#8221;, &#8220;Item
3. Key Information&#8212;D. Risk Factors&#8212; Changes in China&#8217;s economic, political or social conditions or government policies
could have a material adverse effect on our business, results of operations and financial condition&#8221;, &#8220;Item 3. Key Information&#8212;D.
Risk Factors&#8212;Risks Relating to Our Cryptocurrency, Blockchain and Mining Related Businesses&#8212;The current regulatory environment
in foreign markets, and any adverse changes in those environments, could have material adverse impacts on our blockchain products business
and our Fintech business&#8221; and &#8220;&#8212;Overseas Expansion&#8221; below. If the PRC government or a government in any other
jurisdiction changes its policy or regulations to prevent or limit the development of Bitcoin or cryptocurrencies generally, the price
of Bitcoin and the demand for our mining machines as well as the future development of our proposed cryptocurrency related business would
decrease or fail, and our business operations and financial results could be adversely affected. Therefore, our ability to comply with
government policies and regulations, and to anticipate and respond to potential changes in government policies and regulations will have
a significant impact on our business operations and our overall results of operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Production capacity</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As a fabless IC design company,
we outsource the fabrication process of our ICs to third-party foundry partners, and we outsource the testing and packaging process to
third-party testing and packaging partners. We work closely with a limited number of such production partners. We have access to two
of the world&#8217;s leading wafer foundries. We are also in discussions with another two of the world&#8217;s major wafer foundries,
in hopes to diversify our supplier sources. We cannot guarantee that our third-party production partners will be able to meet our manufacturing
requirements or capacity or that they will not raise their prices. As a result, our ability to quickly respond to market demand and meet
production timelines, as well as to price our products competitively, is highly dependent on our collaboration with third-party production
partners. If our production partners are unable to meet our production capacity requirements or deliver products that meet our quality
standards on a timely basis, our results of operations will be adversely affected. We may also incur significant cash outflow at the
early stages of our production process because we are required to make prepayments to some of our third-party production partners to
secure their production capacity beforehand, which may affect our liquidity position. In addition, any failure by our third-party production
partners to perform their obligations in a timely manner may subject us to counterparty risk and make it difficult or impossible for
us to fulfill our customers&#8217; orders, which would harm our reputation and negatively affect our business, results of operations
and financial condition.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">With our long-established
experience and know-how in producing telecommunications products, we have established in-house production capabilities to conduct PCB
assembly and system assembly for both mining machines and a wide range of telecommunications products. The volume of our in-house production
facilities to conduct PCB assembly and system assembly is largely dictated by the production capacity of our SMT production lines in
Hangzhou. We also outsourced some of our production to third-party subcontractors to meet our additional production needs. Our future
growth will depend, in part, on our ability to maintain efficient operations at our existing production facilities, our ability to expand
our production capacity as needed and the performance of our subcontractors when we are required to outsource part of our production.
We seek sufficient production capacity and effectively adjust our production equipment to produce different types of products. We are
currently expanding our production capacity by constructing new production facilities, which we expect will increase our capital expenditures
and affect our results of operations. Our future growth and results of operations will be affected by our investment in and continual
maintenance and upgrading of production facilities.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>


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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Expansion and diversification of our product
and service offerings</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our blockchain products business
has historically contributed most of our revenues. We intend to diversify our product and service offerings and achieve more stable performance
by expanding into the upstream and downstream markets of the blockchain and Fintech industry value chain. We believe if successful, the
development our new businesses will be a key driver for our stable and sustainable growth in the future. We intend to expand our mining
machine hosting services and establish mining farms overseas to provide centralized services to miners. We also intend to commence proprietary
Bitcoin mining overseas by employing our own mining machine inventory during the market downcycles, the success of which depends on many
factors, such as the advancement of computing efficiency, the fluctuation of cryptocurrency prices and the popularity of cryptocurrencies
in real economy. We expect the costs for preparation and commencement of our proprietary mining to mainly include energy consumption
fees.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have begun exploring and
developing a cryptocurrency exchange business by launching our self-developed proprietary cryptocurrency exchange platform in 2021. We
continuously apply for compliance licenses in strictly selected regions to facilitate our Fintech businesses. As of the date of this annual
report, we have established two cryptocurrency exchange platforms and a cross-border payment and foreign exchange business. See &#8220;&#8212;Overseas
Expansion&#8221; below. Meanwhile, we are focused on application development, regulatory compliance and talent recruitment to ramp up
execution of our Fintech business plans for the expansion in these countries. However, if our operations at these jurisdictions or our
execution of business plan prove incorrect, we may incur additional expenses or losses.</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">

</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We also intend to explore
the application of blockchain technology into non-cryptocurrency industries. Although we have accumulated extensive industry experience
and knowledge in cryptocurrency and blockchain technology industries, we are only at an early stage of executing our plan to launch blockchain-enabled
financial business. As a result, our ability to apply our accumulated industry knowledge and operational experience to these new businesses
will be critical to our future business growth and prospects. Commencement of new businesses, however, may also incur significant costs
and experience a prolonged ramp-up period. If any adverse development in such new businesses arises, our results of operations and prospects
may be significantly and negatively affected. We may not be able to develop those new businesses as successfully as contemplated, or
at all.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Product mix</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We develop, manufacture and sell a range of blockchain and telecommunications
products. The sales of blockchain products accounted for, 42.3%, 77.3% and 79.8% of our total revenues for 2020, 2021 and 2022, respectively,
and the sales of telecommunications products accounted for 8.6%, 16.7% and 11.6% of our total revenues for 2020, 2021 and 2022. With the
volatility of Bitcoin price and the stagnation of industrial chain caused by COVID-19, the performance of our blockchain product business
has fluctuated significantly. Our profitability and financial performance could be affected by the mix of products manufactured and sold
in a particular period. In 2022, we have launched cryptocurrency currency exchanges and cross-border payment businesses, as we are still
at an early stage of development of this business sector, the Fintech service businesses accounted for only 8.3% of our total revenue.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Overseas Expansion </b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">From August 2020 to February
2023, we established our wholly-owned subsidiaries in Canada, Australia, Singapore, Hong Kong, the Bahamas, New Zealand and Malaysia to
apply for Fintech business related licenses and wholly-owned subsidiaries in the United States in accelerating the construction of compliant
mining farms in North America. We carefully selected these countries and/or regions because of what we believe to be a Fintech-friendly
regulatory environment. We are at an initial stage of executing our plan to launch Fintech businesses to capture the growth opportunity
along the value chain of the blockchain and Fintech industry. As of the date of this annual report, we have received the MSB License from
the Financial Transactions and Reports Analysis Centre of Canada, which allows us to engage in foreign exchange dealing, money transferring
and dealing in virtual currencies in Canada; registration approval from AUSTRAC as digital currency exchange, which allows us to provide
cryptocurrency exchange services in Australia; acquired a company with an AFSL for engaging in financial services in Australia; registration
approval as an independent remittance dealer on the AUSTRAC Remittance Sector Register, which allows us to provide remittance services
in Australia; the TCSP license and registration approval as a Trust Company from the Company Registry in Hong Kong, which allows us to
carry on a trust or company service business; the MSO license from the Customs and Excise Department in Hong Kong, which allows us to
operate money changing and remittance services; the Type 4 and 9 licenses from the Securities and Futures Commission in Hong Kong, which
allows us to carry on advising on securities and asset management service; registered as a Digital Asset Business and a Firm Dealing in
Securities as Agent or Principal, Arranging Deals, Managing Securities and Advising on Securities from the Securities Commission of the
Bahamas, which allows us to carry on digital asset business activities and securities activities in and from the Commonwealth of the Bahamas.
In April 2021, we launched our first self-developed proprietary cryptocurrency exchange platform Ebonex and in February 2022, we launched
another self-developed proprietary cryptocurrency exchange platform, also branded Ebonex, in Australia. On top of that, in March 2022,
we established a cross-border payment and foreign exchange business in Australia, through the acquisition of an Australian company with
an AFSL, and in the fourth quarter of 2022, we launched our self-developed proprietary cross-border payment and foreign exchange platform,
EbonFX, targeting qualified investors subject to compliance with applicable laws in the jurisdictions EbonFX operates. We are also in
the process of obtaining additional and/or relevant licenses and approvals for our subsidiaries in Singapore, Hong Kong, Australia, New
Zealand and Malaysia. If and once obtained, the licenses will allow us to operate additional Fintech businesses in such countries and
regions. Meanwhile, we are focused on application development, regulatory compliance and talent recruitment to ramp up execution of our
new business plans for the expansion in these countries. We expect such ramp-up will support our future operations and our compliance
with local rules and regulations. Our expenses to date to implement our new business plans, including establishing in Canada, Australia,
Singapore, Hong Kong, the Bahamas, New Zealand, the United States and Malaysia, have been mainly on server rentals, application development,
regulatory compliance, talent acquisition and offices rentals to set up blockchain and Fintech businesses in the abovementioned countries
and regions. There is no guarantee that we will receive any additional required approvals and licenses for our proposed business in these
jurisdictions in a timely manner or on commercially reasonable terms, or at all, or that we will commence the proposed business as planned,
or at all. If our operations at these jurisdictions or our execution of business plan proves incorrect, we may incur additional expenses
or losses.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Any restrictions imposed by
a foreign government could force us to restructure operations, perhaps significantly, which could result in significant costs and inefficiencies
that harm our profitability, or even cause us to cease operations in the applicable jurisdiction. Fintech is a recent technological innovation
and the regulatory schemes to which Fintech businesses may be subject have not been fully explored or developed by foreign jurisdictions.
Thus, Fintech faces an uncertain regulatory landscape in many foreign jurisdictions. Various foreign jurisdictions may from time to time
adopt laws, regulations or directives that affect our Fintech businesses. Due in part to its international nature and the nascent stage
of regulation, along with the limited experience with Fintech, and language barriers between international journalists, translators and
regulators, information regarding the regulation of Fintech in various jurisdictions may be incomplete, inaccurate or unreliable. As both
the regulatory landscape develops and journalistic familiarity with Fintech increases, mainstream media&#8217;s understanding of Fintech
and the regulation thereof may improve. As we enter into the markets in Australia, Singapore, Hong Kong, the Bahamas, New Zealand, the
United States and Malaysia, we expect to continue to monitor the local regulations regarding Fintech service platforms and retain local
regulatory counsels. See &#8220;Item&#160;3. Key Information&#8212;D. Risk Factors&#8212;Risks Relating to Our Cryptocurrency, Blockchain
and Mining Related Businesses&#8212;The current regulatory environment in foreign markets, and any adverse changes in those environments,
could have material adverse impacts on our blockchain products business and our Fintech business,&#8221; &#8220;Item&#160;3. Key Information&#8212;D.
Risk Factors&#8212;If we are unable to manage our growth or execute our strategies effectively, our business, results of operations and
financial condition may be materially and adversely affected&#8221; and &#8220;Item 3. Key Information&#8212;D. Risk Factors&#8212; We
may not successfully develop, market or launch any future Fintech businesses or continue operating our existing Fintech businesses&#8221;
for details of the associated risks.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Key Components of Results of Operations</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Revenues</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 36pt">Revenues represent the sales
of goods supplied and services provided to customers in our blockchain products and telecommunications businesses, and provision of services
to our customers, primarily mining machine hosting services and the newly established Fintech businesses. We used to generate revenues
primarily from our blockchain products business and mining machine hosting service, mainly including sales of Bitcoin mining machines
and related accessories and mining machine hosting services. However, we have halted all mining machine custody services in the PRC at
the end of April 2021.&#160;The combined impact of COVID-19 and Bitcoin halving event in 2020 significantly affected the expected returns
on Bitcoin related activities such as mining, and in turn resulted in a much lower demand and average selling price of our Bitcoin mining
machines. In 2021, the spreading of COVID-19 continued to disrupt our raw material supplies; however, the price of Bitcoin has maintained
at a high level with volatility, and investors returned to digital currency and blockchain investment, which had a positive impact on
the market. Our revenue in 2021 therefore increased significantly compared with 2020. With the continuous decline in Bitcoin prices in
2022, as well as the continuation of the COVID-19 pandemic and large cryptocurrency exchanges declaring bankruptcy starting the second
half of 2022, investors have once again begun to invest cautiously. The shortage of overseas raw material supply has not improved, resulting
in a decrease in our blockchain product revenue compared to the previous year.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 36pt">&#160;</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">
</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following table sets
forth the breakdown of our revenues by category, both in absolute amount and as a percentage of total revenues for each category for
the periods indicated:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(1)</span></td>
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of mining machine hosting services, maintenance services and training services. As we have halted all mining machine custody services
in the PRC at the end of April 2021, our service revenue decreased since 2021. The breakdown of service revenues is set forth below for
the periods indicated:&#160;</p></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have historically generated a significant portion of our revenues
from sales in China. Only a small proportion of our revenues was generated from sales to customers located in other countries and regions,
including exports to Hong Kong, the United States, Central Asia and Southeast Asia. Due to the impact of COVID-19, our overseas sales
have decreased in 2020 and 2021, however, with the overseas Fintech business we launched in 2022, our overseas market share has slightly
rebounded in 2022. The following table sets forth the breakdown of our revenues by geographical location of our customers, both in absolute
amount and as a percentage of total revenue, for the periods indicated:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

</div><!-- Field: Page; Sequence: 104; Value: 1 --><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(1)</span></td>
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    Kong.</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify"><i>Product Sales </i>&#8211; <i>Bitcoin
Mining Machines and Related Accessories </i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">&#160;</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Revenues from sales of blockchain
products primarily comprises sales of Bitcoin mining machines, related modules and accessories. We generated 41.2%, 77.0% and 79.7% of
our revenue from sales of Bitcoin mining machines in 2020, 2021 and 2022. Revenues from sales of our Bitcoin mining machines are primary
affected by the number of Bitcoin mining machines sold and their average selling price. The following table sets forth the breakdown of
sales volume and average selling price (per unit) of mining machines delivered for the periods indicated:</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">

</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">482</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-bottom: 1.5pt">Ebit E15</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">395</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">309</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">586</td><td style="padding-bottom: 4pt; font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">25,769</td><td style="padding-bottom: 4pt; font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">34,404</td><td style="padding-bottom: 4pt; font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">749</td><td style="padding-bottom: 4pt; font-weight: bold; text-align: left">&#160;</td></tr>
  </table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 24px; padding-bottom: 8pt; text-align: justify; font-size: 10pt"><span style="font-size: 10pt">(1)</span></td>
    <td>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Mainly include Ebit E9.1, Ebit E9.2, Ebit E9.3,
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    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We have recognized RMB106 million (approximately
    $16.4 million) and RMB166 million (approximately $24.7 million) in revenue in the years ended December 31, 2021 and 2022, as a result
    of payment received from one of the customers following a court mediation related to a claim the Company brought against the customer
    for mining machine sales in November 2019. Pursuant to the mediation, the customer would pay us RMB272 million. During the year ended
    December 31, 2018 when the sales contract was entered into, we determined that the customer did not have the intent or ability to pay
    as the amounts became due and therefore the collection was not probable. As a result, no revenue was recognized upon the shipments of
    the mining machines. The total of RMB272 million has been recognized as revenue pursuant to ASC 606 because the contract has been terminated
    and the consideration received is nonrefundable. We recognize revenues only to the extent of the consideration received as the collection
    of the remaining consideration still involves uncertainty.</p>
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    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In addition, we also recognized RMB7.4 million
    (approximately $1.1 million) in revenue in the year ended December 31, 2022, as a result of payment received from one of the customers
    following a court mediation related to a claim the Company brought against the customer for mining machine sales in January 2019. Pursuant
    to the mediation, the customer would pay us RMB73.6 million. During the year ended December 31, 2018 when the sales contract was entered
    into, we determined that the customer did not have the intent or ability to pay as the amounts became due and therefore the collection
    was not probable. As a result, no revenue was recognized upon the shipments of the mining machines. The total of RMB7.4 million has been
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    recognize revenues only to the extent of the consideration received as the collection of the remaining consideration still involves uncertainty.</p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p></td></tr>
  </table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="text-align: justify; font-size: 10pt; width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(2)</span></td>
    <td style="text-align: justify; font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Mainly include Ebit E10 and Ebit E10+ series, including Ebit E10.1, Ebit E10.2, Ebit E10.3, Ebit E10.5, E10B and E10C.</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>


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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The average selling price
of our Bitcoin mining machines changes from period to period and is primarily affected by the Bitcoin price and expected economic returns
on Bitcoin mining activities, and the performance of the mining machines.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Bitcoin price and expected
economic returns on Bitcoin mining activities could significantly affect the demand of mining machines and in turn the average selling
price of Bitcoin mining machines. See &#8220;&#8212;Key Factors Affecting Our Results of Operations&#8221; for details of factors affecting
economic return on Bitcoin mining activities and the market demands. Particularly, a significant fluctuation in Bitcoin price in a short
period of time could significantly reverse the trend of average selling price of Bitcoin mining machines in certain periods of time. For
example, a significant drop in the Bitcoin price in the first quarter of 2020, third and fourth quarters of 2021 and a continuous decline
throughout 2022, significantly reduced the average selling price of Bitcoin mining machines in the same periods. Meanwhile, due to the
combined impact of COVID-19 and Bitcoin halving event in 2020, which significantly affected the expected returns on Bitcoin related activities
such as mining, it negatively affected the average selling price of Bitcoin mining machines. The unprecedented uncertainty and volatility
in the COVID-19 environment has an adverse impact on the supply chain of raw materials. With limited raw materials, we have optimized
the hardware architecture to ensure the competitiveness of our products.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, the average selling price of Bitcoin mining machines is
also significantly affected by the performance of the Bitcoin mining machines. The following table sets forth the revenue, total computing
power sold and average selling price (per TH/s) of our own brand mining machines for the periods indicated:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
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    <td><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Mainly
        include Ebit E9.1, Ebit E9.2, Ebit E9.3, Ebit E9.5, E9.6, Ebit E9+, Ebit E9i and Ebit E9i+ series. RMB106 million (approximately
        $16.4 million) and RMB173.4 million (approximately $25.8 million) revenue were recognized in the year ended December 31, 2021
        and 2022, as a result of payment received from two of the customers following court mediations. Refer to our discussion above.</span></p></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(2)</span></td>
    <td style="text-align: justify">Mainly include Ebit E10 and Ebit E10+ series, including Ebit E10.1,
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Exclude revenues from sales
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In general, the average selling
price of our Bitcoin mining machines in terms of computing power decreases as a result of the overall technology advancement which also
resulted in a lower unit cost in production of such Bitcoin mining machine. New models launched in the markets generally exert downward
pressure on prices of existing models. We typically price our Bitcoin mining machine based on their computing power and reduce the price
of the previous generation when we introduce a new generation with higher computing power.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 106; Value: 1 --><div>
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    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify"><i>Product Sales </i>&#8211;<i>Telecommunications
</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Revenues from our telecommunications
business primarily comprises sales of fiber-optic communication access devices and enterprise convergent terminals. We also produce and
sell a small portion of related parts and accessories. Sales of our telecommunications products are primarily driven by the demand from
the major telecommunications service providers in China as end users. Sales of telecommunications products could also be affected by
any adjustment of our business focus and sales and marketing efforts from time to time. Changes in the mix of our telecommunications
products sold could also affect the gross profit margin in the telecommunications business.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Service - Management and
Maintenance</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Revenues from our management
and maintenance services include service fees for provision of mining machine hosting services to buyers of our Bitcoin mining machines,
and provision of maintenance and other services.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We generate service revenues
mainly from mining machine hosting services and other maintenance services. Revenues from provision of mining machine hosting services
was US$9.1 million, US$2.8 million and nil in 2020, 2021 and 2022, representing 98.0% a, 90.0% and 0% of our total service revenues, respectively.
We provided mining machine hosting services only to buyers of our Bitcoin mining machines, and typically entered into separate service
agreements with these buyers for such services. We have halted all mining machine custody services in the PRC at the end of April 2021.
Revenues from mining machine hosting services mainly include hosting service fees we charge to our customers, which is primarily calculated
based on the amount of power consumption (the number of kWh) and the average service fee per kWh. The average service fee per kWh is primarily
affected by the utility cost. The average service fee per kWh was generally US$0.04 throughout 2020 and April 2021.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><i>Service - Fintech&#160;Businesses</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 36pt">Revenue from our Fintech businesses
include transaction fees and service fees charged for cross-border payment and foreign exchange services provided to customers as well
as service fees charged for cryptocurrency exchange business. We have launched our proprietary cryptocurrency exchange platform Ebonex
to promote our cryptocurrency exchange business, with qualified customers trading various virtual currencies on our platform. Revenue
generated from our cryptocurrency exchange business is negligible in 2022. In addition, in order to coordinate the development of our
global payment business, we launched the independently developed cross-border payment and foreign exchange platform EbonFX to provide
qualified customers with cross-border payment and foreign exchange services. As we are still at an early stage of development in this
business sector, the Fintech service businesses accounted for only 8.3% of our total revenue in 2022.</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Cost of Revenues</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Cost of revenues for our
mining machines and telecommunications products represents costs and expenses directly attributable to the manufacture of our
products sold and delivered, which primarily comprises of costs of (1) raw materials, components and parts including wafers; (2)
production overhead, including mainly packaging and testing costs, subcontracting cost, amortization and depreciation of intangible
assets, production equipment and utilities; (3) direct labor including cost to our production staff and outsourced production
workers; and (4) inventory write-down due to the impact of COVID-19 and the Bitcoin halving event in 2020, and continued decline in
cryptocurrency prices in 2022, which in turn resulted in a significant decrease in the selling price of our Bitcoin mining machines.
We examined and recorded write-down for the potentially obsolete, slow-moving inventories and lower of cost or market adjustment of
US$3.6 million, US$2.2 million and US$6.5 million in 2020, 2021 and 2022.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 36pt">Our average cost of
mining machine per unit primarily comprises of and is mainly affected by the unit cost of wafer, number of ASIC chips used, and the
types and costs of other components included in or sold with the mining machines. The average per unit cost of wafers is affected by
our purchase volume and technology advancement. We generally incur higher per unit cost for models with better performance. The
average cost of our mining machine per unit was US$952, US$165 and US$134 in 2020, 2021 and 2022, respectively. As our mining
machine revenue for 2022 was all generated from the payments received from two customers following related court mediations related
to claims the Company brought against the customers for mining machine sales in January and November 2019, respectively, cost of
revenue for 2022 is nil.</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Cost of revenues for mining
machine hosting services provided by us primarily consists of space leasing fees, infrastructure and equipment related expense, utility
expenses and salaries paid to related staffs. Since the hosting service was halted in 2021, the cost of revenue for hosting services in
2022 is a result of VAT impairments in connection with the disposal of Wuhai Ebang.</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Cost of Fintech services
primarily consists of commission paid to direct sales staff and service fee paid to third party platform providers before we
launched our self-developed cross-border payment and foreign exchange platform EbonFX.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

</div><!-- Field: Page; Sequence: 107; Value: 1 --><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-family: Times New Roman, Times, Serif">The
following table sets forth the breakdown of our cost of revenues by category, both in absolute amount and as a percentage of the cost
of revenues, for the periods indicated:</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Gross Profit/Loss</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our gross profit/loss of sales
of Bitcoin mining machines are primarily affected by Bitcoin prices, which have a significant effect on the average selling price of our
products, and, to a lesser extent, the average per unit production costs of our Bitcoin mining machines, which in turn resulted in a much
lower demand and average selling price of our Bitcoin mining machines, thereby leading to lower revenues. A decrease in the Bitcoin price
and expected economic returns of Bitcoin mining activities could lead to increase in write-down for the potentially obsolete, slow-moving
inventories and lower of cost or market adjustment as a result of stagnant demand and decrease in average selling price for our Bitcoin.
Due to the significant impact of COVID-19 and Bitcoin halving event in 2020 and continued decline in cryptocurrency prices in 2022, which
in turn a significant decrease in the selling price of our Bitcoin mining machines, we recorded write-down for the potentially obsolete,
slow-moving inventories and lower of cost or market adjustment of US$3.6 million, US$2.2 million and US$6.5 million in 2020, 2021 and
2022, respectively. Since 2021, countries have been chattering about trade wars and COVID-19 has continued to spread with variants. Notwithstanding
the foregoing, the price of Bitcoin has maintained at a high level with volatility, and enterprises have also actively resumed production
globally, with investors returning to digital currency and blockchain investment. Our revenue has increased significantly compared with
the previous year. The increase in gross profit for the year ended December 31, 2022 is mainly attributable to revenue recognized following
our receipt of RMB166 million (approximately $24.7 million) payment from a former customer as a result of a court mediation. Refer to
our discussion on revenues above.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our gross profit/loss and
gross profit/loss margin of mining machine hosting services provided by us are primarily affected by the average service fees we charge
our customers. See &#8220;&#8212;Results of Operations&#8212;Revenues&#8212;Service&#8212;Management and Maintenance&#8221; for factors
that could affect the average service fee.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our gross profit/loss and
gross profit/loss margin of sales of telecommunications products are primarily affected by the market price of the product and our cost
of revenues.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

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profit margin of Fintech services are primarily affected by the market price of the third-party service provider and percentage of commissions
we paid to sales employees.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following table sets
forth our gross profit/loss by category for the periods indicated:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Operating Expenses</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Selling expenses include
(1) sales service costs incurred from provision of customer services; (2) traveling costs of our sales and marketing staff and transportation
costs for delivery of blockchain and telecommunications products; and (3) salaries and benefits of our sales and marketing staff; and
(4) others, such as conference costs and lease payment for our sales office.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>General and administrative expenses</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">General and administrative
expenses primarily include research and development expenses and administrative expenses. Administrative expenses include primarily (1)
professional fees, mainly legal service fees and consultant service fees for provision of financing and listing related services to us;
(2) salaries and benefits of our management, finance, operations and other staff and outsourced administrative staff; (3) other miscellaneous
administrative expenses, such as bad debt expense, entertainment expense, utilities, and rental and office expenses; and (4) depreciation
expense of property, plant and equipment, amortization expense and impairment expense primarily relating to intangible assets.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Research and development
expenses primarily include (1) production and procurement expenses for producing prototypes and procuring tools for IC chip design; (2)
technical expenses, primarily comprising outsourcing research and development expenses relating to development of certain non-core technologies
for our mining machines and telecommunications products, such as wafer fabrication and packaging and testing for ASIC chips, design of
user interface, management and structural module and secondary development of certain modules and software development; (3) salaries
and benefits of our research and development staff; and (4) depreciation and amortization of non-patent technology.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Taxation</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Cayman Islands</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Under the current laws of the Cayman Islands, Ebang International Holdings
Inc. is not subject to tax on income or capital gain. Additionally, upon payment of dividends to the shareholders, no Cayman Islands withholding
tax will be imposed.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-right: 0; margin-bottom: 0pt; text-align: left">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>British Virgin Islands</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 35pt">Our subsidiaries incorporated
in the British Virgin Islands, primarily Orient Plus International Limited, Power Ebang Limited, Tower Lead Limited, Summit King Limited,
Ebang Communication Limited, Ebonex International Limited, and Leader Forever Holdings Limited are incorporated in the BVI and under
the current laws of the British Virgin Islands, are not subject to tax on income or capital gain. In addition, payments of dividend by
these subsidiaries to their shareholders are not subject to withholding tax in the BVI.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Australia</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our subsidiaries incorporated in Australia are subject to Australian
Tax on the taxable income as reported in its statutory financial statements adjusted in accordance with relevant Australia tax laws. The
Australian Income Tax had significant changes progressively since June 30, 2017. From July 1, 2022, companies that are base rate entities
must apply the 25% company tax rate. A company is a base rate entity for an income year if 1) the company&#8217;s aggregated turnover
for that income year is less than AUD50 million of that income year, and 2) it has 80% or less of their assessable income in that income
year that is base rate entity passive income. Thus the applicable tax rate is 25% for the Company on assessable profits arising in or
derived from Australia.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Hong Kong</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our subsidiaries incorporated
in Hong Kong, primarily HK Ebang Communications, HongKong Ebang Technology Co., Limited (&#8220;HK Ebang Technology&#8221;), HongKong
Ebang Information Co., Limited (&#8220;HK Ebang Information&#8221;), HK Ebang Digital, Ebang Digital Asset Management Limited (&#8220;Ebang
Digital Asset Management&#8221;), Ebang Digital Asset Custody Limited (&#8220;Ebang Digital Asset Custody&#8221;), Ebang Trust Limited
(&#8220;Ebang Trust&#8221;) and Ebang Financial Services Limited (&#8220;Ebang Financial Services&#8221;) are incorporated in Hong Kong
and are subject to Hong Kong Profits Tax on the taxable income as reported in its statutory financial statements adjusted in accordance
with relevant Hong Kong tax laws. The applicable tax rate is 8.25% on assessable profits arising in or derived from Hong Kong up to HKD2,000,000
and 16.5% on any part of assessable profits over HKD2,000,000.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>PRC</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our PRC subsidiaries are
governed by the income tax laws of the PRC and the income tax provision in respect to operations in the PRC is calculated at the applicable
tax rates on the taxable income for the periods based on existing legislation, interpretations and practices in respect thereof. Under
the Enterprise Income Tax Laws of the PRC (the &#8220;EIT Laws&#8221;), domestic enterprises and Foreign Investment Enterprises (the
&#8220;FIE&#8221;) are usually subject to a unified 25% enterprise income tax rate while preferential tax rates, tax holidays and even
tax exemption may be granted on case-by-case basis. EIT grants preferential tax treatment to certain High and New Technology Enterprises
(&#8220;HNTEs&#8221;). Under this preferential tax treatment, HNTEs are entitled to an income tax rate of 15%, subject to a requirement
that they re-apply for HNTE status every three years. Zhejiang Ebang obtained the &#8220;high-tech enterprise&#8221; tax status in November
2017, which reduced its statutory income tax rate to 15% from November 2017 to November 2020. Zhejiang Ebang further re-applied and obtained
the &#8220;high-tech enterprise&#8221; tax status in December 2020. Hangzhou Dewang obtained the &#8220;high-tech enterprise&#8221; tax
status in November 2018, which reduced its statutory income tax rate to 15% from November 2018 to November 2021. Hangzhou Dewang further
re-applied and obtained the &#8220;high-tech enterprise&#8221; tax status in December 2021. In addition, Ebang IT obtained the &#8220;high-tech
enterprise&#8221; tax status in December 2021, which reduced its statutory income tax rate to 15% from December 2021 to December 2023.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We were subject to value-added
tax, or VAT, at a rate of 17% for the period from beginning of 2018 till end of April 2018, of 16% from May 2018 to the end of March
2019, and of 13% since April 2019 on the gross sales price of our products, less any deductible VAT we have already paid or borne. Entities
that are VAT general taxpayers may offset qualified input VAT paid to suppliers against their output VAT liabilities. Net VAT balance
between input VAT and output VAT is recorded as VAT payable if output VAT is larger than input VAT, and is recorded as VAT recoverable
if input VAT is larger than output VAT. All the VAT returns filed by our subsidiaries in China, have been and remain subject to examination
by the tax authorities. Zhejiang Ebang and Ebang IT are qualified as enterprises of selling self-developed software products and enjoying
a tax refund for the excess of 3% of their actual tax burden after the VAT is levied at the 17% or 16% or 13% tax rate since January
2011.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Dividends paid by our wholly
foreign-owned subsidiaries in China to our intermediary holding companies in Hong Kong will be subject to a withholding tax rate of 10%,
unless the relevant Hong Kong entities satisfy all the requirements under the Arrangement between the PRC and the Hong Kong Special Administrative
Region on the Avoidance of Double Taxation and Prevention of Fiscal Evasion with respect to Taxes on Income and Capital and receives
approval from the relevant tax authority, in which case the dividends paid to the Hong Kong subsidiaries would be subject to withholding
tax at the preferential rate of 5%. Effective from November&#160;1, 2015, the above-mentioned approval requirement has been abolished,
but a Hong Kong entity is still required to file application package with the relevant tax authority, and settle the overdue taxes if
the preferential 5% tax rate is denied based on the subsequent review of the application package by the relevant tax authority.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If our holding company in
the Cayman Islands or any of our subsidiaries outside of China were deemed to be a &#8220;resident enterprise&#8221; under the EIT Law,
it would be subject to enterprise income tax on its worldwide income at a rate of 25%. If the PRC tax authorities determine that our
Cayman Islands holding company is a &#8220;resident enterprise&#8221; for PRC EIT purposes, a number of unfavorable PRC tax consequences
could follow. See &#8220;Item 3. Key Information&#8212;D. Risk Factors&#8212;Risks Relating to Our Business and Industry&#8212;We may
be subject to EIT on our worldwide income if our company or any of our subsidiaries were considered a PRC &#8220;resident enterprise&#8221;
under the PRC Enterprise Income Tax Law, or the EIT Law.&#8221;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Results of Operations</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following table sets forth our selected consolidated profit or
loss data in absolute amount, for the periods indicated. This information should be read together with our consolidated financial statements
and related notes included elsewhere in this report. The operating results in any period are not necessarily indicative of the results
that may be expected for any future period.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
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    <td style="text-align: center">&#160;</td><td style="text-align: center; font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">8,567</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">3,127</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: White">
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    <td style="font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; text-align: right">(32,111</td><td style="font-weight: bold; text-align: left">)</td><td style="font-weight: bold">&#160;</td>
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    <td style="font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; text-align: right">(45,757</td><td style="font-weight: bold; text-align: left">)</td></tr>
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  <tr style="vertical-align: bottom; background-color: White">
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    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right">(30,675</td><td style="padding-bottom: 4pt; font-weight: bold; text-align: left">)</td><td style="font-weight: bold; padding-bottom: 4pt">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Year Ended December 31, 2022 Compared to
Year Ended December 31, 2021</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 36pt"><i>Revenues</i>. We
recognized RMB173.4 million in revenue in 2022 following our receipt of RMB173.4 million (approximately US$25.8 million) payment
from two former customers as a result of court mediations. Our revenues decreased by 37.2% to US$32.3 million in 2022 from US$51.5
million in 2021, primarily due to the following reasons: 1) Bitcoin price&#8217;s continued decrease and large cryptocurrency
exchange platforms declaring bankruptcy in 2022 led to investors being increasingly cautious in investment. 2) Our chip suppliers
have reduced their production capacity due to the impact of COVID-19, resulting in our inability to produce at full capacity,
insufficient inventory and inability to meet the market demand. With limited raw materials, we optimized the hardware structure to
ensure our products&#8217; competitiveness. 3) We have halted all mining machine custody services in the PRC at the end of April
2021, which resulted in nil in revenue in this segment for 2022.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Cost of revenues</i>. Our
cost of revenues decreased by 23.9% to US$16.9 million in 2022 from US$22.2 million in 2021, which is primarily due to a decrease in cost
of revenues as a result of a decrease in sales. Our cost of revenues for 2022 primarily consists of 1) impairment charge on write-downs
for the potentially obsolete, slow-moving inventory and lower of cost or market; 2) VAT recoverable impairment of $4.5 million recorded
in 2022 which was mainly associated with disposal of Wuhai Ebang.</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Gross profit</i>.
As a result of the foregoing, we recorded a gross profit of US$15.4 million in 2022 compared to US$29.2 million in 2021.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>


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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Operating expenses</i>.
Our total operating expenses increased by 133.2% to US$63.4 million
in 2022 from US$27.2 million in 2021, primarily due to increases in both selling expenses and general and administrative expenses.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in; font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify; font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Selling expenses.</i> Our selling expenses increased by 37.9% to US$2.0 million in 2022 from US$1.4 million in 2021, mainly due to increased advertising and marketing expenses occurred in relation to development of our Fintech businesses.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%">
  <tr style="vertical-align: top">
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    <td style="width: 0.25in; font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify; font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>General
    and administrative expenses. </i>Our general and administrative expenses increased by 138.4% to US$61.5 million in 2022 from US$25.8
    million in 2021, primarily due to increases in amortization expenses and impairment losses relating to intangible assets and employee
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Gain from disposal of subsidiaries.
</i>Our gain from disposal of subsidiaries increased by 100% to US$0.006 million in 2022 from nil in 2021, primarily due to the disposal
of Ebang Hongling and Wuhai Ebang during 2022.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Income (loss) from operations.
</i>As a result of the foregoing, our loss from operations was US$48.0 million in 2022 compared to income from operation of US$2.0 million
in 2021.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Interest income.</i> Our
interest income increased by 145.1% to US$4.4 million in 2022 from US$1.8 million in 2021, primarily due to the interest income from our
investments in term deposit and financing products in 2022.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>&#160;</i></p><div>



</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">

</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 36pt"><i>Other income</i>. Our other
income increased by 674.4% to US$1.0 million in 2022 from US$0.1 million in 2021, primarily due to the liability waived before the deregistration
of a subsidiary.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 36pt"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 36pt"><i>Loss from investment.</i>
Our loss from investment decreased by 86.1% to US$0.5 million in 2022 from loss from investment of US$3.7 million in 2021, mainly due
to an investment loss of $3.9 million incurred from marketable securities in 2021 and only US$0.6 million incurred in 2022.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Exchange gain (loss)</i>.
Our exchange loss was US$2.2 million in 2022 compared to the exchange gain with the amount of US$1.8 million in 2021, primarily due to
the currency fluctuation on our foreign currency denominated assets and liabilities.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Government grants</i>.
Our government grants decreased by 81.2% to US$0.08 in 2022 from US$0.4 million in 2021, primarily due to the decrease of non-recurring
rebates from local government.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Income taxes benefit</i>.
Our income taxes benefit decreased by 80.7% to US$0.07 million in 2022 compared to US$0.4 million in 2021, primarily due to the allowance
on the deferred tax assets based on the economic forecast of</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">the Company&#8217;s operation in relation to the
realization of such deferred tax assets. <i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Net income (loss)</i>.
As a result of the foregoing, our net loss decreased to US$45.8 million in 2022 from net income of US$2.8 million in 2021.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Year Ended December 31, 2021 Compared to
Year Ended December 31, 2020</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Revenues</i>. Our revenues
increased by 170.7% to US$51.5 million in 2021 from US$19.0 million in 2020, primarily due to the following reasons: 1) As the Bitcoin
price continued to fluctuate in the high range in 2021, it has driven the enthusiasm and attention of investors. However, our chip suppliers
have reduced their production capacity due to the impact of the COVID-19, resulting in our inability to produce at full capacity, insufficient
inventory and inability to meet the market demand. With limited raw materials, we optimized the hardware structure, used a new framework
and launched new models, which accelerated the sales growth; 2) We have halted all mining machine custody services in the PRC at the
end of April 2021 which offset the growth in total revenue; and 3) RMB106 million revenue was recognized following our receipt of RMB106
million (approximately US$16.4 million) payment from a former customer as a result of a court mediation. See our discussion on revenues
above.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Cost of revenues</i>.
Our cost of revenues increased by 1.5% to US$22.2 million in 2021 from US$21.9 million in 2020, primarily because we have been able to
utilize some of the slow-moving inventories impaired in previous years to manufacture products sold in 2021 as a result of our hardware
optimization.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

</div><!-- Field: Page; Sequence: 112; Value: 1 --><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Gross profit (loss)</i>.
As a result of the foregoing, we recorded a gross profit of US$29.2 million in 2021 as compared to a gross loss of US$2.9 million in
2020.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Operating expenses</i>.
Our total operating expenses increased by 14.5% to US$27.2 million in 2021 from US$23.7 million in 2020, primarily due to increase in
both selling expenses and general and administrative expenses.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Selling
expenses.</i> Our selling expenses increased by 53.3% to US$1.4 million in 2021 from US$0.9 million in 2020, in line with the increase
in our sales.</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>General
and administrative expenses</i>. Our general and administrative expenses increased by 12.9% to US$25.8 million in 2021 from US$22.8 million
in 2020, primarily due to increase in overseas expansion.</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Income (loss) from operations.
</i>As a result of the foregoing, our income from operations was US$2.0 million in 2021 compared to loss from operation of US$26.6 million
in 2020.</p><div>




</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;<i>Interest income.
</i>Our interest income increased by 115.9% to US$1.8 million in 2021 from US$0.8 million in 2020, primarily due to the interest income
from our investments in time deposit and financing products in 2021.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>&#160;Interest expenses</i>.
Our interest expenses decreased by 99.4% to US$4.0 thousand in 2021 from US$0.7 million in 2020, primarily due to repayment of loan with
Hangzhou United Bank in 2021.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;<i>Loss from investment.
</i>Our loss from investment increased by 100% to US$3.7 million in 2021 from US$0 in 2020, the increase in loss from investment was
mainly due to investment loss of $3.9 million from marketable securities, offset by investment income of US$0.2 million from wealth management
products.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Exchange gain (loss)</i>.
Our exchange gain was US$1.8 million in 2021 compared to the exchange loss with the amount of US$0.3 million in 2020, primarily due to
the currency fluctuation on our foreign currency denominated assets and liabilities.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Government grants</i>.
Our government grants decreased by 89.2% to US$0.4 million in 2021 from US$4.0 million in 2020, primarily due to the decrease of non-recurring
rebates from local government.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Income taxes provision
(benefit).</i> Our income taxes benefits decreased by 104.1% to US$0.4 million in 2021 compared to the income tax provision with the
amount of US$9.3 million in 2020, primarily due to the allowance on the deferred tax assets based on the economic forecast of the Company&#8217;s
operation in relation to the realization of such deferred tax assets.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Net income (loss)</i>.
As a result of the foregoing, our net income increased to US$2.8 million in 2021 from net loss of US$32.1 million in 2020.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><div><a id="a_025"></a></div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>B.</b></span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Liquidity and capital
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our primary source of liquidity
historically has been cash generated from our business operations, bank loans, equity contributions from our shareholders and borrowings,
which have historically been sufficient to meet our working capital and capital expenditure requirements.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As of December 31, 2022 and
2021, our cash and cash equivalents were US$251.3 million and US$239.9 million. Our cash and cash equivalents primarily consist of cash
on hand, demand deposits and time deposits placed with banks or other financial institutions and have original maturities of less than
three months.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We believe that our existing
cash and cash equivalents, anticipated cash raised from financings, and anticipated cash flow from operations, will be sufficient to
meet our anticipated cash needs for the next 12 months from the date of this annual report. We may, however, decide to enhance our liquidity
position or increase our cash reserve for future investments through additional capital and finance funding. We may need additional cash
resources in the future if we experience changes in business conditions or other developments, or if we find and wish to pursue opportunities
for investments, acquisitions, capital expenditures or similar actions. If we determine that our cash requirements exceed the amount
of cash and cash equivalents we have on hand at the time, we may seek to issue equity or debt securities or obtain credit facilities.
The issuance and sale of additional equity would result in further dilution to our shareholders. The incurrence of indebtedness would
result in increased fixed obligations and could result in operating covenants that would restrict our operations. We cannot assure you
that financing will be available in amounts or on terms acceptable to us, if at all.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our ability to manage our
working capital, including receivables and other assets and liabilities and accrued liabilities, may materially affect our financial
condition and results of operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following table sets
forth our selected consolidated cash flow data for the periods indicated:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Operating Activities</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 36pt">Net cash provided by operating
activities for 2022 was US$4.3 million, which primarily reflected our net loss of US$45.8 million as mainly adjusted for (1) depreciation
and amortization expenses of US$10.7 million, (2) write-down for the potentially obsolete, slow-moving inventories and lower of cost or
market adjustment of US$6.5 million, (3) impairment of intangible assets adjustments of US$20.7 million, (4) impairment of VAT recoverable
adjustments of US$4.5 million, (5) provision for credit loss of US$3.8 million, (6) share-based compensation of US$3.9 million<span style="font-family: Times New Roman, Times, Serif">&#65292;</span>7)
loss on foreign currency transactions of US$2.2 million and (8) changes in working capital. Adjustment for changes in working capital
primarily consisted of (i) a decrease of US$10.4 million in net prepayments and other current assets, (ii) a decrease of US$2.9 million
in net accounts receivable, (iii) a decrease of US$14.1 million in accrued liabilities and other payables.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 36pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 36pt">Net cash used in operating
activities for 2021 was US$15.8 million, which primarily reflected our net income of US$2.8 million as mainly adjusted for (1) depreciation
and amortization expenses of US$6.3 million, (2) write-down for the potentially obsolete, slow-moving inventories and lower of cost or
market adjustment of US$2.2 million, (3) impairment of property plant and equipment adjustments of US$3.1 million and (4) changes in working
capital. Adjustment for changes in working capital primarily consisted of (i) an increase of US$3.8 million in VAT recoverable, (ii) an
increase of US$5.4 million in net inventories, (iii) a decrease of US$18.3 million in accrued liabilities and other payables.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 36pt">Net cash used in operating
activities for 2020 was US$15.5 million, which primarily reflected our net loss of US$32 million as mainly adjusted for (1) depreciation
and amortization expenses of US$7.2 million, (2) write-down for the potentially obsolete, slow-moving inventories and lower of cost or
market adjustment of US$3.6 million, (3) Allowance for doubtful accounts adjustments of US$2.7 million, (4) deferred income taxes adjustments
of US$8.6 million, and (5) changes in working capital. Adjustment for changes in working capital primarily consisted of (i) a decrease
of US$9.7 million in inventory due to the reduced amount of mining machine orders received and anticipated for our mining machines in
response to the combined impact of COVID-19 and Bitcoin halving event, (ii) a decrease of US$7.0 million in accrued liabilities and other
payables, (iii) a decrease of US$9.2 million in accounts payable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Investing Activities</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 36pt">Net cash provided by investing
activities for 2022 was US$6.6 million, mainly attributable to (i) collections from short-term investment of US$55.1 million, (ii) cash
paid for short-term investment of US$28.6 million, and (iii) cash paid for the purchases of property, plant and equipment and intangible
assets of US$14.1 million, and (iv) cash paid for business combination net of cash acquired of US$5.9 million.</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Net cash used in investing activities for 2021 was US$6.5 million,
mainly attributable to (i) collections from short-term investment of US$474.4 million, (ii) cash paid for short-term investment of US$472.4
million, and (iii) cash paid for the purchases of property, plant and equipment and intangible assets of US$8.5 million.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Net cash used in investing
activities for 2020 was US$63.2 million, mainly attributable to (i) purchase of property, plant and equipment of US$10.8 million, (ii)
purchase of intangible assets of US$11.9 million, and (iii) cash paid for the purchase of debt investments of US$79.9 million and collected
from the redemption of such debt investments of US$39.1 million.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

</div><!-- Field: Page; Sequence: 114; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->105<!-- Field: /Sequence --></span></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b><i>Financing Activities</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We did not occur any cash
flows from financing activities during 2022.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Net cash provided by financing
activities for 2021 was US$248.3 million, mainly attributable to (i) issuance of shares for cash of US$254.7 million in 2021, (ii) repayment
to related parties for US$5.7 million, (iii) repayment of short-term loans of US$0.8 million.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;Net cash provided by
financing activities for 2020 was US$92.0 million, mainly attributable to (i) issuance of common shares for cash of US$114.2 million
in 2020, (ii) repayment to related parties for US$27.7 million, (iii) proceeds from related party loans of US$9.6 million and (iv) repayment
of short-term loans of US$4.9 million.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Capital Expenditures</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We made capital expenditures of US$22.8 million, US$8.5 million and
US$ 14.1 million, in 2020, 2021 and 2022, respectively. In these periods, our capital expenditures were mainly used for (1) procurement
of equipment such as molds and machinery for the expansion of production capacity and upgrading of production facilities, (2) addition
of intangible assets such as software and non-patent technology and license, and (3) expenditures for constructing our production facilities.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We plan to fund our future
capital expenditures with our existing cash balance and proceeds from this offering. We will continue to make capital expenditures to
meet the expected growth of our business, including for construction of production facilities and procurement of photomask, mold and
various intellectual properties.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><div><a id="a_026"></a></div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="text-align: justify; width: 0px">&#160;</td>
    <td style="text-align: justify; width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>C.</b></span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Research and development,
    patents and licenses, etc.</b></span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">See &#8220;Item&#160;4. Information
on the Company&#8212;B. Business Overview&#8212; Research and Development&#8221; and &#8220;&#8212;Intellectual Property.&#8221;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><div><a id="a_027"></a></div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="text-align: justify; width: 0px">&#160;</td>
    <td style="text-align: justify; width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>D.</b></span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Trend information</b></span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Other than as disclosed elsewhere in this annual report, we are not
aware of any trends, uncertainties, demands, commitments or events for the period from January&#160;1, 2022 to December 31, 2022 that
are reasonably likely to have a material effect on our net revenues, income, profitability, liquidity or capital resources, or that would
cause the disclosed financial information to be not necessarily indicative of future operating results or financial conditions.</p><div>




</div><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><div><a id="a_028"></a></div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="text-align: justify; width: 0px">&#160;</td>
    <td style="text-align: justify; width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>E.</b></span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Critical Accounting
    Policies and Estimates</b></span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">An accounting policy is considered
critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time such
estimate is made, and if different accounting estimates that reasonably could have been used, or changes in the accounting estimates
that are reasonably likely to occur periodically, could materially impact the consolidated financial statements.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We prepare our financial statements
in conformity with the U.S. GAAP, which requires us to make judgments, estimates and assumptions. We continually evaluate these estimates
and assumptions based on the most recently available information, our own historical experiences and various other assumptions that we
believe to be reasonable under the circumstances. Since the use of estimates is an integral component of the financial reporting process,
actual results could differ from our expectations as a result of changes in our estimates. For a description of all our significant accounting
policies, see Note 2 to our annual audited consolidated financial statements in this annual report.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">When reviewing our financial
statements, you should consider our selection of critical accounting policies, the judgments and other uncertainties affecting the application
of such policies, and the sensitivity of reported results to changes in conditions and assumptions. We believe that the following accounting
policy involves a higher degree of judgment and complexity in their application and require us to make critical accounting estimates.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Fair value of the Intangible Asset Identified
in Connection with Business Combination</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Ebang International accounts for its business combination using the
acquisition method of accounting, which requires, among other things, allocation of the fair value of purchase consideration to the assets,
liabilities, identifiable intangible assets acquired, and non-controlling interest, if any, at their estimated fair values on the acquisition
date. Any residual purchase price is recorded as goodwill. When determining the respective fair value, Ebang International makes significant
estimates and assumptions, especially with respect to the intangible asset acquired. The intangible asset does not have observable prices.
Ebang International&#8217;s estimates of fair value are based upon reasonable assumptions with current knowledge of the business environment
and conditions, but which are inherently uncertain and, as a result, actual results may differ from estimates. Significant assumptions
used for the model include the forecasted operating cash flows and discount rate. The Company utilized the assistance of a third-party
valuation firm to determine the fair value as of the date of acquisition.</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><div><a id="a_029"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>ITEM&#160;6. DIRECTORS, SENIOR MANAGEMENT
AND EMPLOYEES</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><div><a id="a_030"></a></div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0px">&#160;</td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>A.</b></span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Directors and senior
    management</b></span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our board of directors is
currently composed of five members. The table below sets forth certain information concerning our current board of directors and our
senior management as of the date of this report. All ages are as of April 28, 2023.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr>
    <td style="vertical-align: bottom; width: 29%; border-bottom: black 1.5pt solid"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Directors
    and Executive Officers</b></span></td>
    <td style="vertical-align: top; width: 1%; text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; width: 9%; border-bottom: black 1.5pt solid; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Age</b></span></td>
    <td style="vertical-align: top; width: 1%; text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; width: 60%; border-bottom: black 1.5pt solid"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Position/Title</b></span></td></tr>
  <tr style="vertical-align: top; background-color: #CCEEFF">
    <td style="padding-left: 9pt; text-indent: -9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Dong Hu</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">49</span></td>
    <td style="text-align: justify">&#160;</td>
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Chairman of the Board, Chief Executive Officer and
    Chief Financial Officer</span></td></tr>
  <tr style="vertical-align: top">
    <td style="padding-left: 9pt; text-indent: -9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Chunjuan
    Peng</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">46</span></td>
    <td style="text-align: justify">&#160;</td>
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Director and Deputy General Manager</span></td></tr>
  <tr style="vertical-align: top; background-color: #CCEEFF">
    <td style="padding-left: 9pt; text-indent: -9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Yanqing
    Gao</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">58</span></td>
    <td style="text-align: justify">&#160;</td>
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Independent Director</span></td></tr>
  <tr style="vertical-align: top">
    <td style="padding-left: 9pt; text-indent: -9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Tingjie
    Lyu</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">67</span></td>
    <td style="text-align: justify">&#160;</td>
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Independent Director</span></td></tr>
  <tr style="vertical-align: top; background-color: #CCEEFF">
    <td style="padding-left: 9pt; text-indent: -9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Mingming
    Su</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">38</span></td>
    <td style="text-align: justify">&#160;</td>
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Independent Director</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Mr. Dong Hu</i> is our
founder and has served as chairman of the board of directors, and our chief executive officer since May 2018 and our chief financial
officer since May 2022. He has also served as a director and chief executive officer of Zhejiang Ebang since January 2010. Mr. Hu has
over 23 years of experience in the network communication and computing industry. Between August 1998 and August 2009, he was a teacher
of the College of Information Engineering at Zhejiang University of Technology. From August 2009, he worked as a teacher of the College
of Computer Science and Technology at the same university until October 2017. He is also an executive director of each of Zhejiang Ebang,
Ebang IT, Hangzhou Dewang, Ebang Hongfa, Hangzhou Ebang Shuotai and Hangzhou Yibang Botong, and a director of HK Ebang Communications,
HK Ebang Technology, and HK Ebang Digital, Ebang Digital Asset Management, Ebang Digital Asset Custody, Ebang Trust, Ebang Financial
Services, Ebon Pay Pte. Ltd., Ebonex Australia, Australia Ebon Pty Ltd, Ebon Management Australia and Compass Global. Mr. Hu is primarily
responsible for overseeing the sales and marketing, research and development, business strategy and overall management of our company.
Mr. Hu graduated from Zhejiang University of Technology with an undergraduate degree in industrial automation in July 1998. In September
2008, Mr. Hu obtained a master of business administration (MBA) degree from Zhejiang University.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 36pt"><i>Ms. Chunjuan Peng </i>is
our deputy general manager and has served as a director since May 2018. She has also served as a deputy general manager of Zhejiang Ebang
since January 2010 and a director of Zhejiang Ebang from January 2010 to March 2021. She has served as a director of Hangzhou Yibang Botong
and HK Ebang Information since November 2021 and August 2022, respectively. Ms. Peng has over 18 years of experience in the areas of business
operation and production and supply chain management. From September 2003 to January 2010, Ms. Peng was a deputy general manager at Hangzhou
Ebang Communication Technology Co., Ltd., where she was responsible for assisting in managing the daily operation of the company. Ms.
Peng is mainly responsible for our production and supply chain management, which includes overseeing the procurement of raw materials
and production and quality control. Ms. Peng graduated from Jiangxi Normal University with a self-taught associate degree in tourism management
in June 1997.&#160;</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Mr. Yanqing Gao&#160;</i>has
served as our director since June 2021. He has been a director of Zhejiang Jianxue Technology Co., Ltd. since November 2019, Jiangsu
Mole Biotechnology Co., Ltd. since April 2016, Shanghai Xinfangxun Communication Technology Co., Ltd. since November 2015 and Hangzhou
Kaipu Technology Co., Ltd. since September 2015. Mr. Gao has also been the deputy manager of Zhejiang Zheke Investment Management Co.,
Ltd. since May 2012. He was a director of Yuancheng Environment co., Ltd. from June 2013 to November 2018. He also served as a director
and the chief financial officer of Zhejiang Tianyuan Biopharmaceutical Co., Ltd. from April 2007 to April 2012. Mr. Gao held various
accounting positions with companies in China since 1990. Mr. Gao received his bachelor&#8217;s degree in accounting from Hangzhou Business
School in 1984 and his EMBA from Zhongnan University of Economics and Law in 2008.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Mr. Tingjie Lyu&#160;</i>has
served as our director since June 2020. He has served as an independent director of China Satellite Communications Co., Ltd., Shenzhen
Aisidi Co., Ltd., China Communications Services Corporation Limited and Beijing Digital Telecom Co., Ltd. since May 2016, June 2014,
June 2015 and May 2013, respectively. He has also served as a director of Wooboo Mobile Media Co., Ltd. since July 2016. Mr. Lyu has
over 38 years of experience in the telecommunications industry. Since June 1985, Mr.&#160;Lyu successively served as a teacher, an associate
professor and a professor at Beijing University of Posts and Telecommunications, College of Economic Management. Mr. Lyu is also an executive
director and an executive vice president of International Telecommunication Association and China Information Economy Society, respectively.
Mr. Lyu is the director of each Modern Management Committee of China Communications Society and Communication Technology and Economics
Committee of China Association of Technology and Economics and the deputy director of E-commerce Teaching Steering Committee of the Ministry
of Education. Mr. Lyu holds a bachelor&#8217;s degree in radio engineering and a master&#8217;s degree in management engineering from
Beijing University of Posts and Telecommunications and a doctor&#8217;s degree in engineering from Kyoto University.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><!-- Field: Page; Sequence: 116; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->107<!-- Field: /Sequence --></span></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Mr. Mingming Su</i>&#160;has
served as our director since November 2021. Mr. Su has served as Chief Strategy Officer of DouYu International Holdings Limited (&#8220;DouYu&#8221;),
a company that has its American depositary shares listed on the Nasdaq Global Select Market, since November 2015 and director of DouYu
since October 2016. Mr. Su served as the investment analyst of Shanda Computer (Shanghai) Co., Ltd. from March 2010 to March 2011, the
investment manager of Hangzhou Bianfeng Network Technology Co., Ltd. from March 2011 to August 2012 and the vice president of investment
at Shenzhen Qingsong Investment Management Partnership (Limited Partnership) from August 2012 to November 2015. Mr. Su obtained his bachelor&#8217;s
degree majoring in library science and minoring in English from Anhui University in July 2007. Mr. Su also obtained his Master of Management
majoring in library science from Chinese Academy of Sciences in March 2010.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Board Diversity Disclosure</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The following information was provided by our
directors on a voluntary basis.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Board Diversity Matrix (As of date of April 28, 2023)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td colspan="3" style="padding-right: 1pt; padding-left: 1pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Country
    of Principal Executive Offices</span></td>
    <td colspan="2" style="padding-right: 1pt; padding-left: 1pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">China</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td colspan="3" style="padding-right: 1pt; padding-left: 1pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Foreign
    Private Issuer</span></td>
    <td colspan="2" style="padding-right: 1pt; padding-left: 1pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Yes</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td colspan="3" style="padding-right: 1pt; padding-left: 1pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Disclosure
    Prohibited Under Home Country Law</span></td>
    <td colspan="2" style="padding-right: 1pt; padding-left: 1pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">No</span></td></tr>
  <tr style="background-color: White">
    <td colspan="3" style="vertical-align: bottom; padding-right: 1pt; padding-left: 1pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Total
    Number of Directors</span></td>
    <td style="vertical-align: bottom; padding-right: 1pt; padding-left: 1pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">5</span></td>
    <td>&#160;</td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="padding-right: 1pt; padding-left: 1pt; text-align: center; width: 61%">&#160;</td>
    <td style="vertical-align: bottom; padding-right: 1pt; padding-left: 1pt; width: 8%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Female</span></td>
    <td style="vertical-align: bottom; padding-right: 1pt; padding-left: 1pt; width: 8%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Male</span></td>
    <td style="vertical-align: bottom; padding-right: 1pt; padding-left: 1pt; width: 8%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Non-Binary</span></td>
    <td style="vertical-align: bottom; padding-right: 1pt; padding-left: 1pt; width: 15%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Did
    not disclose</span></td></tr>
  <tr style="background-color: White">
    <td colspan="2" style="vertical-align: bottom; padding-right: 1pt; padding-left: 1pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Part
    I:</b>&#160;Gender Identity</span></td>
    <td colspan="3">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="padding-right: 1pt; padding-left: 1pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">1</span></td>
    <td style="padding-right: 1pt; padding-left: 1pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4</span></td>
    <td style="padding-right: 1pt; padding-left: 1pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">0</span></td>
    <td style="padding-right: 1pt; padding-left: 1pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">0</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td colspan="5" style="padding-right: 1pt; padding-left: 1pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Part
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-right: 1pt; padding-left: 1pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Underrepresented
    Individual in Home Country</span></td>
    <td colspan="4" style="padding-left: 40pt; text-align: center; text-indent: -40pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">0</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-right: 1pt; padding-left: 1pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Did Not
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    <td colspan="4" style="padding-right: 1pt; padding-left: 1pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">0</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;&#160;</p><div>

</div><div><a id="a_031"></a></div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>B.</b></span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Compensation</b></span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Compensation</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">For the fiscal year ended December 31, 2022, we paid an aggregate of
approximately US$0.64 million in cash to our directors and executive officers, respectively. We have not set aside or accrued any amount
to provide pension, retirement or other similar benefits to our directors and executive officers.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our PRC subsidiaries are
required by law to make contributions equal to certain percentages of each employee&#8217;s salary for his or her medical insurance,
maternity insurance, workplace injury insurance, unemployment insurance, pension benefits through a PRC government-mandated multi-employer
defined contribution plan and other statutory benefits. Our Hong Kong subsidiaries are required by the Hong Kong Mandatory Provident
Fund Schemes Ordinance to make monthly contributions to the mandatory provident fund scheme in an amount equal to at least 5% of an employee&#8217;s
salary.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Employment Agreements and Indemnification
Agreements</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have entered into employment
agreements with our executive officers. Each of our executive officers is employed for a continuous term unless either we or the executive
officer gives prior notice to terminate such employment, or for a specified time period, or for a specified time period which will be
renewed automatically unless a notice of non-renewal is given. We may terminate an executive officer&#8217;s employment for cause at
any time with one month&#8217;s prior notice, including but not limited to as a result of the executive officer&#8217;s commitments of
any serious or persistent breach or non-observance of the terms and conditions of the employment, conviction of a criminal offence, fraud
or dishonesty, habitual neglect of his or her duties, material misconduct being inconsistent with the due and faithful discharge of the
executive officer&#8217;s material duties or material breach of internal procedures or regulations which causes damage to the Company.
An executive officer may terminate his or her employment at any time with one month&#8217;s prior written notice.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->108<!-- Field: /Sequence --></span></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Each executive officer has
agreed to hold, both during and after the employment agreement expires or is earlier terminated, in strict confidence and not to use,
except for our benefit, any confidential information of our company, any of its subsidiaries or their customers and suppliers. In addition,
each of our executive officers have agreed to be bound by non-solicitation restrictions set forth in their confidentiality agreements
with us.</p><div>




</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have entered into indemnification
agreements with each of our directors and executive officers. Under these agreements, we agree to indemnify our directors and executive
officers against all liabilities and expenses incurred by such persons in connection with claims made by reason of their being a director
or officer of our company to the fullest extent permitted by law with certain limited exceptions.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Share Incentive Plan</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our board of directors adopted the 2020 Share Incentive Plan in April
2020, effective from the date of our initial public offering, which was amended and restated on July 9, 2021; and our shareholders adopted
the 2021 Share Incentive Plan, effective as of December 15, 2021 at the annual general meeting of shareholders, to attract and retain
the best available personnel, provide additional incentives to employees, directors and consultants and promote the success of our business.
Under the Amended and Restated 2020 Share Incentive Plan, or the 2020 Plan, the maximum aggregate number of shares that may be issued
pursuant to all awards under the 2020 Plan shall be 349,427 Class A ordinary shares, representing 8% of the enlarged total issued and
outstanding shares of our company immediately upon completion of our initial public offering. Under the 2021 Share Incentive Plan, or
the 2021 Plan, the maximum aggregate number of shares that may be issued pursuant to all awards under the 2021 Plan shall be 333,333 Class
A ordinary shares.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As of the date of this annual report, we have granted 189,066&#160;restricted
share awards under the 2020 Plan and we did not grant any awards under the 2021 Plan.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following paragraphs
describe the principal terms of the 2020 Plan.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b><i>Types of awards.</i></b>
The 2020 Plan permits the awards of options, restricted shares or restricted share units.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b><i>Plan administration.
</i></b>Our board of directors or a committee of one or more members of the board of directors administers the 2020 Plan. The committee
or the full board of directors, as applicable, will determine the participants to receive awards, the type and number of awards to be
granted to each participant, and the terms and conditions of each award grant.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b><i>Award agreement.</i></b>
Awards granted under the 2020 Plan are evidenced by an award agreement that sets forth terms, conditions and limitations for each award,
which may include the term of the award, the provisions applicable in the event of the grantee&#8217;s employment or service terminates,
and our authority to unilaterally or bilaterally amend, modify, suspend, cancel or rescind the award.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b><i>Eligibility. </i></b>We
may grant awards to employees and consultants of our company, our parent company and any of our subsidiaries, our directors, and other
individuals, as determined by the plan administrator. However, we may grant options that are intended to qualify as incentive share options
only to our employees and employees of our parent companies and subsidiaries.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b><i>Vesting schedule.</i></b>
In general, the plan administrator determines the vesting schedule, which is specified in the relevant award agreement.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

</div><!-- Field: Page; Sequence: 118; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->109<!-- Field: /Sequence --></span></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b><i>Exercise of options.
</i></b>The plan administrator determines the exercise price for each award, which is stated in the award agreement. The vested portion
of option will expire if not exercised prior to the time as the plan administrator determines at the time of its grant, except that the
maximum exercisable term is 10 years from the date of a grant.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following paragraphs
describe the principal terms of the 2021 Plan.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b><i>Types of awards.</i></b>
The 2021 Plan permits the awards of options, shares, restricted shares or restricted share units.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b><i>Plan administration.
</i></b>Our board of directors or a committee of one or more members of the board of directors administers the 2021 Plan. The committee
or the full board of directors, as applicable, will determine the participants to receive awards, the type and number of awards to be
granted to each participant, and the terms and conditions of each award grant.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b><i>Award agreement.</i></b>
Awards granted under the 2021 Plan are evidenced by an award agreement that sets forth terms, conditions and limitations for each award,
which may include the term of the award, the provisions applicable in the event of the grantee&#8217;s employment or service terminates,
and our authority to unilaterally or bilaterally amend, modify, suspend, cancel or rescind the award.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b><i>Eligibility. </i></b>We
may grant awards to employees and consultants of our company, our parent company and any of our subsidiaries, our directors, and other
individuals, as determined by the plan administrator. However, we may grant options that are intended to qualify as incentive share options
only to our employees and employees of our parent companies and subsidiaries.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b><i>Vesting schedule.</i></b>
In general, the plan administrator determines the vesting schedule, which is specified in the relevant award agreement.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b><i>Exercise of options.
</i></b>The plan administrator determines the exercise price for each award, which is stated in the award agreement. The vested portion
of option will expire if not exercised prior to the time as the plan administrator determines at the time of its grant, except that the
maximum exercisable term is 10 years from the date of a grant.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><div><a id="a_032"></a></div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>C.</b></span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Board practices</b></span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Overview</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Directors are expected to
provide stewardship in order to promote the long-term success of the Company. They are expected to fulfill their fiduciary duties and
duty of care in the best interests of the Company, considering the various needs of its stakeholders (shareholders, employees, communities,
suppliers and clients), providing advice to and oversight of management&#8217;s activities. Within its responsibilities, the board of
directors oversees the company&#8217;s strategic goals; financial statements, control and risk management; core values, integrity and
ethical standards; management and board remuneration and succession planning, among others.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Board composition</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our board of directors consists
of five directors, including three independent directors. A director is not required to hold any shares in our company to qualify to
serve as a director. The Corporate Governance Rules of Nasdaq generally require that a majority of an issuer&#8217;s board of directors
must consist of independent directors. Our board of directors affirmatively determined that Yanqing Gao, Tingjie Lyu and Mingming Su
are independent directors, and that we have a majority of independent directors serving on our board of directors.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

</div><!-- Field: Page; Sequence: 119; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->110<!-- Field: /Sequence --></span></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">A director may, subject to
any separate requirement for audit committee approval under applicable law, the Articles or the Nasdaq Rules, or disqualification by
the chairman of the relevant board meeting, vote in respect of any contract or transaction in which he or she is interested, provided
that the nature of the interest of any director in such contract or transaction is disclosed by him or her at or prior to its consideration
and any vote in that matter. Our board of directors may exercise all of the powers of our company to borrow money, to mortgage or charge
its undertaking, property and uncalled capital, or any part thereof, and to issue debentures, debenture stock or other securities whenever
money is borrowed or as security for any debt, liability or obligation of our company or of any third party. None of our directors has
a service contract with us that provides for benefits upon termination of service as a director.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Committees of our board of directors</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have established three
committees under the board of directors: an audit committee, a compensation committee and a nominating and corporate governance committee.
We have adopted a charter for each of the three committees. Each committee&#8217;s members and functions are described below.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Audit Committee</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our audit committee consists
of Mr. Yanqing Gao, Mr. Tingjie Lyu and Mr. Mingming Su. Mr. Yanqing Gao is the chairman of our audit committee. We have determined that
each of Mr. Yanqing Gao, Mr. Tingjie Lyu and Mr. Mingming Su satisfies the &#8220;independence&#8221; requirements of the Rule 5605(c)(2)
of the Nasdaq Rules and meets the independence standards under Rule 10A-3 under the Exchange Act. Our board of directors has also determined
that Mr. Yanqing Gao qualifies as an &#8220;audit committee financial expert&#8221; within the meaning of the SEC rules and possesses
financial sophistication within the meaning of the Nasdaq Rules.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The audit committee oversees
our accounting and financial reporting processes and the audits of our financial statements. The audit committee is responsible for,
among other things:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">selecting our independent
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">reviewing with the independent
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">reviewing and approving
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">discussing the annual audited
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
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    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">annually reviewing and
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
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    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">meeting separately and
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
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    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">reporting regularly to
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">performing such other matters
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 120; Value: 1 --><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Compensation Committee</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our compensation committee
consists of Mr. Dong Hu, Mr. Tingjie Lyu and Mr. Mingming Su. Mr. Dong Hu is the chairman of our compensation committee. We have determined
that each of Mr. Tingjie Lyu and Mr. Mingming Su satisfies the &#8220;independence&#8221; requirements of Rule 5605(a)(2) of the Nasdaq
Rules.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The compensation committee
assists the board in reviewing and approving the compensation structure, including all forms of compensation, relating to our directors
and executive officers. Our chief executive officer may not be present at any committee meeting during which his compensation is deliberated.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The compensation committee
is responsible for, among other things:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
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    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">reviewing and approving,
    or recommending to the board for its approval, the compensation for our chief executive officer and other executive officers;</span></td></tr>
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</div><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
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    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">reviewing and recommending
    to the board for determination with respect to the compensation of our non-employee directors;</span></td></tr>
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</div><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
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    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">reviewing and making recommendations
    to the board of directors with respect to the compensation of our directors;</span></td></tr>
  </table><div>
</div><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
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    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">reviewing periodically
    and approving any long-term incentive compensation or equity plans, programs or similar arrangements, annual bonuses, employee pension
    and welfare benefit plans; and</span></td></tr>
  </table><div>
</div><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">selecting compensation
    consultant, legal counsel or other adviser only after taking into consideration all factors relevant to that person&#8217;s independence
    from management.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Nominating and Corporate Governance Committee</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our nominating and corporate
governance committee consists of Ms. Chunjuan Peng, Mr. Yanqing Gao and Mr. Tingjie Lyu. Ms. Chunjuan Peng is the chairperson of our
nominating and corporate governance committee. We have determined that each of Mr. Yanqing Gao and Mr. Tingjie satisfies the &#8220;independence&#8221;
requirements of Rule 5605(a)(2) of the Nasdaq Rules.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The nominating and corporate
governance committee assists the board of directors in selecting directors and in determining the composition of our board and board
committees. The nominating and corporate governance committee is responsible for, among other things:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">identifying and recommending
    nominees for election or re-election to our board of directors, or for appointment to fill any vacancy;</span></td></tr>
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</div><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">reviewing annually with
    our board of directors its composition in light of the characteristics of independence, age, skills, experience and availability
    of service to us;</span></td></tr>
  </table><div>
</div><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
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    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">identifying and recommending
    to our board the directors to serve as members of committees;</span></td></tr>
  </table><div>
</div><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">advising the board periodically
    with respect to developments in the law and practice of corporate governance as well as our compliance with applicable laws and regulations;</span></td></tr>
  </table><div>
</div><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">making recommendations
    to our board of directors on corporate governance matters and on any corrective action to be taken; and</span></td></tr>
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</div><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
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    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">monitoring compliance with
    our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure compliance.</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 121; Value: 1 --><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Duties of Directors</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Under Cayman Islands law,
our directors owe to us certain fiduciary duties, 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 also have a duty to exercise the skills they actually possess and such
care and diligence that a reasonably prudent person would exercise in comparable circumstances.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In fulfilling their duty
of care to us, our directors must ensure compliance with our Articles, as amended and restated from time to time.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our company may have the
right to seek damages if a duty owed by our directors is breached.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The functions and powers
of our board of directors include, among others:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">convening shareholders&#8217;
    annual general meetings and reporting its business operations to shareholders at such meetings;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Code of Ethics and Corporate Governance</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have adopted a code of
ethics, which is applicable to all of our directors, executive officers and employees. We have made our code of ethics publicly available
on our website.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, our board of
directors have adopted a set of corporate governance guidelines covering a variety of matters, including approval of related party transactions.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Terms of Directors and Officers</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the Articles,
our officers will be elected by and serve at the discretion of our board of directors. Each of our directors is not subject to a term
of office and hold office until such time as he or she resigns or is removed from office by ordinary resolution of our shareholders.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">A director will be removed
from office automatically if, among other things, the director (1) becomes bankrupt or makes any arrangement or composition with his
or her creditors; (2) dies or is found by our company to be of unsound mind; or (3) is removed from office pursuant to any other provisions
of our Articles.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Interested Transactions</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">A director may, subject to
any separate requirement for audit committee approval under applicable law, the Articles or the Nasdaq Rules, or disqualification by
the chairman of the relevant board meeting, vote in respect of any contract or transaction in which he or she is interested, provided
that the nature of the interest of any directors in such contract or transaction is disclosed by him or her at or prior to its consideration
and any vote in that matter.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><div><a id="a_033"></a></div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>D.</b></span></td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As of December&#160;31, 2022,
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following table sets
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&#160;</p><div>

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  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The remuneration payable
to our employees includes salaries, project incentives, year-end bonuses and allowances. We determine employees&#8217; remuneration based
on factors including qualifications, contributions and years of experience. In order to maintain the quality, knowledge and skills of
our employees, we appreciate the importance of training to employees. We provide regular trainings to our employees, which include orientation
training for new employees and continuing on-the-job training for existing employees.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><div><a id="a_034"></a></div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>E.</b></span></td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following table sets
forth information concerning the beneficial ownership of our ordinary shares, as of April 27, 2023 with respect to:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
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    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">each of our directors and
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The calculations in the table
below are based on 6,543,938.22 ordinary shares outstanding as of April 27, 2023, comprising of 4,989,746.22 Class A ordinary shares
and 1,554,192 Class B ordinary shares, assuming the sales of all of the securities we are offering and no exercise of the warrants and
excluding ordinary shares reserved for issuance under our Amended and Restated 2020 Share Incentive Plan and 2021 Share Incentive Plan.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Beneficial ownership is determined
in accordance with the rules and regulations of the SEC. In computing the number of shares beneficially owned by a person and the percentage
ownership of that person, we have included shares that the person has the right to acquire within 60 days of April 27, 2023, including
through the exercise of any option, warrant or other right or the conversion of any other security. These shares, however, are not included
in the computation of the percentage ownership of any other person.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">86.3</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-indent: -9pt; padding-left: 9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Affiliates of Dong Hu<sup>(1)</sup></span></td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">3,750</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">1,554,192</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">23.8</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">86.2</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">343,332</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#8211;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">5.2</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">*</span></td><td style="text-align: left">&#160;</td></tr>
  </table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">*</span></td>
    <td><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Represents less than 1% of our total outstanding
    shares.</p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">**</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Except as indicated otherwise
    below, the business address of our directors and executive officers is 12 Marina View, #20-02B, Asia Square Tower 2, Singapore, 018961</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">***</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For each person and group
    included in this column, percentage ownership is calculated by dividing the number of shares beneficially owned by such person or
    group by the sum of the total number of shares outstanding and the number of shares such person or group has the right to acquire
    upon exercise of option, warrant or other right within 60 days after the date of April 27, 2023.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">****</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For each person or group
    included in this column, percentage of total voting power represents voting power based on both Class A and Class B ordinary shares
    held by such person or group with respect to all outstanding shares of our Class A and Class B ordinary shares as a single class.
    Each holder of our Class A ordinary shares is entitled to one vote per share. Each holder of our Class B ordinary shares is entitled
    to 20&#160;votes per share. Our Class B ordinary shares are convertible at any time by the holder into Class A ordinary shares on
    a one for one basis, while Class A ordinary shares are not convertible into Class B ordinary shares under any circumstances.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(1)</span></td>
    <td style="text-align: justify">Represents (1) 1,554,192 Class B ordinary shares held by Top Max Limited
and (2) 3,750 Class A ordinary shares held by Top One Limited<b><i>. </i></b>Top Max Limited is a company incorporated in the British
Virgin Islands with limited liability wholly owned by Vista Eternity (PTC) Limited, or Vista Eternity, a trustee under the Hu Family Trust
in which Mr. Dong Hu, our chairman of the board of directors, chief executive officer and chief financial officer, is the settlor and
the investment manager. Top One Limited, a company incorporated in the British Virgin Islands, is, among others, approximately 2.2% owned
by Mr. Dong Hu. The registered addresses of both of Top Max Limited and Top One Limited is Vistra Corporate Services Centre, Wickhams
Cay II, Road Town, Tortola, VG1110, British Virgin Islands.</td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(2)</span></td>
    <td style="text-align: justify"><p style="margin: 0pt 0; font: 10pt Times New Roman, Times, Serif">Heights Capital Management, Inc. (&#8220;Heights Capital&#8221;), serves
as the investment manager to CVI Investments, Inc. (&#8220;CVI&#8221;), and as such may exercise voting and dispositive power over the
Class A ordinary shares held by CVI and may be deemed to beneficially own these Class A ordinary shares. William Walmsley, Director of
CVI Investments, Inc., may also be deemed to beneficially own these Class A ordinary shares, as may Brian Sopinsky, Secretary of Heights
Capital Management, Inc. Mr. Kobinger disclaims any such beneficial ownership of the securities. Each of Messrs. Walmsley and Sopinsky,
CVI and Heights Capital disclaims beneficial ownership of these Class A ordinary shares except to the extent of their pecuniary interest
therein. The address of the principal business office of Mr. Walmsley and CVI Investments, Inc. is P.O. Box 309GT, Ugland House, South
Church Street, George Town, Grand Cayman, KY1-1104, Cayman Islands. &#160;The address of the principal business office of Mr. Sopinsky
and Heights Capital Management, Inc. is 101 California Street, Suite 3250, San Francisco, California 94111. The number of Class A ordinary
shares held by CVI is based on information included in Amendment No. 2 to the Schedule 13-G filed by CVI with the SEC on February 10,
2023 reporting it&#8217;s beneficial ownership of Class A ordinary shares.</p></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

</div><!-- Field: Page; Sequence: 124; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->115<!-- Field: /Sequence --></span></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are not aware of any arrangement
that may, at a subsequent date, result in a change of control of our company. To our knowledge, as of April 27, 2023, 4,953,465 Class
A ordinary shares, representing 75.7% of our issued and outstanding ordinary shares, were held by one record holder in the United States,
which is Cede&#160;&amp; Co., a nominee of The Depository Trust Company, and none of our Class B ordinary shares are held by record holders
in the United States.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our ordinary shares are divided
into Class A ordinary shares and Class B ordinary shares. Holders of Class A ordinary shares are entitled to one vote per share and the
sole holder of Class B ordinary shares is entitled to 20 votes per share. The sole holder of our Class B ordinary shares may choose to
convert its Class B ordinary shares into the same number of Class A ordinary shares at any time. Class A ordinary shares are not convertible
into Class B ordinary shares under any circumstance. See &#8220;Item 10. Additional Information&#8212;B. Memorandum and Articles of Association&#8221;
for a more detailed description of our Class A ordinary shares and Class B ordinary shares.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><div><a id="a_035"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>ITEM&#160;7. MAJOR SHAREHOLDERS AND RELATED
PARTY TRANSACTIONS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><div><a id="a_036"></a></div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>A.</b></span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Major shareholders</b></span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">See &#8220;Item 6. Directors,
Senior Management and Employees&#8212;E. Share Ownership.&#8221;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><div><a id="a_037"></a></div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>B.</b></span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Related party transactions</b></span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have entered into the
following transactions with related parties:</p><div>




</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Employment Agreements and Indemnification
Agreements</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">See &#8220;Item 6. Directors,
Senior Management and Employees&#8212;B. Compensation&#8212;Employment Agreements and Indemnification Agreements.&#8221;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Share Incentive Plan</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">See &#8220;Item 6. Directors,
Senior Management and Employees&#8212;B. Compensation&#8212;Share Incentive Plan.&#8221;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Other Transactions with Related Parties</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Property Tenancy Agreements with Zhejiang
Wansi Computer Manufacturing Company Limited</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">From 2016 through 2019, our
three PRC subsidiaries, namely, Zhejiang Ebang, Ebang IT and Hangzhou Dewang, entered into several tenancy property management agreements
with Zhejiang Wansi Computer Manufacturing Company Limited, or Zhejiang Wansi. The lease terms range from two to three years. Zhejiang
Wansi is 68.68% owned by the spouse of Mr. Dong Hu, our controlling shareholder, chairman of the board directors, chief executive officer
and chief financial officer. Zhejiang Wansi is therefore an associate of Mr. Dong Hu. In 2020, 2021 and 2022, lease expenses from Zhejiang
Wansi were approximately US$30,000, US$32,000 and US$44,000, respectively. As of December 31, 2020, 2021 and 2022, the operating lease
liabilities to Zhejiang Wansi is approximately $17,700 and $48,800 and $17,500 respectively.&#160;</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-right: 0; margin-bottom: 0pt; text-align: left"><b><i>Property Tenancy Agreements
with Hangzhou Yiquansheng Communication Technology Company Limited</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In May 2021, our PRC subsidiary Zhejiang Ebang Communication Technology
Co., Ltd. entered into a tenancy property management agreement&#160;with Hangzhou Yiquansheng Communication Technology Co., Ltd., or Hangzhou
Yiquansheng. The lease term is from May 2021 to December 2023. Hangzhou Yiquansheng is 100% owned by Mr. Dong Hu, our controlling shareholder,
chairman of the board of directors, chief executive officer and chief financial officer. In 2021 and 2022, lease expenses from Hangzhou
Yiquansheng were approximately US$379,000 and US$558,000, respectively. As of December 31, 2021 and 2022, the operating lease liabilities
to Hangzhou Yiquansheng is approximately $835,000 and $266,034 respectively.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

</div><!-- Field: Page; Sequence: 125; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->116<!-- Field: /Sequence --></span></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Loan Agreements with Related Parties</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In 2019 and up to the date
of this annual report, we obtained several loans from Hong Kong Dewang Limited, or Hong Kong Dewang, with an aggregate principal amount
of approximately US$24.1 million at an interest rate of 4.7500% per annum. The maturity dates of these loans range from June 2022 to May
2023. Hong Kong Dewang is controlled by a relative of Mr. Dong Hu, our controlling shareholder, chairman of the board of directors and
chief executive office, and is therefore an associate of Mr. Dong Hu. As of the date of this report, we have fully repaid such loans.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">During the year ended December
31, 2020, the Company borrowed $749,949 from Dong Hu, CEO of the Company, and fully repaid the loan in the same period. The loan is unsecured,
non-interest bearing and payable on demand.</p><div>

</div><p style="text-align: justify; margin: 0pt 0; font: 10pt Times New Roman, Times, Serif">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">During the year ended December 31, 2020, Hangzhou Yiquansheng borrowed
approximately $562,000 from an affiliate controlled by Dong Hu. The liability was extinguished in connection with the disposal of Hangzhou
Yiquansheng, related gain on extinguishment is included in the gain on disposal, accounted for as a capital contribution.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In 2020, the Company borrowed
approximately $1.8 million from and repaid approximately $2.8 million to Zhejiang Wansi. In 2021, we repaid remaining balance of approximately
$5.7 million to Zhejiang Wansi. The balance of the loan as of December 31, 2020, 2021 and 2022 was US$5.6 million, nil and nil, respectively.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Disposal of a subsidiary to a related party&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In December 2020, the Company
disposed Hangzhou Yiquansheng to an affiliate controlled by Mr. Dong Hu, CEO of the Company, for RMB500,000. The gain on disposal of Hangzhou
Yiquansheng is accounted for as a capital contribution from Dong Hu, as a result of this transaction between entities under common control
of Dong Hu. The disposal of Hangzhou Yiquansheng does not constitute a strategic shift of the Company&#8217;s operation.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><div><a id="a_038"></a></div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>C.</b></span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Interests of Experts
    and Counsel</b></span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Not applicable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><div><a id="a_039"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>ITEM&#160;8. FINANCIAL INFORMATION</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><div><a id="a_040"></a></div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>A.</b></span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Consolidated statements
    and other financial information</b></span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Financial statements</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have appended consolidated
financial statements filed as part of this annual report.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Legal proceedings</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">See &#8220;Item 4. Information
on the Company&#8212;B. Business Overview&#8212;Legal Proceedings.&#8221;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">For risks and uncertainties
relating to the pending cases against us, please see &#8220;Item 3. Key Information&#8212;D. Risk Factors&#8212;Risks Relating to Our
Business Operations&#8212;We have been involved, and may continue to be involved, in disputes, claims or proceedings arising from our
operations or class actions from time to time, which could result in significant liabilities and reputational harm and could materially
and adversely affect our business, financial condition and results of operations.&#8221;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Dividends and dividend policy</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The payment of dividends
is at the discretion of our board of directors, subject to our Articles. In addition, our shareholders may by ordinary resolution declare
a dividend, but no dividend may exceed the amount recommended by our board of directors. In either case, all dividends are subject to
certain restrictions under Cayman Islands law, namely that our company may only pay dividends out of profits or the share premium account,
and 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. Even if we decide to pay dividends, the form, frequency and amount will depend upon our
future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors
that the board of directors may deem relevant.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We do not have any present
plan to pay any cash dividends on our ordinary shares in the foreseeable future. We currently intend to retain most, if not all, of our
available funds and any future earnings to operate and expand our business.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

</div><!-- Field: Page; Sequence: 126; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->117<!-- Field: /Sequence --></span></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are a holding company
incorporated in the Cayman Islands. We may rely on dividends paid by our subsidiaries in China for our cash requirements, including any
payment of dividends to our shareholders. PRC regulations may restrict the ability of our PRC subsidiaries to pay dividends to us. See
&#8220;Item 3. Key Information&#8212;D. Risk Factors&#8212;Risks Relating to Conducting Business in China&#8212;We may rely on dividends
and other distributions on equity paid by our PRC subsidiaries to fund any cash and financing requirements we may have, and any limitation
on the ability of our PRC subsidiaries to make payments to us could have a material and adverse effect on our ability to conduct our
business.&#8221;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><div><a id="a_041"></a></div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>B.</b></span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Significant changes</b></span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Except as disclosed elsewhere
in this annual report, we have not experienced any significant changes since the date of our audited consolidated financial statements
included in this annual report.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><div><a id="a_042"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>ITEM&#160;9. THE OFFER AND LISTING</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><div><a id="a_043"></a></div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="text-align: justify; width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>A.</b></span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Offering and listing
    details</b></span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our Class A ordinary shares
have been listed on the Nasdaq Global Select Market since June 17, 2020 under the symbol &#8220;EBON.&#8221;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our ordinary shares are divided
into Class A ordinary shares and Class B ordinary shares. Holders of Class A ordinary shares are entitled to one vote per share and the
sole holder of Class B ordinary shares is entitled to 20 votes per share. See &#8220;Item 3. Key Information&#8212;D. Risk Factors&#8212;Risks
Relating to Our Securities&#8212;Our dual-class voting structure will limit your ability to influence corporate matters and could discourage
others from pursuing any change of control transactions that holders of our Class A ordinary shares may view as beneficial.&#8221;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><div><a id="a_044"></a></div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="text-align: justify; width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>B.</b></span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Plan of distribution</b></span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Not applicable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><div><a id="a_045"></a></div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="text-align: justify; width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>C.</b></span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Markets</b></span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our Class A ordinary shares
have been listed on the Nasdaq Global Select Market since June 17, 2020 under the symbol &#8220;EBON.&#8221;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

</div><div><a id="a_046"></a></div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 24px; font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>D.</b></span></td>
    <td style="text-align: justify; font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Selling shareholders</b></span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Not applicable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><div><a id="a_047"></a></div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 24px; font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>E.</b></span></td>
    <td style="text-align: justify; font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Dilution</b></span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Not applicable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><div><a id="a_048"></a></div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 24px; font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>F.</b></span></td>
    <td style="text-align: justify; font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Expenses of the issue</b></span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Not applicable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><div><a id="a_049"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>ITEM&#160;10. ADDITIONAL INFORMATION</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><div><a id="a_050"></a></div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 24px; font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>A.</b></span></td>
    <td style="text-align: justify; font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Share capital</b></span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Not applicable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><div><a id="a_051"></a></div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 24px; font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>B.</b></span></td>
    <td style="text-align: justify; font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Memorandum and articles of association</b></span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are an exempted company
incorporated under the laws of the Cayman Islands and our affairs are governed by our Articles, as amended and restated from time to time,
and Companies Act (Revised) of the Cayman Islands, which we refer to as the Companies Act below, and the common law of the Cayman Islands.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following are summaries
of material provisions of our Articles and the Companies Act (Revised) of the Cayman Islands insofar as they relate to the material terms
of our ordinary shares.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>



</div><p style="margin: 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Ordinary Shares</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>General</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Under our second amended and
restated memorandum 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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our issued and outstanding
ordinary shares consist of Class A ordinary shares and Class B ordinary shares. All of our outstanding ordinary shares, which consist
of Class A ordinary shares and Class B ordinary shares, are fully paid and non-assessable. Certificates representing the ordinary shares
are issued in registered form. Our shareholders who are non-residents of the Cayman Islands may freely hold and transfer their ordinary
shares.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Holders of our Class A ordinary
shares and Class B ordinary shares have the same rights except for voting and conversion rights. The Class A ordinary shares and Class
B ordinary shares carry equal rights and rank <i>pari passu</i> with one another, including the rights to dividends and other capital
distributions.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Conversion</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Each Class B ordinary share
is convertible into one Class A ordinary share at any time by the holder thereof. Class A ordinary shares are not convertible into Class
B ordinary shares under any circumstances. Upon any sale of Class B ordinary shares by a holder thereof to any person or entity that is
not an affiliate (as defined in our Articles) of such holder, such Class B ordinary shares will be automatically and immediately converted
into an equal number of Class A ordinary shares.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Voting Rights</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On a show of hands each shareholder
is entitled to one vote or, on a poll, each shareholder is entitled to one vote for each Class A ordinary share and 20 votes for each
Class B ordinary share, voting together as a single class, on all matters that require a shareholder&#8217;s vote. Voting at any shareholders&#8217;
meeting is by show of hands of shareholders who are present in person or by proxy or, in the case of a shareholder being a corporation,
by its duly authorized representative, unless a poll is demanded.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">A poll may be demanded by
the chairman of such meeting or any shareholder present in person or by proxy.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">No shareholder shall be entitled
to vote or be reckoned in a quorum, in respect of any share, unless such shareholder is duly registered as our shareholder and all calls
or instalments due by such shareholder to us have been paid.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">An ordinary resolution to
be passed at a general meeting requires the affirmative vote of a simple majority of the votes cast, while a special resolution requires
the affirmative vote of at least two-thirds of votes attached to all outstanding ordinary shares cast at a general meeting.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Transfer Agent and Registrar</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The transfer agent and registrar
for the Class A ordinary shares is VStock Transfer, LLC, a California limited liability company with its business address at 18 Lafayette
Place, Woodmere, New York 11598.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>General Meetings of Shareholders</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our Articles provides that
our company may (but shall not be obligated to) hold an annual general meeting of shareholders in each calendar year, subject to Cayman
Islands laws and the Nasdaq Rules, in which case we shall specify the meeting as such in the notices calling it, and the annual general
meeting shall be held as a physical meeting in any part of the world and/or at one or more locations or as a hybrid meeting or as an electronic
meeting, at such time and place as may be determined by our directors.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

</div><!-- Field: Page; Sequence: 128; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->119<!-- Field: /Sequence --></span></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Shareholders&#8217; meetings
may be convened by a majority of our board of directors or the chairman of our board of directors. Advance notice of at least ten clear
days (as defined in the Articles) is required for the convening of our annual general meeting and any other general meeting of our shareholders.
Notwithstanding that a meeting is called by shorter notice than that mentioned above, but, subject to the Companies Act, it will be deemed
to have been duly called, if it is so agreed (1) in the case of a meeting called as an annual general meeting by all of our shareholders
entitled to attend and vote at the meeting; and (2) in the case of any other meeting, by a majority in number of the shareholders holding
not less than 95% in nominal value of the issued shares giving that right.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">No business other than the
appointment of a chairman may be transacted at any general meeting unless a quorum is present at the commencement of business. However,
the absence of a quorum will not preclude the appointment of a chairman. If present, the chairman of our board of directors shall be the
chairman presiding at any shareholders&#8217; meetings.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">A corporation being a shareholder
shall be deemed for the purpose of our Articles to be present in person if represented by its duly authorized representative being the
person appointed by resolution of the directors or other governing body of such corporation to act as its representative at the relevant
general meeting or at any relevant general meeting of any class of our shareholders. Such duly authorized representative shall be entitled
to exercise the same powers on behalf of the corporation that he represents as that corporation could exercise if it were our individual
shareholder.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Dividends</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Subject to the Companies Act,
our directors may declare dividends in any currency to be paid to our shareholders. Dividends may be declared and paid out of our profits,
realized or unrealized, or from any reserve set aside from profits which our directors determine is no longer needed. Our board of directors
may also declare and pay dividends out of the share premium account or any other fund or account that can be authorized for this purpose
in accordance with the Companies Act. Except in so far as the rights attaching to, or the terms of issue of, any share otherwise provides,
(1) all dividends shall be declared and paid according to the amounts paid up on the shares in respect of which the dividend is paid,
but no amount paid up on a share in advance of calls shall be treated for this purpose as paid up on that share and (2) all dividends
shall be apportioned and paid pro rata according to the amounts paid up on the shares during any portion or portions of the period in
respect of which the dividend is paid.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our directors may also pay
interim dividends, whenever our financial position, in the opinion of our directors, justifies such payment.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our directors may deduct from
any dividend or bonus payable to any shareholder all sums of money (if any) presently payable by such shareholder to us on account of
calls or otherwise.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">No dividend or other money
payable by us on or in respect of any share shall bear interest against us. In respect of any dividend proposed to be paid or declared
on our share capital, our directors may resolve and direct that (1) such dividend be satisfied wholly or in part in the form of an allotment
of shares credited as fully paid up, provided that our shareholders entitled thereto will be entitled to elect to receive such dividend
(or part thereof if our directors so determine) in cash in lieu of such allotment or (2) the shareholders entitled to such dividend will
be entitled to elect to receive an allotment of shares credited as fully paid up in lieu of the whole or such part of the dividend as
our directors may think fit. Our shareholders may, upon the recommendation of our directors, by ordinary resolution resolve in respect
of any particular dividend that, notwithstanding the foregoing, a dividend may be satisfied wholly in the form of an allotment of shares
credited as fully paid up without offering any right to shareholders to elect to receive such dividend in cash in lieu of such allotment.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Any dividend interest or other
sum payable in cash to the holder of shares may be paid by check or warrant sent by mail addressed to the holder at his registered address,
or addressed to such person and at such addresses as the holder may direct. Every check or warrant shall, unless the holder or joint holders
otherwise direct, be made payable to the order of the holder or, in the case of joint holders, to the order of the holder whose name stands
first on the register in respect of such shares, and shall be sent at his or their risk and payment of the check or warrant by the bank
on which it is drawn shall constitute a good discharge to us.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">All dividends unclaimed for
one year after having been declared may be invested or otherwise made use of by our board of directors for the benefit of our company
until claimed. Any dividend unclaimed after a period of six years from the date of declaration of such dividend shall be forfeited and
reverted to us.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Whenever our directors have
resolved that a dividend be paid or declared, our directors may further resolve that such dividend be satisfied wholly or in part by the
distribution of specific assets of any kind, and in particular of paid up shares, debentures or warrants to subscribe for our securities
or securities of any other company. Where any difficulty arises with regard to such distribution, our directors may settle it as they
think expedient. In particular, our directors may issue fractional certificates, ignore fractions altogether or round the same up or down,
fix the value for distribution purposes of any such specific assets, determine that cash payments shall be made to any of our shareholders
upon the footing of the value so fixed in order to adjust the rights of the parties, vest any such specific assets in trustees as may
seem expedient to our directors, and appoint any person to sign any requisite instruments of transfer and other documents on behalf of
the persons entitled to the dividend, which appointment shall be effective and binding on our shareholders.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Transfer of Ordinary Shares</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Subject to any applicable
restrictions set forth in our Articles, including, for example, the board of directors&#8217; discretion to refuse to register a transfer
of any share (not being a fully paid up share) to a person of whom it does not approve, or any share issued under share incentive plans
for employees upon which a restriction on transfer imposed thereby still subsists, or a transfer of any share to more than four joint
holders, any of our shareholders may transfer all or any of his or her shares by an instrument of transfer in the usual or common form
or in a form prescribed by the Nasdaq Global Select Market or in another form that our directors may approve.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our directors may decline
to register any transfer of any share which is not paid up or on which we have a lien. Our directors may also decline to register any
transfer of any share unless:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
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    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">a fee of such maximum sum as the Nasdaq Global Select Market may determine to be payable or such lesser sum as our directors may from time to time require is paid to us in respect thereof.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If our directors refuse to
register a transfer they shall, within three months after the date on which the instrument of transfer was lodged, send to each of the
transferor and the transferee notice of such refusal.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

</div><!-- Field: Page; Sequence: 130; Value: 1 --><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Liquidation</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Subject to any future shares
which are issued with specific rights, (1) if we are wound up and the assets available for distribution among our shareholders are more
than sufficient to repay the whole of the capital paid up at the commencement of the winding up, the excess shall be distributed <i>pari
passu</i> among those shareholders in proportion to the amount paid up at the commencement of the winding up on the shares held by them,
respectively, and (2) if we are wound up and the assets available for distribution among the shareholders as such are insufficient to
repay the whole of the paid-up capital, those assets shall be distributed so that, as nearly as may be, the losses shall be borne by the
shareholders in proportion to the capital paid up at the commencement of the winding up on the shares held by them, respectively.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If we are wound up (whether
the liquidation is voluntary or by the court), the liquidator may with the sanction of our special resolution and any other sanction required
by the Companies Act, divide among our shareholders in specie or kind the whole or any part of our assets (whether or not they shall consist
of property of the same kind) and may, for such purpose, set such value as the liquidator deems fair upon any property to be divided and
may determine how such division shall be carried out as between the shareholders or different classes of shareholders.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The liquidator may also vest
the whole or any part of these assets in trustees upon such trusts for the benefit of the shareholders as the liquidator shall think fit,
but so that no shareholder will be compelled to accept any assets, shares or other securities upon which there is a liability.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The consideration received
by each holder of a Class A ordinary share and a holder of a Class B ordinary share will be the same in any liquidation event.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Calls on Ordinary Shares and Forfeiture
of Ordinary Shares</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Subject to our Articles and
to the terms of allotment, our board of directors may from time to time make calls upon shareholders for any amounts unpaid on their ordinary
shares in a notice served to such shareholders at least 14 clear days prior to the specified time of payment. The ordinary shares that
have been called upon and remain unpaid are subject to forfeiture.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Redemption of Shares, Repurchase and Surrender
of Ordinary Shares</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are empowered by the Companies
Act and our Articles to purchase our own shares, subject to certain restrictions. Our directors may only exercise this power on our behalf,
subject to the Companies Act, our Articles and to any applicable requirements imposed from time to time by the Nasdaq Global Select Market,
the SEC, or by any other recognized stock exchange on which our securities are listed.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We may also repurchase any
of our shares on such terms and in such manner as have been approved by our board of directors.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Under the Companies Act, the
redemption or repurchase of any share may be paid out of our company&#8217;s profits or out of the proceeds of a fresh 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 the 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 (1) unless it is fully paid up, (2) if such redemption or repurchase
would result in there being no shares outstanding, or (3) if the company has commenced liquidation. In addition, our company may accept
the surrender of any fully paid share for no consideration.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

</div><!-- Field: Page; Sequence: 131; Value: 1 --><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Variations of Rights of Shares</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If at any time, our share
capital is divided into different classes of shares, all or any of the special rights attached to any class of shares may, subject to
the provisions of the Companies Act, be varied with the sanction of a special resolution passed at a general meeting of the holders of
the shares of that class. Consequently, the rights of any class of shares cannot be detrimentally altered without a majority of two-thirds
of the vote of all of the shares in that class.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The rights conferred upon
the holders of the shares of any class issued with preferred or other rights 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 or issue of further shares ranking <i>pari passu</i> with
such existing class of shares.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Issuance of Additional Shares</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our Articles authorize 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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our Articles also authorize
our board of directors to establish from time to time one or more series of preference shares and to determine, with respect to any series
of preference shares, the terms and rights of that series, including:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
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    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the number of shares of the series;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the dividend rights, dividend rates, conversion rights, voting rights; and</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the rights and terms of redemption and liquidation preferences.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our board of directors may
issue preference shares without action by our shareholders to the extent authorized but unissued. Issuance of these shares may dilute
the voting power of holders of ordinary shares.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><div><a id="a_052"></a></div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>C.</b></span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Material contracts</b></span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have not entered into any
material contracts other than in the ordinary course of business and other than those described in &#8220;Item&#160;4. Information on
the Company&#8212;Recent Financings,&#8221; &#8220;Item&#160;7. Major Shareholders and Related Party Transactions&#8212;B. Related Party
Transactions&#8221; or elsewhere in this annual report.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><div><a id="a_053"></a></div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>D.</b></span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Exchange controls</b></span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Not applicable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><div><a id="a_054"></a></div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>E.</b></span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Taxation</b></span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>The following discussion
of Cayman Islands, PRC and United States federal income tax consequences of an investment in Class A ordinary shares 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 or differing interpretation,
possibly with retroactive effect. This summary does not deal with all possible tax consequences relating to an investment in our Class
A ordinary shares, such as the tax consequences under U.S. state and local tax laws or under the tax laws of jurisdictions other than
the Cayman Islands, the People&#8217;s Republic of China and the United States. To the extent that the discussion relates to matters of
Cayman Islands tax law, it represents the opinion of Conyers Dill &amp; Pearman, our counsel as to Cayman Islands law, and to the extent
it relates to PRC tax law, it represents the opinion of Jingtian &amp; Gongcheng, our counsel as to PRC law.</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

</div><!-- Field: Page; Sequence: 132; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->123<!-- Field: /Sequence --></span></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Cayman Islands Taxation</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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 us or holders of our ordinary shares levied by the
government of the Cayman Islands except for stamp duties which may be applicable on instruments executed in, or after execution brought
within the jurisdiction of, the Cayman Islands.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Cayman Islands is a party
to a double tax treaty entered into with the United Kingdom in 2010 but otherwise is not party to any double tax treaties.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">There are no exchange control
regulations or currency restrictions in the Cayman Islands.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to Section 6 of the
Tax Concessions Act (2018 Revision) of the Cayman Islands, we have obtained an undertaking from the Governor-in-Cabinet:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">(1)&#160;that no law which
is enacted in the Cayman Islands imposing any tax to be levied on profits or income or gains or appreciation shall apply to us or our
operations; and</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">(2)&#160;that the aforesaid
tax or any tax in the nature of estate duty or inheritance tax shall not be payable on our shares, debentures or other obligations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The undertaking for us is
for a period of 20 years from May 24, 2018.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>PRC Taxation</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Income Tax and Withholding Tax</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In March 2007, the National
People&#8217;s Congress of China enacted the EIT Law, which became effective on January 1, 2008 (as amended in December 2018). The EIT
Law provides that enterprises organized under the laws of jurisdictions outside China with their &#8220;de facto management bodies&#8221;
located within China may be considered PRC resident enterprises and therefore subject to EIT at the rate of 25% on their worldwide income.
The Implementing Rules of the EIT Law further defines the term &#8220;de facto management body&#8221; as the management body that exercises
substantial and overall management and control over the business, personnel, accounts and properties of an enterprise.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In April 2009, the SAT issued
the Notice Regarding the Determination of Chinese-Controlled Overseas Incorporated Enterprises as PRC Tax Resident Enterprises on the
Basis of De Facto Management Bodies, known as Circular 82, which provides certain specific criteria for determining whether the &#8220;de
facto management body&#8221; of a PRC-controlled enterprise that is incorporated offshore is deemed to be located in China. Although Circular
82 only applies to offshore enterprises controlled by PRC enterprises or PRC enterprise groups, not offshore enterprises controlled by
PRC individuals or foreigners, the criteria set forth in the circular may reflect the SAT&#8217;s general position on how the &#8220;de
facto management body&#8221; test should be applied in determining the tax resident status of all offshore enterprises.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">According to Circular 82,
a Chinese-controlled enterprise which is incorporated offshore will be regarded as a PRC tax resident by virtue of having its &#8220;de
facto management body&#8221; in China and will be subject to EIT on its global income only if all of the following conditions are satisfied:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the primary location of the day-to-day operational management and the places where they perform their duties are in the PRC;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">decisions relating to the enterprise&#8217;s financial and human resources matters are made or are subject to the approval of organizations or personnel in the PRC;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><!-- Field: Page; Sequence: 133; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->124<!-- Field: /Sequence --></span></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the enterprise&#8217;s primary assets, accounting books and records, company seals and board and shareholders&#8217; resolutions are located or maintained in the PRC; and</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">50% or more of voting board members or senior executives habitually reside in the PRC.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the EIT Law and
the EIT Implementation Rules, except as otherwise provided by relevant tax treaties with the PRC government, dividends paid by foreign-invested
investment enterprises to foreign investors which are non-resident enterprises and which have not established or operated premises in
the PRC, or which have established or operated premises but where their income has no de facto relationship with such establishment or
operation of premises shall be subject to a withholding tax of 10%.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Circular 45 further clarifies
certain issues related to the determination of tax resident status. Circular 45 also specifies that when provided with a resident Chinese-controlled,
offshore-incorporated enterprise&#8217;s copy of its recognition of residential status, a payer does not need to withhold a 10% income
tax when paying certain PRC-source income, such as dividends, interest and royalties to such Chinese-controlled offshore-incorporated
enterprise. For more detailed information, see &#8220;Item 3.D. Key Information&#8212;Risk Factors&#8212;Risks Relating to Conducting
Business in China&#8212;We may be subject to EIT on our worldwide income if our company or any of our subsidiaries were considered a PRC
&#8220;resident enterprise&#8221; under the PRC Enterprise Income Tax Law, or the EIT Law.&#8221;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We believe that our Cayman
Islands holding company, Ebang International Holdings Inc., is not a PRC resident enterprise for PRC tax purposes. Ebang International
Holdings Inc. is a company incorporated outside China. As a holding company, its key assets are its ownership interests in its subsidiaries,
and its key assets are located, and its records (including the resolutions of its board of directors and the resolutions of its shareholders)
are maintained, outside China. As such, we do not believe that our company meets all of the conditions above or is a PRC resident enterprise
for PRC tax purposes. For the same reasons, we believe our other entities outside China are not PRC resident enterprises either. However,
the tax resident status of an enterprise is subject to determination by the PRC tax authorities and uncertainties remain with respect
to the interpretation of the term &#8220;de facto management body.&#8221; There can be no assurance that the PRC government will ultimately
take a view that is consistent with our position and there is a risk that the PRC tax authorities may deem our company as a PRC resident
enterprise since a substantial majority of the members of our management team are located in China, in which case we would be subject
to EIT at the rate of 25% on worldwide income. If the PRC tax authorities determine that our Cayman Islands holding company is a &#8220;resident
enterprise&#8221; for EIT purposes, a number of unfavorable PRC tax consequences could follow.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">One example is a 10% withholding
tax would be imposed on dividends we pay to our non-PRC enterprise shareholders and with respect to gains derived by our non-PRC enterprise
shareholders from transferring our shares. It is unclear whether, if we are considered a PRC resident enterprise, holders of our shares
would be able to claim the benefit of income tax treaties or agreements entered into between China and other countries or areas.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">According to the Public Notice
Regarding Certain Corporate Income Tax Matters on Indirect Transfer of Properties by Non-Tax Resident Enterprises, or SAT Public Notice
7, which was promulgated by the SAT and became effective on February 3, 2015, as amended on December 29, 2017, if a non-resident enterprise
transfers the equity interests of a PRC resident enterprise indirectly by transfer of the equity interests of an offshore holding company
(other than a purchase and sale of shares issued by a PRC resident enterprise in the public securities market) without a reasonable commercial
purpose, PRC tax authorities have the power to reassess the nature of the transaction and the indirect equity transfer may be treated
as a direct transfer. As a result, the gain derived from such transfer, which means the equity transfer price less the cost of equity,
will be subject to PRC withholding tax at a rate of up to 10%.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

</div><!-- Field: Page; Sequence: 134; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->125<!-- Field: /Sequence --></span></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Under the terms of SAT Public
Notice 7, a transfer which meets all of the following circumstances shall be directly deemed as having no reasonable commercial purposes
if:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">over 75% of the value of the equity interests of the offshore holding company are directly or indirectly derived from PRC taxable properties;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the function performed and risks assumed by the offshore holding company are insufficient to substantiate its corporate existence; or</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the foreign income tax imposed on the indirect transfer is lower than the PRC tax imposed on the direct transfer of the PRC taxable properties.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On October 17, 2017, the SAT
issued the Announcement of the State Administration of Taxation on Issues Concerning the Withholding of Non-resident Enterprises Income
Tax at Source, or SAT Bulletin 37, which took effect on December 1,&#160;2017, and subsequently amended on June 15, 2018. SAT Bulletin
37 purports to provide further clarifications by setting forth the definitions of equity transfer income and tax basis, the foreign exchange
rate to be used in the calculation of the withholding amount and the date on which the withholding obligation arises.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Specifically, SAT Bulletin
37 provides that where the transfer income subject to withholding at source is derived by a non-PRC resident enterprise in instalments,
the instalments may first be treated as recovery of costs of previous investments. Upon recovery of all costs, the tax amount to be withheld
must then be computed and withheld.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">There is uncertainty as to
the application of SAT Public Notice 7 and SAT Bulletin 37. SAT Public Notice 7 and SAT Bulletin 37 may be determined by the PRC tax authorities
to be applicable to transfers of our shares that involve non-resident investors, if any of such transactions were determined by the tax
authorities to lack a reasonable commercial purpose.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As a result, we and our non-resident
investors in such transactions may become at risk of being taxed under SAT Public Notice 7 and SAT Bulletin 37, and we may be required
to comply with SAT Public Notice 7 and SAT Bulletin 37 or to establish that we should not be taxed under the general anti-avoidance rule
of the EIT Law. This process may be costly and have a material adverse effect on our financial condition and results of operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Value-added Tax</i></b>&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Under the Circular on Comprehensively
Promoting the Pilot Program of the Collection of Value-added Tax to Replace Business Tax, or Circular 36, which was promulgated by the
Ministry of Finance and the SAT on March 23, 2016 and became effective on May 1, 2016, as amended on April 1, 2019, entities and individuals
engaging in the sale of services, intangible assets or fixed assets within the territory of the PRC are required to pay value added tax,
or VAT, instead of business tax.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">According to the Circular
36, our PRC subsidiaries and consolidated affiliated entity are subject to VAT, at a rate of 6% to 17% on proceeds received from customers
and are entitled to a refund for VAT already paid or borne on the goods purchased by it and utilized in the production of goods or provisions
of services that have generated the gross sales proceeds.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">According to the Circular
of the Ministry of Finance and the SAT on Adjusting Value-added Tax Rates promulgated on April 4, 2018, and effective May 1, 2018, where
a taxpayer engages in a taxable sales activity for the value-added tax purpose or imports goods, the previous applicable 17% tax rates
are lowered to 16%.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">According to the Circular
on Policies to Deepen Value-added Tax Reform promulgated by the Ministry of Finance, the SAT, and the General Administration of Customs
on March 20, 2019, and effective April 1, 2019, where a taxpayer engages in a taxable sales activity for the value-added tax purpose or
imports goods, the previous applicable 16% and 10% tax rates are lowered to 13% and 9% respectively.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Material U.S. Federal Income Tax Considerations
</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following discussion is
a summary of material U.S. federal income tax considerations relating to the ownership and disposition of our Class A ordinary shares
and warrants by a U.S. Holder, as defined below, that acquires the Class A ordinary shares and warrants and holds the Class A ordinary
shares and warrants as &#8220;capital assets&#8221; (generally, property held for investment) under Section 1221 of the United States
Internal Revenue Code of 1986, as amended, or the Code. This discussion is based upon existing U.S. federal income tax law as of the date
of this annual report, 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 consequences described below, and there can
be no assurance that the IRS or a court will not take a contrary position. This discussion does not address all aspects of U.S. federal
income taxation that may be important to particular investors in light of their individual circumstances, including investors subject
to special tax rules (such as, for example, financial institutions, insurance companies, regulated investment companies, real estate investment
trusts, broker-dealers, traders in securities that elect mark-to-market treatment, partnerships or other pass-through entities for U.S.
federal income tax purposes and their partners or investors, tax-exempt organizations (including private foundations), investors who are
not U.S. Holders, investors that own (directly, indirectly, or constructively) ordinary shares representing 10% or more of our stock (by
vote or by value), investors that hold their Class A ordinary shares and/or related warrants as part of a straddle, hedge, conversion,
constructive sale or other integrated transaction, or investors that have a functional currency other than the U.S. dollar, all of whom
may be subject to tax rules that differ significantly from those summarized below. In addition, this discussion does not address any U.S.
federal estate, gift or other non-income tax considerations, state, local, or non-U.S. tax considerations, the alternative minimum tax,
or the Medicare contribution tax on net investment income. Each potential investor is urged to consult its tax advisor regarding the U.S.
federal, state, local and non-U.S. income and other tax considerations of an investment in the Class A ordinary shares and related warrants.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>General</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">For purposes of this discussion,
a &#8220;U.S. Holder&#8221; is a beneficial owner of our Class A ordinary shares and related warrants that is, for U.S. federal income
tax purposes, (1) an individual who is a citizen or resident of the United States, (2) a corporation (or other entity or arrangement 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, (3) an estate the income of which is includible in gross income for U.S. federal income tax purposes regardless
of its source, or (4) a trust (a) the administration of which is subject to the primary supervision of a U.S. court and which has one
or more United States persons (within the meaning of Section 7701(a)(30) of the Code) who have the authority to control all substantial
decisions of the trust or (b) that has otherwise elected to be treated as a United States person under the Code.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If a partnership (or other
entity or arrangement treated as a partnership for U.S. federal income tax purposes) is a beneficial owner of our Class A ordinary shares
and warrants, the tax treatment of a partner in the partnership will depend upon the status of the partner and the activities of the partnership.
Partnerships and partners of a partnership holding our Class A ordinary shares and related warrants are urged to consult their tax advisors
regarding an investment in our Class A ordinary shares and related warrants.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Passive Foreign Investment Company Considerations
</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">A non-U.S. corporation, such
as our company, will be classified as a &#8220;passive foreign investment company,&#8221; or PFIC, for U.S. federal income tax purposes
for any taxable year if either (1) 75% or more of its gross income for such year consists of certain types of &#8220;passive&#8221; income,
or the &#8220;income test&#8221; or (2) 50% or more of the value of its assets (generally based on an average of the quarterly values
of the assets) during such year is attributable to assets that produce or are held for the production of passive income, or the &#8220;asset
test&#8221;. For this purpose, cash and assets readily convertible into cash are categorized as passive assets and the company&#8217;s
unbooked intangibles associated with active business activities may generally be classified as active assets. Passive income generally
includes, among other things, dividends, interest, rents, royalties, and gains from the disposition of passive assets. We will be treated
as owning our proportionate share of the assets and earning our proportionate share of the income of any other corporation in which we
own, directly or indirectly, more than 25% (by value) of the stock.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">While we do not expect to
be or become a PFIC in the current or foreseeable taxable years, no assurance can be given in this regard because the determination of
whether we will be or become a PFIC is a factual determination made annually that will depend, in part, upon the composition of our income
and assets. Furthermore, 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 our initial public offering. Under circumstances where our revenue from activities that produce passive income
significantly increases relative to our revenue 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. In addition, because there are uncertainties
in the application of the relevant rules, it is possible that the Internal Revenue Service may challenge our classification of certain
income and assets as non-passive or our valuation of our tangible and intangible assets, each of which may result in our becoming a PFIC
for the current or subsequent taxable years. If we were classified as a PFIC for any year during which a U.S. Holder held our ordinary
shares, we generally would continue to be treated as a PFIC for all succeeding years during which such U.S. Holder held our ordinary shares
even if we cease to be a PFIC in subsequent years, unless certain elections are made.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The discussion herein under
&#8220;Dividends&#8221; is written on the basis that we will not be or become classified as a PFIC for U.S. federal income tax purposes.
If we are treated as a PFIC, the U.S. federal income tax considerations that apply generally are discussed under &#8220;Passive Foreign
Investment Company Rules.&#8221;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Dividends</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Subject to the PFIC rules
described below, any distributions (including constructive distributions of the amount of any PRC tax withheld) paid on the Class A 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 under U.S. federal income tax principles, any distribution will generally
be treated as a &#8220;dividend&#8221; for U.S. federal income tax purposes. Under current law, a non-corporate recipient of dividend
income will generally be subject to tax on dividend income from a &#8220;qualified foreign corporation&#8221; at the lower rates applicable
to &#8220;qualified dividend income&#8221; rather than the marginal tax rates generally applicable to ordinary income, provided that certain
holding period and other requirements are met.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->128<!-- Field: /Sequence --></span></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">A non-U.S. corporation (other
than a corporation that is classified as a PFIC for the taxable year in which the dividend is paid or the preceding taxable year) will
generally be considered to be a qualified foreign corporation (1) if it is eligible for the benefits of a comprehensive income tax treaty
with the United States that the Secretary of Treasury of the United States determines is satisfactory for purposes of this provision and
that includes an exchange of information program, or (2) with respect to any dividend it pays on stock that is readily tradable on an
established securities market in the United States. Our Class A ordinary shares are listed on the Nasdaq Global Select Market. We believe,
but cannot assure you, that Class A ordinary shares will continue to be considered readily tradable on an established securities market
in the United States and that we will be a qualified foreign corporation with respect to dividends paid on the Class A ordinary shares.
However, there can be no assurance that the Class A ordinary shares will continue to be considered readily tradable on an established
securities market in later years. In the event we are deemed to be a PRC resident enterprise under the Enterprise Income Tax Law (see
&#8220;&#8212;PRC Taxation&#8221;), we may be eligible for the benefits of the Agreement Between the Government of the United States of
America and the Government of the People&#8217;s Republic of China for the Avoidance of Double Taxation and the Prevention of Tax Evasion
with Respect to Taxes on Income, or the United States-PRC income tax treaty (that the Secretary of the Treasury of the United States has
determined is satisfactory for this purpose), in which case we would be treated as a qualified foreign corporation with respect to dividends
paid on our Class A ordinary shares. U.S. Holders are urged to consult their tax advisors regarding the availability of the reduced tax
rate on dividends in their particular circumstances. Dividends received on the Class A ordinary shares will not be eligible for the dividends
received deduction allowed to qualifying corporations under the Code.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">For U.S. foreign tax credit
purposes, dividends paid on the Class A ordinary shares will generally be treated as income from foreign sources and will generally constitute
passive category income. If we are deemed to be a PRC resident enterprise under the Enterprise Income Tax Law, a U.S. Holder may be subject
to PRC withholding taxes on dividends paid, if any, on the Class A ordinary shares. A U.S. Holder may be eligible, subject to complex
limitations, to claim a foreign tax credit in respect of any foreign withholding taxes imposed on dividends received on the Class A ordinary
shares. A U.S. Holder who does not elect to claim a foreign tax credit for foreign tax withheld may instead claim a deduction for U.S.
federal income tax purposes in respect of such withholding, but only for a year in which such holder elects to do so for all creditable
foreign income taxes. The rules governing the foreign tax credit are complex. U.S. Holders are urged to consult their tax advisors regarding
the availability of the foreign tax credit under their particular circumstances.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Sale or Other Disposition of Ordinary Shares
</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Subject to the PFIC rules
discussed below, a U.S. Holder will generally recognize capital gain or loss, if any, upon the sale or other disposition of Class A ordinary
shares and warrants in an amount equal to the difference between the amount realized upon the disposition and the holder&#8217;s adjusted
tax basis in such Class A ordinary shares. Any capital gain or loss will be long-term capital gain or loss if the Class A ordinary shares
have been held for more than one year and will generally be U.S. source gain or loss for U.S. foreign tax credit purposes. Long-term capital
gains of non-corporate U.S. Holders are currently eligible for reduced rates of taxation. If we are treated as a PRC resident enterprise
under the Enterprise Income Tax Law, and gain from the disposition of the ordinary shares is subject to tax in the PRC (see &#8220;&#8212;PRC
Taxation&#8221;), such gain may be treated as PRC source gain for foreign tax credit purposes under the United States-PRC income tax treaty.
The deductibility of a capital loss may be subject to limitations. U.S. Holders are urged to consult their tax advisors regarding the
tax consequences if a foreign tax is imposed on a disposition of the Class A ordinary shares, including the availability of the foreign
tax credit under their particular circumstances.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->129<!-- Field: /Sequence --></span></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Passive Foreign Investment Company Rules
</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If we are classified as a
PFIC for any taxable year during which a U.S. Holder holds the Class A ordinary shares or warrants, unless the U.S. Holder makes one of
certain elections (as described below), the U.S. Holder will, except as discussed below, be subject to special tax rules that have a penalizing
effect, regardless of whether we remain a PFIC in subsequent taxable years, on (1) 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% of the average annual distributions
paid in the three preceding taxable years or, if shorter, the U.S. Holder&#8217;s holding period for the ordinary shares or warrants),
and (2) any gain realized on the sale or other disposition, including, under certain circumstances, a pledge, of Class A ordinary shares
or warrants. Under the PFIC rules:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the excess distribution and/or gain will be allocated ratably over the U.S. Holder&#8217;s holding period for the Class A ordinary shares or warrants;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the amount of the excess distribution or gain allocated to the taxable year of distribution or gain and to any taxable years in the U.S. Holder&#8217;s holding period prior to the first taxable year in which we are classified as a PFIC (each such taxable year, a pre-PFIC year) will be taxable as ordinary income;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the amount of the excess distribution or gain allocated to each prior taxable year, other than a pre-PFIC year, will be subject to tax at the highest tax rate in effect applicable to the individuals or corporations, as appropriate, for that year, and will be increased by an additional tax equal to interest on the resulting tax deemed deferred with respect to each such year.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If we are a PFIC for any taxable
year during which a U.S. Holder holds the Class A ordinary shares or warrants and any of our non-U.S. subsidiaries or other corporate
entities in which we own equity interests is also a PFIC, such U.S. Holder would be treated as owning a proportionate amount (by value)
of the shares of the lower-tier PFIC for purposes of the application of these rules. Each U.S. Holder is advised to consult its tax advisors
regarding the application of the PFIC rules to any of our lower-tier PFICs.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If we are a PFIC for any taxable
year during which a U.S. Holder holds the Class A ordinary shares or warrants, we will continue to be treated as a PFIC with respect to
such U.S. Holder for all succeeding taxable years during which the U.S. Holder holds the Class A ordinary shares or warrants, unless we
were to cease to be a PFIC and the U.S. Holder makes a &#8220;deemed sale&#8221; election with respect to the Class A ordinary shares
or warrants. If such election is made, the U.S. Holder will be deemed to have sold its ordinary shares or warrants at their fair market
value and any gain from such deemed sale would be subject to the rules described in the preceding two paragraphs. After the deemed sale
election, so long as we do not become a PFIC in a subsequent taxable year, the Class A ordinary shares or warrants with respect to which
such election was made will not be treated as shares in a PFIC and, as a result, the U.S. Holder will not be subject to the rules described
above with respect to any &#8220;excess distribution&#8221; the U.S. Holder receives from us or any gain from an actual sale or other
disposition of the Class A ordinary shares or warrants. Each U.S. Holder is strongly urged to consult its tax advisors as to the possibility
and consequences of making a deemed sale election if we are and then cease to be a PFIC and such an election becomes available to the
U.S. Holder.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As an alternative to the foregoing
rules, a U.S. Holder of &#8220;marketable stock&#8221; in a PFIC may make a mark-to-market election with respect to the Class A ordinary
shares (but not the warrants), provided that the Class A ordinary shares are &#8220;regularly traded&#8221; (as specially defined in the
applicable United States Treasury Regulations) on the Nasdaq Global Select Market, which is a qualified exchange or other market for these
purposes. We expect that our Class A ordinary shares will be treated as marketable stock upon their listing on the Nasdaq Global Select
Market, but no assurances can be given in this regard. If a mark-to-market election is made, the U.S. Holder will generally (1) include
as ordinary income for each taxable year that we are a PFIC the excess, if any, of the fair market value of Class A ordinary shares held
at the end of the taxable year over the U.S. Holder&#8217;s adjusted tax basis in such Class A ordinary shares and (2) deduct as an ordinary
loss the excess, if any, of the U.S. Holder&#8217;s adjusted tax basis in the Class A ordinary shares over the fair market value of such
Class A ordinary shares held at the end of the taxable year, but only to the extent of the net amount previously included in income as
a result of the mark-to-market election. The U.S. Holder&#8217;s adjusted tax basis in the Class A ordinary shares would be adjusted to
reflect any income or loss resulting from the mark-to-market election. If a U.S. Holder makes an effective mark-to-market election in
any year that we are a PFIC, any gain recognized upon the sale or other disposition of the Class A ordinary shares will be treated as
ordinary income and any loss will be treated as ordinary loss, but only to the extent of the net amount previously included in income
as a result of the mark-to-market election.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

</div><!-- Field: Page; Sequence: 139; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->130<!-- Field: /Sequence --></span></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If a U.S. Holder makes a mark-to-market
election in respect of a corporation classified as a PFIC and such corporation ceases to be classified as a PFIC, the U.S. Holder will
not be required to take into account the mark-to-market gain or loss described above during any period that such corporation is not classified
as a PFIC.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Because a mark-to-market election
cannot be made for any lower-tier PFICs that we may own, a U.S. Holder who makes a mark-to-market election with respect to the Class A
ordinary shares may continue to be subject to the general PFIC rules with respect to such U.S. Holder&#8217;s indirect interest in any
of our non-U.S. subsidiaries or other corporate entities in which we own equity interests that is classified as a PFIC.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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 the general tax treatment for PFICs described above.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As discussed above under &#8220;Dividends,&#8221;
dividends that we pay on the Class A ordinary shares will not be eligible for the reduced tax rate that applies to qualified dividend
income if we are classified as a PFIC for the taxable year in which the dividend is paid or the preceding taxable year. In addition, if
a U.S. Holder owns the Class A ordinary shares or warrants during any taxable year that we are a PFIC, the holder must file an annual
information return with the IRS. Each U.S. Holder is urged to consult its tax advisor concerning the U.S. federal income tax consequences
of purchasing, holding, and disposing Class A ordinary shares or warrants if we are or become a PFIC, including the possibility of making
a mark-to-market election and the unavailability of the qualified electing fund election.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Information Reporting and Backup Withholding</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Certain U.S. Holders are required
to report information to the IRS relating to an interest in &#8220;specified foreign financial assets&#8221; (as defined in the Code),
including shares and warrants issued by a non-United States corporation, for any year in which the aggregate value of all specified foreign
financial assets exceeds $50,000 (or a higher dollar amount prescribed by the IRS), subject to certain exceptions (including an exception
for shares held in custodial accounts maintained with a U.S. financial institution). These rules also impose penalties if a U.S. Holder
is required to submit such information to the IRS and fails to do so.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, U.S. Holders
may be subject to information reporting to the IRS and backup withholding with respect to dividends on and proceeds from the sale or other
disposition of the Class A ordinary shares or warrants. Information reporting will generally apply to payments of dividends on, and to
proceeds from the sale or other disposition of, Class A ordinary shares or warrants by a paying agent within the United States to a U.S.
Holder, other than U.S. Holders that are exempt from information reporting and properly certify their exemption. A paying agent within
the United States will be required to withhold at the applicable statutory rate, currently 24%, in respect of any payments of dividends
on, and the proceeds from the disposition of, Class A ordinary shares or warrants within the United States to a U.S. Holder (other than
U.S. Holders that are exempt from backup withholding and properly certify their exemption) if the holder fails to furnish its correct
taxpayer identification number or otherwise fails to comply with applicable backup withholding requirements. U.S. Holders who are required
to establish their exempt status generally must provide a properly completed IRS Form W-9.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Backup withholding is not
an additional tax. Amounts withheld as backup withholding may be credited against a U.S. Holder&#8217;s U.S. federal income tax liability.
A U.S. Holder generally may obtain a refund of any amounts withheld under the backup withholding rules by filing the appropriate claim
for refund with the IRS in a timely manner and furnishing any required information. Each U.S. Holder is advised to consult with its tax
advisor regarding the application of the United States information reporting rules to their circumstances.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><div><a id="a_055"></a></div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>F.</b></span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Dividends and paying agents</b></span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Not applicable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

</div><!-- Field: Page; Sequence: 140; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->131<!-- Field: /Sequence --></span></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><div><a id="a_056"></a></div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>G.</b></span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Statement by experts</b></span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Not applicable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><div><a id="a_057"></a></div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>H.</b></span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Documents on display</b></span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are subject to the informational
requirements of the Exchange Act. Accordingly, we are required to file reports and other information with the SEC, including annual reports
on Form&#160;20-F and reports on Form&#160;6-K. The SEC maintains an Internet website that contains reports and other information about
issuers, like us, that file electronically with the SEC. The address of that website is <i>www.sec.gov</i>. As a foreign private issuer,
we are exempt from the rules under the Exchange Act prescribing the furnishing and content of quarterly reports and proxy statements,
and officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained
in Section 16 of the Exchange Act.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><div><a id="a_058"></a></div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>I.</b></span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Subsidiary information</b></span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Not applicable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;&#160;</p><div>

</div><div><a id="a_059"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>ITEM&#160;11. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Concentration of Credit Risk</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Financial instruments that
potentially expose us to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. We place
our cash and cash equivalents with financial institutions with high credit ratings and quality.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We conduct credit evaluations
of customers, and generally do not require collateral or other security from our customers. We establish an allowance for doubtful accounts
primarily based upon the age of the receivables and factors surrounding the credit risk of specific customers.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Liquidity Risk</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our policy is to regularly
monitor our liquidity requirements and our compliance with lending covenants, to ensure that we maintain sufficient reserves of cash and
readily realizable marketable securities and adequate committed lines of funding from major financial institutions to meet its liquidity
requirements in the short and longer term. see &#8220;Item 5. Operating and Financial Review and Prospects&#8212;B. Liquidity and Capital
Resources.&#8221;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Currency Risk</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our operations are primarily
in China. Our reporting currency is denominated in U.S. dollars. We are exposed to currency risk primarily through sales and purchases
which give rise to receivables, payables and cash balances that are denominated in a currency other than the functional currency of the
operations to which the transactions relate. Thus, our revenues and results of operations may be impacted by exchange rate fluctuations
between RMB, Hong Kong dollars, Euros, Australian dollars and U.S. dollars. We had currency translation gains of US$2.0 million and US$1.0
million in 2020 and 2021, respectively, recognized in other comprehensive gain, and currency transaction loss of US$5.3 million in 2022,
as a result of changes in the exchange rate.&#160;</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">

</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 141; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->132<!-- Field: /Sequence --></span></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Inflation</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">To date, inflation in China
and Hong Kong has not materially affected our results of operations. According to the National Bureau of Statistics of China, the year-over-year
percent changes in the consumer price index for December 2020, 2021 and 2022 were increases of 0.2%, 1.5% and 1.8%, respectively, and
according to the Census and Statistics Department of Hong Kong, the year-over-year percent changes in the consumer price index for December
2020, 2021 and 2022 were decrease of 0.7%, increase of 1.6% and increase of 2.0%, respectively. Although we have not been materially affected
by inflation in the past, we may be affected if China or Hong Kong experiences higher rates of inflation in the future.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">According to the Australian
Bureau of Statistics, the year-over-year percent changes in the consumer price index for December 2020, 2021 and 2022 were increases of
0.8%, 2.8% and 8.3%, respectively. The inflation increment has led to a significant increase in our overseas business personnel recruitment
and raw material procurement costs. If we are unable to pass on the increase in production costs to our customers, our profitability may
decline, and our operating results may be significantly adversely affected by continued rising inflation.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><div><a id="a_060"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>ITEM&#160;12. DESCRIPTION OF SECURITIES OTHER
THAN EQUITY SECURITIES</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><div><a id="a_061"></a></div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>A.</b></span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Debt securities</b></span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Not applicable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><div><a id="a_062"></a></div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>B.</b></span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Warrants and rights</b></span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Not applicable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><div><a id="a_063"></a></div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>C.</b></span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Other securities</b></span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Not applicable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><div><a id="a_064"></a></div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>D.</b></span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>American Depositary Shares</b></span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Not applicable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>


</div><!-- Field: Page; Sequence: 142; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->133<!-- Field: /Sequence --></span></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><div><a id="a_065"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>PART&#160;II</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><div><a id="a_066"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>ITEM&#160;13. DEFAULTS, DIVIDEND ARREARAGES
AND DELINQUENCIES</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><div><a id="a_067"></a></div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>A.</b></span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Defaults</b></span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">No matters to report.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><div><a id="a_068"></a></div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>B.</b></span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Arrears and delinquencies</b></span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">No matters to report.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><div><a id="a_069"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>ITEM&#160;14. MATERIAL MODIFICATIONS TO THE
RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Material Modifications to the Rights of Security Holders</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On November 20, 2022, at 8:00
a.m. (Singapore Time), we convened an extraordinary general meeting of shareholders (the &#8220;EGM&#8221;). At the EGM, our shareholders
approved the following ordinary resolution:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">THAT with immediate effect
upon passing, every thirty (30) issued and unissued Class A Ordinary Shares and Class B Ordinary Shares of the Company of HK$0.001 each
(the &#8220;Existing Shares&#8221;) be consolidated into one (1) share of HK$0.03 each (each a &#8220;Consolidated Share&#8221;), such
Consolidated Shares shall rank pari passu in all respects with each other, so that following the Share Consolidation the authorised share
capital of the Company will be changed from HK$380,000.00 divided into 380,000,000 Ordinary Shares of a par value of HK$0.001 each consisting
of (i) 333,374,217 Class A Ordinary Shares of a par value of HK$0.001 each, and (ii) 46,625,783 Class B Ordinary Shares of a par value
of HK$0.001 each, to HK$380,000.00 divided into 12,666,666.66 Ordinary Shares of a par value of HK$0.03 each of which (i) 11,112,473.90
Class A Ordinary Shares are designated as Class A Ordinary Shares of a par value of HK$0.03 each, and (ii) 1,554,192.76 Class B Ordinary
Shares are designated as Class B Ordinary Shares of a par value of HK$0.03 each (the &#8220;Share Consolidation&#8221;).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">THAT all fractional entitlements
to the issued Consolidated Shares resulting from the Share Consolidation will be issued to the shareholders of the Company and the Board
shall be authorised to settle as it considers expedient any difficulty resulting from the Share Consolidation and to further deal as the
Board in its discretion and as it considers expedient, as appropriate, the treatment of all such issued fractional shares arising on a
post-consolidation basis.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">See &#8220;Item 10&#8212;Additional
Information&#8212;B. Memorandum and Articles of Association&#8212;Ordinary Shares&#8221; for a description of the rights of securities
holders.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Use of Proceeds</b>&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In June 2020, we completed
our initial public offering in which we offered and sold an aggregate 642,145 (19,264,337 before Share Consolidation) of our Class A ordinary
shares, at an initial offering price of US$156.90 (US$5.23 before Share Consolidation) per Class A ordinary share. The registration statement
on Form F-1, as amended (File No. 333-237843) in connection with the initial public offering was declared effective by the SEC on June
25, 2020. AMTD Global Markets Limited, Loop Capital Markets LLC and Prime Number Capital LLC were the representatives of the underwriters
for our initial public offering. We received net proceeds of approximately US$91.7 million, after deducting underwriting discounts and
commissions and estimated offering expenses payable by us. The total expenses incurred for our company&#8217;s account in connection with
our initial public offering was approximately US$9.1 million, which included US$7.1 million in underwriting discounts and commissions
for the initial public offering and approximately US$2 million in other costs and expenses for our initial public offering. None of the
transaction expenses included payments to directors or officers of our company or their associates, persons owning more than 10% or more
of our equity securities or our affiliates. None of the net proceeds we received from the initial public offering were paid, directly
or indirectly, to any of our directors or officers or their associates, persons owning 10% or more of our equity securities or our affiliates.
For the period from June 25, 2020 to December&#160;31, 2022, we had used approximately US$63.53&#160;million of the net proceeds received
from our initial public offering for (i)&#160;expansion of overseas business and new businesses, including establishing research and development
centers and taking selling and marketing initiatives overseas, (ii) development and introduction of new mining machines, (iii) corporate
branding and marketing activities, and (iv) general corporate purposes, including working capital needs and other corporate uses. We still
intend to use the balance of the net proceeds from our initial public offering as disclosed in the registration statement.</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">

</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

</div><!-- Field: Page; Sequence: 143; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->134<!-- Field: /Sequence --></span></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">From November 2020 to April
2021, we received net proceeds of an aggregate of approximately US$209 million through follow-on public offerings in connection with three
registration statements on Form F-1, as amended (File Nos. 333-249647, 333-252804 and 333-254787, respectively). The offerings were priced
at US$156.9, US$150.00 and US$183.00 (US$5.25, US$5.00 and US$6.1 before Share Consolidation) per unit, respectively, with each unit consisting
of one Class A ordinary share and one warrant to purchase one-half of one Class A ordinary share. The registration statements were declared
effective by the SEC on November 17, 2020, February 10, 2021 and March 31, 2021, respectively. The total expenses incurred for our company&#8217;s
account in connection with these offerings were approximately US$14.4 million, which included US$13.4 million in placement agent fees
and approximately US$1 million in other costs and expenses for these offerings. Univest Securities, LLC was the placement agent for these
offerings. None of the transaction expenses in connection with these offerings included payments to directors or officers of our company
or their associates, persons owning more than 10% or more of our equity securities or our affiliates. None of the net proceeds we received
from these follow-on public offerings were paid, directly or indirectly, to any of our directors or officers or their associates, persons
owning 10% or more of our equity securities or our affiliates. For the Period from November 17, 2020 to December 31, 2022, we had used
approximately US$64.76 million of the net proceeds received from our follow-on offerings for (i) development and application of blockchain
technology into financial services, (ii) research, development, production and sales of ASICs and equipment related to cryptocurrencies,
(iii) expansion of our cryptocurrency mining business as well as establishment and operation of cryptocurrency mining farms, (iv) establishment
and operation of Fintech service platforms.&#160;We still intend to use the net proceeds from such offerings as disclosed in their respective
registration statements.&#160;</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">

</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;&#160;</p><div>

</div><div><a id="a_070"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>ITEM&#160;15. CONTROLS AND PROCEDURES</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><div><a id="a_071"></a></div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>A.</b></span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Disclosure Controls and Procedures</b></span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As of December&#160;31, 2022,
under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer,
we performed an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule&#160;13a-15(e)&#160;under
the Exchange Act). There are inherent limitations to the effectiveness of any disclosure controls and procedures system, including the
possibility of human error and circumventing or overriding them. Even if effective, disclosure controls and procedures can provide only
reasonable assurance of achieving their control objectives.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Based on such evaluation,
our management has concluded that our disclosure controls and procedures were not effective as of December 31, 2022 and as of the date
that the evaluation of the effectiveness of our disclosure controls and procedures was completed,&#160;failed to provide reasonable assurance
that the information we are required to disclose in the reports we file or submit under the Exchange Act is (1)&#160;recorded, processed,
summarized and reported within the time periods specified in the SEC&#8217;s rules&#160;and forms and (2)&#160;accumulated and communicated
to our management to allow timely decisions regarding required disclosures.&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><div><a id="a_072"></a></div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>B.</b></span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Management&#8217;s Annual Report on Internal Control over Financial Reporting</b></span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our management is responsible
for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) and 15d-15(f) under
the Exchange Act. Our management evaluated the effectiveness of our internal control over financial reporting, as required by Rule 13a-15(c)
of the Exchange Act, based on criteria established in the framework in Internal Control-Integrated Framework (2013) issued by the Committee
of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, our management has concluded that our internal control
over financial reporting was not effective as of December 31, 2022 due to a material weakness identified in our internal control over
financial reporting as described below.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Because of its inherent limitations,
internal control over financial reporting may not prevent or detect misstatements. In addition, projections of any evaluation of effectiveness
of our internal control over financial reporting to future periods are subject to the risk that controls may become inadequate because
of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

</div><!-- Field: Page; Sequence: 144; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->135<!-- Field: /Sequence --></span></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;

</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Internal Control Over Financial Reporting</i></b>&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">During the audit of our financial
statements for the year ended December&#160;31, 2022, one material weakness was identified in our internal control over financial reporting.
As defined in the standards established by the Public Company Accounting Oversight Board of the United States, a &#8220;material weakness&#8221;
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 the company&#8217;s annual or interim financial statements will not be prevented or detected on a timely
basis. The material weakness identified is related to the lack of sufficient accounting personnel with appropriate experience and knowledge
in financial reporting in accordance with U.S. GAAP.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are in the process of implementing
a number of measures to improve our internal control over financial reporting to address the material weakness identified, including:
(1) in addition to the CFO and the financial controller, hiring a qualified CFO and a senior financial reporting manager, equipped with
relevant U.S. GAAP and SEC reporting experience and qualifications to strengthen the financial reporting function and to set up a financial
and system control framework, (2) formalizing and standardizing our accounting and financial reporting control procedures and policies
to improve the quality and accuracy of the period end financial closing process, and (3) enhancing an internal audit function as well
as engaging an external consulting firm to help us assess our compliance readiness under rule 13a-15 of the Exchange Act and improve overall
internal control.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">However, we cannot assure
you that we will remediate our material weakness in a timely manner. The process of designing and implementing an effective financial
reporting system is a continuous effort that requires us to anticipate and react to changes in our business and the economic and regulatory
environments and to expend significant resources to maintain a financial reporting system that is adequate to satisfy our reporting obligation.
See &#8220;Item 3. Key Information&#8212;D. Risk Factors&#8212;Risks Relating to Our Business and Industry&#8212;If we fail to implement
and maintain an effective system of internal controls, we may be unable to accurately or timely report our results of operations or prevent
fraud, and investor confidence and the market price of our Class A ordinary shares may be materially and adversely affected.&#8221; Additionally,
we cannot assure you that we have identified all, or that we will not in the future have additional, material weaknesses.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><div><a id="a_073"></a></div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>C.</b></span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Attestation Report of the Registered Public Accounting Firm</b></span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As a company with less than
US$1.235&#160;billion in revenue for our last fiscal year, we qualify as an &#8220;emerging growth company&#8221; 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&#160;404 of the
Sarbanes-Oxley Act of 2002, in the assessment of the emerging growth company&#8217;s internal control over financial reporting.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><div><a id="a_074"></a></div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>D.</b></span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Changes in Internal Control over Financial Reporting</b></span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Subject to the above, there
were no other changes in the Company&#8217;s internal control over financial reporting that occurred during the year ended December 31,
2022, that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting<i>.</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><div><a id="a_075"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>ITEM&#160;16. [RESERVED]</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><div><a id="a_076"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>ITEM&#160;16A. Audit committee financial expert</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have determined that Yanqing
Gao, Tingjie Lyu and Mingming Su are independent, as such term is defined under SEC rules&#160;applicable to foreign private issuers.
In addition, Mr.&#160;Yanqing Gao is regarded as an audit committee financial expert.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

</div><!-- Field: Page; Sequence: 145; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->136<!-- Field: /Sequence --></span></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><div><a id="a_077"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>ITEM&#160;16B. Code of Ethics</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have adopted a code of
ethics applicable to the board of directors and all employees. Since its effective date on April 24, 2020, we have not waived compliance
with or amended the code of ethics.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><div><a id="a_078"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>ITEM&#160;16C. Principal Accountant Fees and
Services</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following table sets forth
the aggregate fees by categories specified below in connection with certain professional services rendered by MaloneBailey, LLP, our independent
registered public accounting firm, for the periods indicated.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 11pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td><span style="font-size: 10pt">&#160;</span></td><td style="font-weight: bold; padding-bottom: 1.5pt"><span style="font-size: 10pt">&#160;</span></td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid"><span style="font-size: 10pt">2022</span></td><td style="padding-bottom: 1.5pt; font-weight: bold"><span style="font-size: 10pt">&#160;</span></td><td style="font-weight: bold; padding-bottom: 1.5pt"><span style="font-size: 10pt">&#160;</span></td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="width: 1%; text-align: left"><span style="font-size: 10pt">$</span></td><td style="width: 6%; text-align: right"><span style="font-size: 10pt">595,000</span></td><td style="width: 1%; text-align: left"><span style="font-size: 10pt">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
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    <td style="text-align: left"><span style="font-size: 10pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 10pt">20,600</span></td><td style="text-align: left"><span style="font-size: 10pt">&#160;</span></td><td><span style="font-size: 10pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 10pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 10pt">20,000</span></td><td style="text-align: left"><span style="font-size: 10pt">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left"><span style="font-size: 10pt">Tax fees</span></td><td><span style="font-size: 10pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 10pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 10pt">-</span></td><td style="text-align: left"><span style="font-size: 10pt">&#160;</span></td><td><span style="font-size: 10pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 10pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 10pt">-</span></td><td style="text-align: left"><span style="font-size: 10pt">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold"><span style="font-size: 10pt">Total</span></td><td style="font-weight: bold"><span style="font-size: 10pt">&#160;</span></td>
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    <td style="font-weight: bold; text-align: left"><span style="font-size: 10pt">$</span></td><td style="font-weight: bold; text-align: right"><span style="font-size: 10pt">615,000</span></td><td><span style="font-size: 10pt">&#160;</span></td></tr>
  </table><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Audit Fees</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Audit fees are fees billed
for professional services rendered by the principal accountant for the audit of the registrant&#8217;s annual financial statements or
services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal&#160;years.
It includes the audits of our consolidated financial statements and other services that generally only the independent accountant reasonably
can provide, such as statutory audits.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Audit-Related Fees</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Audit-related fees are fees
billed for assurance and related services that are reasonably related to the performance of the audits or review of our consolidated financial
statements and not reported under the previous category. These services would include, among others: comfort letters, consents and assistance
with and review of documents, accounting consultations and audits in connection with acquisitions, attestation of services that are not
required by statue or regulation and consultation concerning financial accounting and reporting standards.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Tax Fees</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Tax fees are fees billed for
professional services for tax compliance, tax advice and tax planning.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>All Other Fees</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">All other fees represent the
aggregate fees billed in each of the fiscal years listed for services rendered by the principal accountant for the audit of our annual
financial statements other than services reported under &#8220;Audit Fees,&#8221; &#8220;Audit-related fees,&#8221; and &#8220;Tax fees.&#8221;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Pre-Approval Policies and Procedures</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Following the listing of our
Class A ordinary shares on Nasdaq, the Audit Committee oversees the auditor selection process for new auditors and ensures key partners
in the appointed firm are rotated in accordance with best practices. Also, following our Nasdaq listing, the Audit Committee is required
to pre-approve the audit and non-audit fees and services performed by the Company&#8217;s auditors in order to be sure that the provision
of such services does not impair the audit firm&#8217;s independence.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">All of the audit fees, audit-related
fees and tax fees described in this item 16C have been approved by the Audit Committee.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

</div><!-- Field: Page; Sequence: 146; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->137<!-- Field: /Sequence --></span></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><div><a id="a_079"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>ITEM&#160;16D. Exemptions from the listing
standards for audit committees</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">None.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><div><a id="a_080"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>ITEM&#160;16E. Purchases of equity securities
by the issuer and affiliated purchasers.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">None.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><div><a id="a_081"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>ITEM&#160;16F. Change in registrant&#8217;s
certifying accountant</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Not applicable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><div><a id="a_082"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>ITEM&#160;16G. Corporate governance</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are a &#8220;foreign private
issuer&#8221; (as such term is defined in Rule 3b-4 under the Exchange Act), and our Class A ordinary shares are listed on the Nasdaq
Global Select Market. Nasdaq Stock Market 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 corporate governance listing standards. For instance, we are not required to:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">have a majority of the board be independent (although all of the members of the audit committee must be independent under the Exchange Act);</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">have a compensation committee or a nominations or corporate governance committee consisting entirely of independent directors; </span></td></tr>
  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">have an annual general meeting of shareholders each year; or</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">have regularly scheduled executive sessions with only independent directors each year.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have relied on and intend
to continue to rely on some of these exemptions.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&#160;</p><div>

</div><div><a id="a_083"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>ITEM&#160;16H. Mine safety disclosure</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Not applicable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><div><a id="a_084"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>ITEM&#160;16I. Disclosure Regarding Foreign
Jurisdictions that Prevent Inspections</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Not applicable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>


</div><!-- Field: Page; Sequence: 147; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->138<!-- Field: /Sequence --></span></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><div><a id="a_085"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>PART&#160;III</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><div><a id="a_086"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>ITEM&#160;17. Financial statements</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have responded to Item&#160;18
in lieu of this item.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><div><a id="a_087"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>ITEM&#160;18. Financial statements</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Financial Statements are filed
as part of this annual report, see pages&#160;F-1 to F-34 to this annual report.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><div><a id="a_088"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif"><b>ITEM&#160;19.
Exhibits</b></span>&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: bottom">
    <td style="border-bottom: black 1.5pt solid; text-align: left; width: 11%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Exhibit&#160;no.</b></span></td>
    <td style="text-align: justify; width: 1%">&#160;</td>
    <td style="border-bottom: black 1.5pt solid; text-align: center; width: 88%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Description</b></span></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">1.1</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="https://www.sec.gov/Archives/edgar/data/1799290/000121390021066799/ea152801ex3-1_ebang.htm">Second Amended and Restated Memorandum of Association and Articles of Association of the Registrant, as currently in effect (incorporated herein by reference to Exhibit 3.1 to the Report of Foreign Private Issuer on Form 6-K, furnished with the Securities and Exchange Commission on December 22, 2021)</a></span></td></tr>
  <tr style="vertical-align: top; background-color: White">
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">2.1</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="https://www.sec.gov/Archives/edgar/data/1799290/000121390020033046/ea128160ex4-2_ebanginter.htm">Form of Warrant (November 2020 Offering) (incorporated herein by reference to Exhibit 4.2 to the registration statement on Form F-1 (File No. 333-249647), as amended, initially filed with the Securities and Exchange Commission on October 23, 2020)</a></span></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">2.2</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="https://www.sec.gov/Archives/edgar/data/1799290/000121390021007152/ea134739ex4-2_ebanginter.htm">Form of Warrant (February 2021 Offering) (incorporated herein by reference to Exhibit 4.2 to the registration statement on Form F-1 (File No. 333-252804), as amended, initially filed with the Securities and Exchange Commission on February 5, 2021)</a></span></td></tr>
  <tr style="vertical-align: top; background-color: White">
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">2.3</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="https://www.sec.gov/Archives/edgar/data/1799290/000121390021012903/ea136685ex4-2_ebanginter.htm">Form of Warrant (February 2021 Inducement) (incorporated herein by reference to Exhibit 4.2 to the registration statement on Form F-1 (File No. 333-253784), initially filed with the Securities and Exchange Commission on March 2, 2021)</a></span></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">2.4</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="https://www.sec.gov/Archives/edgar/data/1799290/000121390021018016/ea138411ex4-2_ebanginter.htm">Form of Warrant (April 2021 Offering) (incorporated herein by reference to Exhibit 4.2 to the registration statement on Form F-1 (File No. 333-254787), as amended, initially filed with the Securities and Exchange Commission on March 26, 2021)</a></span></td></tr>
  <tr style="vertical-align: top; background-color: White">
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">2.5</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="f20f2022ex2-5_ebanginter.htm">Description of Securities</a>&#160;</span></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.1</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="https://www.sec.gov/Archives/edgar/data/1799290/000121390020010071/ea121021ex10-1_ebanginter.htm">Form of Indemnification Agreement between the Registrant and each of its directors and executive officers (incorporated herein by reference to Exhibit 10.1 to the registration statement on Form F-1 (File No. 333-237843), as amended, initially filed with the Securities and Exchange Commission on June 17, 2020)</a></span></td></tr>
  <tr style="vertical-align: top; background-color: White">
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.2</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="https://www.sec.gov/Archives/edgar/data/1799290/000121390020010071/ea121021ex10-2_ebanginter.htm">Form of Employment Agreement between the Registrant and each of its executive officers (incorporated herein by reference to Exhibit 10.2 to the registration statement on Form F-1 (File No. 333-237843), as amended, initially filed with the Securities and Exchange Commission on June 17, 2020)</a></span></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.3</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="https://www.sec.gov/Archives/edgar/data/1799290/000121390020033046/ea128160ex10-4_ebanginter.htm">Form of Securities Purchase Agreement (November 2020 Offering) (incorporated herein by reference to Exhibit 10.4 to the registration statement on Form F-1 (File No. 333-249647), as amended, initially filed with the Securities and Exchange Commission on October 23, 2020)</a></span></td></tr>
  <tr style="vertical-align: top; background-color: White">
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.5</span></td>
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    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="https://www.sec.gov/Archives/edgar/data/1799290/000121390021007152/ea134739ex10-4_ebanginter.htm">Form of Securities Purchase Agreement (February 2021 Offering) (incorporated herein by reference to Exhibit 10.4 to the registration statement on Form F-1 (File No. 333-252804), as amended, initially filed with the Securities and Exchange Commission on February 5, 2021)</a></span></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.7</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="https://www.sec.gov/Archives/edgar/data/1799290/000121390021018016/ea138411ex10-4_ebanginter.htm">Form of Securities Purchase Agreement (April 2021 Offering) (incorporated herein by reference to Exhibit 10.4 to the registration statement on Form F-1 (File No. 333-254787), as amended, initially filed with the Securities and Exchange Commission on March 26, 2021)</a></span></td></tr>

<tr style="vertical-align: top; background-color: White">
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.9</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><a href="http://www.sec.gov/Archives/edgar/data/1799290/000121390021036315/ea143920ex10-1_ebanginter.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Amended and Restated 2020 Share Incentive Plan (incorporated by reference to Exhibit 10.1 to the registration statement on Form S-8 (File No. 333-257787), filed with the Securities and Exchange Commission on July 9, 2021)</span></a></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: center">4.10</td>
    <td>&#160;</td>
    <td style="text-align: justify"><a href="f20f2022ex4-10_ebanginter.htm">Form of Restricted Share Award Agreement under the Amended and Restated 2020 Share Incentive Plan</a></td></tr>
  <tr style="vertical-align: top; background-color: White">
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.11</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="https://www.sec.gov/Archives/edgar/data/1799290/000121390021059399/ea150515ex99-1_ebanginter.htm">2021 Share Incentive Plan (incorporated herein by reference to Appendix A to the Registrant&#8217;s Proxy Statement, attached as Exhibit 99.1 to the Report of Foreign Private Issuer on Form 6-K, furnished with the Securities and Exchange Commission on November 15, 2021)</a></span></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: center">4.12</td>
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    <td style="text-align: justify"><a href="f20f2022ex4-12_ebanginter.htm">Form of Restricted Share Award Agreement under the 2021 Share Incentive Plan</a></td></tr>
  <tr style="vertical-align: top; background-color: White">
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  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">12.1</span></td>
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    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="f20f2022ex12-1_ebanginter.htm">Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002</a></span></td></tr>
  <tr style="vertical-align: top; background-color: White">
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">13.1</span></td>
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  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">15.1</span></td>
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  <tr style="vertical-align: top; background-color: White">
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">15.2</span></td>
    <td>&#160;</td>
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  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">15.3</span></td>
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  <tr style="background-color: White">
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">101.INS</span></td>
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    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">101.SCH</span></td>
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    <td style="vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Inline XBRL Taxonomy Extension Calculation Linkbase Document.</span></td></tr>
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    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">101.DEF</span></td>
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    <td style="vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Inline XBRL Taxonomy Extension Definition Linkbase Document.</span></td></tr>
  <tr style="background-color: White">
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">101.LAB</span></td>
    <td>&#160;</td>
    <td style="vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Inline XBRL Taxonomy Extension Label Linkbase Document.</span></td></tr>
  <tr style="background-color: rgb(204,238,255)">
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    <td>&#160;</td>
    <td style="vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Inline XBRL Taxonomy Extension Presentation Linkbase Document.</span></td></tr>
  <tr style="background-color: White">
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    <td style="vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">*</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Furnished
herewith.</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>


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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>SIGNATURES</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The registrant hereby certifies
that it meets all of the requirements for filing on Form&#160;20-F and that it has duly caused and authorized the undersigned to sign
this annual report on its behalf.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td colspan="3"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>EBANG INTERNATIONAL HOLDINGS INC.</b></span></td></tr>
  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td>&#160;</td>
    <td colspan="2">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">By:</span></td>
    <td colspan="2" style="border-bottom: black 1.5pt solid"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">/s/ Dong Hu</span></td></tr>
  <tr style="vertical-align: top">
    <td style="width: 60%">&#160;</td>
    <td style="width: 4%">&#160;</td>
    <td style="width: 5%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Name:&#160; </span></td>
    <td style="width: 31%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Dong Hu</span></td></tr>
  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td>&#160;</td>
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Title: </span></td>
    <td>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Chief Executive Officer and&#160;</p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Chief Financial Officer</p></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Date: April 28, 2023</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;&#160;</p><div>


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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><div><a id="a_089"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>INDEX TO CONSOLIDATED FINANCIAL STATEMENTS</b>&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>&#160;</b></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="width: 90%; text-align: justify">&#160;</td> <td style="width: 10%; border-bottom: black 1.5pt solid; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Page</b></span></td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Consolidated Financial Statements</b></span></td> <td style="vertical-align: bottom; text-align: center">&#160;</td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">&#160;</td> <td style="vertical-align: bottom; text-align: center">&#160;</td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify"><a href="#f_001"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Report of Independent Registered Public Accounting Firm (PCAOB <span style="-sec-ix-hidden: hidden-fact-1">ID206</span>)</span></a></td> <td style="white-space: nowrap; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-2</span></td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">&#160;</td> <td style="white-space: nowrap; vertical-align: bottom; text-align: center">&#160;</td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify"><a href="#f_002"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Consolidated Balance Sheets as of December&#160;31, 2022 and 2021</span></a></td> <td style="white-space: nowrap; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-3</span></td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">&#160;</td> <td style="white-space: nowrap; vertical-align: bottom; text-align: center">&#160;</td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify"><a href="#f_003"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Consolidated Statements of Operations and Comprehensive Income (Loss) for the Years Ended December&#160;31, 2022, 2021 and 2020</span></a></td> <td style="white-space: nowrap; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-4</span></td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">&#160;</td> <td style="white-space: nowrap; vertical-align: bottom; text-align: center">&#160;</td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify"><a href="#f_004"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Consolidated Statements of Changes in Equity for the Years Ended December&#160;31, 2022, 2021 and 2020</span></a></td> <td style="white-space: nowrap; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-5</span></td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">&#160;</td> <td style="white-space: nowrap; vertical-align: bottom; text-align: center">&#160;</td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify"><a href="#f_005"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Consolidated Statements of Cash Flows for the Years Ended December&#160;31, 2022, 2021 and 2020</span></a></td> <td style="white-space: nowrap; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-6</span></td></tr> <tr style="background-color: white"> <td style="vertical-align: top; text-align: justify">&#160;</td> <td style="white-space: nowrap; vertical-align: bottom; text-align: center">&#160;</td></tr> <tr style="background-color: #CCEEFF"> <td style="vertical-align: top; text-align: justify"><a href="#f_006"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Notes&#160;to Consolidated Financial Statements</span></a></td> <td style="white-space: nowrap; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">F-7</span></td></tr> </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>


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    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><div><a id="f_001"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">To the Shareholders and Board of Directors of</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Ebang International Holdings Inc.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>Opinion on the Financial Statements</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We have audited the accompanying consolidated
balance sheets of Ebang International Holdings Inc. and its subsidiaries (collectively, the &#8220;Company&#8221;) as of December 31,
2022 and 2021, and the related consolidated statements of operations and comprehensive income (loss), changes in equity, and cash flows
for each of the years in the three-year period ended December 31, 2022, and the related notes (collectively referred to as the &#8220;financial
statements&#8221;). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company
as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the years in the three-year period
ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>Basis for Opinion</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">These financial statements are the responsibility
of the Company&#8217;s management. Our responsibility is to express an opinion on the Company&#8217;s financial statements based on our
audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (&#8220;PCAOB&#8221;)
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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We conducted our audits 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 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&#8217;s internal
control over financial reporting. Accordingly, we express no such opinion.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i>/s/ <ix:nonNumeric contextRef="c0" name="dei:AuditorName">MaloneBailey, LLP</ix:nonNumeric></i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">www.malonebailey.com</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">We have served as the Company&#8217;s auditor since 2019.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><ix:nonNumeric contextRef="c0" name="dei:AuditorLocation">Houston, Texas</ix:nonNumeric></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">April 28, 2023</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>


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</div><div><a id="f_002"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>EBANG INTERNATIONAL HOLDINGS INC.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>CONSOLIDATED BALANCE SHEETS </b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>(Stated in US dollars)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 7pt"><b>&#160;</b></span></p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="text-align: center"><span style="font-size: 9.5pt">&#160;</span></td><td style="font-weight: bold; padding-bottom: 1.5pt"><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center"><span style="font-size: 9.5pt">Notes</span></td><td style="font-weight: bold; padding-bottom: 1.5pt"><span style="font-size: 9.5pt">&#160;</span></td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid"><span style="font-size: 9.5pt">December&#160;31,<br/>
    2022</span></td><td style="padding-bottom: 1.5pt; font-weight: bold"><span style="font-size: 9.5pt">&#160;</span></td><td style="font-weight: bold; padding-bottom: 1.5pt"><span style="font-size: 9.5pt">&#160;</span></td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid"><span style="font-size: 9.5pt">December&#160;31,<br/>
    2021</span></td><td style="padding-bottom: 1.5pt; font-weight: bold"><span style="font-size: 9.5pt">&#160;</span></td></tr>
  <tr style="vertical-align: bottom">
    <td style="font-weight: bold"><span style="font-size: 9.5pt">ASSETS</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: center"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td colspan="2" style="text-align: right"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td colspan="2" style="text-align: right"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td></tr>
  <tr style="vertical-align: bottom">
    <td style="font-weight: bold"><span style="font-size: 9.5pt">Current assets:</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: center"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td colspan="2" style="text-align: right"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td colspan="2" style="text-align: right"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 66%; text-align: left; text-indent: -9pt; padding-left: 0.25in"><span style="font-size: 9.5pt">Cash and cash equivalents</span></td><td style="width: 1%"><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="width: 9%; text-align: center"><span style="font-size: 9.5pt">&#160;</span></td><td style="width: 1%"><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="width: 1%; text-align: left"><span style="font-size: 9.5pt">$</span></td><td style="width: 9%; text-align: right"><span style="font-size: 9.5pt"><ix:nonFraction contextRef="c4" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CashAndCashEquivalentsAtCarryingValue" scale="0" unitRef="usd">251,294,952</ix:nonFraction></span></td><td style="width: 1%; text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="width: 1%"><span style="font-size: 9.5pt">&#160;</span></td>
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  <tr style="vertical-align: bottom; background-color: White">
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    <td style="text-align: center"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt"><ix:nonFraction contextRef="c4" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:RestrictedCashCurrent" scale="0" unitRef="usd">29,039</ix:nonFraction></span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -9pt; padding-left: 0.25in"><span style="font-size: 9.5pt">Short-term investments</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: center"><span style="font-size: 9.5pt">4</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt"><ix:nonFraction contextRef="c4" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ShortTermInvestments" scale="0" unitRef="usd">5,835,377</ix:nonFraction></span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
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  <tr style="vertical-align: bottom; background-color: White">
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    <td style="text-align: center"><span style="font-size: 9.5pt">6</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt"><ix:nonFraction contextRef="c4" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AccountsReceivableGrossCurrent" scale="0" unitRef="usd">3,334,727</ix:nonFraction></span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt"><ix:nonFraction contextRef="c5" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AccountsReceivableGrossCurrent" scale="0" unitRef="usd">9,872,746</ix:nonFraction></span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -9pt; padding-left: 0.25in"><span style="font-size: 9.5pt">Advances to suppliers</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: center"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt"><ix:nonFraction contextRef="c4" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AdvancesOnInventoryPurchases" scale="0" unitRef="usd">1,178,168</ix:nonFraction></span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt"><ix:nonFraction contextRef="c5" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AdvancesOnInventoryPurchases" scale="0" unitRef="usd">1,057,096</ix:nonFraction></span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; text-indent: -9pt; padding-left: 0.25in"><span style="font-size: 9.5pt">Inventories, net</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: center"><span style="font-size: 9.5pt">7</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt"><ix:nonFraction contextRef="c4" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:InventoryNet" scale="0" unitRef="usd">440,064</ix:nonFraction></span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt"><ix:nonFraction contextRef="c5" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:InventoryNet" scale="0" unitRef="usd">7,137,538</ix:nonFraction></span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -9pt; padding-left: 0.25in"><span style="font-size: 9.5pt">Prepayments</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: center"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt"><ix:nonFraction contextRef="c4" decimals="0" format="ixt:num-dot-decimal" name="ebon:Prepayments" scale="0" unitRef="usd">281,611</ix:nonFraction></span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt"><ix:nonFraction contextRef="c5" decimals="0" format="ixt:num-dot-decimal" name="ebon:Prepayments" scale="0" unitRef="usd">283,776</ix:nonFraction></span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -9pt; padding-left: 0.25in"><span style="font-size: 9.5pt">Other
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    <td style="padding-bottom: 1.5pt; text-align: center"><span style="font-size: 9.5pt">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9.5pt"><ix:nonFraction contextRef="c4" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OtherAssetsCurrent" scale="0" unitRef="usd">6,711,422</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9.5pt"><ix:nonFraction contextRef="c5" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OtherAssetsCurrent" scale="0" unitRef="usd">4,994,271</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9.5pt">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-align: left; padding-bottom: 1.5pt; text-indent: -9pt; padding-left: 9pt"><span style="font-size: 9.5pt">Total
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    <td style="padding-bottom: 1.5pt; text-align: center"><span style="font-size: 9.5pt">&#160;</span></td><td style="font-weight: bold; padding-bottom: 1.5pt"><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right"><span style="font-size: 9.5pt"><ix:nonFraction contextRef="c4" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AssetsCurrent" scale="0" unitRef="usd">269,105,360</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="font-weight: bold; padding-bottom: 1.5pt"><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right"><span style="font-size: 9.5pt"><ix:nonFraction contextRef="c5" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AssetsCurrent" scale="0" unitRef="usd">298,832,145</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left"><span style="font-size: 9.5pt">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-indent: -9pt; padding-left: 9pt"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: center"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-align: left; text-indent: -9pt; padding-left: 9pt"><span style="font-size: 9.5pt">Non-current
    assets:</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: center"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; text-indent: -9pt; padding-left: 0.25in"><span style="font-size: 9.5pt">Property, plant and equipment,
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    <td style="text-align: center"><span style="font-size: 9.5pt">8</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt"><ix:nonFraction contextRef="c4" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PropertyPlantAndEquipmentNet" scale="0" unitRef="usd">36,549,278</ix:nonFraction></span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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    <td style="text-align: center"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -9pt; padding-left: 0.25in"><span style="font-size: 9.5pt">Other
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    <td style="padding-bottom: 1.5pt; text-align: center"><span style="font-size: 9.5pt">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9.5pt">&#160;</span></td>
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    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9.5pt"><ix:nonFraction contextRef="c5" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OtherAssetsNoncurrent" scale="0" unitRef="usd">705,825</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9.5pt">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="font-weight: bold; text-align: left; padding-bottom: 1.5pt; text-indent: -9pt; padding-left: 9pt"><span style="font-size: 9.5pt">Total
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    <td style="padding-bottom: 1.5pt; text-align: center"><span style="font-size: 9.5pt">&#160;</span></td><td style="font-weight: bold; padding-bottom: 1.5pt"><span style="font-size: 9.5pt">&#160;</span></td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -9pt; padding-left: 9pt"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: center"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="font-weight: bold; text-align: left; padding-bottom: 4pt; text-indent: -9pt; padding-left: 9pt"><span style="font-size: 9.5pt">Total
    assets</span></td><td style="padding-bottom: 4pt"><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="padding-bottom: 4pt; text-align: center"><span style="font-size: 9.5pt">&#160;</span></td><td style="font-weight: bold; padding-bottom: 4pt"><span style="font-size: 9.5pt">&#160;</span></td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -9pt; padding-left: 9pt"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: center"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="font-weight: bold; text-align: left; text-indent: -9pt; padding-left: 9pt"><span style="font-size: 9.5pt">LIABILITIES
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    <td style="text-align: center"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-align: left; text-indent: -9pt; padding-left: 9pt"><span style="font-size: 9.5pt">Current liabilities:</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: center"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; text-indent: -9pt; padding-left: 0.25in"><span style="font-size: 9.5pt">Accounts payable</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: center"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">$</span></td><td style="text-align: right"><span style="font-size: 9.5pt"><ix:nonFraction contextRef="c4" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AccountsPayableCurrent" scale="0" unitRef="usd">1,456,577</ix:nonFraction></span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">$</span></td><td style="text-align: right"><span style="font-size: 9.5pt"><ix:nonFraction contextRef="c5" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AccountsPayableCurrent" scale="0" unitRef="usd">3,387,836</ix:nonFraction></span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -9pt; padding-left: 0.25in"><span style="font-size: 9.5pt">Accrued liabilities and other
    payables</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: center"><span style="font-size: 9.5pt">10</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt"><ix:nonFraction contextRef="c4" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:TaxesPayableCurrent" scale="0" unitRef="usd">11,519,091</ix:nonFraction></span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt"><ix:nonFraction contextRef="c5" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:TaxesPayableCurrent" scale="0" unitRef="usd">8,975,988</ix:nonFraction></span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; text-indent: -9pt; padding-left: 0.25in"><span style="font-size: 9.5pt">Operating lease liabilities,
    current</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: center"><span style="font-size: 9.5pt">14</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt"><ix:nonFraction contextRef="c4" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OperatingLeaseLiabilityCurrent" scale="0" unitRef="usd">1,217,604</ix:nonFraction></span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt"><ix:nonFraction contextRef="c5" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OperatingLeaseLiabilityCurrent" scale="0" unitRef="usd">851,936</ix:nonFraction></span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -9pt; padding-left: 0.25in"><span style="font-size: 9.5pt">Operating lease liabilities
    - related parties, current</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: center"><span style="font-size: 9.5pt">14/18</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt"><ix:nonFraction contextRef="c4" decimals="0" format="ixt:num-dot-decimal" name="ebon:OperatingLeaseLiabilitiesRelatedPartyCurrent" scale="0" unitRef="usd">283,567</ix:nonFraction></span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt"><ix:nonFraction contextRef="c5" decimals="0" format="ixt:num-dot-decimal" name="ebon:OperatingLeaseLiabilitiesRelatedPartyCurrent" scale="0" unitRef="usd">595,424</ix:nonFraction></span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -9pt; padding-left: 0.25in"><span style="font-size: 9.5pt">Advances
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-align: left; padding-bottom: 1.5pt; text-indent: -9pt; padding-left: 9pt"><span style="font-size: 9.5pt">Total
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  <tr style="vertical-align: bottom; background-color: White">
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    <td style="text-align: center"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-align: left; text-indent: -9pt; padding-left: 9pt"><span style="font-size: 9.5pt">Total liabilities</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: center"><span style="font-size: 9.5pt">&#160;</span></td><td style="font-weight: bold"><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="font-weight: bold; text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="font-weight: bold; text-align: right"><span style="font-size: 9.5pt"><ix:nonFraction contextRef="c4" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:Liabilities" scale="0" unitRef="usd">22,377,203</ix:nonFraction></span></td><td style="font-weight: bold; text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="font-weight: bold"><span style="font-size: 9.5pt">&#160;</span></td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-indent: -9pt; padding-left: 9pt"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: center"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-indent: -9pt; padding-left: 9pt"><span style="font-size: 9.5pt">Equity:</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: center"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt"><ix:nonFraction contextRef="c4" decimals="0" format="ixt:num-dot-decimal" id="ix_2_fact" name="ebon:CommonStockValue1" scale="0" unitRef="usd">5,978</ix:nonFraction></span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
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  <tr style="vertical-align: bottom; background-color: White">
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    <td style="text-align: center"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt"><ix:nonFraction contextRef="c4" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AdditionalPaidInCapital" scale="0" unitRef="usd">397,620,927</ix:nonFraction></span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  </table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>&#160;</b></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0in; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0in"></td><td style="width: 0.25in; text-align: left"><sup>(1)</sup></td><td style="text-align: justify"><ix:footnote id="ix_0_footnote" xml:lang="en-US">Retrospectively adjusted for the effect of the Reverse Stock
Split effected on November 20, 2022. See Note 12.</ix:footnote></td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 8pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">The accompanying notes are an integral part of
these consolidated financial statements</p><div>


</div><!-- Field: Page; Sequence: 3; Value: 1 --><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><div><a id="f_003"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>EBANG INTERNATIONAL HOLDINGS INC.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
INCOME (LOSS)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>(Stated in US dollars)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-indent: -9pt; padding-left: 9pt">&#160;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: center">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -9pt; padding-left: 9pt">Loss from investment</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:GainLossOnInvestments" scale="0" sign="-" unitRef="usd">509,496</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-5">-</div></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="ebon:IncomeTaxExpenseBenefitContinuingOperationGovernmentGrants" scale="0" unitRef="usd">81,911</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
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    <td style="text-align: center; padding-bottom: 1.5pt">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OtherExpenses" scale="0" unitRef="usd">649,476</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction contextRef="c10" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OtherExpenses" scale="0" unitRef="usd">108,328</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OtherExpenses" scale="0" unitRef="usd">108,624</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-align: left; text-indent: -9pt; padding-left: 9pt">Total other income</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-indent: -9pt; padding-left: 9pt">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-indent: -9pt; padding-left: 9pt">&#160;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: center; padding-bottom: 1.5pt">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: right">(<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProfitLoss" scale="0" sign="-" unitRef="usd">45,757,237</ix:nonFraction></td><td style="padding-bottom: 1.5pt; font-weight: bold; text-align: left">)</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: center; padding-bottom: 4pt">&#160;</td><td style="font-weight: bold; padding-bottom: 4pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-indent: -9pt; padding-left: 9pt">&#160;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
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    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">(<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NetIncomeLoss" scale="0" sign="-" unitRef="usd">45,757,237</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right"><ix:nonFraction contextRef="c10" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NetIncomeLoss" scale="0" unitRef="usd">2,767,821</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">(<ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NetIncomeLoss" scale="0" sign="-" unitRef="usd">32,110,924</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -9pt; padding-left: 9pt">Foreign currency translation adjustment</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="text-align: center; padding-bottom: 1.5pt">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="ebon:ForeignCurrencyTranslationAdjustments" scale="0" sign="-" unitRef="usd">5,338,217</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c10" decimals="0" format="ixt:num-dot-decimal" name="ebon:ForeignCurrencyTranslationAdjustments" scale="0" unitRef="usd">953,073</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="ebon:ForeignCurrencyTranslationAdjustments" scale="0" unitRef="usd">1,960,109</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -9pt; padding-left: 9pt">&#160;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="font-weight: bold; text-align: left; text-indent: -9pt; padding-left: 9pt">Total comprehensive income (loss)</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ComprehensiveIncomeNetOfTaxIncludingPortionAttributableToNoncontrollingInterest" scale="0" sign="-" unitRef="usd">51,095,454</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c10" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ComprehensiveIncomeNetOfTaxIncludingPortionAttributableToNoncontrollingInterest" scale="0" unitRef="usd">3,720,894</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: center; padding-bottom: 1.5pt">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ComprehensiveIncomeNetOfTaxAttributableToNoncontrollingInterest" scale="0" sign="-" unitRef="usd">2,379,686</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction contextRef="c10" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ComprehensiveIncomeNetOfTaxAttributableToNoncontrollingInterest" scale="0" sign="-" unitRef="usd">1,461,374</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="font-weight: bold; text-align: left; padding-bottom: 4pt; text-indent: -9pt; padding-left: 9pt">Comprehensive income (loss) attributable to Ebang International Holdings Inc.</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="text-align: center; padding-bottom: 4pt">&#160;</td><td style="font-weight: bold; padding-bottom: 4pt">&#160;</td>
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    <td style="border-bottom: Black 4pt double; font-weight: bold; text-align: left">$</td><td style="border-bottom: Black 4pt double; font-weight: bold; text-align: right"><ix:nonFraction contextRef="c10" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ComprehensiveIncomeNetOfTax" scale="0" unitRef="usd">5,182,268</ix:nonFraction></td><td style="padding-bottom: 4pt; font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; padding-bottom: 4pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -9pt; padding-left: 9pt">&#160;</td><td>&#160;</td>
    <td style="text-align: center">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  </table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>&#160;</b></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0in; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0in"></td><td style="width: 0.25in; text-align: left"><sup>(1)</sup></td><td style="text-align: justify"><ix:footnote id="ix_1_footnote" xml:lang="en-US">Retrospectively adjusted for the effect of the Reverse Stock
Split effected on November 20, 2022. See Note 12.</ix:footnote></td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>&#160;</b>&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">The accompanying notes are an integral part of
these consolidated financial statements</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>


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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>EBANG INTERNATIONAL HOLDINGS INC.</b></p><div>

</div><div><a id="f_004"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>(Stated in US dollars)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>&#160;</b></p><div>

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  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-indent: -9pt; padding-left: 9pt">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-13">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-indent: -9pt; padding-left: 9pt">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-indent: -9pt; padding-left: 9pt">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-indent: -9pt; padding-left: 9pt">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-62">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-63">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-65">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-indent: -9pt; padding-left: 9pt">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -9pt; padding-left: 9pt">Share issuance from exercise of warrants, net of issuance cost</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-69">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-70">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-71">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-72">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-73">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-74">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c10" decimals="0" format="ixt:num-dot-decimal" name="ebon:StockIssueDuringperiodValueCapitalContributionFromShareholder" scale="0" unitRef="usd">67,950,980</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-indent: -9pt; padding-left: 9pt">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -9pt; padding-left: 9pt">Share-based compensation</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-75">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-76">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-77">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-78">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-79">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-80">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-81">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-82">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-83">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-84">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c10" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:EmployeeBenefitsAndShareBasedCompensation" scale="0" unitRef="usd">707,000</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-indent: -9pt; padding-left: 9pt">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -9pt; padding-left: 9pt">Net income (loss)</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-85">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-86">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-87">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-88">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-89">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c43" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NetIncomeLoss" scale="0" unitRef="usd">4,430,941</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-90">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c45" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NetIncomeLoss" scale="0" sign="-" unitRef="usd">1,663,120</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c10" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NetIncomeLoss" scale="0" unitRef="usd">2,767,821</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-indent: -9pt; padding-left: 9pt">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -9pt; padding-left: 9pt">Transfer to reserve</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-91">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-92">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-93">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-94">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-95">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-96">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-97">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c42" decimals="0" format="ixt:num-dot-decimal" name="ebon:TransferToReserve" scale="0" unitRef="usd">29,802</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c43" decimals="0" format="ixt:num-dot-decimal" name="ebon:TransferToReserve" scale="0" sign="-" unitRef="usd">29,802</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-98">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-99">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-100">-</div></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-indent: -9pt; padding-left: 9pt">&#160;</td><td>&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">The accompanying notes are an integral part of
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>


</div><!-- Field: Page; Sequence: 5; Value: 1 --><div>
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</div><p style="font: 7pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><div><a id="f_005"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>EBANG INTERNATIONAL HOLDINGS INC.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>CONSOLIDATED STATEMENTS OF CASH FLOWS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>(Stated in US dollars)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>&#160;</b></p><div>

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  <tr style="vertical-align: bottom">
    <td style="font-weight: bold">CASH FLOWS FROM OPERATING ACTIVITIES:</td><td>&#160;</td>
    <td colspan="2">&#160;</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2">&#160;</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2">&#160;</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 64%; text-align: left; padding-left: 9pt">Net income (loss)</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">(<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProfitLoss" scale="0" sign="-" unitRef="usd">45,757,237</ix:nonFraction></td><td style="width: 1%; text-align: left">)</td><td style="width: 1%">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; text-indent: -9pt; padding-left: 27pt">Adjustments to reconcile net income (loss) to net cash used in operating activities:</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 18pt">Depreciation and amortization expenses</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-left: 18pt">Provision for (reversal of) credit losses</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProvisionForOtherLosses" scale="0" unitRef="usd">3,803,437</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 18pt">Share-based compensation</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ShareBasedCompensation" scale="0" unitRef="usd">3,903,970</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-148">-</div></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-left: 18pt">Loss on disposal of property, plant and equipment</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:GainLossOnSaleOfPropertyPlantEquipment" scale="0" sign="-" unitRef="usd">547,338</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c10" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:GainLossOnSaleOfPropertyPlantEquipment" scale="0" sign="-" unitRef="usd">9,243</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 18pt">Amortization of debt issuance cost</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-149">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-150">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AmortizationOfFinancingCostsAndDiscounts" scale="0" unitRef="usd">7,098</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-left: 18pt">Inventory write-down</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:InventoryWriteDown" scale="0" unitRef="usd">6,482,019</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:InventoryWriteDown" scale="0" unitRef="usd">3,644,243</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 18pt">Loss on short-term investment</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="ebon:LossOnShorttermInvestment" scale="0" unitRef="usd">509,496</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c10" decimals="0" format="ixt:num-dot-decimal" name="ebon:LossOnShorttermInvestment" scale="0" unitRef="usd">3,656,520</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-151">-</div></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-left: 18pt">Deferred income taxes</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DeferredIncomeTaxExpenseBenefit" scale="0" sign="-" unitRef="usd">80,599</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c10" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DeferredIncomeTaxExpenseBenefit" scale="0" sign="-" unitRef="usd">2,845,588</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DeferredIncomeTaxExpenseBenefit" scale="0" unitRef="usd">8,627,604</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 18pt">Impairment of property, plant and equipment</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-152">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c10" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ImpairmentOfLeasehold" scale="0" unitRef="usd">3,109,922</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-153">-</div></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-left: 18pt">Impairment of intangible assets</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ImpairmentOfIntangibleAssetsFinitelived" scale="0" unitRef="usd">20,738,130</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-154">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-155">-</div></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 18pt">Impairment of VAT recoverable</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OtherAssetImpairmentCharges" scale="0" unitRef="usd">4,474,784</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-156">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-157">-</div></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-left: 18pt">Noncash lease expenses</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="ebon:NoncashLeaseExpenses" scale="0" unitRef="usd">1,711,943</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c10" decimals="0" format="ixt:num-dot-decimal" name="ebon:NoncashLeaseExpenses" scale="0" unitRef="usd">1,066,838</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="ebon:NoncashLeaseExpenses" scale="0" unitRef="usd">659,082</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 18pt">Loss (gain) on foreign currency transactions</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ForeignCurrencyTransactionGainLossUnrealized" scale="0" sign="-" unitRef="usd">2,161,264</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c10" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ForeignCurrencyTransactionGainLossUnrealized" scale="0" unitRef="usd">1,780,087</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ForeignCurrencyTransactionGainLossUnrealized" scale="0" sign="-" unitRef="usd">288,346</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-left: 18pt">Gain on disposal of subsidiaries</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="ebon:PaymentsToAcquireDisposalOSsubsidiaries" scale="0" unitRef="usd">5,941</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-158">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-159">-</div></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 9pt">Changes in assets and liabilities:</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-left: 18pt">Accounts receivable, net</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInReceivables" scale="0" sign="-" unitRef="usd">2,882,106</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c10" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInReceivables" scale="0" sign="-" unitRef="usd">333,888</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInReceivables" scale="0" unitRef="usd">1,351,955</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 18pt">Notes receivable</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c10" decimals="0" format="ixt:num-dot-decimal" name="ebon:IncreaseDecreaseNotesReceivable" scale="0" sign="-" unitRef="usd">775,206</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="ebon:IncreaseDecreaseNotesReceivable" scale="0" unitRef="usd">724,627</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-left: 18pt">Inventories, net</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInInventories" scale="0" unitRef="usd">185,504</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c10" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInInventories" scale="0" unitRef="usd">5,392,810</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInInventories" scale="0" sign="-" unitRef="usd">9,725,152</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 18pt">Advances to suppliers</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="ebon:IncreaseDecreaseAdvancesToSuppliers" scale="0" sign="-" unitRef="usd">178,639</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c10" decimals="0" format="ixt:num-dot-decimal" name="ebon:IncreaseDecreaseAdvancesToSuppliers" scale="0" sign="-" unitRef="usd">818,666</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="ebon:IncreaseDecreaseAdvancesToSuppliers" scale="0" sign="-" unitRef="usd">3,601,544</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-left: 18pt">VAT recoverable</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="ebon:IncreaseDecreaseInVATRecoverables" scale="0" unitRef="usd">1,247,508</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c10" decimals="0" format="ixt:num-dot-decimal" name="ebon:IncreaseDecreaseInVATRecoverables" scale="0" unitRef="usd">3,799,426</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInOtherOperatingAssets" scale="0" unitRef="usd">850,791</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInAccountsPayable" scale="0" sign="-" unitRef="usd">1,787,125</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-left: 18pt">Notes payable</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 18pt">Income taxes payable</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-left: 18pt">Advances from customers</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="ebon:IncreaseDecreaseInCustomerAdvance" scale="0" unitRef="usd">163,883</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt; padding-left: 18pt">Accrued liabilities and other payables</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInOtherAccountsPayableAndAccruedLiabilities" scale="0" sign="-" unitRef="usd">14,109,951</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="font-weight: bold; text-align: left; padding-left: 9pt">NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NetCashProvidedByUsedInOperatingActivities" scale="0" unitRef="usd">4,296,785</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 9pt">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="font-weight: bold; text-align: left; padding-left: 9pt">CASH FLOWS FROM INVESTING ACTIVITIES:</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 18pt">Purchases of property, plant and equipment</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PaymentsToAcquireMachineryAndEquipment" scale="0" unitRef="usd">3,803,943</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c10" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PaymentsToAcquireMachineryAndEquipment" scale="0" unitRef="usd">6,153,759</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PaymentsToAcquireMachineryAndEquipment" scale="0" unitRef="usd">10,833,436</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-left: 18pt">Purchases of intangible assets</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PaymentsToAcquireIntangibleAssets" scale="0" unitRef="usd">10,260,785</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c10" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PaymentsToAcquireIntangibleAssets" scale="0" unitRef="usd">2,365,495</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PaymentsToAcquireIntangibleAssets" scale="0" unitRef="usd">11,927,846</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 18pt">Proceeds from disposal of property, plant and equipment</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-161">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-162">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProceedsFromSaleOfPropertyPlantAndEquipment" scale="0" unitRef="usd">362,314</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-left: 18pt">Cash paid for short-term investments</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PaymentsToAcquireShortTermInvestments" scale="0" unitRef="usd">28,552,566</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c10" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PaymentsToAcquireShortTermInvestments" scale="0" unitRef="usd">472,357,646</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PaymentsToAcquireShortTermInvestments" scale="0" unitRef="usd">79,915,000</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 18pt">Collections from short-term investments</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProceedsFromSaleMaturityAndCollectionsOfInvestments" scale="0" unitRef="usd">55,101,678</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c10" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProceedsFromSaleMaturityAndCollectionsOfInvestments" scale="0" unitRef="usd">474,365,880</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProceedsFromSaleMaturityAndCollectionsOfInvestments" scale="0" unitRef="usd">39,080,000</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-left: 18pt">Payments for business combination, net of cash acquired</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PaymentsToAcquireBusinessesNetOfCashAcquired" scale="0" unitRef="usd">5,863,499</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-163">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-164">-</div></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 1.5pt; text-align: left; padding-left: 18pt">Cash from disposal of subsidiaries, net of cash disposed of</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="ebon:CashFromDisposalOfSubsidiariesNetOfCashDisposedOf" scale="0" sign="-" unitRef="usd">11,492</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-165">-</div></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="ebon:CashFromDisposalOfSubsidiariesNetOfCashDisposedOf" scale="0" unitRef="usd">53,435</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="font-weight: bold; text-align: left; padding-left: 9pt">NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NetCashProvidedByUsedInInvestingActivities" scale="0" unitRef="usd">6,609,393</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c10" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NetCashProvidedByUsedInInvestingActivities" scale="0" sign="-" unitRef="usd">6,511,020</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NetCashProvidedByUsedInInvestingActivities" scale="0" sign="-" unitRef="usd">63,180,533</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 9pt">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="font-weight: bold; text-align: left; padding-left: 9pt">CASH FLOWS FROM FINANCING ACTIVITIES:</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 18pt">Proceeds from short-term loans</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-166">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-167">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProceedsFromIssuanceOfLongTermDebt" scale="0" unitRef="usd">765,967</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-left: 18pt">Repayment of short-term loans</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 18pt">Proceeds from related party loans</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-left: 18pt">Repayment to related parties</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt; padding-left: 18pt">Proceeds from issuance of ordinary shares</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="font-weight: bold; text-align: left; padding-left: 9pt">NET CASH PROVIDED BY FINANCING ACTIVITIES</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 9pt">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="font-weight: bold; text-align: left; padding-left: 9pt">EFFECT OF FOREIGN EXCHANGE ON CASH, CASH EQUIVALENTS AND RESTRICTED CASH</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 9pt">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="font-weight: bold; text-align: left; padding-left: 9pt">NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalentsPeriodIncreaseDecreaseIncludingExchangeRateEffect" scale="0" unitRef="usd">11,300,514</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 9pt">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="font-weight: bold; text-align: left; padding-bottom: 1.5pt; padding-left: 9pt">CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF YEAR</td><td style="padding-bottom: 1.5pt">&#160;</td>
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c37" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents" scale="0" unitRef="usd">14,123,751</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c20" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents" scale="0" unitRef="usd">5,778,167</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 9pt">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="font-weight: bold; text-align: left; padding-bottom: 4pt; padding-left: 9pt">CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF YEAR</td><td style="padding-bottom: 4pt">&#160;</td>
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    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c5" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents" scale="0" unitRef="usd">240,926,602</ix:nonFraction></td><td style="padding-bottom: 4pt; text-align: left">&#160;</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c37" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents" scale="0" unitRef="usd">14,123,751</ix:nonFraction></td><td style="padding-bottom: 4pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 9pt">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="font-weight: bold; text-align: left; padding-left: 9pt">SUPPLEMENTAL DISCLOSURE OF CASH FLOW&#160;INFORMATION:</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 9pt">Cash paid for:</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-bottom: 4pt; padding-left: 9pt">Interest</td><td style="padding-bottom: 4pt">&#160;</td>
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    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c10" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:InterestPaidNet" scale="0" unitRef="usd">4,382</ix:nonFraction></td><td style="padding-bottom: 4pt; text-align: left">&#160;</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:InterestPaidNet" scale="0" unitRef="usd">1,493,469</ix:nonFraction></td><td style="padding-bottom: 4pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 4pt; padding-left: 9pt">Income taxes</td><td style="padding-bottom: 4pt">&#160;</td>
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    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c10" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncomeTaxesPaidNet" scale="0" unitRef="usd">928</ix:nonFraction></td><td style="padding-bottom: 4pt; text-align: left">&#160;</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncomeTaxesPaidNet" scale="0" unitRef="usd">293,028</ix:nonFraction></td><td style="padding-bottom: 4pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 9pt">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-align: left; padding-left: 9pt">NON-CASH INVESTING AND FINANCING ACTIVITIES:</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 4pt; padding-left: 9pt">Liabilities assumed in connection with purchase of property, plant and equipment</td><td style="padding-bottom: 4pt">&#160;</td>
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    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c10" decimals="0" format="ixt:num-dot-decimal" name="ebon:TransferFromPrepaymentsToPropertyPlantAndEquipment" scale="0" unitRef="usd">3,318,477</ix:nonFraction></td><td style="padding-bottom: 4pt; text-align: left">&#160;</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="ebon:TransferFromPrepaymentsToPropertyPlantAndEquipment" scale="0" unitRef="usd">5,731,084</ix:nonFraction></td><td style="padding-bottom: 4pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 4pt; padding-left: 9pt">Liabilities assumed in connection with purchase of intangible assets</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="ebon:LiabilitiesAssumedInConnectionWithPurchaseOfIntangibleAssets" scale="0" unitRef="usd">5,440</ix:nonFraction></td><td style="padding-bottom: 4pt; text-align: left">&#160;</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c10" decimals="0" format="ixt:num-dot-decimal" name="ebon:LiabilitiesAssumedInConnectionWithPurchaseOfIntangibleAssets" scale="0" unitRef="usd">366,407</ix:nonFraction></td><td style="padding-bottom: 4pt; text-align: left">&#160;</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="ebon:LiabilitiesAssumedInConnectionWithPurchaseOfIntangibleAssets" scale="0" unitRef="usd">7,951,897</ix:nonFraction></td><td style="padding-bottom: 4pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">The accompanying notes are an integral part of
these consolidated financial statements.</p><div>

</div><p style="font: 7pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>


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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><div><a id="f_006"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>EBANG INTERNATIONAL HOLDINGS INC.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>(In U.S. Dollars, unless stated otherwise)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><ix:nonNumeric contextRef="c0" continuedAt="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_1" escape="true" name="us-gaap:OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Note 1 &#8211; Nature of business and organization</b></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p></ix:nonNumeric><div>

</div><ix:continuation continuedAt="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_2" id="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Ebang International Holdings Inc. (&#8220;Ebang
International&#8221;) was incorporated on May 17, 2018, as a holding company, as an exempted company with limited liability in the Cayman
Islands. Ebang International principally engages in manufacturing high-performance bitcoin mining machines and telecommunication products
and conducts business through its subsidiaries in the People&#8217;s Republic of China (the &#8220;PRC&#8221;). In January 2010, Mr. Dong
Hu, chairman of the board of directors, chief executive officer and chief financial officer, founded Zhejiang Ebang Communication Technology
Co., Ltd. (&#8220;Zhejiang Ebang&#8221;), which established Zhejiang Ebang Information Technology Co., Ltd. (&#8220;Ebang IT&#8221;) to
conduct development and sales of communications network access devices and related equipment. In August 2015, Zhejiang Ebang was listed
on the National Equities Exchange and Quotations (&#8220;NEEQ&#8221;). In August 2016, Zhejiang Ebang acquired <ix:nonFraction contextRef="c70" decimals="4" format="ixt:num-dot-decimal" name="ebon:PercentageOfEquityInterest" scale="-2" unitRef="pure">51.05</ix:nonFraction>% of the equity interest
in Hangzhou Dewang Information Technology Co., Ltd. (&#8220;Hangzhou Dewang&#8221;) through capital injection in Hangzhou Dewang. In March
2018, Zhejiang Ebang was delisted from the NEEQ in preparation for the reorganizations. Ebang International underwent a series of onshore
and offshore reorganizations, which were completed on May 22, 2018.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">

</p></ix:continuation><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

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the controlling shareholder of Zhejiang Ebang controlled Zhejiang Ebang and Ebang International; therefore, for accounting purposes, the
reorganization is accounted for as a transaction of entities under common control. Accordingly, the accompanying consolidated financial
statements have been prepared as if the current corporate structure had been in existence throughout the periods presented.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_4" id="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Ebang International and its consolidated subsidiaries
are collectively referred to herein as the &#8220;Company&#8221;, &#8220;we&#8221; and &#8220;us&#8221;, unless specific reference is
made to an entity.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_5" id="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_4"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Corporate Structure</b></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_6" id="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_5"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Ebang International Holdings Inc. is a holding
company incorporated in the Cayman Islands that does not have substantive operations. We conduct our businesses through our subsidiaries.
As of December 31, 2022, our principal subsidiaries consist of the following entities (in chronological order based on their dates of
incorporation):</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_7" id="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_6"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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    <td style="text-align: justify">&#160;</td>
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</div><div>

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    <td><span style="font-size: 8pt">&#160;</span></td>
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    <td><span style="font-size: 8pt">&#160;</span></td>
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    <td><span style="font-size: 8pt">&#160;</span></td>
    <td><span style="font-size: 8pt">&#160;</span></td>
    <td><span style="font-size: 8pt">&#160;</span></td>
    <td><span style="font-size: 8pt">&#160;</span></td>
    <td><span style="font-size: 8pt">&#160;</span></td></tr>
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    <td><span style="font-size: 8pt">&#160;</span></td>
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    <td><span style="font-size: 8pt">&#160;</span></td>
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    <td><span style="font-size: 8pt">&#160;</span></td>
    <td><span style="font-size: 8pt">&#160;</span></td>
    <td><span style="font-size: 8pt">&#160;</span></td>
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    <td><span style="font-size: 8pt">&#160;</span></td>
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</div><div>

</div><ix:continuation continuedAt="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_10" id="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_9"><ix:continuation continuedAt="_ScheduleOfSubsidiaryOfLimitedLiabilityCompanyOrLimitedPartnershipDescriptionTextBlock-c0_cont_2" id="_ScheduleOfSubsidiaryOfLimitedLiabilityCompanyOrLimitedPartnershipDescriptionTextBlock-c0_cont_1"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
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19.</ix:footnote></p></td>
</tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 7pt">&#160;</span></p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation id="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_10"><ix:continuation id="_ScheduleOfSubsidiaryOfLimitedLiabilityCompanyOrLimitedPartnershipDescriptionTextBlock-c0_cont_2"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
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</tr></table></ix:continuation></ix:continuation><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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</div><div>

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</div><div>

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</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_4" id="_SignificantAccountingPoliciesTextBlock-c0_cont_3"><ix:nonNumeric contextRef="c0" continuedAt="_ConsolidationPolicyTextBlock-c0_cont_1" escape="true" name="us-gaap:ConsolidationPolicyTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="text-decoration:underline">Principles of consolidation</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:nonNumeric></ix:continuation><div>

</div><div>

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</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_6" id="_SignificantAccountingPoliciesTextBlock-c0_cont_5"><ix:nonNumeric contextRef="c0" continuedAt="_PriorPeriodReclassificationAdjustmentDescription-c0_cont_1" escape="true" name="us-gaap:PriorPeriodReclassificationAdjustmentDescription"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="text-decoration:underline">Reclassification</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:nonNumeric></ix:continuation><div>

</div><div>

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</div><div>

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</div><div>

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income or loss applicable to the non-controlling interest in the subsidiaries are reflected in the consolidated statements of operations
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</div><div>

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the balance sheet date and revenues and expenses during the reporting periods. Significant accounting estimates reflected in the Company&#8217;s
consolidated financial statements including, but not limited to, estimates for inventory write-down, share-based compensation, the purchase
price allocation relating to business combination, useful lives of long-lived assets, impairment of long-lived assets and goodwill, credit
losses and income taxes including valuation allowance for deferred tax assets. Changes in facts and circumstances may result in revised
estimates. Actual results could differ from those estimates, and as such, differences may be material to the consolidated financial statements.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">
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HK Ebang Communications, HK Ebang Information, all US and BVI entities is United State dollars, the functional currency of Ebang International,
HK Ebang Technology is Hong Kong dollar (&#8220;HKD&#8221;), the functional currency of the PRC subsidiaries is Renminbi (&#8220;RMB&#8221;),
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</p></ix:continuation></ix:continuation><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

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Revenues, costs and expenses are translated at the average rates for the annual period. Translation gains and losses are recognized in
the consolidated statements of operations and comprehensive income (loss) as other comprehensive income (loss). Transactions in currencies
other than the reporting currency are measured and recorded in the reporting currency at the exchange rate prevailing on the transaction
date. The cumulative gain or loss from foreign currency transactions is reflected in the consolidated statements of operations and comprehensive
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</div><div>


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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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</div><div>

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</div><div>

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</div><div>

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</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_20" id="_SignificantAccountingPoliciesTextBlock-c0_cont_19"><ix:continuation continuedAt="_InvestmentPolicyTextBlock-c0_cont_2" id="_InvestmentPolicyTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="background-color: white">The Company&#8217;s
short-term investments consist of investments in marketable securities, which are accounted for under ASC 321 and reported at their readily
determinable fair values as quoted by market exchanges with changes in fair value recognized in earnings. </span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

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investments also include wealth management products with certain financial institutions, which are subject to variable rates of return
or not principal-guaranteed. These investments are classified as available-for-sale debt securities and reported at fair value, with unrealized
gains and losses recorded in accumulated other comprehensive loss on the consolidated balance sheets, if any. Realized gains and losses
from the sale of available-for-sale debt securities are determined on an aggregate approach basis and are included in the consolidated
statements of operations and comprehensive income (loss).</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

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short-term investments are also comprised of time deposits placed with banks with original maturities of greater than three months but
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</div><div>

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accounts receivable and other receivable, are within the scope of ASC Topic 326. The Company has identified the relevant risk characteristics
of its customers and the related receivables and other current assets which include type of the products and services the Company provides,
nature of the customers or a combination of these characteristics. Receivables with similar risk characteristics have been grouped into
pools. For each pool, the Company considers the historical credit loss experience, current economic conditions, supportable forecasts
of future economic conditions, and any recoveries in assessing the lifetime expected credit losses. Other key factors that influence the
expected credit loss analysis include customer demographics, payment terms offered in the normal course of business to customers, and
industry-specific factors that could impact the Company&#8217;s receivables. Additionally, external data and macroeconomic factors are
also considered. For the years ended December 31, 2022, 2021 and 2020, the Company recorded credit losses on other receivable of $<ix:nonFraction contextRef="c4" decimals="0" format="ixt:num-dot-decimal" name="ebon:AllowanceForDoubtfulOtherReceivables" scale="0" unitRef="usd">1,835,121</ix:nonFraction>,
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</div><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">
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</div><div>

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process, and raw materials. Inventories are stated at the lower of cost and net realizable value. Cost of inventory is determined using
the weighted average cost method. Adjustments are recorded to write down the cost of inventory to the estimated net realizable value due
to slow-moving and obsolete inventory, which is dependent upon factors such as historical and forecasted consumer demand, and promotional
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</div><div>

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using the acquisition method of accounting. The purchase price of the acquisition is allocated to the assets, liabilities, identifiable
intangible assets acquired, and non-controlling interest, if any, based on their estimated fair values as of the acquisition date. The
excess of the purchase price over those fair values is recorded as goodwill. Acquisition-related expenses are expensed as incurred. Consideration
transferred in a business acquisition is measured at fair value as of the date of acquisition. Transaction costs directly attributable
to the acquisition are expensed as incurred.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation></ix:continuation><div>
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price over the fair value of the identifiable assets and liabilities acquired in a business combination. In accordance with ASC Topic
350, Goodwill and Other Intangible Assets (&#8220;ASC 350&#8221;), recorded goodwill amounts are not amortized, but rather assessed for
impairment annually or more frequently if there are indicators of impairment present, applying a fair-value based test.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">

</p></ix:continuation></ix:continuation><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin: 0pt 0">&#160;</p><div>

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assessment indicates that it is more likely than not that the fair value of a reporting unit is less than the carrying amount, the Company
would be required to perform a quantitative impairment analysis for goodwill. The quantitative analysis requires a comparison of fair
value of the reporting unit to the carrying value, including goodwill. If the carrying value of the reporting unit exceeds its fair value,
an impairment loss is recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting
unit. The fair value is generally determined using the income approach. No impairment charge was recognized for the year ended December
31, 2022.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p></ix:continuation></ix:continuation><div>
</div><div>


</div><!-- Field: Page; Sequence: 10; Value: 1 --><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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</div><div>

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</div><div>

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</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_35" id="_SignificantAccountingPoliciesTextBlock-c0_cont_34"><ix:continuation continuedAt="_PropertyPlantAndEquipmentPolicyTextBlock-c0_cont_4" id="_PropertyPlantAndEquipmentPolicyTextBlock-c0_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The cost and related accumulated depreciation
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operations and comprehensive income (loss). Expenditures for maintenance and repairs are charged to earnings as incurred, while additions,
renewals and betterments, which are expected to extend the useful life of assets, are capitalized.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_36" id="_SignificantAccountingPoliciesTextBlock-c0_cont_35"><ix:continuation id="_PropertyPlantAndEquipmentPolicyTextBlock-c0_cont_4"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Construction in progress represents assets under
construction. All direct costs relating to the construction are capitalized as construction in progress. Construction in progress is not
depreciated until the asset is placed in service.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_37" id="_SignificantAccountingPoliciesTextBlock-c0_cont_36"><ix:nonNumeric contextRef="c0" continuedAt="_IntangibleAssetsFiniteLivedPolicy-c0_cont_1" escape="true" name="us-gaap:IntangibleAssetsFiniteLivedPolicy"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="text-decoration:underline">Intangible assets, net</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p></ix:nonNumeric></ix:continuation><div>

</div><div>

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useful lives primarily consist of software, non-patent technology, patents, land use right and a license acquired in connection with the
business combination. The Company typically amortizes its software, non-patent technology, patents and license with definite useful lives
on a straight-line basis over the shorter of the contractual terms or the estimated useful lives.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_39" id="_SignificantAccountingPoliciesTextBlock-c0_cont_38"><ix:continuation continuedAt="_IntangibleAssetsFiniteLivedPolicy-c0_cont_3" id="_IntangibleAssetsFiniteLivedPolicy-c0_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The intangible asset acquired in connection with the business combination
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</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_40" id="_SignificantAccountingPoliciesTextBlock-c0_cont_39"><ix:continuation continuedAt="_IntangibleAssetsFiniteLivedPolicy-c0_cont_4" id="_IntangibleAssetsFiniteLivedPolicy-c0_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">According to the law of PRC, the government owns
all the land in the PRC. Companies or individuals are authorized to possess and use the land only through land use rights granted by the
Chinese government for a specified period of time. The Company amortizes its land use rights using the straight-line method over the periods
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</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_41" id="_SignificantAccountingPoliciesTextBlock-c0_cont_40"><ix:continuation continuedAt="_IntangibleAssetsFiniteLivedPolicy-c0_cont_5" id="_IntangibleAssetsFiniteLivedPolicy-c0_cont_4"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The estimated useful lives are as follows:</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_42" id="_SignificantAccountingPoliciesTextBlock-c0_cont_41"><ix:nonNumeric contextRef="c0" escape="true" name="us-gaap:ScheduleOfFiniteLivedIntangibleAssetsTableTextBlock"><ix:continuation id="_IntangibleAssetsFiniteLivedPolicy-c0_cont_5"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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</div><div>

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equipment, right-of-use assets and intangible assets with finite lives are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying value of an asset may not be recoverable. The Company assesses the recoverability of the assets based on the
undiscounted future cash flows the assets are expected to generate and recognizes an impairment loss when estimated undiscounted future
cash flows expected to result from the use of the asset plus net proceeds expected from the disposition of the asset, if any, are less
than the carrying value of the asset. If an impairment is identified, the Company would reduce the carrying amount of the asset to its
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</p></ix:continuation></ix:continuation><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

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</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_46" id="_SignificantAccountingPoliciesTextBlock-c0_cont_45"><ix:continuation continuedAt="_FairValueMeasurementPolicyPolicyTextBlock-c0_cont_2" id="_FairValueMeasurementPolicyPolicyTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The accounting standard regarding the fair value
of financial instruments and related fair value measurements defines financial instruments and requires disclosure of the fair value of
financial instruments held by the Company.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>


</div><!-- Field: Page; Sequence: 11; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->11<!-- Field: /Sequence --></p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_47" id="_SignificantAccountingPoliciesTextBlock-c0_cont_46"><ix:continuation continuedAt="_FairValueMeasurementPolicyPolicyTextBlock-c0_cont_3" id="_FairValueMeasurementPolicyPolicyTextBlock-c0_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The accounting standards define fair value, establish
a three-level valuation hierarchy for disclosures of fair value measurement and enhance disclosure requirements for fair value measures.
The three levels are defined as follows:</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_48" id="_SignificantAccountingPoliciesTextBlock-c0_cont_47"><ix:continuation continuedAt="_FairValueMeasurementPolicyPolicyTextBlock-c0_cont_4" id="_FairValueMeasurementPolicyPolicyTextBlock-c0_cont_3"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.25in"></td><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Level
1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.</span></td>
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</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_49" id="_SignificantAccountingPoliciesTextBlock-c0_cont_48"><ix:continuation continuedAt="_FairValueMeasurementPolicyPolicyTextBlock-c0_cont_5" id="_FairValueMeasurementPolicyPolicyTextBlock-c0_cont_4"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.25in"></td><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Level
2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are
observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments.</span></td>
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</div><div>

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</div><div>

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or comparable assets or liabilities. The income approach uses valuation techniques to convert future amounts to a single present value
amount. The measurement is based on the value indicated by current market expectations about those future amounts. The cost approach is
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</div><div>

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</div><div>

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except for short-term investments and operating lease liability &#8211; related parties, current are reported in the consolidated balance
sheets at face value or cost, which approximate fair value because of the short period of time between the origination of such instruments
and their expected realization and their current market rates of interest.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

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has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial
and operational decisions. Parties are also considered to be related if they are subject to common control or common significant influence.
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a transfer of resources or obligations between related parties.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

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exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated
on terms equivalent to those that prevail in arm&#8217;s-length transactions unless such representations can be substantiated. It is not,
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</div><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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</div><div>

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of Topic 606, the Company recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects
the consideration which the entity expects to receive in exchange for those goods or services to the extent the Company deems the collection
of such consideration is probable. Value-added tax that the Company collects concurrent with revenue-producing activities is excluded
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</div><div>

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transfer of control is considered complete when products have been picked up by or shipped to customers. The Company&#8217;s sales arrangements
for bitcoin mining machines usually require a full prepayment before the delivery of products. The advance payment is not considered a
significant financing component because the period between the Company transfers a promised good to a customer and when the customer pays
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</div><div>

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recognizes revenue at a point in time when products are delivered and customer acceptance is made. For the sales arrangements of telecommunications
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</div><div>

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services to customers and maintenance services primarily relates to the Company&#8217;s repairment service for the telecommunication equipment
the Company sold to its customers. The Company halted mining machine hosting services in the PRC at the end of April 2021. Revenue from
the maintenance service to the customer is recognized at a point in time when services are provided. Revenue from the management service
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or signing a contract with the Company to provide payment services on the customer&#8217;s behalf. Revenue is measured as the difference
between the exchange rate set by the Company to the customer and a rate available in the wholesale foreign exchange market. The Company
executes the transaction and makes payments to the recipient to satisfy its performance obligation to the customer, and therefore, the
Company recognizes revenue at a point in time when this performance obligation has been fulfilled.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation></ix:continuation><div>

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contract. As of December 31, 2022 and 2021, the Company recorded contract liabilities of $<ix:nonFraction contextRef="c4" decimals="0" format="ixt:num-dot-decimal" name="ebon:AdvancesFromCustomers" scale="0" unitRef="usd">1,010,852</ix:nonFraction> and $<ix:nonFraction contextRef="c5" decimals="0" format="ixt:num-dot-decimal" name="ebon:AdvancesFromCustomers" scale="0" unitRef="usd">894,174</ix:nonFraction>, respectively, which
were presented as advances from customers on the accompanying consolidated balance sheets. During the years ended December 31, 2022, 2021
and 2020, the Company recognized $<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInContractWithCustomerLiability" scale="0" unitRef="usd">31,761</ix:nonFraction>, $<ix:nonFraction contextRef="c10" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInContractWithCustomerLiability" scale="0" unitRef="usd">126,333</ix:nonFraction> and $<ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInContractWithCustomerLiability" scale="0" unitRef="usd">279,423</ix:nonFraction>, of contract liabilities as revenue, respectively.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

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</div><div>

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in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company&#8217;s
chief operating decision maker for making operating decisions and assessing performance as the source for determining the Company&#8217;s
reportable segments. The Company&#8217;s chief operating decision maker has been identified as the chief executive officer of the Company
who reviews financial information based on U.S. GAAP. The chief operating decision maker now reviews results analyzed by the marketing
channel. This analysis is only presented at the revenue level with no allocation of direct or indirect costs. Consequently, the Company
has determined that it has only <ix:nonFraction contextRef="c0" decimals="0" format="ixt-sec:numwordsen" name="us-gaap:NumberOfOperatingSegments" scale="0" unitRef="pure">one</ix:nonFraction> operating segment.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

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</div><div>

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selling expenses.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

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</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_79" id="_SignificantAccountingPoliciesTextBlock-c0_cont_78"><ix:continuation continuedAt="ebon_GeneralAndAdministrativeExpensesPolicyTextBlock-c0_cont_2" id="ebon_GeneralAndAdministrativeExpensesPolicyTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">General and administrative expenses consist primarily
of research and development expenses, salary and welfare for general and administrative personnel, rental expenses, depreciation and amortization
associated with general and administrative personnel, allowance for doubtful accounts, impairment of intangible assets, entertainment
expenses, general office expenses and professional service fees.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation></ix:continuation><div>
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</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_80" id="_SignificantAccountingPoliciesTextBlock-c0_cont_79"><ix:continuation id="ebon_GeneralAndAdministrativeExpensesPolicyTextBlock-c0_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company recognizes research and development
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31, 2022, 2021 and 2020, respectively.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_81" id="_SignificantAccountingPoliciesTextBlock-c0_cont_80"><ix:nonNumeric contextRef="c0" continuedAt="_LesseeLeasesPolicyTextBlock-c0_cont_1" escape="true" name="us-gaap:LesseeLeasesPolicyTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="text-decoration:underline">Operating leases</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:nonNumeric></ix:continuation><div>

</div><div>

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leases are included in operating lease right-of-use (&#8220;ROU&#8221;) assets, operating lease liability, current, and operating lease
liability, non-current in the Company&#8217;s consolidated balance sheets. ROU assets represent the Company&#8217;s right to use an underlying
asset for the lease term and lease liabilities represent the Company&#8217;s obligation to make lease payments arising from the lease.
For the initial measurement of the lease liabilities, the Company uses the discount rate as of the commencement date of the lease, incorporating
the entire lease term. Operating lease liabilities related to lease payments due within one year and over are classified as current and
non-current, respectively, in the consolidated balance sheets. The ROU asset is measured as the amount of the lease liabilities with adjustments,
if applicable, for lease prepayments made prior to or at lease commencement, initial direct costs incurred and lease incentives. When
determining the lease term, the Company includes options to extend or terminate the lease when it is reasonably certain that it will exercise
that option, if any. As the Company&#8217;s leases do not provide an implicit rate, the Company used an incremental borrowing rate based
on the information available at the commencement date in determining the present value of lease payments. For leases that have lease terms
of 12 months or less and do not include a purchase option that is reasonably certain to exercise, the Company elected not to apply ASC
842 recognition requirements.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_83" id="_SignificantAccountingPoliciesTextBlock-c0_cont_82"><ix:nonNumeric contextRef="c0" continuedAt="_GovernmentContractorsRevenueRecognitionPolicyPolicyTextBlock-c0_cont_1" escape="true" name="us-gaap:GovernmentContractorsRevenueRecognitionPolicyPolicyTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="text-decoration:underline">Government grants </span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:nonNumeric></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_84" id="_SignificantAccountingPoliciesTextBlock-c0_cont_83"><ix:continuation id="_GovernmentContractorsRevenueRecognitionPolicyPolicyTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Government grants represent cash subsidies received
from PRC government. Cash subsidies that have no defined rules and regulations to govern the criteria necessary for companies to enjoy
the benefits are recognized when received. Such subsidies are generally provided as incentives from the local government to encourage
the expansion of local businesses. Total government grants received amounted to $<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInNotesReceivables" scale="0" unitRef="usd">81,911</ix:nonFraction>, $<ix:nonFraction contextRef="c10" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInNotesReceivables" scale="0" unitRef="usd">434,604</ix:nonFraction> and $<ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInNotesReceivables" scale="0" unitRef="usd">4,006,567</ix:nonFraction> for the years ended December
31, 2022, 2021 and 2020, respectively.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>


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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_85" id="_SignificantAccountingPoliciesTextBlock-c0_cont_84"><ix:nonNumeric contextRef="c0" continuedAt="ebon_ValueAddedTaxesPolicyTextBlock-c0_cont_1" escape="true" name="ebon:ValueAddedTaxesPolicyTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="text-decoration:underline">Value-added taxes</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:nonNumeric></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_86" id="_SignificantAccountingPoliciesTextBlock-c0_cont_85"><ix:continuation continuedAt="ebon_ValueAddedTaxesPolicyTextBlock-c0_cont_2" id="ebon_ValueAddedTaxesPolicyTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><ix:nonNumeric contextRef="c0" name="ebon:VATDescription">Revenue is recognized net of value-added taxes
(&#8220;VAT&#8221;). VAT is based on gross sales price and the VAT rate applicable to the Company is 17% for the period from the beginning
of 2018 till the end of April 2018, then changed to 16% from May 2018 to the end of March 2019, and changed to 13% since April 2019. Entities
that are VAT general taxpayers are allowed to offset qualified input VAT paid to suppliers against their output VAT liabilities. Net VAT
balance between input VAT and output VAT is recorded as VAT payable if output VAT is larger than input VAT and is recorded as VAT recoverable
if input VAT is larger than output VAT. All of the VAT returns filed by the Company&#8217;s subsidiaries in China, have been and remain
subject to examination by the tax authorities. Furthermore, the Company&#8217;s subsidiaries in China may be qualified to receive a refund on VAT
for the excess input VAT after meeting certain prerequisites specified in relevant regulations prescribed by the State Tax Bureau of the
PRC.</ix:nonNumeric>&#160;</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_87" id="_SignificantAccountingPoliciesTextBlock-c0_cont_86"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><ix:continuation id="ebon_ValueAddedTaxesPolicyTextBlock-c0_cont_2">For the years ended December 31, 2022, 2021 and
2020, the Company recorded impairment on VAT recoverable of $<ix:nonFraction contextRef="c4" decimals="1" format="ixt:num-dot-decimal" name="us-gaap:NoncurrentAssets" scale="0" unitRef="usd">4.5</ix:nonFraction> million, <span style="-sec-ix-hidden: hidden-fact-183">nil</span> and <span style="-sec-ix-hidden: hidden-fact-184">nil</span>, respectively. The impairment of VAT recoverable
incurred during the year ended December 31, 2022 was primarily related to Wuhai Ebang as the Company determined the VAT could not be recovered.</ix:continuation>
The Company expects to use or receive the remaining VAT recoverable in future operations.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation><div>
</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_88" id="_SignificantAccountingPoliciesTextBlock-c0_cont_87"><ix:nonNumeric contextRef="c0" continuedAt="_IncomeTaxPolicyTextBlock-c0_cont_1" escape="true" name="us-gaap:IncomeTaxPolicyTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="text-decoration:underline">Income taxes</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:nonNumeric></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_89" id="_SignificantAccountingPoliciesTextBlock-c0_cont_88"><ix:continuation continuedAt="_IncomeTaxPolicyTextBlock-c0_cont_2" id="_IncomeTaxPolicyTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company accounts for current income taxes
in accordance with the laws of the relevant tax authorities. The charge for taxation is based on the results for the fiscal 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.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_90" id="_SignificantAccountingPoliciesTextBlock-c0_cont_89"><ix:continuation continuedAt="_IncomeTaxPolicyTextBlock-c0_cont_3" id="_IncomeTaxPolicyTextBlock-c0_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Deferred taxes are accounted for using the asset
and liability method 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 used in the computation of assessable tax profit. In principle,
deferred tax liabilities are recognized for all taxable temporary differences. Deferred tax assets are recognized to the extent that it
is probable that taxable profit will be available against which deductible temporary differences can be utilized. 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 income statement, except when it is related to items credited or charged directly to equity, in which case the deferred
tax is also dealt with in equity. Deferred tax assets are reduced by a valuation&#160;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. Current income taxes are provisioned
in accordance with the laws of the relevant taxing authorities.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_91" id="_SignificantAccountingPoliciesTextBlock-c0_cont_90"><ix:continuation id="_IncomeTaxPolicyTextBlock-c0_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">An uncertain tax position is recognized as a benefit
only if it is &#8220;more likely than not&#8221; 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. For tax positions not meeting the &#8220;more likely than not&#8221; test, no tax benefit is recorded. No penalties and
interest incurred related to underpayment of income tax are classified as income tax expenses in the period incurred.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_92" id="_SignificantAccountingPoliciesTextBlock-c0_cont_91"><ix:nonNumeric contextRef="c0" continuedAt="_ComprehensiveIncomePolicyPolicyTextBlock-c0_cont_1" escape="true" name="us-gaap:ComprehensiveIncomePolicyPolicyTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="text-decoration:underline">Comprehensive income (loss)</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:nonNumeric></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_93" id="_SignificantAccountingPoliciesTextBlock-c0_cont_92"><ix:continuation id="_ComprehensiveIncomePolicyPolicyTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Comprehensive income (loss) consists of two components,
net income (loss) and other comprehensive income (loss). Other comprehensive income (loss) refers to revenues, expenses, gains and losses
that under GAAP are recorded as an element of shareholders&#8217; equity but are excluded from net income (loss). Other comprehensive
income (loss) consists of a foreign currency translation adjustment resulting from the Company not using the United States dollar as its
functional currency.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>


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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_94" id="_SignificantAccountingPoliciesTextBlock-c0_cont_93"><ix:nonNumeric contextRef="c0" continuedAt="_EarningsPerSharePolicyTextBlock-c0_cont_1" escape="true" name="us-gaap:EarningsPerSharePolicyTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="text-decoration:underline">Earnings (loss) per share</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p></ix:nonNumeric></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_95" id="_SignificantAccountingPoliciesTextBlock-c0_cont_94"><ix:continuation id="_EarningsPerSharePolicyTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company computes earnings (loss) per share
(&#8220;EPS&#8221;) in accordance with ASC 260, &#8220;Earnings per Share&#8221;. ASC 260 requires companies to present basic and diluted
EPS. Basic EPS is measured as net income (loss) attributable to Ebang International Holdings Inc., divided by the weighted average ordinary
share outstanding for the period. Diluted EPS presents the dilutive effect on a per-share basis of the potential ordinary shares (e.g.,
convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date,
if later.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_96" id="_SignificantAccountingPoliciesTextBlock-c0_cont_95"><ix:nonNumeric contextRef="c0" continuedAt="ebon_StatutoryReservesPolicyTextBlock-c0_cont_1" escape="true" name="ebon:StatutoryReservesPolicyTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="text-decoration:underline">Statutory reserves</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:nonNumeric></ix:continuation><div>

</div><div>

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entities must make appropriations from after-tax profit to the non-distributable &#8220;statutory surplus reserve fund&#8221;. Subject
to certain cumulative limits, the &#8220;statutory surplus reserve fund&#8221; requires annual appropriations of 10% of after-tax profit
until the aggregated appropriations reach 50% of the registered capital (as determined under accounting principles generally accepted
in the PRC (&#8220;PRC GAAP&#8221;) at each year-end). For foreign-invested enterprises and joint ventures in the PRC, annual appropriations
should be made to the &#8220;reserve fund&#8221;. For foreign-invested enterprises, the annual appropriation for the &#8220;reserve fund&#8221;
cannot be less than 10% of after-tax profits until the aggregated appropriations reach 50% of the registered capital (as determined under
PRC GAAP at each year-end).</ix:nonNumeric> If the Company has accumulated loss from prior periods, the Company is able to use the current period net
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</div><div>

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</div><div>

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</div><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;&#160;</p><div>


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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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</div><div>

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</div><div>

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</div><div>

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</div><div>

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</div><div>

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</div><div>

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    <td>&#160;</td>
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    <td>&#160;</td>
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    <td>&#160;</td>
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</div><div>

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</div><div>

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assigned to assets acquired and liabilities assumed, the life of the intangible asset, as well as the significant assumptions, can materially
impact the Company&#8217;s consolidated financial statements. Significant assumptions used for the model include the forecasted operating
cash flows and discount rate. The Company utilized the assistance of a third-party valuation firm to determine the fair value as of the
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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</div><div>

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</div><div>

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</div><div>

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</div><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>


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</div><div>

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</div><div>

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</div><div>

</div><ix:continuation continuedAt="_EarningsPerShareTextBlock-c0_cont_5" id="_EarningsPerShareTextBlock-c0_cont_4"><ix:continuation id="_ScheduleOfEarningsPerShareDilutedByCommonClassTextBlock-c0_cont_1"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: top"> <td style="width: 24px; font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><sup>(1)</sup></span></td> <td style="text-align: justify; font-size: 10pt"><ix:footnote id="ix_5_footnote" xml:lang="en-US"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Retrospectively adjusted for the effect of the Reverse Stock Split effected on November 20, 2022. See Note 12.</span></ix:footnote></td></tr> </table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p></ix:continuation></ix:continuation><div>

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</div><div>

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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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</div><div>

</div><ix:continuation id="_EarningsPerShareTextBlock-c0_cont_7"><ix:continuation id="_ScheduleOfEarningsPerShareBasicAndDilutedTableTextBlock-c0_cont_1"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: top"> <td style="width: 24px; font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><sup>(1)</sup></span></td> <td> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><ix:footnote id="ix_6_footnote" xml:lang="en-US">Retrospectively adjusted for the effect of
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><ix:nonNumeric contextRef="c0" continuedAt="_LoansNotesTradeAndOtherReceivablesDisclosureTextBlock-c0_cont_1" escape="true" name="us-gaap:LoansNotesTradeAndOtherReceivablesDisclosureTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Note 6 &#8211; Accounts receivable, net</b></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p></ix:nonNumeric><div>

</div><div>

</div><ix:continuation continuedAt="_LoansNotesTradeAndOtherReceivablesDisclosureTextBlock-c0_cont_2" id="_LoansNotesTradeAndOtherReceivablesDisclosureTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Accounts receivable, net consist of the following:</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p></ix:continuation><div>

</div><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><ix:continuation continuedAt="_LoansNotesTradeAndOtherReceivablesDisclosureTextBlock-c0_cont_4" id="_LoansNotesTradeAndOtherReceivablesDisclosureTextBlock-c0_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Movements of allowance for doubtful accounts are as follows:</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation id="_LoansNotesTradeAndOtherReceivablesDisclosureTextBlock-c0_cont_4"><ix:nonNumeric contextRef="c0" escape="true" name="us-gaap:AccountsReceivableAllowanceForCreditLossTableTextBlock"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  </table></ix:nonNumeric></ix:continuation><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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</div><div>

</div><ix:continuation continuedAt="_InventoryDisclosureTextBlock-c0_cont_2" id="_InventoryDisclosureTextBlock-c0_cont_1"><ix:nonNumeric contextRef="c0" escape="true" name="us-gaap:ScheduleOfInventoryCurrentTableTextBlock"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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  </table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p></ix:nonNumeric></ix:continuation><div>



</div><div>

</div><ix:continuation id="_InventoryDisclosureTextBlock-c0_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During the years ended December 31, 2022, 2021 and 2020, the Company
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><ix:nonNumeric contextRef="c0" continuedAt="_PropertyPlantAndEquipmentDisclosureTextBlock-c0_cont_1" escape="true" name="us-gaap:PropertyPlantAndEquipmentDisclosureTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Note 8 &#8211; Property, plant and equipment, net</b></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p></ix:nonNumeric><div>

</div><div>

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</div><div>

</div><ix:continuation continuedAt="_PropertyPlantAndEquipmentDisclosureTextBlock-c0_cont_3" id="_PropertyPlantAndEquipmentDisclosureTextBlock-c0_cont_2"><ix:nonNumeric contextRef="c0" escape="true" name="us-gaap:PropertyPlantAndEquipmentTextBlock"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
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  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Accumulated depreciation</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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</div><div>

</div><ix:continuation id="_PropertyPlantAndEquipmentDisclosureTextBlock-c0_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Depreciation expense for the years ended December 31, 2022, 2021 and
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19.</p></ix:continuation><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 19; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->19<!-- Field: /Sequence --></p></div><div>
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</div><p style="margin: 0">&#160;</p><div>

</div><ix:nonNumeric contextRef="c0" continuedAt="_GoodwillAndIntangibleAssetsDisclosureTextBlock-c0_cont_1" escape="true" name="us-gaap:GoodwillAndIntangibleAssetsDisclosureTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Note 9 &#8211; Intangible assets, net</b></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p></ix:nonNumeric><div>

</div><div>

</div><ix:continuation continuedAt="_GoodwillAndIntangibleAssetsDisclosureTextBlock-c0_cont_2" id="_GoodwillAndIntangibleAssetsDisclosureTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The following table presents the Company&#8217;s intangible assets
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</div><div>

</div><ix:continuation continuedAt="_GoodwillAndIntangibleAssetsDisclosureTextBlock-c0_cont_3" id="_GoodwillAndIntangibleAssetsDisclosureTextBlock-c0_cont_2"><ix:nonNumeric contextRef="c0" escape="true" name="us-gaap:ScheduleOfIntangibleAssetsAndGoodwillTableTextBlock"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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</div><div>

</div><ix:continuation continuedAt="_GoodwillAndIntangibleAssetsDisclosureTextBlock-c0_cont_4" id="_GoodwillAndIntangibleAssetsDisclosureTextBlock-c0_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Amortization expense for the years ended December
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to the asset&#8217;s economic obsolescence identified during the period. The impairment loss was included in the general and administrative
expenses in the consolidated statements of operations and comprehensive income (loss). No impairment was recorded for the years ended
December 31, 2021 and 2020.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation><div>
</div><div>

</div><ix:continuation continuedAt="_GoodwillAndIntangibleAssetsDisclosureTextBlock-c0_cont_5" id="_GoodwillAndIntangibleAssetsDisclosureTextBlock-c0_cont_4"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Estimated future amortization expense related
to intangible assets held as of December 31, 2022:</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation id="_GoodwillAndIntangibleAssetsDisclosureTextBlock-c0_cont_5"><ix:nonNumeric contextRef="c0" escape="true" name="ebon:ScheduleOfEstimatedFutureAmortizationExpenseRelatedToIntangibleAssetsTableTextBlock"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 89%; text-align: left">2023</td>
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  <tr style="vertical-align: bottom; background-color: White">
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c4" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:FiniteLivedIntangibleAssetsAmortizationExpenseRollingYearThree" scale="0" unitRef="usd">346,832</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 4pt">Total</td>
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  </table></ix:nonNumeric></ix:continuation><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:nonNumeric contextRef="c0" continuedAt="_AccountsPayableAndAccruedLiabilitiesDisclosureTextBlock-c0_cont_1" escape="true" name="us-gaap:AccountsPayableAndAccruedLiabilitiesDisclosureTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Note 10 &#8211; Accrued liabilities and other payables </b></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p></ix:nonNumeric><div>

</div><div>

</div><ix:continuation continuedAt="_AccountsPayableAndAccruedLiabilitiesDisclosureTextBlock-c0_cont_2" id="_AccountsPayableAndAccruedLiabilitiesDisclosureTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The components of accrued liabilities and other payables are as follows:</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_AccountsPayableAndAccruedLiabilitiesDisclosureTextBlock-c0_cont_3" id="_AccountsPayableAndAccruedLiabilitiesDisclosureTextBlock-c0_cont_2"><ix:nonNumeric contextRef="c0" escape="true" name="us-gaap:ScheduleOfAccruedLiabilitiesTableTextBlock"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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</div><div>

</div><ix:continuation id="_AccountsPayableAndAccruedLiabilitiesDisclosureTextBlock-c0_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Other accrued liabilities mainly consist of insurance payables, social
security payables, accrued professional service fees. The customer custodial cash liabilities represent the cash held on behalf of customers
for the settlement of future cross-border payment and foreign exchange services. The corresponding customer custodial cash asset with
balance in the same amount was included in other current asset, net in the consolidated balance sheet.</p></ix:continuation><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><ix:nonNumeric contextRef="c0" continuedAt="_IncomeTaxDisclosureTextBlock-c0_cont_1" escape="true" name="us-gaap:IncomeTaxDisclosureTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Note 11 &#8211; Income taxes</b></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:nonNumeric><div>

</div><div>

</div><ix:continuation continuedAt="_IncomeTaxDisclosureTextBlock-c0_cont_2" id="_IncomeTaxDisclosureTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Cayman Islands</i></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_IncomeTaxDisclosureTextBlock-c0_cont_3" id="_IncomeTaxDisclosureTextBlock-c0_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Under the current laws of the Cayman Islands,
Ebang International is not subject to tax on income or capital gain. Additionally, upon payments of dividends to the shareholders, no
Cayman Islands withholding tax will be imposed.<i>&#160;</i></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_IncomeTaxDisclosureTextBlock-c0_cont_4" id="_IncomeTaxDisclosureTextBlock-c0_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>British Virgin Islands (&#8220;BVI&#8221;)</i></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_IncomeTaxDisclosureTextBlock-c0_cont_5" id="_IncomeTaxDisclosureTextBlock-c0_cont_4"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company&#8217;s subsidiaries incorporated
in the BVI are not subject to tax on income or capital gain, In addition, payments of dividend by these subsidiaries to their shareholders
are not subject to withholding tax in the BVI.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_IncomeTaxDisclosureTextBlock-c0_cont_6" id="_IncomeTaxDisclosureTextBlock-c0_cont_5"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Australia</i></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_IncomeTaxDisclosureTextBlock-c0_cont_7" id="_IncomeTaxDisclosureTextBlock-c0_cont_6"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company&#8217; subsidiaries incorporated in Australia are subject
to Australian Tax on the taxable income as reported in its statutory financial statements adjusted in accordance with relevant Australia
tax laws. <ix:nonNumeric contextRef="c177" name="ebon:SubsidiariesIncorporatedDescription">The Australian Income Tax had significant changes progressively since June 30, 2017. From July 1, 2022, companies that are base
rate entities must apply the 25% company tax rate. A company is a base rate entity for an income year if 1) the company&#8217;s aggregated
turnover for that income year is less than AUD50,000,000 of that income year, and 2) it has 80% or less of their assessable income in
that income year that is base rate entity passive income.</ix:nonNumeric> Thus the applicable tax rate is <ix:nonFraction contextRef="c0" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:EffectiveIncomeTaxRateReconciliationDeductionsOther" scale="-2" unitRef="pure">25</ix:nonFraction>% for the Company on assessable profits arising
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</div><div>

</div><ix:continuation continuedAt="_IncomeTaxDisclosureTextBlock-c0_cont_8" id="_IncomeTaxDisclosureTextBlock-c0_cont_7"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Hong Kong</i></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_IncomeTaxDisclosureTextBlock-c0_cont_9" id="_IncomeTaxDisclosureTextBlock-c0_cont_8"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company&#8217; subsidiaries incorporated in
Hong Kong are subject to Hong Kong Profits Tax on the taxable income as reported in its statutory financial statements adjusted in accordance
with relevant Hong Kong tax laws. <ix:nonNumeric contextRef="c0" name="us-gaap:IncomeTaxExaminationDescription">The applicable tax rate is 8.25% on assessable profits arising in or derived from Hong Kong up to HKD2,000,000
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</div><div>

</div><ix:continuation continuedAt="_IncomeTaxDisclosureTextBlock-c0_cont_10" id="_IncomeTaxDisclosureTextBlock-c0_cont_9"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>PRC</i></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_IncomeTaxDisclosureTextBlock-c0_cont_11" id="_IncomeTaxDisclosureTextBlock-c0_cont_10"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company&#8217;s subsidiaries incorporated
in the PRC are governed by the income tax laws of the PRC and the income tax provision in respect to operations in the PRC is calculated
at the applicable tax rates on the taxable income for the periods based on existing legislation, interpretations and practices in respect
thereof. <ix:nonNumeric contextRef="c0" name="ebon:IncomeTaxEffectsDescription">Under the Enterprise Income Tax Laws of the PRC (the &#8220;EIT Laws&#8221;), domestic enterprises and Foreign Investment Enterprises
(the &#8220;FIE&#8221;) are usually subject to a unified 25% enterprise income tax rate while preferential tax rates, tax holidays and
even tax exemption may be granted on case-by-case basis. EIT grants preferential tax treatment to certain High and New Technology Enterprises
(&#8220;HNTEs&#8221;). Under this preferential tax treatment, HNTEs are entitled to an income tax rate of 15%, subject to a requirement
that they re-apply for HNTE status every three years. Zhejiang Ebang obtained the &#8220;high-tech enterprise&#8221; tax status in November
2017, which reduced its statutory income tax rate to 15% from November 2017 to November 2020. Zhejiang Ebang further re-applied and obtained
the HNTE status in December 2020. Hangzhou Dewang obtained the &#8220;high-tech enterprise&#8221; tax status in November 2018, which reduced
its statutory income tax rate to 15% from November 2018 to November 2021. Hangzhou Dewang further re-applied and obtained the HNTE status
in December 2021. In addition, Ebang IT obtained the &#8220;high-tech enterprise&#8221; tax status in December 2021, which reduced its
statutory income tax rate to 15% from December 2021 to December 2023.</ix:nonNumeric></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>

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</div><div>

</div><ix:continuation continuedAt="_IncomeTaxDisclosureTextBlock-c0_cont_13" id="_IncomeTaxDisclosureTextBlock-c0_cont_12"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Reconciliation of the differences between statutory
income tax rate and the effective tax rate&#160;</i></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_IncomeTaxDisclosureTextBlock-c0_cont_14" id="_IncomeTaxDisclosureTextBlock-c0_cont_13"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The reconciliation of tax computed by applying
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</div><div>

</div><ix:continuation continuedAt="_IncomeTaxDisclosureTextBlock-c0_cont_15" id="_IncomeTaxDisclosureTextBlock-c0_cont_14"><ix:nonNumeric contextRef="c0" escape="true" name="us-gaap:ScheduleOfEffectiveIncomeTaxRateReconciliationTableTextBlock"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
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    <td colspan="2" style="font-weight: bold; text-align: center">For the year ended December&#160;31,</td><td style="font-weight: bold">&#160;</td><td style="font-weight: bold">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>


</div><!-- Field: Page; Sequence: 21; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->21<!-- Field: /Sequence --></p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><ix:continuation continuedAt="_IncomeTaxDisclosureTextBlock-c0_cont_16" id="_IncomeTaxDisclosureTextBlock-c0_cont_15"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Significant components of the provision for income taxes are as follows:</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_IncomeTaxDisclosureTextBlock-c0_cont_17" id="_IncomeTaxDisclosureTextBlock-c0_cont_16"><ix:nonNumeric contextRef="c0" escape="true" name="us-gaap:ScheduleOfComponentsOfIncomeTaxExpenseBenefitTableTextBlock"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">(<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OtherTaxExpenseBenefit" scale="0" unitRef="usd">72,933</ix:nonFraction></td><td style="padding-bottom: 4pt; text-align: left">)</td><td style="padding-bottom: 4pt">&#160;</td>
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  </table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p></ix:nonNumeric></ix:continuation><div>



</div><div>

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</div><div>

</div><ix:continuation continuedAt="_IncomeTaxDisclosureTextBlock-c0_cont_19" id="_IncomeTaxDisclosureTextBlock-c0_cont_18"><ix:nonNumeric contextRef="c0" escape="true" name="us-gaap:ScheduleOfDeferredTaxAssetsAndLiabilitiesTableTextBlock"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
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    <td style="text-align: center">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
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    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right"><div style="-sec-ix-hidden: hidden-fact-205">-</div></td><td style="padding-bottom: 4pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td>&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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</div><div>

</div><ix:continuation continuedAt="_IncomeTaxDisclosureTextBlock-c0_cont_20" id="_IncomeTaxDisclosureTextBlock-c0_cont_19"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In assessing the realizability of deferred tax
assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.
The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which
those temporary differences become deductible. Management considers the cumulative earnings and projected future taxable income in making
this assessment. Recovery of substantially all of the Company&#8217;s deferred tax assets is dependent upon the generation of future
income, exclusive of reversing taxable temporary differences.&#160;</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_IncomeTaxDisclosureTextBlock-c0_cont_21" id="_IncomeTaxDisclosureTextBlock-c0_cont_20"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="text-decoration:underline">Uncertain tax positions</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_IncomeTaxDisclosureTextBlock-c0_cont_22" id="_IncomeTaxDisclosureTextBlock-c0_cont_21"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The PRC tax authorities conduct periodic and ad
hoc tax filing reviews on business enterprises operating in the PRC after those enterprises complete their relevant tax filings. In general,
the PRC tax authorities have up to five years to conduct examinations of the tax filings of the Company&#8217;s PRC entities. Accordingly,
the PRC subsidiaries&#8217; tax years of 2018 through 2022 remain open to examination by the respective tax authorities. It is therefore
uncertain as to whether the PRC tax authorities may take different views about the Company&#8217;s PRC entities&#8217; tax filings, which
may lead to additional tax liabilities.&#160;</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation><div>
</div><div>

</div><ix:continuation id="_IncomeTaxDisclosureTextBlock-c0_cont_22"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company evaluates each uncertain tax position
(including the potential application of interest and penalties) based on the technical merits, and measures the unrecognized benefits
associated with the tax positions. As of December 31, 2022 and 2021, the Company did not have any significant unrecognized uncertain tax
positions.</p></ix:continuation><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>


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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->22<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><ix:nonNumeric contextRef="c0" continuedAt="_StockholdersEquityNoteDisclosureTextBlock-c0_cont_1" escape="true" name="us-gaap:StockholdersEquityNoteDisclosureTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Note 12 &#8211; Equity</b></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p></ix:nonNumeric><div>

</div><div>

</div><ix:continuation continuedAt="_StockholdersEquityNoteDisclosureTextBlock-c0_cont_2" id="_StockholdersEquityNoteDisclosureTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i>Ordinary shares</i></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_StockholdersEquityNoteDisclosureTextBlock-c0_cont_3" id="_StockholdersEquityNoteDisclosureTextBlock-c0_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company adopted a dual-class share structure.
Each Class A ordinary share is entitled to one vote per share and each Class B ordinary share is entitled to twenty votes per share. Each
Class B ordinary share can be converted into one Class A ordinary share at any time, while Class A ordinary shares cannot be converted
into Class B ordinary shares.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_StockholdersEquityNoteDisclosureTextBlock-c0_cont_4" id="_StockholdersEquityNoteDisclosureTextBlock-c0_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company completed the initial public offering
(&#8220;IPO&#8221;) in 2020 with new issuance of totaling <ix:nonFraction contextRef="c178" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:StockIssuedDuringPeriodSharesAcquisitions" scale="0" unitRef="shares">642,145</ix:nonFraction> (<ix:nonFraction contextRef="c178" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:StockIssuedDuringPeriodSharesReverseStockSplits" scale="0" unitRef="shares">19,264,337</ix:nonFraction> before the Reverse Stock Split) Class A ordinary shares
at a price of $<ix:nonFraction contextRef="c178" decimals="1" format="ixt:num-dot-decimal" name="ebon:PaymentsOfOrdinaryDividend" scale="0" unitRef="usd">156.9</ix:nonFraction> ($<ix:nonFraction contextRef="c179" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:SharesIssuedPricePerShare" scale="0" unitRef="usdPershares">5.23</ix:nonFraction> before the Reverse Stock Split) per share. Net proceeds raised by the Company from the IPO amounted to approximately
$<ix:nonFraction contextRef="c180" decimals="-6" format="ixt:num-dot-decimal" name="ebon:UnderwritingDiscountsAndCommissions" scale="6" unitRef="usd">92</ix:nonFraction> million after deducting underwriting discounts and commissions and other offering expenses. The Company received all the net proceeds
on July 2, 2020.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_StockholdersEquityNoteDisclosureTextBlock-c0_cont_5" id="_StockholdersEquityNoteDisclosureTextBlock-c0_cont_4"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company commenced an additional offering with new issuance of totaling
<ix:nonFraction contextRef="c181" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:StockIssuedDuringPeriodSharesAcquisitions" scale="0" unitRef="shares">266,666</ix:nonFraction> (<ix:nonFraction contextRef="c181" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:StockIssuedDuringPeriodSharesReverseStockSplits" scale="0" unitRef="shares">8,000,000</ix:nonFraction> before the Reverse Stock Split) units at a price of $<ix:nonFraction contextRef="c181" decimals="1" format="ixt:num-dot-decimal" name="ebon:PaymentsOfOrdinaryDividend" scale="0" unitRef="usd">157.5</ix:nonFraction> ($<ix:nonFraction contextRef="c182" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:SharesIssuedPricePerShare" scale="0" unitRef="usdPershares">5.25</ix:nonFraction> before the Reverse Stock Split) per unit in November
2020 (the &#8220;November 2020 Offering&#8221;), intending to raise $<ix:nonFraction contextRef="c181" decimals="-6" format="ixt:num-dot-decimal" name="ebon:UnderwritingDiscountsAndCommissions" scale="6" unitRef="usd">42</ix:nonFraction> million funding prior to deducting underwriting discounts and
commissions and other offering expenses. Each unit consists of one share of Class A ordinary shares and one warrant to purchase one-half
of a Class A ordinary share. As of December 31, 2020, the Company completed the offering of <ix:nonFraction contextRef="c183" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:StockIssuedDuringPeriodSharesAcquisitions" scale="0" unitRef="shares">153,333</ix:nonFraction> (<ix:nonFraction contextRef="c183" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:StockIssuedDuringPeriodSharesReverseStockSplits" scale="0" unitRef="shares">4,600,000</ix:nonFraction> before the Reverse Stock
Split) units in relation to the November 2020 Offering and received net proceeds of approximately $<ix:nonFraction contextRef="c183" decimals="-6" format="ixt:num-dot-decimal" name="us-gaap:ProceedsFromDebtNetOfIssuanceCosts" scale="6" unitRef="usd">23</ix:nonFraction> million. The units issued consisting
of an aggregate of <ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="ebon:AggregateSharesIssued" scale="0" unitRef="shares">153,333</ix:nonFraction> (<ix:nonFraction contextRef="c11" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:StockIssuedDuringPeriodSharesReverseStockSplits" scale="0" unitRef="shares">4,600,000</ix:nonFraction> before the Reverse Stock Split) shares of Class A ordinary shares and <ix:nonFraction contextRef="c184" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ClassOfWarrantOrRightNumberOfSecuritiesCalledByEachWarrantOrRight" scale="0" unitRef="shares">153,333</ix:nonFraction> (<ix:nonFraction contextRef="c185" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:StockIssuedDuringPeriodSharesReverseStockSplits" scale="0" unitRef="shares">4,600,000</ix:nonFraction> before
the Reverse Stock Split) warrant which can be exercised for <ix:nonFraction contextRef="c186" decimals="0" format="ixt:num-dot-decimal" name="ebon:ExercisedSharesIssued" scale="0" unitRef="shares">76,667</ix:nonFraction> (<ix:nonFraction contextRef="c186" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:StockIssuedDuringPeriodSharesReverseStockSplits" scale="0" unitRef="shares">2,300,000</ix:nonFraction> before the Reverse Stock Split) shares of Class A ordinary
shares. In January 2021, the Company completed the November 2020 Offering by selling another <ix:nonFraction contextRef="c187" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:SaleOfStockNumberOfSharesIssuedInTransaction" scale="0" unitRef="shares">113,333</ix:nonFraction> (<ix:nonFraction contextRef="c187" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:StockIssuedDuringPeriodSharesReverseStockSplits" scale="0" unitRef="shares">3,400,000</ix:nonFraction> before the Reverse Stock
Split) units for net proceeds of approximately $<ix:nonFraction contextRef="c187" decimals="-6" format="ixt:num-dot-decimal" name="us-gaap:ProceedsFromDebtNetOfIssuanceCosts" scale="6" unitRef="usd">17</ix:nonFraction> million. The units issued consisting of an aggregate of <ix:nonFraction contextRef="c188" decimals="0" format="ixt:num-dot-decimal" name="ebon:AggregateSharesIssued" scale="0" unitRef="shares">113,333</ix:nonFraction> (<ix:nonFraction contextRef="c188" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:StockIssuedDuringPeriodSharesReverseStockSplits" scale="0" unitRef="shares">3,400,000</ix:nonFraction> before the
Reverse Stock Split) shares of Class A ordinary shares and <ix:nonFraction contextRef="c189" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ClassOfWarrantOrRightNumberOfSecuritiesCalledByEachWarrantOrRight" scale="0" unitRef="shares">113,333</ix:nonFraction> (<ix:nonFraction contextRef="c190" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:StockIssuedDuringPeriodSharesReverseStockSplits" scale="0" unitRef="shares">3,400,000</ix:nonFraction> before the Reverse Stock Split) warrant which can be exercised
for <ix:nonFraction contextRef="c191" decimals="0" format="ixt:num-dot-decimal" name="ebon:ExercisedSharesIssued" scale="0" unitRef="shares">56,667</ix:nonFraction> (<ix:nonFraction contextRef="c191" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:StockIssuedDuringPeriodSharesReverseStockSplits" scale="0" unitRef="shares">1,700,000</ix:nonFraction> before the Reverse Stock Split) shares of Class A ordinary shares.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_StockholdersEquityNoteDisclosureTextBlock-c0_cont_6" id="_StockholdersEquityNoteDisclosureTextBlock-c0_cont_5"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In February 2021, the Company launched another
offering for an aggregate of <ix:nonFraction contextRef="c192" decimals="0" format="ixt:num-dot-decimal" name="ebon:AggregateOfferingUnits" scale="0" unitRef="shares">640,000</ix:nonFraction> (<ix:nonFraction contextRef="c192" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:StockIssuedDuringPeriodSharesReverseStockSplits" scale="0" unitRef="shares">19,200,000</ix:nonFraction> before the Reverse Stock Split) units at $<ix:nonFraction contextRef="c192" decimals="0" format="ixt:num-dot-decimal" name="ebon:AggregaPricePerUnit" scale="0" unitRef="usdPershares">150</ix:nonFraction> ($<ix:nonFraction contextRef="c193" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:SharesIssuedPricePerShare" scale="0" unitRef="usdPershares">5</ix:nonFraction> before the Reverse Stock Split) per
unit (the &#8220;February 2021 Offering&#8221;). Each unit offered in the February 2021 Offering consists of one Class A ordinary share
and one warrant to purchase one-half of one Class A ordinary share. The warrants are immediately exercisable and expire on the fifth anniversary
of the original issuance date. The exercise price of each two warrants is $<ix:nonFraction contextRef="c194" decimals="1" format="ixt:num-dot-decimal" name="us-gaap:WarrantExercisePriceDecrease" scale="0" unitRef="usdPershares">157.5</ix:nonFraction> ($<ix:nonFraction contextRef="c195" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:SharesIssuedPricePerShare" scale="0" unitRef="usdPershares">5.25</ix:nonFraction> before the Reverse Stock Split). The warrants
may be exercised only for a whole number of shares and the Company does not issue fractional shares upon exercise of the warrants. The
Company completed the February 2021 Offering by selling <ix:nonFraction contextRef="c196" decimals="0" format="ixt:num-dot-decimal" name="ebon:OfferingSaleOfUnits" scale="0" unitRef="shares">640,000</ix:nonFraction> (<ix:nonFraction contextRef="c196" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:StockIssuedDuringPeriodSharesReverseStockSplits" scale="0" unitRef="shares">19,200,000</ix:nonFraction> before the Reverse Stock Split) units and received net proceeds
of approximately $<ix:nonFraction contextRef="c192" decimals="-6" format="ixt:num-dot-decimal" name="us-gaap:ProceedsFromDebtNetOfIssuanceCosts" scale="6" unitRef="usd">90</ix:nonFraction> million. The units issued consisting of an aggregate of <ix:nonFraction contextRef="c197" decimals="0" format="ixt:num-dot-decimal" name="ebon:AggregateShares" scale="0" unitRef="shares">640,000</ix:nonFraction> (<ix:nonFraction contextRef="c197" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:StockIssuedDuringPeriodSharesReverseStockSplits" scale="0" unitRef="shares">19,200,000</ix:nonFraction> before the Reverse Stock Split) shares
of Class A ordinary shares and <ix:nonFraction contextRef="c198" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ClassOfWarrantOrRightNumberOfSecuritiesCalledByEachWarrantOrRight" scale="0" unitRef="shares">640,000</ix:nonFraction> (<ix:nonFraction contextRef="c199" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:StockIssuedDuringPeriodSharesReverseStockSplits" scale="0" unitRef="shares">19,200,000</ix:nonFraction> before the Reverse Stock Split) warrant which can be exercised for <ix:nonFraction contextRef="c200" decimals="0" format="ixt:num-dot-decimal" name="ebon:ExercisedSharesIssued" scale="0" unitRef="shares">320,000</ix:nonFraction> (<ix:nonFraction contextRef="c200" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:StockIssuedDuringPeriodSharesReverseStockSplits" scale="0" unitRef="shares">9,600,000</ix:nonFraction>
before the Reverse Stock Split) shares of Class A ordinary shares.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation><div>
</div><div>

</div><ix:continuation continuedAt="_StockholdersEquityNoteDisclosureTextBlock-c0_cont_7" id="_StockholdersEquityNoteDisclosureTextBlock-c0_cont_6"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company also entered into inducement agreements
with certain investors (the &#8220;Holders&#8221;) in February 2021 to induce them to exercise the warrants issued to them in connection
with the November 2020 Offering and the February 2021 Offering for all <ix:nonFraction contextRef="c201" decimals="0" format="ixt:num-dot-decimal" name="ebon:OfferingShares" scale="0" unitRef="shares">453,333</ix:nonFraction> (<ix:nonFraction contextRef="c202" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:StockIssuedDuringPeriodSharesReverseStockSplits" scale="0" unitRef="shares">13,600,000</ix:nonFraction> before the Reverse Stock Split) Class A ordinary
shares available for exercise thereunder (the &#8220;Warrant Inducement Offering&#8221;). The Holders exercised these warrants, in full,
and were issued <ix:nonFraction contextRef="c203" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:StockIssuedDuringPeriodSharesAcquisitions" scale="0" unitRef="shares">453,333</ix:nonFraction> (<ix:nonFraction contextRef="c204" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:StockIssuedDuringPeriodSharesReverseStockSplits" scale="0" unitRef="shares">13,600,000</ix:nonFraction> before the Reverse Stock Split) Class A ordinary shares as a result of such exercises, with the Company
receiving aggregate net proceeds of approximately $<ix:nonFraction contextRef="c201" decimals="-6" format="ixt:num-dot-decimal" name="ebon:AggregateNetProceeds" scale="6" unitRef="usd">68</ix:nonFraction> million after deducting sales commissions payable to the warrant solicitation agents
and related expenses. Additionally, as consideration for their exercise of such warrants, the Company issued to the Holders the new warrants,
which are exercisable, anytime within <ix:nonNumeric contextRef="c205" continuedAt="ebon_NewWarrantsTerm-c205_cont_1" format="ixt-sec:durwordsen" name="ebon:NewWarrantsTerm">five</ix:nonNumeric> (5)<ix:continuation id="ebon_NewWarrantsTerm-c205_cont_1"> years</ix:continuation> from the date on which they became exercisable, at an exercise price of $<ix:nonFraction contextRef="c201" decimals="1" format="ixt:num-dot-decimal" name="us-gaap:WarrantExercisePriceDecrease" scale="0" unitRef="usdPershares">331.8</ix:nonFraction> ($<ix:nonFraction contextRef="c206" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:SharesIssuedPricePerShare" scale="0" unitRef="usdPershares">11.06</ix:nonFraction>
before the Reverse Stock Split) per share, for an aggregate of up to the <ix:nonFraction contextRef="c201" decimals="0" format="ixt:num-dot-decimal" name="ebon:AggregateShares" scale="0" unitRef="shares">453,333</ix:nonFraction> (<ix:nonFraction contextRef="c207" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:StockIssuedDuringPeriodSharesReverseStockSplits" scale="0" unitRef="shares">13,600,000</ix:nonFraction> before the Reverse Stock Split) Class A ordinary
shares.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><ix:continuation continuedAt="_StockholdersEquityNoteDisclosureTextBlock-c0_cont_8" id="_StockholdersEquityNoteDisclosureTextBlock-c0_cont_7"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In March 2021, the Company launched another offering for an aggregate
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2021 Offering&#8221;). Each unit offered in the March 2021 Offering consists of one Class A ordinary share and one warrant to purchase
one-half of one Class A ordinary share. The warrants are immediately exercisable and expire on the fifth anniversary of the original issuance
date. The exercise price of each two warrants is $<ix:nonFraction contextRef="c210" decimals="1" format="ixt:num-dot-decimal" name="us-gaap:WarrantExercisePriceIncrease" scale="0" unitRef="usdPershares">197.7</ix:nonFraction> ($<ix:nonFraction contextRef="c211" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:SharesIssuedPricePerShare" scale="0" unitRef="usdPershares">6.59</ix:nonFraction> before the Reverse Stock Split). The warrants may be exercised only for
a whole number of shares and the Company does not issue fractional shares upon exercise of the warrants. The Company completed the March
2021 Offering by selling <ix:nonFraction contextRef="c212" decimals="0" format="ixt:num-dot-decimal" name="ebon:OfferingShares" scale="0" unitRef="shares">466,667</ix:nonFraction> (<ix:nonFraction contextRef="c212" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:StockIssuedDuringPeriodSharesReverseStockSplits" scale="0" unitRef="shares">14,000,000</ix:nonFraction> before the Reverse Stock Split) units and received net proceeds of approximately $<ix:nonFraction contextRef="c212" decimals="-6" format="ixt:num-dot-decimal" name="us-gaap:ProceedsFromDebtNetOfIssuanceCosts" scale="6" unitRef="usd">80</ix:nonFraction> million.
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shares of Class A ordinary shares.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On November 20, 2022, the Company effected a 1-for-30 reverse stock
split of Ordinary Shares (the &#8220;Reverse Stock Split&#8221;), pursuant to which every 30 issued and unissued Class A ordinary shares
and Class B ordinary shares of the Company of HK$0.001 each (the &#8220;Existing Shares&#8221;) be consolidated into one share of HK$0.03
each (each a &#8220;Consolidated Share&#8221;) in accordance with an ordinary resolution passed at an extraordinary general meeting of
the Company held on November 20, 2022.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:continuation continuedAt="_StockholdersEquityNoteDisclosureTextBlock-c0_cont_9" id="_StockholdersEquityNoteDisclosureTextBlock-c0_cont_8"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Warrants</i></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_StockholdersEquityNoteDisclosureTextBlock-c0_cont_10" id="_StockholdersEquityNoteDisclosureTextBlock-c0_cont_9"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The following table sets forth the Company&#8217;s
warrant activities for the years ended December 31, 2022, 2021 and 2020:</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>

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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-bottom: 1.5pt">Exercised</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>Balance at December 31, 2021</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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  </table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:nonNumeric></ix:continuation><div>


</div><div>



</div><ix:continuation continuedAt="_StockholdersEquityNoteDisclosureTextBlock-c0_cont_12" id="_StockholdersEquityNoteDisclosureTextBlock-c0_cont_11"><ix:continuation id="_ScheduleOfStockholdersEquityNoteWarrantsOrRightsTextBlock-c0_cont_1"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0in"></td><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif">*</span></td><td style="text-align: justify"><ix:footnote id="ix_7_footnote" xml:lang="en-US"><span style="font-family: Times New Roman, Times, Serif">Retrospectively adjusted for the effect of the Reverse Stock Split effected on November 20, 2022. See Note 12.</span></ix:footnote></td>
</tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation id="_StockholdersEquityNoteDisclosureTextBlock-c0_cont_12"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">The
intrinsic value of these warrants was approximately <span style="-sec-ix-hidden: hidden-fact-213">nil</span> and <span style="-sec-ix-hidden: hidden-fact-214">nil</span> as of December&#160;31, 2022, and 2021, respectively.</span></p></ix:continuation><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:nonNumeric contextRef="c0" continuedAt="_DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock-c0_cont_1" escape="true" name="us-gaap:DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Note 13 &#8211; Share-based compensation</b></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:nonNumeric><div>

</div><div>

</div><ix:continuation continuedAt="_DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock-c0_cont_2" id="_DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In order to attract and retain talents, the Company adopted a share
incentive plan in April 2020, which was amended and restated on July 9, 2021 (the &#8220;2020 Plan&#8221;). The maximum aggregate number
of shares that may be issued pursuant to all awards under the 2020 Plan shall be <ix:nonFraction contextRef="c218" decimals="0" format="ixt:num-dot-decimal" name="ebon:AggregateNumberOfShares" scale="0" unitRef="shares">349,427</ix:nonFraction> (<ix:nonFraction contextRef="c219" decimals="0" format="ixt:num-dot-decimal" name="ebon:AggregateNumberOfShares" scale="0" unitRef="shares">10,482,827</ix:nonFraction> before Reverse Stock Split) Class
A ordinary shares. The Company also adopted the 2021 Share Incentive Plan (the &#8220;2021 Plan&#8221;), under which the maximum aggregate
number of shares that may be issued pursuant to all awards shall be <ix:nonFraction contextRef="c220" decimals="0" format="ixt:num-dot-decimal" name="ebon:AggregateNumberOfShares" scale="0" unitRef="shares">333,333</ix:nonFraction> (<ix:nonFraction contextRef="c221" decimals="0" format="ixt:num-dot-decimal" name="ebon:AggregateNumberOfShares" scale="0" unitRef="shares">10,000,000</ix:nonFraction> before Reverse Stock Split) Class A ordinary shares.
The Company did not grant any award under the 2021 plan.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock-c0_cont_3" id="_DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock-c0_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company granted <span style="-sec-ix-hidden: hidden-fact-219">172,333</span> and <ix:nonFraction contextRef="c222" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardNonOptionEquityInstrumentsGranted" scale="0" unitRef="shares">61,200</ix:nonFraction> (<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardNonOptionEquityInstrumentsGranted" scale="0" unitRef="shares">5,170,000</ix:nonFraction>
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annual performance review result for each grantee and recognizes the related compensation expenses. The amount of compensation expense
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</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>


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</div><div>

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</div><div>

</div><ix:continuation id="_DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock-c0_cont_5"><ix:continuation id="_ScheduleOfShareBasedCompensationRestrictedStockUnitsAwardActivityTableTextBlock-c0_cont_1"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
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</tr></table></ix:continuation></ix:continuation><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

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</div><div>

</div><ix:continuation continuedAt="_LesseeOperatingLeasesTextBlock-c0_cont_2" id="_LesseeOperatingLeasesTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company entered into operating lease agreements for factory buildings,
office spaces and employee dormitories including lease agreements with its related party, with various initial term expiration dates through
2030 and various renewal and termination options. None of the amounts disclosed below for these leases contains variable payments, residual
value guarantees or options that were recognized as part of the right-of-use assets and lease liabilities. As the Company&#8217;s leases
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</div><div>

</div><ix:continuation continuedAt="_LesseeOperatingLeasesTextBlock-c0_cont_3" id="_LesseeOperatingLeasesTextBlock-c0_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">As
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</div><div>

</div><ix:continuation continuedAt="_LesseeOperatingLeasesTextBlock-c0_cont_4" id="_LesseeOperatingLeasesTextBlock-c0_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Also see Note 18 for related party operating lease
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</div><div>

</div><ix:continuation continuedAt="_LesseeOperatingLeasesTextBlock-c0_cont_5" id="_LesseeOperatingLeasesTextBlock-c0_cont_4"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The following components of lease cost are included
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</div><div>

</div><ix:continuation continuedAt="_LesseeOperatingLeasesTextBlock-c0_cont_6" id="_LesseeOperatingLeasesTextBlock-c0_cont_5"><ix:nonNumeric contextRef="c0" escape="true" name="us-gaap:LeaseCostTableTextBlock"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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</div><div>


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</div><ix:continuation continuedAt="_LesseeOperatingLeasesTextBlock-c0_cont_7" id="_LesseeOperatingLeasesTextBlock-c0_cont_6"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Supplemental cash flow information related to operating leases was
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</div><div>

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</div><div>

</div><ix:continuation continuedAt="_LesseeOperatingLeasesTextBlock-c0_cont_9" id="_LesseeOperatingLeasesTextBlock-c0_cont_8"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Supplemental balance sheet information related to operating leases
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</div><div>

</div><ix:continuation continuedAt="_LesseeOperatingLeasesTextBlock-c0_cont_10" id="_LesseeOperatingLeasesTextBlock-c0_cont_9"><ix:nonNumeric contextRef="c0" escape="true" name="ebon:ScheduleOfBalanceSheetInformationRelatedToOperatingLeasesTableTextBlock"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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  </table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p></ix:nonNumeric></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_LesseeOperatingLeasesTextBlock-c0_cont_11" id="_LesseeOperatingLeasesTextBlock-c0_cont_10"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company&#8217;s maturity analysis of operating lease liabilities
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</div><div>

</div><ix:continuation id="_LesseeOperatingLeasesTextBlock-c0_cont_11"><ix:nonNumeric contextRef="c0" escape="true" name="ebon:ScheduleOfMaturityAnalysisOfOperatingLeaseLiabilitiesTexBlock"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
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  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>


</div><!-- Field: Page; Sequence: 26; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->26<!-- Field: /Sequence --></p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><ix:nonNumeric contextRef="c0" continuedAt="ebon_StatutoryReservesAndRestrictedNetAssetsTextBlock-c0_cont_1" escape="true" name="ebon:StatutoryReservesAndRestrictedNetAssetsTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Note 15 &#8211; Statutory reserves and restricted net assets </b></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p></ix:nonNumeric><div>

</div><div>

</div><ix:continuation continuedAt="ebon_StatutoryReservesAndRestrictedNetAssetsTextBlock-c0_cont_2" id="ebon_StatutoryReservesAndRestrictedNetAssetsTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As a result of the PRC laws and regulations and
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the PRC entities are restricted from transferring a portion of their net assets to the Company. Amounts restricted include paid-in capital,
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</div><div>

</div><ix:continuation continuedAt="ebon_StatutoryReservesAndRestrictedNetAssetsTextBlock-c0_cont_3" id="ebon_StatutoryReservesAndRestrictedNetAssetsTextBlock-c0_cont_2"><ix:nonNumeric contextRef="c0" escape="true" name="us-gaap:StatutoryAccountingPracticesDisclosureTextBlock"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
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    <td>PRC entities</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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</div><div>

</div><ix:continuation id="ebon_StatutoryReservesAndRestrictedNetAssetsTextBlock-c0_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As of December&#160;31, 2022 and 2021, total restricted
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:nonNumeric contextRef="c0" continuedAt="_SegmentReportingDisclosureTextBlock-c0_cont_1" escape="true" name="us-gaap:SegmentReportingDisclosureTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Note 16 &#8211; Segment and revenue analysis</b></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:nonNumeric><div>

</div><div>

</div><ix:continuation continuedAt="_SegmentReportingDisclosureTextBlock-c0_cont_2" id="_SegmentReportingDisclosureTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company operates in a single operating segment that includes the
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</div><div>

</div><ix:continuation continuedAt="_SegmentReportingDisclosureTextBlock-c0_cont_4" id="_SegmentReportingDisclosureTextBlock-c0_cont_3"><ix:nonNumeric contextRef="c0" escape="true" name="us-gaap:ScheduleOfRevenueByMajorCustomersByReportingSegmentsTableTextBlock"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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</div><div>

</div><ix:continuation continuedAt="_SegmentReportingDisclosureTextBlock-c0_cont_6" id="_SegmentReportingDisclosureTextBlock-c0_cont_5"><ix:nonNumeric contextRef="c0" escape="true" name="us-gaap:RevenueFromExternalCustomersByGeographicAreasTableTextBlock"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
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</div><div>

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</div><div>

</div><ix:continuation id="_SegmentReportingDisclosureTextBlock-c0_cont_7"><ix:nonNumeric contextRef="c0" escape="true" name="us-gaap:ScheduleOfRevenuesFromExternalCustomersAndLongLivedAssetsByGeographicalAreasTableTextBlock"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

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</div><div>

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</div><div>

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</div><div>

</div><ix:continuation continuedAt="_RelatedPartyTransactionsDisclosureTextBlock-c0_cont_4" id="_RelatedPartyTransactionsDisclosureTextBlock-c0_cont_3"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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</div><ix:continuation continuedAt="_RelatedPartyTransactionsDisclosureTextBlock-c0_cont_5" id="_RelatedPartyTransactionsDisclosureTextBlock-c0_cont_4"><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">During the year ended December 31, 2020, the Company obtained loans
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has fully repaid the loan related to Hong Kong Dewang Limited. The interest associated with this loan for the amount of approximately
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</div><div>




</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><ix:continuation continuedAt="_RelatedPartyTransactionsDisclosureTextBlock-c0_cont_6" id="_RelatedPartyTransactionsDisclosureTextBlock-c0_cont_5"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0in"></td><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">c)</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Operating
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</tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p></ix:continuation><div>
</div><div>

</div><ix:continuation continuedAt="_RelatedPartyTransactionsDisclosureTextBlock-c0_cont_7" id="_RelatedPartyTransactionsDisclosureTextBlock-c0_cont_6"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company leases office space from
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</div><div>

</div><ix:continuation continuedAt="_RelatedPartyTransactionsDisclosureTextBlock-c0_cont_8" id="_RelatedPartyTransactionsDisclosureTextBlock-c0_cont_7"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company leases office space from Hangzhou
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</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>


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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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    <td style="text-align: justify; font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Due to a
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</div><div>

</div><ix:continuation continuedAt="_RelatedPartyTransactionsDisclosureTextBlock-c0_cont_10" id="_RelatedPartyTransactionsDisclosureTextBlock-c0_cont_9"><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The balance of due to related party represents advances the Company
obtained from a related party. The balances owed to the related party are unsecured, non-interest bearing and payable on demand.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_RelatedPartyTransactionsDisclosureTextBlock-c0_cont_11" id="_RelatedPartyTransactionsDisclosureTextBlock-c0_cont_10"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">For the year ended December 31, 2020, the Company
borrowed approximately $<ix:nonFraction contextRef="c37" decimals="-5" format="ixt:num-dot-decimal" name="us-gaap:RelatedPartyTransactionDueFromToRelatedParty" scale="6" unitRef="usd">1.8</ix:nonFraction> million from and repaid approximately $<ix:nonFraction contextRef="c37" decimals="-5" format="ixt:num-dot-decimal" name="us-gaap:RelatedPartyTransactionDueFromToRelatedPartyCurrent" scale="6" unitRef="usd">2.8</ix:nonFraction> million to Zhejiang Wansi Computer Manufacturing Company Limited,
respectively. As of December 31, 2021, the borrowings have been fully repaid by the Company.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_RelatedPartyTransactionsDisclosureTextBlock-c0_cont_12" id="_RelatedPartyTransactionsDisclosureTextBlock-c0_cont_11"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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</div><div>

</div><ix:continuation continuedAt="_RelatedPartyTransactionsDisclosureTextBlock-c0_cont_13" id="_RelatedPartyTransactionsDisclosureTextBlock-c0_cont_12"><p style="text-align: justify; margin: 0pt 0; font: 10pt Times New Roman, Times, Serif">During the year ended December 31, 2020, the Company borrowed $<ix:nonFraction contextRef="c37" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentRepurchaseAmount" scale="0" unitRef="usd">749,949</ix:nonFraction>
from Dong Hu and fully repaid the loan in the same period. The loan is unsecured, non-interest bearing and payable on demand.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_RelatedPartyTransactionsDisclosureTextBlock-c0_cont_14" id="_RelatedPartyTransactionsDisclosureTextBlock-c0_cont_13"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0in"></td><td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">f)</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Disposal
of a subsidiary to a related party</span></td>
</tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation><div>
</div><div>

</div><ix:continuation continuedAt="_RelatedPartyTransactionsDisclosureTextBlock-c0_cont_15" id="_RelatedPartyTransactionsDisclosureTextBlock-c0_cont_14"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In December 2020, the Company disposed of Hangzhou
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is accounted for as a capital contribution from Dong Hu, CEO as a result of this transaction between entities under common control of
Dong Hu. The disposal of Hangzhou Yiquansheng does not constitute a strategic shift of the Company&#8217;s operation.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation><div>
</div><div>

</div><ix:continuation id="_RelatedPartyTransactionsDisclosureTextBlock-c0_cont_15"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During the year ended December 31, 2020, Hangzhou
Yiquansheng borrowed approximately $<ix:nonFraction contextRef="c316" decimals="0" format="ixt:num-dot-decimal" name="ebon:BorrowingAmount" scale="0" unitRef="usd">562,000</ix:nonFraction> from the affiliate controlled by Mr. Dong Hu. The liability was extinguished in connection
with the disposal of Hangzhou Yiquansheng, related gain on extinguishment is included in the gain on disposal, accounted for as a capital
contribution.&#160;</p></ix:continuation><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:nonNumeric contextRef="c0" continuedAt="ebon_LossgainOnDisposalOfSubsidiariesTextBlock-c0_cont_1" escape="true" name="ebon:LossgainOnDisposalOfSubsidiariesTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Note 19 &#8211; Disposal of subsidiaries</b></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p></ix:nonNumeric><div>

</div><div>

</div><ix:continuation continuedAt="ebon_LossgainOnDisposalOfSubsidiariesTextBlock-c0_cont_2" id="ebon_LossgainOnDisposalOfSubsidiariesTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On June 30, 2022, the Company disposed of <ix:nonFraction contextRef="c323" decimals="2" format="ixt:num-dot-decimal" name="ebon:EquityMethodInvestmentOwnershipPercentage1" scale="-2" unitRef="pure">100</ix:nonFraction>%
of the equity interest of Ebang Hongling and its <ix:nonFraction contextRef="c324" decimals="2" format="ixt:num-dot-decimal" name="ebon:EquityMethodInvestmentOwnershipPercentage1" scale="-2" unitRef="pure">100</ix:nonFraction>% owned subsidiary Wuhai Ebang to a third party for a cash consideration of RMB<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="ebon:EquityInterestAmount" scale="0" unitRef="cny">1</ix:nonFraction>.
This disposal resulted in a gain of $<ix:nonFraction contextRef="c4" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DisposalGroupDeferredGainOnDisposal" scale="0" unitRef="usd">5,941</ix:nonFraction> for the year ended December 31, 2022.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation id="ebon_LossgainOnDisposalOfSubsidiariesTextBlock-c0_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">For the period from January 1, 2022 to June 30,
2022, Ebang Hongling and Wuhai Ebang did not generate any revenue and incurred a net loss of approximately $<ix:nonFraction contextRef="c325" decimals="-5" format="ixt:num-dot-decimal" name="us-gaap:GainLossOnPriceRiskDerivativesNet" scale="6" unitRef="usd">6.7</ix:nonFraction> million. Net negative
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strategic shift that has (or will have) a major effect on the Company&#8217;s operations and financial results.</p></ix:continuation><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:nonNumeric contextRef="c0" continuedAt="_CommitmentsAndContingenciesDisclosureTextBlock-c0_cont_1" escape="true" name="us-gaap:CommitmentsAndContingenciesDisclosureTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Note 20 &#8211; Commitments and contingencies</b></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p></ix:nonNumeric><div>

</div><div>

</div><ix:continuation continuedAt="_CommitmentsAndContingenciesDisclosureTextBlock-c0_cont_2" id="_CommitmentsAndContingenciesDisclosureTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Operating lease commitments</i></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_CommitmentsAndContingenciesDisclosureTextBlock-c0_cont_3" id="_CommitmentsAndContingenciesDisclosureTextBlock-c0_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The information of lease commitments is provided
in Note 14.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_CommitmentsAndContingenciesDisclosureTextBlock-c0_cont_4" id="_CommitmentsAndContingenciesDisclosureTextBlock-c0_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Contingencies</i></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_CommitmentsAndContingenciesDisclosureTextBlock-c0_cont_5" id="_CommitmentsAndContingenciesDisclosureTextBlock-c0_cont_4"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On July 16, 2018, Wangjing Technology (Suzhou)
Co., Ltd. (&#8220;Wangjing Technology&#8221;) filed a copyright infringement dispute against Zhejiang Ebang and three other defendants.
On January 1, 2016, due to production and operation needs, Zhejiang Ebang entrusted the fourth defendant Suzhou Qiao Network Technology
Co., Ltd. (&#8220;Suzhou Qiao&#8221;) to carry out technical development (involving products: embedded software for gateway). In the process
of technical cooperation, the software developed by the fourth defendant Suzhou Qiao was charged for copyright infringement and Zhejiang
Ebang is thereby involved in the case. The plaintiff, Wangjing Technology sued the defendants in this case to jointly compensate the plaintiff
for the economic losses and reasonable rights maintenance costs totaling RMB<ix:nonFraction contextRef="c327" decimals="-6" format="ixt:num-dot-decimal" name="us-gaap:CostMaintenance" scale="6" unitRef="cny">3</ix:nonFraction> million (approximately $<ix:nonFraction contextRef="c327" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CostMaintenance" scale="0" unitRef="usd">431,000</ix:nonFraction>). <ix:nonNumeric contextRef="c328" name="ebon:ContingenciesDescription">On August 6, 2020, Zhejiang
Ebang received the judgment of the first trial of the case, and the judgment was as follows: 1) Zhejiang Ebang and Suzhou Qiao should
immediately cease the infringement of the plaintiff&#8217;s software copyright. 2) Zhejiang Ebang and Suzhou Qiao should jointly compensate
the plaintiff by RMB0.5 million (approximately $71,000). 3) Zhejiang Ebang should publish notices on its official website regarding the
copyright infringement involved in the case for no less than 15 consecutive days. 4) The Court rejected the plaintiff&#8217;s other claims.</ix:nonNumeric>
Zhejiang Ebang has filed an appeal and the judgment of the first trial has not yet become effective due to the appeal. On January 27,
2021, the appeal has been held online for trial investigation. The Company has recorded an expense of RMB<ix:nonFraction contextRef="c10" decimals="-5" format="ixt:num-dot-decimal" name="us-gaap:CostsAndExpenses" scale="6" unitRef="cny">0.5</ix:nonFraction> million related to this matter
for the year ended December 31, 2021. The result of this appeal is still pending.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_CommitmentsAndContingenciesDisclosureTextBlock-c0_cont_6" id="_CommitmentsAndContingenciesDisclosureTextBlock-c0_cont_5"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif"><span style="text-decoration:underline">Litigation
settlement&#160;</span></span></p><p style="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin: 0pt 0">&#160;</p></ix:continuation><div>

</div><div>

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Intermediate People&#8217;s Court against one of its customers. The defendant had purchased from the Company, and the Company had delivered
<ix:nonFraction contextRef="c329" decimals="0" format="ixt:num-dot-decimal" name="ebon:NumberOfUnitsDelivered" scale="0" unitRef="shares">90,000</ix:nonFraction> units of mining machines for a total amount of RMB<ix:nonFraction contextRef="c329" decimals="-5" format="ixt:num-dot-decimal" name="ebon:TotalAmountMiningMachines" scale="6" unitRef="cny">453.6</ix:nonFraction> million (approximately $<ix:nonFraction contextRef="c329" decimals="-5" format="ixt:num-dot-decimal" name="ebon:TotalApproximatelyAmountMiningMachines" scale="6" unitRef="usd">65.1</ix:nonFraction> million) pursuant to an executed sales contract.
The defendant has paid RMB<ix:nonFraction contextRef="c329" decimals="-6" format="ixt:num-dot-decimal" name="ebon:DefendantPaidAmount" scale="6" unitRef="cny">380</ix:nonFraction> million (approximately $<ix:nonFraction contextRef="c329" decimals="-5" format="ixt:num-dot-decimal" name="ebon:DefendantApproximatelyPaidAmount" scale="6" unitRef="usd">54.5</ix:nonFraction> million), and the Company is seeking payment of the remaining balance of RMB<ix:nonFraction contextRef="c329" decimals="-5" format="ixt:num-dot-decimal" name="ebon:BalanceAmountOfDefendantPaidAmount" scale="6" unitRef="cny">73.6</ix:nonFraction>
million (approximately $<ix:nonFraction contextRef="c329" decimals="-5" format="ixt:num-dot-decimal" name="ebon:BalanceAmountOfApproximatelyDefendantPaidAmount" scale="6" unitRef="usd">10.6</ix:nonFraction> million) plus interest and legal expenses. On December 30, 2021, Hangzhou Intermediate People&#8217;s Court
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to Zhejiang Provisional Superior People&#8217;s Court and the appeal was automatically withdrawn according to the ruling made by Zhejiang
Provisional Superior People&#8217;s Court on March 22, 2022. The court has made enforcement action regarding the payment by the defendant.
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was entered into in 2018, no associated revenue was recognized as the Company concluded the collection of the consideration was not probable.
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of operations and comprehensive income (loss) because the contract has been terminated which leaves the Company no remaining obligations
to transfer products and the receipt of consideration is nonrefundable.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation><div>


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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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million) pursuant to a sales contract and a supplementary contract, alleging that the defendants only paid RMB<ix:nonFraction contextRef="c334" decimals="-6" format="ixt:num-dot-decimal" name="ebon:TotalBalance" scale="6" unitRef="cny">13</ix:nonFraction> million
(approximately $<ix:nonFraction contextRef="c334" decimals="-6" format="ixt:num-dot-decimal" name="ebon:TotalBalance" scale="6" unitRef="usd">2</ix:nonFraction> million) of the total balance and seeking full payment of the outstanding RMB<ix:nonFraction contextRef="c329" decimals="-6" format="ixt:num-dot-decimal" name="us-gaap:LettersOfCreditOutstandingAmount" scale="6" unitRef="cny">282</ix:nonFraction> million (approximately $<ix:nonFraction contextRef="c329" decimals="-6" format="ixt:num-dot-decimal" name="us-gaap:LettersOfCreditOutstandingAmount" scale="6" unitRef="usd">40</ix:nonFraction>
million) balance plus interest and hold both defendants jointly and severally liable. In August 2021, an agreement was reached
between the Company and defendants following a mediation by the court, pursuant to which the defendants agree to pay a total of
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concluded the collection of the consideration was not probable. The Company has received RMB<ix:nonFraction contextRef="c335" decimals="-6" format="ixt:num-dot-decimal" name="ebon:DefendantPaidAmount" scale="6" unitRef="cny">166</ix:nonFraction> million (approximately $<ix:nonFraction contextRef="c335" decimals="-5" format="ixt:num-dot-decimal" name="ebon:DefendantApproximatelyPaidAmount" scale="6" unitRef="usd">24.7</ix:nonFraction>
million) and RMB<ix:nonFraction contextRef="c335" decimals="-6" format="ixt:num-dot-decimal" name="ebon:BalanceAmountOfDefendantPaidAmount" scale="6" unitRef="cny">106</ix:nonFraction> million (approximately $<ix:nonFraction contextRef="c335" decimals="-6" format="ixt:num-dot-decimal" name="ebon:BalanceAmountOfApproximatelyDefendantPaidAmount" scale="6" unitRef="usd">16</ix:nonFraction> million) from the settlement during the year ended December 31, 2022 and 2021,
respectively. Such receipts were recorded as revenue in the consolidated statements of operations and comprehensive income (loss)
because the contract has been terminated which leaves the Company no remaining obligations to transfer products and the receipt of
consideration is nonrefundable.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_CommitmentsAndContingenciesDisclosureTextBlock-c0_cont_9" id="_CommitmentsAndContingenciesDisclosureTextBlock-c0_cont_8"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In April 2021, Chongqing Duomeiduo Culture Media Co., Ltd. (&#8220;DMD&#8221;)
filed a civil action in the Beijing Chaoyang District People&#8217; Court against the Company for sales contract disputes, claiming the
Company and Borui Shikong Culture Communication Co., Ltd. (&#8220;Borui&#8221;) to return the payment made for the contract in dispute,
totaling RMB<ix:nonFraction contextRef="c336" decimals="-6" format="ixt:num-dot-decimal" name="us-gaap:RevenueNotFromContractWithCustomerOther" scale="6" unitRef="cny">2</ix:nonFraction> million and 30 bitcoins. On December 16, 2021, the case was transferred to Beijing Dongcheng District People&#8217;s Court
for trial. On March 9, 2023, the court announced the verdict that the sales contract between Borui and DMD is voided and requested Borui
to return DMD goods payment of RMB<ix:nonFraction contextRef="c337" decimals="-6" format="ixt:num-dot-decimal" name="ebon:GoodsPayment" scale="6" unitRef="cny">2</ix:nonFraction> million and 30 bitcoins. In addition, the Company, as one of the defendants, has no responsibility
for the case.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation id="_CommitmentsAndContingenciesDisclosureTextBlock-c0_cont_9"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">From time to time, the Company is subject to legal
proceedings and claims in the ordinary course of business. The Company records a liability when it is both probable that a liability will
be incurred and the amount of the loss can be reasonably estimated. The Company reviews the need for any such liability on a regular basis. For the years ended December 31, 2022, 2021 and 2020, the Company accrued <span style="-sec-ix-hidden: hidden-fact-248">nil</span>, RMB<ix:nonFraction contextRef="c5" decimals="-5" format="ixt:num-dot-decimal" name="us-gaap:CommitmentsAndContingencies" scale="6" unitRef="cny">0.5</ix:nonFraction> million
and <span style="-sec-ix-hidden: hidden-fact-249">nil</span> related to its legal contingencies, respectively.</p></ix:continuation><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><ix:nonNumeric contextRef="c0" continuedAt="_SubsequentEventsTextBlock-c0_cont_1" escape="true" name="us-gaap:SubsequentEventsTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Note 21 &#8211; Subsequent events</b></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:nonNumeric><div>

</div><div>

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shift that has (or will have) a major effect on the Company&#8217;s operations and financial results.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation id="_SubsequentEventsTextBlock-c0_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company has assessed all events from December
31, 2022 up through April 28, 2023, which is the date that these financial statements are available to be issued, unless as disclosed
above, there are not any material subsequent events that require disclosure in these financial statements.</p></ix:continuation><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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</div><div>

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net assets of consolidated subsidiaries in accordance with Securities and Exchange Commission Regulation S-X Rule 5-04 and concluded that
it was applicable for the Company to disclose the financial statements for the parent company.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>

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the Parent Company have been prepared using the same accounting policies as set out in the Company&#8217;s consolidated financial statements
except that the Parent Company used the equity method to account for its investment in its subsidiaries. The Parent Company and its subsidiaries
were included in the consolidated financial statements whereby the inter-company balances and transactions were eliminated upon consolidation.
The Parent Company&#8217;s share of loss from its subsidiaries is reported as &#8220;share of loss from subsidiaries&#8221; in the condensed
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</div><div>

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and, therefore, is not subjected to income taxes for all years presented. The footnote disclosures contain supplemental information relating
to the operations of the Company and, as such, these statements should be read in conjunction with the notes to the consolidated financial
statements of the Company. Certain information and footnote disclosures normally included in financial statements prepared in accordance
with US GAAP have been condensed or omitted.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>


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presents. As of December 31, 2022 and 2021, there were no material commitments or contingencies, significant provisions for long-term
obligations or guarantees of the Company, except for those which have been separately disclosed in the consolidated financial statements,
if any.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p></ix:continuation><div>

</div><div>

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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; text-indent: -9pt; padding-left: 0.25in">Additional paid-in capital</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c339" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AdditionalPaidInCapital" scale="0" unitRef="usd">397,620,927</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -9pt; padding-left: 0.25in">Accumulated deficit</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c339" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:RetainedEarningsAccumulatedDeficit" scale="0" sign="-" unitRef="usd">66,988,873</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-align: left; padding-bottom: 1.5pt; text-indent: -9pt; padding-left: 27pt">Total shareholders&#8217; equity</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c339" decimals="0" format="ixt:num-dot-decimal" name="ebon:TotalShareholdersEquityAmount" scale="0" unitRef="usd">318,931,581</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
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</div><div>

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<td style="width: 0.25in"><sup>(1)</sup></td><td><ix:footnote id="ix_10_footnote" xml:lang="en-US">Retrospectively adjusted for the effect of the Reverse Stock Split effected on November 20, 2022. See Note 12.</ix:footnote></td></tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>


</div><!-- Field: Page; Sequence: 32; Value: 1 --><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 8pt">&#160;</span></p><div>

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(loss)</i></b></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 8pt">&#160;</span></p></ix:continuation><div>

</div><div>

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    <td style="text-align: center"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: center"><span style="font-size: 9.5pt">&#160;</span></td>
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                                            the year<br/> ended</b></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-size: 9.5pt"><b>December&#160;31,</b></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-size: 9.5pt"><b>2022</b></span></p></td><td style="text-align: center"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: center"><span style="font-size: 9.5pt">&#160;</span></td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; text-align: center"><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-size: 9.5pt"><b>For
                                            the year<br/> ended</b></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-size: 9.5pt"><b>December&#160;31,</b></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-size: 9.5pt"><b>2021</b></span></p></td><td style="text-align: center"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: center"><span style="font-size: 9.5pt">&#160;</span></td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; text-align: center"><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-size: 9.5pt"><b>For
                                            the year<br/> ended</b></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-size: 9.5pt"><b>December&#160;31,</b></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-size: 9.5pt"><b>2020</b></span></p></td><td style="text-align: center"><span style="font-size: 9.5pt">&#160;</span></td></tr>
  <tr style="vertical-align: bottom">
    <td style="font-weight: bold"><span style="font-size: 9.5pt">Operating expenses:</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td colspan="2" style="text-align: center"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td colspan="2" style="text-align: center"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td colspan="2" style="text-align: center"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 64%; text-align: left; padding-bottom: 1.5pt; text-indent: -9pt; padding-left: 0.25in"><span style="font-size: 9.5pt">General
    and administrative expenses</span></td><td style="width: 1%; padding-bottom: 1.5pt"><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="width: 1%; border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9.5pt">$</span></td><td style="width: 9%; border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9.5pt"><ix:nonFraction contextRef="c346" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:SellingGeneralAndAdministrativeExpense" scale="0" unitRef="usd">33,796,950</ix:nonFraction></span></td><td style="width: 1%; padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="width: 1%; padding-bottom: 1.5pt"><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="width: 1%; border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9.5pt">$</span></td><td style="width: 9%; border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9.5pt"><ix:nonFraction contextRef="c347" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:SellingGeneralAndAdministrativeExpense" scale="0" unitRef="usd">6,233,339</ix:nonFraction></span></td><td style="width: 1%; padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="width: 1%; padding-bottom: 1.5pt"><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="width: 1%; border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9.5pt">$</span></td><td style="width: 9%; border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9.5pt"><ix:nonFraction contextRef="c348" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:SellingGeneralAndAdministrativeExpense" scale="0" unitRef="usd">6,401,580</ix:nonFraction></span></td><td style="width: 1%; padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9.5pt">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="font-weight: bold; text-align: left; padding-bottom: 1.5pt; text-indent: -9pt; padding-left: 27pt"><span style="font-size: 9.5pt">Total
    operating expenses</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9.5pt"><ix:nonFraction contextRef="c346" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OperatingExpenses" scale="0" unitRef="usd">33,796,950</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9.5pt"><ix:nonFraction contextRef="c347" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OperatingExpenses" scale="0" unitRef="usd">6,233,339</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9.5pt"><ix:nonFraction contextRef="c348" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OperatingExpenses" scale="0" unitRef="usd">6,401,580</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9.5pt">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -9pt; padding-left: 9pt"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="font-weight: bold; text-align: left; padding-bottom: 1.5pt; text-indent: -9pt; padding-left: 9pt"><span style="font-size: 9.5pt">Loss
    from operations</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9.5pt">(<ix:nonFraction contextRef="c346" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OperatingIncomeLoss" scale="0" sign="-" unitRef="usd">33,796,950</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9.5pt">)</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9.5pt">(<ix:nonFraction contextRef="c347" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OperatingIncomeLoss" scale="0" sign="-" unitRef="usd">6,233,339</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9.5pt">)</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9.5pt">(<ix:nonFraction contextRef="c348" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OperatingIncomeLoss" scale="0" sign="-" unitRef="usd">6,401,580</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9.5pt">)</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -9pt; padding-left: 9pt"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; text-indent: -9pt; padding-left: 0.25in"><span style="font-size: 9.5pt">Interest income</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt"><ix:nonFraction contextRef="c346" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:InvestmentIncomeInterest" scale="0" unitRef="usd">2,409,547</ix:nonFraction></span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt"><ix:nonFraction contextRef="c347" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:InvestmentIncomeInterest" scale="0" unitRef="usd">541,598</ix:nonFraction></span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt"><ix:nonFraction contextRef="c348" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:InvestmentIncomeInterest" scale="0" unitRef="usd">798,328</ix:nonFraction></span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -9pt; padding-left: 0.25in"><span style="font-size: 9.5pt">Other expenses</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt">(<ix:nonFraction contextRef="c346" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OtherExpenses" scale="0" unitRef="usd">52,793</ix:nonFraction></span></td><td style="text-align: left"><span style="font-size: 9.5pt">)</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt">(<ix:nonFraction contextRef="c347" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OtherExpenses" scale="0" unitRef="usd">8,505</ix:nonFraction></span></td><td style="text-align: left"><span style="font-size: 9.5pt">)</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt">(<ix:nonFraction contextRef="c348" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OtherExpenses" scale="0" unitRef="usd">4,162</ix:nonFraction></span></td><td style="text-align: left"><span style="font-size: 9.5pt">)</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; text-indent: -9pt; padding-left: 0.25in"><span style="font-size: 9.5pt">Exchange gain (loss)</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt">(<ix:nonFraction contextRef="c346" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ForeignCurrencyTransactionGainLossBeforeTax" scale="0" sign="-" unitRef="usd">67,696</ix:nonFraction></span></td><td style="text-align: left"><span style="font-size: 9.5pt">)</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt"><ix:nonFraction contextRef="c347" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ForeignCurrencyTransactionGainLossBeforeTax" scale="0" unitRef="usd">1,478,258</ix:nonFraction></span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt"><ix:nonFraction contextRef="c348" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ForeignCurrencyTransactionGainLossBeforeTax" scale="0" unitRef="usd">340,643</ix:nonFraction></span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -9pt; padding-left: 0.25in"><span style="font-size: 9.5pt">Other income</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="-sec-ix-hidden: hidden-fact-253; font-size: 9.5pt">-</span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt"><ix:nonFraction contextRef="c347" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OtherNonoperatingIncomeExpense" scale="0" unitRef="usd">18,114</ix:nonFraction></span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="-sec-ix-hidden: hidden-fact-254; font-size: 9.5pt">-</span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -9pt; padding-left: 0.25in"><span style="font-size: 9.5pt">Share
    of income (loss) from subsidiaries</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9.5pt">(<ix:nonFraction contextRef="c346" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncomeLossFromSubsidiariesNetOfTax" scale="0" sign="-" unitRef="usd">12,380,350</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9.5pt">)</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9.5pt"><ix:nonFraction contextRef="c347" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncomeLossFromSubsidiariesNetOfTax" scale="0" unitRef="usd">8,634,815</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9.5pt">(<ix:nonFraction contextRef="c348" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncomeLossFromSubsidiariesNetOfTax" scale="0" sign="-" unitRef="usd">25,408,649</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9.5pt">)</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -9pt; padding-left: 9pt"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="font-weight: bold; text-align: left; padding-bottom: 4pt; text-indent: -9pt; padding-left: 9pt"><span style="font-size: 9.5pt">Net
    income (loss)</span></td><td style="padding-bottom: 4pt"><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="border-bottom: Black 4pt double; text-align: left"><span style="font-size: 9.5pt">$</span></td><td style="border-bottom: Black 4pt double; text-align: right"><span style="font-size: 9.5pt">(<ix:nonFraction contextRef="c346" decimals="0" format="ixt:num-dot-decimal" name="ebon:NetIncomelossAmount" scale="0" sign="-" unitRef="usd">43,888,242</ix:nonFraction></span></td><td style="padding-bottom: 4pt; text-align: left"><span style="font-size: 9.5pt">)</span></td><td style="padding-bottom: 4pt"><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="border-bottom: Black 4pt double; text-align: left"><span style="font-size: 9.5pt">$</span></td><td style="border-bottom: Black 4pt double; text-align: right"><span style="font-size: 9.5pt"><ix:nonFraction contextRef="c347" decimals="0" format="ixt:num-dot-decimal" name="ebon:NetIncomelossAmount" scale="0" unitRef="usd">4,430,941</ix:nonFraction></span></td><td style="padding-bottom: 4pt; text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="padding-bottom: 4pt"><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="border-bottom: Black 4pt double; text-align: left"><span style="font-size: 9.5pt">$</span></td><td style="border-bottom: Black 4pt double; text-align: right"><span style="font-size: 9.5pt">(<ix:nonFraction contextRef="c348" decimals="0" format="ixt:num-dot-decimal" name="ebon:NetIncomelossAmount" scale="0" sign="-" unitRef="usd">30,675,420</ix:nonFraction></span></td><td style="padding-bottom: 4pt; text-align: left"><span style="font-size: 9.5pt">)</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -9pt; padding-left: 9pt"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="font-weight: bold; text-align: left; text-indent: -9pt; padding-left: 9pt"><span style="font-size: 9.5pt">Comprehensive
    income (loss)</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -9pt; padding-left: 9pt"><span style="font-size: 9.5pt">Net income (loss)</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">$</span></td><td style="text-align: right"><span style="font-size: 9.5pt">(<ix:nonFraction contextRef="c346" decimals="0" format="ixt:num-dot-decimal" name="ebon:NetIncomelosses" scale="0" sign="-" unitRef="usd">43,888,242</ix:nonFraction></span></td><td style="text-align: left"><span style="font-size: 9.5pt">)</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">$</span></td><td style="text-align: right"><span style="font-size: 9.5pt"><ix:nonFraction contextRef="c347" decimals="0" format="ixt:num-dot-decimal" name="ebon:NetIncomelosses" scale="0" unitRef="usd">4,430,941</ix:nonFraction></span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">$</span></td><td style="text-align: right"><span style="font-size: 9.5pt">(<ix:nonFraction contextRef="c348" decimals="0" format="ixt:num-dot-decimal" name="ebon:NetIncomelosses" scale="0" sign="-" unitRef="usd">30,675,420</ix:nonFraction></span></td><td style="text-align: left"><span style="font-size: 9.5pt">)</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="font-weight: bold; text-align: left; text-indent: -9pt; padding-left: 9pt"><span style="font-size: 9.5pt">Other comprehensive
    income (loss):</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -9pt; padding-left: 0.25in"><span style="font-size: 9.5pt">Foreign
    currency translation adjustment</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9.5pt">(<ix:nonFraction contextRef="c346" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OtherComprehensiveIncomeForeignCurrencyTransactionAndTranslationGainLossArisingDuringPeriodNetOfTax" scale="0" sign="-" unitRef="usd">4,827,526</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9.5pt">)</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9.5pt"><ix:nonFraction contextRef="c347" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OtherComprehensiveIncomeForeignCurrencyTransactionAndTranslationGainLossArisingDuringPeriodNetOfTax" scale="0" unitRef="usd">751,327</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-size: 9.5pt"><ix:nonFraction contextRef="c348" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OtherComprehensiveIncomeForeignCurrencyTransactionAndTranslationGainLossArisingDuringPeriodNetOfTax" scale="0" unitRef="usd">1,418,510</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-size: 9.5pt">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="font-weight: bold; text-align: left; padding-bottom: 4pt; text-indent: -9pt; padding-left: 9pt"><span style="font-size: 9.5pt">Comprehensive
    income (loss)</span></td><td style="padding-bottom: 4pt"><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="border-bottom: Black 4pt double; text-align: left"><span style="font-size: 9.5pt">$</span></td><td style="border-bottom: Black 4pt double; text-align: right"><span style="font-size: 9.5pt">(<ix:nonFraction contextRef="c346" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OtherComprehensiveIncomeLossTax" scale="0" sign="-" unitRef="usd">48,715,768</ix:nonFraction></span></td><td style="padding-bottom: 4pt; text-align: left"><span style="font-size: 9.5pt">)</span></td><td style="padding-bottom: 4pt"><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="border-bottom: Black 4pt double; text-align: left"><span style="font-size: 9.5pt">$</span></td><td style="border-bottom: Black 4pt double; text-align: right"><span style="font-size: 9.5pt"><ix:nonFraction contextRef="c347" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OtherComprehensiveIncomeLossTax" scale="0" unitRef="usd">5,182,268</ix:nonFraction></span></td><td style="padding-bottom: 4pt; text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="padding-bottom: 4pt"><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="border-bottom: Black 4pt double; text-align: left"><span style="font-size: 9.5pt">$</span></td><td style="border-bottom: Black 4pt double; text-align: right"><span style="font-size: 9.5pt">(<ix:nonFraction contextRef="c348" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OtherComprehensiveIncomeLossTax" scale="0" sign="-" unitRef="usd">29,256,910</ix:nonFraction></span></td><td style="padding-bottom: 4pt; text-align: left"><span style="font-size: 9.5pt">)</span></td></tr>
  </table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 8pt">&#160;</span></p></ix:nonNumeric></ix:continuation><div>


</div><div>

</div><ix:continuation continuedAt="_CondensedFinancialInformationOfParentCompanyOnlyDisclosureTextBlock-c0_cont_11" id="_CondensedFinancialInformationOfParentCompanyOnlyDisclosureTextBlock-c0_cont_10"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>(c) Condensed statements of cash flows</i></b></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 8pt">&#160;</span></p></ix:continuation><div>

</div><div>

</div><ix:continuation id="_CondensedFinancialInformationOfParentCompanyOnlyDisclosureTextBlock-c0_cont_11"><ix:nonNumeric contextRef="c0" escape="true" name="srt:ScheduleOfCondensedCashFlowStatementTableTextBlock"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td><span style="font-size: 9.5pt">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9.5pt">&#160;</span></td>
    <td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 9.5pt"><b>For
                                            the year<br/> ended</b></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 9.5pt"><b>December&#160;31,</b></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 9.5pt"><b>2022</b></span></p></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9.5pt">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9.5pt">&#160;</span></td>
    <td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 9.5pt"><b>For
                                            the year<br/> ended</b></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 9.5pt"><b>December&#160;31,</b></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 9.5pt"><b>2021</b></span></p></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9.5pt">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9.5pt">&#160;</span></td>
    <td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 9.5pt"><b>For
                                            the year<br/> ended</b></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 9.5pt"><b>December&#160;31,</b></span></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-size: 9.5pt"><b>2020</b></span></p></td><td style="padding-bottom: 1.5pt"><span style="font-size: 9.5pt">&#160;</span></td></tr>
  <tr style="vertical-align: bottom">
    <td style="font-weight: bold"><span style="font-size: 9.5pt">Cash Flows from Operating Activities:</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td colspan="2" style="text-align: center"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td colspan="2" style="text-align: center"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td colspan="2" style="text-align: center"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 64%; text-align: left; text-indent: -9pt; padding-left: 0.25in"><span style="font-size: 9.5pt">Net income (loss)</span></td><td style="width: 1%"><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="width: 1%; text-align: left"><span style="font-size: 9.5pt">$</span></td><td style="width: 9%; text-align: right"><span style="font-size: 9.5pt">(<ix:nonFraction contextRef="c349" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NetIncomeLossAvailableToCommonStockholdersDiluted" scale="0" sign="-" unitRef="usd">43,888,242</ix:nonFraction></span></td><td style="width: 1%; text-align: left"><span style="font-size: 9.5pt">)</span></td><td style="width: 1%"><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="width: 1%; text-align: left"><span style="font-size: 9.5pt">$</span></td><td style="width: 9%; text-align: right"><span style="font-size: 9.5pt"><ix:nonFraction contextRef="c350" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NetIncomeLossAvailableToCommonStockholdersDiluted" scale="0" unitRef="usd">4,430,941</ix:nonFraction></span></td><td style="width: 1%; text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="width: 1%"><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="width: 1%; text-align: left"><span style="font-size: 9.5pt">$</span></td><td style="width: 9%; text-align: right"><span style="font-size: 9.5pt">(<ix:nonFraction contextRef="c351" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NetIncomeLossAvailableToCommonStockholdersDiluted" scale="0" sign="-" unitRef="usd">30,675,420</ix:nonFraction></span></td><td style="width: 1%; text-align: left"><span style="font-size: 9.5pt">)</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; text-indent: -9pt; padding-left: 0.25in"><span style="font-size: 9.5pt">Adjustments to reconcile net
    income (loss) to net cash used in operating activities:</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -9pt; padding-left: 27pt"><span style="font-size: 9.5pt">Share of (income) loss from subsidiaries</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt"><ix:nonFraction contextRef="c349" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncomeLossFromSubsidiariesNetOfTax" scale="0" sign="-" unitRef="usd">12,380,350</ix:nonFraction></span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt">(<ix:nonFraction contextRef="c350" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncomeLossFromSubsidiariesNetOfTax" scale="0" unitRef="usd">8,634,815</ix:nonFraction></span></td><td style="text-align: left"><span style="font-size: 9.5pt">)</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt"><ix:nonFraction contextRef="c351" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncomeLossFromSubsidiariesNetOfTax" scale="0" sign="-" unitRef="usd">25,408,649</ix:nonFraction></span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; text-indent: -9pt; padding-left: 27pt"><span style="font-size: 9.5pt">Amortization expense</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt"><ix:nonFraction contextRef="c349" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AdjustmentForAmortization" scale="0" unitRef="usd">6,987,975</ix:nonFraction></span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt"><ix:nonFraction contextRef="c350" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AdjustmentForAmortization" scale="0" unitRef="usd">1,987,974</ix:nonFraction></span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt"><ix:nonFraction contextRef="c351" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AdjustmentForAmortization" scale="0" unitRef="usd">165,664</ix:nonFraction></span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -9pt; padding-left: 27pt"><span style="font-size: 9.5pt">Share-based compensation</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt"><ix:nonFraction contextRef="c349" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ShareBasedCompensation" scale="0" unitRef="usd">3,903,970</ix:nonFraction></span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt"><ix:nonFraction contextRef="c350" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ShareBasedCompensation" scale="0" unitRef="usd">707,000</ix:nonFraction></span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="-sec-ix-hidden: hidden-fact-255; font-size: 9.5pt">-</span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -9pt; padding-left: 27pt"><span style="font-size: 9.5pt">Due to
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -9pt; padding-left: 9pt"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
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    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; text-indent: -9pt; padding-left: 27pt"><span style="font-size: 9.5pt">Collections from short-term investments</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -9pt; padding-left: 27pt"><span style="font-size: 9.5pt">Purchases
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="font-weight: bold; text-align: left; text-indent: -9pt; padding-left: 9pt"><span style="font-size: 9.5pt">Net Cash Provided
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -9pt; padding-left: 9pt"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
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    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td><span style="font-size: 9.5pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 9.5pt">&#160;</span></td><td style="text-align: left"><span style="font-size: 9.5pt">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="text-align: center; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">F-33</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><!-- Field: Rule-Page --><div style="margin-top: 0pt; margin-bottom: 0pt; width: 100%"><div style="font-size: 1pt; border-top: Black 1.5pt solid">&#160;</div></div><!-- Field: /Rule-Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>






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UNITED STATES
SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C.
20549
FORM
20-F
(Mark One)
☐
REGISTRATION
STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
☒
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
for the fiscal year
ended
December 31
,
2022
OR
☐
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition
period from ________________ to ________________
OR
☐
SHELL
COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of event requiring
this shell company report
Commission file
number:
001-39337
EBANG INTERNATIONAL
HOLDINGS INC.
(Exact name of
Registrant as specified in its charter)
Cayman Islands
(Jurisdiction
of incorporation or organization)
12 Marina View
,
#20-02B
,
Asia Square Tower 2
,
Singapore
,
018961
(Address of principal
executive offices)
Mr. Dong Hu
Chief Executive
Officer
12 Marina View
,
#20-02B
,
Asia Square Tower 2
,
Singapore
,
018961
Tel:
+86 571
-
8817-6197
Email:
ir@ebang.com
(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
Class A ordinary shares, par value HK$0.03 per share
EBON
Nasdaq Global Select Market
Securities registered
or to be registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
Securities for
which there is a reporting obligation pursuant to Section 15(d) of the Act:
None
(Title of Class)
Indicate the number
of outstanding shares of each of the issuer's classes of capital stock or common stock as of the close of business covered by the
annual report.
An aggregate of
6,543,938.22 ordinary shares, representing
4,989,746.22
Class A ordinary shares, par value HK$0.03 per share, and
1,554,192
Class B ordinary
Shares, par value HK$0.03 per share, as of April 27, 2023.
Indicate by check
mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
☐  
Yes      ☒
No
If this report
is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13
or 15(d) of the Securities Exchange Act of 1934.
☐  
Yes     ☒
No
Indicate by check
mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
☒
Yes
☐   No
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 during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
☒
Yes
☐   No
Indicate by check
mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company.
See definition of "large accelerated filer", "accelerated filer", and "emerging growth company" in
Rule 12b-2 of the Exchange Act.
Large accelerated filer
☐
Accelerated filer
☐
Non-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 pursuant
to Section 13(a) of the Exchange Act.
☒
† 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.
Indicate by check
mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal
control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting
firm that prepared or issued its audit report.
☐
If securities are registered pursuant to Section
12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction
of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error
corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive
officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check
mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
US GAAP
☒
International Financial Reporting Standards
as issued by the International Accounting
Standards Board
☐
Other
☐
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
(APPLICABLE ONLY
TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
Indicate by check
mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.
☐  
Yes      ☐   No
EBANG INTERNATIONAL
HOLDINGS INC.
TABLE OF CONTENTS
Page
INTRODUCTION
iii
ENFORCEABILITY OF CIVIL LIABILITIES
v
FORWARD-LOOKING STATEMENTS
vii
PART I
1
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
1
A.
Directors and senior management
1
B.
Advisers
1
C.
Auditors
1
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
1
A.
Offer statistics
1
B.
Method and expected timetable
1
ITEM 3. KEY INFORMATION
1
A.
[Reserved]
3
B.
Capitalization and indebtedness
3
C.
Reasons for the offer and use of proceeds
3
D.
Risk factors
3
ITEM 4.
    INFORMATION ON THE COMPANY
59
A.
History
    and development of the company
59
B.
Business
    overview
59
C.
Organizational
    structure
87
D.
Property,
    plants and equipment
89
ITEM 4A.
    UNRESOLVED STAFF COMMENTS
89
ITEM 5.
    OPERATING AND FINANCIAL REVIEW AND PROSPECTS
89
A.
Operating
    results
90
B.
Liquidity
    and capital resources
104
C.
Research
    and development, patents and licenses, etc.
106
D.
Trend
    information
106
E.
Critical
    Accounting Policies and Estimates
106
ITEM 6.
    DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
107
A.
Directors
    and senior management
107
B.
Compensation
108
C.
Board
    practices
110
D.
Employees
114
E.
Share
    ownership
114
ITEM 7.
    MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
116
A.
Major
    shareholders
116
B.
Related
    party transactions
116
C.
Interests
    of experts and counsel
117
ITEM 8.
    FINANCIAL INFORMATION
117
A.
Consolidated
    statements and other financial information
117
B.
Significant
    changes
118
ITEM 9.
    THE OFFER AND LISTING
118
A.
Offer and listing details
118
B.
Plan
    of distribution
118
C.
Markets
118
D.
Selling
    shareholders
118
E.
Dilution
118
F.
Expenses
    of the issue
118
i
ITEM 10.
    ADDITIONAL INFORMATION
118
A.
Share
    capital
118
B.
Memorandum
    and articles of association
118
C.
Material
    contracts
123
D.
Exchange controls
123
E.
Taxation
123
F.
Dividends
    and paying agents
131
G.
Statement
    by experts
132
H.
Documents
    on display
132
I.
Subsidiary
    information
132
ITEM 11.
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
132
ITEM 12.
    DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
133
A.
Debt
    securities
133
B.
Warrants
    and rights
133
C.
Other
    securities
133
D.
American
    Depositary Shares
133
PART II
134
ITEM 13.
    DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
134
A.
Defaults
134
B.
Arrears
    and delinquencies
134
ITEM 14.
    MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
134
ITEM 15.
    CONTROLS AND PROCEDURES
135
A.
Disclosure
    controls and procedures
135
B.
Management's
    annual report on internal control over financial reporting
135
C.
Attestation
    report of the registered public accounting firm
136
D.
Changes
    in internal control over financial reporting
136
ITEM 16.
    [RESERVED]
136
ITEM 16A.
    Audit committee financial expert
136
ITEM 16B.
    Code of ethics
137
ITEM 16C.
    Principal accountant fees and services
137
ITEM 16D.
    Exemptions from the listing standards for audit committees
138
ITEM 16E.
    Purchases of equity securities by the issuer and affiliated purchasers
138
ITEM 16F.
    Change in registrant's certifying accountant
138
ITEM 16G.
    Corporate governance
138
ITEM 16H.
    Mine safety disclosure
138
ITEM
    16I. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
138
PART III
139
ITEM 17.
    Financial statements
139
ITEM 18.
    Financial statements
139
ITEM 19.
    Exhibits
139
Index
    to Consolidated Financial Statements
F-1
ii
INTRODUCTION
In this annual report,
otherwise indicated or unless the context otherwise requires,
●
"ASICs" are
    to application-specific ICs, meaning ICs designed for a specific application;
●
"China" and
    the "PRC" are to the People's Republic of China, excluding, for the purposes of this annual report only, Taiwan,
    the Hong Kong Special Administrative Region and the Macao Special Administrative Region;
●
"Fintech" means
    financial technology;
●
"ICs" or "chips"
    are to integrated circuits;
●
"PRC operating subsidiaries"
    are to, for the purpose of this annual report, primarily, Zhejiang Ebang Communication Technology Co., Ltd. ("Zhejiang Ebang"),
    Zhejiang Ebang Information Technology Co., Ltd. ("Ebang IT"), Hangzhou Dewang Information Technology Co., Ltd. ("Hangzhou
    Dewang"), Hangzhou Yibang Botong Technology Co., Ltd. ("Hangzhou Yibang Botong"), Shanghai Yijiaxin IC Design
    Co., Ltd. ("Shanghai Yijiaxin") and Hangzhou Zhenghao Information Technology Co., Ltd.;
●
"PRC subsidiaries" are to, for the purpose of this annual
report, primarily, PRC operating subsidiaries, Hangzhou Ebang Hongfa Technology Co., Ltd. ("Ebang Hongfa"), Hangzhou Bangyun
Information Technology Co., Ltd. (formerly known as Yunnan Ebang Information Technology Co., Ltd.) ("Hangzhou Bangyun"), and
Hangzhou Ebang Shuotai Technology Co., Ltd. ("Hangzhou Ebang Shuotai") ;
●
"operating
    subsidiaries" are to, for the purpose of this annual report, primarily, PRC operating subsidiaries, Ebonex Australia Pty Ltd
    ("Ebonex Australia"), Ebon Management Australia Pty Limited ("Ebon Management Australia"), Compass Global
    Holdings Pty Ltd ("Compass Global"), Ebang Communications (HK) Technology Limited (formerly known as Hong Kong Bite Co.,
    Limited) ("HK Ebang Communications"), HongKong Ebang Digital Technology Limited ("HK Ebang Digital") and
    Ebon Management Pte. Ltd.;
●
"shares" or
    "Class A ordinary shares" refer to our Class A ordinary shares, par value HK$0.03 per share;
●
"US$," "U.S.
    Dollars," "$" and "dollars" refer to the legal currency of the United States; and
●
"we," "us,"
    "our company," the "Company," "Ebang" and "our" refer to Ebang International Holdings
    Inc., our Cayman Islands holding company and from time to time, in the context of describing our business, our operations and consolidated
    financial information, Ebang International Holdings Inc. and its subsidiaries.
We
are a Cayman Islands holding company and conduct all of our operations through our operating subsidiaries. Investors in our shares are
not purchasing equity securities of our operating subsidiaries but instead are purchasing equity securities of a Cayman Islands holding
company. Ebang does not conduct its business through the variable interest entity ("VIE") structure. As most of our operations
are conducted through our PRC operating subsidiaries, we face various legal and operational risks and uncertainties related to doing
business in China. Since the PRC legal system continues to evolve, there are risks arising from the legal system in China, which include
uncertainties regarding new legislation, regulations or interpretations governing our business activities, which may be promulgated or
adopted; there is a risk that the Chinese government may intervene or influence our operations at any time, or may exert more control
over offerings conducted in Hong Kong and overseas, which could result in a material change in our operations and/or the value of our
securities; we also face risks associated with regulatory approvals on offerings conducted overseas and foreign investment in China-based
issuers, anti-monopoly regulatory actions, and oversight on cybersecurity and data privacy, which may negatively impact our ability to
conduct certain businesses, access foreign investments, or list on a foreign stock exchange. In particular, it is now illegal to engage
in digital asset transactions including Bitcoin mining operations in China, the ruling of which may adversely affect us.
iii
In
addition, in connection with our previous issuance of securities to foreign investors, under current PRC laws, regulations and regulatory
rules, as of the date of this annual report, we and our PRC subsidiaries, (i) are not required to obtain permissions from the China Securities
Regulatory Commission (the "CSRC"), (ii) are not required to go through cybersecurity review by the Cyberspace Administration
of China, or the CAC, and (iii) have not been asked to obtain or were denied such permissions by any PRC authority. However, the PRC
government has recently indicated an intent to exert more oversight and control over offerings that are conducted overseas and/or foreign
investment in China-based issuers. For more detailed information, see "Item 3.D. Key Information—Risk Factors—Risks
Relating to Conducting Business in China—We may be required to obtain approval or subject to filings or other requirements from
the CSRC or other PRC regulatory authorities in connection with our offshore offerings under PRC law, and we cannot predict whether or
for how long we will be able to complete such filing."
Furthermore, as more stringent
criteria have been imposed by the U.S. Securities and Exchange Commission (the "SEC") and the Public Company Accounting Oversight
Board (the "PCAOB") recently, our securities may be prohibited from trading on a national exchange or over-the-counter under
the Holding Foreign Companies Accountable Act (the "HFCAA") and related regulations, if the PCAOB is unable to inspect our
auditors for two consecutive years beginning in 2022. As a result, an exchange may determine to delist our securities. The PCAOB issued
a Determination Report on December 16, 2021 which found that the PCAOB was unable to inspect or investigate completely registered public
accounting firms headquartered in: (1) mainland China of the People's Republic of China because of a position taken by one or more
authorities in mainland China; and (2) Hong Kong, a Special Administrative Region and dependency of the PRC, because of a position taken
by one or more authorities in Hong Kong. Furthermore, the PCAOB's report identified the specific registered public accounting firms
which were subject to these determinations. On December 29, 2022, legislation entitled "Consolidated Appropriations Act, 2023"
(the "Consolidated Appropriations Act"), was signed into law, which reduces the number of consecutive non- inspection years
required for triggering the prohibitions under the Holding Foreign Companies Accountable Act from three years to two. On August 26, 2022,
the CSRC, the Ministry of Finance of the PRC (the "MOF"), and the PCAOB signed a Statement of Protocol (the "Protocol")
governing inspections and investigations of audit firms based in mainland China and Hong Kong, taking the first step toward opening access
for the PCAOB to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong. Pursuant to
the fact sheet with respect to the Protocol disclosed by the SEC, the PCAOB shall have independent discretion to select any issuer audits
for inspection or investigation and has the unfettered ability to transfer information to the SEC. On December 15, 2022, the PCAOB determined
that it was able to secure complete access to inspect and investigate registered public accounting firms headquartered in mainland China
and Hong Kong and voted to vacate its previous determinations to the contrary. However, should PRC authorities obstruct or otherwise fail
to facilitate the PCAOB's access in the future, the PCAOB Board will consider the need to issue a new determination. Our financial
statements have been audited by an independent registered public accounting firm that is headquartered in the United States who is subject
to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess an auditor's compliance with the
applicable professional standards, and has been inspected by the PCAOB on a regular basis. Our auditor is not among the PCAOB-registered
public accounting firms headquartered in the PRC or Hong Kong that are subject to PCAOB's determination on December 16, 2021 of
having been unable to inspect or investigate completely. As of the date of this annual report, we have not been identified by the SEC
as a commission-identified issuer under the HFCAA. However, there is a risk that our auditor cannot be inspected by the PCAOB in the future.
The lack of inspection could cause trading in our securities to be prohibited under the HFCAA, and, as a result, The Nasdaq Stock Market
LLC ("Nasdaq") may determine to delist our securities, which may cause the value of our securities to decline or become worthless.
See risks disclosed under "Item 3.D. Key Information—Risk Factors—Risks Relating to Conducting Business in China—
The recent joint statement by the SEC and the PCAOB, rule changes by Nasdaq, and the Holding Foreign Companies Accountable Act all call
for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors,
especially the non-U.S. auditors who are not inspected by the PCAOB. These developments could add uncertainties to our continued listing
or future offerings of our securities in the U.S."
iv
ENFORCEABILITY
OF CIVIL LIABILITIES
We
are incorporated under the laws of the Cayman Islands to take advantage of certain benefits associated with being a Cayman Islands exempted
company:
●
political and economic
    stability;
●
an effective judicial system;
●
a favorable tax system;
●
the absence of exchange
    control or currency restrictions; and
●
the availability of professional
    and support services.
However,
certain disadvantages accompany incorporation in the Cayman Islands. These disadvantages include, but are not limited to, the following:
●
the Cayman Islands has
    a less exhaustive body of securities laws than the United States and these securities laws provide significantly less protection
    to investors; and
●
Cayman Islands companies
    may not have standing to sue before the federal courts of the United States.
Our
constitutional documents do not contain provisions requiring that disputes, including those arising under the securities laws of the
United States, between us, our officers, directors and shareholders, be arbitrated.
To
date, we have conducted a majority of our operations outside the United States, and a majority of our assets are located outside the
United States. Substantially all of our officers are nationals or residents of jurisdictions other than the United States and a 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 us or 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.
We
have appointed Cogency Global Inc., located at 122 East, 42nd Street, 18th Floor, New York, NY 10168, as our agent upon whom process
may be served in any action brought against us under the securities laws of the United States.
Cayman Islands
There
is uncertainty as to whether the courts in the Cayman Islands would (1) recognize or enforce judgments of United States courts obtained
against us or our directors or officers to impose liabilities against us predicated upon the civil liability provisions of the securities
laws of the United States or any state in the United States; or (2) entertain original actions brought in each respective jurisdiction
against us or our directors or officers predicated upon the federal securities laws of the United States or the securities laws of any
state in the United States.
v
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 courts of the
Cayman Islands would recognize as a valid judgment, a final and conclusive judgment
in personam
obtained in the federal or state
courts in the United States under which a sum of money is payable (other than a sum of money payable in respect of multiple damages,
taxes or other charges of a like nature or in respect of a fine or other penalty) or, in certain circumstances, an
in personam
judgment for non-monetary relief, and would give a judgment based thereon provided that (a) such courts had proper jurisdiction over
the parties subject to such judgment, (b) such courts did not contravene the rules of natural justice of the Cayman Islands, (c) such
judgment was not obtained by fraud, (d) the enforcement of the judgment would not be contrary to the public policy of the Cayman Islands,
(e) no new admissible evidence relevant to the action is submitted prior to the rendering of the judgment by the courts of the Cayman
Islands, and (f) there is due compliance with the correct procedures under the laws of the Cayman Islands. However, the Cayman Islands
courts are unlikely to enforce a punitive judgment of a United States court predicated upon the civil liability provisions of the federal
securities laws in the United States without retrial on the merits if such judgment is determined by the courts of the Cayman Islands
to give rise to obligations to make payments that may be regarded as fines, penalties or punitive in nature. Because such a determination
has not yet been made by a court of the Cayman Islands, it is uncertain whether such civil liability judgments from United States courts
would be enforceable in the Cayman Islands. A Cayman Islands court may stay enforcement proceedings if concurrent proceedings are being
brought elsewhere.
The PRC
The
PRC Civil Procedures Law governs the recognition and enforcement of foreign judgments. PRC courts may recognize and enforce foreign judgments
in accordance with the PRC Civil Procedures Law based either on treaties between China and the country where the judgment is made or
on principles of reciprocity between jurisdictions.
The
PRC does not have any treaties or other agreements with the United States or the Cayman Islands that provide for the reciprocal recognition
and enforcement of foreign judgments. In addition, according to the PRC Civil Procedures Law, courts in the PRC will not enforce a foreign
judgment against us or our directors and officers if they determine that the judgment violates the basic principles of PRC law or national
sovereignty, security or public interest. As a result, it is uncertain whether a PRC court would enforce a judgment rendered by a court
in the United States or the Cayman Islands. Under the PRC Civil Procedures Law, foreign shareholders may originate actions based on PRC
law against us in the PRC, if they can establish sufficient nexus to the PRC for a PRC court to have jurisdiction, and meet other procedural
requirements, including, among others, the plaintiff must have a direct interest in the case, and there must be a concrete claim, a factual
basis and a cause for the suit.
In
addition, it will be difficult for U.S. shareholders to originate actions against us in China in accordance with PRC laws because we
are incorporated under the laws of the Cayman Islands and it will be difficult for U.S. shareholders, by virtue only of holding our ordinary
shares, to establish a connection to China for a PRC court to have jurisdiction as required under the PRC Civil Procedures Law.
For
a detailed description of risks related to enforceability of civil liabilities, please refer to risks disclosed under "Item 3.D.
Key Information—Risk Factors—Other Risks Relating to Our Business Operations—Certain judgments obtained against us
by our shareholders may not be enforceable" and "—You may face difficulties in protecting your interests, and your
ability to protect your rights through U.S. courts may be limited, because we are incorporated under Cayman Islands law and conduct our
operations primarily in emerging markets."
vi
FORWARD-LOOKING
STATEMENTS
This
annual report on Form 20-F contains "forward-looking statements" within the meaning of Section 27A of the Securities Act
of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). Many of the forward-looking statements contained in this annual report can be identified by the use of forward-looking words
such as "anticipate," "believe," "could," "expect," "should," "plan,"
"intend," "will," "estimate" and "potential," among others.
Forward-looking
statements appear in a number of places in this annual report and include, but are not limited to, statements regarding Ebang International
Holdings Inc. and its subsidiaries' intent, belief or current expectations. Forward-looking statements are based on our management's
beliefs and assumptions and on information currently available to our management. Such statements are subject to risks and uncertainties,
and actual results may differ materially from those expressed or implied in the forward-looking statements due to various factors, including,
but not limited to, those identified under the section "Item 3. Key Information—D. Risk factors" in this annual
report. These risks and uncertainties include factors relating to:
●
our goals and strategies;
●
our business and operating
    strategies and plans for the development of existing and new businesses, ability to implement such strategies and plans and expected
    time;
●
our future business development,
    financial condition and results of operations;
●
expected changes in our
    revenues, costs or expenditures;
●
our dividend policy;
●
our expectations regarding
    demand for and market acceptance of our products and services;
●
our expectations regarding
    our relationships with customers and business partners;
●
the trends in, expected growth in and market size of the blockchain
and Fintech industries in the markets we have business and globally;
●
our ability to maintain
    and enhance our market position;
●
our ability to continue
    to develop new technologies and/or upgrade our existing technologies;
●
developments in, or changes to, laws, regulations, governmental policies,
incentives and taxation affecting our operations, in particular in the blockchain and Fintech industries;
●
relevant governmental policies
    and regulations relating to our businesses and industry;
●
competitive environment,
    competitive landscape and potential competitor behavior in our industry; overall industry outlook in our industry;
●
our ability to attract,
    train and retain executives and other employees;
●
the development of the
    global financial and capital markets;
●
fluctuations in inflation,
    interest rates and exchange rates;
●
general business, political,
    social and economic conditions in the markets we have business;
●
assumptions underlying
    or related to any of the foregoing; and
●
other factors discussed
    under "Item 3. Key Information—D. Risk factors" in this annual report.
Forward-looking
statements speak only as of the date they are made, and we do not undertake any obligation to update them in light of new information
or future developments or to release publicly any revisions to these statements in order to reflect later events or circumstances or
to reflect the occurrence of unanticipated events.
vii
PART I
ITEM 1.
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
A.
Directors and senior
    management
Not
applicable.
B.
Advisers
Not
applicable.
C.
Auditors
Not
applicable.
ITEM 2.
OFFER STATISTICS AND EXPECTED TIMETABLE
A.
Offer statistics
Not
applicable.
B.
Method and expected
    timetable
Not
applicable.
ITEM 3.
KEY INFORMATION
As
a Cayman Islands holding company, Ebang relies on dividends and other distributions on equity paid by its operating subsidiaries for
cash and financing requirements, including the funds necessary to pay dividends and other cash distributions to its shareholders or to
service any expenses it may incur. Our subsidiaries', including PRC subsidiaries', ability to distribute dividends is based
upon their distributable earnings. Current PRC regulations permit our PRC subsidiaries to pay dividends to their respective shareholders
only out of their accumulated profits, if any, as determined in accordance with PRC accounting standards and regulations. In addition,
under PRC law, our PRC subsidiaries are required to set aside at least 10% of its after-tax profits each year, if any, to fund certain
statutory reserve funds until such reserve funds reach 50% of its registered capital. And the after-tax profits shall be used to cover
the loss that the PRC subsidiaries made in previous financial year before any statutory reserve is drawn therefrom, if the statutory
reserve is insufficient to cover such loss. These reserves are not distributable as cash dividends. If each of our PRC subsidiaries incurs
debt on its own behalf in the future, the instruments governing such debt may restrict its ability to pay dividends to Ebang. According
to the relevant PRC regulations on Foreign Exchange Administration of the Overseas Direct Investment of Domestic Institutions, the operating
subsidiaries of Ebang who remit dividends to Ebang shall, on the basis of the approval document issued by the competent administrative
department of overseas direct investment (SAFE and its branch offices) and the foreign exchange registration certificate for overseas
direct investment, handle the formalities for the outward remittance of funds for overseas direct investment at a designated foreign
exchange bank. The designated foreign exchange bank shall handle the formalities for the domestic institution after an authenticity check.
To
date, there have not been any such dividends or other distributions from our PRC subsidiaries to our subsidiaries located outside of
China. In addition, as of the date of this annual report, PRC subsidiaries have never issued any dividends or distributions to Ebang
or its shareholders outside of China. Furthermore, as of the date of this annual report, neither Ebang nor any of its subsidiaries have
ever paid dividends or made distributions to U.S. investors. For risks relating to the fund flows of our operations in China, see "Item
3. Key Information—D. Risk Factors—Risks Relating to Our Business and Industry—Our corporate structure may restrict
our ability to receive dividends from, and transfer funds to, our PRC operating subsidiaries, which could restrict our ability to act
in response to changing market conditions in a timely manner."
1
Ebang
is permitted under PRC laws and regulations as an offshore holding company to provide funding to its PRC subsidiaries in China through
shareholder loans or capital contributions, subject to satisfaction of applicable government registration, approval and filing requirements.
According to the relevant PRC regulations on foreign-invested enterprises in China, there are no quantity limits on Ebang's ability
to make capital contributions to its PRC subsidiaries. However, our PRC subsidiaries may not procure loans which exceed one of the following
criteria: (i) the difference between their respective registered capital and total investment amount as recorded in the Foreign Investment
Comprehensive Management Information System; or (ii) the upper limit of risk-weighted outstanding cross-border financings, which equals
to the capital or net assets multiplied by the cross-border financing leverage ratio multiplied by the macro-prudential adjustment parameter.
The
following table presents the cash flows from Ebang to its subsidiaries for the periods indicated:
Years Ended December 31,
2020
2021
2022
US$
US$
US$
(in thousands)
Transfers from Ebang to its subsidiaries
49,241
196,985
-
Cash
flows are principally transferred between Ebang and its subsidiaries as operating cash support, of which neither entity demands repayment.
To date, Ebang has not provided any loan to its subsidiaries.
Cash
transfers between the subsidiaries are managed by our management, who decides how cash is allocated among subsidiaries based on the subsidiaries'
business development and operational needs. To date, no transfer of assets other than cash has occurred between the Company and its subsidiaries.
We do not anticipate that our subsidiaries will pay cash dividends in the foreseeable future.
As
of date of this annual report, we have never faced difficulties or limitations on our ability to transfer cash to our subsidiaries, across
borders and to U.S. investors. Currently, there are no restrictions on the ability of our subsidiaries to distribute earnings or pay
dividends subject to there being sufficient distributable reserves and having relevant foreign exchange registration certificate obtained,
as applicable. In the future, cash proceeds raised from overseas financing activities may continue to be transferred by Ebang to the
subsidiaries via capital contribution or shareholder loans, as the case may be. We intend to retain most, if not all, of our available
funds and any future earnings for the development and growth of our business overseas. We do not expect to pay dividends in the foreseeable
future.
All
share and price per share information in this annual report has been adjusted to reflect our one-for-thirty reverse stock split of our
issued and outstanding ordinary shares, which became effective upon shareholder approval at the Company's extraordinary general
meeting on November 20, 2022 at 8:00 a.m. (Singapore Time).
2
A.
[Reserved]
B.
Capitalization and indebtedness
Not
applicable.
C.
Reasons for the offer
    and use of proceeds
Not
applicable.
D.
Risk factors
Our
business, financial condition and results of operations could be materially and adversely affected if any of the risks described below
occur. As a result, the market price of our Class A ordinary shares, par value HK$0.03 per share (the "Class A Ordinary Shares")
could decline, and you could lose all or part of your investment. This annual report also contains forward-looking statements that involve
risks and uncertainties. See "Forward-Looking Statements." The risks below are not the only ones facing the Company. Additional
risks not currently known to us or that we currently deem immaterial may also adversely affect us.
The following risk factors have
been grouped as follows:
a)
Risks relating to conducting
    business in China;
b)
Risks relating to our Fintech
    and blockchain product businesses;
c)
Risks relating to our business
    operations;
d)
Risks relating to our securities;
    and
e)
General risks.
Summary of Key
Risks
Our
business is subject to numerous risks and uncertainties, discussed in more detail below. These risks include, among others, the following
key risks:
●
It is now illegal to engage
    in digital asset transactions including Bitcoin mining operations in China, the ruling of which may adversely affect us
●
Changes in China's
    economic, political or social conditions or government policies could have a material adverse effect on our business, results of
    operations and financial condition
●
Uncertainties in the interpretation
    and enforcement of PRC laws and regulations could limit the legal protections available to you and us
●
Our corporate structure
    may restrict our ability to receive dividends from, and transfer funds to, our PRC operating subsidiaries, which could restrict our
    ability to act in response to changing market conditions in a timely manner
●
We may be subject to the PRC
Enterprise Income Tax Law and dividends payable to our foreign investors and gains on the sale of our Class A ordinary shares by our
foreign investors may become subject to PRC tax
●
We may be required to obtain approval or subject to filings or other requirements from the CSRC or
other PRC regulatory authorities in connection with our offshore offerings under PRC law, and we cannot predict whether or for how long
we will be able to complete such filing
3
●
We are subject to risks
    associated with legal, political or other conditions or developments regarding holding, using or mining of Bitcoins, which could
    negatively affect our business, results of operations and financial position
●
The current regulatory
    environment in foreign markets, and any adverse changes in those environments, could have material adverse impacts on our blockchain
    products business and our Fintech business
●
The future development
    and growth of cryptocurrency is subject to a variety of factors that are difficult to predict and evaluate. If cryptocurrency does
    not grow as we expect, our business, operating results, and financial condition could be adversely affected
●
We may face challenges in regard to stringent licensing and regulatory
requirements in the money services business we operate
●
We are also exposed to financial and technological
risks in the money service business which calls for a high and strict standard of compliance in managing such risks and adequate infrastructures
in place in which failure of managing these risks will be adverse to our business
●
Our results of operations
    have been and are expected to continue to be significantly impacted by the fluctuation of cryptocurrency prices, especially the price
    of Bitcoin
●
We have derived and may
    continue to derive a significant portion of our revenues from our Bitcoin mining machines business. If the market for Bitcoin mining
    machines ceases to exist or diminishes significantly, our business, results of operations and financial condition would be materially
    and adversely affected
●
The industries in which
    we operate and which we intend to operate in the future are characterized by constant changes. If we fail to continuously innovate
    and to provide products that meet the expectations of our customers, we may be unable to attract new customers or retain existing
    customers, and hence our business and results of operations may be adversely affected
●
We face risks associated
    with the expansion of our blockchain products and Fintech business operations overseas and if we are unable to effectively manage
    such risks, our business growth and profitability may be negatively affected
●
We may not successfully
    develop, market or launch any future Fintech businesses or continue operating our existing Fintech businesses
●
Our intellectual property
    rights are valuable, and any inability to protect them could adversely impact our business, operating results, and financial condition
●
We rely on a limited number
    of third parties to fabricate our ASIC chips, and IC packaging and testing services
●
We have been involved,
    and may continue to be involved, in disputes, claims or proceedings arising from our operations or class actions from time to time,
    which could result in significant liabilities and reputational harm and could materially and adversely affect our business, financial
    condition and results of operations
●
We have and may increasingly
    become a target for public scrutiny, including complaints to regulatory agencies, negative media coverage, and malicious allegations,
    all of which could severely damage our reputation and materially and adversely affect our business and prospects
●
The recent joint statement
    by the SEC and the PCAOB, rule changes by Nasdaq, and the HFCAA and related regulations, all call for additional and more stringent
    criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors
    who are not inspected by the PCAOB. These developments could add uncertainties to our continued listing or future offerings of our
    securities in the U.S.
●
Because we do not expect
    to pay dividends in the foreseeable future, you must rely on price appreciation of our Class A ordinary shares for return on your
    investment
4
●
You may face difficulties
    in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because we are incorporated
    under Cayman Islands law and conduct our operations primarily in emerging markets
●
Our dual-class voting structure
    will limit your ability to influence corporate matters and could discourage others from pursuing any change of control transactions
    that holders of our Class A ordinary shares may view as beneficial
●
We are a "controlled
    company" within the meaning of the Nasdaq Rules, and, as a result, can rely on exemptions from certain corporate governance
    requirements that provide protection to shareholders of other companies
●
We are an emerging growth
    company within the meaning of the Securities Act and may take advantage of certain reduced reporting requirements
●
We are a foreign private
    issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions applicable to United
    States domestic public companies
●
We have in the past incurred
    and continue to incur losses and negative cash flows from operating activities, and we may not achieve or sustain profitability
Risks Relating
to Conducting Business in China
It is now
illegal to engage in digital asset transactions including Bitcoin mining operations in China, the ruling of which may adversely affect
us
China
has now taken harsh regulatory action to ban cryptocurrency mining operations and to severely restrict the right to acquire, own, hold,
sell or use these Bitcoin assets or to exchange them for fiat currency. Such restrictions may adversely affect us as the large-scale
use of digital assets as a means of exchange is presently confined to certain regions globally. Ongoing and future regulatory actions
may impact our ability to continue to operate, and such actions could affect our ability to continue as a going concern or to pursue
our business strategy at all, which could have a material adverse effect on our business, prospects or operations.
On
May 21, 2021, the Financial Stability and Development Committee of the State Council in China proposed to "crack down on Bitcoin
mining and trading." However, it was not until September 15, 2021, as described below, that all digital asset transactions were
banned in China. In May 2021, local governments began to issue corresponding measures in succession to respond to the central government,
including Xinjiang Changji Hui Autonomous Prefecture Development and Reform Commission issuing a notice on the immediate shutdown of
enterprises engaged in cryptocurrency mining on June 9, 2021. On June 18, 2021, according to the public media report - Sichuan Provincial
Development and Reform Commission and Sichuan Energy Bureau issued a notice on the shutdown of cryptocurrency mining projects with the
deadline of June 25, 2021. On September 3, 2021, the newly issued Notification of Overhauling the Mining Activity of Cryptocurrency (or
the Notification No. 1283) banned all new cryptocurrency operations in China and set forth penalties on a going forward basis for all
of the PRC. On September 15, 2021, the People's Bank of China, the Office of the Central Cyberspace Affairs Commission, the Supreme
People's Court, the Supreme People's Procuratorate, the Ministry of Industry and Information Technology, the Ministry of
Public Security, the State Administration for Market Regulation, the China Banking and Insurance Regulatory Commission, the China Securities
Regulatory Commission, and the State Administration of Foreign Exchange jointly issued the Circular on Further Preventing and Disposing
of Risks in Virtual Currency Trading and Speculation (Yin Fa [2021] No.237), which clarified that virtual currency-related business activities
in China and the provision of services by an overseas virtual currency exchange to a Chinese resident via the Internet will be considered
as illegal financial activities.
In
consideration of the PRC government's attitude and our intentional business plan, we will not conduct any cryptocurrency mining
operations or cryptocurrency trading operations in mainland PRC. We do not have any mining operation in the PRC and have halted all mining
machine custody business in China in April 2021. While we do not believe the PRC governmental authorities will seek to impose retroactive
fines, penalties or sanctions, there can be no assurance they may not seek to do so. Any such regulations, if implemented, will cause
us to incur additional compliance costs and have a material adverse effect on our future business operations.
5
There are
risks to foreign investors in Chinese companies
The
Chinese government implements the management systems of pre-establishment national treatment and negative list for foreign investment.
Pre-establishment national treatment refers to the treatment given to foreign investors and their investments during the investment access
stage, which is not lower than that given to their domestic counterparts; negative list for foreign investment refers to special administrative
measures for the restricted or prohibited access of foreign investment in specific fields as stipulated by the Chinese government.
Pursuant
to the Special Administrative Measures for Foreign Investment Access (2021 Edition), or the 2021 Edition Negative List, issued by The
Ministry of Commerce of the PRC (the "MOFCOM") and the National Development and Reform Commission (the "NDRC")
on December 27, 2021, which came into effect on January 1, 2022, our business does not fall into the Negative List. However, the 2021
Edition Negative List regulates that "Fields not mentioned in the Negative List for Foreign Investment Access shall be subject
to administration under the principle of consistency for domestic and foreign investments. The relevant provisions of the Negative List
for Market Access shall apply to domestic and foreign investors on a unified basis."
In
addition, based on the Negative List for Market Access (2022) which became effective on March 12, 2022, "the Catalogue for Guidance
on Industrial Restructuring shall be included in the Negative List for Market Access"; plus, according to the Decision of the State
Council on Promulgating and Implementing the "Temporary Provisions on Promoting Industrial Structure Adjustment," valid from
December 2, 2005, "In principle, the 'Guidance Catalogue for the Industrial Structure Adjustment "shall apply
to various types of enterprises inside China." "The industries of the eliminated category under the 'Guidance Catalogue
for the Industrial Structure Adjustment' shall apply to the foreign investment enterprises." and "Investments are prohibited
from being contributed to projects under the eliminated category." Furthermore, the NDRC released on December 30, 2021 its No.
49 Decree, announcing that the Decision of the National Development and Reform Commission on Amending the Guiding Catalog for Industrial
Restructuring (2019 Version) (the "Amended Catalog"). The Amended Catalog added 'virtual currency mining activities'
to the eliminated category of '1. outdated production processing and equipment' under the original Catalog. Therefore, the
foreign investment enterprises are prohibited from virtual currency activities and our mining machine custody business are banned in
China as well.
Changes in
China's economic, political or social conditions or government policies could have a material adverse effect on our business, results
of operations and financial condition
Most of our revenues were
and, a lot of revenues, in the foreseeable future, are expected to be derived in China, and a lot of our operations, including most of
our manufacturing, is conducted in China. Accordingly, our business, prospects, results of operations and financial condition may be influenced
to a significant degree by political, economic and social conditions in China generally and by continued economic growth in China as a
whole. The Chinese economy differs from the economies of most developed countries in many respects, including the degree of government
involvement, level of development, growth rate, control of foreign exchange and allocation of resources. Although the PRC government has
implemented measures emphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive
assets and the establishment of improved corporate governance in business enterprises, a substantial portion of productive assets in China
is still owned by the government. In addition, the Chinese government continues to play a significant role in regulating industry development
by imposing industrial policies. The Chinese government also exercises significant control over China's economic growth through
strategically allocating resources, controlling the payment of foreign currency-denominated obligations, setting monetary policy and providing
preferential treatment to particular industries or companies.
While
the Chinese economy has experienced significant growth over the past decades, growth has been uneven, both geographically and among various
sectors of the economy, and the rate of growth has been slowing since 2012. The Chinese government has implemented various measures to
encourage economic growth and guide the allocation of resources. Some of these measures may benefit the overall Chinese economy but may
have a negative effect on us. For example, our financial condition and results of operations may be adversely affected by government
control over capital investments or changes in tax regulations. In addition, in the past the Chinese government has implemented certain
measures, including interest rate increases, to control the pace of economic growth. These measures may cause decreased economic activity
in China, and since 2012, and in particular in 2020 as a result of COVID-19, China's economic growth slowed down. Any prolonged
slowdown in the Chinese economy may reduce the demand for our products and services and materially and adversely affect our business
and results of operations.
6
Uncertainties
in the interpretation and enforcement of PRC laws and regulations could limit the legal protections available to you and us
The
PRC legal system is a civil law system based on written statutes. Unlike the common law system, prior court decisions may be cited for
reference but have limited precedential value. The PRC legal system is evolving rapidly, but its current slate of laws may not be sufficient
to cover all aspects of the economic activities in China, including such activities that relate to or have an impact on our business.
Implementation and interpretations of laws, regulations and rules are not always undertaken in a uniform matter (some of which can change
rapidly with little advance notice) and enforcement of these laws, regulations and rules involves uncertainties.
From
time to time, we may have to resort to administrative and court proceedings to enforce our legal rights. However, since PRC administrative
and court authorities have significant discretion in interpreting and implementing statutory and contractual terms, it may be more difficult
to evaluate the outcome of administrative and court proceedings and the level of protection we enjoy than in more developed legal systems.
Furthermore, the PRC legal system is based in part on government policies and internal rules (some of which are not published in a timely
manner or at all) that may have a retroactive effect. As a result, we may not always be aware of any potential violation of these policies
and rules until sometime after the violation. Such uncertainties, including unpredictability towards the scope and effect of our contractual,
property (including intellectual property) and procedural rights, and any failure to respond to changes in the regulatory environment
in China could materially and adversely affect our business and impede our ability to continue our operations.
In
addition, the PRC governmental authorities may intervene or influence our operations at any time, or may exert more control over offerings
conducted overseas and/or foreign investment in China-based issuers, which could significantly limit or completely hinder our ability
to offer or continue to offer Class A ordinary shares to investors and cause the value of such shares to significant decline or be worthless.
A severe
or prolonged downturn in the global or Chinese economy could materially and adversely affect our business and our financial condition
Although
the Chinese economy has grown steadily in the past decade, there is considerable uncertainty over the long-term effects of the expansionary
monetary and fiscal policies adopted by the People's Bank of China and financial authorities of some of the world's leading
economies, including the United States and China. The proposed tariffs by the U.S. government and the potential of a trade war between
the U.S. and China could dampen the growth prospects of the Chinese and global economy. There have been concerns over unrest and terrorist
threats in the Middle East, Europe and Africa, which have resulted in volatility in oil and other markets. There have also been concerns
on the relationship among China and other Asian countries, which may result in or intensify potential conflicts in relation to territorial
disputes. The ongoing war between Russian and Ukraine has escalated global geopolitical tensions when Russia launched a large-scale land
invasion into Ukraine in February 2022. Economic conditions in China are sensitive to global economic conditions, as well as changes
in domestic economic and political policies and the expected or perceived overall economic growth rate in China. Any severe or prolonged
slowdown in the global or Chinese economy may materially and adversely affect our business, results of operations and financial condition.
Increases
in labor costs and enforcement of stricter labor laws and regulations in the PRC and our PRC subsidiaries' additional payments
of statutory employee benefits may adversely affect our business and profitability
The
average wage in China has increased in recent years and is expected to continue to grow. The average wage level for our PRC subsidiaries'
employees has also increased in recent years. We expect that our PRC subsidiaries' labor costs, including wages and employee benefits,
will continue to increase. Unless we are able to pass on these increased labor costs to our customers, our profitability and results
of operations may be materially and adversely affected.
7
In
addition, our PRC subsidiaries have been subject to stricter regulatory requirements in terms of entering into labor contracts with our
employees and paying various statutory employee benefits, including pensions, housing funds, medical insurance, work-related injury insurance,
unemployment insurance and maternity insurance to designated government agencies for the benefit of our PRC subsidiaries' employees.
Pursuant to the PRC Labor Contract Law and its implementation rules, employers are subject to stricter requirements in terms of signing
labor contracts, minimum wages, paying remuneration, determining the term of employee's probation and unilaterally terminating
labor contracts. In the event that our PRC subsidiaries decide to terminate some of our PRC subsidiaries' employees or otherwise
change their employment or labor practices, the PRC Labor Contract Law and its implementation rules may limit their ability to effect
those changes in a desirable or cost-effective manner, which could adversely affect our business and results of operations.
Pursuant
to PRC laws and regulations, companies registered and operating in China are required to apply for social insurance registration and
housing fund deposit registration within 30 days of their establishment and to pay for their employees different social insurance including
pension insurance, medical insurance, work-related injury insurance, unemployment insurance and maternity insurance to the extent required
by law. Our PRC subsidiaries have not fully paid social insurance and housing provident funds for all of their employees due to inconsistency
in implementation or interpretation of the relevant PRC laws and regulations among government authorities in the PRC and, in some cases,
voluntary decisions by the relevant employees. As the PRC government may enhance its enforcement measures relating to social insurance
and housing fund deposit collection, our PRC subsidiaries may be required to make up the contributions for their employees, and may be
further subjected to late fees payment and administrative fines, which may materially and adversely affect our financial condition and
results of operations. As the interpretation and implementation of labor-related laws and regulations are still evolving, we cannot assure
you that our PRC subsidiaries' current employment practices do not and will not violate labor-related laws and regulations in China,
which may subject us to labor disputes or government investigations. In addition, we may incur additional expenses in order to comply
with such laws and regulations, which may adversely affect our business and profitability.
We may be
adversely affected by inflation or labor shortage in China
In
recent years, the PRC economy has experienced periods of rapid expansion and highly fluctuating rates of inflation. According to the
National Bureau of Statistics of China, the year-over-year percent changes in the consumer price index for December 2020, 2021 and 2022
were increases of 0.2%, 1.5% and 1.8%, respectively. Although we have not been materially affected by inflation in the past, we may be
affected if PRC experiences higher rates of inflation in the future. It is uncertain when the general price level may increase or decrease
sharply in the future. Moreover, the significant economic growth in China has resulted in a general increase in labor costs and shortage
of low-cost labor. Inflation may cause our production cost to continue to increase. If we are unable to pass on the increase in production
cost to our customers, we may suffer a decrease in profitability and a loss of customers and our results of operations could be materially
and adversely affected.
Our corporate
structure may restrict our ability to receive dividends from, and transfer funds to, our PRC operating subsidiaries, which could restrict
our ability to act in response to changing market conditions in a timely manner
We
are a Cayman Islands holding company and a certain portion of our operations are conducted through our operating subsidiaries. The ability
of our operating subsidiaries to make dividend and other payments to us may be restricted by factors that include changes in applicable
foreign exchange and other laws and regulations.
In
particular, under the PRC law, each of our PRC operating subsidiaries may only pay dividends after 10% of its net profit has been set
aside as reserve funds, unless such reserves have reached at least 50% of its registered capital. In addition, the profit available for
distribution from our PRC operating subsidiaries is determined in accordance with generally accepted accounting principles in the PRC.
This calculation may differ if it were performed in accordance with U.S. GAAP. As a result, we may not have sufficient distributions
from our PRC operating subsidiaries to enable necessary profit distributions to our shareholders in the future, which would be based
upon our financial statements prepared under U.S. GAAP.
Distributions
by our PRC operating subsidiaries to us other than as dividends may be subject to governmental approval and taxation. Any transfer of
funds from our company to our PRC operating subsidiaries, either as a shareholder loan or as an increase in registered capital, is subject
to registration or approval of PRC governmental authorities, including the relevant administration of foreign exchange and/or the relevant
examining and approval authority. These limitations on the free flow of funds between us and our PRC subsidiaries could restrict our
ability to act in response to changing market conditions in a timely manner.
8
We may be
subject to EIT on our worldwide income if our company or any of our subsidiaries were considered a PRC "resident enterprise"
under the PRC Enterprise Income Tax Law, or the EIT Law
Under
the EIT Law and its implementation rules, enterprises established outside of the PRC with "de facto management bodies" within
the PRC are considered a "resident enterprise" and will be subject to EIT at a rate of 25% on their worldwide income. The
implementation rules under EIT define the term "de facto management bodies" as "establishments that carry out substantial
and overall management and control over the production, operation, personnel, accounting, properties, etc. of an enterprise." The
State Administration of Taxation of the PRC, or the SAT promulgated the Notice Regarding the Determination of Chinese-Controlled Offshore
Incorporated Enterprises as PRC Tax Resident Enterprises on the Basis of De Facto Management Bodies, or Circular 82, on April 22,
2009, as amended on November 8, 2013, provides certain specific criteria for determining whether the "de facto management body"
of a Chinese-controlled offshore incorporated enterprise is located in the PRC. On July 27, 2011, the SAT issued the Measures for
Administration of Income Tax of Chinese Controlled Resident Enterprises Incorporated Overseas (Trial), or Circular 45, as amended on
June 15, 2018, to supplement Circular 82 and other tax laws and regulations. Circular 45 clarifies certain issues relating to resident
status determination. Although Circular 82 and Circular 45 apply only to offshore enterprises controlled by PRC enterprises or PRC group
companies and not those controlled by PRC individuals or foreigners, the determining criteria set forth in Circular 82 and Circular 45
may reflect the SAT's general position on how the "de facto management body" test should be applied in determining
the tax resident status of offshore enterprises, regardless of whether they are controlled by PRC enterprises or individuals or foreign
enterprises. A substantial majority of our senior management team is located in China. If our company or any of our subsidiaries were
considered to be a PRC "resident enterprise," we would be subject to EIT at a rate of 25% on our worldwide income, which
could materially reduce our net income.
Dividends
payable to our foreign investors and gains on the sale of our Class A ordinary shares by our foreign investors may become subject to
PRC tax
Under
the EIT Law and its implementation regulations issued by the State Council, a 10% PRC withholding tax is applicable to dividends payable
to investors that are non-resident enterprises, which do not have an establishment or place of business in the PRC or which have such
establishment or place of business but the dividends are not effectively connected with such establishment or place of business, to the
extent such dividends are derived from sources within the PRC. Similarly, any gain realized on the transfer of our Class A ordinary shares
by such investors is also subject to PRC tax at a current rate of 10%, subject to any reduction or exemption set forth in applicable
tax treaties or under applicable tax arrangements between jurisdictions, if such gain is regarded as income derived from sources within
the PRC. If we are deemed a PRC resident enterprise, dividends paid on our Class A ordinary shares, and any gain realized from the transfer
of our Class A ordinary shares, would be treated as income derived from sources within the PRC and would as a result be subject to PRC
taxation. Furthermore, if we are deemed a PRC resident enterprise, dividends payable to individual investors who are non-PRC residents
and any gain realized on the transfer of our Class A ordinary shares by such investors may be subject to PRC tax at a current rate of
20%, subject to any reduction or exemption set forth in applicable tax treaties or under applicable tax arrangements between jurisdictions.
If we or any of our subsidiaries established outside China are considered a PRC resident enterprise, it is unclear whether holders of
our Class A ordinary shares would be able to claim the benefit of income tax treaties or agreements entered into between China and other
countries or areas. If dividends payable to our non-PRC investors, or gains from the transfer of our Class A ordinary shares by such
investors, are deemed as income derived from sources within the PRC and thus are subject to PRC tax, the value of your investment in
our Class A ordinary shares may decline significantly.
Any adverse changes of any preferential
tax treatments and government grants that may be available to us in the future could materially and adversely affect our business, financial
condition and results of operations.
We have benefited from preferential
tax treatments from the government and government grants, such as "high-tech enterprise" tax status and VAT tax refund. We
cannot assure you that we are able to meet the relevant requirements and be re-granted the preferential tax treatments and government
grants upon their expiration, or to apply for other preferential tax treatments or government grants. The policies regarding the preferential
tax treatments and government grants are subject to change and termination. The government authorities may decide to reduce, eliminate
or cancel our tax preferences at any time. Therefore, we cannot assure you of the continued availability of such tax preferences or government
grants which we currently enjoy. The discontinuation, reduction or delay of the preferential tax treatments and government grants could
adversely affect our financial condition and results of operations. For more detailed information, see "Item 5. Operating and Financial
Review and Prospects—Operating Results—Key Components of Results of Operations—Taxation".
PRC regulations
relating to investments in offshore companies by PRC residents may subject our PRC-resident beneficial owners or our PRC subsidiaries
to liability or penalties, limit our ability to inject capital into our PRC subsidiaries or limit our PRC subsidiaries' ability
to increase their registered capital or distribute profits
In
July 2014, the State Administration of Foreign Exchange of the PRC, or SAFE, promulgated the Circular on Relevant Issues Concerning Foreign
Exchange Control on Domestic Residents' Offshore Investment and Financing and Roundtrip Investment through Special Purpose Vehicles,
or SAFE Circular 37, which replaces the previous SAFE Circular 75. SAFE Circular 37 requires PRC residents, including PRC individuals
and PRC corporate entities, to register with SAFE or its local branches in connection with their direct or indirect offshore investment
activities. SAFE Circular 37 is applicable to our shareholders who are PRC residents and may be applicable to any offshore acquisitions
that we may make in the future.
9
Under
SAFE Circular 37, PRC residents who make, or have prior to the implementation of SAFE Circular 37 made, direct or indirect investments
in offshore special purpose vehicles, or SPVs, are required to register such investments with SAFE or its local branches. In addition,
any PRC resident who is a direct or indirect shareholder of an SPV, is required to update its registration with the local branch of SAFE
with respect to that SPV, to reflect any material change. Moreover, any subsidiary of such SPV in China is required to urge the PRC resident
shareholders to update their registration with the local branch of SAFE to reflect any material change. If any PRC resident shareholder
of such SPV fails to make the required registration or to update the registration, the subsidiary of such SPV in China may be prohibited
from distributing its profits or the proceeds from any capital reduction, share transfer or liquidation to the SPV, and the SPV may also
be prohibited from making additional capital contributions into its subsidiaries in China. In February 2015, SAFE promulgated a Notice
on Further Simplifying and Improving Foreign Exchange Administration Policy on Direct Investment, or SAFE Notice 13. Under SAFE Notice
13, applications for foreign exchange registration of inbound foreign direct investments and outbound direct investments, including those
required under SAFE Circular 37, must be filed with qualified banks instead of SAFE. Qualified banks should examine the applications
and accept registrations under the supervision of SAFE. We have used commercially reasonable efforts to notify PRC residents or entities
who directly or indirectly hold shares in our Cayman Islands holding company and who are known to us as being PRC residents to complete
the foreign exchange registrations. However, we may not be informed of the identities of all the PRC residents or entities holding direct
or indirect interest in our company, nor can we compel our beneficial owners to comply with SAFE registration requirements. We cannot
assure you that all other shareholders or beneficial owners of ours who are PRC residents or entities have complied with, and will in
the future make, obtain or update any applicable registrations or approvals required by, SAFE regulations. Failure by such shareholders
or beneficial owners to comply with SAFE regulations, or failure by us to amend the foreign exchange registrations of our PRC subsidiaries,
could subject us to fines or legal sanctions, restrict our overseas or cross-border investment activities, limit our PRC subsidiaries'
ability to make distributions or pay dividends to us or affect our ownership structure, which could adversely affect our business and
prospects.
Furthermore,
as these foreign exchange and outbound investment related regulations are relatively new and their interpretation and implementation
has been constantly evolving, it is unclear how these regulations, and any future regulation concerning offshore or cross-border investments
and transactions, will be interpreted, amended and implemented by the relevant government authorities. For example, we may be subject
to a more stringent review and approval process with respect to our foreign exchange activities, such as remittance of dividends and
foreign-currency-denominated borrowings, which may adversely affect our financial condition and results of operations. We cannot assure
you that we have complied or will be able to comply with all applicable foreign exchange and outbound investment related regulations.
In addition, if we decide to acquire a PRC domestic company, we cannot assure you that we or the owners of such company, as the case
may be, will be able to obtain the necessary approvals or complete the necessary filings and registrations required by the foreign exchange
regulations. This may restrict our ability to implement our acquisition strategy and could adversely affect our business and prospects.
We and our
shareholders face uncertainties with respect to indirect transfers of equity interests in PRC resident enterprises or other assets attributed
to a Chinese establishment of a non-Chinese company, or immovable properties located in China owned by non-Chinese companies
In
February 2015, SAT issued a Public Notice Regarding Certain Corporate Income Tax Matters on Indirect Transfer of Properties by Non-Tax
Resident Enterprises, or SAT Public Notice 7. SAT Public Notice 7 extends its tax jurisdiction to transactions involving transfer of
other taxable assets through offshore transfer of a foreign intermediate holding company. In addition, SAT Public Notice 7 provides clear
criteria for assessment of reasonable commercial purposes and has introduced safe harbors for internal group restructurings and the purchase
and sale of equity through a public securities market. SAT Public Notice 7 also brings challenges to both foreign transferor and transferee
(or other person who is obligated to pay for the transfer) of taxable assets. In October 2017, SAT issued the Announcement of the State
Administration of Taxation on Issues Concerning the Withholding of Non-resident Enterprise Income Tax at Source, or SAT Bulletin 37,
which came into effect on December 1, 2017. The SAT Bulletin 37 further clarifies the practice and procedure of the withholding
of non-resident EIT. Where a non-resident enterprise transfers taxable assets indirectly by disposing of the equity interests of an overseas
holding company, which is an indirect transfer, the non-resident enterprise as either transferor or transferee, or the PRC entity that
directly owns the taxable assets, may report such Indirect Transfer to the relevant tax authority. Using a "substance over form"
principle, the PRC tax authority may disregard the existence of the overseas holding company if it lacks a reasonable commercial purpose
and was established for the purpose of reducing, avoiding or deferring PRC tax. As a result, gains derived from such indirect transfer
other than transfer of shares acquired and sold on public markets may be subject to EIT, and the transferee or other person who is obligated
to pay for the transfer is obligated to withhold the applicable taxes, currently at a rate of 10%. Both the transferor and the transferee
may be subject to penalties under PRC tax laws if the transferee fails to withhold the taxes and the transferor fails to pay the taxes.
10
We
face uncertainties as to the reporting and other implications of certain past and future transactions that involve PRC taxable assets,
such as offshore restructuring, sale of the shares in our offshore subsidiaries and investments. Our company may be subject to filing
obligations or taxed if our company is transferor in such transactions and may be subject to withholding obligations if our company is
transferee in such transactions, under SAT Public Notice 7 or SAT Bulletin 37, or both.
We are subject
to PRC restrictions on currency exchange
Some
of our revenues and expenses are denominated in Renminbi. The Renminbi is currently convertible under the "current account,"
which includes dividends, trade and service-related foreign exchange transactions, but not under the "capital account," which
includes foreign direct investment and loans, including loans we may secure from our onshore subsidiaries. Currently, certain of our
PRC subsidiaries may purchase foreign currency for settlement of "current account transactions," including payment of dividends
to us, without the approval of the SAFE by complying with certain procedural requirements. However, the relevant PRC governmental authorities
may limit or eliminate our ability to purchase foreign currencies in the future for current account transactions. Foreign exchange transactions
under the capital account remain subject to limitations and require approvals from, or registration with, the SAFE and other relevant
PRC governmental authorities. Since a part of our future net income and cash flow will be denominated in Renminbi, any existing and future
restrictions on currency exchange may limit our ability to utilize cash generated in Renminbi to fund our business activities outside
of the PRC or pay dividends in foreign currencies to our shareholders, including holders of our Class A ordinary shares, and may limit
our ability to obtain foreign currency through debt or equity financing for our subsidiaries.
If the custodians
or authorized users of our controlling non-tangible assets, including chops and seals, fail to fulfill their responsibilities, or misappropriate
or misuse these assets, our business and operations may be materially and adversely affected
Under
PRC law, legal documents for corporate transactions, including agreements and contracts such as the leases and sales contracts that our
business relies on, are executed using the chop or seal of the signing entity or with the signature of a legal representative whose designation
is registered and filed with the relevant local branch of the market supervision administration.
In
order to maintain the physical security of our chops and the chops of our PRC subsidiaries, we generally store these items in secured
locations accessible only by the authorized personnel of each of our PRC subsidiaries and consolidated entities. Although we monitor
such authorized personnel, there is no assurance such procedures will prevent all instances of abuse or negligence. Accordingly, if any
of our authorized personnel misuse or misappropriate our corporate chops or seals, we could encounter difficulties in maintaining control
over the relevant entities and experience significant disruption to our operations. If a designated legal representative obtains control
of the chops in an effort to obtain control over any of our PRC subsidiaries or consolidated entities, we, our PRC subsidiaries or consolidated
entities would need to pass a new shareholder or board resolution to designate a new legal representative and we would need to take legal
action to seek the return of the chops, apply for new chops with the relevant authorities, or otherwise seek legal redress for the violation
of the representative's fiduciary duties to us, which could involve significant time and resources and divert management attention
away from our regular business. In addition, the affected entity may not be able to recover corporate assets that are sold or transferred
out of our control in the event of such a misappropriation if a transferee relies on the apparent authority of the representative and
acts in good faith.
11
The M&A
Rules and certain other PRC regulations establish complex procedures for some acquisitions of Chinese companies by foreign investors,
which could make it more difficult for us to pursue growth through acquisitions in China
The
Regulations on Mergers and Acquisitions of Domestic Companies by Foreign Investors, or the M&A Rules, adopted by six PRC regulatory
agencies in August 2006 and amended in June 2009, and some other regulations and rules concerning mergers and acquisitions established
additional procedures and requirements that could make merger and acquisition activities by foreign investors more time consuming and
complex, including requirements in some instances that shall obtained an approval from the Ministry of Commerce, or the MOFCOM, in advance
of any change-of-control transaction in which a foreign investor takes control of a PRC domestic enterprise. Moreover, the Anti-Monopoly
Law requires that the MOFCOM shall be notified in advance of any concentration of undertaking if certain thresholds are triggered. In
addition, the Safety Review System for Merger and Acquisition of Domestic Companies by Foreign Investors issued by the MOFCOM that became
effective in September 2011 specify that mergers and acquisitions by foreign investors that raise "national defense and security"
concerns and mergers and acquisitions through which foreign investors may acquire de facto control over domestic enterprises that raise
"national security" concerns are subject to strict review by the MOFCOM, and the rules prohibit any activities attempting
to bypass a security review, including by structuring the transaction through a proxy or contractual control arrangement. In the future,
we may grow our business by acquiring complementary businesses. Complying with the requirements of the above-mentioned regulations and
other relevant rules to complete such transactions could be time consuming, and any required approval processes, including obtaining
approval from the MOFCOM or its local counterparts may delay or inhibit our ability to complete such transactions, which could affect
our ability to expand our business or maintain our market share.
We may be
required to obtain approval or subject to filings or other requirements from the CSRC or other PRC regulatory authorities in connection with our offshore offerings under PRC law,
and we cannot predict whether or for how long we will be able to complete such filing
On
July 6, 2021, the relevant PRC government authorities issued the Opinions on Strictly Scrutinizing Illegal Securities Activities in Accordance
with the Law. These opinions emphasized the need to strengthen the administration over illegal securities activities and the supervision
on overseas listings by China-based companies, to improve relevant laws and regulations on data security, cross-border data transmission,
and confidential information management, and provided that efforts will be made to revise the regulations on strengthening the confidentiality
and file management relating to the offering and listing of securities overseas, and proposed to take effective measures, such as promoting
the construction of relevant regulatory systems to deal with the risks and incidents faced by China-based overseas-listed companies.
On
February 17, 2023, the CSRC promulgated Trial Administrative Measures of the Overseas Securities Offering and Listing by Domestic Companies
(the "Overseas Listing Trial Measures") and five related guidelines, which became effective on March 31, 2023. The Overseas
Listing Trial Measures comprehensively improve and reform the existing regulatory regime for overseas offering and listing of PRC domestic
companies' securities and will regulate both direct and indirect overseas offering and listing of PRC domestic companies'
securities through a filing-based regulatory regime.
12
Pursuant
to the Overseas Listing Trial Measures, PRC domestic companies that seek to offer and list securities in overseas markets, either through
direct or indirect means, are required to go through the filing procedure with the CSRC and report relevant information. The Overseas
Listing Trial Measures provides that if the issuer meets both of the following criteria, the overseas securities offering and listing
conducted by such issuer will be deemed as an indirect overseas listing by PRC domestic companies: (i) 50% or more of any of the issuer's
operating revenue, total profit, total assets or net assets as documented in its audited consolidated financial statements for the most
recent fiscal year is accounted for by domestic companies; and (ii) the main parts of the issuer's business activities are conducted
in mainland China, or its main place(s) of business are located in mainland China, or the majority of senior management staff in charge
of its business operations and management are PRC citizens or have their usual place(s) of residence located in mainland China. Besides,
the determination as to indirect overseas listing by PRC domestic companies, shall be made on a substance over form basis. Subsequent
securities offerings of an issuer in the same overseas market where it has previously offered and listed securities shall be filed with
the CSRC within 3 working days after the offering is completed, and Subsequent securities offerings and listings of an issuer in other
overseas markets than where it has offered and listed shall be filed with the CSRC within 3 working days after the relevant application
is submitted overseas. If a domestic company fails to fulfill the filing procedure, the CSRC shall order rectification, issue warnings
to such domestic company, and impose a fine; directly liable persons-in-charge and other directly liable persons shall be warned and
each imposed a fine. According to Circular on the Arrangements for the Filing-based Administration of Overseas Securities Offering and
Listing by Domestic Companies issued by the CSRC on February 17, 2023, from the implementation date of the Overseas Listing Trial Measures,
domestic enterprises subject to the scope of filing that have offered shares or been listed overseas, or have met the following conditions
shall be deemed as "existing enterprises", which are not required to go through the filing immediately but shall be required
to do so if they involve in re-financing and other filing matters in the future.
Based
on the aforementioned criteria, we may be deemed as a PRC domestic company and our offshore offerings may be deemed as an indirect overseas
listing by PRC domestic companies. Since we had already completed overseas offering prior to the effective date of the Overseas Listing
Trial Measures, we should be deemed as an "existing enterprise" and not be required to go through the filing immediately.
Only when we involve in re-financing and other filing matters will we be required to complete such filling with the CSRC. If so, we cannot
assure you that we could meet such requirements or complete such filing in a timely manner. Any failure may restrict our ability to complete
the proposed offshore offerings, which would have a material adverse effect on our business and financial positions. Further, as the
Overseas Listing Trial Measures was recently promulgated, there remains substantial uncertainties as to its interpretation and implementation
and how it may impact our ability to raise or utilize fund for business operation.
On
December 28, 2021, the CAC, the NDRC, the MIIT, and several other administrations jointly promulgated the Cybersecurity Review Measures
( the "Cybersecurity Measures"), which became effective on February 15, 2022. The Cybersecurity Measures has replaced its
previous version promulgated on April 13, 2020. According to the Cybersecurity Measures, among others, (i) an application for cybersecurity
review shall be made by an issuer who is a network platform operator holding personal information of more than one million users before
such issuer applies to list securities on a foreign stock exchange; and (ii) the relevant PRC governmental authorities may initiate cybersecurity
review if such governmental authorities determine that the issuer's network products or services, or data processing activities
affect or may affect national security. On the bases that (i) the Cybersecurity Measures was promulgated recently, (ii) the exact scope
of "network platform operator" under the Cybersecurity Measures remains unclear, and (iii) there are substantial uncertainties
on the interpretation and application of the Cybersecurity Measures, there can be no assurance that we would be required to apply for
such cybersecurity review for our offshore offerings. Any failure in completion of a cybersecurity review may result in administrative
penalties, including fines, a shut-down of our business, revocation of requisite licenses, as well as reputational damage or legal proceedings
or actions against us, which may have material adverse effects on our business, financial condition and results of operations. As of
the date of this annual report, we have not been involved in any formal investigations on cybersecurity review made by the CAC on such
basis.
13
In
addition, we cannot assure you that any new rules or regulations promulgated in the future will not impose additional requirements on
us. If it is determined in the future that approval and filing from the CSRC or other regulatory authorities or other procedures, including
the cybersecurity review under the enacted version of the revised Measures for Cybersecurity Review and the draft of Regulations on the
Network Data Security, are required for our offshore offerings, it is uncertain whether we can or how long it will take us to obtain
such approval or complete such filing procedures and any such approval or filing could be rescinded or rejected. Any failure to obtain
or delay in obtaining such approval or completing such filing procedures for our offshore offerings, or a rescission of any such approval
or filing if obtained by us, would subject us to sanctions by the CSRC or other PRC regulatory authorities for failure to seek CSRC approval
or filing or other government authorization for our offshore offerings. These regulatory authorities may impose fines and penalties on
our operations in China, limit our ability to pay dividends outside of China, limit our operating privileges in China, delay or restrict
the repatriation of the proceeds from our offshore offerings into China or take other actions that could materially and adversely affect
our business, financial condition, results of operations, and prospects, as well as the trading price of our listed securities. The CSRC
or other PRC regulatory authorities also may take actions requiring us, or making it advisable for us, to halt our offshore offerings
before settlement and delivery of the shares offered. Consequently, if investors engage in market trading or other activities in anticipation
of and prior to settlement and delivery, they do so at the risk that settlement and delivery may not occur. In addition, if the CSRC
or other regulatory authorities later promulgate new rules or explanations requiring that we obtain their approvals or accomplish the
required filing or other regulatory procedures for our prior offshore offerings, we may be unable to obtain a waiver of such approval
requirements, if and when procedures are established to obtain such a waiver. Any uncertainties or negative publicity regarding such
approval requirement could materially and adversely affect our business, prospects, financial condition, reputation, and the trading
price of our listed securities.
We face regulatory
uncertainties in China that could restrict our ability to grant share incentive awards to our employees or consultants who are PRC citizens
Pursuant
to the Notices on Issues concerning the Foreign Exchange Administration for Domestic Individuals Participating in a Stock Incentive Plan
of an Overseas Publicly-Listed Company issued by SAFE on February 15, 2012, or Circular 7, a qualified PRC agent (which could be the
PRC subsidiary of the overseas-listed company) is required to file, on behalf of "domestic individuals" (both PRC residents
and non-PRC residents who reside in China for a continuous period of not less than one year, excluding the foreign diplomatic personnel
and representatives of international organizations) who are granted shares or share options by the overseas-listed company according
to its share incentive plan, an application with SAFE to conduct SAFE registration with respect to such share incentive plan, and obtain
approval for an annual allowance with respect to the purchase of foreign exchange in connection with the share purchase or share option
exercise. Such PRC individuals' foreign exchange income received from the sale of shares and dividends distributed by the overseas
listed company and any other income shall be fully remitted into a collective foreign currency account in China, which is opened and
managed by the PRC domestic agent before distribution to such individuals. In addition, such domestic individuals must also retain an
overseas entrusted institution to handle matters in connection with their exercise of share options and their purchase and sale of shares.
The PRC domestic agent also needs to update registration with SAFE within three months after the overseas-listed company materially changes
its share incentive plan or make any new share incentive plans.
We
have adopted our Amended and Restated 2020 Share Incentive Plan (the "2020 Plan"), effective upon the completion of our initial
public offering, and our 2021 Share Incentive Plan (the "2021 Plan"), effective upon shareholder approval at the 2021 annual
general meeting of shareholders held on December 15, 2021. As of the date of this annual report, we have granted 189,066 restricted share
awards under the 2020 Plan and we did not grant any awards under the 2021 Plan. We may grant share incentive awards under both or either
plan in the future. When we do, from time to time, we need to apply for or update our registration with SAFE or its local branches on
behalf of our employees or consultants who receive options or other equity-based incentive grants under the 2020 Plan, 2021 Plan or future
share incentive plans we may adopt or material changes in such plan(s). However, we may not always be able to make applications or update
our registration on behalf of our employees or consultants who hold any type of share incentive awards in compliance with Circular 7,
nor can we ensure you that such applications or update of registration will be successful. If we or the participants of our share incentive
plan(s) who are PRC citizens fail to comply with Circular 7, we and/or such participants of our share incentive plan(s) may be subject
to fines and legal sanctions, there may be additional restrictions on the ability of such participants to exercise their share options
or remit proceeds gained from sale of their shares into China, and we may be prevented from further granting share incentive awards under
our share incentive plan(s) to our employees or consultants who are PRC citizens.
14
Our Hong
Kong subsidiaries could become subject to the direct oversight of the PRC government at any time if the National laws of mainland China
are applied to Hong Kong
The
national laws of the PRC (the "National Laws"), including, but not limited to (i) the Cybersecurity Review Measures which
became effective on February 15, 2022; and (ii) approval by the CSRC or any other Chinese regulatory authority to approve or permit our
offering of securities in the U.S., do not currently apply to our Hong Kong subsidiaries, except for those set forth below. However,
due to the uncertainty of the PRC legal system and changes in laws, regulations or policies, including how these laws, regulations or
policies would be interpreted or implemented, and the national laws applicable in Hong Kong, the Basic Law might be revised in the future.
Pursuant
to Article 18 of the Basic Law of the Hong Kong Special Administrative Region of the PRC (the "Basic Law"), "The laws
in force in the Hong Kong Special Administrative Region shall be the Basic Law, the laws previously in force in Hong Kong as provided
for in Article 8 of this Law, and the laws enacted by the legislature of the Region. National laws shall not be applied in the Hong Kong
Special Administrative Region except for those listed in Annex III to the Basic Law. The laws listed therein shall be applied locally
by way of promulgation or legislation by the Region. Also, regarding the Annex III and several Instruments of the Basic Law, National
Laws, which have applied in Hong Kong until now are as following:
Resolution
on the Capital, Calendar, National Anthem and National Flag of the PRC; Resolution on the National Day of the PRC; Declaration of the
Government of the PRC on the Territorial Sea; Nationality Law of the PRC; Regulations of the PRC Concerning Diplomatic Privileges and
Immunities; Law of the PRC on the National Flag; Regulations of the PRC Concerning Consular Privileges and Immunities; Law of the PRC
on the National Emblem; Law of the PRC on the Territorial Sea and the Contiguous Zone; Law of the PRC on Garrisoning the Hong Kong Special
Administrative Region; Law of the PRC on the Exclusive Economic Zone and the Continental Shelf; Law of the PRC on Judicial Immunity from
Compulsory Measures Concerning the Property of Foreign Central Banks; and Law of the PRC on the National Anthem; Law of the PRC on Safeguarding
National Security in the Hong Kong Special Administrative Region.
The
CSRC released, on December 24, 2021, the Provisions of the State Council on the Administration of Domestic Companies Offering Securities
for Overseas Listing (Revision Draft for Comments) (the "Provisions") and the Administrative Measures for the Filing of Domestic
Companies Seeking Overseas Securities Offering and Listing (the "Measures") for public comment. According to the Provisions
and Measures, "Domestic companies that seek to offer and list securities in overseas markets shall fulfill the filing procedure
with the securities regulatory agency under the State Council and report relevant information;" and "An overseas offering
and listing is prohibited under any of the following circumstances: (1) if the intended securities offering and listing falls under specific
clauses in national laws and regulations and relevant provisions prohibiting such financing activities." Furthermore, the Cybersecurity
Review Measures (2021) was officially released to the public on December 28, 2021 and became effective on February 15, 2022. According
to the Cybersecurity Review Measures (2021), "To go public abroad, an online platform operator who possesses the personal information
of more than 1 million users shall declare to the Office of Cybersecurity Review for cybersecurity review."
As
of the date of this annual report, we have two wholly-owned subsidiaries and operating entities established in Hong Kong, Ebang Communications
(HK) Technology Limited, or HK Ebang Communications, principally for the trading of blockchain chips; and HongKong Ebang Digital Technology
Limited, or HK Ebang Digital, principally for cryptocurrency exchange businesses. Neither entities have established any subsidiary or
branch in PRC or have committed any business operations in PRC. For additional information, see "Item 4. Information of the Company
– C. Organizational Structure."
Based
on the aforementioned Basic Law, our Hong Kong subsidiaries are not subject to the Cybersecurity Measures and the Provisions and the
Measures. However, due to the uncertainty of the PRC legal system and changes in laws, regulations or policies, including how these laws,
regulations or policies would be interpreted or implemented, the national laws applicable in Hong Kong in the Basic Law might be revised
in the future. Therefore, we cannot assure you that we will not be affected by the foregoing or relevant laws, regulations or policies
in the future. If there are any changes to the foregoing laws, regulations and policies, or if any new laws, regulations, and policies,
etc., would be published, we would manage to comply with the changed laws, regulations and policies. However, we could not guarantee
that the relevant laws, regulations, or policies would not be applied retroactively, so we might face penalties, and our reputation and
results of operations could be materially and adversely affected.
15
Risks Relating
to Our Fintech and Blockchain Product Businesses
We are subject
to risks associated with legal, political or other conditions or developments regarding holding, using or mining of Bitcoin, which could
negatively affect our business, results of operations and financial position
Our
customers are based globally. As such, changes in government policies, taxes, general economic and fiscal conditions, as well as political,
diplomatic or social events, expose us to financial and business risks. In particular, changes in domestic or overseas policies and laws
regarding holding, using and/or mining of Bitcoin could result in an adverse effect on our business operations and results of operations.
Moreover, if any domestic or international jurisdiction where we operate or sell our Bitcoin mining machines prohibits or restricts Bitcoin
mining activities, we may face legal and other liabilities and will experience a material loss of revenue.
There
are significant uncertainties regarding future regulations pertaining to the holding, using or mining of Bitcoin, which may adversely
affect our results of operations. While Bitcoin has gradually gained more market acceptance and attention, it is anonymous and may be
used for black market transactions, money laundering, illegal activities or tax evasion. As a result, governments may seek to regulate,
restrict, control or ban the holding, use mining holding of Bitcoin. In addition, due to compliance risk, cost, government regulation
or public pressure, banks and financial institutions may not provide banking services, or may cut off services, to businesses that provide
cryptocurrency-related services or that accept cryptocurrencies, including Bitcoin, as payment. Our existing policies and procedures
for the detection and prevention of money laundering and terrorism-funding activities through our business activities have only been
adopted in recent years and may not completely eliminate instances in which we or our products may be used by other parties to engage
in money laundering and other illegal or improper activities. We cannot assure you that there will not be a failure in detecting money
laundering or other illegal or improper activities which may adversely affect our reputation, business, financial condition and results
of operations.
With
advances in technology, cryptocurrencies are likely to undergo significant changes in the future. It remains uncertain whether Bitcoin
will be able to cope with, or benefit from, those changes. In addition, as Bitcoin mining employs sophisticated and high computing power
devices that need to consume large amounts of electricity to operate, future developments in the regulation of energy consumption, including
possible restrictions on energy usage in the jurisdictions where we sell our products, may also affect our business operations and the
demand for our current Bitcoin mining machines. There has been negative public reaction to the environmental impact of Bitcoin mining,
particularly the large consumption of electricity, and governments of various jurisdictions have responded. For example, pursuant to
the Notification No. 1283, new virtual currency mining projects are forbidden to apply for electricity facility installation, and the
electricity facility installation shall be strictly reviewed. It is not permissible to supply power to virtual currency mining enterprises
in any name, and all applications for electricity facility installation projects in progress shall be stopped. In the United States,
certain local governments of the state of Washington have discussed measures to address the environmental impacts of Bitcoin-related
operations, such as the high electricity consumption of Bitcoin mining activities. Any legislation and increased regulation regarding
climate change could impose significant costs on us and our suppliers, including costs related to increased energy requirements, capital
equipment, environmental monitoring and reporting, and other costs to comply with such regulations. Specifically, imposition of a carbon
tax or other regulatory fee in a jurisdiction where we operate or on electricity that we purchase could result in substantially higher
energy costs, and due to the significant amount of electrical power required to operate cryptocurrency mining machines, could in turn
put our facilities at a competitive disadvantage. Any future climate change regulations could also negatively impact our ability to compete
with companies situated in areas not subject to such limitations. Given the political significance and uncertainty around the impact
of climate change and how it should be addressed, we cannot predict how legislation and regulation will affect our financial condition,
operating performance and ability to compete. Furthermore, even without such regulation, increased awareness and any adverse publicity
in the global marketplace about potential impacts on climate change by us or other companies in our industry could harm our reputation.
Any of the foregoing could have a material adverse effect on our financial position, results of operations and cash flows.
The further
development and acceptance of digital asset networks and other digital assets, which represent a new and rapidly changing industry, are
subject to a variety of factors that are difficult to evaluate. The slowing or stopping of the development or acceptance of digital asset
systems may adversely affect an investment in us
The
use of cryptocurrencies to, among other things, buy and sell goods and services and complete transactions, is part of a new and rapidly
evolving industry that employs cryptocurrency assets, including Bitcoin, based upon a computer-generated mathematical or cryptographic
protocol. Large-scale acceptance of Bitcoin as a means of payment has not, and may never, occur. The growth of this industry in general,
and the use of Bitcoin in particular, is subject to a high degree of uncertainty, and the slowing or stopping of the development or acceptance
of developing protocols may occur unpredictably.
16
Recent
events in the industry, such as filing for and seeking protection of Chapter 11 proceedings by major market participants, may have significant
impact on further development and acceptance of digital asset networks and digital assets as they exposed how unpredictable and turbulent
the digital assets industry can be. Specifically, the Chapter 11 Bankruptcy filings of digital asset exchanges FTX Trading Ltd., et al.
("FTX") (including its affiliated hedge fund, Alameda Research LLC) was unexpected and significantly reduced confidence in
the digital assets industry as it was one of the largest and considered among safest digital asset trading platforms. Furthermore, it
also revealed potential systemic risks and industry contagion as a significant number of other major market participants were affected
by FTX's Chapter 11 filing – namely, among others, BlockFi Inc., et al. ("BlockFi"), as one of the largest digital
asset lending companies. At this time, we believe that there are no significant exposures of our business to any of the industry participants
who have filed for Chapter 11 bankruptcy to date; however, such failure of key institutions in the cryptocurrency asset industry highlights
the risk of systemic interconnectedness between major market participants and the effect it could have on the industry as a whole.
The
closure and temporary shutdown of major digital asset exchanges and trading platforms, such as FTX, due to fraud or business failure,
has disrupted investor confidence in cryptocurrencies and led to a rapid escalation of enforcement action taken by various regulatory
authorities against participants in the digital asset industry. Thus, the failures of key market participants and systemic contagion
risk are expected to, as a consequence, invite more intense and frequent regulatory scrutiny. All of this could have a negative impact
on further development, confidence in, and acceptance of digital asset networks and digital assets, including Bitcoin.
Other
factors that could affect further development and acceptance of digital asset networks and other digital assets include, but are not
limited to:
●
increased
                                            universal adoption and use of Bitcoin as a medium of exchange;
●
governmental
                                            and quasi-governmental regulation of Bitcoin and its use, or restrictions on or regulation
                                            of access to and operation of the Bitcoin network or similar cryptocurrency systems and platforms;
●
changes
                                            in consumer demographics and public tastes and preferences;
●
the
                                            maintenance and development of the open-source software protocol of the Bitcoin network;
●
the
                                            increased consolidation of contributors to the Bitcoin blockchain through Bitcoin mining
                                            pools;
●
the
                                            availability and popularity of other cryptocurrencies and other forms or methods of buying
                                            and selling goods and services, including new means of using fiat currencies;
●
the
                                            use of the networks supporting cryptocurrencies for developing smart contracts and distributed
                                            applications;
●
general
                                            economic conditions and the regulatory environment relating to cryptocurrencies and other
                                            digital assets;
●
environmental
                                            or tax restrictions, excise taxes or other additional costs on the use of electricity to
                                            mine bitcoin;
●
an
                                            increase in Bitcoin transaction costs and any related reduction in the use of and demand
                                            for Bitcoin; and
●
negative
                                            consumer sentiment and perception of bitcoin specifically or cryptocurrencies generally.
We
may face several risks due to disruptions in the digital asset markets, including but not limited to, the risk from depreciation in our
stock price, financing risk, risk of increased losses or impairments in our investments or other assets, risks of legal proceedings and
government investigations, and risks from price declines or price volatility of digital assets
In
the second half of 2022 and beginning of 2023, some well-known digital asset market participants, including digital asset lenders Celsius
Network LLC, et al. ("Celsius"), Voyager Digital Ltd., et al. ("Voyager"), Three Arrows Capital ("Three
Arrows") and Genesis Global Holdco, LLC, et al. ("Genesis") declared bankruptcy, resulting in a loss of confidence
in participants of the digital asset ecosystem and negative publicity surrounding digital assets more broadly. In November 2022, FTX,
the third largest digital asset exchange by volume at the time, halted customer withdrawals and shortly thereafter, FTX and its subsidiaries
filed for bankruptcy.
17
In
addition, in February 2023, the SEC entered into a settlement agreement with cryptocurrency exchange Payward Ventures, Inc. and Payward
Trading Ltd. (doing business as, and hereinafter, "Kraken") for failing to register its "staking-as-a-service"
program as a securities offering in violation of Section 5 of the Securities Act. Pursuant to the settlement agreement, Kraken agreed
to cease operations of its staking program in the U.S. and pay the SEC $30 million in fines.
In
response to these events, the digital asset markets, including the market for Bitcoin specifically, have experienced extreme price volatility
and several other entities in the digital asset industry have been, and may continue to be, negatively affected, further undermining
confidence in the digital asset market and in Bitcoin. These events have also negatively impacted the liquidity of the digital asset
market as certain entities affiliated with FTX engaged in significant trading activity. If the liquidity of the digital asset market
continues to be negatively impacted by these events, digital asset prices (including the price of Bitcoin) may continue to experience
significant volatility and confidence in the digital asset market may be further undermined. These events are continuing to develop and
it is not possible to predict at this time all of the risks that they may pose to us, our service providers or the digital asset industry
as a whole.
Although
we had not been materially and adversely affected by the downfall of FTX or any of the above-mentioned cryptocurrency companies, nor
have we had any material assets that may not be recovered or may otherwise be lost or misappropriated due to the bankruptcies, the failure
or insolvency of large exchanges like FTX have caused and ma continue to cause the price of Bitcoin to fall and decrease confidence in
the ecosystem, which could adversely affect an investment in us. Such market volatility and decrease in Bitcoin price have had a material
and adverse effect on our results of operations and financial condition and we expect our results of operations to continue to be affected
by the Bitcoin price as the results of our operations are significantly tied to the price of Bitcoin. If we do not continue adjusting
our short-term strategy to optimize our operating efficiency in the current dynamic market conditions, such market conditions could have
a further negative result on our business, prospects or operations.
The current
regulatory environment in foreign markets, and any adverse changes in those environments, could have material adverse impacts on our
blockchain products business and our Fintech business
We currently export our products to various overseas markets, have
established two cryptocurrency exchange platforms and one cross-border payment and foreign exchange platform, and we intend to further
develop our business and operations in the future to provide Fintech businesses in overseas jurisdictions, including, but not limited
to, Singapore, Hong Kong, Australia, New Zealand, the Bahamas, the United States and Malaysia. Our blockchain products business and Fintech
businesses could therefore be significantly affected by regulatory developments in jurisdictions outside the PRC, including the United
States and other jurisdictions.
Certain
aspects of our business are subject to extensive laws, rules, regulations, policies and legal and regulatory guidance, including those
governing securities, commodities, cryptocurrency asset custody, exchange and transfer, data governance, data protection, cybersecurity
and tax. Many of these legal and regulatory regimes were adopted prior to the advent of the Internet, mobile technologies, cryptocurrency
assets and related technologies. As a result, they do not contemplate or address unique issues associated with the crypto economy, are
subject to significant uncertainty, and vary widely across federal, state and local laws, including the PRC and international jurisdictions.
These legal and regulatory regimes, including the laws, rules and regulations thereunder, evolve frequently and may be modified, interpreted
and applied in an inconsistent manner from one jurisdiction to another, and may conflict with one another. Moreover, the complexity and
evolving nature of certain aspects of our business and the significant uncertainty surrounding the regulation of the crypto economy require
us to exercise our judgement as to whether certain laws, rules and regulations apply to us, and it is possible that governmental bodies
and regulators may disagree with our conclusions. In addition, governmental authorities that oversee certain aspects of the cryptocurrency
markets, including those in the United States and other jurisdictions, have taken actions based on current laws and regulations, and
are likely to continue to issue new laws, rules and regulations governing the cryptocurrency industry in which we currently operate and
may operate in the future. As a result, and as discussed further in "- We are subject to risks associated with legal, political
or other conditions or developments regarding holding, using or mining of Bitcoin, which could negatively affect our business, results
of operations and financial position," existing and future regulations affecting the mining, holding, using, or transferring of
cryptocurrencies may adversely affect our future business operations and results of operations, could subject us to significant fines
and other regulatory consequences, and could result in our or our customers' liability for activities conducted by our customers.
18
As
described under "Item 4. Information on the Company—B. Business Overview—Regulation—Regulatory Overview of United
States," United States federal and state securities laws may specifically limit our ability and the ability of our customers to
use our blockchain and telecommunications products where these operations are conducted in connection with cryptocurrencies that are
considered "securities" for purposes of United States laws. We have designed new chips for mining cryptocurrencies other
than Bitcoin, and the likely status of these cryptocurrencies as securities could limit distributions, transfers, or other actions involving
such cryptocurrencies, including mining, in the United States. For example, the distribution of cryptocurrencies to miners through the
mining process could be deemed to involve an illegal offering or distribution of securities subject to United States federal or state
laws. In addition, miners on cryptocurrency networks could, under certain circumstances, be viewed as statutory underwriters or as "brokers"
subject to regulation under the Securities Exchange Act of 1934. This could require us or our customers to change, limit, or cease their
mining operations, register as broker-dealers and comply with applicable laws, or be subject to penalties, including fines, or other
regulatory consequences. In addition, we could face liability for facilitating their illegal activities.
Further,
if Bitcoin, Ethereum, or any other supported cryptocurrency or other digital asset is deemed to be a security under any United States
federal, state, or foreign jurisdiction, or in a proceeding in a court of law or otherwise, it may have adverse consequences for such
supported cryptocurrency or other digital asset, which could adversely affect our business, prospects, operations or financial condition.
For instance, all transactions in such supported cryptocurrency or other digital asset would have to be registered with the SEC or other
foreign authority, or conducted in accordance with an exemption from registration, which could severely limit its liquidity, usability
and transactability. Moreover, the networks on which such supported cryptocurrency or digital assets are utilized may be required to
be regulated as securities intermediaries, and subject to applicable rules, which could effectively render the network impracticable
for its existing purposes. Further, it could draw negative publicity and a decline in the general acceptance of the cryptocurrency or
other digital asset. Also, it may make it difficult for such supported cryptocurrency or other digital asset to be traded, cleared, and
custodied as compared to other cryptocurrency or other digital assets that are not considered to be securities. Specifically, even if
transactions in a cryptocurrency or other digital asset were registered with the SEC or conducted in accordance with an exemption from
registration, the current intermediary-based framework for securities trading, clearances and settlements is not consistent with the
operations of the digital asset market. For example, under current SEC guidance, cryptocurrency and other digital asset securities cannot
be held on behalf of customers by broker-dealers that also support custody of traditional securities; and the SEC has not permitted public
permissionless blockchain-based clearance and settlement systems for securities.
In
addition, cryptocurrencies and other digital assets are, in certain instances, subject to additional U.S. laws and regulations related
to transactions in commodities as enforced by the Commodity Futures Trading Commission, or CFTC, and to money transmission, money service
business, anti-money laundering, and know-your-customer activities as enforced by the Department of the Treasury's Financial Crimes
Enforcement Network, or FinCEN, and by state governments. We or our customers could be subject to regulatory restrictions or regulatory
actions based on these laws and regulations.
Under
the Investment Company Act of 1940, as amended, a company may fall within the definition of an investment company under section 3(c)(1)(A)
thereof if it is or holds itself out as being engaged primarily, or proposes to engage primarily in the business of investing, reinvesting
or trading in securities, or under section 3(a)(1)(C) thereof if it is engaged or proposes to engage in business of investing, reinvesting,
owning, holding, or trading in securities, and owns or proposes to acquire "investment securities" (as defined) having a
value exceeding 40% of its total assets (exclusive of government securities and cash items) on an unconsolidated basis. There is no authoritative
law, rule or binding guidance published by the SEC regarding the status of digital assets as "securities" or "investment
securities" under the Investment Company Act. Although we believe that we are not engaged in the business of investing, reinvesting,
or trading in investment securities, and 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, to the extent the digital assets which we own or otherwise acquire may
be deemed "securities" or "investment securities" by the SEC or a court of competent jurisdiction, we may meet
the definition of an investment company. If we fall within the definition of an investment company under the Investment Company Act,
we would be required to register with the SEC. If an investment company fails to register, it likely would have to stop doing almost
all business, and its contracts would become voidable. Generally non-U.S. issuers may not register as an investment company without an
SEC order.
Cryptocurrencies
and digital assets are recent technological innovations, and the regulatory schemes to which digital assets and their related exchanges
may be subject have not been fully explored or developed by foreign jurisdictions. Thus, cryptocurrencies and other digital assets face
an uncertain regulatory landscape in many foreign jurisdictions. Various foreign jurisdictions may from time to time adopt laws, regulations
or directives that affect our cryptocurrency businesses. Due in part to its international nature and the nascent stage of regulation,
along with the limited experience with cryptocurrencies and digital assets, and language barriers between international journalists,
translators and regulators, information regarding the regulation of cryptocurrencies and other digital assets in various jurisdictions
may be incomplete, inaccurate or unreliable. As both the regulatory landscape develops and journalistic familiarity with cryptocurrencies
and other digital assets increase, mainstream media's understanding of cryptocurrencies, digital assets, and the regulation thereof
may improve. As we enter into the markets in Australia, Singapore, the Bahamas, Hong Kong, New Zealand and the United States, we have
retained local regulatory counsel and expect to continue to monitor the local regulations regarding cryptocurrencies, digital assets,
and financial service platforms.
19
We
expect that regulations governing our current and planned business operations will vary from country to country as well as within countries.
We cannot assure you that we will be familiar with local laws and regulations at all times when we establish digital asset and financial
services platform businesses or develop any other business and operations in a foreign country. An increase in the regulation of such
operations may affect our proposed businesses by increasing compliance costs or prohibiting certain or all of our proposed activities.
In addition, existing and proposed laws and regulations can delay or impede the development of new products, result in negative publicity,
decrease demand for our products, require significant management time and attention, and subject us to claims or other remedies, including
fines or demands that we modify or cease existing business practices.
Furthermore,
any action brought against us or our customers by a foreign regulator, or by an individual in a private action, based on foreign law
could cause us or our customers to incur significant legal expenses and divert our management's attention from the operation of
the business. If our or our customers' operations are found to be in violation of any laws and regulations, we or they may be subject
to penalties associated with the violation, including civil and criminal penalties, damages and fines. This could in turn require us
to curtail or cease all or some operations. Regulatory action or regulatory change could also decrease demand for our products and services,
which would be harmful to the success of our business.
The future
development and growth of the cryptocurrency and digital assets industry is subject to a variety of factors that are difficult to predict
and evaluate. If the cryptocurrency and digital assets industry does not grow as we expect, our business, operating results, and financial
condition could be adversely affected
Cryptocurrency
assets built on blockchain technology were only introduced in 2008 and remain in the early stages of development. In addition, different
digital assets are designed for different purposes. Bitcoin, for instance, was designed to serve as a peer-to-peer electronic cash system,
while Ethereum was designed to be a smart contract and decentralized application platform. Many other digital asset networks, ranging
from cloud computing to tokenized securities networks, have only recently been established. The further growth and development of any
digital assets and their underlying networks and other cryptographic and algorithmic protocols governing the creation, transfer, and
usage of digital assets represent a new and evolving paradigm that is subject to a variety of factors that are difficult to evaluate,
including:
●
many digital asset networks
    have limited operating histories, have not been validated in production, and are still in the process of developing and making significant
    decisions that will affect the design, supply, issuance, functionality, and governance of their respective digital assets and underlying
    blockchain networks, any of which could adversely affect their respective digital assets;
●
many digital asset networks
    are in the process of implementing software upgrades and other changes to their protocols, which could introduce bugs, security risks,
    or adversely affect the respective digital asset networks;
●
several large and prominent
    networks, including Bitcoin and Ethereum, are developing new features to address fundamental speed, scalability, and energy usage
    issues. If these issues are not successfully addressed, or are unable to receive widespread adoption, it could adversely affect the
    underlying cryptocurrency and other digital assets;
●
security issues, bugs,
    and software errors have been identified with many digital assets and their underlying blockchain networks, some of which have been
    exploited by malicious actors. There are also inherent security weaknesses in some digital assets, such as when creators of certain
    digital asset networks use procedures that could allow hackers to counterfeit tokens. Any weaknesses identified with a digital asset
    could adversely affect its price, security, liquidity, and adoption. If a malicious actor or botnet (a volunteer or hacked collection
    of computers controlled by networked software coordinating the actions of the computers) obtains a majority of the compute or staking
    power on a digital asset network, as has happened in the past, it may be able to manipulate transactions, which could cause financial
    losses to holders, damage the network's reputation and security, and adversely affect its value;
●
the development of new
    technologies for mining, such as improved ASICs, or changes in industry patterns, such as the consolidation of mining power in a
    small number of large mining farms, could reduce the security of blockchain networks, lead to increased liquid supply of digital
    assets, and reduce a digital asset's price and attractiveness;
●
if rewards and transaction
    fees for miners or validators are not sufficiently high to attract and retain miners, a digital asset network's security and
    speed may be adversely affected, increasing the likelihood of a malicious attack;
●
the governance of many
    decentralized blockchain networks is by voluntary consensus and open competition, and many developers are not directly compensated
    for their contributions. As a result, there may be a lack of consensus or clarity on the governance of any particular cryptocurrency
    network, a lack of incentives for developers to maintain or develop the network, and other unforeseen issues, any of which could
    result in unexpected or undesirable errors, bugs, or changes, or stymie such network's utility and ability to respond to challenges
    and grow; and
●
many digital asset networks
    are in the early stages of developing partnerships and collaborations, all of which may not succeed and adversely affect the usability
    and adoption of the respective digital assets.
20
Various
other technical issues have also been uncovered from time to time that resulted in disabled functionalities, exposure of certain users'
personal information, theft of users' assets, and other negative consequences, and which required resolution with the attention
and efforts of their global miner, user, and development communities. If any such risks or other risks materialize, and in particular
if they are not resolved, the development and growth of the digital asset space may be significantly affected and, as a result, our business,
operating results, and financial condition could be adversely affected.
We may face challenges in regard to stringent
licensing and regulatory requirements in the money services business we operate
The money services business
industry is relatively competitive in the jurisdictions we carry out or intend to carry out such businesses. Apart from the fierce competition
we may face in this area, we may also face difficulty in penetrating the market. Regulators in various countries are imposing stricter
licensing requirements towards new entrants. For instance, the Malaysian regulatory body is not only taking into consideration the aspect
of compliance in granting the relevant licenses but also the value proposition of a business plan. The same is observed in Hong Kong and
Australia, in which the relevant regulator requires a business plan as a prerequisite of granting a license. The Australian regulatory
body imposes strict and ongoing obligations upon licensees of AFS licenses, including, among others, the requirement to report transfer
instructions by users and the business' compliance with its obligations under anti-money laundering laws.
Given the current approach
by those countries that we conduct or intend to conduct business in, we might face uncertainty in connection with obtaining necessary
licenses and approval before carrying out our money services business. The procedures and processes of obtaining such licenses and approval
requires financial, human, and infrastructural resources. In the event that such licenses and approval are not granted by the relevant
bodies, we might suffer from a loss even before the commencement of money services business in jurisdictions in which we intend to carry
out such business. The risk disclosed herein is not abrogated upon the obtainment of requisite licenses and approval. As various countries
seek to regulate the industry in a more comprehensive manner, more legal requirements may be put in place to maintain licenses and approval.
The uncertainty of such future regulations also poses a substantial risk to us, which may adversely affect our business operations.
We are also exposed to financial and technological
risks in the money service business which calls for a high and strict standard of compliance in managing such risks and adequate infrastructures
in place in which failure of managing these risks will be adverse to our business
In light of the various regulatory
and compliance requirements in place with regards to money services businesses, we are expected to prepare and provide all mechanisms
and infrastructures in order to meet such requirements. The provision of these mechanisms and infrastructures must be done even in the
license application stage, which include,
inter alia,
safekeeping users' funds, data protection, anti-money laundering, consumer
protection and preventing cyber and financial crimes. The need of these infrastructures connotes to having policies in place, which may
include Know-Your-Customer (KYC) procedures and a robust technological system which can aid the identification, prevention and mitigation
of such risks in the carrying out of money services businesses.
As discussed, the risks of
running a money services business are multifaceted. The failure to provide and maintain such infrastructure could mean two things;
firstly
,
we may face the risk of failing to obtain the relevant approval and license from the regulators, in countries where we intend to obtain
such licenses such as Malaysia; and
secondly
, even if license and approval have been obtained previously, for example, we have
obtained relevant licenses in Hong Kong and Australia, we may face penalties imposed by regulators which may include but are not limited
to suspension, revocation, and termination of such licenses and approval should we breach any regulatory and compliance requirements.
In addition to any threat to our licenses in the event of a breach, regulators also have the power to enforce pecuniary measures, including
but not limited to significant fines and the commencement of legal proceedings. The possibility of such actions presents a financial,
commercial, human resources and reputational risk to money services businesses, which must be mitigated by adequate funding, operational
infrastructure and strict compliance controls. Failure to manage such risks may result in an adverse effect to our business operations.
Any decrease in our receipt of fees and
charges, or limitations on our fees and charges, could adversely affect our business, results of operations and financial condition
Our cross-border payment solutions
include a variety of fees and charges associated with transactions. If the users of our products and services decrease their transaction
activities, or the extent to which they use alternative services, our revenue in connection with the cross border payment business could
be materially adversely affected. In addition, several market factors can affect the amount of our fees and charges, including the market
for similar charges for competitive products. Furthermore, regulators in relevant jurisdictions in which we conduct or intend to conduct
our cross-border payment business have scrutinized the electronic payments industry's pricing, charges and other practices related
to its customers. Any restrictions on our ability to price our products and services could materially and adversely affect our revenue.
In order to remain competitive and to continue
to increase our revenues and earnings, we must continually and quickly update our services, a process that could result in higher costs
and the loss of revenues, earnings and customers if the new services do not perform as intended or are not accepted in the marketplace
The payments technology industry
in which we compete is characterized by rapid technological change, new product introductions, evolving industry standards and changing
customer needs. In order to remain competitive, we are continually involved in a number of projects, including the development of new
platforms, mobile payment applications, e-commerce services and other new offerings emerging in the payments technology industry. These
projects carry the risks associated with any development effort, including cost overruns, delays in delivery and performance problems.
In the payments technology markets, these risks are even more acute. Any delay in the delivery of new services or the failure to differentiate
our services could render our services less desirable to customers, or possibly even obsolete.
21
Our cross-border payment business depends
on our relationships with banks and other financial institutions around the world, which may impose fees, restrictions and compliance
burdens on us that make our operations more difficult or expensive
Our cross-border payment business includes facilitation of payment
and foreign exchange solutions, primarily cross-border, cross-currency transactions, for small and medium size enterprises and other organizations.
Increased regulation and compliance requirements are impacting these businesses by making it more costly for us to provide our solutions
or by making it more cumbersome for businesses to do business with us. Any factors that increase the cost of cross-border trade for us
or our customers or that restrict, delay, or make cross-border trade more difficult or impractical, such as trade policy (including restrictions
arising out of the Russian and Ukrainian conflict) or higher tariffs, could negatively impact our revenues and harm our business. We may
also have difficulty establishing or maintaining banking relationships needed to conduct our services due to banks' policies.
Future developments
regarding the treatment of digital assets for U.S. and foreign tax purposes could adversely impact our business
Due
to the new and evolving nature of digital assets and the absence of comprehensive legal and tax guidance with respect to digital asset
products, services and transactions, many significant aspects of the U.S. and foreign tax treatment of transactions involving digital
assets, such as the purchase and sale of cryptocurrency assets on our platform, as well as the provision of staking rewards and other
cryptocurrency asset incentives, are uncertain, and it is unclear whether, when and what guidance may be issued in the future on the
treatment of cryptocurrency asset transactions for U.S. and foreign income tax purposes.
In
2014, the IRS released Notice 2014-21, discussing certain aspects of "virtual currency" for U.S. federal income tax purposes
and, in particular, stating that such virtual currency (i) is "property," (ii) is not "currency" for purposes
of the rules relating to foreign currency gain or loss, and (iii) may be held as a capital asset. In 2019, the IRS released Revenue Ruling
2019-24 and a set of "Frequently Asked Questions" (which have been periodically updated), that provide additional guidance,
including guidance to the effect that, under certain circumstances, hard forks of digital currencies are taxable events giving rise to
ordinary income and guidance with respect to the determination of the tax basis of virtual currency. However, this guidance does not
address other significant aspects of the U.S. federal income tax treatment of digital assets and related transactions.
There
continues to be uncertainty with respect to the timing, character and amount of income inclusions for various digital asset transactions
including, but not limited to lending and borrowing digital assets, staking rewards and other digital asset incentives that we offer.
Although we believe our treatment of digital asset transactions for federal income tax purposes is consistent with existing guidance
provided by the IRS and existing U.S. federal income tax principles, because of the rapidly evolving nature of digital asset innovations
and the increasing variety and complexity of digital asset transactions and products, it is possible the IRS and various U.S. states
may disagree with our treatment of certain digital asset offerings for U.S. tax purposes, which could adversely affect our customers
and the vitality of our business and platforms.
There
can be no assurance that the IRS, the U.S. state revenue agencies or other foreign tax authorities, will not alter their respective positions
with respect to digital assets in the future or that a court would uphold the treatment set forth in existing guidance. It also is unclear
what additional guidance may be issued in the future on the treatment of existing digital asset transactions and future digital asset
innovations for purposes of U.S. tax or other foreign tax regulations. Any such alteration of existing IRS, U.S. state and foreign tax
authority positions or additional guidance regarding digital asset products and transactions could result in adverse tax consequences
for holders of digital assets and could have an adverse effect on the value of digital assets and the broader digital asset markets.
Future technological and operational developments that may arise with respect to digital assets may increase the uncertainty with respect
to the treatment of digital assets for U.S. and foreign tax purposes. The uncertainty regarding tax treatment of digital asset transactions
impacts our customers, and could impact our business, both domestically and abroad.
Our results
of operations have been and are expected to continue to be significantly impacted by the fluctuation of cryptocurrency prices, especially
the price of Bitcoin
Our mining machines are currently
designed primarily for Bitcoin mining. The demand for, and pricing of, our mining machines are therefore affected by the expected economic
returns of Bitcoin mining activities, which in turn are primarily driven by, among other factors, the Bitcoin price. The price of Bitcoin
has experienced significant fluctuations over its short existence and may continue to fluctuate significantly in the future.
22
We expect our results of operations
to continue to be affected by cryptocurrency prices and global cryptocurrency market environment and development trends, as we generated
42.3%, 77.3% and 79.8% of our revenue from sales of our Bitcoin mining machines and related accessories in 2020, 2021 and 2022, respectively,
and 48.1%, 5.5% and nil from provision of mining machine hosting services in the same periods, respectively. We have halted all mining
machine custody services in the PRC at the end of April 2021. With the launch of our two cryptocurrency exchange platforms, and our plan
to develop and operate future cryptocurrency exchange platforms, we anticipate that we will generate an increasing amount of our total
revenue from transaction fees on our platforms in connection with the purchase, sale, and trading of cryptocurrency assets by our customers.
Due to the continued decline in cryptocurrency prices and major cryptocurrency exchange platforms declaring bankruptcy in 2022, which
negatively impacted the crypto currency trading market, we have not generated material revenue from our cryptocurrency exchange products
and services. As such, any declines in the volume of cryptocurrency assets transactions, the price of cryptocurrency assets, or market
liquidity for cryptocurrency assets generally will likely have a material and adverse effect on our results of operations and financial
condition. We cannot assure you that the Bitcoin price or Bitcoin network transaction fees will remain high enough to sustain the demand
for our Bitcoin mining machines or that cryptocurrency prices will not decline significantly in the future. At the same time, if transaction
fees increase to such an extent as to discourage users from using cryptocurrency as a medium of exchange, it may decrease the transaction
volume of the digital assets and may affect the demand for our Bitcoin mining machines and cryptocurrency exchange businesses. Furthermore,
fluctuations in cryptocurrency prices, especially in Bitcoin price, can have an immediate impact on the trading price of our Class A ordinary
shares even before our financial performance is affected, if at all.
In
addition to the market volatility, various other factors, mostly beyond our control, could impact cryptocurrency prices. For example,
the usage of cryptocurrency in the retail and commercial marketplace is relatively low in comparison with the usage for speculation,
which contributes to cryptocurrency price volatility. Renowned persons, including social media influencers, may also publicly discuss
their holdings (or the holdings of companies with which they are affiliated) of cryptocurrency or their intent to buy or sell large quantities
of cryptocurrency. At a minimum, these public statements delivered through social media, such as Twitter, may cause cryptocurrency prices
to experience significant volatility.
In
addition, any shortage of power supply due to government control measures or other reasons, and any increase in energy costs, would raise
the costs of Bitcoin mining. This in turn could affect our customers' expected economic return for mining activities and the demand
for and pricing of our current Bitcoin mining machines and future hosting services.
Furthermore, fluctuations
in the Bitcoin price may affect the value of our inventory as well as the provision we make to the inventory as we manage our inventory
based on, among others, the sales forecast of our Bitcoin mining machines. As we generally increase our procurement volume and stock up
finished goods for the launch of new products or we expect a surge of demand of Bitcoin mining machines, a significant drop in the Bitcoin
price can lead to a lower expected sales price and excessive inventory, which in turn will lead to impairment losses with respect to such
inventory. For example, in 2020, 2021 and 2022, as a result of the significant fluctuation of the Bitcoin price, we recorded write-downs
for the potentially obsolete, slow-moving inventory and lower of cost or market adjustment of US$3.6 million, US$2.2 million and US$6.5
million and in cost of revenues, respectively, which in turn had a significant negative impact on our profitability. If the Bitcoin price
drops significantly in the future, we may need to make similar write-downs again. To the extent that we are able to sell such inventory
above its carrying value, our gross profit may also be inflated by such write down.
The Bitcoin price drop also
adversely impacted the ability of our customers who purchased our Bitcoin mining products to make payments. We offered sales on credit
to some of our customers in response to the Bitcoin price drop in 2020, 2021 and 2022 and may continue to offer credit sales when the
Bitcoin price drops significantly. Additionally, if the Bitcoin price drops significantly in the future, we may need to offer to certain
of our customers price concession, even if we generally do not offer price concessions to customers. We did not provide price concessions
to customers in 2020, 2021 and 2022. However, we cannot assure you that we will not provide such price concession in the future. If we
provide any price concession to our customers in the future, our revenues and results of operations may be adversely affected.
We have derived
and may continue to derive a significant portion of our revenues from our Bitcoin mining machines business. If the market for Bitcoin
mining machines ceases to exist or diminishes significantly, our business, results of operations and financial condition would be materially
and adversely affected
We
have generated, and expect to generate in the foreseeable future, a significant portion of our revenues from sales of our Bitcoin mining
machines. Sales of our Bitcoin mining machines and related accessories accounted for 42.3%, 77.3% and 79.8% of our revenues in 2020,
2021 and 2022, respectively. Revenues from provision of mining machine hosting services accounted for 48.1%, 5.5% and nil of our revenues
in 2020, 2021 and 2022, respectively, as we have halted all mining machine custody services in the PRC at the end of April 2021. If the
market for Bitcoin mining machines ceases to exist or diminishes significantly, we would experience a significant loss of sales, cancelation
of orders, or loss of customers for our Bitcoin mining machines. Adverse factors that may affect the market for Bitcoin mining machines
include:
●
Another cryptocurrency,
    especially one that is not created using the same mining processes as Bitcoin, displaces Bitcoin as the mainstream cryptocurrency,
    thereby causing Bitcoin to lose value or become worthless, which could adversely affect the sustainability of our business.
●
Bitcoin fails to gain wide
    market acceptance and fails to become a generally accepted medium of exchange in the global economy due to certain inherent limitations
    to cryptocurrencies.
●
Over time, the reward for
    Bitcoin mining will decline in terms of the amount of Bitcoin awarded, which may reduce the incentive to mine Bitcoin. Specifically,
    a recent halving event occurred in May 2020, and Bitcoins are expected to be fully mined out by the year of 2140. Therefore, Bitcoin
    mining machines may become less productive as the available rewards for Bitcoin mining continue to decrease.
23
If
we cannot maintain the scale and profitability of the sales of our Bitcoin mining machines and, at the same time, successfully expand
our business in other application markets, our business, results of operations, financial condition and prospects will suffer. Furthermore,
excess inventory, inventory markdowns, brand image deterioration and margin squeeze caused by declining economic returns for miners or
pricing competition for our Bitcoin mining machines could all have a material and adverse effect on our business, results of operations
and financial condition.
Further,
while historically, China was a location of significant digital asset mining at low electric power rates, China's and other foreign
countries' governments have taken action to prohibit or significantly restrict digital asset mining. For example, in May and June
of 2021, in their efforts to curb digital asset trading and mining, regulators in several Chinese Provinces, including Qinghai, Inner
Mongolia and Sichuan, announced policies to curb or ban local digital asset mining operations. Within a month following the ban announcement,
the price of Bitcoin experienced a drop of over 30%. Additionally, in January 2022, the Central Bank of Russia called for a ban on cryptocurrency
activities ranging from mining to trading. Whether or not the lack of mining activity domestically or internationally will negatively
impact miner manufacturing and the development, price, availability of new and enhanced mining equipment is unknown. Should China or
other countries that currently restrict digital asset mining eliminate such restrictions or actually seek to enhance such mining activity,
or should other jurisdictions follow suit, the likely decrease in mining activity would likely reduce our revenue and profitability,
and it is possible that our industry may not be able to withstand the sudden and extreme loss of mining power.
The industries
in which we operate and which we intend to operate in the future are characterized by constant changes. If we fail to continuously innovate
and to provide products that meet the expectations of our customers, we may be unable to attract new customers or retain existing customers,
and hence our business and results of operations may be adversely affected
The
industries in which we operate and intend to operate in the future are characterized by constant changes, including rapid technological
evolution, continual shifts in customer demands, frequent introductions of new products and solutions and constant emergence of new industry
standards and practices. Thus, our success will depend, in part, on our ability to respond to these changes in a cost-effective and timely
manner. To maintain the relevancy of our products and to continue to broaden and enhance our product portfolio for delivering the most
effective products to our customers, we have actively invested in product planning and research and development. The process of developing
and marketing new products is inherently complex and involves significant uncertainties, including the following:
●
our product planning efforts
    may fail resulting in the development or commercialization of new technologies or ideas;
●
our research and development
    efforts may fail to translate new product plans into commercially feasible products;
●
our new technologies or
    new products may not be well received by consumers;
●
we may not have adequate
    funding and resources necessary for continual investments in product planning and research and development;
●
our products may become
    obsolete due to rapid advancements in technology and changes in consumer preferences; and
●
our newly developed technologies
    may not be protected as proprietary intellectual property rights.
Any
failure to anticipate the next-generation technology roadmap or changes in customer preferences or to timely develop new or enhanced
products in response could result in decreased revenue and market share. In particular, we may experience difficulties with product design,
product development, marketing or certification, which could result in excessive research and development expenses and capital expenditure,
delays or prevent our introduction of new or enhanced products. Furthermore, our research and development efforts may not yield the expected
results, or may prove to be futile due to the lack of market demand.
24
Increasing
mining difficulty and decreasing mining rewards could result in downward pressure on the expected economic returns on Bitcoin mining
The
difficulty of Bitcoin mining, or the amount of computational resources required for a set amount of reward for recording a new block,
directly affects the expected economic returns for Bitcoin miners, which in turn affects the demand for our Bitcoin mining machines.
Bitcoin mining difficulty is a measure of how much computing power is required to record a new block, and it is affected by the total
amount of computing power in the Bitcoin network. The Bitcoin algorithm is designed so that one block is generated, on average, every
ten minutes, no matter how much computing power is in the network. Thus, as more computing power joins the network, and assuming the
rate of block creation does not change (remaining at one block generated every ten minutes), the amount of computing power required to
generate each block and hence the mining difficulty increases. In other words, based on the current design of the Bitcoin network, Bitcoin
mining difficulty would increase together with the total computing power available in the Bitcoin network, which is in turn affected
by the number of Bitcoin mining machines in operation. For example, Bitcoin mining difficulty would increase based on increases in the
total computing power available in the Bitcoin network, which is in turn affected by the number of Bitcoin mining machines in operation.
From January 2017 to December 2022, Bitcoin mining difficulty increased by approximately 105 times, according to BTC.com. As a result,
a strong growth in sales of our Bitcoin mining machines can contribute to further growth in the total computing power in the network,
thereby driving up the difficulty of Bitcoin mining and resulting in downward pressure on the expected economic return of Bitcoin mining
and the demand for, and pricing of, our products.
In
addition, the number of Bitcoin awarded for solving a block in the blockchain halves approximately every four years until the estimated
complete depletion of Bitcoin by around the year 2140. In each of 2013, 2014 and 2015, approximately 25 Bitcoin were awarded for each
block solved. The number of Bitcoin awarded for solving a block halved in 2016 to 12.5 Bitcoin per block, and halved again in May 2020
to 6.25 Bitcoin per block. We have experienced declined demand for Bitcoin mining machines since the Bitcoin halving event in May 2020
as the mining rewards were slashed and the expected economic returns on Bitcoin mining was adversely affected.
Aside
from mining rewards, transaction fees are another form of incentive for participation in Bitcoin verification processes. Bitcoin users
may offer to pay a discretionary Bitcoin transaction fee to the network member who solves the block and adds that user's transaction
to the blockchain to incentivize prioritizing that user's transaction. Transaction fees are discretionary, so if the transaction
fees were to become the only or primary income for Bitcoin mining activities in the future, the expected economic returns from Bitcoin
mining and therefore the demand for our products will decrease significantly, which will result in a significant negative impact on our
business and results of operations.
Our business
growth is dependent on the development of blockchain technology and applications, particularly in the field of Bitcoin
We
derive our revenue predominantly from our blockchain products business. The development of blockchain technology is still in a relatively
early stage, and there can be no assurance that blockchain applications, including those in the fields of cryptocurrencies and other
areas such as artificial intelligence, will gain wide market acceptance. Any blockchain application may become redundant or obsolete
with the introduction of new competing technologies or products. If market acceptance or confidence in blockchain technology is lost
or reduced for any reason, such as due to cybersecurity issues, the demand for our existing or future blockchain products may decline.
Our
blockchain products business depends significantly on the development of cryptocurrency applications, in particular, Bitcoin applications,
as all of our mining machines are currently designed for Bitcoin mining. The cryptocurrency market is rapidly and continuously evolving.
Any actual or perceived adverse development in Bitcoin or other cryptocurrencies can significantly affect market demand for mining activities,
mining machines and cryptocurrency transactions. In addition, any event or rumor that generates negative publicity for the cryptocurrency
market could hinder the development and reduce market acceptance of cryptocurrency applications. Under such circumstances, our business,
results of operations and financial condition could be materially and adversely affected.
25
If we are
unable to manage our growth or execute our strategies effectively, our business, results of operations and financial condition may be
materially and adversely affected
We are in the process of developing
integrated circuits (the "ICs") for mining other cryptocurrencies in order to adapt our future models of mining machines to
other cryptocurrencies promptly and efficiently when all the Bitcoins have been discovered or Bitcoin is replaced by other cryptocurrencies
as mainstream cryptocurrencies. We began to provide mining machine hosting services in 2017 and intend to leverage our experience in the
mining machine industry to establish mining farms and provide cryptocurrency exchange services to the cryptocurrency community in order
to diversify our offerings. We have halted all mining machine custody services in the PRC at the end of April 2021, and we are in the
process of locating and/or constructing compliant mining farms in North America. As of the date of this annual report, we have established
two cryptocurrency exchange platforms and one cross-border payment and foreign exchange platform outside the PRC; have received the Money
Services Business (MSB) License in Canada; received registration approval as digital currency exchange, acquired a company with an Australian
Financial Services License (AFSL) and registration approval as an independent remittance dealer in Australia; received the Money Service
Operator (MSO) License, Type 4 and 9 licenses, the Trust or Company Service Provider (TCSP) license and registration approval as a Trust
Company in Hong Kong, and received registration as a Digital Asset Business and a Firm Dealing in Securities as Agent or Principal, Arranging
Deals, Managing Securities and Advising on Securities in the Bahamas; and we are in the process of obtaining relevant licenses and approvals
for our subsidiaries in Singapore, Hong Kong, Australia, New Zealand and Malaysia to engage in additional Fintech businesses. We may fail
to successfully execute our expansion plan due to our limited resources and other reasons beyond our control. For example, the gain we
obtain from running mining farms may not cover their operating expenses due to a prolonged depression of cryptocurrency prices, and our
Fintech related services may be unable to compete effectively with other similar services already available to the Fintech community.
Should we fail to successfully manage our growth or implement our strategies, the resources we allocate to the new business lines will
be wasted, and our business, results of operations and financial condition could be materially and adversely affected.
Each of our subsidiaries in Hong Kong, Canada,
Australia, Singapore, the Bahamas, New Zealand, the United States and Malaysia have a limited operating history, which makes it hard for
us to evaluate their abilities to generate revenue through operations, and to date, each of them has not generated material revenue from
any commercially available blockchain products or Fintech services
Our
subsidiaries in Hong Kong, Canada, Australia, Singapore, the Bahamas, New Zealand, the United States and Malaysia were recently formed
between August 2020 and February 2023 for the purpose of establishing our blockchain and Fintech businesses. Their limited operating
history and the relative immaturity of the blockchain and Fintech industry make it difficult for us to evaluate their current business
and future prospects. They have encountered, and will continue to encounter, risks and difficulties frequently experienced by growing
companies in rapidly developing and changing industries, including challenges in forecasting accuracy, determining appropriate uses of
their limited resources, gaining market acceptance, managing a complex and evolving regulatory landscape and developing new products.
These subsidiaries' current or future operating model may require changes in order for them to scale their operations efficiently
and be successful. Investors in our securities should consider the business and prospects of our overseas subsidiaries in these countries
in light of the risks and difficulties they face as early-stage companies focused on developing products in the field of financial technology.
26
We may not
successfully develop, market or launch any future Fintech businesses or continue operating our existing Fintech businesses
In April 2021, we launched
our first self-developed proprietary cryptocurrency exchange platform Ebonex and another self-developed proprietary cryptocurrency exchange
platform in February 2022, we also branded Ebonex in Australia. In March 2022, we established a cross-border payment and foreign exchange
business, through the acquisition of a company with an AFSL for engaging in financial services in Australia. As of the date of this annual
report, these businesses have only been accessed and/or utilized by a small number of users and have not generated material revenue. In
September 2020, we received the MSB License from the Financial Transactions and Reports Analysis Centre of Canada, which allows us to
engage in foreign exchange dealing, money transferring and dealing in virtual currencies in Canada. In December 2021 and March 2022, we
received registration approval from the AUSTRAC as a digital currency exchange and acquired a company with an AFSL for engaging in financial
services in Australia. In September and December 2021, we received the TCSP Licenses from the Companies Registry of Hong Kong, which allows
us to carry on a trust or company service business in Hong Kong. In January 2022, we have received registration approval as a Trust Company
by the Companies Registry of Hong Kong, which allows us to engage in trust related business in Hong Kong. In September 2022, we received
the Type 4 and 9 licenses from the Securities and Futures Commission in Hong Kong, which allows us to carry on advising on securities
and asset management service. In November 2022, we received registration as a Firm Dealing in Securities as Agent or Principal, Arranging
Deals, Managing Securities and Advising on Securities from Securities Commission of The Bahamas, which allows us to carry on securities
activities in and from the Commonwealth of The Bahamas. In January 2023, we received registration as a Digital Asset Business from Securities
Commission of The Bahamas, which allows us to carry on digital asset business activities in and from the Commonwealth of The Bahamas.
In March 2023, we received the MSO license from Customs and Excise Department in Hong Kong, which allows us to operate money changing
and remittance services. In April 2023, we received another registration approval from the AUSTRAC as a digital currency exchange and
registration approval as an independent remittance dealer on the AUSTRAC Remittance Sector Register. We are in the process of obtaining
relevant licenses and approvals for our subsidiaries in Singapore, Hong Kong, Australia, New Zealand and Malaysia to engage in additional
Fintech businesses and we are at an initial preparatory stage of the construction of regulatory compliant mining farms in North America.
There is no guarantee that we will receive any additional required approvals and licenses for our proposed businesses in such jurisdictions
in a timely manner or on commercially reasonable terms, or at all, or that we will commence the proposed businesses as planned, if at
all. Additionally, as we have limited experience in operating the proposed business, we will need to obtain additional management, regulatory
compliance technical expertise and devote substantial time and effort to these initiatives, which may not be as profitable as we expected
or at all. We will also need to obtain additional capital resources to pursue development of Fintech businesses, and we may not be successful
in raising that capital. In addition, we may face relevant restrictions from existing and future regulations in connection with our expansion
into this line of business. While we have been closely monitoring the development of the relevant regulations and have been in communication
with regulatory authorities, this business initiative may not be viable due to regulatory concerns. Our plan to develop, market or launch
any future cryptocurrency exchanges or to continue operating our existing cryptocurrency exchanges may suffer significant delays in our
efforts and may ultimately not be successful. It is possible that the launch of our future Fintech businesses may never occur, and even
if the proposed business is successfully developed, it is possible that it will not be accessed or utilized by a sufficient number of
users or will otherwise not achieve a viable business scale or market acceptance.
We depend
on major mobile operating systems and third-party platforms for the distribution of certain products and services. If Google Play, the
Apple App Store, or other platforms prevent customers from downloading our apps, our ability to grow may be adversely affected
We
rely upon third-party platforms for the distribution of certain products and services. Our Ebonex apps are provided to eligible users
as free applications through both the Apple App Store and the Google Play Store, and are also accessible via mobile and traditional websites.
The Google Play Store and Apple App Store are global application distribution platforms and the main distribution channels for our apps.
As such, the promotion, distribution, and operation of our apps are subject to the respective platforms' terms and policies for
application developers, which are very broad and subject to frequent changes and re-interpretation. Further, these distribution platforms
often contain restrictions related to cryptocurrency assets that are uncertain, broadly construed, and can limit the nature and scope
of services that can be offered. If our products are found to be in violation of any such terms and conditions, we may no longer be able
to offer our products through such third-party platforms. There can be no guarantee that third-party platforms will continue to support
our product offerings, or that customers will be able to continue to use our products. Any changes, bugs, technical or regulatory issues
with third-party platforms, our relationships with mobile manufacturers and carriers, or changes to their terms of service or policies
could degrade our products' functionalities, reduce or eliminate our ability to distribute our products, give preferential treatment
to competitive products, limit our ability to deliver high quality offerings, or impose fees or other charges, any of which could affect
our product usage and harm our business.
27
Our intellectual
property rights are valuable, and any inability to protect them could adversely impact our business, operating results, and financial
condition
Our
business depends in large part on our proprietary technology and our brand. We rely on, and expect to continue to rely on, a combination
of patent, trademark, trade dress, domain name, copyright, and trade secrets, as well as confidentiality and license agreements with
our employees, contractors, consultants, and third parties with whom we have relationships, to establish and protect our brand and other
intellectual property rights. However, our efforts to protect our intellectual property rights may not be sufficient or effective. Our
proprietary technology and trade secrets could be lost through misappropriation or breach of our confidentiality and license agreements,
and any of our intellectual property rights may be challenged, which could result in them being narrowed in scope or declared invalid
or unenforceable. There can be no assurance that our intellectual property rights will be sufficient to protect against others offering
products, services, or technologies that are substantially similar to ours and that compete with our business. As a result, we may be
forced into an adverse price competition that reduces our profit margin.
Our
ability to successfully defend intellectual property challenges from competitors and other parties may depend, in part, on our ability
to counter-assert our patents defensively. Effective protection of our intellectual property may be expensive and difficult to maintain,
both in terms of application and registration costs as well as the costs of defending and enforcing those rights. As we have grown, we
have sought to obtain and protect our intellectual property rights in an increasing number of countries, a process that can be expensive
and may not always be successful. In some instances, patent applications or patents may be abandoned or allowed to lapse, resulting in
partial or complete loss of patent rights in a relevant jurisdiction. Further, intellectual property protection may not be available
to us in every country in which our products and services are available. For example, some foreign countries have compulsory licensing
laws under which a patent owner must grant licenses to third parties. In addition, many countries limit the enforceability of patents
against certain third parties, including government agencies or government contractors. In these countries, patents may provide limited
or no benefit. We may also agree to license our patents to third parties as part of various patent pools and open patent projects. Those
licenses may diminish our ability, though, to counter-assert our patents against certain parties that may bring claims against us. Even
when we are able to obtain intellectual property rights protections, there is no guarantee that we will be able to effectively enforce
our rights. In this respect, we may incur expenses and efforts to monitor and enforce our intellectual property rights. Infringement
of our intellectual property rights and the resulting diversion of resources to protect such rights through litigation or other means
could also adversely affect our profitability.
If Bitcoin
is replaced by other cryptocurrencies as the mainstream cryptocurrency, we will lose the market for our current mining machines and our
results of operations will be materially and adversely affected
Although
we have begun to develop new chips for mining other cryptocurrencies, all of our revenue from sales of cryptocurrency mining machines
was generated from the sale of mining machines designed for Bitcoin mining in 2020, 2021 and 2022. We face the risk that other cryptocurrencies
could replace Bitcoin as the largest cryptocurrency, which may in turn negatively impact the value of Bitcoin and diminish interest in
mining Bitcoin. Acceptance of Bitcoin may decline due to various reasons such as the following:
●
potential changes in Bitcoin's
    algorithms or source code that may negatively impact user acceptance;
●
patches, upgrades, attacks
    or hacking of Bitcoin's infrastructure that may undermine user interest or confidence;
●
usage of Bitcoin for illicit
    or illegal activities by bad actors that may erode public perception of Bitcoin; or
●
hacking, fraud or other
    problems with Bitcoin exchanges, wallets or other related infrastructure, that may negatively impact user confidence.
28
If
fewer people accept Bitcoin currency or fewer merchants accept Bitcoin as a payment method, Bitcoin may decline in value. Although Bitcoin
is currently the largest cryptocurrency by market capitalization, a substantial amount of Bitcoin-related transactions may be speculation-related
and a technological breakthrough in the form of a preferred cryptocurrency is a continuous threat. Digital asset technology is rapidly
advancing and changing and new digital assets are created regularly. New digital assets competing with the digital assets we specialize
in (such as Bitcoin) may increase in popularity and in turn cause a decline in the value of Bitcoin, which may in turn lead to a decline
in the Bitcoin network and our ability to generate revenue from our current mining activities. This may include the development of so-called
central bank digital currencies (CBCDs). Many governments around the world, and central banks are reportedly considering or studying
the potential for CBCDs, including the Australian federal government and the Reserve Bank of Australia and the United States Federal
Reserve. Other cryptocurrencies may be designed with algorithms that are not compatible with the kind of computing done by ASIC chip
mining machines. If such a cryptocurrency were to become dominant, our existing technological know-how may not be applicable in creating
hardware for participants in that cryptocurrency network, and we may face greater competition from new players. In addition, since the
value of and support for Bitcoin depend entirely on the community using it, any disagreement between the users may result in the splitting
of the network to support other cryptocurrencies and the users may sell all their Bitcoin and switch to other cryptocurrencies. As a
result, our mining machines and our results of operations would be materially and adversely affected.
We rely on
a limited number of third parties to fabricate our ASIC chips, which are the core technology used in our mining machines
The
ASIC chip is the key component of a mining machine as it determines the efficiency of the device. Currently, only a small number of wafer
foundries in the world are capable of producing the highly sophisticated silicon wafers used for ASIC chips. Therefore, the ability to
source high-quality wafers is a major barrier to entry for new entrants and has provided us with a great competitive advantage in the
market.
In
2020, 2021 and 2022, all of our ASIC wafers were fabricated by Samsung. We principally purchased ASIC chips either directly from Samsung
or through intermediaries that purchased from Samsung. However, this arrangement does not guarantee that Samsung will reserve foundry
capacity for us, which we believe is in line with market arrangements with other wafer foundries.   As such, there are risks
that Samsung may be unable to accept our purchase orders or continue their supply of ASIC wafers to us. Such changes may result in delays
to our production, which could negatively affect our reputation and results of operations.
In
order to diversify our ASIC chips suppliers, we have established working relations with Taiwan Semiconductor Manufacturing Company, Limited,
or TSMC, since November 2017. However, we cannot guarantee that we will be able to continue to source ASIC wafers from Samsung or TSMC
on the same or similar terms or in a timely manner, or start to source ASIC wafers from other suppliers. In addition, replacing a supplier
may require that we divert attention and resources away from our business. We may also suffer lower gross profit margins if we fail to
pass on any additional costs to our customers. As a result, a change in our relationship with Samsung or TSMC could have a significant
negative impact on our business, financial condition and results of operation.
We depend on a limited number
of suppliers to allocate to us a portion of their manufacturing capacity sufficient to meet our needs, to produce products of acceptable
quality and at acceptable final test yields, and to deliver those products to us on a timely basis and at acceptable prices. These suppliers
may raise prices or may be unable to meet our required capacity for any reason, such as shortages or delays in the shipment of semiconductor
equipment or raw materials required to manufacture our ICs. In particular, we have experienced a global shortage in semiconductors from
2021 to the first half of 2022, which has and may continue to adversely impact the production activity and capacity of our third-party
foundry partners. If these third-party foundry partners fail to succeed in their technology migration or secure enough semiconductors,
they will not be able to deliver to us qualified ICs in a sufficient amount, which will significantly affect our technological advancement
and shipment of Bitcoin mining machines. This could in turn result in lost sales and have a material adverse effect on our relationships
with our customers and on our business and financial condition. In addition, our business relationships with the suppliers may deteriorate.
For example, in November 2019, we brought a legal action against a then-major supplier for breach of contract for delivering defective
products. Under such circumstances, we may not be able to obtain the required capacity and would have to seek alternative suppliers, which
may not be available on commercially reasonable terms, or at all. Moreover, it is possible that other customers of these suppliers that
are larger and/or better financed than we are, or that have long-term contracts with them, may receive preferential treatment in terms
of capacity allocation or pricing. In addition, if we do not accurately forecast our capacity needs, these suppliers may not have available
capacity to meet our immediate needs or we may be required to pay higher costs to fulfill those needs, either of which could materially
and adversely affect our business, financial condition and results of operations.
29
In
particular, the production of our ASICs may require advanced IC fabrication technologies. Foundries other than Samsung or TSMC, however,
might not have sufficient production capacity for such technologies, or at all, to meet our requirements. This may expose us to risks
associated with engaging new foundries. For example, using foundries with which we have not established relationships could expose us
to potentially unfavorable pricing, unsatisfactory quality or insufficient capacity allocation.
Other
risks associated with the concentration of third-party foundry suppliers include limited control over delivery schedules and quality
assurance, lack of capacity in periods of excess demand, unauthorized use of our intellectual property and limited ability to manage
inventory and parts. In particular, although we have entered into confidentiality agreements with our third-party foundry suppliers for
the protection of our intellectual property, it may not protect our intellectual property with the same degree of care as we use to protect
our intellectual property. If we fail to properly manage any of these risks, our business and results of operations may be materially
and adversely affected. Moreover, if Samsung or TSMC suffers any damage to its facilities, suspends manufacturing operations, loses benefits
under material agreements, experiences power outages or computer virus attacks, lacks sufficient capacity to manufacture our products,
encounters financial difficulties, is unable to secure necessary raw materials from its suppliers or suffers any other disruption or
reduction in efficiency, we may encounter supply delays or disruptions.
We rely on
a limited number of third parties for IC packaging and testing services
Fabrication
of IC chips requires specialized services to process the silicon wafers into IC chips by packaging them and to test their proper functioning.
We rely on a limited number of production partners for such packaging and testing services. We have worked closely with world-class outsourced
semiconductor assembly and test, or OSAT, companies on a limited number of specialized production partners exposes us to a number of
risks, including difficulties in finding alternate suppliers, capacity shortages or delays, lack of control or oversight in timing, quality
or costs, and misuse of our intellectual property. If any such problems arise with our OSAT partners, we may experience delays in our
production and delivery timeline, inadequate quality control of our products or excessive costs and expenses. As a result, our financial
condition, results of operation, reputation and business may be adversely affected.
Failure at
tape-out or failure to achieve the expected final test yields for our ASIC chips could negatively impact our results of operations
The
tape-out process is a critical milestone in our business. A successful tape-out means all the stages in the design and verification process
of our ASIC chips have been completed, and the chip design is ready to be sent for manufacturing. The tape-out process requires considerable
investment in time and resources and close cooperation with the wafer foundry, and repeated failures can significantly increase our costs,
lengthen our product development period and delay our product launch. If the tape-out or testing of a new ASIC chip design fails, either
as a result of design flaws by our research and development team or problems with production or the testing process by the wafer foundry,
we may incur considerable costs and expenses to fix or restart the design process. Such obstacles may decrease our profitability or delay
the launch of new products.
Once
tape-out is successful, the ASIC design is sent for manufacturing, and the final test yield is a measurement of the production success
rate. The final test yield is a function of both product design, which is developed by us, and process technology, which typically belongs
to a third-party foundry, such as Samsung and TSMC in our case. Low final test yields can result from a product design deficiency or
a process technology failure or a combination of both. As such, we may not be able to identify problems causing low final test yields
until our product designs go to the manufacturing stage, which may substantially increase our per unit costs and delay the launch of
new products.
30
For
example, if either Samsung or TSMC experiences manufacturing inefficiencies or encounters disruptions, errors or difficulties during
production, we may fail to achieve acceptable final test yields or experience product delivery delays. We cannot guarantee that Samsung
and TSMC will be able to develop, obtain or successfully implement process technologies needed to manufacture future generations of our
mining machines on a timely basis. Moreover, during the periods in which foundries are implementing new process technologies, their manufacturing
facilities may not be fully productive. A substantial delay in the technology transitions to smaller geometry process technologies could
have a material and adverse effect on us, particularly if our competitors transition to such technologies before us.
In
addition, resolution of yield problems requires cooperation among us, Samsung or TSMC, and packaging and testing partners. We cannot
assure you that the cooperation will be successful and that any yield problem can be fixed.
If any person,
institution or a pool of them acting in concert obtains control of more than 50% of the processing power active on the Bitcoin network,
such person, institution or a pool of them could prevent new transactions from gaining confirmations, halt payments between users, and
reverse previously completed transactions, which would erode user confidence in Bitcoin
If
the awards of Bitcoin for solving blocks and transaction fees for recording transactions are not sufficiently high to incentivize miners,
miners may cease expending processing power to solve blocks. Miners ceasing operations would reduce the collective processing power on
the Bitcoin network, which would adversely affect the confirmation process for transactions and make the Bitcoin network more vulnerable
to any person, institution or a pool of them which has obtained over 50% control over the computing power on the Bitcoin network. In
such event, such person, institution or a pool of them could prevent new transactions from gaining confirmation, halt payments between
users, and reverse previously completed transactions. Such changes or any reduction in confidence in the confirmation process or processing
power of the Bitcoin network may erode user confidence in Bitcoin, which would decrease the demand for our products.
The decentralized
nature of cryptocurrency may be subject to challenges, which could negatively affect our results of operations
A
key reason for Bitcoin and other cryptocurrencies to have attracted many new and committed users in a short period of time is its decentralized
nature, or the lack of control by a central authority. However, there are divergent views on the decentralized nature of cryptocurrencies.
For example, there are claims that most of the actual services and businesses built within the cryptocurrency ecosystem are in fact centralized
since they are run by specific people, in specific locations, with specific computer systems, and that they are susceptible to specific
regulations. Individuals, companies or groups, as well as cryptocurrency exchanges that control vast amounts of cryptocurrency can affect
cryptocurrency's market prices. Furthermore, mining equipment production and mining pool locations may become centralized. The
concerns or skepticism about the decentralized nature of Bitcoin may cause customers to lose confidence in the cryptocurrency industry's
prospects. This in turn could adversely affect the market demand for our mining machines, the operation of our cryptocurrency exchanges
and our business. Furthermore, the possibility that a person or a coordinated group of people may gain more than 50% control of the process
power active on Bitcoin and be able to manipulate transactions, despite the intended decentralized structure, may also erode confidence
in Bitcoin. Our business, prospects and results of operations therefore may adversely be affected by the divergent views on the decentralized
nature of Bitcoin.
31
Change of
Bitcoin algorithms and mining mechanisms may materially and adversely affect our business and results of operations
Our
ASIC chips are designed for proof-of-work, or POW, mechanism, which the Bitcoin network uses to validate Bitcoin transactions. Many within
the Bitcoin community believe that POW is a foundation within Bitcoin's code that would not be changed. However, there have been
debates on mechanism change to avoid the "de facto control" by a great majority of the network computing power. POW validation
consumes large amounts of computing power and electricity. Proof-of-stake validation is a more recent development, which involves the
validator losing part of its cryptocurrency holdings if it fails to correctly validate a block. While there are some drawbacks to proof-of-stake,
it requires far less energy than proof-of-work. Cryptocurrencies whose transactions are validated on a proof-of-stake basis do not require
miners. Future cryptocurrencies may utilize proof-of-stake rather than proof-of work, meaning that there will be less opportunity for
miners to earn rewards. With the possibility of a change in rule or protocol of the Bitcoin network, if our Bitcoin mining machines cannot
be modified to accommodate any such changes, our mining machines will not be able to meet customer demand, and the results of our operations
will be significantly affected. For more details, see "Item 3. Key Information—D. Risk Factors—Risks Relating to Our
Cryptocurrency, Blockchain and Mining Related Businesses—The administrators of the Bitcoin network's source code could propose
amendments to the Bitcoin network's protocols and software that, if accepted and authorized by the Bitcoin network's community,
could adversely affect our business, results of operations and financial condition" and "Item 3. Key Information—D.
Risk Factors—Risks Relating to Our Cryptocurrency, Blockchain and Mining Related Businesses—The acceptance of Bitcoin network
software patches or upgrades by a significant, but not overwhelming, percentage of the users and miners in the Bitcoin network could
result in a "fork" in the blockchain, resulting in the operation of two separate networks that cannot be merged. The existence
of forked blockchains could erode user confidence in Bitcoin and could adversely impact our business, results of operations and financial
condition."
We face risks associated with the expansion
of our blockchain products and Fintech business operations overseas and if we are unable to effectively manage such risks, our business
growth and profitability may be negatively affected
We intend to grow our blockchain products and Fintech businesses in
part by expanding our sales network and operations internationally. Currently, we mainly rely on our production partners in South Korea
and Taiwan, including Samsung and TSMC, for the fabrication, testing and packaging of our ASICs. Any significant deterioration in the
cross-strait relationship may have a negative impact on the ability of our production partners in Taiwan to fulfill their contractual
obligations and ship the ASICs to us, which could have a material and adverse effect on our business, financial condition and results
of operations. Our expansion plans also include possibly establishing an assembly facility and offices for sales, research and development
and other operations in the United States; and we are at an initial preparatory stage of establishing other cryptocurrency exchange platforms
in Hong Kong and overseas. Any significant deterioration in the relationship between China and any of these countries and region may have
a material and adverse effect on our proposed business operations in these jurisdictions. However, there are risks associated with such
global expansion plans, including:
●
high costs of investment
    to establish a presence in a new market and manage international operations;
●
competition in unfamiliar
    markets;
●
foreign currency exchange
    rate fluctuations;
●
regulatory differences
    and difficulties in ensuring compliance with multi-national legal requirements and multi-national operations;
●
changes in economic, legal,
    political or other local conditions in new markets;
●
our limited customer base
    and limited sales and relationships with international customers;
●
competitors in the overseas
    markets may be more dominant and have stronger ties with customers and greater financial and other resources;
32
●
challenges in managing
    our international sales channels effectively;
●
difficulties in and costs
    of exporting products overseas while complying with the different commercial, legal and regulatory requirements of the overseas markets
    in which we offer our products;
●
difficulty in ensuring
    that our customers comply with the sanctions imposed by the Office of Foreign Assets Control, or OFAC, on various foreign states,
    organizations and individuals;
●
inability to obtain, maintain
    or enforce intellectual property rights;
●
inability to effectively
    enforce contractual or legal rights or intellectual property rights in certain jurisdictions under which we operate; and
●
governmental policies favoring
    domestic companies in certain foreign markets or trade barriers including export requirements, tariffs, taxes and other restrictions
    and charges. In particular, a worldwide trend in favor of nationalism and protectionist trade policy and the ongoing trade dispute
    between the United States and China as well as other potential international trade disputes could cause turbulence in international
    markets. These government policies or trade barriers could increase the prices of our products and make us less competitive in such
    countries.
If
we are unable to effectively manage such risks, we may encounter difficulties in our overseas expansion plans and our business, reputation,
results of operations and financial condition may be impaired.
We plan to
increase our export of mining machines to the United States and the European Union in the future, which may be subject to high tariff
rates resulting from protectionism trade policies, and as a result, our future sales volumes, profitability and results of operations
will be materially and adversely affected
Historically,
only a small portion of our mining machines were exported to the United States. Going forward we plan to increase our export of mining
machines to the U.S. market. However, the United States and China have recently been involved in controversy over trade barriers in China
that have threatened a trade war between these two countries, and have implemented or proposed to implement tariffs on certain imported
products. Although the United States had not announced any trade policies that may directly impact the export of our mining machines
as of the date of this annual report, we cannot accurately predict whether any anti-dumping duties, tariffs or quota fees will be imposed
on our mining machines by the United States in the future. Any export requirements, tariffs, taxes and other restrictions and charges
imposed by the United States on our mining machines could significantly increase our customers' purchase costs of our mining machines
and make our mining machines less competitive in the U.S. market. As a result, our future sales volumes, profitability and results of
operations could be adversely affected.
In
addition, we also intend to increase our export of mining machines to the European Union in the future. However, the worldwide populism
trend that calls for protectionism trade policy and potential international trade disputes could cause turbulence in the international
markets. These government policies or trade barriers could increase the prices of our mining machines and cause us to lose our sales
and market share to our competitors in these countries.
33
Our blockchain
customers rely on a steady and inexpensive power supply for operating mining farms and running mining hardware. Failure to access a large
quantity of power at reasonable costs could significantly increase their operating expenses and adversely affect their demand for our
mining machines
Many
of our blockchain customers engage in the cryptocurrency mining business. Cryptocurrency mining consumes a significant amount of energy
power to process the computations and cool down the mining hardware. Therefore, a steady and inexpensive power supply is critical to
cryptocurrency mining. There can be no assurance that the operations of our blockchain customers will not be affected by power shortages
or an increase in energy prices in the future. In particular, the power supply could be disrupted by natural disasters, such as floods,
mudslides and earthquakes, or other similar events beyond the control of our customers. Further, certain of our customers may experience
power shortages due to seasonal variations in the supply of certain types of power such as hydroelectricity. Power shortages, power outages
or increased power prices could adversely affect mining farm businesses of our blockchain customers and reduce the expected market demand
for our mining machines significantly. Under such circumstances, our business, results of operations and financial condition could be
materially and adversely affected.
In
addition, as we intend to establish and operate mining farms to provide hosting services for third parties and engage in proprietary
Bitcoin and other cryptocurrency mining activities to mine cryptocurrencies for ourselves in the near future, any increase in energy
prices or a shortage in power supply in locations where our future mining farms are located may increase our potential mining costs and
reduce the expected economic returns from our proprietary mining operation significantly.
The average
selling prices of certain products may decrease from time to time due to technological advancement and we may not be able to pass onto
our suppliers such decreases, which may in turn adversely affect our profitability
The IC design industry is
characterized by rapid launches of new products, continuous technological advancements and changing market trends and customer preferences,
all of which translate to a shorter life cycle and a decrease in the average selling prices of products over time. Because we compete
in the environment of rapidly-evolving technology advancement and market trends and developments of the IC design industry, we cannot
assume that we will be able to pass on any decrease in average selling prices of our products to our suppliers. If the average selling
prices of our products unusually or significantly decrease and such decreases cannot be offset by a corresponding decrease in the prices
of the principal components of our products, our gross profit margins may be materially and adversely affected, which in turn, may adversely
affect our profitability.
We may not
be able to price our products at our desired margins as a result of any decrease in our bargaining power or changes in market conditions
We
set prices for our mining machines and telecommunication products based on a number of internal and external factors, such as the cost
of production, the technological contents of our products, market conditions, and competition we face. Our ability to set favorable prices
at our desired margins and to accurately estimate costs, among other factors, has a significant impact on our profitability. We cannot
assure you that we will be able to maintain our pricing or bargaining power or that our gross profit margin will not be driven down by
market conditions or other factors. If we see higher pricing pressure due to intensified competition from other manufacturers as our
competitors' products may be more technologically advanced or energy-efficient, decreases in prices to our customers in the end
market or any other reasons, or if we otherwise lose bargaining power due to weaker demand for our products, we may need to reduce the
prices and lower the margins of our products and we may even be unable to continue to market our products at all. Moreover, we may not
be able to accurately estimate our costs or pass on all or part of any increase in our costs of production, in particular the costs of
raw materials, components and parts, to our customers.
34
Shortages
in, or rises in the prices of, the components of our mining machines may adversely affect our business
Given
the long production period to manufacture, assemble, and deliver certain components and products, problems could arise in planning production
and managing inventory levels that could seriously interrupt our operations, including the possibility of defective parts, an increase
in component costs, delays in delivery schedules, and shortages of components. In addition to ASIC chips, the components we use for our
mining machines include printed circuit boards, or PCBs, other electronic components, fans, and aluminum casings. The production of our
mining machines also requires certain ancillary equipment and components such as controllers, power adaptors, and connectors. The production
of our current products depends on obtaining adequate supplies of these components on a timely basis and at competitive prices. We do
not typically maintain large inventory of the components, and rather purchase them on an "as-needed" basis from various third-party
component manufacturers that satisfy our quality standards and meet our production requirements. We may have to turn to less reputable
suppliers if we cannot source adequate components from our regular suppliers. Under such circumstances, the quality of the components
may suffer and could cause performance issues in our mining machines.
Shortages
of components could result in reduced production or delays in production, as well as an increase in production costs, which may negatively
affect our ability to fulfill orders or make timely shipments to blockchain customers, as well as our customer relationships and profitability.
Component shortages may also increase our costs of goods sold because we may be required to pay higher prices for components in short
supply, or redesign or reconfigure products to accommodate for the substitute components, without being able to pass such cost to our
blockchain customers. As a result, our business, results of operations and reputation could be materially and adversely affected by any
product defects.
Cryptocurrency
exchanges and wallets, and to a lesser extent, cryptocurrency blockchains themselves, may be susceptible to hacking and fraud risks,
which may adversely erode user confidence in cryptocurrencies, and adversely impact our brand and reputation and our business, operating
results, and financial condition
Cryptocurrency
transactions are entirely digital and, as with any virtual system, face risk from hackers, malware and operational glitches. For example,
hackers can target cryptocurrency exchanges, wallets, and custodians to gain unauthorized access to the private keys associated with
the wallet addresses where cryptocurrencies are stored. Cryptocurrency transactions and accounts are not insured by any type of government
program and cryptocurrency transactions generally are immutable by design. Certain features of cryptocurrency networks, such as decentralization,
open source protocols, and reliance on peer-to-peer connectivity, may increase the risk of fraud or cyber attack by potentially reducing
the likelihood of a coordinated response. Cryptocurrencies have been susceptible to hacking and several cryptocurrency exchanges and
miners have reported cryptocurrency losses, which highlights concern over the security of cryptocurrencies and in turn affect the demand
and the market price of cryptocurrencies. In addition, while cryptocurrencies use private key encryption to verify owners and register
transactions, scammers and other bad actors may attempt to sell fraudulent digital assets. The techniques used to obtain unauthorized,
improper, or illegal access to systems and information (including customers' 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. Additionally, certain threats are designed to remain dormant or undetectable until launched
against a target and we may not be able to implement adequate preventative or protective measures. These risks may adversely affect the
operation of the cryptocurrency network which would erode user confidence in digital assets, or in the use of technology to conduct financial
transactions, which could negatively impact us, including the market perception of the effectiveness of our security measures, the technology
infrastructure of our exchange platforms, and the demand for our mining machines.
35
In particular, our cryptocurrency
exchange business involves the collection, storage, processing, and transmission of confidential information, customer, employee, service
provider, and other personal data, as well as information required to access customer assets. We have built our reputation on the premise
that our platforms offer customers a secure way to purchase, store, and transact in digital assets. As a result, any actual or perceived
security breach of our exchange platforms or our third-party partners may:
●
harm our reputation and brand;
●
result in our systems or services being unavailable and interrupt our operations;
●
result in improper disclosure of data and violations of applicable privacy and data protection laws;
●
result in significant regulatory scrutiny, investigations, fines, penalties, and other legal, regulatory, and financial exposure;
●
cause us to incur significant remediation costs;
●
lead to theft or irretrievable loss of our or our customers' fiat currencies or digital assets;
●
reduce customer confidence in, or decreased use of, our products and services;
●
divert the attention of management from the operation of our business;
●
result in significant compensation or contractual penalties from us to our customers or third parties as a result of losses to them or claims by them; and
●
adversely affect our business and operating results.
Although we have developed
systems and processes designed to protect the data we manage, prevent data loss and other security breaches, effectively respond to known
and potential risks, and expect to continue to expend significant resources to bolster these protections, there can be no assurance that
these security measures will provide absolute security or prevent breaches or attacks. As of the date of this annual report, we have not
experienced breaches of our security measures, however, we may experience in the future, breaches of our security measures due to human
error, malfeasance, insider threats, system errors, vulnerabilities, or other irregularities. Certain types of cyberattacks could harm
us even if our systems are left undisturbed. Unauthorized parties may attempt to gain access to our systems and facilities, as well as
those of our customers, partners, and third-party service providers, through various means, including hacking, social engineering, phishing,
and attempting to fraudulently induce individuals (including employees, service providers, and customers) into disclosing usernames, passwords,
payment card information, digital wallet information or other sensitive information, which may in turn be used to access our information
technology systems and customers' digital assets. Threats can come from a variety of sources, including criminal hackers, hacktivists,
state-sponsored intrusions, industrial espionage, and insiders. Certain threat actors may be supported by significant financial and technological
resources, making them even more sophisticated and difficult to detect. We may also acquire other companies that expose us to unexpected
security risks or increase costs to improve the security posture of the acquired company. As a result, our costs and the resources we
devote to protecting against these advanced threats and their consequences may continue to increase over time.
From time to time, we may encounter technical
issues in connection with the integration of supported digital assets and changes and upgrades to their underlying networks, which could
adversely affect our business
A variety of front and back-end
technical and development work is required to implement our wallet, custody, trading, staking and other solutions for our customers, and
to integrate our supported digital assets with our existing technical infrastructure. For certain digital assets, a significant amount
of development work is required and there is no guarantee that we will be able to successfully integrate any existing or future digital
assets. In addition, such integration may introduce software errors or weaknesses into our platforms, including into our existing infrastructure.
Even if such integration is initially successful, any number of technical changes, software upgrades, soft or hard forks, cybersecurity
incidents, or other changes to the underlying blockchain network may occur from time to time, causing incompatibility, technical issues,
disruptions, or security weaknesses to our platforms. If we are unable to identify, troubleshoot and resolve any such issues successfully,
we may no longer be able to support such digital assets, our customers' assets may be frozen or lost, the security of our hot, warm,
or cold wallets may be compromised, and our platforms and technical infrastructure may be affected, all of which could adversely impact
our business.
36
Failure to comply with anti-corruption and
anti-money laundering laws, including the Foreign Corrupt Practices Act (the "FCPA") and similar laws associated with our
activities outside of the United States, could subject us to penalties and other adverse consequences
We operate an international
business and may have direct or indirect interactions with officials and employees of government agencies or state-owned or affiliated
entities. We are subject to the FCPA, and other applicable anti-corruption and anti-money laundering laws in certain countries in which
we conduct activities. The FCPA prohibits providing, offering, promising, or authorizing, directly or indirectly, anything of value to
government officials, political parties, or political candidates for the purpose of obtaining or retaining business or securing any improper
business advantage. In addition, U.S. public companies are required to maintain records that accurately and fairly represent their transactions
and have an adequate system of internal accounting controls.
In many foreign countries,
including countries in which we may conduct business, it may be a local custom that businesses engage in practices that are prohibited
by the FCPA, or other applicable laws and regulations. We face significant risks if we or any of our directors, officers, employees, contractors,
agents or other partners or representatives fail to comply with these laws and governmental authorities in the United States and elsewhere
could seek to impose substantial civil and/or criminal fines and penalties which could have a material adverse effect on our business,
reputation, operating results, prospects and financial condition.
Any violation of the FCPA,
other applicable anti-corruption laws, or anti-money laundering laws could result in whistleblower complaints, adverse media coverage,
investigations, loss of export privileges, severe criminal or civil sanctions and, in the case of the FCPA, suspension or debarment from
U.S. government contracts, any of which could have a materially adverse effect on our reputation, business, operating results, prospects
and financial condition. In addition, responding to any enforcement action or internal investigation related to alleged misconduct may
result in a significant diversion of management's attention and resources and significant defense costs and other professional fees.
There is a lack of liquid markets for cryptocurrencies,
and blockchain-based assets are susceptible to potential manipulation
Cryptocurrencies and other
digital assets that are represented and trade on a ledger-based platform may not necessarily benefit from viable trading markets. Stock
exchanges have listing requirements and vet issuers, requiring them to be subjected to rigorous listing standards and rules; and monitor
investors transacting on such platform for fraud and other improprieties. These conditions may not necessarily be replicated on a distributed
ledger platform, depending on the platform's controls and other policies. The more lax a distributed ledger platform is about vetting
issuers of cryptocurrency and other digital assets or users that transact on the platform, the higher the potential risk for fraud or
the manipulation of the ledger due to a control event. These factors may decrease liquidity or volume or may otherwise increase volatility
of investment securities or other assets trading on a ledger-based system, which may adversely affect us. Such circumstances could have
a material adverse effect on our ability to continue as a going concern or to pursue our business strategy at all, which could have a
material adverse effect on our business, prospects or operations, and potentially the value of any Bitcoin or other cryptocurrencies or
digital assets we acquire or hold for our own account, and so could harm investors.
Cryptocurrencies face significant scaling
obstacles that can lead to high fees or delayed transaction settlement times, and attempts to increase transaction processing capacity
may not be effective
Many cryptocurrency networks
face significant scaling challenges. As the Bitcoin network continues to develop and grow, certain technical issues might be uncovered,
and the troubleshooting and resolution of such issues requires the attention and efforts of Bitcoin's global development community.
A number of second layer technology solutions have been recently promoted to resolve this problem by, among other things, enabling faster
transactions: in August 2017, the Bitcoin network underwent a hard fork that resulted in the creation of a new digital asset network called
Bitcoin Cash. This hard fork was contentious, and as a result some users of the Bitcoin Cash network may harbor ill will toward the Bitcoin
network. These users may attempt to negatively impact the use or adoption of the Bitcoin network. Also in August 2017, the Bitcoin network
was upgraded with a technical feature known as "Segregated Witness" that, among other things, potentially doubles the transactions
per second that can be handled on-chain and enables so-called second layer solutions, such as the Lightning Network or payment channels,
that have the potential to substantially increase transaction throughput (i.e., millions of transactions per second). As of the date of
this annual report, digital wallets and intermediaries that support Segregated Witness or Lightning Network-like technologies do not yet
have material adoption. In 2021, the Bitcoin protocol implemented the Taproot upgrade to add enhanced support for complex transactions
on the network such as multi-signature transactions, which require two or more parties to execute a transaction on the Bitcoin network.
Prior to the upgrade, multi-signature transactions were historically slow, expensive, and easily identifiable. Taproot is intended to
reduce the amount of data written to a block and makes multi-signature transactions indistinguishable from regular transactions, adding
an enhanced layer of privacy. This upgrade may fail to work as expected, which could lead to a decline in support and price of Bitcoin.
Unfortunately, there is no assurance that the digital asset community will accept these solutions or that these solutions will work as
expected or effectively resolve these problems.
As the use of digital asset
networks increases without a corresponding increase in throughput of the networks, average fees and settlement times can increase significantly.
Bitcoin's network, for example, has been, at times, at capacity, which has led to very high transaction fees. Increased fees and
decreased settlement speeds could preclude certain use cases for Bitcoin (e.g., micropayments), and can reduce demand for and the market
price of Bitcoin, which could adversely affect the market demand for our mining machines. There is no guarantee that any of the mechanisms
already in place or being explored for increasing the scale of settlement of Bitcoin transactions will be effective, or how long they
will take to become effective, which could adversely affect the market demand for our mining machines.
37
The administrators of the Bitcoin network's
source code could propose amendments to the Bitcoin network's protocols and software that, if accepted and authorized by the Bitcoin
network's community, could adversely affect our business, results of operations and financial condition
The Bitcoin network is based
on a cryptographic, algorithmic protocol that governs the end-user-to-end-user interactions between computers connected to the Bitcoin
network. A loosely organized group can propose amendments to the Bitcoin network's source code through one or more software upgrades
that alter the protocols and software that govern the Bitcoin network and the properties of Bitcoin, including the irreversibility of
transactions and limitations on the mining of new Bitcoin. To the extent a significant majority of the users and miners on the Bitcoin
network accept and authorize such software upgrade(s), the Bitcoin network would be subject to new protocols and software that may render
our mining machines less desirable, which in turn may adversely affect our business, results of operations and financial condition. If
less than a significant majority of the users and miners on the Bitcoin network install any such software upgrade(s), the Bitcoin network
could fork.
The acceptance of Bitcoin network software
patches or upgrades by a significant, but not overwhelming, percentage of the users and miners in the Bitcoin network could result in
a "fork" in the blockchain, resulting in the operation of two separate networks that cannot be merged. The existence of forked
blockchains could erode user confidence in Bitcoin and could adversely impact our business, results of operations and financial condition
Bitcoin is based on open source
software and has no official developer or group of developers that formally controls the Bitcoin network. Any individual can download
the Bitcoin network software and make any desired modifications, which are proposed to users and miners on the Bitcoin network through
software downloads and upgrades. However, miners and users must consent to those software modifications by downloading the altered software
or upgrade implementing the changes; otherwise, the changes do not become part of the Bitcoin network. Since the Bitcoin network's
inception, changes to the Bitcoin network have been accepted by the vast majority of users and miners, ensuring that the Bitcoin network
remains a coherent economic system. However, a developer or group of developers could potentially propose a modification to the Bitcoin
network that is not accepted by a vast majority of miners and users, but that is nonetheless accepted by a substantial population of participants
in the Bitcoin network. In such a case, a "fork" in the blockchain could develop and two separate Bitcoin networks could result,
one running the pre-modification software program and the other running the modified version. An example is the introduction of Bitcoin
Cash in mid-2017. This hard fork was contentious, and as a result some users of the Bitcoin Cash network may harbor ill will toward the
Bitcoin Network. These users may attempt to negatively impact the use or adoption of the Bitcoin Network. This kind of hard fork split
in the Bitcoin network was contentious, and as a result may erode user confidence in the stability of the Bitcoin network, may cause some
Bitcoin Network users to negatively affect the use or adoption, and could negatively affect the demand for our mining machines.
Our Bitcoin mining machines use open source
software and hardware as their basic controller system, which may subject us to certain risks
We use open source software
and hardware in our Bitcoin mining machines. For example, our mining machine controller open source software needs to be installed on
open source, which serves as the basic controller system for our mining machines, and we expect to continue to use open source software
and hardware in the future. Open source software is generally freely accessible, usable and modifiable, and is made available to the general
public on an "as-is" basis under the terms of a non-negotiable license. As a result, we may from time to time face claims
from others claiming ownership of, or seeking to enforce the terms of, an open source license, including by demanding the release of the
open source software, derivative works or our proprietary source code that was developed using such software. These claims could also
result in litigation, requiring us to purchase a costly license or to devote additional research and development resources to change our
technologies, either of which would have a negative effect on our business and operating results. In addition, if the license terms for
the open source software we utilize change, we may be forced to re-engineer or discontinue our solutions or incur additional
costs.
Bitcoin mining activities are energy-intensive,
which may restrict the geographic locations of miners and have a negative environmental impact
Bitcoin mining activities
are inherently energy-intensive and electricity costs account for a significant portion of the overall mining costs. The availability
and cost of electricity will restrict the geographic locations of mining activities. Any shortage of electricity supply or increase in
electricity cost in a jurisdiction may negatively impact the viability and the expected economic return for Bitcoin mining activities
in that jurisdiction, which may in turn decrease the sales of our Bitcoin mining machines in that jurisdiction.
Further, our mining equipment
will only be valuable and so our business model can only be successful if the costs, including electrical power costs, associated with
Bitcoin mining are lower than the price of Bitcoin itself. As a result, mining operations can only be successful if miners can obtain
sufficient electrical power for their geographical sites on a cost-effective basis, and the establishment of new mining data centers and
demand for our mining equipment requires miners to find sites where that is the case. Even if our electrical power costs do not increase,
significant fluctuations in, and any prolonged periods of, low Bitcoin prices may also cause the electrical supply to no longer be cost-effective.
Because there has been limited precedent
set for financial accounting of Bitcoin and other Bitcoin assets, the determination that we have made for how to account for Bitcoin assets
transactions may be subject to change
Because there has been limited
precedent set for the financial accounting of cryptocurrencies and related revenue recognition and no official guidance has yet been provided
by the Financial Accounting Standards Board, the PCAOB or the SEC, it is unclear how companies may in the future be required to account
for Bitcoin transactions and assets and related revenue recognition. A change in regulatory or financial accounting standards could result
in the necessity to change our accounting methods and restate our financial statements. Such a restatement could negatively impact our
business, prospects, financial condition and results of operation. Such circumstances would also have a material adverse effect on our
ability to continue as a going concern or to pursue our business strategy at all, which would potentially have a material adverse effect
on the value of any cryptocurrencies we hold or expects to acquire for our own account and harm investors.
38
We have an evolving business model and strategy
Our business model has significantly
evolved since our incorporation and we expect it to continue to do so in the future. As blockchain and Fintech businesses become more
widely available, we expect their services and products to evolve. In order to stay current with our industry, our business model will
also need to evolve. As a result, from time to time, we may modify aspects of our business model relating to our strategy, including pursuing
business opportunities outside of the blockchain and Fintech industry, including the sustainable energy industry. We cannot offer any
assurance that these or any other modifications will be successful or will not result in harm to our business. These modifications may
increase the complexity of our business and place significant strain on our management, personnel, operations, systems, technical performance,
financial resources and internal financial control and reporting functions. We may not be able to manage growth effectively, which could
damage our reputation, limit our growth and adversely affect our operating results. Further, we cannot provide any assurance that we will
successfully identify all emerging trends and growth opportunities within the blockchain and Fintech industry or the industry sectors
into which we will venture and we may lose out on such opportunities. Such circumstances could have a material adverse effect on our business,
prospects, financial condition and operating results.
Significant disruptions of information technology
systems or security breaches could materially adversely affect our business
We are increasingly dependent
upon information technology systems, infrastructure, and data to operate our business. In the ordinary course of business, we collect,
store, and transmit large amounts of confidential information (including, among other things, trade secrets or other intellectual property,
proprietary business information and personal information). It is critical that we do so in a secure manner to maintain the confidentiality
and integrity of such confidential information. We also have outsourced elements of our operations to third parties, and as a result,
we manage a number of third-party vendors who may or could have access to our confidential information. Attacks on information technology
systems are increasing in their frequency, levels of persistence, sophistication, and intensity, and they are being conducted by increasingly
sophisticated and organized groups and individuals with a wide range of motives and expertise. The size and complexity of our information
technology systems, and those of third-party vendors with whom we contract, and the large amounts of confidential information stored on
those systems, make such systems vulnerable to service interruptions or to security breaches from inadvertent or intentional actions by
our employees, third-party vendors, and/or business partners, or from cyber-attacks by malicious third parties. Cyber-attacks could include
the deployment of harmful malware, ransomware, denial-of-service attacks, social engineering, and other means to affect service reliability
and threaten the confidentiality, integrity and availability of information.
Significant disruptions of
our information technology systems, or those of our third-party vendors, or security breaches could materially adversely affect our business
operations and/or result in the loss, misappropriation and/or unauthorized access, use or disclosure of, or the prevention of access to,
confidential information, including, among other things, trade secrets or other intellectual property, proprietary business information
and personal information, and could result in financial, legal, business and reputational harm to us. The Company continually assesses
these threats and makes investments to increase internal protection, detection, and response capabilities, as well as ensure the Company's
third-party providers have required capabilities and controls, to address this risk.
Any failure or perceived failure
by us or any third-party collaborators, service providers, contractors or consultants to comply with our privacy, confidentiality, data
security or similar obligations to third parties, or any data security incidents or other security breaches that result in the unauthorized
access, release or transfer of sensitive information, including personally identifiable information, may result in governmental investigations,
enforcement actions, regulatory fines, litigation or public statements against us, could cause third parties to lose trust in us or could
result in claims by third parties asserting that we have breached our privacy, confidentiality, data security or similar obligations,
any of which could have a material adverse effect on our reputation, business, financial condition or results of operations. Moreover,
data security incidents and other security breaches can be difficult to detect, and any delay in identifying them may lead to increased
harm. To date, the Company has not experienced any material impact to the business or operations resulting from information or cybersecurity
attacks; however, because of the frequently changing attack techniques, along with the increased volume and sophistication of the attacks,
there is the potential for the Company to be adversely impacted. While we have implemented data security measures intended to protect
our information technology systems and infrastructure, there can be no assurance that such measures will successfully prevent service
interruptions or data security incidents
.
Other Risks Relating to Our Business Operations
We face risks related to health epidemics,
such as the COVID-19 pandemic, which could disrupt our operations and adversely affect our business, financial condition and results of
operations
Our business could be materially
and adversely affected by health epidemics such as the COVID-19 pandemic originated in Wuhan city at the end of 2019 and other outbreaks
affecting the jurisdictions in which we operate. Health epidemics may cause market panics, which materially and negatively affected the
global financial markets. Such disruption and the potential slowdown of the world's economy in 2023 and beyond could have a material
adverse effect on our results of operations and financial condition. We and our customers experienced and may continue to experience significant
business disruptions and suspension of operations due to various government restrictions put in place to attempt to stop the spread of
the COVID-19 pandemic, especially the large-scale lock-downs implemented during fiscal year 2022, which have caused and may continue to
cause shortages in the supply of raw materials, reduction in our production capacity, increase in the likelihood of default from our customers
and product delivery delays. The pandemic has also led to great volatility in the Bitcoin price, which has adversely affected and may
continue to negatively affect the demand for our mining machines both in terms of the price and the quantity.
39
Our third-party manufacturers,
suppliers, sub-contractors and customers have been and will continue to be disrupted by worker absenteeism, quarantines, restrictions
on employees' ability to work, office and factory closures, disruptions to ports and other shipping infrastructure, border closures,
or other travel or health-related restrictions. Depending on the magnitude of such effects on our supply chain, shipments of parts from
our manufacturers and suppliers, have been and may continue to be delayed. Supply chain disruptions could therefore negatively impact
our operations.
The effectiveness of the COVID-19
vaccine and vaccination programs remains to be verified worldwide, including against variants of the virus. The sweeping nature of the
COVID-19 pandemic makes it extremely difficult to predict how the company's business and operations will be affected in the longer
run. So far, the likely overall economic impact of the pandemic is widely viewed as highly negative to the global economy.
High customer concentration exposes us to
all of the risks faced by our major customers and may subject us to significant fluctuations or declines in revenues
Our customers include both
enterprises and individuals. A limited number of our major customers, however, have contributed a significant portion of our revenues
in the past. Our revenue from the top ten largest customers accounted for approximately 91%, 81% and 88% of our total revenues in 2020,
2021 and 2022. Although we continually seek to diversify our customer base, we cannot assure you that the proportion of the revenue contribution
from these customers to our total revenues will decrease in the near future. We offer credit sales to our major, long-term customers.
Dependence on a limited number of major customers will expose us to the risks of substantial losses and may increase our account receivables
and extend its turn over days if any of them reduces or even ceases business collaborations with us. Specifically, any one of the following
events, among others, may cause material fluctuations or declines in our revenues and have a material and adverse effect on our business,
financial condition, results of operations and prospects:
●
an overall decline in the business of one or more of our significant customers;
●
the decision by one or more of our significant customers to switch to our competitors;
●
the reduction in the prices of our mining machines agreed by one or more of our significant customers; or
●
the failure or inability of any of our significant customers to make timely payment for our services.
If we fail to maintain relationships
with these major customers, and if we are unable to find replacement customers on commercially desirable terms or in a timely manner or
at all, our business, financial condition, results of operations and prospects may be materially and adversely affected.
We have been involved, and may continue
to be involved, in disputes, claims or proceedings arising from our operations or class actions from time to time, which could result
in significant liabilities and reputational harm and could materially and adversely affect our business, financial condition and results
of operations
We have been, and in the future
may continue to be, involved in disputes, claims or proceedings arising out of our operations. For example, we are currently involved
in several ongoing civil actions in relation to our sales of mining machines, among others, to a customer and our procurement of ASIC
wafers from a supplier.  See "Item 4. Information on the Company—B. Business Overview —Legal Proceedings."
In addition, we may have disagreements with regulatory bodies in the course of our operations, which may subject us to administrative
proceedings and unfavorable orders, directives or decrees that may result in financial losses. Ongoing disputes, claims or proceedings
may divert our management's attention and consume their time and our other resources.
In the past, shareholders
of public companies have often brought securities class action suits against an issuer following periods of instability in the market
price of an issuer's securities, or after the publication of third-party research reports. As of the date of this annual report,
we are not aware of any lawsuits threatened or filed against us based on any alleged violation of securities laws. We cannot assure you
that there would not be any future claims against us or that we would successfully defend against them. Any such suit, whether or not
successful, could harm our reputation, result in share price volatility and a loss of customers, and restrict our ability to raise capital
in the future. Even if claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary
to resolve them, could divert the resources of our management and require significant expenditures, which could prevent us from competing
effectively and could have an adverse effect on our business, operating results, and financial condition. 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. Furthermore, any disputes, claims or proceedings which are initially not of material importance may escalate
and become important to us, due to a variety of factors, such as the facts and circumstances of the cases, the likelihood of loss, the
monetary amount at stake and the parties involved. As of the date of this annual report, we are not able to quantify the likelihood or
amount of exposure from any of these potential actions.
Negative publicity arising
from disputes, claims or proceedings may damage our reputation and adversely affect the image of our brands and products. In addition,
if any verdict or award is rendered against us, we could be required to pay significant monetary damages, assume other liabilities and
even to suspend or terminate the related business ventures or projects. Consequently, our business, results of operations and financial
condition may be materially and adversely affected.
40
We are exposed to credit risks and concentration
of credit risks in relation to defaults from counterparties
There are credit risks associated with our business. In particular,
a drop in the Bitcoin price may also result in lower economic returns for mining activities of our blockchain customers and adversely
affect their businesses and financial conditions, which may further affect their credit profiles and their ability to settle our accounts
receivables. Although we generally require our blockchain customers to make full payment for our mining machines before delivery of products,
we provide credit sales to customers when the market is sluggish. As for our telecommunication product sales, we always use credit sales.
As of December 31, 2021 and 2022, our net accounts receivable US$9.9 million and US$3.3 million, respectively, and we recorded allowance
for doubtful accounts of US$4.6 million and US$3.5 million, as of the same dates.
In addition, we also face concentration of credit risks associated
with our business. Our exposure to credit risk is influenced mainly by the individual characteristics of each customer as well as the
industry or country in which the customers operate and is concentrated on a few customers. As of December 31, 2021 and 2022, 13% and 20%
of our total accounts receivables were due from one of our customers, respectively.
Although we 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 counterparties 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.
The businesses that we are pursuing through
certain of our subsidiaries' initiatives are novel and subject to technical, operational, financial, regulatory, legal, reputational
and marketing risks and we cannot assure you that such acquisitions or strategic alliances may be successfully implemented
We have and may continue to
acquire interests in various businesses, including financial technology companies, broker-dealers, and digital currency transfer and payment
businesses. We have limited experience with the operation of such businesses. In some countries the licensing requirements and regulations
expressly cover companies engaged in digital currency activities; in others it is not clear whether or how the existing laws and regulations
apply to digital currency activities. Licenses and registrations that we may be required to obtain may subject us to various anti-money
laundering, know-your-customer, record-keeping, reporting and capital and bonding requirements, limitations on the investment of customer
funds, and inspection by regulatory agencies. These are areas in which we do not have substantial experience and which are subject to
the risks of new and novel businesses, including technical, operational, financial, regulatory, legal and reputational risks, as well
as the risk that we may be unable to market, license or sell our technology successfully or profitably. The occurrence of any such risks,
any such penalties, or even allegations of criminal or civil misconduct, could have a material adverse effect on us and on our financial
results and business.
We may look for other potential
acquisitions or strategic alliances in the future to expand our business. However, we may not be able to find suitable acquisition candidates,
complete acquisitions on favorable terms, if at all, or integrate any acquired business, products or technologies into our operations.
If we do complete acquisitions, they may be viewed negatively by customers or investors and they may not enable us to strengthen our competitive
position or achieve our goals. In addition, any acquisitions that we make could lead to difficulties in integrating personnel, technologies
and operations from the acquired businesses and in retaining and motivating key personnel from these businesses. Moreover, acquisitions
may disrupt our ongoing operations, divert management from day-to-day responsibilities and increase our expenses. Future acquisitions
may reduce our cash available for operations and other uses, and could result in increases in amortization expenses related to identifiable
intangible assets acquired, potentially dilutive issuances of equity securities or the incurrence of debt. We cannot predict the number,
timing or size of future acquisitions, or the effect that any such acquisitions might have on our operating results.
Our prepayments to suppliers may subject
us to counterparty risk associated with such suppliers and negatively affect our liquidity
We are required to prepay some of our suppliers before the service
is provided to secure the supplier's production capacity. As of December 31, 2021 and 2022, the outstanding balance of prepayments
we made to our third-party foundry partners amounted to US$1.1 million and US$1.2 million, respectively. The amount of our prepayments
may significantly increase as we continue to pursue technological advancement. We are subject to counterparty risk exposure to our suppliers.
Any failure by our suppliers to perform their contract obligations on a timely manner and/or with our requested quality may result in
us not being able to fulfill customers' orders accordingly. In such event, we may not be able to regain the prepayment in a timely
manner or in full, even though our suppliers are obligated to return such prepayments under specified circumstances as previously agreed
upon. Furthermore, if the cash outflows for the prepayments significantly exceed the cash inflows during any period, our future liquidity
position will be adversely affected.
41
If we experience difficulty in collecting
our trade receivables, our liquidity, financial condition and results of operations would be negatively impacted.
We derive our revenues from the sale of products and are subject to
counterparty risks such as our customer's inability to pay. As of December 31, 2021 and 2022, our trade receivables amounted
to US$9.9 million and US$3.3 million, respectively. There can be no assurance that we will be able to collect our trade receivables on
a timely basis, and our trade receivable turnover days may increase, which in turn could materially and adversely affect our liquidity,
financial condition and results of operations.
If we fail to maintain appropriate inventory
levels in line with the approximate level of demand for our products, we could lose sales or face excessive inventory risks and holding
costs
To operate our business successfully
and meet our customers' demands and expectations, we must maintain a certain level of finished goods inventory to ensure immediate
delivery when required. We are also required to maintain an appropriate level of raw materials for our production. However, forecasts
are inherently uncertain. If our forecasted demand is lower than what eventually transpires, we may not be able to maintain an adequate
inventory level of our finished goods or produce our products in a timely manner, and we may lose sales and market share to our competitors.
On the other hand, we may also be exposed to increased inventory risks due to accumulated excess inventory of our products or raw materials,
parts and components for our products. Excess inventory levels may lead to increases in inventory holding costs, risks of inventory obsolescence
and provisions for write-downs, which will materially and adversely affect our business, financial condition and results of operations.
In order to maintain an appropriate
inventory level of finished goods and raw materials to meet market demand, we adjust our procurement amount and production schedule from
time to time based on customers' orders and anticipated demand. We also carry out an inventory review and an aging analysis on a
regular basis. We make provision for obsolete and slow-moving inventory of raw materials and finished goods that are no longer suitable
for use in production or sale. However, we cannot guarantee that these measures will always be effective and that we will be able to maintain
an appropriate inventory level. We may also be exposed to the risk of holding excessive inventory, including older generation mining machines
that are less marketable as well as older ASIC chips which may increase our inventory holding costs and subject us to the risk of inventory
obsolescence or write-offs, which could have a material adverse effect on our business, results of operations and financial condition.
For example, we recorded write-down for the potentially obsolete, slow-moving inventory and lower of cost or market adjustment of US$3.6
million, US$2.2 million and US$6.5 million in 2020, 2021 and 2022, respectively. If we cannot maintain an appropriate inventory level,
we may lose sales and market share to our competitors.
We require various approvals, licenses,
permits and certifications to operate our business. If we fail to obtain or renew any of these approvals, licenses, permits or certifications,
it could materially and adversely affect our business and results of operations
In accordance with the laws
and regulations in the jurisdictions in which we operate, we are required to maintain various approvals, licenses, permits and certifications
in order to operate our business or engage in the business we plan to enter into. Complying with such laws and regulations may require
substantial expenses, any non-compliance may expose us to liability. In the event of that government authorities consider us to be in
non-compliance, we may have to incur significant expenses and divert substantial management time to rectify the incidents. If we fail
to obtain all the necessary approvals, licenses, permits and certifications, we may be subject to fines, sanctions, revocation of licenses
or permits to operate our business, or the suspension of operations of the facilities that do not have the requisite approvals, licenses,
permits or certifications, which would adversely affect our reputation, business and results of operations. See "Regulation"
for further details on the requisite approvals license permits and certifications.
42
We have previously made sales to Iran, which
is subject to sanctions, and our interactions with a blockchain may expose us to SDN and other regulations administered by the United
States
Iran is subject to a comprehensive
sanctions program administered by the Office of Foreign Assets Control, or OFAC, and shipments of products subject to the Export Administration
Regulations promulgated by the Bureau of Industry and Security, or BIS, in the Commerce Department are also subject to restrictions. In
2016 and 2017, we engaged in transactions that included the sale and/or delivery of our products to Iran under circumstances that may
involve breaches of U.S. sanctions and export control laws. On August 2, 2018, we disclosed these transactions to both OFAC and BIS by
our submission of Voluntary Self Disclosures, or VSDs. On January 25, 2019, BIS closed the VSD with a Warning Letter and no penalty. On
March 4, 2019, OFAC closed the VSD with a Cautionary Letter and no penalty.
OFAC requires us to not conduct
business with persons named on its specially designated nationals ("SDN") list. However, because of the pseudonymous nature
of blockchain transactions we may inadvertently and without our knowledge engage in transactions with persons named on OFAC's SDN
list or from countries on OFAC's sanctioned countries' list. While we have implemented internal control measures to mitigate
our risk exposure to international sanctions, sanctions laws and regulations are constantly evolving, new persons and entities are regularly
added to the list of SDN list, and we may not be adequately capable of determining the ultimate identity of the individual with whom we
transact with respect to selling cryptocurrency assets. Further, new requirements or restrictions could come into effect which might increase
the scrutiny on our business or result in one or more of our business activities being deemed to have violated sanctions. To the extent
government enforcement authorities enforce these and other laws and regulations that are impacted by decentralized distributed ledger
technology, or if they were to determine that any of our future activities constitutes a violation of the sanctions they impose or provides
a basis for a sanctions designation of us, we may be subject to investigation, administrative or court proceedings, and civil or criminal
monetary fines and penalties, all of which could harm our reputation and affect the value of our ordinary shares.
We had historically experienced a decrease
in our telecommunications business and if we are unable to continue to operate our telecommunications business successfully, we may suspend
or cease our telecommunication business entirely
Revenues from our telecommunications
business were US$1.6 million, US$8.6 million and US$3.7 million, for the years ended December 31, 2020, 2021 and 2022, respectively. In
December 2020, we sold all our equity ownership in Hangzhou Yiquansheng Communication Technology Co., Ltd., which provided technology
services in the telecommunication sector and had incurred losses since its incorporation, to an affiliate controlled by Mr. Dong Hu, our
chairman of the board of directors and Chief Executive Officer. Our telecommunications business will likely continue to be driven by the
development of the communications industry in China, government policies, technological changes, user preference, and many other factors
beyond our control. There is no guarantee that we will be able to maintain the competitiveness of our products or continue to operate
our telecommunications business successfully as a key source of revenue. If we fail to grow our telecommunications business organically,
we may suspend or cease such business line entirely.
Any disruption in our business relationship
with our major telecommunications products customers as a result of market consolidation or otherwise will adversely affect our sales
and market share in the telecommunications market
The telecommunications industry
has experienced and may continue to experience significant consolidation. The merger and expansion of participants will enable them to
maximize their economies of scale to provide more competitive prices and invest a larger amount of resources into research and development.
Our telecommunication products are primarily sold to major telecommunications service providers and institutional customers in China.
Consolidation of our customers may mean that we could lose out in price and non-price competition and lead to a significant reduction
of market share. As a result, our business and results of operations in the telecommunications market could be materially and adversely
affected.
We typically engage third-party
agents to manage certain aspects of our business dealings with telecommunications products customers, and our business relationship with
them may be adversely affected by any actual or perceived misconduct of our agents, over whom we have limited control. For example, in
2018, a local court in China convicted an employee of a major telecommunications products customer for taking bribes from a group of business
partners, including our agents, and as a result, we have been blacklisted by such customer until the end of 2020. Although we are no longer
blacklisted by such customer due to lapse of time, any future disruption of our business relationship with major telecommunications products
customers could materially and adversely affect our business and results of operations.
43
The telecommunications industry is subject
to extensive and evolving laws and regulations
We may be directly or indirectly
affected by changes in government regulations relating to the telecommunications and broadcast industries in the PRC or the U.S. Failure
to comply with the relevant laws and regulations could subject us to severe penalties, which could have a significant impact on our cash
flow. Moreover, the change of laws and regulations may render our current products illegal and require us to invest additional resources
into the research and development of new products in compliance with the laws. As a result, our business and results of operations may
be adversely affected. For example, in January 2021 the New York Stock Exchange LLC, or NYSE announced to delist three Chinese telecommunication
companies based on guidance that the U.S. Department of Treasury's Office of Foreign Assets Control provided to the NYSE. We are
uncertain whether such actions will have further impact on our business or the Chinese telecommunication industry in general.
Our customers are also subject
to laws and regulations applicable to the telecommunications and broadcast industries in the PRC. As they change their products to adapt
to any change of telecommunications and broadcast laws, this may also require us to modify our products to fit their new products. Such
modified or newly adopted laws and regulations could, directly or indirectly, affect the pricing, distribution and required standards
of our telecommunications products and services and may have a material adverse impact on our business.
If we fail to maintain an effective quality
control system, our business could be materially and adversely affected
We place great emphasis on
product quality and adhere to stringent quality control measures and have obtained quality control certifications for our products. To
meet our customers' requirements and expectations for the quality and safety of our products, we have adopted a stringent quality
control system to ensure that every step of the production process is strictly monitored and managed. Failure to maintain an effective
quality control system or to obtain or renew our quality standards certifications may result in a decrease in demand for our products
or cancellation or loss of purchase orders from our customers. Moreover, our reputation could be impaired. As a result, our business and
results of operations could be materially and adversely affected.
The quality of our products and services
relies on third party suppliers and service providers we engage. If we fail to provide satisfactory services or maintain their service
levels, it could materially and adversely affect our business, reputation, financial condition and results of operations
We rely on third-party suppliers
and service providers to provide quality products and services to customers, and our brand and reputation may be harmed by actions taken
by them that are beyond our control. Despite the measures we have taken to ensure the quality of products and services provided by third-party
suppliers and service providers, to the extent that there are manufacturing defects beyond our control, or our third-party suppliers and
service providers are unable to maintain the efficiency of their production facilities, supply sufficient components or raw materials
in a timely manner, or provide satisfactory services to our customers, we may suffer reputational damage, and our brand image, business
and results of operations may be materially and adversely affected.
Our production facilities may be unable
to maintain efficiency, encounter problems in ramping up production or otherwise have difficulty meeting our production requirements
Our future growth will depend
upon our ability to maintain efficient operations at our existing production facilities and our ability to expand our production capacity
as needed. The average utilization rate of our surface mount technology (SMT) production lines was 40.1%, 34.7% and 26.5% for 2020, 2021
and 2022, respectively. The utilization rate of our production facilities depends primarily on the demand for our products and the availability
and maintenance of our equipment but may also be affected by other factors, such as the availability of employees, a stable supply of
electricity, seasonal factors and changes in environmental laws and regulations. In order to meet our customers' demands and advancements
in technology, we maintain and upgrade our equipment periodically. The COVID-19 pandemic in 2022 continued to negatively affect our production
facilities and the utilization rate of our production facilities in 2022. If the pandemic continues or we are unable to maintain our production
facilities' efficiency, we may be unable to fulfill our purchase orders in a timely manner, or at all. This would negatively impact
our reputation, business and results of operations.
As we continue to grow and
expand our business, we expect to acquire additional production lines and possibly a new production facility to increase our production
capacity. If we are unable to acquire the necessary equipment or production facility at an acceptable price, or at all, we may not be
successful in achieving our business expansion plans.
44
We rely on third-party logistics service
providers to deliver our products. Disruption in logistics may prevent us from meeting customer demand and our business, results of operations
and financial condition may suffer as a result
We engage third-party logistics
service providers to deliver the ICs from our production partners to our assembly plant and our products from our warehouses to our customers.
Disputes with or termination of our contractual relationships with one or more of our logistics service providers could result in delayed
delivery of products or increased costs. There can be no assurance that we can continue or extend relationships with our current logistics
service providers on terms acceptable to us, or that we will be able to establish relationships with new logistics service providers to
ensure accurate, timely and cost-efficient delivery services. If we are unable to maintain or develop good relationships with our preferred
logistics service providers, it may inhibit our ability to offer products in sufficient quantities, on a timely basis, or at prices acceptable
to our consumers. If there is any breakdown in our relationships with our preferred logistics service providers, we cannot assure you
that no interruptions in our product delivery would occur or that they would not materially and adversely affect our business, prospects
and results of operations.
As we do not have any direct
control over these logistics service providers, we cannot guarantee their quality of service. In addition, services provided by these
logistics service providers could be interrupted by unforeseen events beyond our control, such as poor handling provided by these logistics
service providers, natural disasters, pandemics, adverse weather conditions, riots and labor strikes. If there is any delay in delivery,
damage to products or any other issue, we may lose customers and sales and our brand image may be tarnished.
We face intense industry competition
As a blockchain and Fintech
technology company, we operate in a highly competitive environment. Our competitors include companies that may have a larger market share,
greater brand recognition, broader international customer base, greater financial resources or other competitive advantages. We anticipate
that competition will increase as blockchain and Fintech gain greater acceptance and more players join the market. Furthermore, we anticipate
encountering new competition as we expand our sales and operations to new locations geographically and into wider applications of cryptocurrency
mining and mining farm operations, blockchain and Fintech businesses. We also compete in the communication network devices industry in
China with respect to our telecommunications business. Some of our competitors in this industry include larger, more well-established
companies with greater economies of scale and more bargaining power with suppliers.
Strong competition in the
market may require us to lower our prices, increase our sales and marketing expenses or otherwise invest greater resources to maintain
or gain market share as needed to adequately compete. Such efforts may negatively impact our profitability. If we are unable to effectively
adapt to changes or developments in the competitive landscape, our business, financial conditions and results of operations may be adversely
affected.
Competition from
central bank digital currencies ("CBDCs") could adversely affect the value of Bitcoin and other digital assets
Central
banks in some countries have started to introduce digital forms of legal tender. For example, China's CBDC project was made available
to consumers in January 2022, and governments from Russia to the European Union have been discussing potential creation of new digital
currencies. A 2021 survey of central banks by the Bank for International Settlements found that 86% are actively researching the potential
for CBDCs, 60% were experimenting with the technology and 14% were deploying pilot projects. Whether or not they incorporate blockchain
or similar technology, CBDCs, as legal tender in the issuing jurisdiction, could have an advantage in competing with, or replace, Bitcoin
and other cryptocurrencies as a medium of exchange or store of value. As a result, the value of Bitcoin could decrease, which could have
a material adverse effect on our business, prospects, financial condition, and operating results.
We have and may increasingly become a target
for public scrutiny, including complaints to regulatory agencies, negative media coverage, and malicious allegations, all of which could
severely damage our reputation and materially and adversely affect our business and prospects
We have been and may continue
to be a target for public scrutiny, including complaints to regulatory agencies, negative media coverage, and malicious allegations, which
had adversely affected and may adversely affect our reputation. Certain features of cryptocurrency networks, such as decentralization,
independence from sovereignty and anonymity of transactions, create the possibility of heightened attention from the public, regulators
and the media. Heightened regulatory and public concerns over us and cryptocurrency-related issues may subject us to additional legal
and social responsibilities and increased scrutiny and negative publicity over these issues, due to our leading position in the industry.
From time to time, these allegations, regardless of their veracity, may result in consumer dissatisfaction, public protests or negative
publicity, which could result in government inquiry or substantial harm to our brand, reputation and operations.
45
Moreover, as our business
expands and grows, both organically and through acquisitions of and investments in other businesses, domestically and internationally,
we may be exposed to heightened public scrutiny in jurisdictions where we already operate as well as in new jurisdictions where we may
operate. U.S. public companies that have substantially all of their operations in China have been the subject of intense scrutiny, criticism
and negative publicity by investors, financial commentators and regulatory agencies, such as the SEC. Much of the scrutiny, criticism
and negative publicity has centered on financial and accounting irregularities and mistakes, a lack of effective internal controls over
financial accounting, inadequate corporate governance policies or a lack of adherence thereto and, in many cases, allegations of fraud.
As a result of the scrutiny, criticism and negative publicity, the publicly traded stock of many U.S. listed Chinese companies sharply
decreased in value and, in some cases, has become virtually worthless. Many of these companies are now subject to shareholder lawsuits
and SEC enforcement actions and are conducting internal and external investigations into the allegations. It is not clear what effect
this sector-wide scrutiny, criticism and negative publicity will have on us, our business and our stock price. There is no assurance that
we would not become a target for regulatory or public scrutiny in the future or that scrutiny and public exposure would not severely damage
our reputation as well as our business and prospects. If we become the subject of any unfavorable allegations, whether such allegations
are proven to be true or untrue, we will have to expend significant resources to investigate such allegations and/or defend our Company.
This situation will be costly and time consuming and distract our management from growing our business. If such allegations are not proven
to be groundless, we and our business operations will be severely affected and you could sustain a significant decline in the value of
our stock.
In addition, cryptocurrency
asset platforms are relatively new. Many of our cryptocurrency exchange competitors are unlicensed, unregulated, operate without supervision
by any governmental authorities, and do not provide the public with significant information regarding their ownership structure, management
team, corporate practices, cybersecurity, and regulatory compliance. Since the inception of the crypto economy, numerous cryptocurrency
assets platforms have also been sued, investigated, or shut down due to fraud, manipulative practices, business failure, security breaches
and government mandated regulation. In many of these instances, customers of these platforms were not compensated or made whole for their
losses. In addition, there have been reports that a significant amount of cryptocurrency asset trading volume on cryptocurrency asset
platforms is fabricated and false in nature, with a specific focus on unregulated platforms located outside the United States. Such reports
may indicate that the market for cryptocurrency asset platform activities is significantly smaller than otherwise understood.
For example, in the second
half of 2022 and beginning of 2023, each of Celsius Network, Voyager Digital Ltd., Three Arrows Capital and Genesis declared bankruptcy,
resulting in a loss of confidence in participants of the digital asset ecosystem and negative publicity surrounding digital assets more
broadly. In November 2022, FTX, the third largest digital asset exchange by volume at the time, halted customer withdrawals and shortly
thereafter, FTX and its subsidiaries filed for bankruptcy.
In response to these events,
the digital asset markets, including the market for Bitcoin specifically, have experienced extreme price volatility and several other
entities in the digital asset industry have been, and may continue to be, negatively affected, further undermining confidence in the digital
assets markets and in bitcoin. These events have also negatively impacted the liquidity of the digital assets markets as certain entities
affiliated with FTX engaged in significant trading activity. If the liquidity of the digital assets markets continues to be negatively
impacted by these events, digital asset prices (including the price of Bitcoin) may continue to experience significant volatility and
confidence in the digital asset markets may be further undermined. These events are continuing to develop and it is not possible to predict
at this time all of the risks that they may pose to us, our service providers or on the digital asset industry as a whole.
Negative perception, a lack
of stability and standardized regulation in the crypto economy, and the closure or temporary shutdown of cryptocurrency asset platforms,
and associated losses suffered by customers may reduce confidence in the crypto economy and result in greater volatility of the prices
of assets, including significant depreciation in value. Any of these events could harm an adverse impact on our business.
Product defects resulting in a large-scale
product recall or product liability claims against us could materially and adversely affect our business, results of operations and reputation
We manufacture products in
accordance with internationally accepted quality standards and specifications provided by our customers. However, we cannot assure you
that all products produced by us are free of defects. Consequently, any product defects identified by our customers or end users might
erode our reputation and negatively affect our customer relationships and future business. Product defects may also result in product
returns and large-scale product recalls or product liability claims against us for substantial damages. Such claims, irrespective of the
outcomes or the merits, would likely be time-consuming and costly to defend and could divert significant resources and management attention.
Furthermore, even if we are able to defend any such claim successfully, we cannot assure you that our customers will not lose confidence
in our products or that our future relationships with our customers will not be damaged. As a result, our business, results of operations,
reputation and brand image could be materially and adversely affected by any product defects.
46
Power shortages, labor disputes and other
factors may result in constraints on our production activities
Historically, we have not
experienced constraints on our production activities, including at our assembly plant, due to power shortages, labor disputes or other
factors. However, there can be no assurance that our operations will not be affected by power shortages, labor disputes or other factors
in the future, thereby causing material production disruptions and delays in our delivery schedule. In such event, our business, results
of operations and financial condition could be materially and adversely affected.
Cyber-security incidents, including data
security breaches or computer viruses, could harm our business by disrupting our delivery of services, damaging our reputation or exposing
us to liability
We receive, process, store
and transmit, often electronically, the data of our customers and others, much of which is confidential. Unauthorized access to our computer
systems or stored data could result in the theft, including cyber-theft, or improper disclosure of confidential information, and the deletion
or modification of records could cause interruptions in our operations. These cyber-security risks increase when we transmit information
from one location to another, including over the Internet or other electronic networks. Despite the security measures we have implemented,
our facilities, systems and procedures, and those of our third-party service providers, may be vulnerable to security breaches, acts of
vandalism, software viruses, misplaced or lost data, programming or human errors or other similar events which may disrupt our delivery
of services or expose the confidential information of our customers and others. Any security breach involving the misappropriation, loss
or other unauthorized disclosure or use of confidential information of our customers or others, whether by us or a third party, could
subject us to civil and criminal penalties, have a negative impact on our reputation, or expose us to liability to our customers, third
parties or government authorities. We are not aware of such breaches to date. Any of these developments could have a material adverse
effect on our business, financial condition and results of operations.
If we suffer failure or disruption in our
information systems, our ability to effectively manage our business operations could be adversely affected
We use information systems
to obtain, process, analyze and manage data crucial to our business such as our enterprise resource planning system. We use these systems
to, among other things, monitor the daily operations of our business, maintain operating and financial data, manage our distribution network
as well as manage our research and development activities, production operations and quality control systems. Any system damage or failure
that interrupts data input, retrieval or transmission or increases service time could disrupt our normal operations. In particular, our
operations could be disrupted if such damage or failure includes any security breach caused by hacking or cyber-security incidents, involves
efforts to gain unauthorized access to our information or systems, or causes intentional malfunctions, loss or corruption of data, software
or hardware, the intentional or inadvertent transmission of computer viruses and similar events or third-party actions. There can be no
assurance that we will be able to effectively handle a failure of our information systems, or that we will be able to restore our operational
capacity in a timely manner to avoid disruption to our business. The occurrence of any of these events could adversely affect our ability
to effectively manage our business operations and negatively impact our reputation.
We may be subject to liability in connection
with industrial accidents at our manufacturing facilities
Due to the nature of our operations,
we are subject to the risks of potential liability associated with industrial accidents at our production facilities. We cannot assure
you that industrial accidents, whether due to malfunction of equipment or other reasons, will not occur in the future at our production
facilities. Under such circumstances, we may be subject to employee claims for compensation or penalties imposed by relevant government
authorities and may suffer damage to our reputation. In addition, we may experience interruptions in our operations or may be required
to change the manner in which we operate, as a result of governmental investigations or the implementation of safety measures due to accidents.
Any of the foregoing events could materially and adversely affect our business, financial condition and results of operations.
We currently do not have insurance coverage
covering all risks related to our business and operations
We do not maintain insurance
policies covering all of our business risks, such as risks relating to properties, receivables, goods in transit and public liability.
There is no assurance that the insurance coverage we do have would be sufficient to cover our potential losses. See the section headed
"Item 4. Information on the Company—B. Business Overview——Insurance" for more information on the insurance
policies maintained by us. In the event there is any damage to these items, we would have to pay for the difference ourselves where our
cash flow and liquidity could be negatively affected.
47
If we fail to comply with labor, work safety
or environmental regulations, we could be exposed to penalties, fines, suspensions or action in other forms
Our operations are subject
to the labor, work safety and environmental protection laws and regulations promulgated by the PRC government. These laws and regulations
require us to pay social insurance, maintain safe working conditions and adopt effective measures to control and properly dispose of solid
waste and other environmental pollutants. We could be exposed to penalties, fines, suspensions or actions in other forms if we fail to
comply with these laws and regulations. The laws and regulations in the PRC may be amended from time to time and changes in those laws
and regulations may cause us to incur additional costs in order to comply with the more stringent rules. In the event that changes to
existing laws and regulations require us to incur additional compliance costs or require costly changes to our production process, our
costs could increase and we may suffer a decline in sales for certain products, as a result of which our business, financial conditions
and results of operations could be materially and adversely affected.
The determination of the fair value changes
of our financial assets measured at fair value through profit or loss requires the use of estimates that are based on unobservable inputs,
and therefore inherently involves a certain degree of uncertainty
We use significant unobservable
inputs, such as discount rate, expected rate of return, expected volatility and risk-free interest rate, in valuing our financial assets
measured at fair value through profit or loss including bank wealth management products. The fair value change of financial assets at
fair value through profit or loss may affect our financial position and results of operations. Accordingly, such determination requires
us to make significant estimates, which may be subject to material changes, and therefore inherently involves a certain degree of uncertainty.
Factors beyond our control such as general economic condition and changes in market interest rates may influence and cause adverse changes
to the estimates we use and thereby affect the fair value of our financial assets measured at fair value through profit or loss, which
in return may adversely affect our results of operation and financial condition.
The loss of any member of our senior management
team, or our failure to attract, train and retain qualified personnel, especially our design and technical personnel, could impair our
ability to grow our business and effectively execute our business strategy.
Since our inception, the growth
and expansion of our business operations have been dependent upon the business strategies and foresight of our senior management. Our
future success depends, in large part, on the continued contributions of our senior management team, specifically Mr. Dong Hu.
In addition, our future success
depends on our ability to retain, attract and incentivize qualified personnel, including our management, sales, marketing, finance and
especially research and development personnel. As the driver of our technological and product innovations, our research and development
personnel represent a very significant asset of ours. As the technology in the semiconductor and blockchain industries are advancing at
a quick pace, there is an increasing need for skilled engineers. Many companies across the world are struggling to find suitable candidates
for their research and development positions. The process of hiring employees with the combination of skills and characteristics required
to implement our strategy can be extremely competitive and time-consuming. We cannot assure you that we will be able to attract adequate
personnel as we continue to pursue our business strategies.
Moreover, we cannot assure
you that we will be able to retain key existing employees. The loss of any of our founder, senior management or research and
development team members could harm our ability to implement our business strategies and respond to the rapidly changing market conditions
in which we operate, or could result in other operating risks. The loss of one or more of our key employees, especially our key design
and technical personnel, or our inability to retain, attract and motivate qualified design and technical personnel, could have a
material adverse effect on our business, financial condition and results of operations.
Our corporate actions are significantly
influenced by our principal shareholders, including Dong Hu, our chairman of the board of director, chief executive officer and chief
financial officer, who have the ability to exert significant influence over important corporate matters that require approval of shareholders
while their interests may differ from those of the other shareholders. This may deprive you of the opportunity to receive a premium for
your Class A Ordinary Shares and materially reduce the value of your investment.
Our share capital is designated into Class A ordinary shares and
Class B ordinary shares, par value HK$0.03 per share ("Class B ordinary shares"). Each Class A ordinary share is
entitled to one vote and each Class B ordinary share is entitled to twenty (20) votes at general meetings of our shareholders. Dong
Hu, our chairman of the board of directors, chief executive officer and chief financial officer, beneficially owns 100% of our Class B
ordinary shares, representing approximately 86.8% of the aggregate voting power of our issued and outstanding share capital as of December 31,
2022. However, the interests of our chairman of the board of directors, chief executive officer and chief financial officer may differ
from the interests of other shareholders. This concentration of ownership and the protective provisions in our second amended and restated
articles of association (the "Articles") may discourage, delay or prevent a change in control of our company, which could
have the dual effect of depriving our shareholders of an opportunity to receive a premium for their shares as part of a sale of our company
and reducing the price of our Class A ordinary shares. We may not be able to enter into other transactions that could be beneficial to
us without the consent of our chairman of the board of directors, chief executive officer and chief financial officer. As a result of
the foregoing, the value of your investment could be materially reduced.
48
Any change or discontinuation of preferential
tax treatment we currently enjoy would increase our tax charge
Our PRC subsidiaries are subject to the PRC corporate income tax at
a standard rate of 25% on their taxable income, but in 2020, 2021 and 2022, preferential tax treatment was available to three (3) of our
PRC subsidiaries. Zhejiang Ebang obtained the "high-tech enterprise" tax status in November 2017, which reduced its statutory
income tax rate to 15% from November 2017 to November 2020. Zhejiang Ebang further re-applied and obtained the "high-tech enterprise"
tax status for three years from December 2020. Hangzhou Dewang Information Technology Co., Ltd., or Hangzhou Dewang, obtained the "high-tech
enterprise" tax status in November 2018, which reduced its statutory income tax rate to 15% from November 2018 to November 2021.
Hangzhou Dewang further re-applied and obtained the tax status "high-tech enterprise" tax for the three-year period start
from December 2021. In addition, Zhejiang Ebang Information Technology Co., Ltd., or Ebang IT, obtained the "high-tech enterprise"
tax status in December 2021, which reduced its statutory income tax rate to 15% from December 2021 to December 2023.
We cannot assure you that
the PRC policies on preferential tax treatments will not change or that the current preferential tax treatments we enjoy or will be entitled
to enjoy will not be canceled. Moreover, we cannot assure you that our PRC subsidiaries will be able to renew the same preferential tax
treatments upon expiration. If any such change, cancelation or discontinuation of preferential tax treatment occurs, the relevant PRC
subsidiaries will be subject to the PRC enterprise income tax, or EIT, at a rate of 25% on taxable income. As a result, the increase in
our tax charge could materially and adversely affect our results of operations.
The recent joint statement by the SEC and
the PCAOB, rule changes by Nasdaq, and the HFCAA and related regulations, all call for additional and more stringent criteria to be applied
to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected
by the PCAOB. These developments could add uncertainties to our continued listing or future offerings of our securities in the U.S.
On April 21, 2020, SEC Chairman
Jay Clayton and PCAOB Chairman William D. Duhnke III, along with other senior SEC staff, released a joint statement highlighting the risks
associated with investing in companies based in or have substantial operations in emerging markets including China. The joint statement
emphasized the risks associated with lack of access for the PCAOB to inspect auditors and audit work papers in China and higher risks
of fraud in emerging markets.
On May 18, 2020, Nasdaq filed
three proposals with the SEC to (i) apply a minimum offering size requirement for companies primarily operating in a "Restrictive
Market," (ii) adopt a new requirement relating to the qualification of management or the board of directors for Restrictive Market
companies, and (iii) apply additional and more stringent criteria to an applicant or listed company based on the qualifications of the
company's auditor. On October 4, 2021, the SEC approved Nasdaq's revised proposal for the rule changes.
On May 20, 2020, the U.S.
Senate passed the HFCAA requiring a foreign company to certify it is not owned or controlled by a foreign government if the PCAOB is unable
to audit specified reports because the company uses a foreign auditor not subject to PCAOB inspection. If the PCAOB is unable to inspect
the company's auditors for three consecutive years, the issuer's securities are prohibited to trade on a national exchange.
On December 2, 2020, the U.S. House of Representatives approved the HFCAA. On December 18, 2020, the HFCAA was signed into law.
On March 24, 2021, the SEC
adopted interim final rules relating to the implementation of certain disclosure and documentation requirements of the HFCAA.
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 board of directors of a company 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.
49
On December 2, 2021, the SEC
adopted amendments to finalize rules implementing the submission and disclosure requirements in the HFCAA.
On December 16, 2021, the
PCAOB issued a report on its determinations that it was unable to inspect or investigate completely PCAOB-registered public accounting
firms headquartered in the PRC and in Hong Kong because of positions taken by the PRC and Hong Kong authorities in those jurisdictions.
On August 26, 2022, the CSRC,
MOF, and the PCAOB signed the Protocol, governing inspections and investigations of audit firms based in China and Hong Kong, taking the
first step toward opening access for the PCAOB to inspect and investigate registered public accounting firms headquartered in the PRC
and Hong Kong. Pursuant to the fact sheet with respect to the Protocol disclosed by the SEC, the PCAOB shall have independent discretion
to select any issuer audits for inspection or investigation and has the unfettered ability to transfer information to the SEC.
On December 15, 2022, the
PCAOB determined that it was able to secure complete access to inspect and investigate registered public accounting firms headquartered
in mainland China and Hong Kong and vacated its previous determinations to the contrary. However, should PRC authorities obstruct or otherwise
fail to facilitate the PCAOB's access in the future, the PCAOB may consider the need to issue a new determination.
On June 22, 2021, the U.S.
Senate passed the Accelerating Holding Foreign Companies Accountable Act, and on December 29, 2022, the Consolidated Appropriations Act
2023 was signed into law, which contained, among other things, an identical provision to the Accelerating Holding Foreign Companies Accountable
Act, which reduces the number of consecutive non-inspection years required for triggering the prohibitions under the HFCAA from three
years to two.
Our financial statements contained in this annual report on Form 20-F
for the year ended December 31, 2022 have been audited by our U.S.-based auditor, MaloneBailey, LLP, an independent registered public
accounting firm that is headquartered in the United States with offices in Beijing and Shenzhen. MaloneBailey, LLP is not among the PCAOB-registered
public accounting firms headquartered in the PRC or Hong Kong that are subject to PCAOB's determination on December 16, 2021 of
having been unable to inspect or investigate completely. As of the date of this annual report, we have not been identified by the SEC
as a commission-identified issuer under the HFCAA. However, 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. Furthermore, the HFCAA and related laws, which now 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, may result in the
delisting of our Class A ordinary shares or the prohibition of trading in our securities in the future if the PCAOB is unable to inspect
our auditor at such future time. Delisting may cause a significant decrease in or a total loss of the value of our securities. Although
a shareholder's ownership of our Company may not decrease directly from delisting, the ownership may become worth much less, or,
in some cases, lose its entire value.
We incur significant costs and demands upon management and accounting and finance resources as a result of complying with the laws and
regulations affecting public companies; if we fail to maintain proper and effective internal controls, our ability to produce accurate
and timely financial statements and otherwise make timely and accurate public disclosure could be impaired, which could harm our operating
results, our ability to operate our business and our reputation.
As a public reporting company, we are required to, among other things,
maintain a system of effective internal control over financial reporting. Ensuring that we have adequate internal financial and accounting
controls and procedures in place so that we can produce accurate financial statements on a timely basis is a costly and time-consuming
effort that needs to be re-evaluated frequently. Substantial work will continue to be required to further implement, document, assess,
test and remediate our system of internal controls. As of December 31, 2022, our disclosure controls and procedures were not effective
and management determined that we did not maintain effective internal control over financial reporting due to a material weakness. Management
is undertaking actions to remediate the material weaknesses, but there is no assurance they will be remediated this year. See "Item
15. Control and Procedures—Internal Control Over Financial Reporting."
If our internal control over
financial reporting or our disclosure controls are not effective, we may be unable to issue our financial statements in a timely manner,
we may be unable to obtain the required audit or review of our financial statements by our independent registered public accounting firm
in a timely manner or we may be otherwise unable to comply with the periodic reporting requirements of the SEC, our ordinary shares listing
on Nasdaq could be suspended or terminated and our share price could materially suffer. In addition, we or members of our management could
be subject to investigation and sanction by the SEC and other regulatory authorities and to shareholder lawsuits, which could impose significant
additional costs on us and divert management attention.
Fluctuations in exchange rates could affect
our results of operations and reduce the value of your investment
We primarily operate in China.
Our reporting currency is denominated in U.S. dollars. We are exposed to currency risks primarily through sales and purchases which give
rise to receivables, payables and cash balances that are denominated in a currency other than the functional currency of the operations
to which the transaction relates. We are therefore subject to the risk of fluctuations in the exchange rate of U.S. dollars against Australian
dollars, Hong Kong dollars, Renminbi, South Korean won and Euros. The value of U.S. dollars against Australian dollars, Hong Kong
dollars, Renminbi, South Korean won and Euros fluctuates and is subject to changes resulting from the PRC government's policies
and depends to a large extent on domestic and international economic and political developments, as well as supply and demand in the local
market. With the development of the foreign exchange market and progress toward interest rate liberalization and Renminbi internationalization,
the PRC government may in the future announce further changes to the exchange rate system, and we cannot assure you that Renminbi will
not appreciate or depreciate significantly in value against Australian dollars, Hong Kong dollars, South Korean won, U.S dollars or Euros
in the future.
50
We incurred a foreign exchange gain of US$1.8 million in 2021, and
a foreign exchange loss of US$0.3 million and US$2.2 million in 2020 and 2022, respectively. We had currency translation gains of US$2.0
million and US$1.0 million in 2020 and 2021, respectively, recognized in other comprehensive gain, and currency transaction loss of US$5.3
million in 2022, which is recognized in other comprehensive loss. Such currency translation gains or losses resulted from exchange differences
on translation of financial statements of our entities using currencies other than U.S. dollars as their functional currencies, net of
nil tax.
In addition, should Renminbi
appreciate against other currencies, the value of the proceeds from any future financings, which are to be converted from U.S. dollars
or other currencies into Renminbi, would be reduced and might accordingly hinder our business development due to the reduced amount of
funds raised. On the other hand, in the event of devaluation of Renminbi, the dividend payments of our company, which are to be paid in
U.S. dollars after conversion of the distributable profit denominated in Renminbi, would be reduced. Hence, substantial fluctuation in
the currency exchange rate of Renminbi may have a material adverse effect on our business, results of operations and financial condition
and the value of your investment in our Class A ordinary shares.
Risks Relating to Our Securities
Because we do not expect to pay dividends
in the foreseeable future, you must rely on price appreciation of our Class A ordinary shares for return on your investment
We currently intend to retain
most, if not all, of our available funds and any future earnings to fund the development and growth of our business. As a result, we do
not expect to pay any cash dividends in the foreseeable future. Therefore, you should not rely on an investment in the Class A ordinary
shares as a source for any future dividend income.
Our board of directors has
complete discretion as to whether to distribute dividends. Even if our board of directors decides to declare and pay dividends, the timing,
amount and form of future dividends, if any, will depend on, among other things, our future results of operations and cash flow, our capital
requirements and surplus, the amount of distributions, if any, received by us from our subsidiary, our financial condition, contractual
restrictions and other factors deemed relevant by our board of directors. Accordingly, the return on your investment in our Class A ordinary
shares will likely depend entirely upon any future price appreciation of the Class A ordinary shares. There is no guarantee that the Class
A ordinary shares will appreciate in value or even maintain the price at which you purchased the Class A ordinary shares. You may not
realize a return on your investment in our Class A ordinary shares and you may even lose your entire investment in our Class A ordinary
shares.
There can be no assurance that we will not
be classified as a passive foreign investment company, or PFIC, for U.S. federal income tax purposes for any taxable year, which could
result in adverse U.S. federal income tax consequences to U.S. Holders of our Class A ordinary shares and related warrants
A non-U.S. corporation, such
as our company, will be classified as a "passive foreign investment company," or PFIC, for U.S. federal income tax purposes
for any taxable year if either (1) at least 75% of its gross income for such year consists of certain types of "passive"
income or the "income test"; or (2) at least 50% of the value of its assets (generally based on an average of the quarterly
values of the assets) during such year is attributable to assets that produce passive income or are held for the production of passive
income, or the "asset test." Based on the current and expected composition of our income and assets and value of our assets
and projections as to the value of our Class A ordinary shares, we do not presently expect to be a PFIC for the current taxable year.
However, no assurance can be given in this regard because the determination of whether we are or will become a PFIC for any taxable year
is a fact-intensive inquiry made on an annual basis that depends, in part, upon the composition of our income and assets, which may change
over time if we expand and diversify our product offerings. Fluctuations in the market price of our Class A ordinary shares may cause
us to be or become a PFIC for the current or subsequent taxable years because the value of our assets for the purpose of the asset test
may be determined by reference to the market price of our Class A ordinary shares (which has been and may continue to be volatile). The
composition of our income and assets may also be affected by how, and how quickly, we use our liquid assets and the cash.
If we were to be or become
a PFIC for any taxable year during which a U.S. Holder (as defined in "Item 10. Additional Information—E. Taxation—Material
U.S. Federal Income Tax Considerations") holds our Class A ordinary shares or warrants, certain adverse U.S. federal income tax
consequences could apply to such U.S. Holder. See "Item 10. Additional Information—E. Taxation—Material U.S. Federal
Income Tax Considerations—Passive Foreign Investment Company Rules."
51
Our Articles contain anti-takeover provisions
that could have a material adverse effect on the rights of holders of our Class A ordinary shares
Our Articles contain provisions
to limit the ability of others to acquire control of our company or cause us to engage in change-of-control transactions. These provisions
could have the effect of depriving our shareholders of an opportunity to sell their shares at a premium over prevailing market prices
by discouraging third parties from seeking to obtain control of our company in a tender offer or similar transaction. Our board of directors
has the authority, without further action by our shareholders, to issue preferred shares in one or more series and to fix their designations,
powers, preferences, privileges, and relative participating, optional or special rights and the qualifications, limitations or restrictions,
including dividend rights, conversion rights, voting rights, terms of redemption and liquidation preferences, any or all of which may
be greater than the rights associated with our ordinary shares. Preferred shares could be issued quickly with terms calculated to delay
or prevent a change in control of our company or make removal of management more difficult. If our board of directors decides to issue
preferred shares, the price of our Class A ordinary shares may fall and the voting and other rights of the holders of our Class A ordinary
shares may be materially and adversely affected.
You may face difficulties in protecting
your interests, and your ability to protect your rights through U.S. courts may be limited, because we are incorporated under Cayman Islands
law and conduct our operations primarily in emerging markets
We are an exempted company
incorporated under the laws of the Cayman Islands. Our corporate affairs are governed by our Articles, the Companies Act (Revised) of
the Cayman Islands and the common law of the Cayman Islands. The rights of shareholders to take action against the directors, actions
by minority shareholders and the fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent governed
by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent
in the Cayman Islands as well as from the common law of England, the decisions of whose courts are of persuasive authority, but are not
binding, on a court in the Cayman Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under Cayman
Islands law are not as clearly established as they would be under statutes or judicial precedent in some jurisdictions in the United States.
In particular, the Cayman Islands have a less developed body of securities laws than the United States. Some U.S. states, such as Delaware,
have more fully developed and judicially interpreted bodies of corporate law than the Cayman Islands. In addition, Cayman Islands companies
may not have standing to initiate a shareholder derivative action in a federal court of the United States.
Shareholders of Cayman Islands
exempted companies like us have no general rights under Cayman Islands law to inspect corporate records or to obtain copies of lists of
shareholders of these companies. Our directors have discretion under our Articles to determine whether or not, and under what conditions,
our corporate records may be inspected by our shareholders, but are not obliged to make them available to our shareholders. This may make
it more difficult for you to obtain the information needed to establish any facts necessary for a shareholder motion or to solicit proxies
from other shareholders in connection with a proxy contest.
Certain corporate governance
practices in the Cayman Islands, which is our home country, differ significantly from requirements for companies incorporated in other
jurisdictions such as the United States. If we choose to follow home country practice in the future, our shareholders may be afforded
less protection than they otherwise would under rules and regulations applicable to U.S. domestic issuers.
In addition, we conduct substantially
all of our business operations in emerging markets, including China, and substantially all of our directors and senior management are
based in China. The SEC, U.S. Department of Justice, or the DOJ, and other authorities often have substantial difficulties in bringing
and enforcing actions against non-U.S. companies and non-U.S. persons, including company directors and officers, in certain emerging markets,
including China. Additionally, our public shareholders may have limited rights and few practical remedies in emerging markets where we
operate, as shareholder claims that are common in the United States, including class action securities law and fraud claims, generally
are difficult or impossible to pursue as a matter of law or practicality in many emerging markets, including China. For example, in China,
there are significant legal and other obstacles for the SEC, the DOJ and other U.S. authorities to obtaining information needed for shareholder
investigations or litigation. Although the competent authorities in China may establish a regulatory cooperation mechanism with the securities
regulatory authorities of another country or region to implement cross-border supervision and administration, the regulatory cooperation
with the securities regulatory authorities in the United States has not been efficient in the absence of a mutual and practical cooperation
mechanism. According to Article 177 of the PRC Securities Law which became effective in March 2020, no foreign securities regulator is
allowed to directly conduct investigation or evidence collection activities within the territory of the PRC. Accordingly, without the
consent of the competent PRC securities regulators and relevant authorities, no organization or individual may provide the documents and
materials relating to securities business activities to foreign securities regulators.
As a result of all of the
above, our public shareholders may have more difficulty in protecting their interests in the face of actions taken by management, members
of the board of directors or controlling shareholders than they would as public shareholders of a company incorporated in the United States.
52
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 Nasdaq listing standards; these practices may afford less protection to shareholders than they would enjoy if we complied fully with
the relevant listing standards
As a Cayman Islands company
listed on the Nasdaq Global Select Market, we are subject to the Nasdaq Stock Market listing standards ("Nasdaq Rules"). 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 Rules. We currently follow
home country practice in lieu of the requirements under the Nasdaq Rules with respect to certain corporate governance standards. For example,
based on home country practice, we are not required to seek shareholder approval for issuance of 20% or more of our outstanding ordinary
shares or voting power in a private offering (as defined by Nasdaq Rules) and we are not required to host an annual general meeting of
shareholders each year. Accordingly, our shareholders may not be provided with the benefits of certain corporate governance requirements
of the Nasdaq Rules.
Cayman Islands economic substance requirements
may have an effect on our business and operations
The Cayman Islands, together
with several other non-European Union jurisdictions, have introduced legislation aimed at addressing concerns raised by the Council of
the European Union as to offshore structures engaged in certain activities which attract profits without real economic activity. With
effect from January 1, 2019, the International Tax Co-operation (Economic Substance) Act (As Revised) (the "
Substance Act
")
came into force in the Cayman Islands introducing certain economic substance requirements for in-scope Cayman Islands entities which are
engaged in certain "relevant activities," which in the case of exempted companies incorporated before January 1, 2019, will
apply in respect of financial years commencing July 1, 2019, onwards. As our company, Ebang International Holdings Inc., is a Cayman Islands
company, compliance obligations include filing annual notifications, which need to state whether our company is carrying out any relevant
activities and if so, whether our company has satisfied economic substance tests to the extent required under the Substance Act. As it
is a new regime, it is anticipated that the Substance Act will evolve and be subject to further clarification and amendments. We may need
to allocate additional resources to keep updated with these developments, and may have to make changes to our operations in order to comply
with all requirements under the Substance Act. Failure to satisfy these requirements may subject us to penalties under the Substance Act.
Our dual-class voting structure will limit
your ability to influence corporate matters and could discourage others from pursuing any change of control transactions that holders
of our Class A ordinary shares may view as beneficial
We have a dual-class share
structure such that our ordinary shares consist of Class A ordinary shares and Class B ordinary shares. Holders of Class A ordinary shares
are entitled to one vote per share, while the sole holder of Class B ordinary shares is entitled to 20 votes per share. Each
Class B ordinary share is convertible into one Class A ordinary share at any time by the holder thereof, while Class A ordinary shares
are not convertible into Class B ordinary shares under any circumstances. Upon any sale, transfer, assignment or disposition of any Class
B ordinary shares by a holder thereof to any non-affiliate of such holder, each of such Class B ordinary shares will be automatically
and immediately converted into one Class A ordinary share.
Mr. Dong Hu, our founder,
chairman of the board of directors, chief executive officer and chief financial officer, beneficially owns all of our issued Class B ordinary
shares. These Class B ordinary shares constituted approximately 23.8% of our total issued and outstanding share capital and 86.2%
of the aggregate voting power of our total issued and outstanding share capital as of April 27, 2023. As a result of the dual-class share
structure and the concentration of ownership, Mr. Dong Hu has a considerable influence over matters such as decisions regarding mergers
and consolidations, election of directors and other significant corporate actions. He may take actions that are not in the best interest
of us or our other shareholders. This concentration of ownership may discourage, delay or prevent a change in control of our company,
which could have the effect of depriving our other shareholders of the opportunity to receive a premium for their shares as part of a
sale of our company and may reduce the price of our Class A ordinary shares. This concentrated control will limit your ability to influence
corporate matters and could discourage others from pursuing any potential merger, takeover or other change of control transactions that
holders of Class A ordinary shares may view as beneficial.
In addition, certain shareholder
advisory firms have announced changes to their eligibility criteria for inclusion of shares of public companies on certain indices, including
the S&P 500, to exclude companies with multiple classes of shares and companies whose public shareholders hold no more than 5% of
total voting power from being added to such indices. Several shareholder advisory firms have also announced their opposition to the use
of multiple class structures. As a result, the dual-class structure of our ordinary shares may prevent the inclusion of our Class A ordinary
shares in such indices and may cause shareholder advisory firms to publish negative commentary about our corporate governance practices
or otherwise seek to cause us to change our capital structure. Any such exclusion from indices could result in a less active trading market
for our Class A ordinary shares. Any actions or publications by shareholder advisory firms critical of our corporate governance practices
or capital structure could also adversely affect the value of our Class A ordinary shares.
53
We are a "controlled company"
within the meaning of the Nasdaq Rules, and, as a result, can rely on exemptions from certain corporate governance requirements that provide
protection to shareholders of other companies
We are a "controlled
company" as defined under the Nasdaq Rules as Mr. Dong Hu, our founder, chairman of the board of directors, chief executive officer
and chief financial officer, owns more than 50% of our total voting power. For so long as we remain a controlled company under that definition,
we are permitted to elect to rely, and may rely, on certain exemptions from corporate governance rules. As a result, you may not have
the same protection afforded to shareholders of companies that are subject to these corporate governance requirements.
Certain judgments obtained against us by
our shareholders may not be enforceable
We are a Cayman Islands company
and the majority of our assets are located outside of the United States. The most significant portion of our operations is conducted in
China. In addition, a majority of our current directors and officers are nationals and residents of countries other than the United States.
Substantially all of the assets of these persons may be located outside the United States. As a result, it may be difficult or impossible
for you to bring an action against us or against these individuals in the United States in the event that you believe that your rights
have been infringed under the U.S. federal securities laws or otherwise. Even if you are successful in bringing an action of this kind,
the laws of the Cayman Islands and of China may render you unable to enforce a judgment against our assets or the assets of our directors
and officers.
We are an emerging growth company within
the meaning of the Jumpstart Our Business Startups Act (the "JOBS Act") and may take advantage of certain reduced reporting
requirements
We are an "emerging
growth company," as defined in the JOBS Act, and we may take advantage of certain exemptions from requirements applicable to other
public companies that are not emerging growth companies including, most significantly, not being required to comply with the auditor attestation
requirements of Section 404 for so long as we are an emerging growth company until the fifth anniversary from the date of our initial
listing.
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. However, we have elected to "opt
out" of this provision and, as a result, we will comply with new or revised accounting standards as required when they are adopted
for public companies. This decision to opt out of the extended transition period under the JOBS Act is irrevocable.
We are a foreign private issuer within the
meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions applicable to United States domestic public
companies
Because we are a foreign private
issuer under the Exchange Act, we are exempt from certain provisions of the securities rules and regulations in the United States that
are applicable to U.S. domestic issuers, including:
●
the rules under the Exchange Act requiring the filing of quarterly reports on Form 10-Q or current reports on Form 8-K with the SEC;
●
the sections of the Exchange Act regulating the solicitation of proxies, consents, or authorizations in respect of a security registered under the Exchange Act;
●
the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and
●
the selective disclosure rules by issuers of material nonpublic information under Regulation FD.
We have and plan to continue
to file an annual report on Form 20-F within four months of the end of each fiscal year. In addition, we publish our results on a
semi-annual basis through press releases, distributed pursuant to the rules and regulations of the Nasdaq Global Select Market. Press
releases relating to financial results and material events will also be furnished to the SEC on Form 6-K. However, the information
we are required to file with or furnish to the SEC will be less extensive and less timely than that required to be filed with the
SEC by U.S. domestic issuers. As a result, you may not be afforded the same protections or information that would be made available to
you were you investing in a U.S. domestic issuer.
54
Certain data and information in this annual
report were obtained from third-party sources and were not independently verified by us
This annual report contains
certain data and information that have been derived from third-party reports, either commissioned by us or publicly accessible, and other
publicly available sources. Statistical data in these sources of information also include projections based on a number of assumptions.
The countries where we operate property markets may not grow at the rate projected by such statistical data, or at all. The failure of
our industry to grow at the projected rate may have a material adverse effect on our business. In addition, the complex and changing nature
of the broad macroeconomic factors discussed in this annual report may result in significant uncertainties for any projections or estimates
relating to the growth prospects or future condition of our market. Furthermore, if any one or more of the assumptions underlying the
market data is later found to be incorrect, actual results may differ from the projections based on these assumptions.
We have not independently
verified the data and information contained in such third-party publications and reports. Data and information contained in such third-party
publications and reports may be collected using third-party methodologies, which may differ from the data collection methods used by us.
In addition, these industry publications and reports generally indicate that the information contained therein was believed to be reliable,
but do not guarantee the accuracy and completeness of such information. You should therefore not place undue reliance on such information.
General Risk Factors
We have in the past incurred and continue
to incur losses and negative cash flows from operating activities, and we may not achieve or sustain profitability
We incurred a loss from operations
of US$26.6 million and US$48.0 million in 2020 and 2022, respectively, while we generated an income from operations of US$2.0 million
in 2021. We incurred a gross loss of US$2.9 million in 2020, and generated gross profit of US$29.2 million and US$15.4 million in 2021
and 2022, respectively. We had negative cash flows from operating activities of US$15.8 million and US$14.1 million for 2020 and 2021,
respectively and positive cash flows from operating activities of US$2.1 million for 2022. In addition, we have received significant non-recurring
tax rebates from local governments in the past, but we cannot assure you that we will continue to receive significant tax rebates or other
discretionary government grants in the future. Even if we are eligible for any additional tax rebates or other government grants, we cannot
assure you of the timing and the amount of any such rebates or other grants. To the extent that we do not receive any additional
tax rebates or other government grants, our financial condition could be materially and adversely affected. We cannot assure you that
we will be able to generate net profit or positive cash flow from operating activities in the future. Our ability to achieve profitability
will depend in large part on our ability to control expenses and manage our growth effectively, to achieve a more stable performance given
the significant fluctuation and volatility of the Bitcoin price and Bitcoin mining machine business, and to maintain our competitive advantage
in the Bitcoin markets. We expect to continue to make investments in the development and expansion of our business, which will place significant
demands on our management and our operational and financial resources. Continuous expansion may increase the complexity of our business,
and we may encounter various difficulties. We may fail to develop and improve our operational, financial and management controls, enhance
our financial reporting systems and procedures, recruit, train and retain highly skilled personnel, or maintain customer satisfaction
to effectively support and manage our growth. If we invest substantial time and resources to expand our operations but fail to manage
the growth of our business and capitalize on our growth opportunities effectively, we may not be able to achieve profitability, and our
business, results of operations and financial condition would be materially and adversely affected.
Our limited operating history and our volatile
historical results of operations could make it difficult for us to forecast our business and assess the seasonality and volatility in
our business
We began producing and selling
our own brand mining machines in December 2016. We generated US$19.0 million, US$51.5 million and US$32.3 million, in revenue in
2020, 2021 and 2022, respectively. As we have suffered from the significant drop in the average Bitcoin price historically, we cannot
assure you that we will be able to gain revenue growth or that we will not experience another significant decline.
As the market for Bitcoin
mining machines is relatively nascent and still rapidly evolving, we cannot forecast longer-term demand or order patterns for our products.
Because of our limited operating history and historical data, as well as the limited visibility into future demand trends for our products,
we may not be able to accurately forecast our future total revenue and budget our operating expenses accordingly. As most of our expenses
are fixed in the short-term or incurred in advance of anticipated total revenue, we may not be able to adjust our expenses in a timely
manner in order to offset any shortfall in revenue.
Our business is subject to
the varying order patterns of the Bitcoin mining machine market. In addition, many of the regions in which our products are purchased
have varying holiday seasons that differ from traditional patterns observed by other semiconductor suppliers and these seasonal buying
patterns can impact our sales. We have experienced fluctuations in orders during our limited operating history, and we expect such volatility
to occur in the future. Our volatile historical results of operations could make it difficult to assess the impact of seasonal factors
on our business. If we or any of our third-party manufacturing service providers are unable to increase production of new or existing
products to meet any increases in demand due to seasonality or other factors, our total revenue would be adversely affected and our reputation
with our customers may be damaged. Conversely, if we overestimate customer demand, we may reduce our orders or delay shipments of our
products from units forecasted, and our total revenue in a particular period could be lower than expected.
55
Our business requires significant financial
resources and we may need additional capital but may not be able to obtain it in a timely manner and on favorable terms or at all
We had negative cash flows
from operating activities of US$15.8 million and US$14.1 million for 2020 and 2021, respectively and positive cash flows from operating
activities of US$2.1 million for 2022. We have in the past financed our working capital needs primarily with our net cash from operating
activities, capital contributions by shareholders and bank borrowings.
We may require additional
cash resources due to the future growth, development and expansion of our business. Our future capital requirements may be substantial
as we seek to expand our operations, diversify our product offering, and pursue acquisitions and equity investments. In addition, we incurred
accrued payables of US$11.5 million and accounts payable of US$1.5 million as of December 31, 2022. If our cash resources are insufficient
to satisfy our cash requirements, we may be required to seek to issue additional equity or debt securities or obtain new or expanded credit
facilities or enter into additional factoring arrangements.
Our ability to obtain external
financing in the future is subject to a variety of uncertainties, including our future financial condition, results of operations and
cash flows and the liquidity of international capital and lending markets. In addition, our loan agreements may contain financial covenants
that restrict our ability to incur additional indebtedness or to distribute dividends. Any indebtedness that we may incur in the future
may also contain operating and financial covenants that could further restrict our operations. There can be no assurance that financing
will be available in a timely manner or in amounts or on terms acceptable to us, or at all. A large amount of bank borrowings and other
debt may result in a significant increase in interest expense while at the same time exposing us to increased interest rate risks. Equity
financings could result in dilution to our shareholders, and the securities issued in future financings may have rights, preferences and
privileges that are senior to those of our ordinary shares. Any failure to raise needed funds on terms favorable to us, or at all, could
severely restrict our liquidity as well as have a material adverse effect on our business, results of operations and financial condition.
Third parties have claimed and may, from
time to time, assert or claim that we infringed their intellectual property rights and any failure to protect our intellectual property
rights could have a material adverse impact on our business
We operate in an industry
where participants own a large number of patents and other intellectual property rights that are material to operations and will vigorously
pursue, protect and defend these rights. Our competitors or other third parties may allege to own intellectual property rights and interests
that could potentially conflict with our own. It is difficult to monitor all of the patent applications and other intellectual property
rights protection registrations or applications that may be filed in the PRC or in other relevant jurisdictions. If we offer products
that may potentially infringe on such pending applications and the applications are granted, third parties may initiate intellectual infringement
claims against us. For example, we are currently involved in an ongoing civil litigation claim against us and four other defendants in
relation to potential infringement of intellectual property rights.
As we expand our operations
with new products and into new markets, the chances of encountering infringement claims by third parties will increase. We may incur substantial
costs in defending or settling such disputes and such actions could divert significant resources and management attention. In addition,
some of our customer agreements in the future may require us to indemnify and defend our customers from third-party infringement claims
and to pay damages in the case of adverse rulings. As such, claims of this sort also could harm our relationships with our customers and
may deter future customers from doing business with us. If securities analysts and investors regard these announcements as negative, the
market price of our Class A ordinary shares may decline. We do not know whether we could prevail in any such proceeding given the complex
technical issues and inherent uncertainties involved in IP litigation. If any pending or future proceedings result in an adverse outcome,
we could be required to:
●
cease the manufacturing, use or sale of the infringing products, processes or technologies;
●
stop shipment to certain geographic areas;
●
pay substantial damages for infringement;
●
expend significant resources to develop non-infringing processes, technologies or products;
●
license technology from the third-party claiming infringement, which license may not be available on commercially reasonable terms, or at all;
●
cross-license our technology to a competitor in order to resolve an infringement claim, which could weaken our ability to compete with that competitor; or
●
pay substantial damages to our customers to discontinue their use of or replace infringing products sold to them with non-infringing products.
56
Even if intellectual property
claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could
divert the resources of our management and require significant expenditures. Moreover, such claims, whether successful or not, may cause
significant damage to our reputation and a loss of customers. Any of the foregoing could prevent us from competing effectively and could
have an adverse effect on our business, operating results, and financial condition.
If we are unable to maintain or enhance
our brand recognition, our business, results of operations and financial condition may be materially and adversely affected
Maintaining and enhancing
the recognition, image and acceptance of our brand are important to our ability to differentiate our products from and to compete effectively
with our peers. Our brand image, however, could be jeopardized if we fail to maintain high product quality, pioneer and keep pace with
evolving technology trends, or timely fulfill the orders for our products. If we fail to promote our brand or to maintain or enhance our
brand recognition and awareness among our customers, or if we are subject to events or negative allegations affecting our brand image
or the publicly perceived position of our brand, our business, operating results and financial condition could be adversely affected.
If counterfeit products are sold under our
brand names and trademarks, our reputation and financial results could be materially and adversely affected.
Third-party merchants and
dealers are separately responsible for sourcing counterfeit products that are sold under our brand names and trademarks. Counterfeit products
may be defective or inferior in quality as compared to authentic products. If our customers are not satisfied by counterfeit products
sold under our brand names and trademarks, we may be subject to reputational damage. We believe our brand and reputation are important
to our success and our competitive position. The discovery of counterfeit products sold under our brand names and trademarks may severally
damage our reputation and cause customers to refrain from making future purchases from us, which would materially and adversely affect
our business operations and financial results.
We face risks of unexpected events, including
natural disasters, acts of God and occurrence of epidemics, which could severely disrupt our business operations
Natural disasters, epidemics
and other acts of God which are beyond our control may adversely affect the economy, infrastructure and livelihood of the people in China
and in other territories in which we operate and may materially and adversely affect our operations, as our primary facilities and offices
are located in China and we have other facilities and offices outside of China. Material damage to, or the loss of, such facilities due
to fire, severe weather, flood, earthquake, or other acts of God or cause may not be adequately covered by proceeds of our insurance coverage
and could materially and adversely affect our business and results of operations. Any outbreaks of contagious disease, acts of war or
terrorist attacks may cause damage or disruption to our business, our employees and our markets, any of which could adversely impact our
business and results of operations.
The trading price of our Class A ordinary
shares may be volatile, which could result in substantial losses to investors
The trading price of our Class
A ordinary shares has been volatile since our Class A ordinary shares began to trade on the Nasdaq Global Select Market on June 26, 2020.
The trading price of our Class A ordinary shares has previously and may in the future fluctuate widely due to factors beyond our control.
This volatility may occur because of broad market and industry factors, like the performance and fluctuation of the market prices of other
companies with business operations located mainly in China that have listed their securities in the United States as well as factors related
to the cryptocurrency industry and pricing of cryptocurrencies generally. A number of Chinese companies have listed or are in the process
of listing (or attempting to list) their securities on U.S. stock markets. The securities of some of these companies have experienced
significant volatility, including price declines in connection with their initial public offerings. The trading performances of these
Chinese companies' securities after their offerings may affect the attitudes of investors toward Chinese companies listed in the
United States in general and consequently may impact the trading performance of the Class A ordinary shares, regardless of our actual
operating performance.
57
In addition to market and
industry factors, the price and trading volume for the Class A ordinary shares may be highly volatile for factors specific to our own
operations, including the following:
●
variations in our revenues, earnings and cash flow;
●
changes in the operating performance or market valuations of other cryptocurrency related companies;
●
announcements of new investments, acquisitions, strategic partnerships or joint ventures by us or our competitors;
●
announcements of new services and expansions by us or our competitors;
●
changes in financial estimates by securities analysts;
●
detrimental adverse publicity about us, our services or our industry;
●
additions or departures of key personnel;
●
fluctuations of exchange rates between Renminbi and the U.S. dollar;
●
release of lock-up or other transfer restrictions on our outstanding equity securities or sales of additional equity securities;
●
potential litigation or regulatory investigations; and
●
general economic or political conditions in China or elsewhere in the world.
Any of these factors may result
in large and sudden changes in the volume and price at which the Class A ordinary shares will trade.
Additionally, any negative
news or perceptions about inadequate corporate governance practices or fraudulent accounting, corporate structure or other matters of
other Chinese companies may also negatively affect the attitudes of investors towards Chinese companies in general, including us, regardless
of whether we have engaged in any inappropriate activities. In particular, the global financial crisis and the ensuing economic recessions
in many countries have contributed and may continue to contribute to extreme volatility in the global stock markets. These broad market
and industry fluctuations may adversely affect the market price of our Class A ordinary shares. Volatility or a lack of positive performance
in our Class A ordinary shares price may also adversely affect our ability to retain key employees, most of whom may be granted options
or other equity incentives in the future.
If securities or industry analysts do not
publish research or reports about our business, or if they adversely change their recommendations regarding our Class A ordinary shares,
the market price for the Class A ordinary shares and trading volume could decline
The trading market for our
Class A ordinary shares will be influenced by research or reports that industry or securities analysts publish about our business. If
one or more analysts who cover us downgrade our Class A ordinary shares, the market price for our Class A ordinary shares would likely
decline. If one or more of these analysts cease to cover us or fail to regularly publish reports on us, we could lose visibility in the
financial markets, which in turn could cause the market price or trading volume for our Class A ordinary shares to decline.
We will continue to incur increased costs
as a public company, which could lower our profits or make it more difficult to run a business
As a public company, we have
incurred significant legal, accounting and other expenses that we did not incur as a private company to ensure that we comply with the
various requirements on corporate governance practices imposed by the Sarbanes-Oxley Act of 2002, as well as rules subsequently implemented
by the SEC and Nasdaq Global Select Market. For example, we have increased the number of independent directors and adopt policies regarding
internal controls and disclosure controls and procedures. We have also incurred additional costs associated with our public company reporting
requirements. We expect that these rules and regulations will continue to cause us to incur elevated legal and financial compliance costs,
devote substantial management effort to ensure compliance and make some corporate activities more time-consuming and costly. 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.
58
ITEM 4. INFORMATION ON THE COMPANY
A.
History and development of the company
In January 2010, Mr. Dong
Hu, our founder, chairman of the board of directors, chief executive officer and chief financial officer, founded Zhejiang Ebang Communication
Technology Co., Ltd., or Zhejiang Ebang, which established Ebang IT in August 2010, to conduct development and sales of communications
network access devices and related equipment. In early 2014, in view of the burgeoning opportunities in the blockchain industry, we began
to conduct research and feasibility studies on the blockchain business and develop blockchain computing equipment. In August 2015, Zhejiang
Ebang was listed in China on the National Equities Exchange and Quotations Co., Ltd., or the NEEQ. In August 2016, we acquired 51.05%
of the equity interest in Hangzhou Dewang through our capital injection in Hangzhou Dewang. In March 2018, Zhejiang Ebang was delisted
from the NEEQ in preparation for the reorganization.
On May 17, 2018, we incorporated
Ebang International Holdings Inc., our holding company, as an exempted company with limited liability in the Cayman Islands. In 2018,
we underwent a series of corporate reorganizations for our initial public offering, including the incorporation of our company as the
listing vehicle, incorporation of our oversea holding companies and issuance of shares to shareholders of Ebang Hongfa to reflect their
respective shareholdings before the reorganization. We completed the reorganization in May 2018.
On June 26, 2020, our Class
A ordinary shares commenced trading on the Nasdaq Global Select Market under the symbol "EBON." We raised approximately US$91.7
million in net proceeds after deducting underwriting commissions and the offering expenses payable by us from our initial public offering.
From August 2020 to April
2023, to expand our Fintech businesses globally, we established our subsidiaries in Canada, Australia, Singapore, Hong Kong, the Bahamas,
New Zealand and Malaysia. As of the date of this annual report, we have established two cryptocurrency exchange platforms and one cross-border
payment and foreign exchange platform outside the PRC, received the MSB License in Canada, registration approval as digital currency exchange,
acquired a company with an AFSL and registration approval as an independent remittance dealer in Australia, the MSO License, Type 4 and
9 licenses, TCSP license and registration approval as a Trust Company in Hong Kong, registration as a Digital Asset Business and a Firm
Dealing in Securities as Agent or Principal, Arranging Deals, Managing Securities and Advising on Securities in the Bahamas.
Corporate Information
Our principal executive offices
are located at 12 Marina View, #20-02B, Asia Square Tower 2, Singapore, 018961. Our telephone number at this address is +86 571-8817-6197.
Our registered office in the Cayman Islands is located at Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman KY1-1111.
Investors should submit any
inquiries to the address and telephone number of our principal executive offices. Our corporate website is
http://www.ebang.com
.
Our agent for service of process in the United States is located at 122 East 42nd Street, 18th Floor, New York, N.Y. 10168, United States.
B.
Business Overview
As a global blockchain technology
and Fintech company, we have strong application-specific integrated circuit (ASIC) chip design capability. With years of industry experience
and expertise, we have become a global Bitcoin mining machine producer. Based on our deep understanding of the Fintech industry and compliance
with laws and regulations in various jurisdictions, we have launched professional, convenient and innovative Fintech service platforms.
We
strive to expand into the upstream and downstream markets of the blockchain and Fintech industry value chain to diversify our offerings
and achieve a more stable financial performance, by starting with the cryptocurrency mining and farming business, and expanding into
further Fintech businesses. As of the date of this annual report, we have established two cryptocurrency exchange platforms and one cross-border
payment and foreign exchange platform.
We believe our extensive experience
in the blockchain and Fintech industry positions us well in our future endeavors. We intend to continue to concentrate our efforts in
our blockchain and Fintech related businesses in 2023, specifically in Singapore, Hong Kong, Australia, New Zealand, the United States
and Malaysia. Although we have not generated substantial revenue from such businesses to date, we carefully selected these countries and/or
regions because of what we believe to be a Fintech-friendly regulatory environment.
59
Overseas Expansion
From August 2020 to February
2023, we established our wholly-owned subsidiaries in Canada, Australia, Singapore, Hong Kong, the Bahamas, New Zealand and Malaysia to
apply for Fintech business related licenses and wholly-owned subsidiaries in the United States in accelerating the construction of compliant
mining farms in North America. We carefully selected these countries and/or regions because of what we believe to be a Fintech-friendly
regulatory environment. We are at an initial stage of executing our plan to launch Fintech businesses to capture the growth opportunity
along the value chain of the blockchain and Fintech industry. As of the date of this annual report, we have received the MSB License from
the Financial Transactions and Reports Analysis Centre of Canada, which allows us to engage in foreign exchange dealing, money transferring
and dealing in virtual currencies in Canada; registration approval from AUSTRAC as digital currency exchange, which allows us to provide
cryptocurrency exchange services in Australia; acquired a company with an AFSL for engaging in financial services in Australia; registration
approval as an independent remittance dealer on the AUSTRAC Remittance Sector Register, which allows us to provide remittance services
in Australia; the TCSP license and registration approval as a Trust Company from the Company Registry in Hong Kong, which allows us to
carry on a trust or company service business; the MSO license from the Customs and Excise Department in Hong Kong, which allows us to
operate money changing and remittance services; the Type 4 and 9 licenses from the Securities and Futures Commission in Hong Kong, which
allows us to carry on advising on securities and asset management service; registered as a Digital Asset Business and a Firm Dealing in
Securities as Agent or Principal, Arranging Deals, Managing Securities and Advising on Securities from the Securities Commission of the
Bahamas, which allows us to carry on digital asset business activities and securities activities in and from the Commonwealth of the Bahamas.
In April 2021, we launched our first self-developed proprietary cryptocurrency exchange platform Ebonex and in February 2022, we launched
another self-developed proprietary cryptocurrency exchange platform, also branded Ebonex, in Australia. On top of that, in March 2022,
we established a cross-border payment and foreign exchange business in Australia, through the acquisition of an Australian company with
an AFSL, and in the fourth quarter of 2022, we launched our self-developed proprietary cross-border payment and foreign exchange platform,
EbonFX, targeting qualified investors subject to compliance with applicable laws in the jurisdictions EbonFX operates. We are also in
the process of obtaining additional and/or relevant licenses and approvals for our subsidiaries in Singapore, Hong Kong, Australia, New
Zealand and Malaysia. If and once obtained, the licenses will allow us to operate additional Fintech businesses in such countries and
regions. Meanwhile, we are focused on application development, regulatory compliance and talent recruitment to ramp up execution of our
new business plans for the expansion in these countries. We expect such ramp-up will support our future operations and our compliance
with local rules and regulations. Our expenses to date to implement our new business plans, including establishing in Canada, Australia,
Singapore, Hong Kong, the Bahamas, New Zealand, the United States and Malaysia, have been mainly on server rentals, application development,
regulatory compliance, talent acquisition and offices rentals to set up blockchain and Fintech businesses in the abovementioned countries
and regions. There is no guarantee that we will receive any additional required approvals and licenses for our proposed business in these
jurisdictions in a timely manner or on commercially reasonable terms, or at all, or that we will commence the proposed business as planned,
or at all. If our operations at these jurisdictions or our execution of business plan proves incorrect, we may incur additional expenses
or losses.
Any restrictions imposed by
a foreign government could force us to restructure operations, perhaps significantly, which could result in significant costs and inefficiencies
that harm our profitability, or even cause us to cease operations in the applicable jurisdiction. Fintech is a recent technological innovation
and the regulatory schemes to which Fintech businesses may be subject have not been fully explored or developed by foreign jurisdictions.
Thus, Fintech faces an uncertain regulatory landscape in many foreign jurisdictions. Various foreign jurisdictions may from time to time
adopt laws, regulations or directives that affect our Fintech businesses. Due in part to its international nature and the nascent stage
of regulation, along with the limited experience with Fintech, and language barriers between international journalists, translators and
regulators, information regarding the regulation of Fintech in various jurisdictions may be incomplete, inaccurate or unreliable. As both
the regulatory landscape develops and journalistic familiarity with Fintech increases, mainstream media's understanding of Fintech
and the regulation thereof may improve. As we enter into the markets in Australia, Singapore, Hong Kong, the Bahamas, New Zealand, the
United States and Malaysia, we expect to continue to monitor the local regulations regarding Fintech service platforms and retain local
regulatory counsels. See "Item 3. Key Information—D. Risk Factors—Risks Relating to Our Cryptocurrency, Blockchain
and Mining Related Businesses—The current regulatory environment in foreign markets, and any adverse changes in those environments,
could have material adverse impacts on our blockchain products business and our Fintech business," "Item 3. Key Information—D.
Risk Factors—If we are unable to manage our growth or execute our strategies effectively, our business, results of operations and
financial condition may be materially and adversely affected" and "Item 3. Key Information—D. Risk Factors— We
may not successfully develop, market or launch any future Fintech businesses or continue operating our existing Fintech businesses"
for details of the associated risks.
60
Our Value Proposition
We design fabless ICs in the
front-end and back-end, which are the major components of the IC product development chain. We currently dedicate our technology and expertise
in IC design for our blockchain products business and telecommunication products business.
The following diagram illustrates
the general process of IC design and production for our blockchain and telecommunications products businesses:
We independently design and
develop our blockchain and telecommunications products in-house, including the design of proprietary ASIC chips for our cryptocurrency
mining machines. Front-end IC design and back-end IC design are the key parts of the IC design process. We determine the parameters of
the IC chip, establish the basic logic of the design, map out the initial plan for the physical layout, and conduct back-end verification
on the design. Our strong design capability has ensured that we have achieved a 100% tape-out success rate to date. We then
closely partner with industry-leading third-party suppliers to fabricate, test and package the IC products we design. Leveraging
our long-established experience and know-how in producing telecommunications products, we have also established in-house production capabilities
to conduct PCB assembly and system assembly for both mining machines and a wide range of telecommunications products. We believe our outstanding
technical expertise and production experience in IC development chain enables us to continuously introduce ICs of higher performance and
power efficiency for application in both the blockchain and telecommunications fields.
Currently, we have two self-developed cryptocurrency exchange platforms
operating under the brand name Ebonex, and we support users to buy and/or sell digital assets through Ebonex. Our customers include retail
users and institutions. We aim to establish a global blockchain financial service platform, with services to be provided to each countries
and regions in which we operate under their respective laws and regulations.
Ebonex is based on our self-developed
trading system, which provides a highly available, high-concurrency trade match service system. We have embedded robust anti-money laundering
("AML"), Know Your Customer ("KYC"), Know Your Transaction ("KYT") and asset custody third-party services
in Ebonex to protect user assets and ensure that users' access meets regulatory standards. We believe users can experience stable
system services, convenient deposits and withdrawals, smooth trading and diversified digital asset services on Ebonex. We are committed
to building a world-leading comprehensive digital asset service platform to meet the asset service needs of cryptocurrency asset users
worldwide while complying with the current laws, regulations, and legal standards to which we are subject, as well as additional laws,
regulations and legal standards that may be introduced in the future.
61
As part of our growth
                                                                                                                  and diversification strategy, we acquired an Australian company which owned financial services business with an ASFL in March 2022.
                                                                                                                  The strategic acquisition provides immediate scale, capability and expertise to facilitate us into entering the global financial
                                                                                                                  markets, and together with our strong internal technological capabilities, we have successfully launched a self-developed
                                                                                                                  proprietary cross-border payment and foreign exchange platform, EbonFX. The cross-border payment and foreign exchange business
                                                                                                                  offers a comprehensive range of cost-effective payment and risk management solutions to businesses looking to manage their currency
                                                                                                                  exposure and streamline their international payments, whilst satisfying local regulatory and compliance requirements. Backed by our
                                                                                                                  network of established partnerships with banks and government regulated financial institutions around the world, EbonFX is a ASIC-licensed and regulated platform that enables its customers to transact safely and securely with confidence at any time in 39
                                                                                                                  currencies across the world.
Our approach to international
payments is centered around providing our customers with reliable, convenient and cost-effective ways to transact from anywhere, at anytime,
and on any device. We strive to make international payments simple and easy for our customers, offering personalized service and tailored
solutions to meet the unique needs of each customer. Our team of experienced foreign exchange specialists provide guidance and support
on navigating the complexities of the currency markets. We continuously monitor the currency markets to stay up to date on the latest
trends and ensure our rates are competitive and give us the edge to help clients make informed decisions about their currency transactions
and save money when sending and receiving foreign currencies. Our multi-currency balance capability enables our customers to hold and
manage multiple currencies in a single account, which makes it easier for them to receive, send and manage their global currency needs
and reduces the need for multiple bank accounts. In addition, we help manage foreign exchange (FX) risks for our customers through a range
of tailored hedging strategies (e.g., forwards and options) to help them manage their foreign currency exposures. When developing a risk
management strategy, our team of experts take the time to identify the specific risks clients face by understanding their business operations,
cash flows, and exposures to foreign currency risks.
The customers are at the heart
of our business. We understand the first-hand impact of high FX margin, fees and banking costs on customers' profit margins, and
seek out to build a better solution for businesses and individuals operating across borders, improving on the constraints of the current
global financial system.
Our Blockchain Products Business
Our blockchain products business
consists primarily of Bitcoin mining machine sales.
Bitcoin Mining Machine Products
Our technology and expertise
in ASIC applications is primarily dedicated to our blockchain products business, which consists predominantly of the design, development,
production and sales of our proprietary ASIC-based Bitcoin mining machines under the Ebit brand. Our Ebit Bitcoin mining machines feature
our proprietary ASICs, and the ASICs are integrated with components procured by us.
Since the beginning of our
ASIC designing business, we have successfully and independently completed the design of 14nm, 12nm, 10nm, 8nm, 7nm and 6nm ASIC chips.
Our existing ASIC chips are targeted at solving Bitcoin's cryptographic algorithms incorporating the latest technology. Since the
launch of our first mining machine with 10nm ASIC chips in 2017, we have introduced mining machines with second generation 10nm ASIC chips
in 2019 and mining machines with 8nm ASIC chips in 2020; and we have successfully and independently completed the design of 6nm ASIC chips
and the design of a chip for simultaneous Litecoin and Dogecoin mining in 2021. We currently focus on developing our proprietary 5nm-optimized
ASIC chips and optimized mining machines for non-Bitcoin cryptocurrencies such as Litecoin. We will continue to devote significant resources
to new innovations applying blockchain technology and further determine the timeline for launching these products based on market demands
and conditions.
We have also designed our
hardware architecture to optimize the computing power of our ASIC chips while efficiently consuming energy. This includes incorporating
heat dissipation technology, such as high-grade aluminum cases and customized heat sinks and fans. All of our mining machine products
incorporate built-in controllers so they can operate as standalone devices. Our products utilize automatic cluster management software
system for intelligent tracking and monitoring of the operation status of the device, which provides convenience for large-scale set-ups
with multiple devices. Our products are also configured to allow for simplified software and internet connection setup, thereby reducing
installation and configuration time.
We continuously introduce
new series of Bitcoin mining machines incorporating the latest development of ASIC design and process technology. We also produce and
sell Bitcoin mining machine accessories and offer ancillary service to our customers to assist their operations.
Our Fintech businesses
Our Fintech businesses is
primarily comprised of cryptocurrency exchange and cross-border payment businesses.
Our Cryptocurrency Exchange Business
In April 2021, we launched our first self-developed proprietary cryptocurrency
exchange platform Ebonex and in February 2022, we launched another self-developed proprietary cryptocurrency exchange platform, also branded
Ebonex, in Australia. We plan to launch additional trading platforms in the jurisdictions into which we are expanding. All core technologies
of Ebonex are independently and completely developed by us with our own independent intellectual property rights. Ebonex strictly prohibits
domestic resident users in China, as well as individuals and institutions in sanctioned countries, to open accounts and trade. As of December
31, 2022, immaterial revenue has been generated from the operations of Ebonex.
62
We invest heavily in compliance
tools. In addition to robust AML, KYC, and KYT programs, we have introduced professional service providers, such as real-time account
reconciliation platforms, digital asset custodians, biometric digital KYC platforms, financial market data and infrastructure providers,
and liquidity providers, in Ebonex to meet regulatory requirements, protect user assets and ensure smooth trading experience. These features
also allow us to quickly adapt to emerging threats in the crypto economy, build scenarios and typologies around specific transaction types,
and gives us the flexibility to support new products and services.
Our ultimate objective through
our Ebonex platform is to provide secure, fast, efficient and stable multi-currency and multi-mode trading services to a global audience.
We have increased our investment in marketing and sales, and have assembled a dedicated marketing and growth team in our regions of operation.
We expect that we will obtain more cryptocurrency exchange users and institutional users in the countries and/or regions where we operate
in the future. With the expansion of our operations and marketing activities, we have begun to attract users and generate revenue from
user transactions.
Our Cross-Border Payment and Foreign Exchange
Business
In March 2022, we established
our cross-border payment and foreign exchange business. This was achieved through acquiring an established specialist cross-border payment
company that has been successfully running for over 10 years in Australia. Since the acquisition, we have successfully launched our self-developed
proprietary cross-border payment and foreign exchange platform, EbonFX, and fostered strong collaborative relationships with prominent
international banks. This enables us to offer our clients a comprehensive, one-stop service, from website registration to safe and secure
cross-border payment in multiple currencies. These transformational efforts have been instrumental in propelling us forward within the
increasingly competitive Fintech market space. Our new, modern, and robust platform, designed with reliability and scalability in mind,
positions us perfectly for growth.
Through EbonFX, clients can
access competitive foreign exchange rates, fees and services in the market. On top of this, our dedicated service team, comprised of FX
market specialists and experienced professionals, offers tailored solutions to mitigate FX risks for our customers and help protect their
profitability. Our customers are able to access our cross-border payment services across multiple currencies that can be sent to over
180 countries and territories. Some of the key benefits of using EbonFX to transact cross-border payment include that it is a simple
and intuitive online portal available 24/7, its access to competitive FX rates in real-time, FX professionals on-call and hedging &
FX risk management.
We understand the impact of foreign exchange fluctuations that may
have on the profitability of our customers' businesses. Our range of solutions includes (but is not limited to) the following:
●
Spot: A spot transaction is an FX transaction where the value date is
2 business days after the trade date or T+2. The spot solution of the EbonFX platform allows our customer to exchange currencies for immediate
use.
●
Forwards:
                                            An FX forward is a transaction where the value date is more than 2 business days after the
                                            trade date. Forwards provide a way for our customer to hedge against future currency fluctuations,
                                            which can help to reduce risk.
●
Options:
                                            EbonFX offers wholesale clients option contracts in foreign exchange. These options are derivatives
                                            and they give the buyer of the contract the right (but not the obligation) to buy or sell
                                            a currency at a pre-agreed exchange rate on a predetermined date in the future.
●
Market
                                            orders: EbonFX provides a facility for where our customer may place an order at a rate nominated
                                            by the customer, which may or may not be filled depending on prevailing market conditions
                                            and will include a margin determined by EbonFX.
We monitor rates across all
international time zones and once the customer's target FX rate is reached, the order is automatically executed. This eliminates
the need for any customers to continually watch the currency exchange rates 24/7. In essence, EbonFX provides customer-centric cross-border
payment services.
Our Telecommunications Business
We entered the telecommunications
business in 2010. Our communications network devices mainly focus on the access layer, which is the entry point for providing access to
the telecommunications network for end users. Our products are broadly grouped under the following product lines, as well as related parts
and accessories:
●
Fiber-Optic
    Communication Access Devices.
Our fiber-optic communication access devices are mainly used by network server rooms for telecommunication operators. Our
    fiber-optic communication access devices are also designed to address the shortage of Fibre-Optic cables in metropolitan areas and
    to meet the high bandwidth interconnection needs of data centers for the clients. The main products we offer under our fiber-optic
    communication access devices product line include multiprotocol label switching (MPLS) fiber-optic access network devices,
    multi-service access platform (MSAP) integrated business access devices and wavelength-division multiplexing (WDM/DCI) fiber-optic
    devices.
●
Enterprise Convergent Terminals.
Our enterprise convergent terminal products are designed to provide complete informatization service for enterprises and are used to meet the gigabit broadband development needs for government and enterprises and household clients. The main products we offer under our enterprise convergent terminal product line include gigabit passive optical network (GPON), Fiber to the Room (FTTR), passive optical network converged gateway, enterprise cloud gateway devices, Industrial Internet of Things (IoT) access devices and business enterprise smart wireless access devices.
63
Our Customers
Blockchain Products Business
Our customer base for sales
of our Ebit mining machines is comprised of both enterprises and individual buyers. We generally do not enter into long term agreements
with our mining machine customers. Sales are typically made on one-off sales contract or purchase order bases. Generally, we either require
prepayment in full or offer alternate payment plans for customers to prepay a certain percentage with the remainder to be settled after
delivery of the products and we have extended credit sales to certain customers since 2018. Substantially all of the customers of our
mining machine hosting services before we halted such services in the PRC were customers who have purchased our mining machines.
In 2020, 2021 and 2022, a
significant portion of our mining machine customers were located in China. All of our mining machines are distributed through direct sales.
Nevertheless, we do not restrict resales of our mining machine products by our customers, so some of our customers in China may resell
purchased products to end users or other buyers located in overseas markets. Our revenues generated from sales to customers in China represent
99.8%, 100.0% and 91.6% of our total revenues in 2020, 2021 and 2022, respectively.
Cryptocurrency Exchange Business
Our target users mainly include
retail users as well as institutions. By providing them with digital asset services and infrastructure, we generate revenue through fees
and commissions including transaction commissions, handling fees, transaction spreads, system implementation fees, revenue sharing, and
service fees.
Since our cryptocurrency exchange is in the early stages of operation
and has only had a short history, as of December 31, 2022, we have generated immaterial revenue from such operations. However, we believe
that with our experience in the blockchain and cryptocurrency industry, continuous research and development, and technology accumulation,
as well as the expansion of our marketing and operation activities, we will further drive our competitive position and obtain relevant
operating revenue in the near future.
Cross-Border Payment and Foreign Exchange
Business
Tapping into the existing client base of our acquired Australian cross-border
payment and foreign exchange business and aiming to expand beyond the existing client pool, we are mainly targeting retailers, wholesalers,
small businesses, importers and exporters. Most importers and exporters are aware of the effects that fluctuations in exchange rates can
have on the profitability of their businesses. Currency movements are also important to individuals such as expatriates and high net worth
individuals, and those looking to make international investments. With our global business network, we are continuously looking to serve
customers in Australia and beyond.
Telecommunications Business
Our telecommunications products
are mainly sold in China under the brand name "EBANG" through direct sales. Our customer base for our telecommunications products
primarily includes major telecommunications service providers in China.
We do not have any long-term
or exclusive agreement with our telecommunications product customers. Sales to our enterprises customers are generally made on one-off
sales contract or purchase order bases with a credit period of one to nine months. We generally enter into framework agreement with the
major telecommunications service providers in China with a credit period up to one year. We typically require payments to be made in installments
upon delivery of the products. We encourage our sales representatives to negotiate shorter credit periods to reduce our credit risk.
64
Research and Development
We have historically and continue
to place strong emphasis on research and development. We consider research and development capability as a crucial factor to our success
and our ability to develop innovative and competitive products to meet the technological requirements of customers. As of December 31,
2022, our research and development team comprised of 126 employees, or approximately 42.4% of our total number of employees. Our research
and development expenses were US$5.1 million in 2022.
Our research and development
team is overseen by our Chairman, CEO and CFO, Mr. Dong Hu. Within our research and development team, we have a specialized ASIC chip
design team focused on designing ASIC chips for the development of cutting-edge mining machine products and for other blockchain research
and development projects that utilize ASIC chips. The other members of our research and development team focus on non-ASIC aspects of
mining machine products, telecommunications products and new applications for blockchain technology.
Our organization demonstrates strong research and development capabilities
in the Fintech sector, with a focus on cryptocurrency and cross-border payment. Our highly skilled R&D team excels in monitoring and
assessing user needs, market trends, and industry advancements, guiding the direction of our projects and product roadmaps while identifying
growth opportunities and potential challenges in the rapidly evolving Fintech landscape. With an unwavering commitment to innovation,
we stay ahead of the curve, transforming our technological expertise in payment technology, cryptocurrencies, and regulatory frameworks
into competitive products and services. Furthermore, our expert team of market analysts in the cross-border payment domain employs a comprehensive
research approach, merging valuable market intelligence with thorough analysis, ensuring our clients have access to first-rate information
and well-informed investment decisions.
Production
Our Fabless Model
We do not directly manufacture
ICs used for our products. Instead, we utilize what is known as a fabless model, whereby we conduct front-end and back-end designs of
our IC chips, which are then manufactured, packaged and tested by world-class wafer foundry and OSAT partners we cooperate with. Under
the fabless model, we are able to leverage the expertise of industry leaders that are certified by the ISO in such areas as fabrication,
assembly, quality control and assurance, reliability and testing. In addition, the fabless model allows us to avoid many of the significant
costs and risks associated with owning and operating various fabrication and packaging and testing facilities. Our fabrication partner
is responsible for procurement of the majority of the raw materials used in the production of our ICs. As a result, we can focus our resources
on research and development, product design and additional quality assurances.
Wafer Fabrication
We primarily work with an
IC fabrication partner to ascertain their production resource that can be allocated to us before we place an order according to our business
need. After we place our orders, and once they accept our orders, we are required to prepay in full in order to secure production capacity.
Subject to sufficient production capacity, wafers were delivered in an average of approximately three to four months from the time we
placed our order prior to the global outbreak of COVID-19; however, since such outbreak, we have experienced production capacity shortages
and shipment delays from the IC fabrication partner.
We principally purchased wafers
for our ASIC chips from Samsung, and also began to work with TSMC in 2017 on the development of a new ASIC chip and established a relationship
and are in discussions with two other major wafer foundries in order to diversify our supplier sources and to gain access to additional
capacity for future ASIC chips. We will seek to procure wafers from either or both of these two wafer foundries in the event that our
current suppliers are unable to accept or fulfil our purchase orders or otherwise continue supply us wafers. While we continue to seek
opportunities to improve our supply chain, we face concentration risks, as we currently depend on two suppliers for our wafers. See "Item
3. Key Information—D. Risk Factors—Risks Relating to Our Business and Industry—we rely on a limited number of third
parties to fabricate our ASIC chips, which are the core technology used in our mining machines."
65
Packaging and Testing
After the wafers are manufactured,
they are shipped to an OSAT company for packaging into IC chips, which are then tested to ensure the required quality assurance procedures
are all met. Properly tested IC chips are then delivered to our production facilities for mounting and assembly.
We procure IC packaging and
testing services from leading OSAT companies, including STATS ChipPAC. In 2018, in order to keep up with our increasing production demand,
we began working with PTI. STATS ChipPAC is controlled by Jiangsu Changjiang Electronics Technology Co., Ltd. and its various subsidiaries,
or JCET, which along with PTI are among the largest OSAT companies in the world.
Assembly Plant
We have in-house capabilities
to produce our blockchain and telecommunications products at our production facilities. These include PCB assembly to create the mounted
circuit boards once the IC chips have been manufactured, and general assembly to integrate the circuit boards with other components and
parts for assembling the final products.
We procure certain raw materials,
components and parts, such as electronic components, metal cases, cables, antennae and packaging materials, which are used by us for the
assembly of PCBs and our final products. We typically maintain three or four different suppliers for most of our raw materials, components
and parts. We generally place purchase orders with our suppliers based on our estimated purchase orders and production schedule. The lead
time for procurement was generally one to four months prior to the global outbreak of COVID-19; however, since such outbreak, we have
experienced raw material shortages and shipment delays from our suppliers.  We are typically required to pay our suppliers before
or upon delivery of the raw materials, components and parts. We closely monitor the quality of all raw materials provided by our suppliers
to ensure that all raw materials comply with the stringent requirements of our customers. For more information, see "Item 4. Information
on the Company—B. Business Overview—Quality Control."
We outsource some of our production
to third-party subcontractors in order to meet additional capacity needs. We currently maintain a working relationship with approximately
four to five third-party subcontractors for PCB and general system assembly. The terms of our subcontracting arrangement are set out in
individual written work orders, and the amount of work outsourced is determined on an as-needed basis. To maintain our product standards,
we institute strict quality control measures with our third-party subcontractors. These measures include requiring product testing at
various stages of production and utilizing our proprietary software to record and report the quality testing results.
Production Facilities
We operate one production
facility in Hangzhou, Zhejiang, which houses three SMT production lines and three general assembly lines, as of December 31, 2022.
SMT production lines are responsible
for PCB assembly, which is a key process for both our mining machine and telecommunications products. The maximum output volume of our
in-house production facilities is largely dictated by the production capacity of our SMT production lines in Hangzhou. The average utilization
rate of our SMT production lines was 40.1%, 34.7% and 26.5% for 2020, 2021 and 2022, respectively.
Historically, we outsourced
some of our SMT production activities to third-party subcontractors in order to meet additional capacity needs. For the years ended December
31, 2020, 2021 and 2022, our outsourced productive SMT production volume amounted to approximately 8.4%, 27.4% and nil of our total in-house
and outsourced productive SMT production volume, respectively.
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Quality Control
We place great emphasis on
the importance of quality control in every aspect of our business. We produce our products in accordance with our strict quality control
system and quality standards. We obtained all the material quality control certifications in the PRC for our products or production facilities.
From sourcing of raw materials, production, delivery and installation, each stage of the production process is subject to our quality
control procedures for both in-house production and outsourced third-party production.
We have implemented various
quality-control checks into our production process and the IC fabrication process by our production partners. In addition, we provide
timely and effective after-sales services and support to our users. We have quality control personnel based at each of our production
facilities. They are part of our production department and are led by our quality control supervisor. The quality control team is primarily
responsible for monitoring the quality of procurement raw materials, production process and finished products and supervising the product
testing. We have our own on-site quality control staff to inspect each stage of the production process. The quality control staff inspects
semi-finished products at various stages of the production process to ensure their compliance with our internal quality control standards
and measures. This helps us detect defects during the production process and take steps to rectify those defects, where appropriate. For
outsourced production, we require that all third-party contractors utilize a software system we provide to track, test and record each
product made for us using unique identifying barcodes on the products so that we can review the testing results of their products. Our
third-party contractors also agree to allow us to conduct sample testing of their products and random spot checks of their facilities.
We require final testing on the products before their delivery to our customers to ensure the products meet the specifications and requirements
of its customers.
After-Sales Services and Warranties
We provide installation services
of communication network devices to our customers depending upon the products purchased and the type of customer. Our mining machines
are configured by the end-users using our instruction manual.
For our mining machines, we
provide a six-month warranty for the overall machine and a one-year warranty for the power supplies. During the warranty period, we provide
maintenance and after-sale services, which include technical support, equipment repair and maintenance. In connection with warranty service,
the customer will courier the hardware to us, and we will ship the machine back to the customer once repairs are completed. Our service
hotline is available seven days a week between 8:30 a.m. to 10:30 p.m. and we offer on-site maintenance services as needed.
For our telecommunications
products, we typically provide a 12 to 36-month warranty depending on the type of customer and product. During the warranty period, we
provide maintenance and after-sale services, which include technical support, system and network resting, equipment repair and maintenance.
Our service hotline is available seven days a week between 8:30 a.m. to 11:00 p.m. and we offer on-site maintenance services as needed.
Sales and Marketing
Historically, the marketing
of our blockchain and Fintech products was done through word of mouth, press releases of our product launches and exhibitions when we
launch a new product. Certain of our available products are also advertised on our website which is updated periodically. From time to
time, we maintain a presence on social media in order to raise awareness of our brand.
For our telecommunications
products, we obtain supplier contracts through bidding processes held by the major telecommunications service providers in China, in order
to become an approved supplier. We set up sales offices in the provinces with large distribution scale according to the winning bids.
Our sales offices also serve the surrounding provinces to form an effective sales network.
Competition
Our company operates in multiple
vertical business areas, including integrated circuits (IC), mining machine production, and Fintech, which encompasses both cryptocurrency
and cross-border payment sectors. The competitive landscape in each of these verticals is characterized by various challenges and opportunities.
In the vertical field of integrated
circuit (IC), we face competition from both more mature companies and new entrants. Some of these competitors may possess advantages such
as stronger brand recognition, greater access to capital, longer industry tenure, more established relationships with suppliers or customers,
and more extensive resources. Our competitive strategy in this domain focuses on continuous innovation, cutting-edge technology, and high-quality
products.
In the vertical field of mining
machine production,, we primarily compete with other leading manufacturers, as well as any potential new entrants capable of overcoming
the significant barriers to entry, particularly in technology and access to wafer foundry capacity. Our approach to competition in this
sector emphasizes on technology and service quality, ensuring our products remain at the forefront of the market.
In
the vertical field of Fintech, including cryptocurrency and cross-border payment, a diversified and dynamic competitive landscape has
emerged since the late 2000s. We face competition from numerous well-known participants, ranging from large, established financial incumbents
to smaller early-stage Fintech providers and companies native to the crypto economy, such as decentralized exchanges. In the cross-border
payment business, we encounter competition from various entities, including traditional banks, payment processing companies, and Fintech
startups that offer diverse payment solutions and services for seamless cross-border transactions and international payment processing.
Despite this competitive landscape, our strengths in innovation, technology, and adaptability have positioned us as a formidable player
in this field.
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We anticipate that the intensity
of competition across all verticals will persist, driven by rapid technological advancements and the emergence of new market entrants.
By maintaining a focus on innovation, research and development, and strategic partnerships, we aim to navigate the dynamic competitive
landscapes in the integrated circuits, mining machine production, and Fintech industries. Our ability to adapt and commitment to delivering
high-quality technology and services will be crucial in differentiating ourselves from competitors and ensuring sustainable growth across
all our business verticals.
Intellectual Property
We rely on a combination of
copyright, trademark, patent and other proprietary technology and contractual restrictions on disclosure to protect our intellectual property
rights. We enter into relevant confidentiality agreements or provisions with our employees and certain customers and suppliers and rely
on such confidentiality agreements or provisions and other protection of our technical know-how to maintain our technical advantages in
our products and design.
As of the date of this annual
report, we have registered 58 patents, 10 IC layout designs and 65 software copyrights, with an additional 33 patent applications in the
PRC.
On November 27, 2020, we obtained
an exclusive license of a key patent in the Bitcoin mining industry, which license granted us with the exclusive right to use the patent
in South Korea and export the product from South Korea to other countries. On January 1, 2022, we obtained another license which granted
us with the right to use the patent in the United States and export the product from the United States to other countries. The core of
this patent is AsicBoost, a method that can increase performance of Bitcoin mining by about 20%. The performance gain is achieved through
a high-level optimization of the Bitcoin mining algorithm which allows for drastic reduction in gate count on the mining chip.
Despite our efforts to protect
our proprietary rights, unauthorized parties may attempt to copy or otherwise obtain and use our technology. Monitoring unauthorized use
of our technology is difficult and costly, and we cannot be certain that the steps we have taken will prevent misappropriation of our
technology. From time to time, we may have to resort to litigation to enforce our intellectual property rights, which could result in
substantial costs and diversion of our resources.
Through the use of licensing
arrangements, we utilize various technologies, software and other intellectual property that were developed by third parties. During the
course of product design and manufacturing, we incorporate certain third-party technologies or implement technical or commercial standards,
practices or intellectual property which require licenses from wafer foundries. These licenses allow us to use or access the wafer foundries'
technologies and intellectual property rights in connection with the making of photomask for our ASIC chips. We have also purchased licenses
for various design software from third parties to conduct our IC chip design. These license grants were usually perpetual and irrevocable
on a project-by-project basis. Third parties may initiate litigation against us alleging infringement of their proprietary rights or breach
of a licensing agreement or declaring their non-infringement of our intellectual property rights. If third parties prevail on such claims,
and if we fail to develop non-infringing technology or license the infringed or similar technology or cure the breach on a timely basis,
our business could be harmed. Moreover, even if we are able to license the infringed or similar technology, license fees could be substantial
and may adversely affect our results of operations.
See "Item 3. Key Information—D.
Risk Factors—Risks Relating to Our Business and Industry—We may face difficulties in protecting our intellectual property
rights" and "Item 3. Key Information—D. Risk Factors—Risks Relating to Our Business and Industry—Third parties
have claimed and may, from time to time, assert or claim that we infringed their intellectual property rights and any failure to protect
our intellectual property rights could have a material adverse impact on our business."
Insurance
Besides the PRC government-mandated
social insurance and housing provident fund schemes and motor vehicle insurance, we do not maintain any insurance covering our properties,
equipment, inventory or employees, and we do not carry any business interruption or product liability insurance or any third-party liability
insurance to cover claims in respect of personal injuries or any damages arising from accidents on our properties or in relation to our
operations. We believe that our insurance coverage is adequate and is in line with industry practice.
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Environmental Matters
We have received GB/T24001-2016/ISO
14001:2015 environmental management system certification, which is valid until September 11, 2024 and subject to renewal. Due to the nature
of our business, our operational activities do not directly generate industrial pollutants, and we did not incur significant cost for
compliance with applicable environmental protection laws and regulations in 2020, 2021 and 2022.
Legal Proceedings
We may from time to time be
subject to various legal, arbitration or administrative proceedings arising in the ordinary course of business, such as proceedings in
respect of disputes with suppliers or customers and labor disputes. As of the date of this annual report, we are party to the following
legal, arbitration or administrative proceedings, regulatory inquiries or investigations made or pending that we believe are material
to our business and results:
On November 19, 2019, we filed
a civil action in the High Court of the Hong Kong Special Administrative Region, Court of First Instance against a then-major supplier,
alleging breach of contract for delivering defective products and seeking damages in the sum of US$25.1 million plus interest and costs.
As of the date of this annual report, the case is still under review by the court.
REGULATION
Regulatory Overview of the PRC
We are engaged in the research
and development, production and sales of blockchain and telecommunications products in the PRC. The following sets forth a summary, which
does not purport to be complete, of the relevant PRC regulatory authorities and PRC laws, regulations and government policies that are
applicable to our business operations in the PRC.
Competent Regulatory Authorities
The Ministry of Industry and
Information Technology of the PRC, or the MIIT, and its departments are in charge of the industrial and information technology sectors
at the national level. The MIIT formulates and directs the implementation of industrial sector planning, industrial policies and standards;
monitors the daily operations of industrial sector; promotes the development and independent innovation of major technical equipment;
manages the communications industry, guiding and advancing the construction of information technology infrastructures; and coordinates
the safeguarding of national information technology security, while in charging of the approval of network access licenses (including
trial), telecommunications business operation licenses, specifications and standards for organizational implementation software and system
integration services, and radio transmission equipment type approval certificates. The local Commissions of Economy and Information Technology
are the competent authorities in charge of the industrial and information technology sectors at the local level.
The General Administration
of Quality Supervision, Inspection and Quarantine of the PRC is in charge of mandatory product certification activities, and the Certification
and Accreditation Administration of the PRC, or the CNCA, is in charge of the organization, implementation, supervision, management and
overall coordination of mandatory product certification activities at the national level. The local Quality and Technology Supervision
Bureaus and various Entry and Exit Inspection and Quarantine Offices are responsible for the supervision, management and enforcement of
mandatory product certification activities in their relevant local areas.
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The National Copyright Administration
of the PRC is in charge of the management of software copyright registration. The Copyright Protection Center of China and its local software
registration offices are responsible for software registration.
The MOFCOM and its local bureaus
are responsible for supervising and managing the establishment of overseas companies for foreign investment.
The NDRC and its local bureaus
are responsible for providing macro guidance, comprehensive services and overall supervision over outbound investments.
The General Administration
of Customs of the PRC, or the PRC Customs, and its local bureaus are responsible for the supervision of import and export trade, registration
of customs declaration enterprises, approvals of bonded premises, and other relevant matters.
SAFE and its local bureaus
are responsible for the supervision and management of foreign exchange receipts and payments or foreign exchange operational activities
carried out by PRC institutions and individuals, and foreign exchange receipts and payments or foreign exchange operational activities
carried out in the PRC by foreign institutions and individuals.
The State Administration of
Work Safety and its local bureaus are responsible for the supervision and management of work safety activities.
The Ministry of Ecology and
Environment of the PRC and its local bureaus are responsible for the management of environmental protection activities, while the local
bureaus also supervise and manage the protection of resources, prevention of pollution and other matters on environmental protection in
the local areas.
The China Semiconductor Industry
Association is a national industrial and non-profit social organization, consisting of entities, experts and other related enterprises
and institutions engaged in the manufacturing, design, scientific research, development, operation, application and education of integrated
circuits, semiconductor discrete devices, semiconductor materials and equipment.
Regulations and Government Policies Relating
to the IC and Blockchain Industries
Pursuant to the Circular on
Prevention of Risks Associated with Bitcoin, or the Circular, jointly promulgated by the People's Bank Of China, or the PBOC, the MIIT,
the China Banking Regulatory Commission, the CSRC and the China Insurance Regulatory Commission on December 3, 2013, Bitcoin shall be
considered a kind of virtual commodity in nature, which does not have the same legal status with fiat currencies and shall not be used
and circulated in the market as currency. This circular also provides that financial institutions and payment institutions shall not engage
in businesses related to Bitcoin.
Pursuant to the Announcement
on Prevention of Risks from Offering and Financing of Cryptocurrencies promulgated by seven PRC governmental authorities including the
PBOC on September 4, 2017, illegal activities in offering and financing of cryptocurrencies, including initial coin offerings (ICOs),
are forbidden in the PRC because such activities may be considered to constitute illegal offering of securities or illegal fundraising.
This announcement further provides that financial institutions and payment institutions shall not engage in businesses related to cryptocurrency
offering or financing transactions.
There is no prohibition under
PRC laws and regulations currently in effect on the possession of Bitcoin by PRC citizens and organizations.
Purchase and running of computing
hardware by PRC citizens or organizations for the purpose of Bitcoin mining in China do not violate any PRC laws and regulations currently
in effect. PRC citizens and organizations are not prohibited from engaging in Bitcoin mining activities in China. Design, production,
sale (including both wholesale and retail) of computing hardware used for Bitcoin mining, including BPUs, in China, or sale (including
both wholesale and retail) or export of such computing hardware from China, do not violate any provisions of any PRC laws and regulations
currently in effect, provided that such activities shall comply with the general regulatory rules in relation to the administration of
industry and commerce registration, taxation, fire control and environmental protection and the relevant policies and requirements imposed
by any PRC governmental authorities.
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As demonstrated by the Circular
of the State Council on Printing and Distributing Policies for Encouraging the Development of the Software and IC Industries issued on
June 24, 2000, the PRC continues to enact policies encouraging new and advanced technology and supporting the software and IC industries.
On January 28, 2011, the State
Council issued the Circular of the State Council on Printing and Distributing Policies for Further Encouraging the Development of the
Software Industry and the Integrated Circuit Industry, or the Circular, which aims to formulate a series of policies for the purposes
of further optimizing development environment for the software industry and integrated circuit industry, increasing the quality and the
level of industry development and cultivating a number of influential and strong leading enterprises in these industries. The Circular
addresses topics including fiscal tax policies, investment and financing policies, research and development policies, import and export
policies, talent policies, intellectual property policies and market policies.
On June 24, 2014, the State
Council issued the Outline for Promoting the Development of the National Integrated Circuit Industry, which highlights that great
efforts shall be put on the development of the IC design industry. By focusing on the industrial chain of key areas and strengthening
IC design, software development, system integration, collaborative innovation in contents and services, the goal is to drive the development
of the manufacturing industry through the rapid growth of the design industry.
On June 8, 2015, the NDRC
issued the Notice on Implementing Major Engineering Packages in Emerging Industries. The Notice highlights the efforts in developing IC
construction infrastructures, focusing on enhancing the level of advanced technology, design industry concentration ratio and industrial
chain supporting ability, selecting areas with more mature technology, good industrial base and wide application potential, and accelerating
the industrialization of high performance IC products.
On May 4, 2016, the Ministry
of Finance of the PRC, the SAT, NDRC and the MIIT, jointly released the Notice on Enterprise Income Tax Preferential Policies for Software
and IC Enterprises. This Notice specifically stipulates the preferential policies on EIT related to IC manufacturing enterprises, IC design
enterprises, software enterprises, key software enterprises within the national planning layout and IC design enterprises.
On December 15, 2016, the
State Council issued the Notice of the 13th Five-Year Plan for National Informatization. This notice highlights the need to strengthen
the layout of strategic innovative technologies, including blockchain technology, as well as others such as enhanced quantum communications,
future networks, brain-like computing, artificial intelligence, holographic display, virtual display, big data cognitive analysis, new
nonvolatile storage, driverless vehicles and gene editing.
On July 8, 2017, the State
Council issued the Notice on Issuing New Generation AI Development Plan. This notice points out that advancing the integration of blockchain
technology and artificial intelligence and establishing a new social credit system will significantly minimize the cost and risk of interpersonal
communications.
In August 2017, the State
Council issued the Guidance on Further Expanding and Upgrading Information Consumption Potential for Sustained Release of Domestic Demand,
which highlights and encourages the use of open source code to develop personalized software and the launch of trial applications using
new technologies such as blockchain and artificial intelligence.
In October 2017, the General
Office of the State Council issued the Guiding Opinions on Actively Promoting Supply Chain Innovation and Application, which highlights
and promotes the research of using emerging technologies such as blockchain and artificial intelligence to establish a credit evaluation
mechanism based on supply chain.
In November 2017, the State
Council issued the Guiding Opinions on Deepening Internet + Advanced Manufacturing Industry to Develop Industrial Internet which promotes
the research and exploration of applications of emerging technologies in industrial Internet, such as edge computing, artificial intelligence,
augmented reality, virtual reality, and blockchain technology.
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On May 21, 2021, the Financial
Stability and Development Committee of the State Council in China proposed to "crack down on Bitcoin mining and trading."
However, it was not until September 15, 2021, as described below, that all digital asset transactions were banned in China.
In May 2021, local governments
began to issue corresponding measures in succession to respond to the central government, including Xinjiang Changji Hui Autonomous Prefecture
Development and Reform Commission issuing a notice on the immediate shutdown of enterprises engaged in cryptocurrency mining on June 9,
2021.
On June 18, 2021, according
to the public media report - Sichuan Provincial Development and Reform Commission and Sichuan Energy Bureau issued a notice on the shutdown
of cryptocurrency mining projects with the deadline of June 25, 2021. On September 3, 2021, the newly issued Notification of Overhauling
the Mining Activity of Cryptocurrency (or the Notification No. 1283) banned all new cryptocurrency operations in China and set forth penalties
on a going forward basis for all of the PRC.
Pursuant to the Circular on
Further Preventing and Disposing of Risks in Virtual Currency Trading and Speculation (Yin Fa [2021] No.237) promulgated by ten PRC governmental
authorities including the PBOC on September 15, 2021, virtual currency-related business activities in China and the provision of services
by an overseas virtual currency exchange to a Chinese resident via the Internet will be considered as illegal financial activities.
Laws and Regulations Relating to Industry
Qualifications
Pursuant to the Telecommunications
Regulations of the PRC issued on September 25, 2000 and last amended on February 6, 2016 and the Administrative Measures for the Network
Access of Telecommunications Equipment issued on May 10, 2001 and last amended on September 23, 2014, the State implements a network access
system that covers telecommunications terminal equipment, wireless communications equipment and network interconnection equipment connected
to public telecommunications networks. A network access license issued by the MIIT shall be obtained for telecommunications equipment
implementing network access. Without a network access license, such equipment is not allowed to be connected to a public telecommunications
network for use nor to be sold domestically.
Pursuant to the Regulations
on Administration of Mandatory Product Certification issued on July 3, 2009 and effected on September 1, 2009, producers, sellers or importers
of products included in the product catalog shall entrust a certification agency designated by the CNCA to certify the products produced,
sold or imported thereby.
Pursuant to the Regulations
of the PRC for the Administration of Radio Operation promulgated on September 11, 1993, last amended on November 11, 2016 and effected
on December 1, 2016, in addition to micro-power short-range radio transmitting equipment, any other radio transmitting equipment that
is manufactured or imported for sale or use domestically shall apply to the state authority in charge of radio regulation for approval.
Laws and Regulations Relating to Work Safety
The Work Safety Law of the
PRC, issued on June 29, 2002, last amended on June 10, 2021, and effective September 1, 2021, provides that production and operation entity
must comply with the Work Safety Law and other laws and regulations related to work safety, strengthen work safety management, establish
and improve a work safety responsibility system and work safety rules and systems for all employees, increase efforts to guarantee the
input of funds, materials, technology, and personnel in work safety, improve work safety conditions, strengthen standardization and informatization
of work safety, construct a dual prevention mechanism consisting of graded management and control of safety risks and examination and
control of potential risks, improve the risk prevention and resolution mechanism, raise work safety levels, and ensure work safety. Production
and business operation entities shall have the conditions for work safety as specified in this law and relevant laws, regulations, national
standards or industrial specifications. Production and business operation entities that do not have such conditions are not allowed to
engage in production or operation activities. Breach of the Work Safety Law of the PRC will incur various penalties, according to the
specific circumstances.
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Laws and Regulations Relating to Product
Quality
Pursuant to the Product Quality
Law of the PRC (2018 Version), issued and promulgated on February 22, 1993, last amended on and effective December 29, 2018, producers
shall be responsible for the quality of their products. Product quality shall satisfy the following requirements: no unreasonable danger
to personal safety and the safety of property shall exist; where there are national or industry standards for protection of health, personal
safety and the safety of property, such standards shall be complied with. If the products of a producer or seller do not comply with the
national or industry standards for protection of health or personal safety or the safety of property, orders shall be issued to cease
their production or sale and products that have been illegally produced or sold shall be confiscated. A fine shall be imposed equal to
an amount greater than the value of the products that have been illegally produced or sold (hereafter including products already sold
and goods not yet sold) but less than three times the value of the products; where there is illegal income, the illegal income shall be
confiscated; where the circumstances are serious, the business license shall be revoked; where the case constitutes a crime, criminal
liability shall be pursued in accordance with law. If a producer or a seller is found to mix impurities or imitations into products, or
to pass fake goods off as genuine ones or shoddy products as good ones or sub-standard products as standard ones, such producer or seller
shall be ordered to stop production or selling; the products illegally produced or sold shall be confiscated and a fine not less than
50% of but not more than three times the value of the products illegally produced or sold shall be imposed concurrently; if there are
illegal proceeds, such proceeds shall be confiscated concurrently; if the circumstances are serious, the business license shall be revoked;
if the case constitutes a crime, criminal liability shall be investigated in accordance with the law.
Pursuant to the PRC Regulations
on Administration of Radio Operation, issued on September 11, 1993, last amended on November 11, 2016 and effective December 1, 2016,
the manufacture or import of radio transmission devices that are required to obtain approval must meet the provisions of the relevant
laws, national standards and relevant regulations of the state authority in charge of radio regulation and comply with the technical standards
regarding approved radio transmission devices. The approval number shall be labeled on the devices. The competent authorities for radio
regulation may order anyone who violates this regulation by manufacturing or importing radio transmission devices to be sold or used domestically
without obtaining the requisite approval to rectify and may impose a fine between RMB50,000 and RMB200,000; for those refusing to rectify,
authorities may confiscate the radio transmission devices that have not obtained approval and impose a fine between RMB200,000 and RMB1,000,000.
Pursuant to the Regulation
of Telecommunications of the PRC (2016 Version) (issued and effective on February 6, 2016), anyone who violates the provisions of this
regulation in lowering product quality or performance after obtaining the telecommunications equipment network access license shall be
subject to punishment by the product quality supervision authorities pursuant to the provisions of the relevant laws and administrative
regulations.
Laws and Regulations Relating to Industry
Standards
The Measures on Administration
of Information System Integration and Service Qualification Identification (Interim) is the industrial regulation as recognized by the
China Information Technology Industry Federation, targeting information systems integration and service qualification identification.
In particular, information system integration qualification is the objective evaluation standard for enterprises engaged in information
systems integration and service comprehensive ability and level. According to the Notice on the Management of Computer Information System
Integration Industry issued by the MIIT on December 29, 2018 and became effective on the same day, information system integration qualification
was expressly cancelled by the State Council in 2014.
The Technical Requirements
for Access Network Multi-service Access Platform, or MSAP, is a communications industrial standard on access network multi-service access
platform, stipulating MSAP system's requirements in network location and function model. In addition, the Safety of Information
Technology Equipment (Part 1) and the Radio Disturbance Limits and Measurement Methods for Information Technology Equipment is the national
standard of information technology equipment.
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The Technical Requirements
and Test Methods of Lightning Resistibility for Telecommunications Terminal Equipment is the industry standard for telecommunications
equipment.
Laws and Regulations Relating to Other Business
Areas
Trade
Pursuant to the Foreign Trade
Law of the PRC, issued on May 12, 1994, last amended on and effective November 7, 2016, foreign trade operators engaged in import or export
of goods or technologies shall file records with the foreign trade department of the State Council or its authorized agencies, unless
otherwise stipulated by the laws, administrative regulations or the foreign trade department of the State Council. Specific measures for
record filing shall be stipulated by the foreign trade department of the State Council. PRC Customs shall not process import and export
declaration and clearance formalities for foreign trade operators who have not filed records in accordance with the provisions.
Foreign Exchange
Pursuant to the Regulation
on Administration of Foreign Exchange of the PRC promulgated by the State Council on January 29, 1996 and last amended on and effective
August 5, 2008, other regulations issued by SAFE and other relevant government authorities, Renminbi is freely convertible into other
currencies for current account items such as trade related receipts and payments, interest payments and dividends; as for capital account
items such as direct investment, loans and portfolio investment, the prior approval of SAFE is required to convert Renminbi into other
currencies and transfer the converted currencies out of the PRC. Transactions in the PRC are subject to payment in Renminbi. Pursuant
to relevant regulations and laws, after a domestic company gets listed overseas, if any of its domestic shareholders intends to increase
or decrease overseas shares, the domestic shareholder shall handle overseas shareholding registration formalities with the local foreign
exchange authority within twenty working days prior to the intended share increase or decrease.
Pursuant to the Notice on
Administration of Foreign Exchange Involved in Offshore Investment, Financing and Round-Trip Investment Conducted by Domestic Residents
Through Special Purpose Vehicles, which was promulgated by SAFE and went into effect on July 4, 2014, prior to making capital contribution
in a special purpose vehicle by a PRC resident using its legitimate assets or interests in the PRC or overseas, the PRC resident shall
apply to the foreign exchange bureau for completion of foreign exchange registration formalities for overseas investments. A "domestic
entity" referred to in this notice shall mean enterprise and institutional legal persons and any other economic organizations established
in the PRC pursuant to the law; a "PRC resident individual" shall mean a PRC citizen holding a PRC resident identity document,
military personnel identity document or armed police personnel identity document, and any foreign individual who does not hold a PRC identity
document but normally resides in the PRC due to economic reasons.
Pursuant to the Notice on
Further Simplification and Improvement of Foreign Exchange Administration Policies for Direct Investment, promulgated by SAFE on February
13, 2015 and effective June 1, 2015, two administrative approval matters, including foreign exchange registration approval under domestic
direct investment and foreign exchange registration approval under overseas direct investment, shall be reviewed and processed directly
by banks. SAFE and its local bureaus shall implement indirect supervision through the foreign exchange registration with banks for direct
investment.
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Pursuant to the Notice of
SAFE on Reforming the Mode of Management of Settlement of Foreign Exchange Capital of Foreign-Funded Investment Enterprises promulgated
on March 30, 2015 and effective June 1, 2015, and the Notice of SAFE on Reforming and Regulating the Policies for Administration of Foreign
Exchange Settlement under the Capital Account promulgated on and effective June 9, 2016, the system of voluntary foreign exchange settlement
is implemented for the foreign exchange earnings of foreign exchange capital of foreign-invested enterprises. Foreign exchange capital
in a foreign-invested enterprise capital account, for which the monetary contribution has been confirmed by SAFE (or for which the monetary
contribution has been registered for account entry), may be settled at a bank as required by the actual management needs of the enterprise.
The voluntary settlement ratio of foreign-invested enterprise foreign exchange capital projects has been temporarily set at 100%. SAFE
may make adjustments to the said ratio at appropriate times based on the status of the international balance of payments. In addition,
foreign exchange earnings under capital projects and the Renminbi funds obtained from the exchange settlements thereof shall not be used
by foreign-invested enterprises for the following purposes: (1) direct or indirect payments of expenditures exceeding its business scope
or those being prohibited by the laws and regulations of the PRC; (2) direct or indirect uses in securities investments or investments
other than capital-protected banking products (except as otherwise expressly provided); (3) issuance of loans to non-affiliated enterprises
(excluding those that are expressly permitted within their business scope); and (4) construction or purchase of real estate not for personal
use (except for real estate enterprises).
Foreign Investment
In March 2019, the Standing
Committee of the National People's Congress of the PRC passed the Foreign Investment Law of the People's Republic of China,
or the Foreign Investment Law. Among other things, the Foreign Investment Law defines the "foreign investment" as the investment
activities in China conducted by foreign individuals, enterprises and other organizations, or the Foreign Investors, in a direct or indirect
manner. The PRC governmental authorities will administrate foreign investment by applying the principal of pre-entry national treatment
together with a negative list, to be specific, the Foreign Investors are prohibited from making any investments in the fields catalogued
into prohibited industries for foreign investment based on the negative list, while they are allowed to make investments in the restricted
industries provided that all the requirements and conditions as set forth in the negative list have been satisfied; when the Foreign Investors
make investments in the fields other than those included in the negative list, the national treatment principle shall apply.
Pursuant to the Special Administrative
Measures for Foreign Investment Access (2021 Edition), or the 2021 Edition Negative List, issued by the MOFCOM and the NDRC on December
27, 2021 which came into effect on January 1, 2022, our business does not fall into the negative list and is permitted for foreign investment.
However,
the 2021 Edition Negative List regulates that "Fields not mentioned in the Negative List for Foreign Investment Access shall be
subject to administration under the principle of consistency for domestic and foreign investments. The relevant provisions of the Negative
List for Market Access shall apply to domestic and foreign investors on a unified basis."
In addition, based on the
Negative List for Market Access (2022), "the Catalogue for Guidance on Industrial Restructuring shall be included in the Negative
List for Market Access"; plus, according to the Decision of the State Council on Promulgating and Implementing the "Temporary
Provisions on Promoting Industrial Structure Adjustment," valid from December 2, 2005, "In principle, the 'Guidance
Catalogue for the Industrial Structure Adjustment "shall apply to various types of enterprises inside China." "The industries
of the eliminated category under the 'Guidance Catalogue for the Industrial Structure Adjustment' shall apply to the foreign
investment enterprises." and "Investments are prohibited from being contributed to projects under the eliminated category."
What's more, the NDRC released on December 30, 2021 its No. 49 Decree, announcing that the Decision of the National Development
and Reform Commission on Amending the Guiding Catalog for Industrial Restructuring (2019 Version) (the "Amended Catalog").
The Amended Catalog added 'virtual currency mining activities' to the eliminated category of '1. outdated production
processing and equipment 'under the original Catalog.". Therefore, the foreign investment enterprises are prohibited from
virtual currency activities and our Bitcoin mining business are banned in China as well.
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Outbound Investment
Pursuant to the Measures for
Administration of Overseas Investment of Enterprises promulgated by the NDRC on December 26, 2017 and effective March 1, 2018, investors
shall perform procedures such as overseas investment project approval and filing, report relevant information, and cooperate in supervision
and inspections when they conduct overseas investments. Projects subject to approval by the NDRC are sensitive projects developed by investors,
either directly or through their control of overseas enterprises. Projects subject to filing are non-sensitive projects directly developed
by investors, in which the investors directly invest assets or equities, or provide financing or guarantees.
Pursuant to the Measures for
Administration of Overseas Investment Management promulgated on September 6, 2014 and effective October 6, 2014, filing and approval are
managed by the MOFCOM and its provincial bureaus in light of the different circumstances of overseas investments of enterprises. Approval
is required for enterprises conducting overseas investments involving sensitive countries and regions or sensitive industries. Filing
will be administered for enterprises conducting overseas investments in other circumstances.
Laws and Regulations Relating to Environmental
Protection
Pursuant to the Environmental
Protection Law of the PRC issued on December 26, 1989, amended on April 24, 2014 and effective January 1, 2015, entities that cause environmental
pollution and other public nuisances shall adopt effective measures to prevent the pollution of and hazards caused to the environment.
Construction projects shall be equipped with constructional environmental protection facilities, which must be simultaneously designed,
built and put into operation with the main part of the construction. Enterprises discharging pollutants must report to and register with
the relevant authorities in accordance with the provisions of the competent environmental protection authority under the State Council.
The competent environmental protection authority shall record unlawful environmental acts of enterprises in the social credit file, and
disclose information in a timely manner. Enterprises and other producers and operators unlawfully discharging pollutants shall be fined
and ordered to take corrective measures. For those refusing to make corrections, the competent authority may, starting from the day after
the date of ordering correction, continuously impose daily fines based on the sum of the original fine. Enterprises and other producers
and operators, which discharge pollutants exceeding the pollutant discharge standard or key pollutant gross discharge control thresholds,
may be ordered by the competent environmental protection authority above the provincial level to take measures such as restricting production,
suspending production and rectification. Serious cases may be reported to and approved by the competent government authority, resulting
in orders of suspension or shutdown of operations.
Pursuant to the Environmental
Impact Assessment Law of the PRC issued on October 28, 2002, amended on and effective December 29, 2018, the PRC government implemented
an environmental impact evaluation system, which classifies and manages the environmental impact evaluation of construction projects based
on the degree of environmental impact caused by construction projects.
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Pursuant to the Administrative
Regulations on Environmental Protection in Construction Projects promulgated on November 11, 1998 and amended on July 16, 2017, construction
projects are classified and environmental impact reports, environmental impact statements or environmental impact registration forms
shall be compiled based on the extent of environmental impact of construction projects. For a construction project for which an environmental
impact report or environmental impact statement is prepared, its matching environmental protection facilities may go into production
or be delivered for use only after they pass the acceptance check; and they may not go into production or be delivered for use if no
acceptance check is made for them or they fail to pass the acceptance check. Where a construction project goes into production or is
delivered for use without the completion of construction of matching environmental protection facilities required for the construction
project, without going through acceptance checks or without passing the acceptance checks in violation of the provisions hereof, or fraud
is committed in the acceptance check of the environmental protection facilities, the competent administrative department of environmental
protection at or above the county level shall order the construction unit to effect rectification within a specified time limit and impose
a fine of more than RMB 200,000 but less than RMB 1 million against it; if it fails to effect rectification within the time limit, a
fine of more than RMB 1 million but less than RMB 2 million shall be imposed; the person in charge who is held directly liable and other
liable persons shall be subject to a fine of more than RMB 50,000 but less than RMB 200,000; if material environmental pollution or ecological
damage is caused, the construction unit will be ordered to stop production or use of the construction project, or be ordered to close
down upon approval by the people's government with the authority of approval.
Laws and Regulations Relating to Taxation
Enterprise Income Tax
Pursuant to the EIT Law promulgated
on March 16, 2007, amended on and effective December 29, 2018, and the Regulation on Implementation of the Enterprise Income Tax Law
of the PRC, or the EIT Implementation Rules, issued on December 6, 2007 and amended on and effective April 23, 2019, EIT shall be applicable
at a uniform rate of 25% to all resident or non-resident enterprises. EIT shall be payable by a resident enterprise for income sourced
within or outside the PRC. EIT shall be payable by a non-resident enterprise, for income sourced within the PRC by its institutions or
premises established in the PRC, and for income sourced outside the PRC for which the institutions or premises established in the PRC
have a de facto relationship. Where the non-resident enterprise has no institutions or premises established in the PRC or has income
bearing no de facto relationship with the institution or premises established, EIT shall be payable by the non-resident enterprise only
for income sourced within the PRC.
Pursuant to the Administrative
Measures on the Accreditation of High and New Technology Enterprises accredited high and new technology may make declarations under and
benefit from tax concession policies in accordance with relevant regulations including the EIT Law and the EIT Implementation Rules,
the Law of the PRC on Administration of Levying and Collection of Taxes and the Regulation of Implementation of the Law of the PRC on
Administration of Levying and Collection of Taxes.
Pursuant to the Notice on
Enterprise Income Tax Policies for Further Encouraging the Development of Software and Integrated Circuit Industries, IC production enterprises
with an IC production line below 0.8 micrometer (inclusive), after accreditation, shall be entitled to a tax concession period beginning
in the profit-making year that is prior to December 31, 2017, for which EIT shall be exempted for the first and second years and be reduced
by 50% in the third to fifth years. In addition, IC production enterprises with an IC production line below 0.25 micrometer or an investment
of over RMB8 billion, after accreditation, shall be entitled to a reduced EIT tax rate at 15%, and, for those with an operation period
of over 15 years, the tax concession period shall be deemed to start from the profit-making year prior to December 31, 2017, for which
EIT shall be exempted in the first to fifth years and be reduced by 50% in the sixth to tenth years. As for IC design enterprises newly
established within the PRC and eligible software enterprises, upon accreditation, the tax concession period shall be deemed to start
from the profit-making year prior to December 31, 2017, for which EIT shall be exempted for the first and second years and be reduced
by 50% in the third to fifth years.
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Value-Added Tax
Pursuant to the Provisional
Regulation on Value-Added Tax of the PRC ("VAT Provisional Regulation") promulgated by the State Council, as amended on November
10, 2008, February 6, 2016 and November 19, 2017 and effective November 19, 2017, all entities and individuals in the PRC engaging in
the sales of goods, provision of processing services, repairs and replacement services, sales services, intangible assets, real estate
and the importation of goods are required to pay value added tax, or VAT. According to VAT Provisional Regulation, taxpayers that sell
goods, labor services or tangible personal property leasing services or import goods and do not fall within the scope as specified in
Item 2, Item 4 and Item 5 of Article 2 of VAT Provisional Regulation shall be subject to a 17% tax rate; taxpayers that sell transport
services, postal services, basic telecommunications services, construction services, or real property leasing services, sell real property,
transfer the land use right, or sell or import the goods listed below shall be subject to an 11% tax rate: (1) such agricultural products
as grain, edible vegetable oil, and common salt; (2) tap water, heat supply, air-conditioning, hot water, gas, liquefied petroleum gas,
natural gas, dimethyl ether, methane and civil-use coal products; (3) books, newspapers, magazines, audio-visual products, and electronic
publications; (4) feeds, chemical fertilizers, pesticides, agricultural machineries and mulching films; and (5) other goods specified
by the State Council; taxpayers that sell services or intangible assets and do not fall within the scope as specified in Item1, Item
2 and Item 5 of Article 2 of VAT Provisional Regulation shall be subject to a 6% tax rate.
Pursuant to the Notice on
Value-Added Tax Policies of Software Products released by the Ministry of Finance and the SAT on October 13, 2011, a general taxpayer
who sells self-developed and self-produced software products, VAT shall be collected at a tax rate of 17% and the refund-upon-collection
policy shall be applied to the part VAT in excess of 3% of their actual tax burden.
According to the Circular
of the Ministry of Finance and the SAT on Adjusting Value-added Tax Rates promulgated on April 4, 2018, and effective May 1, 2018, where
a taxpayer engages in a taxable sales activity for the value-added tax purpose or imports goods, the previous applicable 17% and 11%
tax rates are lowered to 16% and 10% respectively.
According to the Circular
on Policies to Deepen Value-added Tax Reform promulgated by the Ministry of Finance, the SAT, and the General Administration of Customs
on March 20, 2019, and effective April 1, 2019, where a taxpayer engages in a taxable sales activity for the value-added tax purpose
or imports goods, the previous applicable 16% and 10% tax rates are lowered to 13% and 9% respectively.
According to Announcement
of the Ministry of Finance and the State Taxation Administration to Further Step up the Application of End-of-Period Excess Input Value-Added
Tax Credit Refund Policies issued by the Ministry of Finance and the SAT on March 21, 2022 and effective on April 1, 2022, Starting from
the tax filing period of April 2022, an eligible enterprise in the manufacturing and other sectors may apply to the competent tax authority
for a refund of its incremental VAT credit amount; starting from the tax filing period of July 2022, an eligible medium-sized enterprise
in the manufacturing and other sectors may apply to the competent tax authority for a lump-sum refund of its existing VAT credit amount;
and starting from the tax filing period of October 2022, an eligible large enterprise in the manufacturing and other sectors may apply
to the competent tax authority for a lump-sum refund of its existing VAT credit amount.
Tax on Dividends
Pursuant to the EIT Law and
the EIT Implementation Rules, except as otherwise provided by relevant tax treaties with the PRC government, dividends paid by foreign-invested
investment enterprises to foreign investors which are non-resident enterprises and which have not established or operated premises in
the PRC, or which have established or operated premises but where their income has no de facto relationship with such establishment or
operation of premises shall be subject to a withholding tax of 10%. Pursuant to the Arrangement between Mainland China and the Hong Kong
Special Administrative Region for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income
entered into between the PRC government and the Hong Kong Special Administrative Region, where the beneficial owner is a company directly
holding at least 25% of the equity interest of the company paying the dividends, the tax charged shall not exceed 5% of the distributed
dividends. In any other case, the tax charged shall not exceed 10% of the distributed dividends.
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Pursuant to the Announcement
on Issues Relating to "Beneficial Owner" in Tax Treaties promulgated by the SAT on February 3, 2018 and came effective April
1, 2018, a "beneficial owner" shall mean a person who has ownership and control over the income, and the rights and property
from which the income is derived. Upon the determination of the "beneficial owner" status of a resident of the treaty counterparty
who needs to enjoy the tax treaty benefits (hereinafter referred to as the "applicant"), a comprehensive analysis shall be
conducted taking into account the actual conditions of the specific case. In general, the following factors are unfavorable for the determination
of "beneficial owner" status of an applicant: (1) the applicant is obligated to pay 50% or more of the income, within 12
months from its receipt, to a resident of a third country (region), where the term "obligated" includes agreed obligations
and de facto payment for which there is no agreed obligation; (2) the business activities undertaken by the applicant do not constitute
substantive business activities, where substantive business activities shall include manufacturing, distribution and management activities
of a substantive nature, the determination of whether the business activities undertaken by the applicant are of a substantive nature
shall be based on the functions actually performed and the risks borne, and investment holding management activities of a substantive
nature undertaken by the applicant may constitute substantive business activities (where the applicant undertakes investment holding
management activities which do not constitute substantive business activities, and simultaneously undertakes other business activities,
if such other business activities are not sufficiently significant, these shall not constitute substantive business activities); (3)
the treaty counterparty country (region) does not levy, or exempts tax on the relevant income, or levies tax but with a very low actual
tax rate; (4) in addition to the loan contract based on which interest is derived and paid, there exists other loans or deposit contracts
between the creditor and the third party, of which factors such as the amount, interest rate and date of execution are similar; and (5)
in addition to the transfer contract for rights to use such as copyright, patent, technology, from which the royalties are derived and
paid, there exists other transfer contracts for rights to use or ownership in relation to copyright, patent, technology between the applicant
and a third party.
Pursuant to the Notice of
the SAT on the Relevant Issues Concerning the Implementation of Dividend Clauses in Tax Treaties promulgated by the SAT and effective
February 20, 2009, all of the following conditions shall be satisfied before the concession tax rate in a tax treaty can be enjoyed:
(1) the tax resident obtaining dividends shall be restricted to the company as provided in the tax treaty; (2) among all the ownership
equity interests and voting shares of the PRC resident company, the proportion directly owned by the tax resident complies with the prescribed
proportions under the tax treaty; and (3) the proportion of the equity interests of the PRC resident company directly owned by such tax
resident complies with, at all times within the twelve months before obtaining the dividends, the proportions specified in the tax treaty.
Pursuant to the Announcement
of the State Taxation Administration on Issuing the Administrative Measures for Entitlement to Treaty Benefits for Non-resident Taxpayers
promulgated by the SAT on October 14, 2019 and effective January 1, 2020, entitlement to treaty benefits for non-resident taxpayers shall
be handled by means of "self-judgment of eligibility, declaration of entitlement, and retention of relevant materials for future
reference". Where non-resident taxpayers judge by themselves that they meet the conditions for entitlement to treaty benefits,
they may obtain such entitlement themselves at the time of making tax declarations, or at the time of making withholding declarations
via withholding agents. At the same time, they shall collect, gather and retain relevant materials for future reference in accordance
with the provisions of these Measures, and shall accept the follow-up administration of tax authorities. Relevant information proving
the status of "beneficial owner" shall be retained in the case of entitlement to dividends, interest and treaty benefits
of royalty clauses.
Laws and Regulations Relating to Labor
and Social Security
Pursuant to the Labor Law
of the PRC promulgated on July 5, 1994 and amended on and effective December 29, 2018, companies must negotiate and enter into employment
contracts with their employees based on the principle of fairness. Companies must establish and strengthen an employment hygiene system,
strictly implement the national labor safety and health rules and standards, deliver occupational health and safety education to employees,
prevent work-related accidents, and reduce occupational hazards. In addition, employers and employees shall purchase social insurances
and pay for social insurance fees in compliance with applicable PRC laws.
Labor Contracts
The Labor Contract Law of
the PRC, which was promulgated on June 29, 2007 and subsequently amended on December 28, 2012 and effective July 1, 2013, serves as the
primary law regulating the labor contract relationship between companies and employees. Pursuant to this law, an employment relationship
is established between the employer and the worker since the day of employment. The employer shall execute a written employment contract
with the worker. Furthermore, to safeguard the legal rights and interests of workers, the way to calculate compensation for the probation
period and for damages shall be subject to the provisions of the law.
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Social Security and Housing
Provident Fund
As required under the Social
Insurance Law of the PRC promulgated on October 28, 2010, and amended on and effective December 29, 2018, the Regulation on Work-Related
Injury Insurance promulgated on April 27, 2003, amended on December 20, 2010 and effective January 1, 2011, the Provisional Measures
on Insurance for Maternity of Employees promulgated on and effective December 14, 1994 and implemented on January 1, 1995, and the Regulation
on Administration of Housing Provident Funds promulgated on April 3, 1994 and last amended on and effective March 24, 2019, employers
and employees within the PRC shall pay for social insurance fees and housing provident funds in compliance with applicable PRC laws.
Laws and Regulations Relating to Intellectual
Property
Trademarks
Pursuant to the Trademark
Law of the PRC promulgated on August 23, 1982, amended on April 23, 2019 and effective November 1, 2019 and the Regulation on Implementation
of the Trademark Law of the PRC promulgated on August 3, 2002, amended on April 29, 2014 and effective May 1, 2014, the right to the
exclusive use of a registered trademark is limited to the approved trademark registration, and to goods for which the use of the trademark
has been approved. The period of validity of registered trademarks lasts for ten years from the day of registration approval. Absent
the authorization by the owner of the registered trademark, the use of the registered trademark or a similar trademark on the same category
of goods or similar goods constitutes an infringement of the right to exclusive use of the registered trademark. The infringer shall,
in accordance with the relevant regulations, cease the infringement activities, take correction actions, and compensate for losses.
Patents
Pursuant to the Patent Law
of the PRC promulgated on March 12, 1984, last amended on December 27, 2008 and effective October 1, 2009, and the Rules for the Implementation
of the Patent Law of the PRC amended on January 9, 2010 and effective February 1, 2010, after the grant of the patent right for inventions
and utility models, except otherwise regulated under the Patent Law, no entity or individual may, without the authorization of the patent
owner, exploit such patent, that is to manufacture, use, offer to sell, sell or import the patented product, or use the patented process,
and use, offer to sell, sell or import products directly obtained from such patented process, for production or business purposes. After
the patent right is granted for a design, no unit or individual shall, without the authorization of the patent owner, exploit such patent,
that is to manufacture, offer to sell, sell, or import any product containing such patented design for production or business purposes.
Where infringement has been established, the infringer shall, in accordance with the relevant regulations, be ordered to cease the infringement
activities, take corrective actions, and compensate for losses.
Copyrights
Pursuant to the Copyright
Law of the PRC promulgated on September 7, 1990, last amended on November 11, 2020, and effective June 1, 2021, works of PRC citizens,
legal persons or unincorporated organizations shall, regardless of whether they have been published, be entitled to the copyright pursuant
to this law. Works include written works; oral works; musical, dramatic, opera, dance, acrobatic and artistic works; visual arts, architectural
works; photographic works; audiovisual works; graphical works and modeling works such as engineering design graphs, product design graphs,
maps and schematic diagrams; computer software; and other intellectual achievements that meet the characteristics of works.
Pursuant to the Regulation
on Protection of Computer Software promulgated on December 20, 2001, last amended on January 30, 2013 and effective date on March 1,
2013, software copyright is conferred on the software development completion date. The protection period for a software copyright of
a legal person or other organizations lasts for 50 years, concluding on the day of December 31 in the 50th year after the initial release
of the software. However, in the case where the software has not been released within 50 years from its development completion date,
protection shall no longer be offered by these regulations. A software copyright holder may register with competent software registration
authority under the State Council Copyright Administrative Department. Registration certification documents issued by the competent software
registration authority serve as the prima facie proof of such registration.
IC Layout Designs
Pursuant to the Regulation
on the Protection of Integrated Circuit Layout Designs promulgated on April 2, 2001 and implemented on October 1, 2001, and the Protection
of Integrated Circuit Layout Designs Regulations Implementing Rules promulgated on September 18, 2001 and effective October 1, 2001,
layout design proprietary right holders enjoy the following proprietary rights: to duplicate the whole or any part of the protected layout
designs that is original; to make commercial use of the protected layout designs, ICs containing such layout designs, or items containing
such ICs.
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Regulatory Overview of Australia
We are engaged in cryptocurrencies
and foreign exchange business in Australia. Our corporate entities engaged in these businesses were established and registered in Australia
and have adopted measures to ensure compliance with its regulatory obligations.
Existing regulatory framework on foreign
exchange and crypto assets
While the regulation of foreign
exchange business has long been settled in Australia, the same cannot be said for cryptocurrency. In any event, cryptocurrencies or digital
currencies, and cryptocurrency exchanges are legal in Australia.
Financial products and services
offered in Australia are generally regulated by imposing obligations on the sellers or distributors of the product. The Australian Securities
and Investments Commission (ASIC) and the Australian Transaction Reports and Analysis Centre (AUSTRAC) oversee different aspects of the
foreign exchange and crypto asset ecosystem of Australia and at this stage, there is currently no clear, holistic policy that directly
regulates crypto assets (cryptocurrencies/digital currencies) or Crypto Asset Secondary Service Providers (
CASSP
) in Australia.
It can be said at this stage
that the existing regulatory framework for crypto assets is composed of a patchwork of obligations drawn from various parts of Australian
laws, including the
Corporations Act 2001 (Corporations Act)
,
Anti-Money Laundering and Counter-Terrorism Financing Act 2006
(AML/CTF Act)
, and the
Competition and Consumer Act 2010
.
In essence, if the crypto
asset is a financial product and a designated service, it will fall within the ambit of the Corporations Act and the AML/CTF Act, but
if it is not a financial product, then it is considered a consumer product subject to the Australian Consumer Law under the Australian
Competition and Consumer Commission (ACCC).
Government bodies and laws on foreign exchange
and crypto assets and exchanges
The Australian Securities
and Investments Commission (ASIC) and the Australian Transaction Reports and Analysis Centre (AUSTRAC) are the two (2) primary regulators
of foreign exchange contracts and crypto assets and exchanges.
ASIC and the Corporations Act and the ASIC
Act
ASIC is the government regulator
for among others, corporations, financial markets, and the financial services industry of Australia and administers the Corporations
Act and the
Australian Securities and Investments Commission Act 2001
(ASIC Act), which embody the regulatory obligations on the
industry it supervises. ASIC imposes the requirement to hold an Australian Financial Services License (AFSL) before engaging in financial
services (in relation to financial products) in Australia.
We hold an AFSL that authorizes
us to deal in and provide general financial product advice in relation to among others,
foreign exchange contracts
e.g., FX
Forward and Options Contracts,
and
non-cash payment products
(NCP).
While there have been no
changes recently to the laws governing foreign exchange contracts, NCP products have received some attention in relation to crypto or
digital assets. An NCP is described as an arrangement through which a party makes payments, or causes payments to be made, other than
by the physical delivery of Australian or foreign currency. Examples include stored value cards, electronic cash and direct debit services.
An intermediary that arranges
for the issue of an NCP facility may need an AFS License or be a Representative of an AFS licensee. However, just because a crypto asset
is what is used to complete a transaction does not necessarily mean that the crypto asset is an NCP facility as it will depend on the
rights and obligations associated with the asset.
According to ASIC's
INFO 225, if the asset provides the holder with a right to use the asset to make a payment, it is likely to be an NCP facility. An arrangement
is also likely to be an NCP if for example a person offers an arrangement where payments can be made using a crypto asset but fiat currency
is sent to recipients.
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Australian Financial Services License (AFSL)
As an AFS Licensee engaged
in financial services in Australia, in particular, advising and dealing in foreign exchange contracts and non-cash payment products,
we are subject to general obligations under the Corporations Act, including among others, providing financial services efficiently, honestly
and fairly; having in place adequate arrangements for the management of conflicts of interest; complying with our license conditions
and financial services laws; having adequate human, financial and technological resources; maintaining a dispute resolution system for
retail clients; and ensuring that our representatives are adequately trained and competent. Additionally, we must have adequate risk
management systems in place. ASIC requires all AFS Licensees to have their compliance arrangements in relation to these obligations to
be audited on an annual basis.
ASIC initiatives concerning crypto assets
The Australian government
has publicly stated that it is committed to ensuring that consumers can buy, sell, and store crypto assets using Australian crypto asset
secondary service providers.
In October 2021, ASIC amended
Information Sheet (INFO 225) in relation to crypto assets to help understand the obligations under the Corporations Act and the ASIC
Act.
Based on INFO 225, Australian
laws apply where the crypto asset is promoted or sold in Australia, including from offshore. As such, the use of offshore or decentralized
structures does not mean that Australian laws do not apply or can be ignored and encourages entities to build their products and services
in a way that complies with the intention of the laws in place to safeguard consumers and the integrity of financial markets in Australia.
Furthermore, INFO 225 provides
that it is incumbent on issuers to determine if issuing the crypto asset falls within the definition of a 'financial product'
under the Corporations Act and if so, the need to hold an AFSL or to obtain authorization will apply and the product will be regulated
by ASIC, failure to do so may trigger legal action from ASIC against those companies without AFSL or authorization.
Whether a crypto asset is
considered a financial product depends on its use, as primarily defined in section 763A of the Corporations Act.
With regards to the ASIC
Act, it prohibits engagement in misleading or deceptive conduct in the course of operating a crypto asset business whether a financial
product is involved or not.
AUSTRAC and the AML/CTF Act
AUSTRAC is the Australian
Government agency responsible for preventing, detecting, and responding to criminal abuse of the financial system to protect the Australian
community from serious and organized crime. AUSTRAC also regulates certain business activities in the financial, bullion and gambling
sectors. These business activities are called designated services and have been identified because they pose a risk for money laundering
and terrorism financing.
Presently, Australia's
cryptocurrency regulations under the AML/CTF Act and regulations, require digital currency exchanges (DCE) to register with AUSTRAC.
The regulations require entities acting as exchanges, or providing registrable exchange type services, to identify and verify their users,
maintain records, and comply with government AML/CTF reporting obligations.
One of our business entities
in Australia has been registered as a Digital Currency Exchange Provider with AUSTRAC and complies with the regulatory obligations imposed
by AUSTRAC under the Anti Money-Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act), including among others, having an
AML/CTF Program; identifying the types of money laundering and terrorist financing risks that may be faced by the business and the consequences
of non-compliance; reporting on suspicious matters; and keeping records for the prescribed period.
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Australian Government recent regulatory objectives
for crypto assets
The Australian Government
is committed to ensuring that consumers can engage (buy, sell, and store) crypto assets using Australian CASSP with confidence and has
announced in October 2021 that it intends to regulate the digital asset market by imposing a licensing (marketing and financial services)
regime.
As articulated by the Australian
Government, the proposed licensing regime is designed to provide a framework for minimum standards of conduct, including for custody
of private keys and the suitability of key persons to be operating secondary service provider businesses (through fit and proper person
tests).
These changes will provide
regulatory clarity and give confidence to both consumers and businesses.
On March 21, 2022, the Australian
Government issued a "policy paper" advising that it intends to:
1.
Establish a market licensing regime for crypto exchanges – aimed to ensure that consumers can trust the exchanges they use to buy cryptocurrencies; and
2.
Introduce
                                            custody arrangements for cryptocurrency exchanges – aimed to ensure that crypto investors
                                            who hold their crypto on exchange can always access their money by introducing custody requirements
                                            for crypto assets.
The policy paper named the
following existing Government initiatives, all drawing on benefits of innovation in Australia.
●
The
                                            Government Digital Economy Strategy is designed to position Australia to be a top 10 digital
                                            economy and society by 2030 through AUD1.2 billion of strategic investment.
●
The
                                            National Blockchain Roadmap 2020-2025 highlights the potential of blockchain technology across
                                            the Australian economy.
●
AUD60
                                            million in funding to the Digital Finance Cooperative Research Centre (DFCRC) to bring together
                                            fintech, industry, research, regulatory stakeholders to capitalize on the financial sector
                                            transformation arising from the digitization of assets.
●
The
                                            Blockchain Pilot Grants program provided AUD5.6 million to two blockchain projects.
●
The
                                            Australian Border Force has undertaken a successful blockchain trial to digitize trade processes.
●
Implemented
                                            an anti-money laundering and counter-terrorism financing framework for crypto asset secondary
                                            service providers via AUSTRAC's digital currency exchange register.
●
Commitment
                                            to investigating the feasibility of a central bank digital currency, the potential of Decentralised
                                            Autonomous Organisations and reviewing the taxation of digital transactions and assets.
Following an announcement
by the Australian Government in August 2022 that it will be commencing consultation with stakeholders on a new regulatory regime for
the cryptocurrency/digital assets sector, the Department of the Treasury (the "Treasury") released its 'Token Mapping
Consultation Paper' (Consultation Paper) in February 2023. The Consultation Paper invited feedback from the industry on how to
address matters such as the existing gaps in regulatory framework and to inform future licensing and policy decisions in the cryptocurrency
sector. Following the Token Mapping exercise, the Treasury is expected to release a consultation paper on the design of a licensing and
custody framework for CASSP in mid-2023.
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The Australian Competition and Consumer Commission
(ACCC)
The ACCC is an independent
Commonwealth statutory authority whose role is to enforce the
Competition and Consumer Act 2010
. The ACCC provides guidance to
consumers about buying and sending fiat and crypto currencies and can intervene in cases involving misleading and deceptive conduct.
The Australian Taxation Office and taxation
laws on crypto or digital currencies
While the Australian Taxation
Office (ATO) has provided some guidance on the income tax treatment of crypto and digital assets and has adopted some legislative reform
with regards to Goods and Services Tax, this has been limited to crypto ownership in Australia.
The inability of the ATO
to provide comprehensive binding guidance is due, in part, to the fact that crypto includes a broad range of tokens and other "things"
with different rights, entitlement and obligations. As such, without a specific crypto regime it is difficult for the ATO to administer
the law in a consistent and sensible way.
Board of Taxation review
In March 2022, the Board
of Taxation (the "Board") commenced a review into the appropriate policy framework for the taxation of digital transactions
and digital assets, including cryptocurrency and non-fungible tokens (NFTs). The Board was required to report back to the Government
by December 31, 2022 in accordance with the Consultation Guide. However, according to the latest announcement by the Board on its official
website, the Board is now asked to report back to the Government by September 30, 2023. Whilst the outcome of the final report released
to the public, the terms of reference for the review requires the Board to, among others, consider whether or not any changes to Australia's
taxation laws and/or their administration are warranted in the context of digital assets and transactions, both for retail and wholesale
investors.
It is said that the review
signals an increasing desire for Australia to be at the forefront of technology and innovation. Meanwhile, in considering the tax and
accounting process of these digital assets, the industry is expected to have recourse to the guidelines provided by the ATO.
The Australian Sanctions Office (ASO)
The following is a brief
summary of the sanctions regime imposed by the Australian Government. This summary does not intend to set out the laws and regulations
relating to Australia's sanctions regime in their entirety.
ASO is the Australian Government's
sanctions regulator and it operates under Australia's Department of Foreign Affairs and Trade (DFAT). ASO is tasked with, among
others, providing guidance on Australian sanctions law and works with other government agencies to monitor compliance with sanctions
legislation. Australia adopts both the United Nations Security Council (UNSC) sanctions regimes and the Australian autonomous sanctions
regimes as a matter of international law as well as a matter of Australian foreign policy. Penalties for breaching sanctions laws include
up to ten years in prison and substantial fines.
Australia has in March and
April 2022 extended its autonomous sanctions in relation to Russia. These sanctions measures are aimed at restrictions on exports and
commercial activities, including providing and dealing with assets of designated persons or entities, and restrictions on certain imports
including arms material, energy products such as oil, and gold. However, Sanctions Permits may be issued, subject to certain criteria.
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Regulatory Overview of United States
The following sets forth
a description of certain laws, regulations and government policies relating to cryptocurrencies and cryptocurrency mining in the United
States, which we consider a key market for our overseas business.
We are not aware of any law
that currently makes it per se illegal for a natural person or entity simply to possess, sell, or trade Bitcoin on its own behalf in
connection with lawful transactions in the United States, provided that any transaction complies generally with applicable law. We are
also not aware of any United States federal law that currently prohibits any legal entity or natural person from importing blockchain
processing units, or BPUs, into the United States or manufacturing or selling BPUs within the United States. Nonetheless, in the United
States, both the federal government and individual states have regulations in place that govern the offer, sale, and transmission of
various types of cryptocurrency, including but not limited to Bitcoin, and the legal status of Bitcoin and other cryptocurrencies and
digital assets continues to evolve. Nevertheless, the United States currently hosts a complex and rapidly evolving regulatory environment
and we are subject to a wide range of laws and regulations enacted by U.S. federal, state and local governments, governmental agencies
and regulatory authorities, including the Commodity Futures Trading Commission, the SEC, the Federal Trade Commission, or the FTC, and
the Financial Crimes Enforcement Network of the U.S. Department of the Treasury, or FinCEN. Other regulatory bodies, governmental or
semi-governmental, have shown an interest in regulating or investigating companies engaged in the blockchain or cryptocurrency businesses.
The United States Commodity
Futures Trading Commission, or CFTC, has taken the position that cryptocurrencies, such as Bitcoin, are "commodities" covered
by the Commodity Exchange Act and subject to regulation by the CFTC. In March 2018, a United States federal court affirmed the CFTC's
authority to regulate cryptocurrencies. This means that the CFTC has jurisdiction over any futures, options or derivatives contracts
involving cryptocurrencies as well as any fraud or manipulation involving cryptocurrencies in the spot market. Our products are not intended
to be used either for any futures, options or derivatives trading or to enable fraud or manipulation. However, to the extent that any
mining activity using our products were to be deemed a form of fraud or manipulation, or our products were otherwise used for fraud or
manipulation, we could potentially be subject to regulatory or private actions related to those uses.
In addition, while the SEC
has taken the position that Bitcoin, Ether, and certain cryptocurrencies subject to significant operational restrictions are not "securities"
regulated by the federal securities laws, it is likely that the SEC would view almost all other cryptocurrencies (other than Bitcoin
and Ether) that can be mined to be "securities," based on their status as "investment contracts" under the guidance
provided by the SEC "Framework for 'Investment Contract' Analysis of Digital Assets," and the application of
the test under
SEC v. W. J. Howey Co.,
328 U.S. 293 (1946) (the "
Howey
test") to cryptocurrencies.
It is similarly likely that these other cryptocurrencies will be treated as securities under the laws of the individual states.
The status of most currently-existing
cryptocurrencies and other digital assets as securities could impose significant restrictions on us or our customers with operations
that are located in the United States or involve United States residents. Typically, offerings and distributions of securities in the
United States are required to register with the SEC under the Securities Act and, in compliance with state law, with applicable state
regulators. If the offering of a cryptocurrency or digital asset that can be mined using our products is deemed a security, miners may
be required to cease mining that cryptocurrency or digital asset, which would negatively affect our business. In addition, if the Company
were viewed as facilitating an illegal distribution of a cryptocurrency or digital asset, the Company could have liability associated
with its product sales. Further, even if a cryptocurrency or digital asset that is considered to be a security is legally distributed
under the U.S. federal and state securities laws, the miners of that cryptocurrency or digital asset could be viewed as statutory underwriters
or as "brokers" subject to regulation under the Exchange Act because they are effecting transactions in those securities
for a fee (i.e., mining rewards). This outcome would again potentially reduce the viability of our product sales and could also result
in the Company incurring liability. Any of these developments could limit the future development of our business. See "Item 3.
Key Information—D. Risk Factors—Risks Relating to Our Business and Industry—Risks Relating to Our Cryptocurrency, Blockchain
and Mining Related Businesses— The current regulatory environment in foreign markets, and any adverse changes in those environments,
could have material adverse impacts on our blockchain products business and our Fintech business."
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Under Section 5 of the Federal
Trade Commission Act of 1914, which currently prohibits "unfair methods of competition in or affecting commerce, and unfair or
deceptive acts or practices in or affecting commerce," the FTC is authorized to "prevent persons, partnerships, or corporations,
except banks [and certain other entities] from using unfair methods of competition in or affecting commerce and unfair or deceptive acts
or practices in or affecting commerce." Based upon a new "Policy Statement Regarding the Scope of Unfair Methods of Competition
Under Section 5 of the Federal Trade Commission Act" issued on November 10, 2022, the FTC may now use Section 5 of the FTC Act
to regulate "conduct that tends to cause potential harm similar to an antitrust violation, but that may or may not be covered by
the literal language of the antitrust laws or that may or may not fall into a 'gap' in those laws." In response, the
FTC has been increasing its scrutiny of the digital assets sector, and has initiated various investigations into certain acts and practices
of entities participating in the digital assets sector.
Further, FinCEN regulates
"money transmitters," including certain administrators and exchangers of cryptocurrencies, and state laws also regulate money
transmission; more generally, cryptocurrency transactions may implicate a variety of federal and state laws designed to counter money
laundering. In that regard it should be noted that U.S. Secretary of the Treasury Steven Mnuchin has indicated that federal regulators
are specifically looking for potential money laundering activities involving cryptocurrency.
In addition, since there
has been limited precedent set for the financial accounting of digital assets, it is unclear how we will be required to account for digital
asset transactions (i.e. receiving or selling Bitcoin) or digital assets themselves. Internal Revenue Service Notice 2014-21 states that
at federal level, "the sale or exchange of convertible virtual currency, or the use of convertible virtual currency to pay for
goods or services in a real-world economy transaction, has tax consequences that may result in a tax liability." Under Notice 2014-21,
cryptocurrencies and other digital assets are treated as "property" for U.S. federal tax purposes and this position was reaffirmed
by the IRS in a reminder issued in March 2018 (IR-2018-71). In 2019, the IRS further released Revenue Ruling 2019-24 and a set of "Frequently
Asked Questions" (which have been periodically updated), that provide additional guidance, including guidance to the effect that,
under certain circumstances, hard forks of digital currencies are taxable events giving rise to ordinary income and guidance with respect
to the determination of the tax basis of virtual currency. However, this guidance does not address other significant aspects of the U.S.
federal income tax treatment of cryptocurrency assets and related transactions. Mining, selling, and transacting in cryptocurrencies
and other digital assets are all potentially taxable events for U.S. federal income tax purposes. United States state taxing authorities
may adopt similar views on the taxability of cryptocurrencies and other digital assets.
Even considering the foregoing,
regulations may substantially change in the future and it is presently not possible to know how regulations will apply to our businesses,
or when they will be effective. As the regulatory and legal environment evolves, we may become subject to new laws and further regulation
by the SEC and other agencies, which may affect our mining and other activities. For instance, various bills have been proposed in the
U.S. Congress related to our business, which may be adopted and have an impact on us. Additionally, governmental agencies and regulatory
authorities, such as the SEC, the CFTC, the FTC and the FinCEN may also enact regulations related to our business, which may have an
impact on us. For example, the U.S. Department of the Treasury is expected to announce regulations pursuant to the Infrastructure Investment
and Jobs Act passed in November 2021, which requires digital-asset brokers to turn over information on their clients' transactions
to the U.S. Internal Revenue Service. For example, if the Treasury Department were to classify Bitcoin miners as brokers for purposes
of these rules, or impose an excise tax on electricity usage by digital asset miners, as described in General Explanations of the Administration's
Fiscal Year 2024 Revenue Proposals released by the Department of the Treasury on March 9, 2023, those actions would have an adverse impact
on our business.
Sanctions Laws and Regulations
Following is a summary of
the sanctions regime imposed by the United States. This summary does not intend to set out the laws and regulations relating to the United
States sanctions in their entirety.
Trade Controls
Our business activities are subject to various restrictions under U.S.
export and similar laws and regulations, as well as various economic and trade sanctions administered by OFAC. Further, various countries
regulate the import of certain technology and have enacted or could enact laws that could limit our ability to provide customers with
our products in those countries.
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Economic sanction laws in the
U.S. and other jurisdictions prohibit or otherwise restrict us and our officers, directors, and employees from engaging in transactions
in, or relating to, certain countries, territories, individuals, and entities. In the U.S., OFAC, the U.S. Department of State, and the
U.S. Department of Commerce administer and enforce laws, executive orders, and regulations establishing U.S. economic and trade sanctions.
Such sanctions prohibit, among other things, transactions with, and the provision of services to, certain countries, territories, individuals,
and entities. These persons and entities include specially designated nationals and other persons and entities targeted by OFAC sanctions
programs. The lists of OFAC-restricted countries, territories, individuals, and entities, including the List of Specially Designated Nationals
and Blocked Persons, as such list may be amended from time to time, can be found on the OFAC website at https://ofac.treasury.gov/. In
addition, certain programs administered by OFAC prohibit dealing with individuals or entities in certain countries regardless of whether
such individuals or entities appear on the lists maintained by OFAC. These types of sanctions and similar laws and regulations in non-U.S. jurisdictions
may significantly restrict our business activities in certain countries or territories. The economic sanctions and related laws of different
jurisdictions in which we conduct business also may conflict with one another, such that compliance with all applicable laws may be difficult.
Failure to comply with OFAC or other relevant sanctions could have serious legal and reputational consequences, including civil and criminal
penalties.
Export Control Regulations
The purpose of the export
control regulations is to control exports and re-exports for purposes of national security, foreign policy, short supply, reduction of
nuclear proliferation, limitation of chemical or biological warfare, antiterrorism, crime control, enforcement of economic embargoes,
compliance with United Nations resolutions and other purposes. These laws apply to both the export of tangible products as well as the
export of technology, technical data, software, trade secrets and similar types of information. These programs are administered by various
U.S. agencies. Sanctions for violations of these regulations include civil and criminal penalties — criminal sanctions are often
imposed on both corporate defendants and officers, directors and employees of the corporation in their personal capacities.
Export Administration Regulations
In the United States, the
principal program for the federal regulation of exports is under the U.S. Export Administration Regulations, or the EAR. The EAR controls
the export and re-export of U.S.-origin products and technologies from the United States. The EAR prohibits the export of certain goods,
software and technologies identified therein to specific foreign countries or require exporters to obtain export licenses for the export
of such items. The EAR incorporate the Commerce Control List, a list of approximately 3,000 items, which are subject to export restrictions.
Items on the Commerce Control List are prohibited from export to certain destinations unless an export license is issued by the U.S.
Department of Commerce. Items on the Commerce Control List include products, software and technology. Examples of products that are subject
to export licensing include electronic navigation control systems, computer aided design devices (CAD-CAM), high performance computers,
network components (routers, hubs, servers), computerized telecommunications switches and high performance composite materials. The EAR
also control the "re-export" of products manufactured in foreign countries which incorporate more than a de minimis amount
of U.S. content or which are based on certain U.S. –origin technologies. Finally, the EAR also prohibit the export of any item
that will be used in any prohibited end-use.
C.
Organizational structure
We are an exempted company
incorporated pursuant to the laws of Cayman Islands. We operate and own our assets directly and indirectly through a number of subsidiaries.
Ebang International Holdings
Inc. is a holding company incorporated in Cayman Islands which does not have substantive operations. We conduct our businesses through
our subsidiaries. Our principal subsidiaries consist of the following entities (in chronological order based on their dates of incorporation):
●
Zhejiang
                                            Ebang Communication Technology Co., Ltd., or Zhejiang Ebang, our majority-owned subsidiary
                                            and an onshore holding company established in the PRC on January 21, 2010, principally for
                                            holding our businesses in the design, manufacture and sale of telecommunications and blockchain
                                            processing equipment;
●
Zhejiang
                                            Ebang Information Technology Co., Ltd., or Ebang IT, our majority-owned subsidiary and an
                                            operating entity established in the PRC on August 11, 2010, principally for the design, manufacture
                                            and sale of telecommunications and blockchain processing equipment;
87
●
Hangzhou
                                            Dewang Information Technology Co., Ltd., or Hangzhou Dewang, our majority-owned subsidiary
                                            and an operating entity established in the PRC on December 31, 2015, principally for the
                                            design and manufacture of blockchain chips;
●
Ebang Communications (HK) Technology Limited, or HK Ebang Communications, formerly known as Hong Kong Bite Co., Ltd., our wholly-owned subsidiary and an operating entity established in Hong Kong on February 12, 2016, principally for the trading of blockchain chips;
●
Ebonex Australia Pty Ltd, or Ebonex Australia, our wholly-owned subsidiary and an operating entity established in Australia on April 22, 2021, principally for operating the cryptocurrency exchange platform Ebonex; and
●
Compass Global Holdings Pty Ltd, or Compass Global, which became our
wholly-owned subsidiary in Australia through acquisition on March 21, 2022, principally for the cross-border payment and foreign exchange
business.
The chart below summarizes
our corporate structure and identifies the principal subsidiaries described above as of the date of this annual report:
(1)
The remaining 48.95% equity
    interests are owned by Huzhou Meiman Investment Management LLP, an unaffiliated third party.
(2)
On December 16, 2020, an affiliate controlled by Mr. Dong Hu, our chairman
of the board of directors, chief executive officer and chief financial officer, acquired 0.0036% of the equity interests in Zhejiang Ebang
Communication Technology Co., Ltd.
(3)
There is another Hong Kong
    entity within the Group named Ebang Trust Limited, whose ultimate parent is Ebang International Holdings Inc.
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D.
Property, plants and
    equipment
Our business operation is
headquartered in Hangzhou, Zhejiang. We currently occupy properties in other locations in China, including (1) other research and development
bases in Shanghai and Wuhan, (2) one production facility in Hangzhou and (3) sales offices in Hangzhou, Shijiazhuang, Changsha, Guangzhou,
Taizhou and Shenyang. We also currently occupy properties in other locations outside of China primarily in Singapore, Hong Kong,
Australia and the Bahamas to operate and expand the Fintech businesses.
In addition, we are constructing
our new headquarters in Linping District, Hangzhou which will comprise expanded production, research and development and office space,
among other uses, in order to support our business growth. For more information on our expansion plan and the related properties, see
"—Owned Properties."
Leased Properties
The total gross floor area, or GFA, of our leased properties is approximately
9,043 square meters, or sq.m, our of which, approximately 1,391 sq.m are leased outside of China primarily in Singapore, Hong Kong, Australia
and the Bahamas. These leased properties are used for research and development, sales and other offices. Our lease agreements mainly have
a term of one to four years.
Owned Properties
As of December 31, 2022,
we owned properties in two locations in China with a total GFA of approximately 33,888.08 sq.m. The following table sets forth the GFA
of all properties owned by us:
Location
Approximate GFA
(sq.m.)
Wuhan, Hubei (research and development center)
390.68
Hangzhou, Zhejiang (Linping District)
33,497.40
Total
33,888.08
We believe that we have adequate
facilities, through a combination of leased and owned properties, to accommodate our business operations and future expansion plans.
ITEM 4A. UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 5. OPERATING AND FINANCIAL REVIEW AND
PROSPECTS
Unless otherwise stated,
the discussion and analysis of our financial condition and results of operation in this section apply to our financial information as
prepared according to U.S. GAAP. You should read the following discussion and analysis of our financial condition and operating results
in conjunction with our consolidated financial statements and the related notes included elsewhere in this annual report. The following
discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results
and the timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of various
factors, including those set forth under "Item 3. Key Information—D. Risk Factors."
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A.
Operating results
Overview
As a global blockchain technology
and Fintech company, we have strong application-specific integrated circuit (ASIC) chip design capability. With years of industry experience
and expertise, we have become a global Bitcoin mining machine producer. Based on our deep understanding of the Fintech industry and compliance
with laws and regulations in various jurisdictions, we have launched professional, convenient and innovative Fintech service platforms.
We strive to expand into the
upstream and downstream markets of the blockchain and Fintech industry value chain to diversify our offerings and achieve a more stable
financial performance, by starting with the cryptocurrency mining and farming business, and expanding into further Fintech businesses.
As of the date of this annual report, we have established two cryptocurrency exchange platforms and one cross-border payment and foreign
exchange platform.
We believe our extensive experience in the blockchain and Fintech industry
positions us well in our future endeavors. We intend to continue to concentrate our efforts in our blockchain and Fintech related businesses
in 2023, specifically in Singapore, Hong Kong, Australia, New Zealand, the United States and Malaysia. Although we have not generated
substantial revenue from such businesses to date, we carefully selected these countries and/or regions because of what we believe to be
a Fintech-friendly regulatory environment.
Key Factors Affecting Our Results of Operations
In addition to the general
factors affecting the Chinese and global economy and our industry, our results of operations and financial condition are affected by
a number of industry- and company-specific factors, including those set out below:
Expected economic returns on Bitcoin mining
activities and fluctuation of Bitcoin price especially
Our revenues primarily consist
of proceeds of sales of Bitcoin mining machines, which are, in general, determined by the demand and pricing of our Bitcoin mining machines.
An increase in the economic return of Bitcoin mining activities would generally stimulate the demand and average selling price for our
Bitcoin mining machines, and vice versa. An increase in the Bitcoin price is the most significant factor that could increase the expected
economic returns generated by Bitcoin mining activities. Other factors that may increase the economic return of Bitcoin mining activities
include, among others, increase in transaction fees, decrease in electricity costs or other operating costs, increase in computing power
and efficiency of mining machines, reduction of difficulties of mining activities and increase in number of Bitcoin awarded for mining
activities.
Historically, fluctuation
of the Bitcoin price significantly affected our results of operations and financial condition; in particular, a significant drop in Bitcoin
price resulted in a material negative effect on the global financial market and our results of operation. Due to the COVID-19 pandemic
and the Bitcoin halving event that occurred in 2020, the economic return of Bitcoin mining activities was further reduced as awards from
solving a block was halved, which also affected the demand for our Bitcoin mining machines. As a result, our revenues from our blockchain
products business decreased significantly to US$8.0 million in 2020. In 2021, the sustained outbreak of COVID-19 continued to disrupt
our raw material supplies. Notwithstanding the foregoing, the price of Bitcoin has maintained at a high level with volatility, and investors
returned to cryptocurrency and blockchain investment, which had a positive impact on the market. As a result, we generated revenues of
US$39.8 million from our blockchain products business in 2021. With the continuous decline in Bitcoin prices in 2022, continuation of
the COVID-19 pandemic and large cryptocurrency exchanges declaring bankruptcy starting the second half of 2022, investors have once again
begun to invest cautiously. The shortage of overseas raw material supply has not improved, leading to a decline in our blockchain product
revenue to US$25.8 million. We expect the volatility of the Bitcoin price to continue, which may significantly affect our business of
operations and financial condition. See "Item 3. Key Information—D. Risk Factors—Risks Relating to Our Business and
Industry—Our results of operations have been and are expected to continue to be significantly impacted by the fluctuation of cryptocurrency
prices, especially the price of Bitcoin".  We expect our business and results of operations may be materially and adversely
affected by the global market panics in the near term. See "Item 3. Key Information—D. Risk Factors—Risks Relating to
Our Business and Industry—The global coronavirus COVID-19 outbreak has caused significant disruptions in our business, which we
expect may continue to materially and adversely affect our results of operations and financial condition."
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A decrease in the expected
economic returns of Bitcoin mining activities and the Bitcoin price may also lead to increase in inventory write-down and credit sales
as a result of stagnant demand and decrease in average selling price for our Bitcoin mining machines, which may significantly affect our
gross margin and extend the billing cycle of our products. The pandemic, the halving event in 2020 and trade sanctions from various countries
led some investors to exercise caution. For example, we recorded write-down for the potentially obsolete, slow-moving inventory and lower
of cost or market adjustment of US$3.6 million, US$2.2 million and US$6.5 million in 2020, 2021 and 2022, respectively. If we cannot maintain
an appropriate inventory level, we may lose sales and market share to our competitors.
Bitcoin price fluctuated
significantly in the past few years and resulted in a corresponding fluctuation in our sale of Bitcoin mining machines. We expect that
the Bitcoin price may continue to fluctuate in the future, and as such, we would expect to continue to experience a significant corresponding
fluctuation in both sales volumes and average selling prices of Bitcoin mining machines, as well as write-down of inventory, which may
erode our profitability in the case of a significant Bitcoin price drop.
Market demand for our mining machines and
development of blockchain technology and cryptocurrency markets, especially Bitcoin market
Our current blockchain product
is designed for Bitcoin mining. According to the F&S report, sales of Bitcoin computing hardware, the majority of which comprise
sales of Bitcoin mining machines, have surged at a CAGR of 61.3% from approximately US$0.2 billion in 2015 to approximately US$1.4 billion
in 2019 and are expected to further increase at a CAGR of 24.8% to approximately US$4.3 billion in 2024. Because market demand is dependent
on the development of the blockchain technology, as well as innovations in cryptocurrency applications, our results of operations will
significantly depend on our ability to keep pace with market demand to attract new customers or retain existing customers as well as
to maintain or increase our market share. Our results of operations will also be significantly affected by developments in overall blockchain
technology and cryptocurrency markets, and in particular, the Bitcoin market. The Bitcoin market may be affected by various factors,
including, among others the Bitcoin price and expected return on Bitcoin related activities such as mining and trading, different views
regarding the decentralized nature of cryptocurrencies, acceptance of cryptocurrencies as an investment instrument as well as a currency
for payment, competing cryptocurrencies to Bitcoin, and changes in the Bitcoin algorithm and the mechanism of mining.
Performance and cost of our products
The pricing of and demand
for our Bitcoin mining machines are closely related to their performance. In general, more advanced process technologies, such as the
7 nm and 8 nm process technology we designed, can accommodate designs that produce ASICs with higher power efficiency. The introduction
of new process and design technologies also enables us to gradually lower the production costs of ASICs with comparable computing power.
However, the application of such process technologies also commands high initial setup costs, particularly when the new production techniques
first become available, which translates to higher per unit costs. We have successfully and independently completed the design of 6nm
ASIC chips and the design of a chip for simultaneous Litecoin and Dogecoin mining in 2021. We currently focus on developing our proprietary
5nm-optimized ASIC chips and optimized mining machines for non-Bitcoin cryptocurrencies such as Litecoin. As a result, our new generation
ASICs using the most advanced process technologies will need to achieve strong sales in order to justify the initial setup costs of the
new production techniques and maintain our profitability. At the same time, as the most advanced production capabilities of IC foundries
ramp up, the initial high unit cost for IC fabrication may also decrease, which will likely translate to lower fabrication costs and
a positive effect on our business, results of operations and financial condition.
Competitiveness in research and development
We are a blockchain technology
company with strong application-specific integrated circuit (ASIC) chip design capability, and research and development is key to the
success of our blockchain and telecommunications products. Our research and development expenses were US$8.5 million, US$6.6 million and
US$5.1 million in 2020, 2021 and 2022, respectively. The research and development expenses decreased due to the global outbreak of COVID-19,
which resulted in, among others, travel restrictions, mandatory quarantines to our professional staff, and raw materials supply shortages
from our overseas suppliers for research and development, which in turn resulted in lower research and development expenses. Notwithstanding
COVID-19, we have resumed our research and development activities in the second half of 2020, and through unremitting efforts, we launched
our first self-developed proprietary cryptocurrency exchange platform Ebonex in April 2021 and another self-developed proprietary cryptocurrency
exchange platform, also branded Ebonex, in Australia in February 2022. Our exchange is designed to provide users with secure, fast, efficient,
and stable trading services in multiple currencies and modes. In order to coordinate the development of our cross-border payment business,
we launched our independently developed platform EbonFX in 2022. We will continue to focus on enhancing our product planning and research
and development capabilities to enable us to introduce or improve products that can well address evolving customer needs in a timely manner.
As existing competitors may introduce new technologies or provide more competitive offerings and more companies may enter the market to
compete with us, competition may intensify in the future and consequently our competitiveness and market share may be affected. As a result,
our ability to continue offering new and enhanced ASIC chips for Bitcoin mining as well as competitive products and technologies will
have a significant impact on our results of operations.
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Regulatory environment
We sell mining machines to
customers in China and overseas markets. We have historically generated most of our revenues in our blockchain products business from
customers in China. We intend to grow our overseas sales in the future. In addition, we also intend to expand into certain new business,
such as cryptocurrency mining business and cryptocurrency exchange business. As such, we need to make efforts and incur costs to comply
with laws and regulations relating to our business in various jurisdictions. We are subject to certain regulatory uncertainties. See
"Item 3. Key Information—D. Risk Factors—Risks Relating to Our Business and Industry— It is now illegal to engage
in digital asset transactions including Bitcoin mining operations in China, the ruling of which may adversely affect us", "Item
3. Key Information—D. Risk Factors— Changes in China's economic, political or social conditions or government policies
could have a material adverse effect on our business, results of operations and financial condition", "Item 3. Key Information—D.
Risk Factors—Risks Relating to Our Cryptocurrency, Blockchain and Mining Related Businesses—The current regulatory environment
in foreign markets, and any adverse changes in those environments, could have material adverse impacts on our blockchain products business
and our Fintech business" and "—Overseas Expansion" below. If the PRC government or a government in any other
jurisdiction changes its policy or regulations to prevent or limit the development of Bitcoin or cryptocurrencies generally, the price
of Bitcoin and the demand for our mining machines as well as the future development of our proposed cryptocurrency related business would
decrease or fail, and our business operations and financial results could be adversely affected. Therefore, our ability to comply with
government policies and regulations, and to anticipate and respond to potential changes in government policies and regulations will have
a significant impact on our business operations and our overall results of operations.
Production capacity
As a fabless IC design company,
we outsource the fabrication process of our ICs to third-party foundry partners, and we outsource the testing and packaging process to
third-party testing and packaging partners. We work closely with a limited number of such production partners. We have access to two
of the world's leading wafer foundries. We are also in discussions with another two of the world's major wafer foundries,
in hopes to diversify our supplier sources. We cannot guarantee that our third-party production partners will be able to meet our manufacturing
requirements or capacity or that they will not raise their prices. As a result, our ability to quickly respond to market demand and meet
production timelines, as well as to price our products competitively, is highly dependent on our collaboration with third-party production
partners. If our production partners are unable to meet our production capacity requirements or deliver products that meet our quality
standards on a timely basis, our results of operations will be adversely affected. We may also incur significant cash outflow at the
early stages of our production process because we are required to make prepayments to some of our third-party production partners to
secure their production capacity beforehand, which may affect our liquidity position. In addition, any failure by our third-party production
partners to perform their obligations in a timely manner may subject us to counterparty risk and make it difficult or impossible for
us to fulfill our customers' orders, which would harm our reputation and negatively affect our business, results of operations
and financial condition.
With our long-established
experience and know-how in producing telecommunications products, we have established in-house production capabilities to conduct PCB
assembly and system assembly for both mining machines and a wide range of telecommunications products. The volume of our in-house production
facilities to conduct PCB assembly and system assembly is largely dictated by the production capacity of our SMT production lines in
Hangzhou. We also outsourced some of our production to third-party subcontractors to meet our additional production needs. Our future
growth will depend, in part, on our ability to maintain efficient operations at our existing production facilities, our ability to expand
our production capacity as needed and the performance of our subcontractors when we are required to outsource part of our production.
We seek sufficient production capacity and effectively adjust our production equipment to produce different types of products. We are
currently expanding our production capacity by constructing new production facilities, which we expect will increase our capital expenditures
and affect our results of operations. Our future growth and results of operations will be affected by our investment in and continual
maintenance and upgrading of production facilities.
92
Expansion and diversification of our product
and service offerings
Our blockchain products business
has historically contributed most of our revenues. We intend to diversify our product and service offerings and achieve more stable performance
by expanding into the upstream and downstream markets of the blockchain and Fintech industry value chain. We believe if successful, the
development our new businesses will be a key driver for our stable and sustainable growth in the future. We intend to expand our mining
machine hosting services and establish mining farms overseas to provide centralized services to miners. We also intend to commence proprietary
Bitcoin mining overseas by employing our own mining machine inventory during the market downcycles, the success of which depends on many
factors, such as the advancement of computing efficiency, the fluctuation of cryptocurrency prices and the popularity of cryptocurrencies
in real economy. We expect the costs for preparation and commencement of our proprietary mining to mainly include energy consumption
fees.
We have begun exploring and
developing a cryptocurrency exchange business by launching our self-developed proprietary cryptocurrency exchange platform in 2021. We
continuously apply for compliance licenses in strictly selected regions to facilitate our Fintech businesses. As of the date of this annual
report, we have established two cryptocurrency exchange platforms and a cross-border payment and foreign exchange business. See "—Overseas
Expansion" below. Meanwhile, we are focused on application development, regulatory compliance and talent recruitment to ramp up
execution of our Fintech business plans for the expansion in these countries. However, if our operations at these jurisdictions or our
execution of business plan prove incorrect, we may incur additional expenses or losses.
We also intend to explore
the application of blockchain technology into non-cryptocurrency industries. Although we have accumulated extensive industry experience
and knowledge in cryptocurrency and blockchain technology industries, we are only at an early stage of executing our plan to launch blockchain-enabled
financial business. As a result, our ability to apply our accumulated industry knowledge and operational experience to these new businesses
will be critical to our future business growth and prospects. Commencement of new businesses, however, may also incur significant costs
and experience a prolonged ramp-up period. If any adverse development in such new businesses arises, our results of operations and prospects
may be significantly and negatively affected. We may not be able to develop those new businesses as successfully as contemplated, or
at all.
Product mix
We develop, manufacture and sell a range of blockchain and telecommunications
products. The sales of blockchain products accounted for, 42.3%, 77.3% and 79.8% of our total revenues for 2020, 2021 and 2022, respectively,
and the sales of telecommunications products accounted for 8.6%, 16.7% and 11.6% of our total revenues for 2020, 2021 and 2022. With the
volatility of Bitcoin price and the stagnation of industrial chain caused by COVID-19, the performance of our blockchain product business
has fluctuated significantly. Our profitability and financial performance could be affected by the mix of products manufactured and sold
in a particular period. In 2022, we have launched cryptocurrency currency exchanges and cross-border payment businesses, as we are still
at an early stage of development of this business sector, the Fintech service businesses accounted for only 8.3% of our total revenue.
93
Overseas Expansion
From August 2020 to February
2023, we established our wholly-owned subsidiaries in Canada, Australia, Singapore, Hong Kong, the Bahamas, New Zealand and Malaysia to
apply for Fintech business related licenses and wholly-owned subsidiaries in the United States in accelerating the construction of compliant
mining farms in North America. We carefully selected these countries and/or regions because of what we believe to be a Fintech-friendly
regulatory environment. We are at an initial stage of executing our plan to launch Fintech businesses to capture the growth opportunity
along the value chain of the blockchain and Fintech industry. As of the date of this annual report, we have received the MSB License from
the Financial Transactions and Reports Analysis Centre of Canada, which allows us to engage in foreign exchange dealing, money transferring
and dealing in virtual currencies in Canada; registration approval from AUSTRAC as digital currency exchange, which allows us to provide
cryptocurrency exchange services in Australia; acquired a company with an AFSL for engaging in financial services in Australia; registration
approval as an independent remittance dealer on the AUSTRAC Remittance Sector Register, which allows us to provide remittance services
in Australia; the TCSP license and registration approval as a Trust Company from the Company Registry in Hong Kong, which allows us to
carry on a trust or company service business; the MSO license from the Customs and Excise Department in Hong Kong, which allows us to
operate money changing and remittance services; the Type 4 and 9 licenses from the Securities and Futures Commission in Hong Kong, which
allows us to carry on advising on securities and asset management service; registered as a Digital Asset Business and a Firm Dealing in
Securities as Agent or Principal, Arranging Deals, Managing Securities and Advising on Securities from the Securities Commission of the
Bahamas, which allows us to carry on digital asset business activities and securities activities in and from the Commonwealth of the Bahamas.
In April 2021, we launched our first self-developed proprietary cryptocurrency exchange platform Ebonex and in February 2022, we launched
another self-developed proprietary cryptocurrency exchange platform, also branded Ebonex, in Australia. On top of that, in March 2022,
we established a cross-border payment and foreign exchange business in Australia, through the acquisition of an Australian company with
an AFSL, and in the fourth quarter of 2022, we launched our self-developed proprietary cross-border payment and foreign exchange platform,
EbonFX, targeting qualified investors subject to compliance with applicable laws in the jurisdictions EbonFX operates. We are also in
the process of obtaining additional and/or relevant licenses and approvals for our subsidiaries in Singapore, Hong Kong, Australia, New
Zealand and Malaysia. If and once obtained, the licenses will allow us to operate additional Fintech businesses in such countries and
regions. Meanwhile, we are focused on application development, regulatory compliance and talent recruitment to ramp up execution of our
new business plans for the expansion in these countries. We expect such ramp-up will support our future operations and our compliance
with local rules and regulations. Our expenses to date to implement our new business plans, including establishing in Canada, Australia,
Singapore, Hong Kong, the Bahamas, New Zealand, the United States and Malaysia, have been mainly on server rentals, application development,
regulatory compliance, talent acquisition and offices rentals to set up blockchain and Fintech businesses in the abovementioned countries
and regions. There is no guarantee that we will receive any additional required approvals and licenses for our proposed business in these
jurisdictions in a timely manner or on commercially reasonable terms, or at all, or that we will commence the proposed business as planned,
or at all. If our operations at these jurisdictions or our execution of business plan proves incorrect, we may incur additional expenses
or losses.
Any restrictions imposed by
a foreign government could force us to restructure operations, perhaps significantly, which could result in significant costs and inefficiencies
that harm our profitability, or even cause us to cease operations in the applicable jurisdiction. Fintech is a recent technological innovation
and the regulatory schemes to which Fintech businesses may be subject have not been fully explored or developed by foreign jurisdictions.
Thus, Fintech faces an uncertain regulatory landscape in many foreign jurisdictions. Various foreign jurisdictions may from time to time
adopt laws, regulations or directives that affect our Fintech businesses. Due in part to its international nature and the nascent stage
of regulation, along with the limited experience with Fintech, and language barriers between international journalists, translators and
regulators, information regarding the regulation of Fintech in various jurisdictions may be incomplete, inaccurate or unreliable. As both
the regulatory landscape develops and journalistic familiarity with Fintech increases, mainstream media's understanding of Fintech
and the regulation thereof may improve. As we enter into the markets in Australia, Singapore, Hong Kong, the Bahamas, New Zealand, the
United States and Malaysia, we expect to continue to monitor the local regulations regarding Fintech service platforms and retain local
regulatory counsels. See "Item 3. Key Information—D. Risk Factors—Risks Relating to Our Cryptocurrency, Blockchain
and Mining Related Businesses—The current regulatory environment in foreign markets, and any adverse changes in those environments,
could have material adverse impacts on our blockchain products business and our Fintech business," "Item 3. Key Information—D.
Risk Factors—If we are unable to manage our growth or execute our strategies effectively, our business, results of operations and
financial condition may be materially and adversely affected" and "Item 3. Key Information—D. Risk Factors— We
may not successfully develop, market or launch any future Fintech businesses or continue operating our existing Fintech businesses"
for details of the associated risks.
94
Key Components of Results of Operations
Revenues
Revenues represent the sales
of goods supplied and services provided to customers in our blockchain products and telecommunications businesses, and provision of services
to our customers, primarily mining machine hosting services and the newly established Fintech businesses. We used to generate revenues
primarily from our blockchain products business and mining machine hosting service, mainly including sales of Bitcoin mining machines
and related accessories and mining machine hosting services. However, we have halted all mining machine custody services in the PRC at
the end of April 2021. The combined impact of COVID-19 and Bitcoin halving event in 2020 significantly affected the expected returns
on Bitcoin related activities such as mining, and in turn resulted in a much lower demand and average selling price of our Bitcoin mining
machines. In 2021, the spreading of COVID-19 continued to disrupt our raw material supplies; however, the price of Bitcoin has maintained
at a high level with volatility, and investors returned to digital currency and blockchain investment, which had a positive impact on
the market. Our revenue in 2021 therefore increased significantly compared with 2020. With the continuous decline in Bitcoin prices in
2022, as well as the continuation of the COVID-19 pandemic and large cryptocurrency exchanges declaring bankruptcy starting the second
half of 2022, investors have once again begun to invest cautiously. The shortage of overseas raw material supply has not improved, resulting
in a decrease in our blockchain product revenue compared to the previous year.
The following table sets
forth the breakdown of our revenues by category, both in absolute amount and as a percentage of total revenues for each category for
the periods indicated:
Years Ended December 31,
2020
2021
2022
US$
%
US$
%
US$
%
(in thousands, except percentages)
Product sales – Bitcoin mining machines and related accessories
8,039
42.3
39,756
77.3
25,800
79.8
Product sales – Telecommunications
1,638
8.6
8,567
16.7
3,737
11.6
Service – Management and maintenance
(1)
9,327
49.1
3,127
6.0
86
0.3
Service - Fintech
-
-
-
-
2,705
8.3
Total
19,004
100
51,450
100
32,328
100
(1)
Primarily includes service fee
of mining machine hosting services, maintenance services and training services. As we have halted all mining machine custody services
in the PRC at the end of April 2021, our service revenue decreased since 2021. The breakdown of service revenues is set forth below for
the periods indicated:
Years Ended December 31,
2020
2021
2022
US$
%
US$
%
US$
%
(in thousands, except percentages)
Mining machine hosting services
9,142
98.0
2,814
90.0
-
-
Maintenance services and others
185
2.0
258
8.2
79
91.6
Training services
-
-
55
1.8
7
8.4
Total
9,327
100.0
3,127
100.0
86
100
We have historically generated a significant portion of our revenues
from sales in China. Only a small proportion of our revenues was generated from sales to customers located in other countries and regions,
including exports to Hong Kong, the United States, Central Asia and Southeast Asia. Due to the impact of COVID-19, our overseas sales
have decreased in 2020 and 2021, however, with the overseas Fintech business we launched in 2022, our overseas market share has slightly
rebounded in 2022. The following table sets forth the breakdown of our revenues by geographical location of our customers, both in absolute
amount and as a percentage of total revenue, for the periods indicated:
Years Ended December 31,
2020
2021
2022
US$
%
US$
%
US$
%
(in thousands, except percentages)
China
18,962
99.8
51,433
100.0
29,624
91.6
Overseas
(1)
42
0.2
17
0.0
2,704
8.4
Total
19,004
100.0
51,450
100.0
32,328
100.0
95
(1)
Includes sales to Hong
    Kong.
Product Sales
–
Bitcoin
Mining Machines and Related Accessories
Revenues from sales of blockchain
products primarily comprises sales of Bitcoin mining machines, related modules and accessories. We generated 41.2%, 77.0% and 79.7% of
our revenue from sales of Bitcoin mining machines in 2020, 2021 and 2022. Revenues from sales of our Bitcoin mining machines are primary
affected by the number of Bitcoin mining machines sold and their average selling price. The following table sets forth the breakdown of
sales volume and average selling price (per unit) of mining machines delivered for the periods indicated:
Years Ended December 31,
2020
2021
2022
Revenue
Sales
volume
Average
selling
price per
unit
Revenue
Sales
volume
Average
selling
price per
unit
Revenue
Sales
volume
Average
selling
price
                                            per
unit
(US$ in thousands)
(Unit)
(US$)
(US$ in thousands)
(Unit)
(US$)
(US$ in thousands
(Unit)
(US$)
Mining machines:
Ebit E9 Series
(1)
-
-
-
16,467
22,505
732
25,769
34,404
749
Ebit E10 Series
(2)
-
-
-
23,129
45,073
513
-
-
-
Ebit E12
7,433
10,921
681
40
83
482
-
-
-
Ebit E15
395
309
1280
-
-
-
-
-
-
Total
(3)
7,828
11,230
697
39,636
67,661
586
25,769
34,404
749
(1)
Mainly include Ebit E9.1, Ebit E9.2, Ebit E9.3,
    Ebit E9.5, E9.6, Ebit E9+, Ebit E9i and Ebit E9i+ series
We have recognized RMB106 million (approximately
    $16.4 million) and RMB166 million (approximately $24.7 million) in revenue in the years ended December 31, 2021 and 2022, as a result
    of payment received from one of the customers following a court mediation related to a claim the Company brought against the customer
    for mining machine sales in November 2019. Pursuant to the mediation, the customer would pay us RMB272 million. During the year ended
    December 31, 2018 when the sales contract was entered into, we determined that the customer did not have the intent or ability to pay
    as the amounts became due and therefore the collection was not probable. As a result, no revenue was recognized upon the shipments of
    the mining machines. The total of RMB272 million has been recognized as revenue pursuant to ASC 606 because the contract has been terminated
    and the consideration received is nonrefundable. We recognize revenues only to the extent of the consideration received as the collection
    of the remaining consideration still involves uncertainty.
In addition, we also recognized RMB7.4 million
    (approximately $1.1 million) in revenue in the year ended December 31, 2022, as a result of payment received from one of the customers
    following a court mediation related to a claim the Company brought against the customer for mining machine sales in January 2019. Pursuant
    to the mediation, the customer would pay us RMB73.6 million. During the year ended December 31, 2018 when the sales contract was entered
    into, we determined that the customer did not have the intent or ability to pay as the amounts became due and therefore the collection
    was not probable. As a result, no revenue was recognized upon the shipments of the mining machines. The total of RMB7.4 million has been
    recognized as revenue pursuant to ASC 606 because the contract has been terminated and the consideration received is nonrefundable. We
    recognize revenues only to the extent of the consideration received as the collection of the remaining consideration still involves uncertainty.
(2)
Mainly include Ebit E10 and Ebit E10+ series, including Ebit E10.1, Ebit E10.2, Ebit E10.3, Ebit E10.5, E10B and E10C.
(3)
Exclude revenues from sales
    of in-process mining machines.
96
The average selling price
of our Bitcoin mining machines changes from period to period and is primarily affected by the Bitcoin price and expected economic returns
on Bitcoin mining activities, and the performance of the mining machines.
The Bitcoin price and expected
economic returns on Bitcoin mining activities could significantly affect the demand of mining machines and in turn the average selling
price of Bitcoin mining machines. See "—Key Factors Affecting Our Results of Operations" for details of factors affecting
economic return on Bitcoin mining activities and the market demands. Particularly, a significant fluctuation in Bitcoin price in a short
period of time could significantly reverse the trend of average selling price of Bitcoin mining machines in certain periods of time. For
example, a significant drop in the Bitcoin price in the first quarter of 2020, third and fourth quarters of 2021 and a continuous decline
throughout 2022, significantly reduced the average selling price of Bitcoin mining machines in the same periods. Meanwhile, due to the
combined impact of COVID-19 and Bitcoin halving event in 2020, which significantly affected the expected returns on Bitcoin related activities
such as mining, it negatively affected the average selling price of Bitcoin mining machines. The unprecedented uncertainty and volatility
in the COVID-19 environment has an adverse impact on the supply chain of raw materials. With limited raw materials, we have optimized
the hardware architecture to ensure the competitiveness of our products.
In addition, the average selling price of Bitcoin mining machines is
also significantly affected by the performance of the Bitcoin mining machines. The following table sets forth the revenue, total computing
power sold and average selling price (per TH/s) of our own brand mining machines for the periods indicated:
Years Ended December 31,
2020
2021
2022
Revenue
Total
computing
power sold
Average
selling
price per
TH/s
Revenue
Total
computing
power sold
Average
selling
price per
TH/s
Revenue
Total
computing
power sold
Average
selling
price per
TH/s
(US$ in
thousands)
(TH/s)
(US$)
(US$ in
thousands)
(TH/s)
(US$)
(US$ in
thousands)
(TH/s)
(US$)
Mining machines:
Ebit E9 Series
(1)
-
-
-
16,467
270,060
61
25,769
408,453
63
Ebit E10 Series
(2)
-
-
-
23,129
1,199,390
19
-
-
-
Ebit E12
7,433
480,524
15
40
3,652
11
-
-
-
Ebit E15
395
18,540
21
-
-
-
-
-
-
Total
(3)
7,828
499,064
16
39,636
1,473,102
27
25,769
408,453
63
(1)
Mainly
        include Ebit E9.1, Ebit E9.2, Ebit E9.3, Ebit E9.5, E9.6, Ebit E9+, Ebit E9i and Ebit E9i+ series. RMB106 million (approximately
        $16.4 million) and RMB173.4 million (approximately $25.8 million) revenue were recognized in the year ended December 31, 2021
        and 2022, as a result of payment received from two of the customers following court mediations. Refer to our discussion above.
(2)
Mainly include Ebit E10 and Ebit E10+ series, including Ebit E10.1,
Ebit E10.2, Ebit E10.3, Ebit E10.5, E10B and E10C.
(3)
Exclude revenues from sales
    of in-process mining machines.
In general, the average selling
price of our Bitcoin mining machines in terms of computing power decreases as a result of the overall technology advancement which also
resulted in a lower unit cost in production of such Bitcoin mining machine. New models launched in the markets generally exert downward
pressure on prices of existing models. We typically price our Bitcoin mining machine based on their computing power and reduce the price
of the previous generation when we introduce a new generation with higher computing power.
97
Product Sales
–
Telecommunications
Revenues from our telecommunications
business primarily comprises sales of fiber-optic communication access devices and enterprise convergent terminals. We also produce and
sell a small portion of related parts and accessories. Sales of our telecommunications products are primarily driven by the demand from
the major telecommunications service providers in China as end users. Sales of telecommunications products could also be affected by
any adjustment of our business focus and sales and marketing efforts from time to time. Changes in the mix of our telecommunications
products sold could also affect the gross profit margin in the telecommunications business.
Service - Management and
Maintenance
Revenues from our management
and maintenance services include service fees for provision of mining machine hosting services to buyers of our Bitcoin mining machines,
and provision of maintenance and other services.
We generate service revenues
mainly from mining machine hosting services and other maintenance services. Revenues from provision of mining machine hosting services
was US$9.1 million, US$2.8 million and nil in 2020, 2021 and 2022, representing 98.0% a, 90.0% and 0% of our total service revenues, respectively.
We provided mining machine hosting services only to buyers of our Bitcoin mining machines, and typically entered into separate service
agreements with these buyers for such services. We have halted all mining machine custody services in the PRC at the end of April 2021.
Revenues from mining machine hosting services mainly include hosting service fees we charge to our customers, which is primarily calculated
based on the amount of power consumption (the number of kWh) and the average service fee per kWh. The average service fee per kWh is primarily
affected by the utility cost. The average service fee per kWh was generally US$0.04 throughout 2020 and April 2021.
Service - Fintech Businesses
Revenue from our Fintech businesses
include transaction fees and service fees charged for cross-border payment and foreign exchange services provided to customers as well
as service fees charged for cryptocurrency exchange business. We have launched our proprietary cryptocurrency exchange platform Ebonex
to promote our cryptocurrency exchange business, with qualified customers trading various virtual currencies on our platform. Revenue
generated from our cryptocurrency exchange business is negligible in 2022. In addition, in order to coordinate the development of our
global payment business, we launched the independently developed cross-border payment and foreign exchange platform EbonFX to provide
qualified customers with cross-border payment and foreign exchange services. As we are still at an early stage of development in this
business sector, the Fintech service businesses accounted for only 8.3% of our total revenue in 2022.
Cost of Revenues
Cost of revenues for our
mining machines and telecommunications products represents costs and expenses directly attributable to the manufacture of our
products sold and delivered, which primarily comprises of costs of (1) raw materials, components and parts including wafers; (2)
production overhead, including mainly packaging and testing costs, subcontracting cost, amortization and depreciation of intangible
assets, production equipment and utilities; (3) direct labor including cost to our production staff and outsourced production
workers; and (4) inventory write-down due to the impact of COVID-19 and the Bitcoin halving event in 2020, and continued decline in
cryptocurrency prices in 2022, which in turn resulted in a significant decrease in the selling price of our Bitcoin mining machines.
We examined and recorded write-down for the potentially obsolete, slow-moving inventories and lower of cost or market adjustment of
US$3.6 million, US$2.2 million and US$6.5 million in 2020, 2021 and 2022.
Our average cost of
mining machine per unit primarily comprises of and is mainly affected by the unit cost of wafer, number of ASIC chips used, and the
types and costs of other components included in or sold with the mining machines. The average per unit cost of wafers is affected by
our purchase volume and technology advancement. We generally incur higher per unit cost for models with better performance. The
average cost of our mining machine per unit was US$952, US$165 and US$134 in 2020, 2021 and 2022, respectively. As our mining
machine revenue for 2022 was all generated from the payments received from two customers following related court mediations related
to claims the Company brought against the customers for mining machine sales in January and November 2019, respectively, cost of
revenue for 2022 is nil.
Cost of revenues for mining
machine hosting services provided by us primarily consists of space leasing fees, infrastructure and equipment related expense, utility
expenses and salaries paid to related staffs. Since the hosting service was halted in 2021, the cost of revenue for hosting services in
2022 is a result of VAT impairments in connection with the disposal of Wuhai Ebang.
Cost of Fintech services
primarily consists of commission paid to direct sales staff and service fee paid to third party platform providers before we
launched our self-developed cross-border payment and foreign exchange platform EbonFX.
98
The
following table sets forth the breakdown of our cost of revenues by category, both in absolute amount and as a percentage of the cost
of revenues, for the periods indicated:
Years Ended December 31,
2020
2021
2022
US$
%
US$
%
US$
%
(in thousands, except percentages)
Product sales – Bitcoin mining machines and related accessories
11,394
52.0
12,839
57.8
6,343
37.5
Product sales – Telecommunications
1,715
7.8
6,505
29.2
6,170
36.5
Service – Management and maintenance
8,795
40.2
2,883
13.0
2,833
16.7
Service – Fintech
-
-
-
-
1,570
9.3
Total
21,904
100.0
22,227
100.0
16,916
100.0
Gross Profit/Loss
Our gross profit/loss of sales
of Bitcoin mining machines are primarily affected by Bitcoin prices, which have a significant effect on the average selling price of our
products, and, to a lesser extent, the average per unit production costs of our Bitcoin mining machines, which in turn resulted in a much
lower demand and average selling price of our Bitcoin mining machines, thereby leading to lower revenues. A decrease in the Bitcoin price
and expected economic returns of Bitcoin mining activities could lead to increase in write-down for the potentially obsolete, slow-moving
inventories and lower of cost or market adjustment as a result of stagnant demand and decrease in average selling price for our Bitcoin.
Due to the significant impact of COVID-19 and Bitcoin halving event in 2020 and continued decline in cryptocurrency prices in 2022, which
in turn a significant decrease in the selling price of our Bitcoin mining machines, we recorded write-down for the potentially obsolete,
slow-moving inventories and lower of cost or market adjustment of US$3.6 million, US$2.2 million and US$6.5 million in 2020, 2021 and
2022, respectively. Since 2021, countries have been chattering about trade wars and COVID-19 has continued to spread with variants. Notwithstanding
the foregoing, the price of Bitcoin has maintained at a high level with volatility, and enterprises have also actively resumed production
globally, with investors returning to digital currency and blockchain investment. Our revenue has increased significantly compared with
the previous year. The increase in gross profit for the year ended December 31, 2022 is mainly attributable to revenue recognized following
our receipt of RMB166 million (approximately $24.7 million) payment from a former customer as a result of a court mediation. Refer to
our discussion on revenues above.
Our gross profit/loss and
gross profit/loss margin of mining machine hosting services provided by us are primarily affected by the average service fees we charge
our customers. See "—Results of Operations—Revenues—Service—Management and Maintenance" for factors
that could affect the average service fee.
Our gross profit/loss and
gross profit/loss margin of sales of telecommunications products are primarily affected by the market price of the product and our cost
of revenues.
Our gross profit and gross
profit margin of Fintech services are primarily affected by the market price of the third-party service provider and percentage of commissions
we paid to sales employees.
The following table sets
forth our gross profit/loss by category for the periods indicated:
Years Ended December 31,
2020
2021
2022
US$
US$
US$
(in thousands)
Product sales – Bitcoin mining machines and related accessories
(3,355
)
26,917
19,457
Product sales – Telecommunications
(77
)
2,062
(2,433
)
Service – Management and maintenance
532
244
(2,747
)
Service - Fintech
-
-
1,135
Total
(2,900
)
29,223
15,412
99
Operating Expenses
The following table sets
forth our operating expenses, both in absolute amount and as a percentage of the total operating expenses, for the periods indicated:
Years Ended December 31,
2020
2021
2022
US$
%
US$
%
US$
%
(in thousands, except percentages)
Selling expenses
925
3.9
1,419
5.2
1,956
3.1
General and administrative expenses
(1)
22,822
96.1
25,774
94.8
61,450
96.9
Total operating expenses
23,747
100.0
27,193
100.0
63,406
100.0
(1)
Include research and development
    expenses and other general and administrative expenses. See "—Results of Operations—Operating Expenses—General
    and Administrative Expenses" for details.
Selling expenses
Selling expenses include
(1) sales service costs incurred from provision of customer services; (2) traveling costs of our sales and marketing staff and transportation
costs for delivery of blockchain and telecommunications products; and (3) salaries and benefits of our sales and marketing staff; and
(4) others, such as conference costs and lease payment for our sales office.
General and administrative expenses
General and administrative
expenses primarily include research and development expenses and administrative expenses. Administrative expenses include primarily (1)
professional fees, mainly legal service fees and consultant service fees for provision of financing and listing related services to us;
(2) salaries and benefits of our management, finance, operations and other staff and outsourced administrative staff; (3) other miscellaneous
administrative expenses, such as bad debt expense, entertainment expense, utilities, and rental and office expenses; and (4) depreciation
expense of property, plant and equipment, amortization expense and impairment expense primarily relating to intangible assets.
Research and development
expenses primarily include (1) production and procurement expenses for producing prototypes and procuring tools for IC chip design; (2)
technical expenses, primarily comprising outsourcing research and development expenses relating to development of certain non-core technologies
for our mining machines and telecommunications products, such as wafer fabrication and packaging and testing for ASIC chips, design of
user interface, management and structural module and secondary development of certain modules and software development; (3) salaries
and benefits of our research and development staff; and (4) depreciation and amortization of non-patent technology.
Taxation
Cayman Islands
Under the current laws of the Cayman Islands, Ebang International Holdings
Inc. is not subject to tax on income or capital gain. Additionally, upon payment of dividends to the shareholders, no Cayman Islands withholding
tax will be imposed.
British Virgin Islands
Our subsidiaries incorporated
in the British Virgin Islands, primarily Orient Plus International Limited, Power Ebang Limited, Tower Lead Limited, Summit King Limited,
Ebang Communication Limited, Ebonex International Limited, and Leader Forever Holdings Limited are incorporated in the BVI and under
the current laws of the British Virgin Islands, are not subject to tax on income or capital gain. In addition, payments of dividend by
these subsidiaries to their shareholders are not subject to withholding tax in the BVI.
100
Australia
Our subsidiaries incorporated in Australia are subject to Australian
Tax on the taxable income as reported in its statutory financial statements adjusted in accordance with relevant Australia tax laws. The
Australian Income Tax had significant changes progressively since June 30, 2017. From July 1, 2022, companies that are base rate entities
must apply the 25% company tax rate. A company is a base rate entity for an income year if 1) the company's aggregated turnover
for that income year is less than AUD50 million of that income year, and 2) it has 80% or less of their assessable income in that income
year that is base rate entity passive income. Thus the applicable tax rate is 25% for the Company on assessable profits arising in or
derived from Australia.
Hong Kong
Our subsidiaries incorporated
in Hong Kong, primarily HK Ebang Communications, HongKong Ebang Technology Co., Limited ("HK Ebang Technology"), HongKong
Ebang Information Co., Limited ("HK Ebang Information"), HK Ebang Digital, Ebang Digital Asset Management Limited ("Ebang
Digital Asset Management"), Ebang Digital Asset Custody Limited ("Ebang Digital Asset Custody"), Ebang Trust Limited
("Ebang Trust") and Ebang Financial Services Limited ("Ebang Financial Services") are incorporated in Hong Kong
and are subject to Hong Kong Profits Tax on the taxable income as reported in its statutory financial statements adjusted in accordance
with relevant Hong Kong tax laws. The applicable tax rate is 8.25% on assessable profits arising in or derived from Hong Kong up to HKD2,000,000
and 16.5% on any part of assessable profits over HKD2,000,000.
PRC
Our PRC subsidiaries are
governed by the income tax laws of the PRC and the income tax provision in respect to operations in the PRC is calculated at the applicable
tax rates on the taxable income for the periods based on existing legislation, interpretations and practices in respect thereof. Under
the Enterprise Income Tax Laws of the PRC (the "EIT Laws"), domestic enterprises and Foreign Investment Enterprises (the
"FIE") are usually subject to a unified 25% enterprise income tax rate while preferential tax rates, tax holidays and even
tax exemption may be granted on case-by-case basis. EIT grants preferential tax treatment to certain High and New Technology Enterprises
("HNTEs"). Under this preferential tax treatment, HNTEs are entitled to an income tax rate of 15%, subject to a requirement
that they re-apply for HNTE status every three years. Zhejiang Ebang obtained the "high-tech enterprise" tax status in November
2017, which reduced its statutory income tax rate to 15% from November 2017 to November 2020. Zhejiang Ebang further re-applied and obtained
the "high-tech enterprise" tax status in December 2020. Hangzhou Dewang obtained the "high-tech enterprise" tax
status in November 2018, which reduced its statutory income tax rate to 15% from November 2018 to November 2021. Hangzhou Dewang further
re-applied and obtained the "high-tech enterprise" tax status in December 2021. In addition, Ebang IT obtained the "high-tech
enterprise" tax status in December 2021, which reduced its statutory income tax rate to 15% from December 2021 to December 2023.
We were subject to value-added
tax, or VAT, at a rate of 17% for the period from beginning of 2018 till end of April 2018, of 16% from May 2018 to the end of March
2019, and of 13% since April 2019 on the gross sales price of our products, less any deductible VAT we have already paid or borne. Entities
that are VAT general taxpayers may offset qualified input VAT paid to suppliers against their output VAT liabilities. Net VAT balance
between input VAT and output VAT is recorded as VAT payable if output VAT is larger than input VAT, and is recorded as VAT recoverable
if input VAT is larger than output VAT. All the VAT returns filed by our subsidiaries in China, have been and remain subject to examination
by the tax authorities. Zhejiang Ebang and Ebang IT are qualified as enterprises of selling self-developed software products and enjoying
a tax refund for the excess of 3% of their actual tax burden after the VAT is levied at the 17% or 16% or 13% tax rate since January
2011.
Dividends paid by our wholly
foreign-owned subsidiaries in China to our intermediary holding companies in Hong Kong will be subject to a withholding tax rate of 10%,
unless the relevant Hong Kong entities satisfy all the requirements under the Arrangement between the PRC and the Hong Kong Special Administrative
Region on the Avoidance of Double Taxation and Prevention of Fiscal Evasion with respect to Taxes on Income and Capital and receives
approval from the relevant tax authority, in which case the dividends paid to the Hong Kong subsidiaries would be subject to withholding
tax at the preferential rate of 5%. Effective from November 1, 2015, the above-mentioned approval requirement has been abolished,
but a Hong Kong entity is still required to file application package with the relevant tax authority, and settle the overdue taxes if
the preferential 5% tax rate is denied based on the subsequent review of the application package by the relevant tax authority.
If our holding company in
the Cayman Islands or any of our subsidiaries outside of China were deemed to be a "resident enterprise" under the EIT Law,
it would be subject to enterprise income tax on its worldwide income at a rate of 25%. If the PRC tax authorities determine that our
Cayman Islands holding company is a "resident enterprise" for PRC EIT purposes, a number of unfavorable PRC tax consequences
could follow. See "Item 3. Key Information—D. Risk Factors—Risks Relating to Our Business and Industry—We may
be subject to EIT on our worldwide income if our company or any of our subsidiaries were considered a PRC "resident enterprise"
under the PRC Enterprise Income Tax Law, or the EIT Law."
101
Results of Operations
The following table sets forth our selected consolidated profit or
loss data in absolute amount, for the periods indicated. This information should be read together with our consolidated financial statements
and related notes included elsewhere in this report. The operating results in any period are not necessarily indicative of the results
that may be expected for any future period.
Years Ended December 31,
2020
2021
2022
US $
US  $
US $
(in thousands)
Revenues
19,004
51,450
32,328
Product sales – Bitcoin mining machines and related accessories
8,039
39,756
25,800
Product sales – Telecommunications
1,638
8,567
3,737
Service – Management and maintenance
9,327
3,127
86
Service – Fintech
-
-
2,705
Cost of revenues
(21,904
)
(22,227
)
(16,916
)
Gross profit (loss)
(2,900
)
29,223
15,412
Operating expenses:
Selling expenses
925
1,419
1,956
General and administrative expenses
22,822
25,774
61,450
Total operating expenses
23,747
27,193
63,406
Gain on disposal of subsidiaries
-
-
(6
)
Income (loss) from operations
(26,647
)
2,030
(47,988
)
Other income (expenses):
Interest income
824
1,780
4,363
Interest expenses
(728
)
(4
)
-
Other income
82
133
1,034
Loss from investment
-
(3,657
)
(510
)
Exchange gain (loss)
(288
)
1,780
(2,161
)
Government grants
4,007
435
82
Other expenses
(109
)
(108
)
(650
)
Total other income
3,788
359
2,158
Income (loss) before income taxes provision (benefit)
(22,859
)
2,389
(45,830
)
Income taxes provision (benefit)
9,252
(379
)
(73
)
Net income (loss)
(32,111
)
2,768
(45,757
)
Less: net loss attributable to non-controlling interest
(1,436
)
(1,663
)
(1,869
)
Net income (loss) attributable to Ebang International Holdings Inc.
(30,675
)
4,431
(43,888
)
Year Ended December 31, 2022 Compared to
Year Ended December 31, 2021
Revenues
. We
recognized RMB173.4 million in revenue in 2022 following our receipt of RMB173.4 million (approximately US$25.8 million) payment
from two former customers as a result of court mediations. Our revenues decreased by 37.2% to US$32.3 million in 2022 from US$51.5
million in 2021, primarily due to the following reasons: 1) Bitcoin price's continued decrease and large cryptocurrency
exchange platforms declaring bankruptcy in 2022 led to investors being increasingly cautious in investment. 2) Our chip suppliers
have reduced their production capacity due to the impact of COVID-19, resulting in our inability to produce at full capacity,
insufficient inventory and inability to meet the market demand. With limited raw materials, we optimized the hardware structure to
ensure our products' competitiveness. 3) We have halted all mining machine custody services in the PRC at the end of April
2021, which resulted in nil in revenue in this segment for 2022.
Cost of revenues
. Our
cost of revenues decreased by 23.9% to US$16.9 million in 2022 from US$22.2 million in 2021, which is primarily due to a decrease in cost
of revenues as a result of a decrease in sales. Our cost of revenues for 2022 primarily consists of 1) impairment charge on write-downs
for the potentially obsolete, slow-moving inventory and lower of cost or market; 2) VAT recoverable impairment of $4.5 million recorded
in 2022 which was mainly associated with disposal of Wuhai Ebang.
Gross profit
.
As a result of the foregoing, we recorded a gross profit of US$15.4 million in 2022 compared to US$29.2 million in 2021.
102
Operating expenses
.
Our total operating expenses increased by 133.2% to US$63.4 million
in 2022 from US$27.2 million in 2021, primarily due to increases in both selling expenses and general and administrative expenses.
●
Selling expenses.
Our selling expenses increased by 37.9% to US$2.0 million in 2022 from US$1.4 million in 2021, mainly due to increased advertising and marketing expenses occurred in relation to development of our Fintech businesses.
●
General
    and administrative expenses.
Our general and administrative expenses increased by 138.4% to US$61.5 million in 2022 from US$25.8
    million in 2021, primarily due to increases in amortization expenses and impairment losses relating to intangible assets and employee
    stock ownership plan related expenses.
Gain from disposal of subsidiaries.
Our gain from disposal of subsidiaries increased by 100% to US$0.006 million in 2022 from nil in 2021, primarily due to the disposal
of Ebang Hongling and Wuhai Ebang during 2022.
Income (loss) from operations.
As a result of the foregoing, our loss from operations was US$48.0 million in 2022 compared to income from operation of US$2.0 million
in 2021.
Interest income.
Our
interest income increased by 145.1% to US$4.4 million in 2022 from US$1.8 million in 2021, primarily due to the interest income from our
investments in term deposit and financing products in 2022.
Other income
. Our other
income increased by 674.4% to US$1.0 million in 2022 from US$0.1 million in 2021, primarily due to the liability waived before the deregistration
of a subsidiary.
Loss from investment.
Our loss from investment decreased by 86.1% to US$0.5 million in 2022 from loss from investment of US$3.7 million in 2021, mainly due
to an investment loss of $3.9 million incurred from marketable securities in 2021 and only US$0.6 million incurred in 2022.
Exchange gain (loss)
.
Our exchange loss was US$2.2 million in 2022 compared to the exchange gain with the amount of US$1.8 million in 2021, primarily due to
the currency fluctuation on our foreign currency denominated assets and liabilities.
Government grants
.
Our government grants decreased by 81.2% to US$0.08 in 2022 from US$0.4 million in 2021, primarily due to the decrease of non-recurring
rebates from local government.
Income taxes benefit
.
Our income taxes benefit decreased by 80.7% to US$0.07 million in 2022 compared to US$0.4 million in 2021, primarily due to the allowance
on the deferred tax assets based on the economic forecast of
the Company's operation in relation to the
realization of such deferred tax assets.
Net income (loss)
.
As a result of the foregoing, our net loss decreased to US$45.8 million in 2022 from net income of US$2.8 million in 2021.
Year Ended December 31, 2021 Compared to
Year Ended December 31, 2020
Revenues
. Our revenues
increased by 170.7% to US$51.5 million in 2021 from US$19.0 million in 2020, primarily due to the following reasons: 1) As the Bitcoin
price continued to fluctuate in the high range in 2021, it has driven the enthusiasm and attention of investors. However, our chip suppliers
have reduced their production capacity due to the impact of the COVID-19, resulting in our inability to produce at full capacity, insufficient
inventory and inability to meet the market demand. With limited raw materials, we optimized the hardware structure, used a new framework
and launched new models, which accelerated the sales growth; 2) We have halted all mining machine custody services in the PRC at the
end of April 2021 which offset the growth in total revenue; and 3) RMB106 million revenue was recognized following our receipt of RMB106
million (approximately US$16.4 million) payment from a former customer as a result of a court mediation. See our discussion on revenues
above.
Cost of revenues
.
Our cost of revenues increased by 1.5% to US$22.2 million in 2021 from US$21.9 million in 2020, primarily because we have been able to
utilize some of the slow-moving inventories impaired in previous years to manufacture products sold in 2021 as a result of our hardware
optimization.
103
Gross profit (loss)
.
As a result of the foregoing, we recorded a gross profit of US$29.2 million in 2021 as compared to a gross loss of US$2.9 million in
2020.
Operating expenses
.
Our total operating expenses increased by 14.5% to US$27.2 million in 2021 from US$23.7 million in 2020, primarily due to increase in
both selling expenses and general and administrative expenses.
●
Selling
expenses.
Our selling expenses increased by 53.3% to US$1.4 million in 2021 from US$0.9 million in 2020, in line with the increase
in our sales.
●
General
and administrative expenses
. Our general and administrative expenses increased by 12.9% to US$25.8 million in 2021 from US$22.8 million
in 2020, primarily due to increase in overseas expansion.
Income (loss) from operations.
As a result of the foregoing, our income from operations was US$2.0 million in 2021 compared to loss from operation of US$26.6 million
in 2020.
Interest income.
Our interest income increased by 115.9% to US$1.8 million in 2021 from US$0.8 million in 2020, primarily due to the interest income
from our investments in time deposit and financing products in 2021.
Interest expenses
.
Our interest expenses decreased by 99.4% to US$4.0 thousand in 2021 from US$0.7 million in 2020, primarily due to repayment of loan with
Hangzhou United Bank in 2021.
Loss from investment.
Our loss from investment increased by 100% to US$3.7 million in 2021 from US$0 in 2020, the increase in loss from investment was
mainly due to investment loss of $3.9 million from marketable securities, offset by investment income of US$0.2 million from wealth management
products.
Exchange gain (loss)
.
Our exchange gain was US$1.8 million in 2021 compared to the exchange loss with the amount of US$0.3 million in 2020, primarily due to
the currency fluctuation on our foreign currency denominated assets and liabilities.
Government grants
.
Our government grants decreased by 89.2% to US$0.4 million in 2021 from US$4.0 million in 2020, primarily due to the decrease of non-recurring
rebates from local government.
Income taxes provision
(benefit).
Our income taxes benefits decreased by 104.1% to US$0.4 million in 2021 compared to the income tax provision with the
amount of US$9.3 million in 2020, primarily due to the allowance on the deferred tax assets based on the economic forecast of the Company's
operation in relation to the realization of such deferred tax assets.
Net income (loss)
.
As a result of the foregoing, our net income increased to US$2.8 million in 2021 from net loss of US$32.1 million in 2020.
B.
Liquidity and capital
    resources
Our primary source of liquidity
historically has been cash generated from our business operations, bank loans, equity contributions from our shareholders and borrowings,
which have historically been sufficient to meet our working capital and capital expenditure requirements.
As of December 31, 2022 and
2021, our cash and cash equivalents were US$251.3 million and US$239.9 million. Our cash and cash equivalents primarily consist of cash
on hand, demand deposits and time deposits placed with banks or other financial institutions and have original maturities of less than
three months.
We believe that our existing
cash and cash equivalents, anticipated cash raised from financings, and anticipated cash flow from operations, will be sufficient to
meet our anticipated cash needs for the next 12 months from the date of this annual report. We may, however, decide to enhance our liquidity
position or increase our cash reserve for future investments through additional capital and finance funding. We may need additional cash
resources in the future if we experience changes in business conditions or other developments, or if we find and wish to pursue opportunities
for investments, acquisitions, capital expenditures or similar actions. If we determine that our cash requirements exceed the amount
of cash and cash equivalents we have on hand at the time, we may seek to issue equity or debt securities or obtain credit facilities.
The issuance and sale of additional equity would result in further dilution to our shareholders. The incurrence of indebtedness would
result in increased fixed obligations and could result in operating covenants that would restrict our operations. We cannot assure you
that financing will be available in amounts or on terms acceptable to us, if at all.
104
Our ability to manage our
working capital, including receivables and other assets and liabilities and accrued liabilities, may materially affect our financial
condition and results of operations.
The following table sets
forth our selected consolidated cash flow data for the periods indicated:
Years Ended December 31,
2020
2021
2022
US$
US$
US$
(in thousands)
Net cash provided by (used in) operating activities
(15,539
)
(15,850
)
4,297
Net cash provided by (used in) investing activities
(63,181
)
(6,511
)
6,609
Net cash provided by financing activities
92,059
248,284
-
Effect of foreign exchange on cash, cash equivalents and restricted cash
(4,993
)
880
394
Net increase in cash, cash equivalents and restricted cash
8,346
226,803
11,300
Cash, cash equivalents and restricted cash at the beginning of the year
5,778
14,124
240,927
Cash, cash equivalents and restricted cash at the end of the year
14,124
240,927
252,227
Operating Activities
Net cash provided by operating
activities for 2022 was US$4.3 million, which primarily reflected our net loss of US$45.8 million as mainly adjusted for (1) depreciation
and amortization expenses of US$10.7 million, (2) write-down for the potentially obsolete, slow-moving inventories and lower of cost or
market adjustment of US$6.5 million, (3) impairment of intangible assets adjustments of US$20.7 million, (4) impairment of VAT recoverable
adjustments of US$4.5 million, (5) provision for credit loss of US$3.8 million, (6) share-based compensation of US$3.9 million
，
7)
loss on foreign currency transactions of US$2.2 million and (8) changes in working capital. Adjustment for changes in working capital
primarily consisted of (i) a decrease of US$10.4 million in net prepayments and other current assets, (ii) a decrease of US$2.9 million
in net accounts receivable, (iii) a decrease of US$14.1 million in accrued liabilities and other payables.
Net cash used in operating
activities for 2021 was US$15.8 million, which primarily reflected our net income of US$2.8 million as mainly adjusted for (1) depreciation
and amortization expenses of US$6.3 million, (2) write-down for the potentially obsolete, slow-moving inventories and lower of cost or
market adjustment of US$2.2 million, (3) impairment of property plant and equipment adjustments of US$3.1 million and (4) changes in working
capital. Adjustment for changes in working capital primarily consisted of (i) an increase of US$3.8 million in VAT recoverable, (ii) an
increase of US$5.4 million in net inventories, (iii) a decrease of US$18.3 million in accrued liabilities and other payables.
Net cash used in operating
activities for 2020 was US$15.5 million, which primarily reflected our net loss of US$32 million as mainly adjusted for (1) depreciation
and amortization expenses of US$7.2 million, (2) write-down for the potentially obsolete, slow-moving inventories and lower of cost or
market adjustment of US$3.6 million, (3) Allowance for doubtful accounts adjustments of US$2.7 million, (4) deferred income taxes adjustments
of US$8.6 million, and (5) changes in working capital. Adjustment for changes in working capital primarily consisted of (i) a decrease
of US$9.7 million in inventory due to the reduced amount of mining machine orders received and anticipated for our mining machines in
response to the combined impact of COVID-19 and Bitcoin halving event, (ii) a decrease of US$7.0 million in accrued liabilities and other
payables, (iii) a decrease of US$9.2 million in accounts payable.
Investing Activities
Net cash provided by investing
activities for 2022 was US$6.6 million, mainly attributable to (i) collections from short-term investment of US$55.1 million, (ii) cash
paid for short-term investment of US$28.6 million, and (iii) cash paid for the purchases of property, plant and equipment and intangible
assets of US$14.1 million, and (iv) cash paid for business combination net of cash acquired of US$5.9 million.
Net cash used in investing activities for 2021 was US$6.5 million,
mainly attributable to (i) collections from short-term investment of US$474.4 million, (ii) cash paid for short-term investment of US$472.4
million, and (iii) cash paid for the purchases of property, plant and equipment and intangible assets of US$8.5 million.
Net cash used in investing
activities for 2020 was US$63.2 million, mainly attributable to (i) purchase of property, plant and equipment of US$10.8 million, (ii)
purchase of intangible assets of US$11.9 million, and (iii) cash paid for the purchase of debt investments of US$79.9 million and collected
from the redemption of such debt investments of US$39.1 million.
105
Financing Activities
We did not occur any cash
flows from financing activities during 2022.
Net cash provided by financing
activities for 2021 was US$248.3 million, mainly attributable to (i) issuance of shares for cash of US$254.7 million in 2021, (ii) repayment
to related parties for US$5.7 million, (iii) repayment of short-term loans of US$0.8 million.
Net cash provided by
financing activities for 2020 was US$92.0 million, mainly attributable to (i) issuance of common shares for cash of US$114.2 million
in 2020, (ii) repayment to related parties for US$27.7 million, (iii) proceeds from related party loans of US$9.6 million and (iv) repayment
of short-term loans of US$4.9 million.
Capital Expenditures
We made capital expenditures of US$22.8 million, US$8.5 million and
US$ 14.1 million, in 2020, 2021 and 2022, respectively. In these periods, our capital expenditures were mainly used for (1) procurement
of equipment such as molds and machinery for the expansion of production capacity and upgrading of production facilities, (2) addition
of intangible assets such as software and non-patent technology and license, and (3) expenditures for constructing our production facilities.
We plan to fund our future
capital expenditures with our existing cash balance and proceeds from this offering. We will continue to make capital expenditures to
meet the expected growth of our business, including for construction of production facilities and procurement of photomask, mold and
various intellectual properties.
C.
Research and development,
    patents and licenses, etc.
See "Item 4. Information
on the Company—B. Business Overview— Research and Development" and "—Intellectual Property."
D.
Trend information
Other than as disclosed elsewhere in this annual report, we are not
aware of any trends, uncertainties, demands, commitments or events for the period from January 1, 2022 to December 31, 2022 that
are reasonably likely to have a material effect on our net revenues, income, profitability, liquidity or capital resources, or that would
cause the disclosed financial information to be not necessarily indicative of future operating results or financial conditions.
E.
Critical Accounting
    Policies and Estimates
An accounting policy is considered
critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time such
estimate is made, and if different accounting estimates that reasonably could have been used, or changes in the accounting estimates
that are reasonably likely to occur periodically, could materially impact the consolidated financial statements.
We prepare our financial statements
in conformity with the U.S. GAAP, which requires us to make judgments, estimates and assumptions. We continually evaluate these estimates
and assumptions based on the most recently available information, our own historical experiences and various other assumptions that we
believe to be reasonable under the circumstances. Since the use of estimates is an integral component of the financial reporting process,
actual results could differ from our expectations as a result of changes in our estimates. For a description of all our significant accounting
policies, see Note 2 to our annual audited consolidated financial statements in this annual report.
When reviewing our financial
statements, you should consider our selection of critical accounting policies, the judgments and other uncertainties affecting the application
of such policies, and the sensitivity of reported results to changes in conditions and assumptions. We believe that the following accounting
policy involves a higher degree of judgment and complexity in their application and require us to make critical accounting estimates.
Fair value of the Intangible Asset Identified
in Connection with Business Combination
Ebang International accounts for its business combination using the
acquisition method of accounting, which requires, among other things, allocation of the fair value of purchase consideration to the assets,
liabilities, identifiable intangible assets acquired, and non-controlling interest, if any, at their estimated fair values on the acquisition
date. Any residual purchase price is recorded as goodwill. When determining the respective fair value, Ebang International makes significant
estimates and assumptions, especially with respect to the intangible asset acquired. The intangible asset does not have observable prices.
Ebang International's estimates of fair value are based upon reasonable assumptions with current knowledge of the business environment
and conditions, but which are inherently uncertain and, as a result, actual results may differ from estimates. Significant assumptions
used for the model include the forecasted operating cash flows and discount rate. The Company utilized the assistance of a third-party
valuation firm to determine the fair value as of the date of acquisition.
106
ITEM 6. DIRECTORS, SENIOR MANAGEMENT
AND EMPLOYEES
A.
Directors and senior
    management
Our board of directors is
currently composed of five members. The table below sets forth certain information concerning our current board of directors and our
senior management as of the date of this report. All ages are as of April 28, 2023.
Directors
    and Executive Officers
Age
Position/Title
Dong Hu
49
Chairman of the Board, Chief Executive Officer and
    Chief Financial Officer
Chunjuan
    Peng
46
Director and Deputy General Manager
Yanqing
    Gao
58
Independent Director
Tingjie
    Lyu
67
Independent Director
Mingming
    Su
38
Independent Director
Mr. Dong Hu
is our
founder and has served as chairman of the board of directors, and our chief executive officer since May 2018 and our chief financial
officer since May 2022. He has also served as a director and chief executive officer of Zhejiang Ebang since January 2010. Mr. Hu has
over 23 years of experience in the network communication and computing industry. Between August 1998 and August 2009, he was a teacher
of the College of Information Engineering at Zhejiang University of Technology. From August 2009, he worked as a teacher of the College
of Computer Science and Technology at the same university until October 2017. He is also an executive director of each of Zhejiang Ebang,
Ebang IT, Hangzhou Dewang, Ebang Hongfa, Hangzhou Ebang Shuotai and Hangzhou Yibang Botong, and a director of HK Ebang Communications,
HK Ebang Technology, and HK Ebang Digital, Ebang Digital Asset Management, Ebang Digital Asset Custody, Ebang Trust, Ebang Financial
Services, Ebon Pay Pte. Ltd., Ebonex Australia, Australia Ebon Pty Ltd, Ebon Management Australia and Compass Global. Mr. Hu is primarily
responsible for overseeing the sales and marketing, research and development, business strategy and overall management of our company.
Mr. Hu graduated from Zhejiang University of Technology with an undergraduate degree in industrial automation in July 1998. In September
2008, Mr. Hu obtained a master of business administration (MBA) degree from Zhejiang University.
Ms. Chunjuan Peng
is
our deputy general manager and has served as a director since May 2018. She has also served as a deputy general manager of Zhejiang Ebang
since January 2010 and a director of Zhejiang Ebang from January 2010 to March 2021. She has served as a director of Hangzhou Yibang Botong
and HK Ebang Information since November 2021 and August 2022, respectively. Ms. Peng has over 18 years of experience in the areas of business
operation and production and supply chain management. From September 2003 to January 2010, Ms. Peng was a deputy general manager at Hangzhou
Ebang Communication Technology Co., Ltd., where she was responsible for assisting in managing the daily operation of the company. Ms.
Peng is mainly responsible for our production and supply chain management, which includes overseeing the procurement of raw materials
and production and quality control. Ms. Peng graduated from Jiangxi Normal University with a self-taught associate degree in tourism management
in June 1997.
Mr. Yanqing Gao
has
served as our director since June 2021. He has been a director of Zhejiang Jianxue Technology Co., Ltd. since November 2019, Jiangsu
Mole Biotechnology Co., Ltd. since April 2016, Shanghai Xinfangxun Communication Technology Co., Ltd. since November 2015 and Hangzhou
Kaipu Technology Co., Ltd. since September 2015. Mr. Gao has also been the deputy manager of Zhejiang Zheke Investment Management Co.,
Ltd. since May 2012. He was a director of Yuancheng Environment co., Ltd. from June 2013 to November 2018. He also served as a director
and the chief financial officer of Zhejiang Tianyuan Biopharmaceutical Co., Ltd. from April 2007 to April 2012. Mr. Gao held various
accounting positions with companies in China since 1990. Mr. Gao received his bachelor's degree in accounting from Hangzhou Business
School in 1984 and his EMBA from Zhongnan University of Economics and Law in 2008.
Mr. Tingjie Lyu
has
served as our director since June 2020. He has served as an independent director of China Satellite Communications Co., Ltd., Shenzhen
Aisidi Co., Ltd., China Communications Services Corporation Limited and Beijing Digital Telecom Co., Ltd. since May 2016, June 2014,
June 2015 and May 2013, respectively. He has also served as a director of Wooboo Mobile Media Co., Ltd. since July 2016. Mr. Lyu has
over 38 years of experience in the telecommunications industry. Since June 1985, Mr. Lyu successively served as a teacher, an associate
professor and a professor at Beijing University of Posts and Telecommunications, College of Economic Management. Mr. Lyu is also an executive
director and an executive vice president of International Telecommunication Association and China Information Economy Society, respectively.
Mr. Lyu is the director of each Modern Management Committee of China Communications Society and Communication Technology and Economics
Committee of China Association of Technology and Economics and the deputy director of E-commerce Teaching Steering Committee of the Ministry
of Education. Mr. Lyu holds a bachelor's degree in radio engineering and a master's degree in management engineering from
Beijing University of Posts and Telecommunications and a doctor's degree in engineering from Kyoto University.
107
Mr. Mingming Su
has
served as our director since November 2021. Mr. Su has served as Chief Strategy Officer of DouYu International Holdings Limited ("DouYu"),
a company that has its American depositary shares listed on the Nasdaq Global Select Market, since November 2015 and director of DouYu
since October 2016. Mr. Su served as the investment analyst of Shanda Computer (Shanghai) Co., Ltd. from March 2010 to March 2011, the
investment manager of Hangzhou Bianfeng Network Technology Co., Ltd. from March 2011 to August 2012 and the vice president of investment
at Shenzhen Qingsong Investment Management Partnership (Limited Partnership) from August 2012 to November 2015. Mr. Su obtained his bachelor's
degree majoring in library science and minoring in English from Anhui University in July 2007. Mr. Su also obtained his Master of Management
majoring in library science from Chinese Academy of Sciences in March 2010.
Board Diversity Disclosure
The following information was provided by our
directors on a voluntary basis.
Board Diversity Matrix (As of date of April 28, 2023)
Country
    of Principal Executive Offices
China
Foreign
    Private Issuer
Yes
Disclosure
    Prohibited Under Home Country Law
No
Total
    Number of Directors
5
Female
Male
Non-Binary
Did
    not disclose
Part
    I:
Gender Identity
Directors
1
4
0
0
Part
    II:
Demographic Background
Underrepresented
    Individual in Home Country
0
LGBTQ+
0
Did Not
    Disclose Demographic Background
0
B.
Compensation
Compensation
For the fiscal year ended December 31, 2022, we paid an aggregate of
approximately US$0.64 million in cash to our directors and executive officers, respectively. We have not set aside or accrued any amount
to provide pension, retirement or other similar benefits to our directors and executive officers.
Our PRC subsidiaries are
required by law to make contributions equal to certain percentages of each employee's salary for his or her medical insurance,
maternity insurance, workplace injury insurance, unemployment insurance, pension benefits through a PRC government-mandated multi-employer
defined contribution plan and other statutory benefits. Our Hong Kong subsidiaries are required by the Hong Kong Mandatory Provident
Fund Schemes Ordinance to make monthly contributions to the mandatory provident fund scheme in an amount equal to at least 5% of an employee's
salary.
Employment Agreements and Indemnification
Agreements
We have entered into employment
agreements with our executive officers. Each of our executive officers is employed for a continuous term unless either we or the executive
officer gives prior notice to terminate such employment, or for a specified time period, or for a specified time period which will be
renewed automatically unless a notice of non-renewal is given. We may terminate an executive officer's employment for cause at
any time with one month's prior notice, including but not limited to as a result of the executive officer's commitments of
any serious or persistent breach or non-observance of the terms and conditions of the employment, conviction of a criminal offence, fraud
or dishonesty, habitual neglect of his or her duties, material misconduct being inconsistent with the due and faithful discharge of the
executive officer's material duties or material breach of internal procedures or regulations which causes damage to the Company.
An executive officer may terminate his or her employment at any time with one month's prior written notice.
108
Each executive officer has
agreed to hold, both during and after the employment agreement expires or is earlier terminated, in strict confidence and not to use,
except for our benefit, any confidential information of our company, any of its subsidiaries or their customers and suppliers. In addition,
each of our executive officers have agreed to be bound by non-solicitation restrictions set forth in their confidentiality agreements
with us.
We have entered into indemnification
agreements with each of our directors and executive officers. Under these agreements, we agree to indemnify our directors and executive
officers against all liabilities and expenses incurred by such persons in connection with claims made by reason of their being a director
or officer of our company to the fullest extent permitted by law with certain limited exceptions.
Share Incentive Plan
Our board of directors adopted the 2020 Share Incentive Plan in April
2020, effective from the date of our initial public offering, which was amended and restated on July 9, 2021; and our shareholders adopted
the 2021 Share Incentive Plan, effective as of December 15, 2021 at the annual general meeting of shareholders, to attract and retain
the best available personnel, provide additional incentives to employees, directors and consultants and promote the success of our business.
Under the Amended and Restated 2020 Share Incentive Plan, or the 2020 Plan, the maximum aggregate number of shares that may be issued
pursuant to all awards under the 2020 Plan shall be 349,427 Class A ordinary shares, representing 8% of the enlarged total issued and
outstanding shares of our company immediately upon completion of our initial public offering. Under the 2021 Share Incentive Plan, or
the 2021 Plan, the maximum aggregate number of shares that may be issued pursuant to all awards under the 2021 Plan shall be 333,333 Class
A ordinary shares.
As of the date of this annual report, we have granted 189,066 restricted
share awards under the 2020 Plan and we did not grant any awards under the 2021 Plan.
The following paragraphs
describe the principal terms of the 2020 Plan.
Types of awards.
The 2020 Plan permits the awards of options, restricted shares or restricted share units.
Plan administration.
Our board of directors or a committee of one or more members of the board of directors administers the 2020 Plan. The committee
or the full board of directors, as applicable, will determine the participants to receive awards, the type and number of awards to be
granted to each participant, and the terms and conditions of each award grant.
Award agreement.
Awards granted under the 2020 Plan are evidenced by an award agreement that sets forth terms, conditions and limitations for each award,
which may include the term of the award, the provisions applicable in the event of the grantee's employment or service terminates,
and our authority to unilaterally or bilaterally amend, modify, suspend, cancel or rescind the award.
Eligibility.
We
may grant awards to employees and consultants of our company, our parent company and any of our subsidiaries, our directors, and other
individuals, as determined by the plan administrator. However, we may grant options that are intended to qualify as incentive share options
only to our employees and employees of our parent companies and subsidiaries.
Vesting schedule.
In general, the plan administrator determines the vesting schedule, which is specified in the relevant award agreement.
109
Exercise of options.
The plan administrator determines the exercise price for each award, which is stated in the award agreement. The vested portion
of option will expire if not exercised prior to the time as the plan administrator determines at the time of its grant, except that the
maximum exercisable term is 10 years from the date of a grant.
The following paragraphs
describe the principal terms of the 2021 Plan.
Types of awards.
The 2021 Plan permits the awards of options, shares, restricted shares or restricted share units.
Plan administration.
Our board of directors or a committee of one or more members of the board of directors administers the 2021 Plan. The committee
or the full board of directors, as applicable, will determine the participants to receive awards, the type and number of awards to be
granted to each participant, and the terms and conditions of each award grant.
Award agreement.
Awards granted under the 2021 Plan are evidenced by an award agreement that sets forth terms, conditions and limitations for each award,
which may include the term of the award, the provisions applicable in the event of the grantee's employment or service terminates,
and our authority to unilaterally or bilaterally amend, modify, suspend, cancel or rescind the award.
Eligibility.
We
may grant awards to employees and consultants of our company, our parent company and any of our subsidiaries, our directors, and other
individuals, as determined by the plan administrator. However, we may grant options that are intended to qualify as incentive share options
only to our employees and employees of our parent companies and subsidiaries.
Vesting schedule.
In general, the plan administrator determines the vesting schedule, which is specified in the relevant award agreement.
Exercise of options.
The plan administrator determines the exercise price for each award, which is stated in the award agreement. The vested portion
of option will expire if not exercised prior to the time as the plan administrator determines at the time of its grant, except that the
maximum exercisable term is 10 years from the date of a grant.
C.
Board practices
Overview
Directors are expected to
provide stewardship in order to promote the long-term success of the Company. They are expected to fulfill their fiduciary duties and
duty of care in the best interests of the Company, considering the various needs of its stakeholders (shareholders, employees, communities,
suppliers and clients), providing advice to and oversight of management's activities. Within its responsibilities, the board of
directors oversees the company's strategic goals; financial statements, control and risk management; core values, integrity and
ethical standards; management and board remuneration and succession planning, among others.
Board composition
Our board of directors consists
of five directors, including three independent directors. A director is not required to hold any shares in our company to qualify to
serve as a director. The Corporate Governance Rules of Nasdaq generally require that a majority of an issuer's board of directors
must consist of independent directors. Our board of directors affirmatively determined that Yanqing Gao, Tingjie Lyu and Mingming Su
are independent directors, and that we have a majority of independent directors serving on our board of directors.
110
A director may, subject to
any separate requirement for audit committee approval under applicable law, the Articles or the Nasdaq Rules, or disqualification by
the chairman of the relevant board meeting, vote in respect of any contract or transaction in which he or she is interested, provided
that the nature of the interest of any director in such contract or transaction is disclosed by him or her at or prior to its consideration
and any vote in that matter. Our board of directors may exercise all of the powers of our company to borrow money, to mortgage or charge
its undertaking, property and uncalled capital, or any part thereof, and to issue debentures, debenture stock or other securities whenever
money is borrowed or as security for any debt, liability or obligation of our company or of any third party. None of our directors has
a service contract with us that provides for benefits upon termination of service as a director.
Committees of our board of directors
We have established three
committees under the board of directors: an audit committee, a compensation committee and a nominating and corporate governance committee.
We have adopted a charter for each of the three committees. Each committee's members and functions are described below.
Audit Committee
Our audit committee consists
of Mr. Yanqing Gao, Mr. Tingjie Lyu and Mr. Mingming Su. Mr. Yanqing Gao is the chairman of our audit committee. We have determined that
each of Mr. Yanqing Gao, Mr. Tingjie Lyu and Mr. Mingming Su satisfies the "independence" requirements of the Rule 5605(c)(2)
of the Nasdaq Rules and meets the independence standards under Rule 10A-3 under the Exchange Act. Our board of directors has also determined
that Mr. Yanqing Gao qualifies as an "audit committee financial expert" within the meaning of the SEC rules and possesses
financial sophistication within the meaning of the Nasdaq Rules.
The audit committee oversees
our accounting and financial reporting processes and the audits of our financial statements. The audit committee is responsible for,
among other things:
●
selecting our independent
    registered public accounting firm and pre-approving all auditing and non-auditing services performed by our independent registered
    public accounting firm;
●
reviewing with the independent
    registered public accounting firm any audit problems or difficulties and management's response;
●
reviewing and approving
    all proposed related-party transactions, as defined in Item 404 of Regulation S-K under the Securities Act;
●
discussing the annual audited
    financial statements with management and our independent registered public accounting firm;
●
annually reviewing and
    reassessing the adequacy of our audit committee charter;
●
meeting separately and
    periodically with management and our independent registered public accounting firms;
●
reporting regularly to
    the full board of directors; and
●
performing such other matters
    that are specifically delegated to our audit committee by our board of directors from time to time.
111
Compensation Committee
Our compensation committee
consists of Mr. Dong Hu, Mr. Tingjie Lyu and Mr. Mingming Su. Mr. Dong Hu is the chairman of our compensation committee. We have determined
that each of Mr. Tingjie Lyu and Mr. Mingming Su satisfies the "independence" requirements of Rule 5605(a)(2) of the Nasdaq
Rules.
The compensation committee
assists the board in reviewing and approving the compensation structure, including all forms of compensation, relating to our directors
and executive officers. Our chief executive officer may not be present at any committee meeting during which his compensation is deliberated.
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 board for determination with respect to the compensation of our non-employee directors;
●
reviewing and making recommendations
    to the board of directors with respect to the compensation of our directors;
●
reviewing periodically
    and approving any long-term incentive compensation or equity plans, programs or similar arrangements, annual bonuses, employee pension
    and welfare benefit plans; and
●
selecting compensation
    consultant, legal counsel or other adviser only after taking into consideration all factors relevant to that person's independence
    from management.
Nominating and Corporate Governance Committee
Our nominating and corporate
governance committee consists of Ms. Chunjuan Peng, Mr. Yanqing Gao and Mr. Tingjie Lyu. Ms. Chunjuan Peng is the chairperson of our
nominating and corporate governance committee. We have determined that each of Mr. Yanqing Gao and Mr. Tingjie satisfies the "independence"
requirements of Rule 5605(a)(2) of the Nasdaq Rules.
The nominating and corporate
governance committee assists the board of directors in selecting directors and in determining the composition of our board and board
committees. The nominating and corporate governance committee is responsible for, among other things:
●
identifying and recommending
    nominees for election or re-election to our board of directors, or for appointment to fill any vacancy;
●
reviewing annually with
    our board of directors its composition in light of the characteristics of independence, age, skills, experience and availability
    of service to us;
●
identifying and recommending
    to our board the directors to serve as members of committees;
●
advising the board periodically
    with respect to developments in the law and practice of corporate governance as well as our compliance with applicable laws and regulations;
●
making recommendations
    to our board of directors on corporate governance matters and on any corrective action to be taken; and
●
monitoring compliance with
    our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure compliance.
112
Duties of Directors
Under Cayman Islands law,
our directors owe to us certain fiduciary duties, 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 also have a duty to exercise the skills 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 Articles, as amended and restated from time to time.
Our company may have the
right to seek damages if a duty owed by our directors is breached.
The functions and powers
of our board of directors include, among others:
●
convening shareholders'
    annual general meetings and reporting its business operations to shareholders at such meetings;
●
declaring dividends and
    distributions;
●
appointing officers and
    determining the term of office of officers;
●
exercising the borrowing
    powers of our company and mortgaging the property of our company; and
●
approving the transfer
    of shares of our company, including the registering of such shares in our share register.
Code of Ethics and Corporate Governance
We have adopted a code of
ethics, which is applicable to all of our directors, executive officers and employees. We have made our code of ethics publicly available
on our website.
In addition, our board of
directors have adopted a set of corporate governance guidelines covering a variety of matters, including approval of related party transactions.
Terms of Directors and Officers
Pursuant to the Articles,
our officers will be elected by and serve at the discretion of our board of directors. Each of our directors is not subject to a term
of office and hold office until such time as he or she resigns or is removed from office by ordinary resolution of our shareholders.
A director will be removed
from office automatically if, among other things, the director (1) becomes bankrupt or makes any arrangement or composition with his
or her creditors; (2) dies or is found by our company to be of unsound mind; or (3) is removed from office pursuant to any other provisions
of our Articles.
Interested Transactions
A director may, subject to
any separate requirement for audit committee approval under applicable law, the Articles or the Nasdaq Rules, or disqualification by
the chairman of the relevant board meeting, vote in respect of any contract or transaction in which he or she is interested, provided
that the nature of the interest of any directors in such contract or transaction is disclosed by him or her at or prior to its consideration
and any vote in that matter.
113
D.
Employees
As of December 31, 2022,
we had a total of 297 employees, among which, 41 full-time employees were located outside of China.
The following table sets
forth a breakdown of our employees by function as of December 31, 2022:
Function
Number
of
Employees
Management
5
Research and development
126
Production
31
Sales and marketing
31
Finance, operations and others
104
Total
297
The remuneration payable
to our employees includes salaries, project incentives, year-end bonuses and allowances. We determine employees' remuneration based
on factors including qualifications, contributions and years of experience. In order to maintain the quality, knowledge and skills of
our employees, we appreciate the importance of training to employees. We provide regular trainings to our employees, which include orientation
training for new employees and continuing on-the-job training for existing employees.
E.
Share ownership
The following table sets
forth information concerning the beneficial ownership of our ordinary shares, as of April 27, 2023 with respect to:
●
each of our directors and
    executive officers; and
●
each person known to us
    to beneficially own more than 5.0% of our ordinary shares.
The calculations in the table
below are based on 6,543,938.22 ordinary shares outstanding as of April 27, 2023, comprising of 4,989,746.22 Class A ordinary shares
and 1,554,192 Class B ordinary shares, assuming the sales of all of the securities we are offering and no exercise of the warrants and
excluding ordinary shares reserved for issuance under our Amended and Restated 2020 Share Incentive Plan and 2021 Share Incentive Plan.
114
Beneficial ownership is determined
in accordance with the rules and regulations of the SEC. In computing the number of shares beneficially owned by a person and the percentage
ownership of that person, we have included shares that the person has the right to acquire within 60 days of April 27, 2023, including
through the exercise of any option, warrant or other right or the conversion of any other security. These shares, however, are not included
in the computation of the percentage ownership of any other person.
Class A
ordinary
shares
Class B
ordinary
shares
Percentage
of total
ordinary
shares***
(%)
Percentage
of total
voting
power****
(%)
Directors and Executive Officers**
Dong Hu
(1)
3,750
1,554,192
23.8
86.2
Chunjuan Peng
*
–
*
*
Yanqing Gao
–
–
–
–
Tingjie Lyu
–
–
–
Mingming Su
–
–
–
–
All directors and executive officers as a group
32,486
1,554,192
24.2
86.3
Principal Shareholders:
Affiliates of Dong Hu
(1)
3,750
1,554,192
23.8
86.2
CVI Investments, Inc.
(2)
343,332
–
5.2
*
*
Represents less than 1% of our total outstanding
    shares.
**
Except as indicated otherwise
    below, the business address of our directors and executive officers is 12 Marina View, #20-02B, Asia Square Tower 2, Singapore, 018961
***
For each person and group
    included in this column, percentage ownership is calculated by dividing the number of shares beneficially owned by such person or
    group by the sum of the total number of shares outstanding and the number of shares such person or group has the right to acquire
    upon exercise of option, warrant or other right within 60 days after the date of April 27, 2023.
****
For each person or group
    included in this column, percentage of total voting power represents voting power based on both Class A and Class B ordinary shares
    held by such person or group with respect to all outstanding shares of our Class A and Class B ordinary shares as a single class.
    Each holder of our Class A ordinary shares is entitled to one vote per share. Each holder of our Class B ordinary shares is entitled
    to 20 votes per share. Our Class B ordinary shares are convertible at any time by the holder into Class A ordinary shares on
    a one for one basis, while Class A ordinary shares are not convertible into Class B ordinary shares under any circumstances.
(1)
Represents (1) 1,554,192 Class B ordinary shares held by Top Max Limited
and (2) 3,750 Class A ordinary shares held by Top One Limited
.
Top Max Limited is a company incorporated in the British
Virgin Islands with limited liability wholly owned by Vista Eternity (PTC) Limited, or Vista Eternity, a trustee under the Hu Family Trust
in which Mr. Dong Hu, our chairman of the board of directors, chief executive officer and chief financial officer, is the settlor and
the investment manager. Top One Limited, a company incorporated in the British Virgin Islands, is, among others, approximately 2.2% owned
by Mr. Dong Hu. The registered addresses of both of Top Max Limited and Top One Limited is Vistra Corporate Services Centre, Wickhams
Cay II, Road Town, Tortola, VG1110, British Virgin Islands.
(2)
Heights Capital Management, Inc. ("Heights Capital"), serves
as the investment manager to CVI Investments, Inc. ("CVI"), and as such may exercise voting and dispositive power over the
Class A ordinary shares held by CVI and may be deemed to beneficially own these Class A ordinary shares. William Walmsley, Director of
CVI Investments, Inc., may also be deemed to beneficially own these Class A ordinary shares, as may Brian Sopinsky, Secretary of Heights
Capital Management, Inc. Mr. Kobinger disclaims any such beneficial ownership of the securities. Each of Messrs. Walmsley and Sopinsky,
CVI and Heights Capital disclaims beneficial ownership of these Class A ordinary shares except to the extent of their pecuniary interest
therein. The address of the principal business office of Mr. Walmsley and CVI Investments, Inc. is P.O. Box 309GT, Ugland House, South
Church Street, George Town, Grand Cayman, KY1-1104, Cayman Islands.  The address of the principal business office of Mr. Sopinsky
and Heights Capital Management, Inc. is 101 California Street, Suite 3250, San Francisco, California 94111. The number of Class A ordinary
shares held by CVI is based on information included in Amendment No. 2 to the Schedule 13-G filed by CVI with the SEC on February 10,
2023 reporting it's beneficial ownership of Class A ordinary shares.
115
We are not aware of any arrangement
that may, at a subsequent date, result in a change of control of our company. To our knowledge, as of April 27, 2023, 4,953,465 Class
A ordinary shares, representing 75.7% of our issued and outstanding ordinary shares, were held by one record holder in the United States,
which is Cede & Co., a nominee of The Depository Trust Company, and none of our Class B ordinary shares are held by record holders
in the United States.
Our ordinary shares are divided
into Class A ordinary shares and Class B ordinary shares. Holders of Class A ordinary shares are entitled to one vote per share and the
sole holder of Class B ordinary shares is entitled to 20 votes per share. The sole holder of our Class B ordinary shares may choose to
convert its Class B ordinary shares into the same number of Class A ordinary shares at any time. Class A ordinary shares are not convertible
into Class B ordinary shares under any circumstance. See "Item 10. Additional Information—B. Memorandum and Articles of Association"
for a more detailed description of our Class A ordinary shares and Class B ordinary shares.
ITEM 7. MAJOR SHAREHOLDERS AND RELATED
PARTY TRANSACTIONS
A.
Major shareholders
See "Item 6. Directors,
Senior Management and Employees—E. Share Ownership."
B.
Related party transactions
We have entered into the
following transactions with related parties:
Employment Agreements and Indemnification
Agreements
See "Item 6. Directors,
Senior Management and Employees—B. Compensation—Employment Agreements and Indemnification Agreements."
Share Incentive Plan
See "Item 6. Directors,
Senior Management and Employees—B. Compensation—Share Incentive Plan."
Other Transactions with Related Parties
Property Tenancy Agreements with Zhejiang
Wansi Computer Manufacturing Company Limited
From 2016 through 2019, our
three PRC subsidiaries, namely, Zhejiang Ebang, Ebang IT and Hangzhou Dewang, entered into several tenancy property management agreements
with Zhejiang Wansi Computer Manufacturing Company Limited, or Zhejiang Wansi. The lease terms range from two to three years. Zhejiang
Wansi is 68.68% owned by the spouse of Mr. Dong Hu, our controlling shareholder, chairman of the board directors, chief executive officer
and chief financial officer. Zhejiang Wansi is therefore an associate of Mr. Dong Hu. In 2020, 2021 and 2022, lease expenses from Zhejiang
Wansi were approximately US$30,000, US$32,000 and US$44,000, respectively. As of December 31, 2020, 2021 and 2022, the operating lease
liabilities to Zhejiang Wansi is approximately $17,700 and $48,800 and $17,500 respectively.
Property Tenancy Agreements
with Hangzhou Yiquansheng Communication Technology Company Limited
In May 2021, our PRC subsidiary Zhejiang Ebang Communication Technology
Co., Ltd. entered into a tenancy property management agreement with Hangzhou Yiquansheng Communication Technology Co., Ltd., or Hangzhou
Yiquansheng. The lease term is from May 2021 to December 2023. Hangzhou Yiquansheng is 100% owned by Mr. Dong Hu, our controlling shareholder,
chairman of the board of directors, chief executive officer and chief financial officer. In 2021 and 2022, lease expenses from Hangzhou
Yiquansheng were approximately US$379,000 and US$558,000, respectively. As of December 31, 2021 and 2022, the operating lease liabilities
to Hangzhou Yiquansheng is approximately $835,000 and $266,034 respectively.
116
Loan Agreements with Related Parties
In 2019 and up to the date
of this annual report, we obtained several loans from Hong Kong Dewang Limited, or Hong Kong Dewang, with an aggregate principal amount
of approximately US$24.1 million at an interest rate of 4.7500% per annum. The maturity dates of these loans range from June 2022 to May
2023. Hong Kong Dewang is controlled by a relative of Mr. Dong Hu, our controlling shareholder, chairman of the board of directors and
chief executive office, and is therefore an associate of Mr. Dong Hu. As of the date of this report, we have fully repaid such loans.
During the year ended December
31, 2020, the Company borrowed $749,949 from Dong Hu, CEO of the Company, and fully repaid the loan in the same period. The loan is unsecured,
non-interest bearing and payable on demand.
During the year ended December 31, 2020, Hangzhou Yiquansheng borrowed
approximately $562,000 from an affiliate controlled by Dong Hu. The liability was extinguished in connection with the disposal of Hangzhou
Yiquansheng, related gain on extinguishment is included in the gain on disposal, accounted for as a capital contribution.
In 2020, the Company borrowed
approximately $1.8 million from and repaid approximately $2.8 million to Zhejiang Wansi. In 2021, we repaid remaining balance of approximately
$5.7 million to Zhejiang Wansi. The balance of the loan as of December 31, 2020, 2021 and 2022 was US$5.6 million, nil and nil, respectively.
Disposal of a subsidiary to a related party
In December 2020, the Company
disposed Hangzhou Yiquansheng to an affiliate controlled by Mr. Dong Hu, CEO of the Company, for RMB500,000. The gain on disposal of Hangzhou
Yiquansheng is accounted for as a capital contribution from Dong Hu, as a result of this transaction between entities under common control
of Dong Hu. The disposal of Hangzhou Yiquansheng does not constitute a strategic shift of the Company's operation.
C.
Interests of Experts
    and Counsel
Not applicable.
ITEM 8. FINANCIAL INFORMATION
A.
Consolidated statements
    and other financial information
Financial statements
We have appended consolidated
financial statements filed as part of this annual report.
Legal proceedings
See "Item 4. Information
on the Company—B. Business Overview—Legal Proceedings."
For risks and uncertainties
relating to the pending cases against us, please see "Item 3. Key Information—D. Risk Factors—Risks Relating to Our
Business Operations—We have been involved, and may continue to be involved, in disputes, claims or proceedings arising from our
operations or class actions from time to time, which could result in significant liabilities and reputational harm and could materially
and adversely affect our business, financial condition and results of operations."
Dividends and dividend policy
The payment of dividends
is at the discretion of our board of directors, subject to our Articles. In addition, our shareholders may by ordinary resolution declare
a dividend, but no dividend may exceed the amount recommended by our board of directors. In either case, all dividends are subject to
certain restrictions under Cayman Islands law, namely that our company may only pay dividends out of profits or the share premium account,
and 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. Even if we decide to pay dividends, the form, frequency and amount will depend upon our
future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors
that the board of directors may deem relevant.
We do not have any present
plan to pay any cash dividends on our ordinary shares in the foreseeable future. We currently intend to retain most, if not all, of our
available funds and any future earnings to operate and expand our business.
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We are a holding company
incorporated in the Cayman Islands. We may rely on dividends paid by our subsidiaries in China for our cash requirements, including any
payment of dividends to our shareholders. PRC regulations may restrict the ability of our PRC subsidiaries to pay dividends to us. See
"Item 3. Key Information—D. Risk Factors—Risks Relating to Conducting Business in China—We may rely on dividends
and other distributions on equity paid by our PRC subsidiaries to fund any cash and financing requirements we may have, and any limitation
on the ability of our PRC subsidiaries to make payments to us could have a material and adverse effect on our ability to conduct our
business."
B.
Significant changes
Except as disclosed elsewhere
in this annual report, we have not experienced any significant changes since the date of our audited consolidated financial statements
included in this annual report.
ITEM 9. THE OFFER AND LISTING
A.
Offering and listing
    details
Our Class A ordinary shares
have been listed on the Nasdaq Global Select Market since June 17, 2020 under the symbol "EBON."
Our ordinary shares are divided
into Class A ordinary shares and Class B ordinary shares. Holders of Class A ordinary shares are entitled to one vote per share and the
sole holder of Class B ordinary shares is entitled to 20 votes per share. See "Item 3. Key Information—D. Risk Factors—Risks
Relating to Our Securities—Our dual-class voting structure will limit your ability to influence corporate matters and could discourage
others from pursuing any change of control transactions that holders of our Class A ordinary shares may view as beneficial."
B.
Plan of distribution
Not applicable.
C.
Markets
Our Class A ordinary shares
have been listed on the Nasdaq Global Select Market since June 17, 2020 under the symbol "EBON."
D.
Selling shareholders
Not applicable.
E.
Dilution
Not applicable.
F.
Expenses of the issue
Not applicable.
ITEM 10. ADDITIONAL INFORMATION
A.
Share capital
Not applicable.
B.
Memorandum and articles of association
We are an exempted company
incorporated under the laws of the Cayman Islands and our affairs are governed by our Articles, as amended and restated from time to time,
and Companies Act (Revised) of the Cayman Islands, which we refer to as the Companies Act below, and the common law of the Cayman Islands.
The following are summaries
of material provisions of our Articles and the Companies Act (Revised) of the Cayman Islands insofar as they relate to the material terms
of our ordinary shares.
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Ordinary Shares
General
Under our second amended and
restated memorandum 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.
Our issued and outstanding
ordinary shares consist of Class A ordinary shares and Class B ordinary shares. All of our outstanding ordinary shares, which consist
of Class A ordinary shares and Class B ordinary shares, are fully paid and non-assessable. Certificates representing the ordinary shares
are issued in registered form. Our shareholders who are non-residents of the Cayman Islands may freely hold and transfer their ordinary
shares.
Holders of our Class A ordinary
shares and Class B ordinary shares have the same rights except for voting and conversion rights. The Class A ordinary shares and Class
B ordinary shares carry equal rights and rank
pari passu
with one another, including the rights to dividends and other capital
distributions.
Conversion
Each Class B ordinary share
is convertible into one Class A ordinary share at any time by the holder thereof. Class A ordinary shares are not convertible into Class
B ordinary shares under any circumstances. Upon any sale of Class B ordinary shares by a holder thereof to any person or entity that is
not an affiliate (as defined in our Articles) of such holder, such Class B ordinary shares will be automatically and immediately converted
into an equal number of Class A ordinary shares.
Voting Rights
On a show of hands each shareholder
is entitled to one vote or, on a poll, each shareholder is entitled to one vote for each Class A ordinary share and 20 votes for each
Class B ordinary share, voting together as a single class, on all matters that require a shareholder's vote. Voting at any shareholders'
meeting is by show of hands of shareholders who are present in person or by proxy or, in the case of a shareholder being a corporation,
by its duly authorized representative, unless a poll is demanded.
A poll may be demanded by
the chairman of such meeting or any shareholder present in person or by proxy.
No shareholder shall be entitled
to vote or be reckoned in a quorum, in respect of any share, unless such shareholder is duly registered as our shareholder and all calls
or instalments due by such shareholder to us have been paid.
An ordinary resolution to
be passed at a general meeting requires the affirmative vote of a simple majority of the votes cast, while a special resolution requires
the affirmative vote of at least two-thirds of votes attached to all outstanding ordinary shares cast at a general meeting.
Transfer Agent and Registrar
The transfer agent and registrar
for the Class A ordinary shares is VStock Transfer, LLC, a California limited liability company with its business address at 18 Lafayette
Place, Woodmere, New York 11598.
General Meetings of Shareholders
Our Articles provides that
our company may (but shall not be obligated to) hold an annual general meeting of shareholders in each calendar year, subject to Cayman
Islands laws and the Nasdaq Rules, in which case we shall specify the meeting as such in the notices calling it, and the annual general
meeting shall be held as a physical meeting in any part of the world and/or at one or more locations or as a hybrid meeting or as an electronic
meeting, at such time and place as may be determined by our directors.
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Shareholders' meetings
may be convened by a majority of our board of directors or the chairman of our board of directors. Advance notice of at least ten clear
days (as defined in the Articles) is required for the convening of our annual general meeting and any other general meeting of our shareholders.
Notwithstanding that a meeting is called by shorter notice than that mentioned above, but, subject to the Companies Act, it will be deemed
to have been duly called, if it is so agreed (1) in the case of a meeting called as an annual general meeting by all of our shareholders
entitled to attend and vote at the meeting; and (2) in the case of any other meeting, by a majority in number of the shareholders holding
not less than 95% in nominal value of the issued shares giving that right.
No business other than the
appointment of a chairman may be transacted at any general meeting unless a quorum is present at the commencement of business. However,
the absence of a quorum will not preclude the appointment of a chairman. If present, the chairman of our board of directors shall be the
chairman presiding at any shareholders' meetings.
A corporation being a shareholder
shall be deemed for the purpose of our Articles to be present in person if represented by its duly authorized representative being the
person appointed by resolution of the directors or other governing body of such corporation to act as its representative at the relevant
general meeting or at any relevant general meeting of any class of our shareholders. Such duly authorized representative shall be entitled
to exercise the same powers on behalf of the corporation that he represents as that corporation could exercise if it were our individual
shareholder.
Dividends
Subject to the Companies Act,
our directors may declare dividends in any currency to be paid to our shareholders. Dividends may be declared and paid out of our profits,
realized or unrealized, or from any reserve set aside from profits which our directors determine is no longer needed. Our board of directors
may also declare and pay dividends out of the share premium account or any other fund or account that can be authorized for this purpose
in accordance with the Companies Act. Except in so far as the rights attaching to, or the terms of issue of, any share otherwise provides,
(1) all dividends shall be declared and paid according to the amounts paid up on the shares in respect of which the dividend is paid,
but no amount paid up on a share in advance of calls shall be treated for this purpose as paid up on that share and (2) all dividends
shall be apportioned and paid pro rata according to the amounts paid up on the shares during any portion or portions of the period in
respect of which the dividend is paid.
Our directors may also pay
interim dividends, whenever our financial position, in the opinion of our directors, justifies such payment.
Our directors may deduct from
any dividend or bonus payable to any shareholder all sums of money (if any) presently payable by such shareholder to us on account of
calls or otherwise.
No dividend or other money
payable by us on or in respect of any share shall bear interest against us. In respect of any dividend proposed to be paid or declared
on our share capital, our directors may resolve and direct that (1) such dividend be satisfied wholly or in part in the form of an allotment
of shares credited as fully paid up, provided that our shareholders entitled thereto will be entitled to elect to receive such dividend
(or part thereof if our directors so determine) in cash in lieu of such allotment or (2) the shareholders entitled to such dividend will
be entitled to elect to receive an allotment of shares credited as fully paid up in lieu of the whole or such part of the dividend as
our directors may think fit. Our shareholders may, upon the recommendation of our directors, by ordinary resolution resolve in respect
of any particular dividend that, notwithstanding the foregoing, a dividend may be satisfied wholly in the form of an allotment of shares
credited as fully paid up without offering any right to shareholders to elect to receive such dividend in cash in lieu of such allotment.
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Any dividend interest or other
sum payable in cash to the holder of shares may be paid by check or warrant sent by mail addressed to the holder at his registered address,
or addressed to such person and at such addresses as the holder may direct. Every check or warrant shall, unless the holder or joint holders
otherwise direct, be made payable to the order of the holder or, in the case of joint holders, to the order of the holder whose name stands
first on the register in respect of such shares, and shall be sent at his or their risk and payment of the check or warrant by the bank
on which it is drawn shall constitute a good discharge to us.
All dividends unclaimed for
one year after having been declared may be invested or otherwise made use of by our board of directors for the benefit of our company
until claimed. Any dividend unclaimed after a period of six years from the date of declaration of such dividend shall be forfeited and
reverted to us.
Whenever our directors have
resolved that a dividend be paid or declared, our directors may further resolve that such dividend be satisfied wholly or in part by the
distribution of specific assets of any kind, and in particular of paid up shares, debentures or warrants to subscribe for our securities
or securities of any other company. Where any difficulty arises with regard to such distribution, our directors may settle it as they
think expedient. In particular, our directors may issue fractional certificates, ignore fractions altogether or round the same up or down,
fix the value for distribution purposes of any such specific assets, determine that cash payments shall be made to any of our shareholders
upon the footing of the value so fixed in order to adjust the rights of the parties, vest any such specific assets in trustees as may
seem expedient to our directors, and appoint any person to sign any requisite instruments of transfer and other documents on behalf of
the persons entitled to the dividend, which appointment shall be effective and binding on our shareholders.
Transfer of Ordinary Shares
Subject to any applicable
restrictions set forth in our Articles, including, for example, the board of directors' discretion to refuse to register a transfer
of any share (not being a fully paid up share) to a person of whom it does not approve, or any share issued under share incentive plans
for employees upon which a restriction on transfer imposed thereby still subsists, or a transfer of any share to more than four joint
holders, any of our shareholders may transfer all or any of his or her shares by an instrument of transfer in the usual or common form
or in a form prescribed by the Nasdaq Global Select Market or in another form that our directors may approve.
Our directors may decline
to register any transfer of any share which is not paid up or on which we have a lien. Our directors may also decline to register any
transfer of any share unless:
●
the instrument of transfer is lodged with us and is accompanied by the certificate for the shares to which it relates and such other evidence as our directors may reasonably require to show the right of the transferor to make the transfer;
●
the instrument of transfer is in respect of only one class of share;
●
the instrument of transfer is properly stamped (in circumstances where stamping is required); and
●
a fee of such maximum sum as the Nasdaq Global Select Market may determine to be payable or such lesser sum as our directors may from time to time require is paid to us in respect thereof.
If our directors refuse to
register a transfer they shall, within three months after the date on which the instrument of transfer was lodged, send to each of the
transferor and the transferee notice of such refusal.
121
Liquidation
Subject to any future shares
which are issued with specific rights, (1) if we are wound up and the assets available for distribution among our shareholders are more
than sufficient to repay the whole of the capital paid up at the commencement of the winding up, the excess shall be distributed
pari
passu
among those shareholders in proportion to the amount paid up at the commencement of the winding up on the shares held by them,
respectively, and (2) if we are wound up and the assets available for distribution among the shareholders as such are insufficient to
repay the whole of the paid-up capital, those assets shall be distributed so that, as nearly as may be, the losses shall be borne by the
shareholders in proportion to the capital paid up at the commencement of the winding up on the shares held by them, respectively.
If we are wound up (whether
the liquidation is voluntary or by the court), the liquidator may with the sanction of our special resolution and any other sanction required
by the Companies Act, divide among our shareholders in specie or kind the whole or any part of our assets (whether or not they shall consist
of property of the same kind) and may, for such purpose, set such value as the liquidator deems fair upon any property to be divided and
may determine how such division shall be carried out as between the shareholders or different classes of shareholders.
The liquidator may also vest
the whole or any part of these assets in trustees upon such trusts for the benefit of the shareholders as the liquidator shall think fit,
but so that no shareholder will be compelled to accept any assets, shares or other securities upon which there is a liability.
The consideration received
by each holder of a Class A ordinary share and a holder of a Class B ordinary share will be the same in any liquidation event.
Calls on Ordinary Shares and Forfeiture
of Ordinary Shares
Subject to our Articles and
to the terms of allotment, our board of directors may from time to time make calls upon shareholders for any amounts unpaid on their ordinary
shares in a notice served to such shareholders at least 14 clear days prior to the specified time of payment. The ordinary shares that
have been called upon and remain unpaid are subject to forfeiture.
Redemption of Shares, Repurchase and Surrender
of Ordinary Shares
We are empowered by the Companies
Act and our Articles to purchase our own shares, subject to certain restrictions. Our directors may only exercise this power on our behalf,
subject to the Companies Act, our Articles and to any applicable requirements imposed from time to time by the Nasdaq Global Select Market,
the SEC, or by any other recognized stock exchange on which our securities are listed.
We may also repurchase any
of our shares on such terms and in such manner as have been approved by our board of directors.
Under the Companies Act, the
redemption or repurchase of any share may be paid out of our company's profits or out of the proceeds of a fresh 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 the 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 (1) unless it is fully paid up, (2) if such redemption or repurchase
would result in there being no shares outstanding, or (3) if the company has commenced liquidation. In addition, our company may accept
the surrender of any fully paid share for no consideration.
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Variations of Rights of Shares
If at any time, our share
capital is divided into different classes of shares, all or any of the special rights attached to any class of shares may, subject to
the provisions of the Companies Act, be varied with the sanction of a special resolution passed at a general meeting of the holders of
the shares of that class. Consequently, the rights of any class of shares cannot be detrimentally altered without a majority of two-thirds
of the vote of all of the shares in that class.
The rights conferred upon
the holders of the shares of any class issued with preferred or other rights 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 or issue of further shares ranking
pari passu
with
such existing class of shares.
Issuance of Additional Shares
Our Articles authorize 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.
Our Articles also authorize
our board of directors to establish from time to time one or more series of preference shares and to determine, with respect to any series
of preference shares, the terms and rights of that series, including:
●
the designation of the series;
●
the number of shares of the series;
●
the dividend rights, dividend rates, conversion rights, voting rights; and
●
the rights and terms of redemption and liquidation preferences.
Our board of directors may
issue preference shares without action by our shareholders to the extent authorized but unissued. Issuance of these shares may dilute
the voting power of holders of ordinary shares.
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—Recent Financings," "Item 7. Major Shareholders and Related Party Transactions—B. Related Party
Transactions" or elsewhere in this annual report.
D.
Exchange controls
Not applicable.
E.
Taxation
The following discussion
of Cayman Islands, PRC and United States federal income tax consequences of an investment in Class A ordinary shares 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 or differing interpretation,
possibly with retroactive effect. This summary does not deal with all possible tax consequences relating to an investment in our Class
A ordinary shares, such as the tax consequences under U.S. state and local tax laws or under the tax laws of jurisdictions other than
the Cayman Islands, the People's Republic of China and the United States. To the extent that the discussion relates to matters of
Cayman Islands tax law, it represents the opinion of Conyers Dill & Pearman, our counsel as to Cayman Islands law, and to the extent
it relates to PRC tax law, it represents the opinion of Jingtian & Gongcheng, our counsel as to PRC law.
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Cayman Islands Taxation
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 us or holders of our ordinary shares levied by the
government of the Cayman Islands except for stamp duties which may be applicable on instruments executed in, or after execution brought
within the jurisdiction of, the Cayman Islands.
The Cayman Islands is a party
to a double tax treaty entered into with the United Kingdom in 2010 but otherwise is not party to any double tax treaties.
There are no exchange control
regulations or currency restrictions in the Cayman Islands.
Pursuant to Section 6 of the
Tax Concessions Act (2018 Revision) of the Cayman Islands, we have obtained an undertaking from the Governor-in-Cabinet:
(1) that no law which
is enacted in the Cayman Islands imposing any tax to be levied on profits or income or gains or appreciation shall apply to us or our
operations; and
(2) that the aforesaid
tax or any tax in the nature of estate duty or inheritance tax shall not be payable on our shares, debentures or other obligations.
The undertaking for us is
for a period of 20 years from May 24, 2018.
PRC Taxation
Income Tax and Withholding Tax
In March 2007, the National
People's Congress of China enacted the EIT Law, which became effective on January 1, 2008 (as amended in December 2018). The EIT
Law provides that enterprises organized under the laws of jurisdictions outside China with their "de facto management bodies"
located within China may be considered PRC resident enterprises and therefore subject to EIT at the rate of 25% on their worldwide income.
The Implementing Rules of the EIT Law further defines the term "de facto management body" as the management body that exercises
substantial and overall management and control over the business, personnel, accounts and properties of an enterprise.
In April 2009, the SAT issued
the Notice Regarding the Determination of Chinese-Controlled Overseas Incorporated Enterprises as PRC Tax Resident Enterprises on the
Basis of De Facto Management Bodies, known as Circular 82, which provides certain specific criteria for determining whether the "de
facto management body" of a PRC-controlled enterprise that is incorporated offshore is deemed to be located in China. Although Circular
82 only applies to offshore enterprises controlled by PRC enterprises or PRC enterprise groups, not offshore enterprises controlled by
PRC individuals or foreigners, the criteria set forth in the circular may reflect the SAT's general position on how the "de
facto management body" test should be applied in determining the tax resident status of all offshore enterprises.
According to Circular 82,
a Chinese-controlled enterprise which is incorporated offshore will be regarded as a PRC tax resident by virtue of having its "de
facto management body" in China and will be subject to EIT on its global income only if all of the following conditions are satisfied:
●
the primary location of the day-to-day operational management and the places where they perform their duties are in the PRC;
●
decisions relating to the enterprise's financial and human resources matters are made or are subject to the approval of organizations or personnel in the PRC;
124
●
the enterprise's primary assets, accounting books and records, company seals and board and shareholders' resolutions are located or maintained in the PRC; and
●
50% or more of voting board members or senior executives habitually reside in the PRC.
Pursuant to the EIT Law and
the EIT Implementation Rules, except as otherwise provided by relevant tax treaties with the PRC government, dividends paid by foreign-invested
investment enterprises to foreign investors which are non-resident enterprises and which have not established or operated premises in
the PRC, or which have established or operated premises but where their income has no de facto relationship with such establishment or
operation of premises shall be subject to a withholding tax of 10%.
The Circular 45 further clarifies
certain issues related to the determination of tax resident status. Circular 45 also specifies that when provided with a resident Chinese-controlled,
offshore-incorporated enterprise's copy of its recognition of residential status, a payer does not need to withhold a 10% income
tax when paying certain PRC-source income, such as dividends, interest and royalties to such Chinese-controlled offshore-incorporated
enterprise. For more detailed information, see "Item 3.D. Key Information—Risk Factors—Risks Relating to Conducting
Business in China—We may be subject to EIT on our worldwide income if our company or any of our subsidiaries were considered a PRC
"resident enterprise" under the PRC Enterprise Income Tax Law, or the EIT Law."
We believe that our Cayman
Islands holding company, Ebang International Holdings Inc., is not a PRC resident enterprise for PRC tax purposes. Ebang International
Holdings Inc. is a company incorporated outside China. As a holding company, its key assets are its ownership interests in its subsidiaries,
and its key assets are located, and its records (including the resolutions of its board of directors and the resolutions of its shareholders)
are maintained, outside China. As such, we do not believe that our company meets all of the conditions above or is a PRC resident enterprise
for PRC tax purposes. For the same reasons, we believe our other entities outside China are not PRC resident enterprises either. However,
the tax resident status of an enterprise is subject to determination by the PRC tax authorities and uncertainties remain with respect
to the interpretation of the term "de facto management body." There can be no assurance that the PRC government will ultimately
take a view that is consistent with our position and there is a risk that the PRC tax authorities may deem our company as a PRC resident
enterprise since a substantial majority of the members of our management team are located in China, in which case we would be subject
to EIT at the rate of 25% on worldwide income. If the PRC tax authorities determine that our Cayman Islands holding company is a "resident
enterprise" for EIT purposes, a number of unfavorable PRC tax consequences could follow.
One example is a 10% withholding
tax would be imposed on dividends we pay to our non-PRC enterprise shareholders and with respect to gains derived by our non-PRC enterprise
shareholders from transferring our shares. It is unclear whether, if we are considered a PRC resident enterprise, holders of our shares
would be able to claim the benefit of income tax treaties or agreements entered into between China and other countries or areas.
According to the Public Notice
Regarding Certain Corporate Income Tax Matters on Indirect Transfer of Properties by Non-Tax Resident Enterprises, or SAT Public Notice
7, which was promulgated by the SAT and became effective on February 3, 2015, as amended on December 29, 2017, if a non-resident enterprise
transfers the equity interests of a PRC resident enterprise indirectly by transfer of the equity interests of an offshore holding company
(other than a purchase and sale of shares issued by a PRC resident enterprise in the public securities market) without a reasonable commercial
purpose, PRC tax authorities have the power to reassess the nature of the transaction and the indirect equity transfer may be treated
as a direct transfer. As a result, the gain derived from such transfer, which means the equity transfer price less the cost of equity,
will be subject to PRC withholding tax at a rate of up to 10%.
125
Under the terms of SAT Public
Notice 7, a transfer which meets all of the following circumstances shall be directly deemed as having no reasonable commercial purposes
if:
●
over 75% of the value of the equity interests of the offshore holding company are directly or indirectly derived from PRC taxable properties;
●
at any time during the year before the indirect transfer, over 90% of the total properties of the offshore holding company are investments within PRC territories, or in the year before the indirect transfer, over 90% of the offshore holding company's revenue is directly or indirectly derived from PRC territories;
●
the function performed and risks assumed by the offshore holding company are insufficient to substantiate its corporate existence; or
●
the foreign income tax imposed on the indirect transfer is lower than the PRC tax imposed on the direct transfer of the PRC taxable properties.
On October 17, 2017, the SAT
issued the Announcement of the State Administration of Taxation on Issues Concerning the Withholding of Non-resident Enterprises Income
Tax at Source, or SAT Bulletin 37, which took effect on December 1, 2017, and subsequently amended on June 15, 2018. SAT Bulletin
37 purports to provide further clarifications by setting forth the definitions of equity transfer income and tax basis, the foreign exchange
rate to be used in the calculation of the withholding amount and the date on which the withholding obligation arises.
Specifically, SAT Bulletin
37 provides that where the transfer income subject to withholding at source is derived by a non-PRC resident enterprise in instalments,
the instalments may first be treated as recovery of costs of previous investments. Upon recovery of all costs, the tax amount to be withheld
must then be computed and withheld.
There is uncertainty as to
the application of SAT Public Notice 7 and SAT Bulletin 37. SAT Public Notice 7 and SAT Bulletin 37 may be determined by the PRC tax authorities
to be applicable to transfers of our shares that involve non-resident investors, if any of such transactions were determined by the tax
authorities to lack a reasonable commercial purpose.
As a result, we and our non-resident
investors in such transactions may become at risk of being taxed under SAT Public Notice 7 and SAT Bulletin 37, and we may be required
to comply with SAT Public Notice 7 and SAT Bulletin 37 or to establish that we should not be taxed under the general anti-avoidance rule
of the EIT Law. This process may be costly and have a material adverse effect on our financial condition and results of operations.
Value-added Tax
Under the Circular on Comprehensively
Promoting the Pilot Program of the Collection of Value-added Tax to Replace Business Tax, or Circular 36, which was promulgated by the
Ministry of Finance and the SAT on March 23, 2016 and became effective on May 1, 2016, as amended on April 1, 2019, entities and individuals
engaging in the sale of services, intangible assets or fixed assets within the territory of the PRC are required to pay value added tax,
or VAT, instead of business tax.
According to the Circular
36, our PRC subsidiaries and consolidated affiliated entity are subject to VAT, at a rate of 6% to 17% on proceeds received from customers
and are entitled to a refund for VAT already paid or borne on the goods purchased by it and utilized in the production of goods or provisions
of services that have generated the gross sales proceeds.
126
According to the Circular
of the Ministry of Finance and the SAT on Adjusting Value-added Tax Rates promulgated on April 4, 2018, and effective May 1, 2018, where
a taxpayer engages in a taxable sales activity for the value-added tax purpose or imports goods, the previous applicable 17% tax rates
are lowered to 16%.
According to the Circular
on Policies to Deepen Value-added Tax Reform promulgated by the Ministry of Finance, the SAT, and the General Administration of Customs
on March 20, 2019, and effective April 1, 2019, where a taxpayer engages in a taxable sales activity for the value-added tax purpose or
imports goods, the previous applicable 16% and 10% tax rates are lowered to 13% and 9% respectively.
Material U.S. Federal Income Tax Considerations
The following discussion is
a summary of material U.S. federal income tax considerations relating to the ownership and disposition of our Class A ordinary shares
and warrants by a U.S. Holder, as defined below, that acquires the Class A ordinary shares and warrants and holds the Class A ordinary
shares and warrants as "capital assets" (generally, property held for investment) under Section 1221 of the United States
Internal Revenue Code of 1986, as amended, or the Code. This discussion is based upon existing U.S. federal income tax law as of the date
of this annual report, 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 consequences described below, and there can
be no assurance that the IRS or a court will not take a contrary position. This discussion does not address all aspects of U.S. federal
income taxation that may be important to particular investors in light of their individual circumstances, including investors subject
to special tax rules (such as, for example, financial institutions, insurance companies, regulated investment companies, real estate investment
trusts, broker-dealers, traders in securities that elect mark-to-market treatment, partnerships or other pass-through entities for U.S.
federal income tax purposes and their partners or investors, tax-exempt organizations (including private foundations), investors who are
not U.S. Holders, investors that own (directly, indirectly, or constructively) ordinary shares representing 10% or more of our stock (by
vote or by value), investors that hold their Class A ordinary shares and/or related warrants as part of a straddle, hedge, conversion,
constructive sale or other integrated transaction, or investors that have a functional currency other than the U.S. dollar, all of whom
may be subject to tax rules that differ significantly from those summarized below. In addition, this discussion does not address any U.S.
federal estate, gift or other non-income tax considerations, state, local, or non-U.S. tax considerations, the alternative minimum tax,
or the Medicare contribution tax on net investment income. Each potential investor is urged to consult its tax advisor regarding the U.S.
federal, state, local and non-U.S. income and other tax considerations of an investment in the Class A ordinary shares and related warrants.
General
For purposes of this discussion,
a "U.S. Holder" is a beneficial owner of our Class A ordinary shares and related warrants that is, for U.S. federal income
tax purposes, (1) an individual who is a citizen or resident of the United States, (2) a corporation (or other entity or arrangement 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, (3) an estate the income of which is includible in gross income for U.S. federal income tax purposes regardless
of its source, or (4) a trust (a) the administration of which is subject to the primary supervision of a U.S. court and which has one
or more United States persons (within the meaning of Section 7701(a)(30) of the Code) who have the authority to control all substantial
decisions of the trust or (b) that has otherwise elected to be treated as a United States person under the Code.
If a partnership (or other
entity or arrangement treated as a partnership for U.S. federal income tax purposes) is a beneficial owner of our Class A ordinary shares
and warrants, the tax treatment of a partner in the partnership will depend upon the status of the partner and the activities of the partnership.
Partnerships and partners of a partnership holding our Class A ordinary shares and related warrants are urged to consult their tax advisors
regarding an investment in our Class A ordinary shares and related warrants.
127
Passive Foreign Investment Company Considerations
A non-U.S. corporation, such
as our company, will be classified as a "passive foreign investment company," or PFIC, for U.S. federal income tax purposes
for any taxable year if either (1) 75% or more of its gross income for such year consists of certain types of "passive" income,
or the "income test" or (2) 50% or more of the value of its assets (generally based on an average of the quarterly values
of the assets) during such year is attributable to assets that produce or are held for the production of passive income, or the "asset
test". For this purpose, cash and assets readily convertible into cash are categorized as passive assets and the company's
unbooked intangibles associated with active business activities may generally be classified as active assets. Passive income generally
includes, among other things, dividends, interest, rents, royalties, and gains from the disposition of passive assets. We will be treated
as owning our proportionate share of the assets and earning our proportionate share of the income of any other corporation in which we
own, directly or indirectly, more than 25% (by value) of the stock.
While we do not expect to
be or become a PFIC in the current or foreseeable taxable years, no assurance can be given in this regard because the determination of
whether we will be or become a PFIC is a factual determination made annually that will depend, in part, upon the composition of our income
and assets. Furthermore, 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 our initial public offering. Under circumstances where our revenue from activities that produce passive income
significantly increases relative to our revenue 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. In addition, because there are uncertainties
in the application of the relevant rules, it is possible that the Internal Revenue Service may challenge our classification of certain
income and assets as non-passive or our valuation of our tangible and intangible assets, each of which may result in our becoming a PFIC
for the current or subsequent taxable years. If we were classified as a PFIC for any year during which a U.S. Holder held our ordinary
shares, we generally would continue to be treated as a PFIC for all succeeding years during which such U.S. Holder held our ordinary shares
even if we cease to be a PFIC in subsequent years, unless certain elections are made.
The discussion herein under
"Dividends" is written on the basis that we will not be or become classified as a PFIC for U.S. federal income tax purposes.
If we are treated as a PFIC, the U.S. federal income tax considerations that apply generally are discussed under "Passive Foreign
Investment Company Rules."
Dividends
Subject to the PFIC rules
described below, any distributions (including constructive distributions of the amount of any PRC tax withheld) paid on the Class A 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 under U.S. federal income tax principles, any distribution will generally
be treated as a "dividend" for U.S. federal income tax purposes. Under current law, a non-corporate recipient of dividend
income will generally be subject to tax on dividend income from a "qualified foreign corporation" at the lower rates applicable
to "qualified dividend income" rather than the marginal tax rates generally applicable to ordinary income, provided that certain
holding period and other requirements are met.
128
A non-U.S. corporation (other
than a corporation that is classified as a PFIC for the taxable year in which the dividend is paid or the preceding taxable year) will
generally be considered to be a qualified foreign corporation (1) if it is eligible for the benefits of a comprehensive income tax treaty
with the United States that the Secretary of Treasury of the United States determines is satisfactory for purposes of this provision and
that includes an exchange of information program, or (2) with respect to any dividend it pays on stock that is readily tradable on an
established securities market in the United States. Our Class A ordinary shares are listed on the Nasdaq Global Select Market. We believe,
but cannot assure you, that Class A ordinary shares will continue to be considered readily tradable on an established securities market
in the United States and that we will be a qualified foreign corporation with respect to dividends paid on the Class A ordinary shares.
However, there can be no assurance that the Class A ordinary shares will continue to be considered readily tradable on an established
securities market in later years. In the event we are deemed to be a PRC resident enterprise under the Enterprise Income Tax Law (see
"—PRC Taxation"), we may be eligible for the benefits of the Agreement Between the Government of the United States of
America and the Government of the People's Republic of China for the Avoidance of Double Taxation and the Prevention of Tax Evasion
with Respect to Taxes on Income, or the United States-PRC income tax treaty (that the Secretary of the Treasury of the United States has
determined is satisfactory for this purpose), in which case we would be treated as a qualified foreign corporation with respect to dividends
paid on our Class A ordinary shares. U.S. Holders are urged to consult their tax advisors regarding the availability of the reduced tax
rate on dividends in their particular circumstances. Dividends received on the Class A ordinary shares will not be eligible for the dividends
received deduction allowed to qualifying corporations under the Code.
For U.S. foreign tax credit
purposes, dividends paid on the Class A ordinary shares will generally be treated as income from foreign sources and will generally constitute
passive category income. If we are deemed to be a PRC resident enterprise under the Enterprise Income Tax Law, a U.S. Holder may be subject
to PRC withholding taxes on dividends paid, if any, on the Class A ordinary shares. A U.S. Holder may be eligible, subject to complex
limitations, to claim a foreign tax credit in respect of any foreign withholding taxes imposed on dividends received on the Class A ordinary
shares. A U.S. Holder who does not elect to claim a foreign tax credit for foreign tax withheld may instead claim a deduction for U.S.
federal income tax purposes in respect of such withholding, but only for a year in which such holder elects to do so for all creditable
foreign income taxes. The rules governing the foreign tax credit are complex. 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 of Ordinary Shares
Subject to the PFIC rules
discussed below, a U.S. Holder will generally recognize capital gain or loss, if any, upon the sale or other disposition of Class A ordinary
shares and warrants in an amount equal to the difference between the amount realized upon the disposition and the holder's adjusted
tax basis in such Class A ordinary shares. Any capital gain or loss will be long-term capital gain or loss if the Class A ordinary shares
have been held for more than one year and will generally be U.S. source gain or loss for U.S. foreign tax credit purposes. Long-term capital
gains of non-corporate U.S. Holders are currently eligible for reduced rates of taxation. If we are treated as a PRC resident enterprise
under the Enterprise Income Tax Law, and gain from the disposition of the ordinary shares is subject to tax in the PRC (see "—PRC
Taxation"), such gain may be treated as PRC source gain for foreign tax credit purposes under the United States-PRC income tax treaty.
The deductibility of a capital loss may be subject to limitations. U.S. Holders are urged to consult their tax advisors regarding the
tax consequences if a foreign tax is imposed on a disposition of the Class A ordinary shares, including the availability of the foreign
tax credit under their particular circumstances.
129
Passive Foreign Investment Company Rules
If we are classified as a
PFIC for any taxable year during which a U.S. Holder holds the Class A ordinary shares or warrants, unless the U.S. Holder makes one of
certain elections (as described below), the U.S. Holder will, except as discussed below, be subject to special tax rules that have a penalizing
effect, regardless of whether we remain a PFIC in subsequent taxable years, on (1) 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% 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 or warrants),
and (2) any gain realized on the sale or other disposition, including, under certain circumstances, a pledge, of Class A ordinary shares
or warrants. Under the PFIC rules:
●
the excess distribution and/or gain will be allocated ratably over the U.S. Holder's holding period for the Class A ordinary shares or warrants;
●
the amount of the excess distribution or gain allocated to the taxable year of distribution or gain and to 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 such taxable year, a pre-PFIC year) will be taxable as ordinary income;
●
the amount of the excess distribution or gain allocated to each prior taxable year, other than a pre-PFIC year, will be subject to tax at the highest tax rate in effect applicable to the individuals or corporations, as appropriate, for that year, and will be increased by an additional tax equal to interest on the resulting tax deemed deferred with respect to each such year.
If we are a PFIC for any taxable
year during which a U.S. Holder holds the Class A ordinary shares or warrants and any of our non-U.S. subsidiaries or other corporate
entities in which we own equity interests is also a PFIC, such U.S. Holder would be treated as owning a proportionate amount (by value)
of the shares of the lower-tier PFIC for purposes of the application of these rules. Each U.S. Holder is advised to consult its tax advisors
regarding the application of the PFIC rules to any of our lower-tier PFICs.
If we are a PFIC for any taxable
year during which a U.S. Holder holds the Class A ordinary shares or warrants, we will continue to be treated as a PFIC with respect to
such U.S. Holder for all succeeding taxable years during which the U.S. Holder holds the Class A ordinary shares or warrants, unless we
were to cease to be a PFIC and the U.S. Holder makes a "deemed sale" election with respect to the Class A ordinary shares
or warrants. If such election is made, the U.S. Holder will be deemed to have sold its ordinary shares or warrants at their fair market
value and any gain from such deemed sale would be subject to the rules described in the preceding two paragraphs. After the deemed sale
election, so long as we do not become a PFIC in a subsequent taxable year, the Class A ordinary shares or warrants with respect to which
such election was made will not be treated as shares in a PFIC and, as a result, the U.S. Holder will not be subject to the rules described
above with respect to any "excess distribution" the U.S. Holder receives from us or any gain from an actual sale or other
disposition of the Class A ordinary shares or warrants. Each U.S. Holder is strongly urged to consult its tax advisors as to the possibility
and consequences of making a deemed sale election if we are and then cease to be a PFIC and such an election becomes available to the
U.S. Holder.
As an alternative to the foregoing
rules, a U.S. Holder of "marketable stock" in a PFIC may make a mark-to-market election with respect to the Class A ordinary
shares (but not the warrants), provided that the Class A ordinary shares are "regularly traded" (as specially defined in the
applicable United States Treasury Regulations) on the Nasdaq Global Select Market, which is a qualified exchange or other market for these
purposes. We expect that our Class A ordinary shares will be treated as marketable stock upon their listing on the Nasdaq Global Select
Market, but no assurances can be given in this regard. If a mark-to-market election is made, the U.S. Holder will generally (1) include
as ordinary income for each taxable year that we are a PFIC the excess, if any, of the fair market value of Class A ordinary shares held
at the end of the taxable year over the U.S. Holder's adjusted tax basis in such Class A ordinary shares and (2) deduct as an ordinary
loss the excess, if any, of the U.S. Holder's adjusted tax basis in the Class A ordinary shares over the fair market value of such
Class A ordinary shares held at the end of the taxable year, but only 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 Class A ordinary shares would be adjusted to
reflect any income or loss resulting from the mark-to-market election. If a U.S. Holder makes an effective mark-to-market election in
any year that we are a PFIC, any gain recognized upon the sale or other disposition of the Class A ordinary shares will be treated as
ordinary income and any loss will be treated as ordinary loss, but only to the extent of the net amount previously included in income
as a result of the mark-to-market election.
130
If a U.S. Holder makes a mark-to-market
election in respect of a corporation classified as a PFIC and such corporation ceases to be classified as a PFIC, the U.S. Holder will
not be required to take into account the mark-to-market gain or loss described above during any period that such corporation is not classified
as a PFIC.
Because a mark-to-market election
cannot be made for any lower-tier PFICs that we may own, a U.S. Holder who makes a mark-to-market election with respect to the Class A
ordinary shares may continue to be subject to the general PFIC rules with respect to such U.S. Holder's indirect interest in any
of our non-U.S. subsidiaries or other corporate entities in which we own equity interests that is classified as a PFIC.
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 the general tax treatment for PFICs described above.
As discussed above under "Dividends,"
dividends that we pay on the Class A ordinary shares will not be eligible for the reduced tax rate that applies to qualified dividend
income if we are classified as a PFIC for the taxable year in which the dividend is paid or the preceding taxable year. In addition, if
a U.S. Holder owns the Class A ordinary shares or warrants during any taxable year that we are a PFIC, the holder must file an annual
information return with the IRS. Each U.S. Holder is urged to consult its tax advisor concerning the U.S. federal income tax consequences
of purchasing, holding, and disposing Class A ordinary shares or warrants if we are or become a PFIC, including the possibility of making
a mark-to-market election and the unavailability of the qualified electing fund election.
Information Reporting and Backup Withholding
Certain U.S. Holders are required
to report information to the IRS relating to an interest in "specified foreign financial assets" (as defined in the Code),
including shares and warrants issued by a non-United States corporation, for any year in which the aggregate value of all specified foreign
financial assets exceeds $50,000 (or a higher dollar amount prescribed by the IRS), subject to certain exceptions (including an exception
for shares held in custodial accounts maintained with a U.S. financial institution). These rules also impose penalties if a U.S. Holder
is required to submit such information to the IRS and fails to do so.
In addition, U.S. Holders
may be subject to information reporting to the IRS and backup withholding with respect to dividends on and proceeds from the sale or other
disposition of the Class A ordinary shares or warrants. Information reporting will generally apply to payments of dividends on, and to
proceeds from the sale or other disposition of, Class A ordinary shares or warrants by a paying agent within the United States to a U.S.
Holder, other than U.S. Holders that are exempt from information reporting and properly certify their exemption. A paying agent within
the United States will be required to withhold at the applicable statutory rate, currently 24%, in respect of any payments of dividends
on, and the proceeds from the disposition of, Class A ordinary shares or warrants within the United States to a U.S. Holder (other than
U.S. Holders that are exempt from backup withholding and properly certify their exemption) if the holder fails to furnish its correct
taxpayer identification number or otherwise fails to comply with applicable backup withholding requirements. U.S. Holders who are required
to establish their exempt status generally must provide a properly completed IRS Form W-9.
Backup withholding is not
an additional tax. Amounts withheld as backup withholding may be credited against a U.S. Holder's U.S. federal income tax liability.
A U.S. Holder generally may obtain a refund of any amounts withheld under the backup withholding rules by filing the appropriate claim
for refund with the IRS in a timely manner and furnishing any required information. Each U.S. Holder is advised to consult with its tax
advisor regarding the application of the United States information reporting rules to their circumstances.
F.
Dividends and paying agents
Not applicable.
131
G.
Statement by experts
Not applicable.
H.
Documents on display
We are subject to the informational
requirements of the Exchange Act. Accordingly, we are required to file reports and other information with the SEC, including annual reports
on Form 20-F and reports on Form 6-K. The SEC maintains an Internet website that contains reports and other information about
issuers, like us, that file electronically with the SEC. The address of that website is
www.sec.gov
. As a foreign private issuer,
we are exempt from the rules under the Exchange Act prescribing the furnishing and content of quarterly reports and proxy statements,
and officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained
in Section 16 of the Exchange Act.
I.
Subsidiary information
Not applicable.
ITEM 11. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
Concentration of Credit Risk
Financial instruments that
potentially expose us to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. We place
our cash and cash equivalents with financial institutions with high credit ratings and quality.
We conduct credit evaluations
of customers, and generally do not require collateral or other security from our customers. We establish an allowance for doubtful accounts
primarily based upon the age of the receivables and factors surrounding the credit risk of specific customers.
Liquidity Risk
Our policy is to regularly
monitor our liquidity requirements and our compliance with lending covenants, to ensure that we maintain sufficient reserves of cash and
readily realizable marketable securities and adequate committed lines of funding from major financial institutions to meet its liquidity
requirements in the short and longer term. see "Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital
Resources."
Currency Risk
Our operations are primarily
in China. Our reporting currency is denominated in U.S. dollars. We are exposed to currency risk primarily through sales and purchases
which give rise to receivables, payables and cash balances that are denominated in a currency other than the functional currency of the
operations to which the transactions relate. Thus, our revenues and results of operations may be impacted by exchange rate fluctuations
between RMB, Hong Kong dollars, Euros, Australian dollars and U.S. dollars. We had currency translation gains of US$2.0 million and US$1.0
million in 2020 and 2021, respectively, recognized in other comprehensive gain, and currency transaction loss of US$5.3 million in 2022,
as a result of changes in the exchange rate.
132
Inflation
To date, inflation in China
and Hong Kong has not materially affected our results of operations. According to the National Bureau of Statistics of China, the year-over-year
percent changes in the consumer price index for December 2020, 2021 and 2022 were increases of 0.2%, 1.5% and 1.8%, respectively, and
according to the Census and Statistics Department of Hong Kong, the year-over-year percent changes in the consumer price index for December
2020, 2021 and 2022 were decrease of 0.7%, increase of 1.6% and increase of 2.0%, respectively. Although we have not been materially affected
by inflation in the past, we may be affected if China or Hong Kong experiences higher rates of inflation in the future.
According to the Australian
Bureau of Statistics, the year-over-year percent changes in the consumer price index for December 2020, 2021 and 2022 were increases of
0.8%, 2.8% and 8.3%, respectively. The inflation increment has led to a significant increase in our overseas business personnel recruitment
and raw material procurement costs. If we are unable to pass on the increase in production costs to our customers, our profitability may
decline, and our operating results may be significantly adversely affected by continued rising inflation.
ITEM 12. DESCRIPTION OF SECURITIES OTHER
THAN EQUITY SECURITIES
A.
Debt securities
Not applicable.
B.
Warrants and rights
Not applicable.
C.
Other securities
Not applicable.
D.
American Depositary Shares
Not applicable.
133
PART II
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES
AND DELINQUENCIES
A.
Defaults
No matters to report.
B.
Arrears and delinquencies
No matters to report.
ITEM 14. MATERIAL MODIFICATIONS TO THE
RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
Material Modifications to the Rights of Security Holders
On November 20, 2022, at 8:00
a.m. (Singapore Time), we convened an extraordinary general meeting of shareholders (the "EGM"). At the EGM, our shareholders
approved the following ordinary resolution:
THAT with immediate effect
upon passing, every thirty (30) issued and unissued Class A Ordinary Shares and Class B Ordinary Shares of the Company of HK$0.001 each
(the "Existing Shares") be consolidated into one (1) share of HK$0.03 each (each a "Consolidated Share"), such
Consolidated Shares shall rank pari passu in all respects with each other, so that following the Share Consolidation the authorised share
capital of the Company will be changed from HK$380,000.00 divided into 380,000,000 Ordinary Shares of a par value of HK$0.001 each consisting
of (i) 333,374,217 Class A Ordinary Shares of a par value of HK$0.001 each, and (ii) 46,625,783 Class B Ordinary Shares of a par value
of HK$0.001 each, to HK$380,000.00 divided into 12,666,666.66 Ordinary Shares of a par value of HK$0.03 each of which (i) 11,112,473.90
Class A Ordinary Shares are designated as Class A Ordinary Shares of a par value of HK$0.03 each, and (ii) 1,554,192.76 Class B Ordinary
Shares are designated as Class B Ordinary Shares of a par value of HK$0.03 each (the "Share Consolidation").
THAT all fractional entitlements
to the issued Consolidated Shares resulting from the Share Consolidation will be issued to the shareholders of the Company and the Board
shall be authorised to settle as it considers expedient any difficulty resulting from the Share Consolidation and to further deal as the
Board in its discretion and as it considers expedient, as appropriate, the treatment of all such issued fractional shares arising on a
post-consolidation basis.
See "Item 10—Additional
Information—B. Memorandum and Articles of Association—Ordinary Shares" for a description of the rights of securities
holders.
Use of Proceeds
In June 2020, we completed
our initial public offering in which we offered and sold an aggregate 642,145 (19,264,337 before Share Consolidation) of our Class A ordinary
shares, at an initial offering price of US$156.90 (US$5.23 before Share Consolidation) per Class A ordinary share. The registration statement
on Form F-1, as amended (File No. 333-237843) in connection with the initial public offering was declared effective by the SEC on June
25, 2020. AMTD Global Markets Limited, Loop Capital Markets LLC and Prime Number Capital LLC were the representatives of the underwriters
for our initial public offering. We received net proceeds of approximately US$91.7 million, after deducting underwriting discounts and
commissions and estimated offering expenses payable by us. The total expenses incurred for our company's account in connection with
our initial public offering was approximately US$9.1 million, which included US$7.1 million in underwriting discounts and commissions
for the initial public offering and approximately US$2 million in other costs and expenses for our initial public offering. None of the
transaction expenses included payments to directors or officers of our company or their associates, persons owning more than 10% or more
of our equity securities or our affiliates. None of the net proceeds we received from the initial public offering were paid, directly
or indirectly, to any of our directors or officers or their associates, persons owning 10% or more of our equity securities or our affiliates.
For the period from June 25, 2020 to December 31, 2022, we had used approximately US$63.53 million of the net proceeds received
from our initial public offering for (i) expansion of overseas business and new businesses, including establishing research and development
centers and taking selling and marketing initiatives overseas, (ii) development and introduction of new mining machines, (iii) corporate
branding and marketing activities, and (iv) general corporate purposes, including working capital needs and other corporate uses. We still
intend to use the balance of the net proceeds from our initial public offering as disclosed in the registration statement.
134
From November 2020 to April
2021, we received net proceeds of an aggregate of approximately US$209 million through follow-on public offerings in connection with three
registration statements on Form F-1, as amended (File Nos. 333-249647, 333-252804 and 333-254787, respectively). The offerings were priced
at US$156.9, US$150.00 and US$183.00 (US$5.25, US$5.00 and US$6.1 before Share Consolidation) per unit, respectively, with each unit consisting
of one Class A ordinary share and one warrant to purchase one-half of one Class A ordinary share. The registration statements were declared
effective by the SEC on November 17, 2020, February 10, 2021 and March 31, 2021, respectively. The total expenses incurred for our company's
account in connection with these offerings were approximately US$14.4 million, which included US$13.4 million in placement agent fees
and approximately US$1 million in other costs and expenses for these offerings. Univest Securities, LLC was the placement agent for these
offerings. None of the transaction expenses in connection with these offerings included payments to directors or officers of our company
or their associates, persons owning more than 10% or more of our equity securities or our affiliates. None of the net proceeds we received
from these follow-on public offerings were paid, directly or indirectly, to any of our directors or officers or their associates, persons
owning 10% or more of our equity securities or our affiliates. For the Period from November 17, 2020 to December 31, 2022, we had used
approximately US$64.76 million of the net proceeds received from our follow-on offerings for (i) development and application of blockchain
technology into financial services, (ii) research, development, production and sales of ASICs and equipment related to cryptocurrencies,
(iii) expansion of our cryptocurrency mining business as well as establishment and operation of cryptocurrency mining farms, (iv) establishment
and operation of Fintech service platforms. We still intend to use the net proceeds from such offerings as disclosed in their respective
registration statements.
ITEM 15. CONTROLS AND PROCEDURES
A.
Disclosure Controls and Procedures
As of December 31, 2022,
under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer,
we performed an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under
the Exchange Act). There are inherent limitations to the effectiveness of any disclosure controls and procedures system, including the
possibility of human error and circumventing or overriding them. Even if effective, disclosure controls and procedures can provide only
reasonable assurance of achieving their control objectives.
Based on such evaluation,
our management has concluded that our disclosure controls and procedures were not effective as of December 31, 2022 and as of the date
that the evaluation of the effectiveness of our disclosure controls and procedures was completed, failed to provide reasonable assurance
that the information we are required to disclose in the reports we file or submit under the Exchange Act is (1) recorded, processed,
summarized and reported within the time periods specified in the SEC's rules and forms and (2) accumulated and communicated
to our management to allow timely decisions regarding required disclosures.
B.
Management's Annual Report on Internal Control over Financial Reporting
Our management is responsible
for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) and 15d-15(f) under
the Exchange Act. Our management evaluated the effectiveness of our internal control over financial reporting, as required by Rule 13a-15(c)
of the Exchange Act, based on criteria established in the framework in Internal Control-Integrated Framework (2013) issued by the Committee
of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, our management has concluded that our internal control
over financial reporting was not effective as of December 31, 2022 due to a 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. In addition, projections of any evaluation of effectiveness
of our internal control over financial reporting to future periods are subject to the risk that controls may become inadequate because
of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.
135
Internal Control Over Financial Reporting
During the audit of our financial
statements for the year ended December 31, 2022, one material weakness was identified in our internal control over financial reporting.
As defined in the standards established by the Public Company Accounting Oversight Board of the United States, 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 the company's annual or interim financial statements will not be prevented or detected on a timely
basis. The material weakness identified is related to the lack of sufficient accounting personnel with appropriate experience and knowledge
in financial reporting in accordance with U.S. GAAP.
We are in the process of implementing
a number of measures to improve our internal control over financial reporting to address the material weakness identified, including:
(1) in addition to the CFO and the financial controller, hiring a qualified CFO and a senior financial reporting manager, equipped with
relevant U.S. GAAP and SEC reporting experience and qualifications to strengthen the financial reporting function and to set up a financial
and system control framework, (2) formalizing and standardizing our accounting and financial reporting control procedures and policies
to improve the quality and accuracy of the period end financial closing process, and (3) enhancing an internal audit function as well
as engaging an external consulting firm to help us assess our compliance readiness under rule 13a-15 of the Exchange Act and improve overall
internal control.
However, we cannot assure
you that we will remediate our material weakness in a timely manner. The process of designing and implementing an effective financial
reporting system is a continuous effort that requires us to anticipate and react to changes in our business and the economic and regulatory
environments and to expend significant resources to maintain a financial reporting system that is adequate to satisfy our reporting obligation.
See "Item 3. Key Information—D. Risk Factors—Risks Relating to Our Business and Industry—If we fail to implement
and maintain an effective system of internal controls, we may be unable to accurately or timely report our results of operations or prevent
fraud, and investor confidence and the market price of our Class A ordinary shares may be materially and adversely affected." Additionally,
we cannot assure you that we have identified all, or that we will not in the future have additional, material weaknesses.
C.
Attestation Report of the Registered Public Accounting Firm
As a company with less than
US$1.235 billion in revenue for our last fiscal year, 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 2002, in the assessment of the emerging growth company's internal control over financial reporting.
D.
Changes in Internal Control over Financial Reporting
Subject to the above, there
were no other changes in the Company's internal control over financial reporting that occurred during the year ended December 31,
2022, that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting
.
ITEM 16. [RESERVED]
ITEM 16A. Audit committee financial expert
We have determined that Yanqing
Gao, Tingjie Lyu and Mingming Su are independent, as such term is defined under SEC rules applicable to foreign private issuers.
In addition, Mr. Yanqing Gao is regarded as an audit committee financial expert.
136
ITEM 16B. Code of Ethics
We have adopted a code of
ethics applicable to the board of directors and all employees. Since its effective date on April 24, 2020, we have not waived compliance
with or amended the code of ethics.
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 MaloneBailey, LLP, our independent
registered public accounting firm, for the periods indicated.
2022
2021
Audit fees
$
669,500
$
595,000
Audit related fees
20,600
20,000
Tax fees
-
-
All other fees
-
-
Total
$
690,100
$
615,000
Audit Fees
Audit fees are fees billed
for professional services rendered by the principal accountant for the audit of the registrant's annual financial statements or
services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years.
It includes the audits of our consolidated financial statements and other services that generally only the independent accountant reasonably
can provide, such as statutory audits.
Audit-Related Fees
Audit-related fees are fees
billed for assurance and related services that are reasonably related to the performance of the audits or review of our consolidated financial
statements and not reported under the previous category. These services would include, among others: comfort letters, consents and assistance
with and review of documents, accounting consultations and audits in connection with acquisitions, attestation of services that are not
required by statue or regulation and consultation concerning financial accounting and reporting standards.
Tax Fees
Tax fees are fees billed for
professional services for tax compliance, tax advice and tax planning.
All Other Fees
All other fees represent the
aggregate fees billed in each of the fiscal years listed for services rendered by the principal accountant for the audit of our annual
financial statements other than services reported under "Audit Fees," "Audit-related fees," and "Tax fees."
Pre-Approval Policies and Procedures
Following the listing of our
Class A ordinary shares on Nasdaq, the Audit Committee oversees the auditor selection process for new auditors and ensures key partners
in the appointed firm are rotated in accordance with best practices. Also, following our Nasdaq listing, the Audit Committee is required
to pre-approve the audit and non-audit fees and services performed by the Company's auditors in order to be sure that the provision
of such services does not impair the audit firm's independence.
All of the audit fees, audit-related
fees and tax fees described in this item 16C have been approved by the Audit Committee.
137
ITEM 16D. Exemptions from the listing
standards for audit committees
None.
ITEM 16E. Purchases of equity securities
by the issuer and affiliated purchasers.
None.
ITEM 16F. Change in registrant's
certifying accountant
Not applicable.
ITEM 16G. Corporate governance
We are a "foreign private
issuer" (as such term is defined in Rule 3b-4 under the Exchange Act), and our Class A ordinary shares are listed on the Nasdaq
Global Select Market. Nasdaq Stock Market 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 corporate governance listing standards. For instance, we are not required to:
●
have a majority of the board be independent (although all of the members of the audit committee must be independent under the Exchange Act);
●
have a compensation committee or a nominations or corporate governance committee consisting entirely of independent directors;
●
have an annual general meeting of shareholders each year; or
●
have regularly scheduled executive sessions with only independent directors each year.
We have relied on and intend
to continue to rely on some of these exemptions.
ITEM 16H. Mine safety disclosure
Not applicable.
ITEM 16I. Disclosure Regarding Foreign
Jurisdictions that Prevent Inspections
Not applicable.
138
PART III
ITEM 17. Financial statements
We have responded to Item 18
in lieu of this item.
ITEM 18. Financial statements
Financial Statements are filed
as part of this annual report, see pages F-1 to F-34 to this annual report.
ITEM 19.
Exhibits
Exhibit no.
Description
1.1
Second Amended and Restated Memorandum of Association and Articles of Association of the Registrant, as currently in effect (incorporated herein by reference to Exhibit 3.1 to the Report of Foreign Private Issuer on Form 6-K, furnished with the Securities and Exchange Commission on December 22, 2021)
2.1
Form of Warrant (November 2020 Offering) (incorporated herein by reference to Exhibit 4.2 to the registration statement on Form F-1 (File No. 333-249647), as amended, initially filed with the Securities and Exchange Commission on October 23, 2020)
2.2
Form of Warrant (February 2021 Offering) (incorporated herein by reference to Exhibit 4.2 to the registration statement on Form F-1 (File No. 333-252804), as amended, initially filed with the Securities and Exchange Commission on February 5, 2021)
2.3
Form of Warrant (February 2021 Inducement) (incorporated herein by reference to Exhibit 4.2 to the registration statement on Form F-1 (File No. 333-253784), initially filed with the Securities and Exchange Commission on March 2, 2021)
2.4
Form of Warrant (April 2021 Offering) (incorporated herein by reference to Exhibit 4.2 to the registration statement on Form F-1 (File No. 333-254787), as amended, initially filed with the Securities and Exchange Commission on March 26, 2021)
2.5
Description of Securities
4.1
Form of Indemnification Agreement between the Registrant and each of its directors and executive officers (incorporated herein by reference to Exhibit 10.1 to the registration statement on Form F-1 (File No. 333-237843), as amended, initially filed with the Securities and Exchange Commission on June 17, 2020)
4.2
Form of Employment Agreement between the Registrant and each of its executive officers (incorporated herein by reference to Exhibit 10.2 to the registration statement on Form F-1 (File No. 333-237843), as amended, initially filed with the Securities and Exchange Commission on June 17, 2020)
4.3
Form of Securities Purchase Agreement (November 2020 Offering) (incorporated herein by reference to Exhibit 10.4 to the registration statement on Form F-1 (File No. 333-249647), as amended, initially filed with the Securities and Exchange Commission on October 23, 2020)
4.5
Form of Securities Purchase Agreement (February 2021 Offering) (incorporated herein by reference to Exhibit 10.4 to the registration statement on Form F-1 (File No. 333-252804), as amended, initially filed with the Securities and Exchange Commission on February 5, 2021)
4.7
Form of Securities Purchase Agreement (April 2021 Offering) (incorporated herein by reference to Exhibit 10.4 to the registration statement on Form F-1 (File No. 333-254787), as amended, initially filed with the Securities and Exchange Commission on March 26, 2021)
4.9
Amended and Restated 2020 Share Incentive Plan (incorporated by reference to Exhibit 10.1 to the registration statement on Form S-8 (File No. 333-257787), filed with the Securities and Exchange Commission on July 9, 2021)
4.10
Form of Restricted Share Award Agreement under the Amended and Restated 2020 Share Incentive Plan
4.11
2021 Share Incentive Plan (incorporated herein by reference to Appendix A to the Registrant's Proxy Statement, attached as Exhibit 99.1 to the Report of Foreign Private Issuer on Form 6-K, furnished with the Securities and Exchange Commission on November 15, 2021)
4.12
Form of Restricted Share Award Agreement under the 2021 Share Incentive Plan
8.1
List of significant subsidiaries and consolidated affiliated entity of the Registrant
12.1
Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002
13.1
Certification pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002*
15.1
Consent of Conyers Dill and Pearman
15.2
Consent of Jingtian & Gongcheng
15.3
Consent of MaloneBailey, LLP, Independent Registered Public Accounting Firm
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).
*
Furnished
herewith.
139
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.
EBANG INTERNATIONAL HOLDINGS INC.
By:
/s/ Dong Hu
Name:
Dong Hu
Title:
Chief Executive Officer and
Chief Financial Officer
Date: April 28, 2023
140
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm (PCAOB
ID206
)
F-2
Consolidated Balance Sheets as of December 31, 2022 and 2021
F-3
Consolidated Statements of Operations and Comprehensive Income (Loss) for the Years Ended December 31, 2022, 2021 and 2020
F-4
Consolidated Statements of Changes in Equity for the Years Ended December 31, 2022, 2021 and 2020
F-5
Consolidated Statements of Cash Flows for the Years Ended December 31, 2022, 2021 and 2020
F-6
Notes to Consolidated Financial Statements
F-7
F-
1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
To the Shareholders and Board of Directors of
Ebang International Holdings Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated
balance sheets of Ebang International Holdings Inc. and its subsidiaries (collectively, the "Company") as of December 31,
2022 and 2021, and the related consolidated statements of operations and comprehensive income (loss), changes in equity, and cash flows
for each of the years in the three-year period ended December 31, 2022, and the related notes (collectively referred to as the "financial
statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company
as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the years in the three-year period
ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.
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 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 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/
MaloneBailey, LLP
www.malonebailey.com
We have served as the Company's auditor since 2019.
Houston, Texas
April 28, 2023
F-
2
EBANG INTERNATIONAL HOLDINGS INC.
CONSOLIDATED BALANCE SHEETS
(Stated in US dollars)
Notes
December 31,
2022
December 31,
2021
ASSETS
Current assets:
Cash and cash equivalents
$
251,294,952
$
239,872,316
Restricted cash, current
29,039
171,156
Short-term investments
4
5,835,377
35,443,246
Accounts receivable, net
6
3,334,727
9,872,746
Advances to suppliers
1,178,168
1,057,096
Inventories, net
7
440,064
7,137,538
Prepayments
281,611
283,776
Other
    current assets, net
6,711,422
4,994,271
Total
    current assets
269,105,360
298,832,145
Non-current
    assets:
Property, plant and equipment,
    net
8
36,549,278
33,329,610
Intangible assets, net
9
6,890,738
22,512,208
Operating lease right-of-use
    assets
14
5,343,608
2,132,247
Operating lease right-of-use
    assets - related parties
14/18
519,140
1,136,775
Restricted cash, non-current
903,125
883,130
Goodwill
3
2,299,628
-
VAT recoverable
21,132,898
26,332,231
Other
    assets
1,421,309
705,825
Total
    non-current assets
75,059,724
87,032,026
Total
    assets
$
344,165,084
$
385,864,171
LIABILITIES
    AND EQUITY
Current liabilities:
Accounts payable
$
1,456,577
$
3,387,836
Accrued liabilities and other
    payables
10
11,519,091
8,975,988
Operating lease liabilities,
    current
14
1,217,604
851,936
Operating lease liabilities
    - related parties, current
14/18
283,567
595,424
Advances
    from customers
1,010,852
894,174
Total
    current liabilities
15,487,691
14,705,358
Non-current
    liabilities:
Operating lease liabilities
    – related party, non-current
14/18
-
288,563
Deferred tax liabilities
11
1,133,539
178,582
Operating
    lease liabilities, non-current
14
5,755,973
1,712,303
Total
    non-current liabilities
6,889,512
2,179,448
Total liabilities
22,377,203
16,884,806
Equity:
Class A ordinary share, HKD
0.03
par value,
11,112,474
shares authorized,
4,700,852
and
4,640,318
shares issued and outstanding as of December 31, 2022 and 2021, respectively
(1)
12
18,080
17,848
Class B ordinary share, HKD
0.03
par value,
1,554,192
shares authorized, issued and outstanding as of December 31, 2022 and 2021, respectively
(1)
12
5,978
5,978
Additional paid-in capital
397,620,927
393,717,189
Statutory reserves
15
11,079,649
11,079,649
Accumulated deficit
(
78,068,522
)
(
34,180,280
)
Accumulated
    other comprehensive loss
(
11,724,531
)
(
6,897,005
)
Total Ebang
    International Holdings Inc. shareholders' equity
318,931,581
363,743,379
Non-controlling
    interest
2,856,300
5,235,986
Total
    equity
321,787,881
368,979,365
Total
    liabilities and equity
$
344,165,084
$
385,864,171
(1)
Retrospectively adjusted for the effect of the Reverse Stock
Split effected on November 20, 2022. See Note 12.
The accompanying notes are an integral part of
these consolidated financial statements
F-
3
EBANG INTERNATIONAL HOLDINGS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
INCOME (LOSS)
(Stated in US dollars)
Notes
For the year ended
December 31,
2022
For the year ended
December 31,
2021
For the year ended
December 31,
2020
Product revenue
$
29,537,224
$
48,323,022
$
9,677,278
Service revenue
2,790,895
3,127,225
9,327,023
Total revenues
2/16
32,328,119
51,450,247
19,004,301
Cost of revenues
16,915,795
22,227,055
21,903,644
Gross profit (loss)
15,412,324
29,223,192
(
2,899,343
)
Operating expenses:
Selling expenses
1,956,120
1,418,586
925,373
General and administrative expenses
61,450,444
25,774,237
22,822,085
Total operating expenses
63,406,564
27,192,823
23,747,458
Gain on disposal of subsidiaries
19
(
5,941
)
-
-
Income (loss) from operations
(
47,988,299
)
2,030,369
(
26,646,801
)
Other income (expenses):
Interest income
4,362,832
1,779,672
824,435
Interest expenses
-
(
4,383
)
(
728,346
)
Other income
1,033,622
133,477
81,733
Loss from investment
(
509,496
)
(
3,656,520
)
-
Exchange gain (loss)
(
2,161,264
)
1,780,087
(
288,346
)
Government grants
81,911
434,604
4,006,567
Other expenses
(
649,476
)
(
108,328
)
(
108,624
)
Total other income
2,158,129
358,609
3,787,419
Income (loss) before income taxes provision (benefit)
(
45,830,170
)
2,388,978
(
22,859,382
)
Income taxes provision (benefit)
11
(
72,933
)
(
378,843
)
9,251,542
Net income (loss)
(
45,757,237
)
2,767,821
(
32,110,924
)
Less: net loss attributable to non-controlling interest
(
1,868,995
)
(
1,663,120
)
(
1,435,504
)
Net income (loss) attributable to Ebang International Holdings Inc.
$
(
43,888,242
)
$
4,430,941
$
(
30,675,420
)
Comprehensive income (loss)
Net income (loss)
$
(
45,757,237
)
$
2,767,821
$
(
32,110,924
)
Other comprehensive income (loss):
Foreign currency translation adjustment
(
5,338,217
)
953,073
1,960,109
Total comprehensive income (loss)
(
51,095,454
)
3,720,894
(
30,150,815
)
Less: comprehensive loss attributable to non-controlling interest
(
2,379,686
)
(
1,461,374
)
(
893,905
)
Comprehensive income (loss) attributable to Ebang International Holdings Inc.
$
(
48,715,768
)
$
5,182,268
$
(
29,256,910
)
Net income (loss) per ordinary share attributable to Ebang International Holdings Inc.
Basic
(1)
5
$
(
7.03
)
$
0.75
$
(
7.55
)
Diluted
(1)
5
$
(
7.03
)
$
0.75
$
(
7.55
)
Weighted average ordinary shares outstanding
Basic
(1)
5
6,247,333
5,923,845
4,064,708
Diluted
(1)
5
6,247,333
5,928,858
4,064,708
(1)
Retrospectively adjusted for the effect of the Reverse Stock
Split effected on November 20, 2022. See Note 12.
The accompanying notes are an integral part of
these consolidated financial statements
F-
4
EBANG INTERNATIONAL HOLDINGS INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Stated in US dollars)
Ordinary
    Shares
(1)
Class
    A
Ordinary Shares
(1)
Class
    B
Ordinary Shares
(1)
Additional
Accumulated
    Other
Non-
Number of
Number of
Number of
Paid-in
Statutory
Accumulated
Comprehensive
controlling
Total
Shares
Amount
Shares
Amount
Shares
Amount
Capital
Reserves
Deficit
Loss
Interest
Equity
Balance, January 1, 2020
3,725,700
$
14,330
-
$
-
-
$
-
$
23,888,023
$
11,049,847
$
(
7,905,999
)
$
(
9,066,842
)
$
7,591,265
$
25,570,624
Re-designation of ordinary shares to Class A and Class B ordinary shares immediately prior to the completion of initial public offering
(
3,725,700
)
(
14,330
)
2,171,507
8,352
1,554,192
5,978
-
-
-
-
-
-
Share issuance upon initial public offering, net of issuance cost
-
-
642,145
2,470
-
-
91,682,290
-
-
-
-
91,684,760
Share issuance following initial public offering, net of issuance cost
-
-
153,333
589
-
-
22,506,246
-
-
-
-
22,506,835
Increase in capital from disposal of subsidiary
-
-
-
-
-
-
212,362
-
-
-
-
212,362
Net loss
-
-
-
-
-
-
-
-
(
30,675,420
)
-
(
1,435,504
)
(
32,110,924
)
Foreign currency translation adjustment
-
-
-
-
-
-
-
-
-
1,418,510
541,599
1,960,109
Balance, December 31, 2020
-
$
-
2,966,985
$
11,411
1,554,192
$
5,978
$
138,288,921
$
11,049,847
$
(
38,581,419
)
$
(
7,648,332
)
$
6,697,360
$
109,823,766
Share issuance following initial public offering, net of issuance cost
-
-
1,220,000
4,693
-
-
186,772,032
-
-
-
-
186,776,725
Share issuance from exercise of warrants, net of issuance cost
-
-
453,333
1,744
-
-
67,949,236
-
-
-
-
67,950,980
Share-based compensation
-
-
-
-
-
-
707,000
-
-
-
-
707,000
Net income (loss)
-
-
-
-
-
-
-
-
4,430,941
-
(
1,663,120
)
2,767,821
Transfer to reserve
-
-
-
-
-
-
-
29,802
(
29,802
)
-
-
-
Foreign currency translation adjustment
-
-
-
-
-
-
-
-
-
751,327
201,746
953,073
Balance, December 31, 2021
-
$
-
4,640,318
$
17,848
1,554,192
$
5,978
$
393,717,189
$
11,079,649
$
(
34,180,280
)
$
(
6,897,005
)
$
5,235,986
$
368,979,365
Issuance of vested restricted share awards
-
-
60,534
232
-
-
(
232
)
-
-
-
-
-
Share-based compensation
-
-
-
-
-
-
3,903,970
-
-
-
-
3,903,970
Net loss
-
-
-
-
-
-
-
-
(
43,888,242
)
-
(
1,868,995
)
(
45,757,237
)
Foreign currency translation adjustment
-
-
-
-
-
-
-
-
-
(
4,827,526
)
(
510,691
)
(
5,338,217
)
Balance, December 31, 2022
-
$
-
4,700,852
$
18,080
1,554,192
$
5,978
$
397,620,927
$
11,079,649
$
(
78,068,522
)
$
(
11,724,531
)
$
2,856,300
$
321,787,881
(1)
Retrospectively adjusted for the effect of the Reverse Stock Split effected on November 20, 2022. See Note 12.
The accompanying notes are an integral part of
these consolidated financial statements.
F-
5
EBANG INTERNATIONAL HOLDINGS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Stated in US dollars)
For the year
For the year
For the year
ended
ended
ended
December 31,
December 31,
December 31,
2022
2021
2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)
$
(
45,757,237
)
$
2,767,821
$
(
32,110,924
)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization expenses
10,711,543
6,258,055
7,152,958
Provision for (reversal of) credit losses
3,803,437
(
310,012
)
2,740,639
Share-based compensation
3,903,970
707,000
-
Loss on disposal of property, plant and equipment
547,338
9,243
92,172
Amortization of debt issuance cost
-
-
7,098
Inventory write-down
6,482,019
2,233,452
3,644,243
Loss on short-term investment
509,496
3,656,520
-
Deferred income taxes
(
80,599
)
(
2,845,588
)
8,627,604
Impairment of property, plant and equipment
-
3,109,922
-
Impairment of intangible assets
20,738,130
-
-
Impairment of VAT recoverable
4,474,784
-
-
Noncash lease expenses
1,711,943
1,066,838
659,082
Loss (gain) on foreign currency transactions
2,161,264
(
1,780,087
)
288,346
Gain on disposal of subsidiaries
(
5,941
)
-
-
Changes in assets and liabilities:
Accounts receivable, net
2,882,106
333,888
(
1,351,955
)
Notes receivable
-
775,206
(
724,627
)
Inventories, net
(
185,504
)
(
5,392,810
)
9,725,152
Advances to suppliers
(
178,639
)
(
818,666
)
(
3,601,544
)
VAT recoverable
(
1,247,508
)
(
3,799,426
)
1,429,649
Prepayments and other current assets, net
10,410,167
(
2,951,664
)
3,287,612
Other assets
(
850,791
)
(
51,928
)
-
Accounts payable
(
1,787,125
)
559,817
(
9,234,394
)
Notes payable
-
(
1,100,792
)
1,028,971
Income taxes payable
-
705
(
660
)
Advances from customers
163,883
51,792
(
204,926
)
Accrued liabilities and other payables
(
14,109,951
)
(
18,329,126
)
(
6,993,438
)
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
4,296,785
(
15,849,840
)
(
15,538,942
)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment
(
3,803,943
)
(
6,153,759
)
(
10,833,436
)
Purchases of intangible assets
(
10,260,785
)
(
2,365,495
)
(
11,927,846
)
Proceeds from disposal of property, plant and equipment
-
-
362,314
Cash paid for short-term investments
(
28,552,566
)
(
472,357,646
)
(
79,915,000
)
Collections from short-term investments
55,101,678
474,365,880
39,080,000
Payments for business combination, net of cash acquired
(
5,863,499
)
-
-
Cash from disposal of subsidiaries, net of cash disposed of
(
11,492
)
-
53,435
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
6,609,393
(
6,511,020
)
(
63,180,533
)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term loans
-
-
765,967
Repayment of short-term loans
-
(
771,629
)
(
4,871,795
)
Proceeds from related party loans
-
-
9,631,014
Repayment to related parties
-
(
5,671,902
)
(
27,657,811
)
Proceeds from issuance of ordinary shares
-
254,727,705
114,191,595
NET CASH PROVIDED BY FINANCING ACTIVITIES
-
248,284,174
92,058,970
EFFECT OF FOREIGN EXCHANGE ON CASH, CASH EQUIVALENTS AND RESTRICTED CASH
394,336
879,537
(
4,993,911
)
NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH
11,300,514
226,802,851
8,345,584
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF YEAR
240,926,602
14,123,751
5,778,167
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF YEAR
$
252,227,116
$
240,926,602
$
14,123,751
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for:
Interest
$
-
$
4,382
$
1,493,469
Income taxes
$
7,666
$
928
$
293,028
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Liabilities assumed in connection with purchase of property, plant and equipment
$
4,616,480
$
3,318,477
$
5,731,084
Liabilities assumed in connection with purchase of intangible assets
$
5,440
$
366,407
$
7,951,897
Operating lease right-of-use asset obtained in exchange for operating lease liability
$
5,394,251
$
3,387,501
$
192,395
Remeasurement of the lease liabilities and right-of-use assets due to lease modification
$
1,485,436
$
-
$
-
Issuance of vested restricted share awards
$
232
$
-
$
-
Reconciliation of cash, cash equivalents and restricted cash to the consolidated balance sheets
Cash and cash equivalents
$
251,294,952
$
239,872,316
$
13,669,439
Restricted cash, current
29,039
171,156
406,857
Restricted cash, non-current
903,125
883,130
47,455
Total cash, cash equivalents and restricted cash
$
252,227,116
$
240,926,602
$
14,123,751
The accompanying notes are an integral part of
these consolidated financial statements.
F-
6
EBANG INTERNATIONAL HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In U.S. Dollars, unless stated otherwise)
Note 1 – Nature of business and organization
Ebang International Holdings Inc. ("Ebang
International") was incorporated on May 17, 2018, as a holding company, as an exempted company with limited liability in the Cayman
Islands. Ebang International principally engages in manufacturing high-performance bitcoin mining machines and telecommunication products
and conducts business through its subsidiaries in the People's Republic of China (the "PRC"). In January 2010, Mr. Dong
Hu, chairman of the board of directors, chief executive officer and chief financial officer, founded Zhejiang Ebang Communication Technology
Co., Ltd. ("Zhejiang Ebang"), which established Zhejiang Ebang Information Technology Co., Ltd. ("Ebang IT") to
conduct development and sales of communications network access devices and related equipment. In August 2015, Zhejiang Ebang was listed
on the National Equities Exchange and Quotations ("NEEQ"). In August 2016, Zhejiang Ebang acquired
51.05
% of the equity interest
in Hangzhou Dewang Information Technology Co., Ltd. ("Hangzhou Dewang") through capital injection in Hangzhou Dewang. In March
2018, Zhejiang Ebang was delisted from the NEEQ in preparation for the reorganizations. Ebang International underwent a series of onshore
and offshore reorganizations, which were completed on May 22, 2018.
Immediately before and after the reorganization,
the controlling shareholder of Zhejiang Ebang controlled Zhejiang Ebang and Ebang International; therefore, for accounting purposes, the
reorganization is accounted for as a transaction of entities under common control. Accordingly, the accompanying consolidated financial
statements have been prepared as if the current corporate structure had been in existence throughout the periods presented.
Ebang International and its consolidated subsidiaries
are collectively referred to herein as the "Company", "we" and "us", unless specific reference is
made to an entity.
Corporate Structure
Ebang International Holdings Inc. is a holding
company incorporated in the Cayman Islands that does not have substantive operations. We conduct our businesses through our subsidiaries.
As of December 31, 2022, our principal subsidiaries consist of the following entities (in chronological order based on their dates of
incorporation):
●
Zhejiang Ebang Communication Technology Co., Ltd., or Zhejiang Ebang, our majority-owned subsidiary and an onshore holding company established in the PRC on January 21, 2010 principally for holding our businesses in the design, manufacture and sale of telecommunications and blockchain processing equipment;
●
Zhejiang Ebang Information Technology Co., Ltd., or Ebang IT, our majority-owned subsidiary and an operating entity established in the PRC on August 11, 2010 principally for the design, manufacture and sale of telecommunications and blockchain processing equipment;
●
Hangzhou Dewang Information Technology Co., Ltd., or Hangzhou Dewang, our majority-owned subsidiary and an operating entity established in the PRC on December 31, 2015 principally for the design and manufacture of blockchain chips;
●
Ebang Communications (HK) Technology Limited, or HK Ebang Communications (formerly known as Hong Kong Bite Co., Ltd. or HK Bite), our wholly-owned subsidiary and an operating entity established in Hong Kong on February 12, 2016 principally for the trading of blockchain chips;
●
Ebonex Australia Pty Ltd, or Ebonex Australia, our wholly-owned subsidiary
and an operating entity established in Australia on April 22, 2021 principally for operating the cryptocurrency exchange platform Ebonex;
and
●
Compass Global Holdings Pty Ltd, or Compass Global, which became our wholly-owned
subsidiary in Australia through acquisition on March 21, 2022, principally for the cross-border payment and foreign exchange business.
F-
7
The accompanying consolidated financial statements
reflect the activities of Ebang International and each of the following major entities:
Name
Background
Ownership
Orient Plus
    International Limited ("Orient Plus")
●
A British Virgin Islands ("BVI") company
100% owned by Ebang International
●
Incorporated on June 6, 2018
●
A holding company
Ebang
    Communications (HK) Technology Limited ("HK Ebang Communications"), formerly known as Hong Kong Bite Co., Ltd. or HK
    Bite
●
A Hong Kong company
100% owned by Orient Plus
●
Incorporated on February 12, 2016
●
A Trading company
Power Ebang Limited ("Power Ebang")
●
A British Virgin Islands company
100% owned by Ebang International
●
Incorporated on February 26, 2018
●
A holding company
HongKong
                                            Ebang Technology Co., Ltd.
("HK
                                            Ebang Technology")
●
A Hong Kong company
100% owned by Power Ebang
●
Incorporated on February 12, 2018
●
A holding company
Leader
    Forever Holdings Limited
("Leader Forever")
●
A British Virgin Islands company
100% owned by Ebang International
●
Incorporated on January 7, 2019
●
A holding company
HongKong Ebang Information
    Co., Ltd.
("HK
    Ebang Information")
●
A Hong Kong company
100% owned by Leader Forever
●
Incorporated on April 1, 2019
●
A Trading company
Hangzhou
    Ebang Hongfa Technology Co., Ltd. ("Ebang Hongfa")
●
A PRC limited liability company and deemed a wholly foreign owned enterprise ("WFOE")
100% owned by HK Ebang Technology
●
Incorporated on February 11, 2018
●
A holding company
Hangzhou
    Ebang Hongling Technology Co., Ltd. ("Ebang Hongling")*
●
A PRC limited liability company
100% owned by Ebang Hongfa until 6/30/2022
●
Incorporated on July 3, 2019
Wuhai
    Ebang Information Technology Co., Ltd. ("Wuhai Ebang")*
●
A PRC limited liability company
100% owned by Ebang Hongling until 6/30/2022
●
Incorporated on September 18, 2017
Zhejiang
    Ebang Communication Technology Co., Ltd. ("Zhejiang Ebang")
●
A PRC limited liability company
99.99% owned by Ebang Hongfa
●
Incorporated on January 21, 2010
Zhejiang
    Ebang Information Technology Co., Ltd. ("Ebang IT")
●
A PRC limited liability company
100% owned by Zhejiang Ebang
●
Incorporated on August 11, 2010
Hangzhou
    Bangyun Information Technology
●
A PRC limited liability company
100% owned by Zhejiang Ebang
Co., Ltd. (formerly known
as
    Yunnan Ebang Information Technology Co., Ltd.) ("Hangzhou Bangyun")
●
Incorporated on June 28, 2016
Hangzhou
    Ebang Jusheng Technology Co., Ltd. ("Ebang Jusheng")**
●
A PRC limited liability company
100% owned by Ebang Hongfa until 11/15/2022
●
Incorporated on January 3, 2018
Hangzhou
    Dewang Information Technology Co., Ltd. ("Hangzhou Dewang")
●
A PRC limited liability company
51.05% owned by Ebang Hongfa
●
Incorporated on December 31, 2015
Hangzhou
    Yibang Botong Technology Co., Ltd. ("Hangzhou Yibang Botong")
●
A PRC limited liability company
80% owned by Zhejiang Ebang;
20% owned by Ebang Hongfa
●
Incorporated on November 30, 2021
Ebonex
    International Limited
●
A British Virgin Islands ("BVI") company
100% owned by Ebang International
●
Incorporated on August 18, 2020
Australia
    Ebon Pty Ltd
●
An Australia company
100% owned by Ebonex
●
Incorporated on October 13, 2020
International Limited
●
A holding company
Ebon Management
    Australia Pty Limited
●
An Australia company
100% owned by Australia
("Ebon Management Australia")
●
Incorporated on May 18, 2021
Ebon Pty Ltd
Compass
    Global Holdings Pty Ltd ("Compass Global")
●
An Australia company
100% owned by Australia
●
Acquired on March 21, 2022
Ebon Pty Ltd
*
Ebang Hongling and Wuhai Ebang were disposed of on June 30, 2022. The
disposal did not represent a strategic shift that had a major effect on the Company's operations and financial results. See Note
19.
**
Ebang Jusheng was deregistered on November 15, 2022.
F-
8
Note 2 – Summary of significant accounting policies
Basis of presentation
The accompanying consolidated financial statements
have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP")
for information pursuant to the rules and regulations of the SEC.
Principles of consolidation
The consolidated financial statements include
the financial statements of the Company and its subsidiaries. All significant intercompany transactions and balances have been eliminated
in consolidation.
Reclassification
Certain prior year amounts have been reclassified
to conform to the current year presentation. These reclassifications had no impact on net earnings and financial position.
Non-controlling Interest
Non-controlling interest on the consolidated balance sheets is resulted
from the consolidation of Hangzhou Dewang, a
51.05
% owned subsidiary, and Shanghai Yijiaxin IC Design Co., Ltd. ("Shanghai
Yijiaxin"), a wholly-owned subsidiary of Hangzhou Dewang, which became effectively
51.05
% owned by the Company. The portion of the
income or loss applicable to the non-controlling interest in the subsidiaries are reflected in the consolidated statements of operations
and comprehensive income (loss).
Use of estimates and assumptions
The preparation of financial statements in conformity
with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at
the balance sheet date and revenues and expenses during the reporting periods. Significant accounting estimates reflected in the Company's
consolidated financial statements including, but not limited to, estimates for inventory write-down, share-based compensation, the purchase
price allocation relating to business combination, useful lives of long-lived assets, impairment of long-lived assets and goodwill, credit
losses and income taxes including valuation allowance for deferred tax assets. Changes in facts and circumstances may result in revised
estimates. Actual results could differ from those estimates, and as such, differences may be material to the consolidated financial statements.
Foreign currency translation and transaction
The accompanying consolidated financial statements
are presented in the United States dollar ("$"), which is the reporting currency of the Company. The functional currency of
HK Ebang Communications, HK Ebang Information, all US and BVI entities is United State dollars, the functional currency of Ebang International,
HK Ebang Technology is Hong Kong dollar ("HKD"), the functional currency of the PRC subsidiaries is Renminbi ("RMB"),
the functional currency of the Australian entities is Australian dollar ("AUD"), and the functional currencies of the remaining
subsidiaries are generally the local currencies used in the countries where these subsidiaries are incorporated.
Assets and liabilities denominated in currencies
other than the reporting currency are translated into the reporting currency at the rates of exchange ruling at the balance sheet date.
Revenues, costs and expenses are translated at the average rates for the annual period. Translation gains and losses are recognized in
the consolidated statements of operations and comprehensive income (loss) as other comprehensive income (loss). Transactions in currencies
other than the reporting currency are measured and recorded in the reporting currency at the exchange rate prevailing on the transaction
date. The cumulative gain or loss from foreign currency transactions is reflected in the consolidated statements of operations and comprehensive
income (loss) as exchange gain (loss).
F-
9
Cash and cash equivalents
Cash and cash equivalents consist of cash on hand,
demand deposits and time deposits placed with banks or other financial institutions and have original maturities of less than three months.
Restricted cash
Restricted cash mainly represents the bank deposit
used to pledge the bank acceptance notes and bank deposit pledged in exchange for guarantee services. As of December 31, 2022 and 2021,
the Company had restricted cash balance of $
932,164
and $
1,054,286
, respectively.
Short-term investments
The Company's
short-term investments consist of investments in marketable securities, which are accounted for under ASC 321 and reported at their readily
determinable fair values as quoted by market exchanges with changes in fair value recognized in earnings.
Short-term
investments also include wealth management products with certain financial institutions, which are subject to variable rates of return
or not principal-guaranteed. These investments are classified as available-for-sale debt securities and reported at fair value, with unrealized
gains and losses recorded in accumulated other comprehensive loss on the consolidated balance sheets, if any. Realized gains and losses
from the sale of available-for-sale debt securities are determined on an aggregate approach basis and are included in the consolidated
statements of operations and comprehensive income (loss).
In addition,
short-term investments are also comprised of time deposits placed with banks with original maturities of greater than three months but
less than twelve months.
Current expected credit losses
The Company's financial assets, primarily
accounts receivable and other receivable, are within the scope of ASC Topic 326. The Company has identified the relevant risk characteristics
of its customers and the related receivables and other current assets which include type of the products and services the Company provides,
nature of the customers or a combination of these characteristics. Receivables with similar risk characteristics have been grouped into
pools. For each pool, the Company considers the historical credit loss experience, current economic conditions, supportable forecasts
of future economic conditions, and any recoveries in assessing the lifetime expected credit losses. Other key factors that influence the
expected credit loss analysis include customer demographics, payment terms offered in the normal course of business to customers, and
industry-specific factors that could impact the Company's receivables. Additionally, external data and macroeconomic factors are
also considered. For the years ended December 31, 2022, 2021 and 2020, the Company recorded credit losses on other receivable of $
1,835,121
,
nil
and
nil
, respectively, and credit losses (reversal of credit losses) on accounts receivable of $
1,968,316
, $(
310,012
) and $
2,740,639
,
respectively.
Inventories, net
Inventories consist of finished goods, work in
process, and raw materials. Inventories are stated at the lower of cost and net realizable value. Cost of inventory is determined using
the weighted average cost method. Adjustments are recorded to write down the cost of inventory to the estimated net realizable value due
to slow-moving and obsolete inventory, which is dependent upon factors such as historical and forecasted consumer demand, and promotional
environment. The Company takes ownership, risks and rewards of the products purchased.
Business combination
The Company accounts for its business combination
using the acquisition method of accounting. The purchase price of the acquisition is allocated to the assets, liabilities, identifiable
intangible assets acquired, and non-controlling interest, if any, based on their estimated fair values as of the acquisition date. The
excess of the purchase price over those fair values is recorded as goodwill. Acquisition-related expenses are expensed as incurred. Consideration
transferred in a business acquisition is measured at fair value as of the date of acquisition. Transaction costs directly attributable
to the acquisition are expensed as incurred.
Goodwill
Goodwill represents the excess of the purchase
price over the fair value of the identifiable assets and liabilities acquired in a business combination. In accordance with ASC Topic
350, Goodwill and Other Intangible Assets ("ASC 350"), recorded goodwill amounts are not amortized, but rather assessed for
impairment annually or more frequently if there are indicators of impairment present, applying a fair-value based test.
When performing the annual impairment test, the
Company has the option of performing a qualitative or quantitative assessment to determine if an impairment has occurred. If a qualitative
assessment indicates that it is more likely than not that the fair value of a reporting unit is less than the carrying amount, the Company
would be required to perform a quantitative impairment analysis for goodwill. The quantitative analysis requires a comparison of fair
value of the reporting unit to the carrying value, including goodwill. If the carrying value of the reporting unit exceeds its fair value,
an impairment loss is recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting
unit. The fair value is generally determined using the income approach. No impairment charge was recognized for the year ended December
31, 2022.
F-
10
Property, plant and equipment, net
Property, plant and equipment are stated at cost
less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets.
The estimated useful lives are as follows:
Buildings
20
years
Computer software
10
years
Leasehold improvements
Over the shorter of the lease term or expected useful lives
Office equipment
3
-
5
years
Motor vehicles
5
years
Mechanical equipment
3
-
10
years
The cost and related accumulated depreciation
of assets sold or otherwise retired are eliminated from the accounts and any gain or loss is included in the consolidated statements of
operations and comprehensive income (loss). Expenditures for maintenance and repairs are charged to earnings as incurred, while additions,
renewals and betterments, which are expected to extend the useful life of assets, are capitalized.
Construction in progress represents assets under
construction. All direct costs relating to the construction are capitalized as construction in progress. Construction in progress is not
depreciated until the asset is placed in service.
Intangible assets, net
The Company's intangible assets with definite
useful lives primarily consist of software, non-patent technology, patents, land use right and a license acquired in connection with the
business combination. The Company typically amortizes its software, non-patent technology, patents and license with definite useful lives
on a straight-line basis over the shorter of the contractual terms or the estimated useful lives.
The intangible asset acquired in connection with the business combination
is recognized and measured at fair value at the time of acquisition. See Note 3.
According to the law of PRC, the government owns
all the land in the PRC. Companies or individuals are authorized to possess and use the land only through land use rights granted by the
Chinese government for a specified period of time. The Company amortizes its land use rights using the straight-line method over the periods
the rights are granted.
The estimated useful lives are as follows:
Land use right
50
years
Software
18
-
65
months
Non-patent technology
1
-
3
years
Patents
2
-
10
years
License
20
years
Impairment of long-lived assets other than goodwill
Long-lived assets, including property, plant and
equipment, right-of-use assets and intangible assets with finite lives are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying value of an asset may not be recoverable. The Company assesses the recoverability of the assets based on the
undiscounted future cash flows the assets are expected to generate and recognizes an impairment loss when estimated undiscounted future
cash flows expected to result from the use of the asset plus net proceeds expected from the disposition of the asset, if any, are less
than the carrying value of the asset. If an impairment is identified, the Company would reduce the carrying amount of the asset to its
estimated fair value based on a discounted cash flows approach or, when available and appropriate, to comparable market values.
Fair value measurement
The accounting standard regarding the fair value
of financial instruments and related fair value measurements defines financial instruments and requires disclosure of the fair value of
financial instruments held by the Company.
F-
11
The accounting standards define fair value, establish
a three-level valuation hierarchy for disclosures of fair value measurement and enhance disclosure requirements for fair value measures.
The three levels are defined as follows:
●
Level
1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
●
Level
2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are
observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments.
●
Level
3 inputs to the valuation methodology are unobservable and significant to the fair value. Unobservable inputs reflect the reporting entity's
own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information.
ASC 820 describes three main approaches to measuring
the fair value of assets and liabilities:
(1) market approach; (2) income approach; and
(3) cost approach. The market approach uses prices and other relevant information generated from market transactions involving identical
or comparable assets or liabilities. The income approach uses valuation techniques to convert future amounts to a single present value
amount. The measurement is based on the value indicated by current market expectations about those future amounts. The cost approach is
based on the amount that would currently be required to replace an asset.
The financial asset carried at fair value on a recurring basis as of
December 31, 2022 and 2021 is as follows:
Quoted
Prices in
Active
Markets
for Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total
Balance
Short-term investments
As of December 31, 2022
$
5,611,815
$
223,562
$
-
$
5,835,377
As of December 31, 2021
$
1,114,770
$
34,328,476
$
-
$
35,443,246
Financial instruments included in current assets and current liabilities
except for short-term investments and operating lease liability – related parties, current are reported in the consolidated balance
sheets at face value or cost, which approximate fair value because of the short period of time between the origination of such instruments
and their expected realization and their current market rates of interest.
Related party transactions
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 operational decisions. Parties are also considered to be related if they are subject to common control or common significant influence.
Related parties may be individuals or corporate entities. A transaction is considered to be a related party transaction when there is
a transfer of resources or obligations between related parties.
Transactions involving related parties cannot
be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive, free-market dealings may not
exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated
on terms equivalent to those that prevail in arm's-length transactions unless such representations can be substantiated. It is not,
however, practical to determine the fair value of amounts due from/to related parties due to their related party nature.
F-
12
Revenue recognition
The Company accounts for its revenue in accordance
with ASC 606, Revenue from Contracts with Customers ("Topic 606") for all periods presented. Consistent with the criteria
of Topic 606, the Company recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects
the consideration which the entity expects to receive in exchange for those goods or services to the extent the Company deems the collection
of such consideration is probable. Value-added tax that the Company collects concurrent with revenue-producing activities is excluded
from revenue.
Products revenue
The Company generates revenue primarily from the
sale of bitcoin mining machines and related accessories directly to a customer, such as a business or individual engaged in bitcoin mining
activities. The Company recognizes revenue at a point in time when the control of the products has been transferred to customers. The
transfer of control is considered complete when products have been picked up by or shipped to customers. The Company's sales arrangements
for bitcoin mining machines usually require a full prepayment before the delivery of products. The advance payment is not considered a
significant financing component because the period between the Company transfers a promised good to a customer and when the customer pays
for that good is short. The Company started to offer credit sales to certain customers in 2018. The payment terms under credit sales generally
consist of full payment of consideration within one year after the shipping date.
The Company also generates revenue from the sale
of telecommunication products directly to a customer, such as a business or individual engaged in telecommunication businesses. The Company
recognizes revenue at a point in time when products are delivered and customer acceptance is made. For the sales arrangements of telecommunications
products, the Company generally requires payment upon issuance of invoices.
The Company elected to account for shipping and
handling fees that occur after the customer has obtained control of goods, for instance, free on board shipping point arrangements, as
a fulfillment cost and accrues for such costs.
Service revenue- management and maintenance
services
The Company generates revenue from management and maintenance services
under separate contracts. Revenue from management services primarily includes service fees for the provision of mining machine hosting
services to customers and maintenance services primarily relates to the Company's repairment service for the telecommunication equipment
the Company sold to its customers. The Company halted mining machine hosting services in the PRC at the end of April 2021. Revenue from
the maintenance service to the customer is recognized at a point in time when services are provided. Revenue from the management service
to the customer is recognized as the performance obligation is satisfied over time over the service period.
Service revenue- Cross-border payment and foreign
exchange services
The Company generates revenue from cross-border
payment and foreign exchange services started from March 2022 in connection with the acquisition of Compass Global Holdings Pty Ltd. See
Note 3.
For the majority of the cross-border payment and
foreign exchange services, customers agree to terms and conditions for all transactions, either at the time of initiating a transaction
or signing a contract with the Company to provide payment services on the customer's behalf. Revenue is measured as the difference
between the exchange rate set by the Company to the customer and a rate available in the wholesale foreign exchange market. The Company
executes the transaction and makes payments to the recipient to satisfy its performance obligation to the customer, and therefore, the
Company recognizes revenue at a point in time when this performance obligation has been fulfilled.
Revenue disaggregation
Management has concluded that the disaggregation level is the same
under both the revenue standard and the segment reporting standard. Revenue under the segment reporting standard is measured on the same
basis as under the revenue standard. See Note 16 for information regarding revenue disaggregation by revenue streams and countries.
F-
13
Contract liabilities
Contract liabilities are recorded when consideration
is received from a customer prior to transferring the goods or services to the customer or other conditions under the terms of a sales
contract. As of December 31, 2022 and 2021, the Company recorded contract liabilities of $
1,010,852
and $
894,174
, respectively, which
were presented as advances from customers on the accompanying consolidated balance sheets. During the years ended December 31, 2022, 2021
and 2020, the Company recognized $
31,761
, $
126,333
and $
279,423
, of contract liabilities as revenue, respectively.
Segment reporting
The Company uses the "management approach"
in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company's
chief operating decision maker for making operating decisions and assessing performance as the source for determining the Company's
reportable segments. The Company's chief operating decision maker has been identified as the chief executive officer of the Company
who reviews financial information based on U.S. GAAP. The chief operating decision maker now reviews results analyzed by the marketing
channel. This analysis is only presented at the revenue level with no allocation of direct or indirect costs. Consequently, the Company
has determined that it has only
one
operating segment.
Selling and handling expenses
Selling and handling costs amounted to $
8,745
, $
54,473
and $
96,997
for the years ended December 31, 2022, 2021 and 2020, respectively. Selling and handling costs are expensed as incurred and included in
selling expenses.
General and administrative expenses
General and administrative expenses consist primarily
of research and development expenses, salary and welfare for general and administrative personnel, rental expenses, depreciation and amortization
associated with general and administrative personnel, allowance for doubtful accounts, impairment of intangible assets, entertainment
expenses, general office expenses and professional service fees.
The Company recognizes research and development
expenses when incurred. Research and development expenses amounted to $
5,147,364
, $
6,557,208
and $
8,459,765
for the years ended December
31, 2022, 2021 and 2020, respectively.
Operating leases
The Company determines if an arrangement is a lease at inception. Operating
leases are included in operating lease right-of-use ("ROU") assets, operating lease liability, current, and operating lease
liability, non-current in the Company's consolidated balance sheets. ROU assets represent the Company's right to use an underlying
asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease.
For the initial measurement of the lease liabilities, the Company uses the discount rate as of the commencement date of the lease, incorporating
the entire lease term. Operating lease liabilities related to lease payments due within one year and over are classified as current and
non-current, respectively, in the consolidated balance sheets. The ROU asset is measured as the amount of the lease liabilities with adjustments,
if applicable, for lease prepayments made prior to or at lease commencement, initial direct costs incurred and lease incentives. When
determining the lease term, the Company includes options to extend or terminate the lease when it is reasonably certain that it will exercise
that option, if any. As the Company's leases do not provide an implicit rate, the Company used an incremental borrowing rate based
on the information available at the commencement date in determining the present value of lease payments. For leases that have lease terms
of 12 months or less and do not include a purchase option that is reasonably certain to exercise, the Company elected not to apply ASC
842 recognition requirements.
Government grants
Government grants represent cash subsidies received
from PRC government. Cash subsidies that have no defined rules and regulations to govern the criteria necessary for companies to enjoy
the benefits are recognized when received. Such subsidies are generally provided as incentives from the local government to encourage
the expansion of local businesses. Total government grants received amounted to $
81,911
, $
434,604
and $
4,006,567
for the years ended December
31, 2022, 2021 and 2020, respectively.
F-
14
Value-added taxes
Revenue is recognized net of value-added taxes
("VAT"). VAT is based on gross sales price and the VAT rate applicable to the Company is 17% for the period from the beginning
of 2018 till the end of April 2018, then changed to 16% from May 2018 to the end of March 2019, and changed to 13% since April 2019. Entities
that are VAT general taxpayers are allowed to offset qualified input VAT paid to suppliers against their output VAT liabilities. Net VAT
balance between input VAT and output VAT is recorded as VAT payable if output VAT is larger than input VAT and is recorded as VAT recoverable
if input VAT is larger than output VAT. All of the VAT returns filed by the Company's subsidiaries in China, have been and remain
subject to examination by the tax authorities. Furthermore, the Company's subsidiaries in China may be qualified to receive a refund on VAT
for the excess input VAT after meeting certain prerequisites specified in relevant regulations prescribed by the State Tax Bureau of the
PRC.
For the years ended December 31, 2022, 2021 and
2020, the Company recorded impairment on VAT recoverable of $
4.5
million,
nil
and
nil
, respectively. The impairment of VAT recoverable
incurred during the year ended December 31, 2022 was primarily related to Wuhai Ebang as the Company determined the VAT could not be recovered.
The Company expects to use or receive the remaining VAT recoverable in future operations.
Income taxes
The Company accounts for current income taxes
in accordance with the laws of the relevant tax authorities. The charge for taxation is based on the results for the fiscal 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 taxes are accounted for using the asset
and liability method 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 used in the computation of assessable tax profit. In principle,
deferred tax liabilities are recognized for all taxable temporary differences. Deferred tax assets are recognized to the extent that it
is probable that taxable profit will be available against which deductible temporary differences can be utilized. 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 income statement, except when it is related to items credited or charged directly to equity, in which case the deferred
tax is also dealt with in 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. Current income taxes are provisioned
in accordance with the laws of the relevant taxing authorities.
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. For tax positions not meeting the "more likely than not" test, no tax benefit is recorded. No penalties and
interest incurred related to underpayment of income tax are classified as income tax expenses in the period incurred.
Comprehensive income (loss)
Comprehensive income (loss) consists of two components,
net income (loss) and other comprehensive income (loss). Other comprehensive income (loss) refers to revenues, expenses, gains and losses
that under GAAP are recorded as an element of shareholders' equity but are excluded from net income (loss). Other comprehensive
income (loss) consists of a foreign currency translation adjustment resulting from the Company not using the United States dollar as its
functional currency.
F-
15
Earnings (loss) per share
The Company computes earnings (loss) per share
("EPS") in accordance with ASC 260, "Earnings per Share". ASC 260 requires companies to present basic and diluted
EPS. Basic EPS is measured as net income (loss) attributable to Ebang International Holdings Inc., divided by the weighted average ordinary
share outstanding for the period. Diluted EPS presents the dilutive effect on a per-share basis of the potential ordinary shares (e.g.,
convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date,
if later.
Statutory reserves
Pursuant to the laws applicable to the PRC, PRC
entities must make appropriations from after-tax profit to the non-distributable "statutory surplus reserve fund". Subject
to certain cumulative limits, the "statutory surplus reserve fund" requires annual appropriations of 10% of after-tax profit
until the aggregated appropriations reach 50% of the registered capital (as determined under accounting principles generally accepted
in the PRC ("PRC GAAP") at each year-end). For foreign-invested enterprises and joint ventures in the PRC, annual appropriations
should be made to the "reserve fund". For foreign-invested enterprises, the annual appropriation for the "reserve fund"
cannot be less than 10% of after-tax profits until the aggregated appropriations reach 50% of the registered capital (as determined under
PRC GAAP at each year-end).
If the Company has accumulated loss from prior periods, the Company is able to use the current period net
income after tax to offset the accumulated loss.
Concentration of credit risk
Financial instruments that potentially expose
the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. The Company places
the cash and cash equivalents with financial institutions with high credit ratings and quality.
The Company conducts credit evaluations of customers
and generally does not require collateral or other security from its customers. The Company establishes an allowance for doubtful accounts
primarily based upon various factors surrounding the credit risk of specific customers and general economic conditions. Refer to the current
expected credit loss policy.
Recently issued accounting pronouncements
The Company does not believe the recently issued
but not yet effective accounting standards, if currently adopted, would have a material effect on the Company's consolidated financial
statements.
F-
16
Note 3 – Business Acquisition and Goodwill
Acquisitions in 2022
Compass Global Holdings Pty Ltd("Compass").
On
March 21, 2022, the Company acquired
100
% equity interests of Compass for a total cash consideration of AUD
8,000,000
(approximately
US$
5.9
million). Upon the acquisition, Compass became a consolidated subsidiary of the Company.
The
total purchase consideration of AUD
8
million (approximately US$
5.9
million) consisted of a cash payment of approximately AUD
4.2
million (approximately US$
3.1
million) to the former shareholders of Compass and approximately AUD
3.8
million (approximately US$
2.8
million) to settle liabilities. The assets and liabilities of Compass were recorded at their respective estimated fair value as
of the acquisition date.
The following table summarizes the purchase price
allocation of the assets acquired, liabilities assumed and related deferred income tax assumed at the date of acquisition. The dollar
amount presented in the table was based on the exchange rate of AUD
1.00
to US$
0.7401
on March 21, 2022.
US$
Current assets
13,341,925
Other non-current assets
20,684
License
4,537,549
Total assets acquired
17,900,158
Current liabilities
(
13,340,550
)
Deferred tax liabilities
(
1,134,387
)
Total liabilities assumed
(
14,474,937
)
Net identifiable assets acquired
3,425,221
Total consideration
5,920,795
Goodwill
2,495,574
Goodwill, which is not tax deductible, is primarily attributable to
synergies expected to be achieved from the acquisition.
The fair value of the financial license is determined
using the Multi-period Excess Earnings Method. The determination of fair values involves the use of significant judgments and estimates.
The judgments used to estimate the fair value
assigned to assets acquired and liabilities assumed, the life of the intangible asset, as well as the significant assumptions, can materially
impact the Company's consolidated financial statements. Significant assumptions used for the model include the forecasted operating
cash flows and discount rate. The Company utilized the assistance of a third-party valuation firm to determine the fair value as of the
date of acquisition.
The revenue and net income since the acquisition
date included in the consolidated statements of operations for the period ended December 31, 2022 were $
2,634,580
and $
111,175
, respectively.
Pro forma results reflecting this transaction were not presented because they are not significant to the Company's consolidated
financial results.
Note 4 – Short-term investments
Short-term investments consist of the following:
As of
December 31,
As of
December 31,
2022
2021
Marketable securities
$
5,611,815
$
1,114,770
Time deposits
172,402
18,000,000
Wealth management products
51,160
16,328,476
Total
$
5,835,377
$
35,443,246
The balances of wealth management products as
of December 31, 2022 and 2021 represent wealth management products with variable rates of return or non-principle-guaranteed purchased
from commercial banks.
For the years ended December 31, 2022, 2021 and 2020, the unrealized
loss related to investments in marketable securities was $
640,998
, $
3,890,427
and
nil
, respectively.
There was no unrealized gain or loss associated
with the wealth management products as of December 31, 2022 and 2021. No impairment charges were recorded for the years ended December
31, 2022, 2021 and 2020.
F-
17
Note 5 – Earnings (loss) per share
The calculation of basic earnings (loss) per share
is based on the income attributable to ordinary shareholders of the Company and the weighted average number of ordinary shares in issue
for the years ended December 31, 2022, 2021 and 2020.
The earnings (loss) calculation for the years
ended December 31, 2022, 2021 and 2020 excludes the following potentially dilutive ordinary shares:
Years ended December 31,
2022
2021
2020
Class A ordinary shares exercisable from warrants issued pursuant to the November 2020 Offering (as defined below in Note 12)
(1)
-
-
76,667
Class A ordinary shares exercisable from warrants issued pursuant to the Warrant Inducement Offering (as defined below in Note 12)
(1)
453,333
453,333
-
Class A ordinary shares exercisable from warrants issued pursuant to the March 2021 Offering (as defined below in Note 12)
(1)
233,333
233,333
-
Class A ordinary shares issuable from the outstanding restricted share awards
(1)
133,067
53,000
-
Total
819,733
739,666
76,667
(1)
Retrospectively adjusted for the effect of the Reverse Stock Split effected on November 20, 2022. See Note 12.
The following reflects the income and share data used in the basic
and diluted earnings (loss) per ordinary share computations:
Years ended December 31,
2022
2021
2020
Earnings (loss) attributable to ordinary shareholders of the Company for basic earnings (loss) per share calculation
$
(
43,888,242
)
$
4,430,941
$
(
30,675,420
)
Weighted average number of ordinary shares outstanding for basic earnings (loss) per share calculation
(1)
6,247,333
5,923,845
4,064,708
Basic earnings (loss) per share
(1)
$
(
7.03
)
$
0.75
$
(
7.55
)
Earnings (loss) attributable to ordinary shareholders of the Company for diluted earnings (loss) per share calculation
$
(
43,888,242
)
$
4,430,941
$
(
30,675,420
)
Weighted average number of ordinary shares outstanding basic earnings (loss) per share calculation
(1)
6,247,333
5,923,845
4,064,708
Adjusted for:
- incremental shares issuable related to warrants issued
(1)
-
5,013
-
Weighted average number of shares outstanding for diluted earnings (loss) per share calculation
(1)
6,247,333
5,928,858
4,064,708
Diluted earnings (loss) per share
(1)
$
(
7.03
)
$
0.75
$
(
7.55
)
(1)
Retrospectively adjusted for the effect of
the Reverse Stock Split effected on November 20, 2022. See Note 12.
Note 6 – Accounts receivable, net
Accounts receivable, net consist of the following:
As of
December 31,
As of
December 31,
2022
2021
Accounts receivable
$
6,858,185
$
14,474,383
Less: Allowance for doubtful accounts
(
3,523,458
)
(
4,601,637
)
Accounts receivable, net
$
3,334,727
$
9,872,746
F-
18
Movements of allowance for doubtful accounts are as follows:
For the year
ended
December 31,
For the year
ended
December 31,
For the year
ended
December 31,
2022
2021
2020
Allowance for doubtful accounts, beginning balance
$
4,601,637
$
4,788,855
$
1,772,280
Provision for (reversal of) doubtful accounts
1,968,316
(
310,012
)
2,740,639
Uncollectible accounts receivable written-off
(
2,705,446
)
-
-
Effects of foreign exchange rate
(
341,049
)
122,794
275,936
Allowance for doubtful accounts, ending balance
$
3,523,458
$
4,601,637
$
4,788,855
Note 7 – Inventories, net
As of
December 31,
As of
December 31,
2022
2021
Finished goods
$
10,627,535
$
11,443,135
Work in process
953,088
1,481,664
Raw materials
20,125,467
21,616,348
31,706,090
34,541,147
Less: inventory write-down
(
31,266,026
)
(
27,403,609
)
Inventories, net
$
440,064
$
7,137,538
During the years ended December 31, 2022, 2021 and 2020, the Company
recorded write-down for the potentially obsolete, slow-moving inventories and lower of cost or market adjustment of $
6,482,019
, $
2,233,452
and $
3,644,243
in cost of revenues, respectively.
Note 8 – Property, plant and equipment, net
Property, plant and equipment, net consist of the following:
As of
December 31,
As of
December 31,
2022
2021
Buildings
$
33,224,223
$
4,031,395
Mechanical equipment
17,468,972
19,935,874
Motor vehicles
330,727
454,624
Office equipment
7,343,494
7,369,316
Computer software
675,644
753,986
Leasehold improvement
1,518,282
1,197,048
Construction in progress
785,434
28,874,739
Total
61,346,776
62,616,982
Accumulated depreciation
(
24,797,498
)
(
25,464,318
)
Provision for impairment
-
(
3,823,054
)
Property, plant and equipment, net
$
36,549,278
$
33,329,610
Depreciation expense for the years ended December 31, 2022, 2021 and
2020 amounted to $
1,822,942
, $
2,858,406
and $
6,347,738
, respectively. For the year ended December 31, 2021, the Company recorded an impairment
charge of $
3,109,922
against a certain building as the carrying amount of the asset was deemed not recoverable due to the asset's
economic obsolescence identified during the period. No impairment was recorded for the years ended December 31, 2022 and 2020. The impaired
building was disposed of in the year ended December 31, 2022 in connection with the Company's disposal of Wuhai Ebang. See Note
19.
F-
19
Note 9 – Intangible assets, net
The following table presents the Company's intangible assets
as of the respective balance sheet dates:
As of
December 31,
As of
December 31,
2022
2021
Land use right
$
2,626,781
$
3,005,644
Non-patent technology
704,630
482,604
License
4,181,273
-
Software
5,760,071
6,197,055
Patents
29,879,744
19,879,743
Total
43,152,499
29,565,046
Accumulated amortization
(
15,523,631
)
(
7,052,838
)
Provision for impairment
(
20,738,130
)
-
Intangible assets, net
$
6,890,738
$
22,512,208
Amortization expense for the years ended December
31, 2022, 2021 and 2020 amounted to $
8,888,601
, $
3,399,649
and $
805,220
, respectively.  For the year ended December 31, 2022, the
Company recorded an impairment charge of $
20,738,130
against patents as the carrying amount of the asset was deemed not recoverable due
to the asset's economic obsolescence identified during the period. The impairment loss was included in the general and administrative
expenses in the consolidated statements of operations and comprehensive income (loss). No impairment was recorded for the years ended
December 31, 2021 and 2020.
Estimated future amortization expense related
to intangible assets held as of December 31, 2022:
Year
2023
$
694,117
2024
346,832
2025
261,599
2026
261,599
2027
261,599
Thereafter
5,064,992
Total
$
6,890,738
Note 10 – Accrued liabilities and other payables
The components of accrued liabilities and other payables are as follows:
As of
December 31,
As of
December 31,
2022
2021
Salary payable
$
1,928,684
$
1,444,161
Payable to consultants
49,047
1,531,560
Refundable deposit to customers
86,991
1,262,817
Payable to property, plant and equipment suppliers
4,565,086
3,684,884
Customer custodial cash liabilities
3,919,793
-
Other accrued liabilities
969,490
1,052,566
Total accrued liabilities and other payables
$
11,519,091
$
8,975,988
Other accrued liabilities mainly consist of insurance payables, social
security payables, accrued professional service fees. The customer custodial cash liabilities represent the cash held on behalf of customers
for the settlement of future cross-border payment and foreign exchange services. The corresponding customer custodial cash asset with
balance in the same amount was included in other current asset, net in the consolidated balance sheet.
F-
20
Note 11 – Income taxes
Cayman Islands
Under the current laws of the Cayman Islands,
Ebang International is not subject to tax on income or capital gain. Additionally, upon payments of dividends to the shareholders, no
Cayman Islands withholding tax will be imposed.
British Virgin Islands ("BVI")
The Company's subsidiaries incorporated
in the BVI are not subject to tax on income or capital gain, In addition, payments of dividend by these subsidiaries to their shareholders
are not subject to withholding tax in the BVI.
Australia
The Company' subsidiaries incorporated in Australia are subject
to Australian Tax on the taxable income as reported in its statutory financial statements adjusted in accordance with relevant Australia
tax laws.
The Australian Income Tax had significant changes progressively since June 30, 2017. From July 1, 2022, companies that are base
rate entities must apply the 25% company tax rate. A company is a base rate entity for an income year if 1) the company's aggregated
turnover for that income year is less than AUD50,000,000 of that income year, and 2) it has 80% or less of their assessable income in
that income year that is base rate entity passive income.
Thus the applicable tax rate is
25
% for the Company on assessable profits arising
in or derived from Australia.
Hong Kong
The Company' subsidiaries incorporated in
Hong Kong are subject to Hong Kong Profits Tax on the taxable income as reported in its statutory financial statements adjusted in accordance
with relevant Hong Kong tax laws.
The applicable tax rate is 8.25% on assessable profits arising in or derived from Hong Kong up to HKD2,000,000
and 16.5% on any part of assessable profits over HKD2,000,000.
PRC
The Company's subsidiaries incorporated
in the PRC are governed by the income tax laws of the PRC and the income tax provision in respect to operations in the PRC is calculated
at the applicable tax rates on the taxable income for the periods based on existing legislation, interpretations and practices in respect
thereof.
Under the Enterprise Income Tax Laws of the PRC (the "EIT Laws"), domestic enterprises and Foreign Investment Enterprises
(the "FIE") are usually subject to a unified 25% enterprise income tax rate while preferential tax rates, tax holidays and
even tax exemption may be granted on case-by-case basis. EIT grants preferential tax treatment to certain High and New Technology Enterprises
("HNTEs"). Under this preferential tax treatment, HNTEs are entitled to an income tax rate of 15%, subject to a requirement
that they re-apply for HNTE status every three years. Zhejiang Ebang obtained the "high-tech enterprise" tax status in November
2017, which reduced its statutory income tax rate to 15% from November 2017 to November 2020. Zhejiang Ebang further re-applied and obtained
the HNTE status in December 2020. Hangzhou Dewang obtained the "high-tech enterprise" tax status in November 2018, which reduced
its statutory income tax rate to 15% from November 2018 to November 2021. Hangzhou Dewang further re-applied and obtained the HNTE status
in December 2021. In addition, Ebang IT obtained the "high-tech enterprise" tax status in December 2021, which reduced its
statutory income tax rate to 15% from December 2021 to December 2023.
The subsidiaries of the Company incorporated in other countries are
subject to income tax pursuant to the rules and regulations of their respective countries of incorporation.
Reconciliation of the differences between statutory
income tax rate and the effective tax rate
The reconciliation of tax computed by applying
the statutory income tax rate of
25
% for the years ended December 31, 2022, 2021 and 2020 applicable to the PRC operations to income tax
expenses is as follows:
For the year ended December 31,
For the year ended December 31,
For the year ended December 31,
2022
2021
2020
Statutory income tax rate
25.00
%
25.00
%
25.00
%
Effect of expenses not deductible for tax purposes
0.00
%
0.40
%
0.00
%
Effect of additional deduction of research and development expense
0.70
%
(
35.10
)%
6.70
%
Effect of income tax exemptions and reliefs
2.90
%
60.90
%
(
0.70
)%
Recovery from deferred income tax assets
5.50
%
-
-
Effect of valuation allowance on deferred income tax assets
(
28.00
)%
2.20
%
(
67.10
)%
Income tax difference under different tax jurisdictions
(
6.10
)%
(
45.70
)%
(
2.20
)%
Prior year true-ups
-
(
23.60
)%
-
Others
-
-
(
2.10
)%
Total
(
0.00
)%
(
15.90
)%
(
40.40
)%
F-
21
Significant components of the provision for income taxes are as follows:
For the year
ended
December 31,
For the year
ended
December 31,
For the year
ended
December 31,
2022
2021
2020
Current income tax expense
$
7,666
$
2,466,745
$
623,938
Deferred tax expense (benefit)
(
80,599
)
(
2,845,588
)
8,627,604
Income taxes provision (benefit)
$
(
72,933
)
$
(
378,843
)
$
9,251,542
For the purpose of presentation in the consolidated balance sheets,
deferred income tax assets and liabilities have been offset. Significant components of deferred tax assets and liabilities are as follows:
As of
December 31,
As of
December 31,
2022
2021
Provision for doubtful accounts
$
1,986,464
$
6,374,477
Net operating loss carryforward
35,623,990
19,012,186
Accrued expenses and others
3,672,475
3,899,556
41,282,929
29,286,219
Less: valuation allowance
(
41,282,929
)
(
29,286,219
)
Deferred tax assets
$
-
$
-
Intangible assets
$
1,004,365
$
-
Property, plant and equipment
129,174
178,582
Deferred tax liabilities
$
1,133,539
$
178,582
Total deferred tax liabilities
$
1,133,539
$
178,582
In assessing the realizability of deferred tax
assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.
The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which
those temporary differences become deductible. Management considers the cumulative earnings and projected future taxable income in making
this assessment. Recovery of substantially all of the Company's deferred tax assets is dependent upon the generation of future
income, exclusive of reversing taxable temporary differences.
Uncertain tax positions
The PRC tax authorities conduct periodic and ad
hoc tax filing reviews on business enterprises operating in the PRC after those enterprises complete their relevant tax filings. In general,
the PRC tax authorities have up to five years to conduct examinations of the tax filings of the Company's PRC entities. Accordingly,
the PRC subsidiaries' tax years of 2018 through 2022 remain open to examination by the respective tax authorities. It is therefore
uncertain as to whether the PRC tax authorities may take different views about the Company's PRC entities' tax filings, which
may lead to additional tax liabilities.
The Company evaluates each uncertain tax position
(including the potential application of interest and penalties) based on the technical merits, and measures the unrecognized benefits
associated with the tax positions. As of December 31, 2022 and 2021, the Company did not have any significant unrecognized uncertain tax
positions.
F-
22
Note 12 – Equity
Ordinary shares
The Company adopted a dual-class share structure.
Each Class A ordinary share is entitled to one vote per share and each Class B ordinary share is entitled to twenty votes per share. Each
Class B ordinary share can be converted into one Class A ordinary share at any time, while Class A ordinary shares cannot be converted
into Class B ordinary shares.
The Company completed the initial public offering
("IPO") in 2020 with new issuance of totaling
642,145
(
19,264,337
before the Reverse Stock Split) Class A ordinary shares
at a price of $
156.9
($
5.23
before the Reverse Stock Split) per share. Net proceeds raised by the Company from the IPO amounted to approximately
$
92
million after deducting underwriting discounts and commissions and other offering expenses. The Company received all the net proceeds
on July 2, 2020.
The Company commenced an additional offering with new issuance of totaling
266,666
(
8,000,000
before the Reverse Stock Split) units at a price of $
157.5
($
5.25
before the Reverse Stock Split) per unit in November
2020 (the "November 2020 Offering"), intending to raise $
42
million funding prior to deducting underwriting discounts and
commissions and other offering expenses. Each unit consists of one share of Class A ordinary shares and one warrant to purchase one-half
of a Class A ordinary share. As of December 31, 2020, the Company completed the offering of
153,333
(
4,600,000
before the Reverse Stock
Split) units in relation to the November 2020 Offering and received net proceeds of approximately $
23
million. The units issued consisting
of an aggregate of
153,333
(
4,600,000
before the Reverse Stock Split) shares of Class A ordinary shares and
153,333
(
4,600,000
before
the Reverse Stock Split) warrant which can be exercised for
76,667
(
2,300,000
before the Reverse Stock Split) shares of Class A ordinary
shares. In January 2021, the Company completed the November 2020 Offering by selling another
113,333
(
3,400,000
before the Reverse Stock
Split) units for net proceeds of approximately $
17
million. The units issued consisting of an aggregate of
113,333
(
3,400,000
before the
Reverse Stock Split) shares of Class A ordinary shares and
113,333
(
3,400,000
before the Reverse Stock Split) warrant which can be exercised
for
56,667
(
1,700,000
before the Reverse Stock Split) shares of Class A ordinary shares.
In February 2021, the Company launched another
offering for an aggregate of
640,000
(
19,200,000
before the Reverse Stock Split) units at $
150
($
5
before the Reverse Stock Split) per
unit (the "February 2021 Offering"). Each unit offered in the February 2021 Offering consists of one Class A ordinary share
and one warrant to purchase one-half of one Class A ordinary share. The warrants are immediately exercisable and expire on the fifth anniversary
of the original issuance date. The exercise price of each two warrants is $
157.5
($
5.25
before the Reverse Stock Split). The warrants
may be exercised only for a whole number of shares and the Company does not issue fractional shares upon exercise of the warrants. The
Company completed the February 2021 Offering by selling
640,000
(
19,200,000
before the Reverse Stock Split) units and received net proceeds
of approximately $
90
million. The units issued consisting of an aggregate of
640,000
(
19,200,000
before the Reverse Stock Split) shares
of Class A ordinary shares and
640,000
(
19,200,000
before the Reverse Stock Split) warrant which can be exercised for
320,000
(
9,600,000
before the Reverse Stock Split) shares of Class A ordinary shares.
The Company also entered into inducement agreements
with certain investors (the "Holders") in February 2021 to induce them to exercise the warrants issued to them in connection
with the November 2020 Offering and the February 2021 Offering for all
453,333
(
13,600,000
before the Reverse Stock Split) Class A ordinary
shares available for exercise thereunder (the "Warrant Inducement Offering"). The Holders exercised these warrants, in full,
and were issued
453,333
(
13,600,000
before the Reverse Stock Split) Class A ordinary shares as a result of such exercises, with the Company
receiving aggregate net proceeds of approximately $
68
million after deducting sales commissions payable to the warrant solicitation agents
and related expenses. Additionally, as consideration for their exercise of such warrants, the Company issued to the Holders the new warrants,
which are exercisable, anytime within
five
(5)
years
from the date on which they became exercisable, at an exercise price of $
331.8
($
11.06
before the Reverse Stock Split) per share, for an aggregate of up to the
453,333
(
13,600,000
before the Reverse Stock Split) Class A ordinary
shares.
F-
23
In March 2021, the Company launched another offering for an aggregate
of
466,667
(
14,000,000
before the Reverse Stock Split) units at $
183
($
6.1
before the Reverse Stock Split) per unit (the "March
2021 Offering"). Each unit offered in the March 2021 Offering consists of one Class A ordinary share and one warrant to purchase
one-half of one Class A ordinary share. The warrants are immediately exercisable and expire on the fifth anniversary of the original issuance
date. The exercise price of each two warrants is $
197.7
($
6.59
before the Reverse Stock Split). The warrants may be exercised only for
a whole number of shares and the Company does not issue fractional shares upon exercise of the warrants. The Company completed the March
2021 Offering by selling
466,667
(
14,000,000
before the Reverse Stock Split) units and received net proceeds of approximately $
80
million.
The units issued consisting of an aggregate of
466,667
(
14,000,000
before the Reverse Stock Split) shares of Class A ordinary shares and
466,667
(
14,000,000
before the Reverse Stock Split) warrant which can be exercised for
233,333
(
7,000,000
before the Reverse Stock Split)
shares of Class A ordinary shares.
On November 20, 2022, the Company effected a 1-for-30 reverse stock
split of Ordinary Shares (the "Reverse Stock Split"), pursuant to which every 30 issued and unissued Class A ordinary shares
and Class B ordinary shares of the Company of HK$0.001 each (the "Existing Shares") be consolidated into one share of HK$0.03
each (each a "Consolidated Share") in accordance with an ordinary resolution passed at an extraordinary general meeting of
the Company held on November 20, 2022.
Warrants
The following table sets forth the Company's
warrant activities for the years ended December 31, 2022, 2021 and 2020:
Number of
Weight-
average
shares
Issuable*
exercise
price*
Outstanding and exercisable at January 1, 2020
$
-
$
-
Granted
76,667
165.0
Balance at December 31, 2020
76,667
165.0
Outstanding and exercisable at December 31, 2020
76,667
165.0
Granted
1,063,333
240.9
Exercised
(
453,333
)
159.6
Balance at December 31, 2021
686,667
286.2
Outstanding and exercisable at December 31, 2021
686,667
286.2
Granted
-
-
Exercised
-
-
Balance at December 31, 2022
686,667
286.2
Outstanding and exercisable at December 31, 2022
686,667
286.2
*
Retrospectively adjusted for the effect of the Reverse Stock Split effected on November 20, 2022. See Note 12.
The
intrinsic value of these warrants was approximately
nil
and
nil
as of December 31, 2022, and 2021, respectively.
Note 13 – Share-based compensation
In order to attract and retain talents, the Company adopted a share
incentive plan in April 2020, which was amended and restated on July 9, 2021 (the "2020 Plan"). The maximum aggregate number
of shares that may be issued pursuant to all awards under the 2020 Plan shall be
349,427
(
10,482,827
before Reverse Stock Split) Class
A ordinary shares. The Company also adopted the 2021 Share Incentive Plan (the "2021 Plan"), under which the maximum aggregate
number of shares that may be issued pursuant to all awards shall be
333,333
(
10,000,000
before Reverse Stock Split) Class A ordinary shares.
The Company did not grant any award under the 2021 plan.
The Company granted
172,333
and
61,200
(
5,170,000
and
1,836,000
before the Reverse Stock Split) restricted share awards ("RSAs") in 2022 and 2021, respectively, under
the 2020 Plan. The RSAs vest over
four years
with
25
% vested at each anniversary. The vesting of these RSAs
is
further subject to performance conditions whereby a
50
% or
100
% of the RSAs to be vested in a given year will be forfeited based on the
result of an annual performance review of the grantee in accordance with predetermined performance targets. The unvested portion of the
RSAs will also be forfeited upon the termination of employment or service during the
vesting period. The Company estimates the
annual performance review result for each grantee and recognizes the related compensation expenses. The amount of compensation expense
recorded for the year ended December 31, 2022, 2021 and 2020 was $
3,903,970
, $
707,000
and
nil
, respectively. Unvested compensation expense
as of December 31, 2022 and 2021 was $
3,036,689
and $
3,365,320
, respectively.
F-
24
The following table summarized
the Company's RSAs activity under the 2020 Plan:
Weighted average
Number of
RSAs*
grant date
fair value*
Unvested, January 1, 2021
-
-
Granted
61,200
75.60
Vested
-
-
Forfeited
(
7,333
)
75.60
Unvested, December 31, 2021
53,867
75.60
Granted
172,333
31.06
Vested
(
60,534
)
37.67
Forfeited
(
32,600
)
54.55
Unvested, December 31, 2022
133,066
40.34
*
Retrospectively adjusted for the effect of the Reverse Stock Split
on November 20, 2022. See Note 12.
Note 14 – Operating leases
The Company entered into operating lease agreements for factory buildings,
office spaces and employee dormitories including lease agreements with its related party, with various initial term expiration dates through
2030 and various renewal and termination options. None of the amounts disclosed below for these leases contains variable payments, residual
value guarantees or options that were recognized as part of the right-of-use assets and lease liabilities. As the Company's leases
did not provide an implicit discount rate, the Company used an incremental borrowing rate based on the information available at the commencement
date in determining the present value of lease payments.
As
of December 31, 2022 and 2021, the Company recognized operating lease liabilities, including current and noncurrent, in the amount
of $
7,257,144
and $
3,448,226
, respectively, and the corresponding operating lease right-of-use assets of $
5,862,748
and $
3,269,022
,
respectively.
Also see Note 18 for related party operating lease
commitments.
The following components of lease cost are included
in the Company's consolidated statements of operations and comprehensive income (loss):
For the year
ended
December 31,
For the year
ended
December 31,
For the year
ended
December 31,
2022
2021
2020
Operating lease cost
$
1,948,051
$
1,177,689
$
704,264
Short-term lease cost
35,710
117,118
29,007
Total lease cost
$
1,983,761
$
1,294,807
$
733,271
F-
25
Supplemental cash flow information related to operating leases was
as follows:
For the year
ended
For the year
ended
For the year
ended
December 31,
December 31,
December 31,
2022
2021
2020
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows for operating leases
$
1,559,148
$
1,414,151
$
690,626
Supplemental lease cash flow disclosure
Operating lease right-of-use assets obtained in exchange for operating lease liabilities
$
5,394,251
$
3,387,501
$
192,395
Supplemental balance sheet information related to operating leases
was as follows:
As of
As of
December 31,
December 31,
2022
2021
Operating lease right-of-use assets
$
5,343,608
$
2,132,247
Operating lease right-of-use assets – related parties
519,140
1,136,775
Total operating lease right-of-use assets
$
5,862,748
$
3,269,022
Operating lease liabilities, current
$
1,217,604
$
851,936
Operating lease liabilities – related parties, current
283,567
595,424
Operating lease liabilities, non-current
5,755,973
1,712,303
Operating lease liabilities – related party, non-current
-
288,563
Total operating lease liabilities
$
7,257,144
$
3,448,226
Weighted average remaining lease term of operating leases
6.34
Years
3.09
Years
Weighted average discount rate of operating leases
6.5250
%
6.5250
%
The Company's maturity analysis of operating lease liabilities
as of December 31, 2022 is as follows:
Operating
Leases
2023
$
1,888,515
2024
1,403,677
2025
1,252,710
2026
854,862
2027
886,919
Thereafter
2,610,829
Total lease payment
8,897,512
Less: imputed interest
(
1,640,368
)
Present value of operating lease liabilities
7,257,144
Less: current obligation
(
1,501,171
)
Long-term obligation at December 31, 2022
$
5,755,973
F-
26
Note 15 – Statutory reserves and restricted net assets
As a result of the PRC laws and regulations and
the requirement that distributions by PRC entities can only be paid out of distributable profits computed in accordance with PRC GAAP,
the PRC entities are restricted from transferring a portion of their net assets to the Company. Amounts restricted include paid-in capital,
additional paid-in capital, and the statutory reserves of the Company's PRC subsidiaries.
As of
December 31
As of
December 31,
2022
2021
PRC entities
Paid-in capital
$
83,872,972
$
75,273,694
Additional paid-in capital
93,759,405
97,807,839
Statutory reserves
10,848,816
11,317,257
Total restricted net assets
$
188,481,193
$
184,398,790
As of December 31, 2022 and 2021, total restricted
net assets were $
188,481,193
and $
184,398,790
, respectively.
Note 16 – Segment and revenue analysis
The Company operates in a single operating segment that includes the
selling of bitcoin mining machines and related accessories, telecommunication products, providing management and maintenance services
and cross-border payment and foreign exchange services.
The following table summarizes the revenue generated from different
revenue streams:
For the year
ended
December 31,
For the year
ended
December 31,
For the year
ended
December 31,
2022
2021
2020
Revenue
Product sale - Bitcoin mining machines and related accessories
$
25,800,263
$
39,756,156
$
7,951,296
Product sale - Telecommunication
3,736,961
8,566,866
1,725,982
Service - Management and maintenance
86,344
3,127,225
9,327,023
Service - Cross-border payment and foreign exchange services
2,598,865
-
-
Service - Other revenue
105,686
-
-
$
32,328,119
$
51,450,247
$
19,004,301
F-
27
The following table summarizes the revenues generated from different
geographic region:
For the year
ended
December 31,
For the year
ended
December 31,
For the year
ended
December 31,
2022
2021
2020
Geographic region
Revenue
Mainland China
$
29,623,568
$
51,432,545
$
18,962,130
United States of America
-
-
9,338
Other foreign countries
2,704,551
17,702
32,833
$
32,328,119
$
51,450,247
$
19,004,301
Selected assets of property, plant and equipment, right-of- use assets,
intangible assets and goodwill by geographical region within the operating segment is as follows:
As of
December 31,
As of
December 31,
Geographic region
2022
2021
Mainland China
$
38,070,043
$
38,526,457
Hong Kong
90,949
18,074,339
Australia
10,955,261
2,108,281
Others foreign countries
2,486,139
401,763
$
51,602,392
$
59,110,840
Note 17 – Credit risk and major customers
Accounts receivable concentration of credit risk is as below:
As of December 31,
As of December 31,
2022
2021
Customer A
20
%
*
%
Customer B
*
%
13
%
Customer C
20
%
13
%
Customer D
*
%
11
%
Customer S
11
%
*
%
Supplier concentration of credit risk is as below:
For the year ended December 31,
For the year ended December 31,
For the year ended December 31,
2022
2021
2020
Supplier R
11
%
*
%
*
%
Supplier N
*
%
22
%
*
%
Supplier O
*
%
13
%
*
%
Supplier P
*
%
*
%
28
%
Supplier Q
*
%
*
%
44
%
F-
28
Revenue concentration of credit risk is as below:
For the year ended December 31,
For the year ended December 31,
For the year ended December 31,
2022
2021
2020
Customer H
76
%
32
%
*
%
Customer F
*
%
11
%
*
%
Customer D
*
%
*
%
20
%
Customer J
*
%
*
%
18
%
Customer E
*
%
*
%
12
%
Customer K
*
%
*
%
10
%
Customer L
*
%
*
%
10
%
Customer M
*
%
*
%
10
%
*
Less
than
10
%
Note 18 – Related party transactions
a)
Related parties
Name of related parties
Relationship with the Company
Dong Hu
Chief Executive Officer (CEO) and Chief Financial Officer (CFO) of the Company
Hong Kong Dewang Limited
Wholly owned by Zhengqian Jiang, father-in-law of Dong Hu
Zhejiang Wansi Computer Manufacturing Company Limited
68% owned by Aiqun Jiang, spouse of Dong Hu
Hangzhou Yibang Zhiyang Technology Co., Ltd.
Controlled by Dong Hu
Top Max Limited
Controlled by Dong Hu
Shubo Qian
Brother-in-law of Dong Hu
Jun Hu
Sister of Dong Hu
Hangzhou Yiquansheng Communication Technology Co., Ltd.
Controlled by Dong Hu
b)
Long-term
    loans from a related party
During the year ended December 31, 2020, the Company obtained loans
in the amount of $
6,481,700
from Hong Kong Dewang Limited with interest rate of
4.7500
% per annum. As of December 31, 2020, the Company
has fully repaid the loan related to Hong Kong Dewang Limited. The interest associated with this loan for the amount of approximately
$
678,000
, was included in the consolidated statement of operations and comprehensive income (loss).
c)
Operating
leases with related parties
The Company leases office space from
Zhejiang Wansi Computer Manufacturing Company Limited under non-cancellable operating lease agreements with lease terms ranging from
two
to
three
years
. Lease expense from related party for the years ended December 31, 2022, 2021 and 2020 amounted to $
44,230
,
$
31,647
and $
29,582
, respectively.
The Company leases office space from Hangzhou
Yiquansheng Communication Technology Co., Ltd. under non-cancellable operating lease agreements with lease terms of
31
months. Lease expense
from related party for the years ended December 31, 2022, 2021 and 2020 amounted to $
557,968
, $
378,652
, and
nil
, respectively.
F-
29
d)
Due to a
    related party
The balance of due to related party represents advances the Company
obtained from a related party. The balances owed to the related party are unsecured, non-interest bearing and payable on demand.
For the year ended December 31, 2020, the Company
borrowed approximately $
1.8
million from and repaid approximately $
2.8
million to Zhejiang Wansi Computer Manufacturing Company Limited,
respectively. As of December 31, 2021, the borrowings have been fully repaid by the Company.
e)
Interest free loans from related parties
During the year ended December 31, 2020, the Company borrowed $
749,949
from Dong Hu and fully repaid the loan in the same period. The loan is unsecured, non-interest bearing and payable on demand.
f)
Disposal
of a subsidiary to a related party
In December 2020, the Company disposed of Hangzhou
Yiquansheng to an affiliate controlled by Mr. Dong Hu, CEO and CFO of the Company, for RMB
500,000
. The gain on disposal of Hangzhou Yiquansheng
is accounted for as a capital contribution from Dong Hu, CEO as a result of this transaction between entities under common control of
Dong Hu. The disposal of Hangzhou Yiquansheng does not constitute a strategic shift of the Company's operation.
During the year ended December 31, 2020, Hangzhou
Yiquansheng borrowed approximately $
562,000
from the affiliate controlled by Mr. Dong Hu. The liability was extinguished in connection
with the disposal of Hangzhou Yiquansheng, related gain on extinguishment is included in the gain on disposal, accounted for as a capital
contribution.
Note 19 – Disposal of subsidiaries
On June 30, 2022, the Company disposed of
100
%
of the equity interest of Ebang Hongling and its
100
% owned subsidiary Wuhai Ebang to a third party for a cash consideration of RMB
1
.
This disposal resulted in a gain of $
5,941
for the year ended December 31, 2022.
For the period from January 1, 2022 to June 30,
2022, Ebang Hongling and Wuhai Ebang did not generate any revenue and incurred a net loss of approximately $
6.7
million. Net negative
assets of Ebang Hongling and Wuhai Ebang was approximately $
5,941
. The disposal of Ebang Hongling and Wuhai Ebang does not represent a
strategic shift that has (or will have) a major effect on the Company's operations and financial results.
Note 20 – Commitments and contingencies
Operating lease commitments
The information of lease commitments is provided
in Note 14.
Contingencies
On July 16, 2018, Wangjing Technology (Suzhou)
Co., Ltd. ("Wangjing Technology") filed a copyright infringement dispute against Zhejiang Ebang and three other defendants.
On January 1, 2016, due to production and operation needs, Zhejiang Ebang entrusted the fourth defendant Suzhou Qiao Network Technology
Co., Ltd. ("Suzhou Qiao") to carry out technical development (involving products: embedded software for gateway). In the process
of technical cooperation, the software developed by the fourth defendant Suzhou Qiao was charged for copyright infringement and Zhejiang
Ebang is thereby involved in the case. The plaintiff, Wangjing Technology sued the defendants in this case to jointly compensate the plaintiff
for the economic losses and reasonable rights maintenance costs totaling RMB
3
million (approximately $
431,000
).
On August 6, 2020, Zhejiang
Ebang received the judgment of the first trial of the case, and the judgment was as follows: 1) Zhejiang Ebang and Suzhou Qiao should
immediately cease the infringement of the plaintiff's software copyright. 2) Zhejiang Ebang and Suzhou Qiao should jointly compensate
the plaintiff by RMB0.5 million (approximately $71,000). 3) Zhejiang Ebang should publish notices on its official website regarding the
copyright infringement involved in the case for no less than 15 consecutive days. 4) The Court rejected the plaintiff's other claims.
Zhejiang Ebang has filed an appeal and the judgment of the first trial has not yet become effective due to the appeal. On January 27,
2021, the appeal has been held online for trial investigation. The Company has recorded an expense of RMB
0.5
million related to this matter
for the year ended December 31, 2021. The result of this appeal is still pending.
Litigation
settlement
On January 29, 2019, the Company filed a civil action in the Hangzhou
Intermediate People's Court against one of its customers. The defendant had purchased from the Company, and the Company had delivered
90,000
units of mining machines for a total amount of RMB
453.6
million (approximately $
65.1
million) pursuant to an executed sales contract.
The defendant has paid RMB
380
million (approximately $
54.5
million), and the Company is seeking payment of the remaining balance of RMB
73.6
million (approximately $
10.6
million) plus interest and legal expenses. On December 30, 2021, Hangzhou Intermediate People's Court
made the judgement and supported the request of RMB
73.6
million goods payment from the Company. On January 24, 2022, the defendant appealed
to Zhejiang Provisional Superior People's Court and the appeal was automatically withdrawn according to the ruling made by Zhejiang
Provisional Superior People's Court on March 22, 2022. The court has made enforcement action regarding the payment by the defendant.
During the year ended December 31, 2022, the Company has collected RMB
7.4
million (approximately $
1.1
million). When the sales contract
was entered into in 2018, no associated revenue was recognized as the Company concluded the collection of the consideration was not probable.
The RMB
7.4
million received from the settlement during the year ended December 31, 2022 was recorded as revenue in the consolidated statements
of operations and comprehensive income (loss) because the contract has been terminated which leaves the Company no remaining obligations
to transfer products and the receipt of consideration is nonrefundable.
F-
30
In November 2019, the Company brought a
claim against
one
of the Company's customers and the ultimate beneficial owner of the mining machines (collectively, the
"defendants") in connection with a sale of
80,000
mining machines for an amount of RMB
403
million (approximately $
58
million) pursuant to a sales contract and a supplementary contract, alleging that the defendants only paid RMB
13
million
(approximately $
2
million) of the total balance and seeking full payment of the outstanding RMB
282
million (approximately $
40
million) balance plus interest and hold both defendants jointly and severally liable. In August 2021, an agreement was reached
between the Company and defendants following a mediation by the court, pursuant to which the defendants agree to pay a total of
RMB
272
million to the Company. When the sales contract was entered into in 2018, no associated revenue was recognized as the Company
concluded the collection of the consideration was not probable. The Company has received RMB
166
million (approximately $
24.7
million) and RMB
106
million (approximately $
16
million) from the settlement during the year ended December 31, 2022 and 2021,
respectively. Such receipts were recorded as revenue in the consolidated statements of operations and comprehensive income (loss)
because the contract has been terminated which leaves the Company no remaining obligations to transfer products and the receipt of
consideration is nonrefundable.
In April 2021, Chongqing Duomeiduo Culture Media Co., Ltd. ("DMD")
filed a civil action in the Beijing Chaoyang District People' Court against the Company for sales contract disputes, claiming the
Company and Borui Shikong Culture Communication Co., Ltd. ("Borui") to return the payment made for the contract in dispute,
totaling RMB
2
million and 30 bitcoins. On December 16, 2021, the case was transferred to Beijing Dongcheng District People's Court
for trial. On March 9, 2023, the court announced the verdict that the sales contract between Borui and DMD is voided and requested Borui
to return DMD goods payment of RMB
2
million and 30 bitcoins. In addition, the Company, as one of the defendants, has no responsibility
for the case.
From time to time, the Company is subject to legal
proceedings and claims in the ordinary course of business. The Company records a liability when it is both probable that a liability will
be incurred and the amount of the loss can be reasonably estimated. The Company reviews the need for any such liability on a regular basis. For the years ended December 31, 2022, 2021 and 2020, the Company accrued
nil
, RMB
0.5
million
and
nil
related to its legal contingencies, respectively.
Note 21 – Subsequent events
In March 2023, the Company disposed of its subsidiary,
Ebonex Pte Ltd, to a third party with the cash consideration of SGD
10,000
. The disposal of Ebonex Pte Ltd does not represent a strategic
shift that has (or will have) a major effect on the Company's operations and financial results.
The Company has assessed all events from December
31, 2022 up through April 28, 2023, which is the date that these financial statements are available to be issued, unless as disclosed
above, there are not any material subsequent events that require disclosure in these financial statements.
Note 22 – Condensed financial information
of the parent company
The Company performed a test on the restricted
net assets of consolidated subsidiaries in accordance with Securities and Exchange Commission Regulation S-X Rule 5-04 and concluded that
it was applicable for the Company to disclose the financial statements for the parent company.
The following condensed financial statements of
the Parent Company have been prepared using the same accounting policies as set out in the Company's consolidated financial statements
except that the Parent Company used the equity method to account for its investment in its subsidiaries. The Parent Company and its subsidiaries
were included in the consolidated financial statements whereby the inter-company balances and transactions were eliminated upon consolidation.
The Parent Company's share of loss from its subsidiaries is reported as "share of loss from subsidiaries" in the condensed
financial statements.
The Parent Company is a Cayman Islands company
and, therefore, is not subjected to income taxes for all years presented. The footnote disclosures contain supplemental information relating
to the operations of the Company and, as such, these statements should be read in conjunction with the notes to the consolidated financial
statements of the Company. Certain information and footnote disclosures normally included in financial statements prepared in accordance
with US GAAP have been condensed or omitted.
F-
31
The subsidiaries did not pay any dividend to the Company for the years
presents. As of December 31, 2022 and 2021, there were no material commitments or contingencies, significant provisions for long-term
obligations or guarantees of the Company, except for those which have been separately disclosed in the consolidated financial statements,
if any.
(a) Condensed balance sheets
December 31,
December 31,
2022
2021
Assets
Current assets:
Cash and cash equivalents
$
212,388,959
$
81,576,897
Short-term investments
-
15,000,000
Other current assets, net
257,500
658,045
Due from subsidiaries
114,912,019
242,014,968
Total current assets
327,558,478
339,249,910
Non-current assets:
Intangible assets, net
-
17,726,105
Investment in subsidiaries
-
6,820,967
Total non-current assets
-
24,547,072
Total assets
$
327,558,478
$
363,796,982
Liabilities and Shareholders' Equity
Current liabilities:
Accrued liabilities and other payables
$
-
$
53,603
Deficit of investments in subsidiaries
8,626,897
-
Total current liabilities
8,626,897
53,603
Total liabilities
8,626,897
53,603
Shareholders' equity:
Class A ordinary share, HKD
0.03
par value,
11,112,474
shares authorized,
4,700,852
and
4,640,318
shares issued and outstanding as of December 31, 2022 and 2021, respectively
(1)
18,080
17,848
Class B ordinary share, HKD
0.03
par value,
1,554,193
shares authorized, issued and outstanding as of December 31, 2022 and 2021, respectively
(1)
5,978
5,978
Additional paid-in capital
397,620,927
393,717,189
Accumulated deficit
(
66,988,873
)
(
23,100,631
)
Accumulated other comprehensive loss
(
11,724,531
)
(
6,897,005
)
Total shareholders' equity
318,931,581
363,743,379
Total liabilities and shareholders' equity
$
327,558,478
$
363,796,982
(1)
Retrospectively adjusted for the effect of the Reverse Stock Split effected on November 20, 2022. See Note 12.
F-
32
(b) Condensed statements of operations and comprehensive income
(loss)
For
                                            the year
ended
December 31,
2022
For
                                            the year
ended
December 31,
2021
For
                                            the year
ended
December 31,
2020
Operating expenses:
General
    and administrative expenses
$
33,796,950
$
6,233,339
$
6,401,580
Total
    operating expenses
33,796,950
6,233,339
6,401,580
Loss
    from operations
(
33,796,950
)
(
6,233,339
)
(
6,401,580
)
Interest income
2,409,547
541,598
798,328
Other expenses
(
52,793
)
(
8,505
)
(
4,162
)
Exchange gain (loss)
(
67,696
)
1,478,258
340,643
Other income
-
18,114
-
Share
    of income (loss) from subsidiaries
(
12,380,350
)
8,634,815
(
25,408,649
)
Net
    income (loss)
$
(
43,888,242
)
$
4,430,941
$
(
30,675,420
)
Comprehensive
    income (loss)
Net income (loss)
$
(
43,888,242
)
$
4,430,941
$
(
30,675,420
)
Other comprehensive
    income (loss):
Foreign
    currency translation adjustment
(
4,827,526
)
751,327
1,418,510
Comprehensive
    income (loss)
$
(
48,715,768
)
$
5,182,268
$
(
29,256,910
)
(c) Condensed statements of cash flows
For
                                            the year
ended
December 31,
2022
For
                                            the year
ended
December 31,
2021
For
                                            the year
ended
December 31,
2020
Cash Flows from Operating Activities:
Net income (loss)
$
(
43,888,242
)
$
4,430,941
$
(
30,675,420
)
Adjustments to reconcile net
    income (loss) to net cash used in operating activities:
Share of (income) loss from subsidiaries
12,380,350
(
8,634,815
)
25,408,649
Amortization expense
6,987,975
1,987,974
165,664
Share-based compensation
3,903,970
707,000
-
Impairment of intangible assets
20,738,130
-
-
Changes in assets and liabilities:
Due from subsidiaries
127,102,949
(
195,566,806
)
(
46,448,162
)
Other current assets, net
400,545
210,904
(
868,949
)
Accrued liabilities and other
    payables
(
53,603
)
(
7,973,877
)
75,583
Due to
    subsidiaries
-
-
(
64,871
)
Net Cash Provided
    by (Used in) Operating Activities
127,572,074
(
204,838,679
)
(
52,407,506
)
Cash Flows from
    Investing Activities
Cash paid for short-term investments
-
-
(
79,915,000
)
Collections from short-term investments
15,000,000
25,835,000
39,080,000
Purchases
    of intangible assets
(
10,000,000
)
-
(
11,927,846
)
Net Cash Provided
    by (Used in) Investing Activities
5,000,000
25,835,000
(
52,762,846
)
Cash Flows from
    Financing Activities
Sale of subsidiary
-
-
76,566
Proceeds
    from issuances of ordinary shares
-
254,727,705
114,191,595
Net Cash Provided
    by Financing Activities
-
254,727,705
114,268,161
Effect of Foreign
    Exchange on Cash and Cash Equivalents
(
1,760,012
)
(
2,465,348
)
(
801,360
)
Net Increase
    in Cash and Cash Equivalents
130,812,062
73,258,678
8,296,449
Cash
    and Cash Equivalents at Beginning of Year
81,576,897
8,318,219
21,770
Cash
    and Cash Equivalents at End of Year
$
212,388,959
$
81,576,897
$
8,318,219
Non-Cash Investing
    and Financing Activities:
Issuance
    of vested restricted share awards
$
232
-
-
F-33