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

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

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

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

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

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

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

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

</div><p style="margin-right: 0pt; text-align: center; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonNumeric contextRef="c0" format="ixt:fixed-false" name="dei:DocumentRegistrationStatement">&#9744;</ix:nonNumeric>&#160;<b>REGISTRATION
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</div><p style="margin-right: 0pt; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

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

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

</div><p style="margin-right: 0pt; text-align: center; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><ix:nonNumeric contextRef="c0" format="ixt:fixed-true" name="dei:DocumentAnnualReport">&#9746;</ix:nonNumeric>&#160;<span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>ANNUAL
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</div><p style="margin-right: 0pt; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

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

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

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

</div><p style="margin-right: 0pt; text-align: center; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><ix:nonNumeric contextRef="c0" format="ixt:fixed-false" name="dei:DocumentTransitionReport">&#9744;</ix:nonNumeric>&#160;<span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>TRANSITION
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</div><p style="margin-right: 0pt; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

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

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

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

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

</div><p style="margin-right: 0pt; text-align: center; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><ix:nonNumeric contextRef="c0" format="ixt:fixed-false" name="dei:DocumentShellCompanyReport">&#9744;</ix:nonNumeric>&#160;<span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>SHELL
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</div><p style="margin-right: 0pt; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

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

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

</div><p style="margin-right: 0pt; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Commission
file number: <ix:nonNumeric contextRef="c0" name="dei:EntityFileNumber"><b><span style="text-decoration:underline">001-41291</span></b></ix:nonNumeric></span></p><div>

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

</div><p style="margin-right: 0pt; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><ix:nonNumeric contextRef="c0" name="dei:EntityRegistrantName"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; text-transform: uppercase"><b>MEIHUA
INTERNATIONAL MEDICAL TECHNOLOGIES cO., LTD.</b></span></ix:nonNumeric></p><div>

</div><p style="margin-right: 0pt; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(Exact
Name of Registrant as Specified in Its Charter)</span></p><div>

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

</div><p style="margin-right: 0pt; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><span style="text-decoration:underline">Not
Applicable</span></b></span></p><div>

</div><p style="margin-right: 0pt; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(Translation
of Registrant&#8217;s Name Into English)</span></p><div>

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

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

</div><p style="margin-right: 0pt; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(Jurisdiction
of Incorporation or Organization)</span></p><div>

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

</div><p style="margin-right: 0pt; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><ix:nonNumeric contextRef="c0" name="dei:EntityAddressAddressLine1">88
Tongda Road</ix:nonNumeric>, <ix:nonNumeric contextRef="c0" name="dei:EntityAddressAddressLine2">Touqiao Town</ix:nonNumeric></b></span></p><div>

</div><p style="margin-right: 0pt; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><ix:nonNumeric contextRef="c0" name="dei:EntityAddressAddressLine3">Guangling
District</ix:nonNumeric>, <ix:nonNumeric contextRef="c0" name="dei:EntityAddressCityOrTown">Yangzhou</ix:nonNumeric>, <ix:nonNumeric contextRef="c0" name="dei:EntityAddressPostalZipCode">225000</ix:nonNumeric></b></span></p><div>

</div><p style="margin-right: 0pt; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>People&#8217;s
Republic of <ix:nonNumeric contextRef="c0" format="ixt-sec:countrynameen" name="dei:EntityAddressCountry">China</ix:nonNumeric></b></span></p><div>

</div><p style="margin-right: 0pt; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(Address
of Principal Executive Offices)</span></p><div>

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

</div><p style="margin-right: 0pt; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><ix:nonNumeric contextRef="c1" name="dei:ContactPersonnelName">Xin
Wang</ix:nonNumeric>, Chief Executive Officer</b></span></p><div>

</div><p style="margin-right: 0pt; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><ix:nonNumeric contextRef="c1" name="dei:EntityAddressAddressLine1">88
Tongda Road</ix:nonNumeric>, <ix:nonNumeric contextRef="c1" name="dei:EntityAddressAddressLine2">Touqiao Town</ix:nonNumeric></b></span></p><div>

</div><p style="margin-right: 0pt; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><ix:nonNumeric contextRef="c1" name="dei:EntityAddressAddressLine3">Guangling
District</ix:nonNumeric>, <ix:nonNumeric contextRef="c1" name="dei:EntityAddressCityOrTown">Yangzhou</ix:nonNumeric>, <ix:nonNumeric contextRef="c1" name="dei:EntityAddressPostalZipCode">225000</ix:nonNumeric></b></span></p><div>

</div><p style="margin-right: 0pt; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>People&#8217;s
Republic of <ix:nonNumeric contextRef="c1" format="ixt-sec:countrynameen" name="dei:EntityAddressCountry">China</ix:nonNumeric></b></span></p><div>

</div><p style="margin-right: 0pt; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Tel:
<span style="-sec-ix-hidden: hidden-fact-0">+<span style="-sec-ix-hidden: hidden-fact-1">86-0514-89800199</span></span></b></span></p><div>

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

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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; 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="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom"> <td style="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; width: 34%; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Title of Each Class</b></span></td> <td style="font: 10pt Times New Roman, Times, Serif; width: 1%; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td> <td style="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; width: 32%; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Trading Symbol(s)</b></span></td> <td style="font: 10pt Times New Roman, Times, Serif; width: 1%; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td> <td style="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; width: 32%; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Name of Each Exchange On Which Registered</b></span></td></tr> <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: #CCEEFF"> <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><ix:nonNumeric contextRef="c0" name="dei:Security12bTitle"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Ordinary Share, $0.0005 par value</span></ix:nonNumeric></td> <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td> <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><ix:nonNumeric contextRef="c0" name="dei:TradingSymbol"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">MHUA</span></ix:nonNumeric></td> <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td> <td style="font: 10pt Times New Roman, Times, Serif; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><ix:nonNumeric contextRef="c0" format="ixt-sec:exchnameen" name="dei:SecurityExchangeName">Nasdaq</ix:nonNumeric> Global Market</span></td></tr> </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

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

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

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

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

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

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

</div><!-- Field: Page; Sequence: 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; text-align: center">&#160;</p><div>

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

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

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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Indicate
the number of outstanding shares of each of the issuer&#8217;s classes of capital or common stock as of the close of the period covered
by the annual report (December 31, 2022): <ix:nonFraction contextRef="c2" decimals="INF" format="ixt:num-dot-decimal" name="dei:EntityCommonStockSharesOutstanding" scale="0" unitRef="shares">23,940,000</ix:nonFraction></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes&#160;&#9744;&#160;<ix:nonNumeric contextRef="c0" name="dei:EntityWellKnownSeasonedIssuer">No</ix:nonNumeric>&#160;&#9746;</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; 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
13 or 15(d) of the Securities Exchange Act of 1934. Yes &#9744; <ix:nonNumeric contextRef="c0" name="dei:EntityVoluntaryFilers">No</ix:nonNumeric> &#9746;</span></p><div>

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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">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 (&#167;232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files) <ix:nonNumeric contextRef="c0" name="dei:EntityInteractiveDataCurrent">Yes</ix:nonNumeric> &#9746; No &#9744;</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; 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 12b-2 of the Exchange Act.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; 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="font: 10pt Times New Roman, Times, Serif; vertical-align: top"> <td style="font: 10pt Times New Roman, Times, Serif; white-space: nowrap; width: 20%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Large accelerated Filer </span></td> <td style="font: 10pt Times New Roman, Times, Serif; white-space: nowrap; width: 5%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9744;</span></td> <td style="font: 10pt Times New Roman, Times, Serif; white-space: nowrap; width: 16%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Accelerated filer </span></td> <td style="font: 10pt Times New Roman, Times, Serif; white-space: nowrap; width: 5%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9744;</span></td> <td style="font: 10pt Times New Roman, Times, Serif; white-space: nowrap; width: 19%"><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="font: 10pt Times New Roman, Times, Serif; white-space: nowrap; width: 5%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9746;</span></td> <td style="font: 10pt Times New Roman, Times, Serif; white-space: nowrap; width: 25%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Emerging growth company </span></td> <td style="font: 10pt Times New Roman, Times, Serif; white-space: nowrap; width: 5%"><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; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; 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 provided pursuant
to Section 13(a) of the Exchange Act. <ix:nonNumeric contextRef="c0" format="ixt:fixed-false" name="dei:EntityExTransitionPeriod">&#9744;</ix:nonNumeric></span></p><div>

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">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. <ix:nonNumeric contextRef="c0" format="ixt:fixed-false" name="dei:DocumentFinStmtErrorCorrectionFlag">&#9744;</ix:nonNumeric></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">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). &#9744;</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; 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; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; 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="font: 10pt Times New Roman, Times, Serif; vertical-align: top"> <td style="font: 10pt Times New Roman, Times, Serif; width: 18%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span style="-sec-ix-hidden: hidden-fact-2">U.S. GAAP</span> &#9746;</span></td> <td style="font: 10pt Times New Roman, Times, Serif; width: 1%; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td> <td style="font: 10pt Times New Roman, Times, Serif; width: 62%; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">International Financial Reporting Standards as issued by the International Accounting Standards Board &#9744;</span></td> <td style="font: 10pt Times New Roman, Times, Serif; width: 1%; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td> <td style="font: 10pt Times New Roman, Times, Serif; width: 18%; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Other &#9744;</span></td></tr> </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

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

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

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

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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Annual
Report on Form 20-F</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Year
Ended December 31, 2022</b></span></p><div>

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; 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="font: 10pt Times New Roman, Times, Serif">
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; vertical-align: top; width: 9%; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="width: 1%">&#160;</td>
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; vertical-align: top; width: 81%; text-align: justify; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-bottom: black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; padding-top: 0pt; vertical-align: bottom; width: 9%; text-align: center; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Page</b>&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <td colspan="3" style="text-align: center; font: 10pt Times New Roman, Times, Serif; padding-top: 0pt; vertical-align: top; padding-right: 0pt; padding-left: 0pt"><a href="#a_001"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">PART I</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-top: 0pt; vertical-align: bottom; text-align: center; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">1</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; vertical-align: top; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td>
    <td><span style="font-size: 7pt">&#160;</span></td>
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-top: 0pt; vertical-align: bottom; text-align: center; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; vertical-align: top; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM
    1.</span></td>
    <td>&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-top: 0pt; vertical-align: top; text-align: justify; padding-right: 0pt; padding-left: 0pt"><a href="#a_002"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-top: 0pt; vertical-align: bottom; text-align: center; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">1</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; vertical-align: top; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td>
    <td><span style="font-size: 7pt">&#160;</span></td>
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-top: 0pt; vertical-align: bottom; text-align: center; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; vertical-align: top; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM
    2.</span></td>
    <td>&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-top: 0pt; vertical-align: top; text-align: justify; padding-right: 0pt; padding-left: 0pt"><a href="#a_003"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">OFFER STATISTICS AND EXPECTED TIMETABLE</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-top: 0pt; vertical-align: bottom; text-align: center; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">1</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; vertical-align: top; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td>
    <td><span style="font-size: 7pt">&#160;</span></td>
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-top: 0pt; vertical-align: bottom; text-align: center; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; vertical-align: top; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM
    3.</span></td>
    <td>&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-top: 0pt; vertical-align: top; text-align: justify; padding-right: 0pt; padding-left: 0pt"><a href="#a_004"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">KEY INFORMATION</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-top: 0pt; vertical-align: bottom; text-align: center; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">1</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; vertical-align: top; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td>
    <td><span style="font-size: 7pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-top: 0pt; vertical-align: top; text-align: justify; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-top: 0pt; vertical-align: bottom; text-align: center; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; vertical-align: top; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM
    4.</span></td>
    <td>&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-top: 0pt; vertical-align: top; text-align: justify; padding-right: 0pt; padding-left: 0pt"><a href="#a_005"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">INFORMATION ON THE COMPANY</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-top: 0pt; vertical-align: bottom; text-align: center; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">28</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; vertical-align: top; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td>
    <td><span style="font-size: 7pt">&#160;</span></td>
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-top: 0pt; vertical-align: bottom; text-align: center; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; vertical-align: top; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM
    4A.</span></td>
    <td>&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-top: 0pt; vertical-align: top; text-align: justify; padding-right: 0pt; padding-left: 0pt"><a href="#a_006"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">UNRESOLVED STAFF COMMENTS</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-top: 0pt; vertical-align: bottom; text-align: center; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">71</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; vertical-align: top; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td>
    <td><span style="font-size: 7pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-top: 0pt; vertical-align: top; text-align: justify; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-top: 0pt; vertical-align: bottom; text-align: center; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; vertical-align: top; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM
    5.</span></td>
    <td>&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-top: 0pt; vertical-align: top; text-align: justify; padding-right: 0pt; padding-left: 0pt"><a href="#a_007"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">OPERATING AND FINANCIAL REVIEW AND PROSPECTS</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-top: 0pt; vertical-align: bottom; text-align: center; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">72</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; vertical-align: top; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td>
    <td><span style="font-size: 7pt">&#160;</span></td>
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-top: 0pt; vertical-align: bottom; text-align: center; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; vertical-align: top; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM
    6.</span></td>
    <td>&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-top: 0pt; vertical-align: top; text-align: justify; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#a_008">DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-top: 0pt; vertical-align: bottom; text-align: center; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">84</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; vertical-align: top; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td>
    <td><span style="font-size: 7pt">&#160;</span></td>
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-top: 0pt; vertical-align: bottom; text-align: center; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; vertical-align: top; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM
    7.</span></td>
    <td>&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-top: 0pt; vertical-align: top; text-align: justify; padding-right: 0pt; padding-left: 0pt"><a href="#a_009"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-top: 0pt; vertical-align: bottom; text-align: center; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">91</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; vertical-align: top; padding-right: 0pt; padding-left: 0pt"><span style="font-size: 7pt">&#160;</span></td>
    <td><span style="font-size: 7pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-top: 0pt; vertical-align: top; text-align: justify; padding-right: 0pt; padding-left: 0pt"><span style="font-size: 7pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-top: 0pt; vertical-align: bottom; text-align: center; padding-right: 0pt; padding-left: 0pt"><span style="font-size: 7pt">&#160;</span></td></tr>

<tr style="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM
    8.</span></td>
    <td>&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><a href="#a_010"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">FINANCIAL INFORMATION</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">92</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td>
    <td><span style="font-size: 7pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM
    9.</span></td>
    <td>&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><a href="#a_011"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">THE OFFER AND LISTING</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">92</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td>
    <td><span style="font-size: 7pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM
    10.</span></td>
    <td>&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><a href="#a_012"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ADDITIONAL INFORMATION</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">93</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td>
    <td><span style="font-size: 7pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM
    11.</span></td>
    <td>&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><a href="#a_013"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">101</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td>
    <td><span style="font-size: 7pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM
    12.</span></td>
    <td>&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><a href="#a_014"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">102</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td>
    <td><span style="font-size: 7pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <td colspan="3" style="font: 10pt Times New Roman, Times, Serif; text-align: center; vertical-align: top"><a href="#a_015"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">PART II</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">103</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td>
    <td><span style="font-size: 7pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM
    13.</span></td>
    <td>&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><a href="#a_016"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">103</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td>
    <td><span style="font-size: 7pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM
    14.</span></td>
    <td>&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; text-align: left"><a href="#a_017"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">103</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td>
    <td><span style="font-size: 7pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM
    15.</span></td>
    <td>&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><a href="#a_018"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">CONTROLS AND PROCEDURES</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">103</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td>
    <td><span style="font-size: 7pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM
    16</span></td>
    <td>&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><a href="#a_019"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">[RESERVED]</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">104</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td>
    <td><span style="font-size: 7pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM
    16A.</span></td>
    <td>&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><a href="#a_020"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">AUDIT COMMITTEE FINANCIAL EXPERT</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">104</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td>
    <td><span style="font-size: 7pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM
    16B.</span></td>
    <td>&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><a href="#a_021"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">CODE OF ETHICS</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">104</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td>
    <td><span style="font-size: 7pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM
    16C.</span></td>
    <td>&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><a href="#a_022"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">PRINCIPAL ACCOUNTANT FEES AND SERVICES</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">104</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td>
    <td><span style="font-size: 7pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM
    16D.</span></td>
    <td>&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><a href="#a_023"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">104</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td>
    <td><span style="font-size: 7pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM
    16E.</span></td>
    <td>&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><a href="#a_024"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">105</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td>
    <td><span style="font-size: 7pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM
    16F.</span></td>
    <td>&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><a href="#a_025"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">CHANGES IN REGISTRANT&#8217;S CERTIFYING ACCOUNTANT</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">105</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td>
    <td><span style="font-size: 7pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM
    16G.</span></td>
    <td>&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><a href="#a_026"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">CORPORATE GOVERNANCE</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">105</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td>
    <td><span style="font-size: 7pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM
    16H.</span></td>
    <td>&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><a href="#a_027"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">MINE SAFETY DISCLOSURE</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">105</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td>
    <td><span style="font-size: 7pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM
    16I.</span></td>
    <td>&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><a href="#a_028"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">105</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td>
    <td><span style="font-size: 7pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <td colspan="3" style="text-align: center; font: 10pt Times New Roman, Times, Serif; vertical-align: top"><a href="#a_029"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">PART III</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">106</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td>
    <td><span style="font-size: 7pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM
    17.</span></td>
    <td>&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#a_030">FINANCIAL STATEMENTS</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">106</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td>
    <td><span style="font-size: 7pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM
    18</span></td>
    <td>&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><a href="#a_031"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">FINANCIAL STATEMENTS</span></a></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">106</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td>
    <td><span style="font-size: 7pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 7pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">ITEM
    19</span></td>
    <td>&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><a href="#a_032">EXHIBITS</a></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center">106</td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"></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="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: LowerRoman; Name: PageNo -->i<!-- 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; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Use
of Certain Defined Terms</b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Except
as otherwise indicated by the context and for the purposes of this report only, references in this report to:</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; 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="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8220;China&#8221;
    or the &#8220;PRC&#8221; refers to the People&#8217;s Republic of China, excluding Taiwan and the special administrative regions
    of Hong Kong and Macau for the purposes of this report only;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></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"></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">Depending
on the context, &#8220;we,&#8221; &#8220;us,&#8221; &#8220;our company,&#8221; &#8220;our,&#8221; &#8220;the Company,&#8221; and &#8220;Meihua
International&#8221; refer to Meihua International Medical Technologies Co., Ltd.,&#160;&#32654;&#21326;&#22269;&#38469;&#21307;&#30103;&#31185;&#25216;&#26377;&#38480;&#20844;&#21496;,
a Cayman Islands company, its subsidiaries, Kang Fu International Medical Co., Limited (&#8220;Kang Fu International Medical&#8221;),
Yangzhou Huada Medical Device Co., Ltd (&#8220;Yangzhou Huada&#8221;), Jiangsu Yada Technology Group Co., Ltd (&#8220;Jiangsu Yada&#8221;),
Jiangsu Huadong Medical Device Industrial Co., Ltd (&#8220;Jiangsu Huadong&#8221;), and Yangzhou Guanghui Medical Technology Co., Ltd
(&#8220;Guanghui&#8221;);</span></td>
</tr></table><div>

</div><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160; &#160; &#160;</span></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"></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">&#8220;Kang
Fu International Medical&#8221; refers to Kang Fu International Medical Co., Limited, a limited company organized under the laws of Hong
Kong and a wholly owned subsidiary of Meihua International;</span></td>
</tr></table><div>

</div><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160; &#160; &#160;</span></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"></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">&#8220;Yangzhou
Huada&#8221; refers to Yangzhou Huada Medical Device Co., Ltd, a limited liability company organized under the laws of China, which is
wholly owned by Kang Fu International Medical;</span></td>
</tr></table><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></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"></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">&#8220;Jiangsu
Yada&#8221; refers to Jiangsu Yada Technology Group Co., Ltd, a limited liability company organized under the laws of China, which is
wholly owned by Yangzhou Huada;</span></td>
</tr></table><div>

</div><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160; &#160; &#160;</span></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"></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">&#8220;Jiangsu
Huadong&#8221; refers to Jiangsu Huadong Medical Device Industrial Co., Ltd, a limited liability company organized under the laws of
China and a wholly owned subsidiary of Jiangsu Yada;</span></td>
</tr></table><div>

</div><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160; &#160; &#160;</span></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"></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">&#8220;Guanghui&#8221;
refers to Yangzhou Guanghui Medical Technology Co., Ltd, a limited liability company organized under the laws of China, which is wholly
owned by Jiangsu Huadong.</span></td>
</tr></table><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></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"></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">&#8220;shares,&#8221;
&#8220;Shares&#8221; or &#8220;Ordinary Shares&#8221; refer to the Ordinary Shares of Meihua International Medical Technologies Co.,
Ltd., par value $0.0005 per share;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></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"></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">&#8220;RMB&#8221;
or &#8220;Chinese Yuan&#8221; refers to the legal currency of China;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></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"></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">&#8220;U.S.
dollars,&#8221; &#8220;dollars,&#8221; &#8220;USD&#8221; or &#8220;$&#8221; refers to the legal currency of the United States;</span></td>
</tr></table><div>

</div><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160; &#160; &#160;</span></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"></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">&#8220;HKD&#8221;
refers to the official currency of Hong Kong.</span></td>
</tr></table><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></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"></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">&#8220;GMV&#8221;
refers to the total value of all orders shipped for products sold under our sales model, net of returns;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></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"></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">&#8220;medical
professionals&#8221; refer to doctors, pharmacists and medical assistants;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></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"></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">&#8220;SKU,&#8221;
refers to stock keeping unit;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></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"></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">&#8220;Websites&#8221;
refers to our websites at http://meihuamed.com and&#160;http://ir.meihuamed.com.</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Cautionary
Note Regarding Forward-Looking Statements</b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
addition to historical information, this report contains forward-looking statements within the meaning of Section 27A of the Securities
Act and Section 21E of the Exchange Act. We use words such as &#8220;believe,&#8221; &#8220;expect,&#8221; &#8220;anticipate,&#8221;
&#8220;project,&#8221; &#8220;target,&#8221; &#8220;plan,&#8221; &#8220;optimistic,&#8221; &#8220;intend,&#8221; &#8220;aim,&#8221; &#8220;will&#8221;
or similar expressions which are intended to identify forward-looking statements. Such statements include, among others, those concerning
market and industry segment growth and demand and acceptance of new and existing products; any projections of sales, earnings, revenue,
margins or other financial items; any statements of the plans, strategies and objectives of management for future operations; and any
statements regarding future economic conditions or performance, as well as all assumptions, expectations, predictions, intentions or
beliefs about future events. Investors are cautioned that any such forward-looking statements are not guarantees of future performance
and involve risks and uncertainties, as well as assumptions, which, if they were to ever materialize or prove incorrect, could cause
the results of the Company to differ materially from those expressed or implied by such forward-looking statements. Potential risks and
uncertainties include, among other things, the possibility that we may not be able to maintain or increase our net revenues and profits
due to our failure to anticipate consumer preferences and develop new menswear products, our failure to execute our business expansion
plan, changes in domestic and foreign laws, regulations and taxes, changes in economic conditions, uncertainties related to China&#8217;s
legal system and economic, political and social events in China, a general economic downturn, a downturn in the securities markets, and
other risks and uncertainties which are generally set forth under &#8220;Item 3. Key information&#8212;D. Risk Factors&#8221; and elsewhere
in this report.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Readers
are urged to carefully review and consider the various disclosures made by us in this report and our other filings with the SEC. These
reports attempt to advise interested parties of the risks and factors that may affect our business, financial condition and results of
operations and prospects. The forward-looking statements made in this report speak only as of the date hereof and we disclaim any obligation,
except as required by law, to provide updates, revisions or amendments to any forward-looking statements to reflect changes in our expectations
or future events.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; 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="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: LowerRoman; Name: PageNo -->ii<!-- 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; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; 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; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>PART
I</b></span></p><div>

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

</div><div><a id="a_002"></a></div><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS</b></span></p><div>


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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>A. Directors and Senior Management</b></span></p><div>


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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>B. Advisors</b></span></p><div>


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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>C. Auditors</b></span></p><div>


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

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

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

</div><div><a id="a_003"></a></div><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE</b></span></p><div>


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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>A. Offer Statistics</b></span></p><div>


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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>B. Method and Expected Timetable</b></span></p><div>


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

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

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

</div><div><a id="a_004"></a></div><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>ITEM 3. KEY INFORMATION</b></span></p><div>


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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>A. [Reserved]</b></span></p><div>


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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>B. Capitalization and Indebtedness</b></span></p><div>


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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>C. Reasons for the Offer and Use of Proceeds</b></span></p><div>


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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>D. Risk Factors</b></span></p><div>


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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>An
investment in our capital stock involves a high degree of risk. You should carefully consider the risks described below, together with
all of the other information included in this annual report, before making an investment decision. If any of the following risks actually
occurs, our business, financial condition or results of operations could suffer. In that case, the trading price of our Ordinary Shares
could decline, and you may lose all or part of your investment.</i></span></p><div>

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Risks
Related to Our Business and Industry</b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>In
connection with the initial public offering of our Ordinary Shares in February 2022, we entered into certain agreements with a Hong Kong
entity pursuant to which we believe we were defrauded of in excess of $10 million; because we failed to disclose such agreements at the
time of the initial public offering, regardless of the arguably fraudulent nature of such agreements, we may be subject to potential
liabilities or litigation exposure as a result of such agreements. </i></b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company closed its initial public offering (the &#8220;IPO&#8221;) of its ordinary shares (the &#8220;Ordinary Shares&#8221;) on February
18, 2022, through which the Company raised $39.4 million through the sale of 3,940,000 Ordinary Shares at a purchase price of $10.00
per share. During the roadshow leading up to the IPO, a Hong Kong investment company named Tai He International Group Limited (&#8220;Tai
He&#8221;) was referred to the Company by Shengang Securities Company Limited (&#8220;Shengang&#8221;), the Company&#8217;s co-underwriter
based in the People&#8217;s Republic of China (&#8220;PRC&#8221;). Tai He, through negotiations with Shengang, asserted that it would
participate in the IPO as an investor. As a development stage PRC medical device company, the Company&#8217;s management had no experience
in the U.S. capital markets and relied on its investment bankers and underwriters in providing guidance and advice concerning its U.S.
public offering. Accordingly, the Company was unaware of the actual motives of Tai He. Based on the Company&#8217;s trust in Shengang
and given the circumstances that the Company was unable to make further verification, the Company hastily entered into a series of agreements
with Tai He (the &#8220;Tai He Agreements&#8221;).</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pursuant
to the Tai He Agreements, Tai He agreed to invest a minimum of $35 million in the IPO subject to the Company making a $7.0 million refundable
deposit (the &#8220;Refundable Deposit&#8221;) and advancing a $3.0 million service fee for investor relations and other services (together,
the &#8220;Services&#8221;) payable to Tai He. The Company, its affiliates and individual shareholders paid the $7.0 million Refundable
Deposit and $3.0 million service fee to Tai He in several installments from January 27, 2022 to March 11, 2022. After March 11, 2022,
the Company has made no other payments to, nor had any direct interaction with, Tai He, and, in actuality, the Company never directly
communicated with Tai He during the negotiations, only communicating about Tai He and the Tai He Agreements through Shengang.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">After
the IPO, through the Company&#8217;s internal risk control process, the Company learned that Tai He does not appear to be an investor
in the Company and, when the Company attempted to inquire about it, Tai He refused to speak with the Company. Based on the facts as investigated
and understood by the Company, the Company believes that it was defrauded by Tai He and that Tai He never actually invested $35 million
in the IPO. In fact, the Company learned that Tai He made no investments in the Company at all, and Tai He has no involvement in the
Company&#8217;s IPO matters. In addition, the Refundable Deposit has not been repaid to the Company and no Services have been provided
to the Company by Tai He. As a result, the Company believes that the Tai He Agreements may be deemed a fraud perpetrated by Tai He and
Shengang against the Company by Tai He taking advantage of asymmetric information, including the Company&#8217;s lack of knowledge and
understanding of the U.S. markets, IPO rules and processes, and the trust of the Company.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">After
consultation with professionals, the Company is now aware that the Tai He Agreements were required to be disclosed to the public and
the Company believes that the agreements themselves are fraudulent and non-enforceable, and therefore the Company is disclosing the Tai
He Agreements to meet the compliance requirements of the Securities and Exchange Commission (&#8220;SEC&#8221;). Further, the Company
acknowledges that it had improperly relied on the advice, direction and counsel of Shengang when entering into the Tai He Agreements.
The Company is now proactively working to terminate the Tai He Agreements and recover the monies already paid to Tai He by the Company.
Due to the uncertainty of collection, the Company has written off approximately $4.8 million deposit and fully expensed $2.3 million service fee paid by the Company to Tai He in the year ended December
31, 2022. The Company and its executive management team intends to cooperate with the SEC, as well as any other relevant authorities,
to ensure that its investors&#8217; interests are protected while such matters are resolved. Nonetheless, the existence of the Tai He
Agreements and the Company&#8217;s failure to disclose them could expose the Company potential shareholder litigation and/or SEC enforcement
or other regulatory action.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Our
operating history may not be indicative of our future growth or financial results and we may not be able to sustain our historical growth
rates.</i></b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
operating history may not be indicative of our future growth or financial results. There is no assurance that we will be able to grow
our revenues in future periods. Our growth rates may decline for any number of possible reasons, and some of them are beyond our control,
including decreasing customer demand, increasing competition, declining growth of the medical device industry in general, emergence of
alternative business models, or changes in government policies or general economic conditions. We will continue to expand our sales network
and product offerings to bring greater convenience to our customers and to increase our customer base and number of transactions. However,
the execution of our expansion plan is subject to uncertainty and the total number of items sold and number of transacting customers
may not grow at the rate we expect for the reasons stated above. If our growth rates decline, investors&#8217; perceptions of our business
and prospects may be adversely affected and the market price of our Ordinary Shares could decline.</span></p><div>

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Failure
to maintain the quality and safety of our products could have a material and adverse effect on our reputation, financial condition and
results of operations.</i></b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
quality and safety of our products, whether self-manufactured or outsourced, are critical to our success. As a medical device manufacturer
with a history of over 30 years, and a management team with more than 40 years of industry experience, quality and safety are maintained
as our core value. Our medical devices are directly used on the human body and are essential to human health. We pay close attention
to quality control, monitoring each step in the process from procurement to production and from warehouse to delivery. Maintaining consistent
product quality depends significantly on the effectiveness of our quality control system, which in turn depends on a number of factors,
including but not limited to the design of our quality control system, employee training to ensure that our employees adhere to and implement
our quality control policies and procedures and the effectiveness of monitoring of any potential violation(s) of our quality control
policies and procedures. There can be no assurance that our quality control system will always prove to be effective.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
addition, the quality of the products or services provided by our suppliers or business partners is subject to factors beyond our control,
including the effectiveness and the efficiency of their quality control system, among others. There can be no assurance that our suppliers
or business partners will always be able to adopt appropriate quality control systems and meet our stringent quality control requirements
in respect of the products or services they provide. Any failure of our suppliers or business partners to provide satisfactory products
or services could harm our reputation and adversely impact our operations. In addition, we may be unable to receive sufficient compensation
from suppliers and business partners for the losses caused by them.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of the date of this report, we are unaware of any material accidents related to the quality or safety of our products.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Any
failure to maintain effective quality control over our products and services could materially adversely affect our business.</i></b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
quality of our services and products is critical to the success of our business, and such quality to a large extent depends on the effectiveness
of our quality control system. We have developed a rigorous quality control system that enables us to monitor each stage of the production
process.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">However,
despite our quality control management system, we cannot eliminate all risks of errors, defects or failures. We may fail to detect or
cure defects as a result of a number of factors, many of which are outside our control, including:</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></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"></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">technical
or mechanical malfunctions in the production process;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></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"></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">human
error or malfeasance by our quality control personnel;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></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"></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">tampering
by third parties; and</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></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"></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">defective
raw materials or equipment.</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Failure
to detect quality defects in our products could result in patient injury, customer dissatisfaction, or other problems that could seriously
harm our reputation and business, expose us to liability, and adversely affect our revenue and profitability.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
2018, our PRC subsidiaries Jiangsu Yada and Jiangsu Huadong were fined an immaterial amount for noncompliance with certain local laws
and regulations, which non-compliance was cured by us in the same year.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
the fiscal year of 2022 and as of the date of report, we are not aware of any material investigations, prosecutions, disputes, claims
or other proceedings relating to quality or quality control issues, nor has the Company received any notices of, been punished for, nor
can we foresee any punishment being made by any related government authorities of the PRC as of the date of this report.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Due
to the nature of our business, we may experience or be exposed to significant liability claims or complaints from customers, doctors,
patients or hospitals, litigation and regulatory investigations and proceedings, such as claims arising in relation to medical device
safety, or adverse publicity involving our products, which could adversely affect our financial condition and results of operations.</i></b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
face an inherent risk of liability claims or complaints related to the use of our products by our customers, doctors, patients and hospitals.
We take those complaints and claims seriously and endeavor to reduce such complaints by implementing various remedial measures. Nevertheless,
we cannot assure you that we can successfully prevent or address all such complaints.</span></p><div>

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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Any
complaints or claims against us, even if meritless and unsuccessful, may divert management&#8217;s attention and other resources from
our business and adversely affect our business and operations. Such complaints or claims may cause customers to lose confidence in us
and our brand, which may adversely affect our business and results of operations. Furthermore, negative publicity including but not limited
to negative online reviews on social media and crowd-sourced review platforms, industry findings or media reports related to medical
device quality and safety, public health concerns, illness, injuries, whether or not accurate, and whether or not concerning our products,
can adversely affect our business, results of operations and reputation.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
face potential liability, expenses for legal claims and exposure to other harm due to the nature of our business. For example, customers
could assert legal claims against us in connection with personal injuries or illness related to the use of medical devices we sell. The
PRC government, media outlets and public advocacy groups have been increasingly focused on customer protection in recent years. Selling
of defective products may expose us to liabilities associated with customer protection laws. We may be deemed responsible for compensating
customer losses even if personal injuries or illness are not directly caused by us. Such liability could arise through the actions of
our suppliers or business partners. Thus, we may be held liable if our suppliers or other business partners fail to comply with applicable
product quality and safety related rules and regulations. In such a situation, though we can ask the responsible parties to indemnify
us for such liability, even if we receive full indemnification our reputation could still be adversely affected.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
may face additional exposure to claims and lawsuits. These claims could divert management time and attention away from our business and
result in significant costs to investigate and defend, regardless of the merits of the claims. In some instances, we may elect or be
forced to pay substantial damages if we are unsuccessful in our efforts to defend against these claims, which could harm our business,
financial condition and results of operations. In addition, our directors, management and employees may from time to time be subject
to litigation and regulatory investigations and proceedings or otherwise face potential liability and expense in relation to medical
device quality and safety, commercial, labor, employment, securities or other matters, which could adversely affect our reputation and
results of operations.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of the date of this report, we are not aware of any notices, warnings, investigations, prosecutions, disputes, claims or other proceedings
related to customer rights protection having been brought against us, nor have we been punished or fined or can we foresee any punishment
or fines to be made by any government authorities of the PRC or any other jurisdiction.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
face the risk of fluctuations in the cost, availability and quality of our raw materials, which could adversely affect our results of
operations.</i></b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
cost, availability and quality of our principal raw materials, such as rubber, chemical PE, polyethylene, polypropylene, nylon, non-woven
fabrics and other bulk commodities, are important to our operations. After years of development, we have established long-term cooperative
relationships with numerous raw material suppliers under a positive price negotiation and adjustment mechanism. However, if the cost
of raw materials increases due to policy changes, large market price fluctuations or any other reasons, our business and results of operations
could be adversely affected.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Lack
of availability of raw materials, whether due to shortages in supply, delays or interruptions in processing, failure of timely deliver
materials or otherwise, could interrupt our operations and adversely affect our financial results.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Defective
raw materials or raw materials with quality issues could subject us to product liability claims or legal actions, which could adversely
affect our financial conditions and results of operations.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>A
significant interruption in the operations of our third-party suppliers and other business partners could potentially disrupt our operations.</i></b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have limited control over the operations of our third-party suppliers and other business partners and any significant interruption in
their operations may have an adverse impact on our operations. For example, a significant interruption in the operations of our supplier&#8217;s
manufacturing facilities could cause delay or termination of shipment of the raw materials to us, which may cause delay or termination
of shipment of ordered products to our customers, resulting in damage to our customer relationships. If we could not solve the impact
of the interruptions of operations of our third-party suppliers, our business operations and financial results may be materially and
adversely affected.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Although
we believe that we could establish alternate sources from other suppliers for most of our raw materials, any delay in locating and establishing
relationships with other sources could result in shortages or back orders for such raw materials. There can be no assurance that such
replacement suppliers will provide the raw materials that are needed by us in the quantities that we request or at the prices that we
are willing to pay. Any shortage in quantities or increase in prices could adversely affect our financial conditions and results of operations.</span></p><div>

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>As
the relevant land plots are of allocated land use right, we may be required to pay the land granting fees to convert such allocated land
use rights to granted land use rights.</i></b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Allocated
land use rights may only be held by Chinese state-owned enterprises, government authorities and public entities or used for certain prescribed
purposes - for example, military installations and infrastructure projects. Allocated lands may be requisitioned by the state at any
time and&#160;without compensation. An allocated land use right may be converted to a granted land use rights by the payment of land
granting fees to the land authority. Therefore, we might be required to convert the land use rights of the relevant land plots from &#8220;allocated&#8221;
to &#8220;granted&#8221; by payment of the land granting fees.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>While
we utilize numerous suppliers, we do not have long term contracts with any of those suppliers and they could reduce order quantities
or terminate their sales to us at any time.</i></b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">While
we utilize numerous suppliers, we do not have long term contracts with any of those suppliers. As a result, at any time, our suppliers
could reduce the quantities of products they sell to us or cease selling products to us altogether. Such reductions or terminations could
have a material adverse impact on our revenues, profits and financial condition.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Overall
tightening of the labor market, increases in labor costs or any possible labor unrest may 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; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
business requires a substantial number of personnel. Any failure to retain and maintain stable and dedicated workforce by us may lead
to disruption to our business operations. Although we have not experienced any labor shortages to date, we have observed an overall tightening
and increasingly competitive labor market. We have experienced, and expect to continue to experience, increases in labor costs due to
increases in salary, social benefits and employee headcount. We compete with other companies in our industry and other labor-intensive
industries for labor, and we may not be able to offer competitive remuneration and benefits compared to them. If we are unable to manage
and control our labor costs, our business, financial condition 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; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
are dependent on our top customers. If we fail to acquire new customers or retain existing customers in a cost-effective manner, our
business, financial condition and results of operations may be materially and adversely affected.</i></b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Maintaining
existing customers and developing new customers are always essential to our success. Although we are not heavily dependent on one or
two customers, we are still dependent on our top customers. For the years ended December 31, 2022, 2021 and 2020, our top five customers
contributed approximately 56.53%, 56.96%, and 53.47%, respectively, to our revenue.&#160;&#160;</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
ability to cost-effectively attract new customers and retain existing customers, especially our top customers, is crucial to driving
net revenues growth and achieving profitability. We have invested significantly in branding, sales and marketing to acquire and retain
customers since our inception. For example, we attend domestic and international expos and exhibitions in marketing our products and
attracting new customers. We also expect to continue to invest significantly to acquire new customers and retain existing ones, especially
our top customers. There can be no assurance that new customers will stay with us, or the net revenues from new customers we acquire
will ultimately exceed the cost of acquiring those customers. In addition, if our existing customers, especially our existing top customers
no longer find our products appealing, or if our competitors offer more attractive products, prices, discounts or better customer services,
our existing customers may lose interest in us, decrease their orders or even stop ordering from us. If we are unable to retain our existing
customers, especially our top customers or to acquire new customers in a cost-effective manner, our revenues may decrease and our results
of operations will be adversely affected.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>If
we are unable to build and maintain sufficient sales and distribution network to meet increasing demand of our products, our ability
to execute on our business plan as outlined in this report will be impaired.</i></b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
sell our products through our direct sales force and distribution channel. As of the date of this report, we have 81 employees in our
sales department and 5,000 independent sales agents, 3,004 distributors for domestic sales and 324 exporting distributors for overseas
sales. Each of the aforementioned 324 exporting distributors may sell medical devices to at least three overseas customers. We have also
established a cooperative network with more than 525 hospitals through our direct sales network. For the years ended December 31, 2022,
2021, and 2020, our direct sales force contributed 9.16%, 9.13%, and 10.59% a, respectively, to our revenues, and distributors contributed
90.84%, 90.87%, and 89.41%, respectively, to our revenues.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Although
our sales and distribution satisfy our existing business needs, they might be insufficient to meet demand for our products as we continue
to grow our business, which could result in harm to our sales and business operations, financial condition and results of operations.
To mitigate such risk, we intent to invest our internally generated cash from operations and capital to be raised to add additional teams
to our direct sales force, expand our geographic reach with new distribution channels into other provinces within China and overseas.
If our planned efforts to expand our direct sales force and distribution channels are not effective, our ability to execute on our business
plan and to realize continued growth with be impaired.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>If
we fail to provide a one-stop solution to our customers, we may lose customers, which would cause our financial conditions and results
of operations to be adversely affected.</i></b></span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
sell our own brand of products and the products of other brands. For the fiscal year ended December 31, 2022, 2021, and 2020, we recognized
total revenues of $103,346,341, $104,037,710, and $89,061,010, respectively, of which our own brand sales accounted for 48.88%, 46.19%,
and 49.94%, respectively, and the resales of sourced disposable medical devices from other manufacturers accounted for 51.12%, 53.81%,
and 50.06%, respectively.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">When
we receive an order containing products out of our product portfolio, we may procure such products per the specific order requirements
from other manufacturers and provide our customers with a one-stop shopping experience. Lack of availability of these products from other
manufacturers, whether due to shortages in supply, delays or interruptions in processing, failure of timely delivery or otherwise, could
interrupt our operations and adversely affect our financial results.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Our
industry is intensely competitive. We may face competition from, and we may be unable to compete successfully against, new entrants and
established companies with greater resources.</i></b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
medical device industry is intensely competitive and includes thousands of companies both domestically and internationally. As more medical
device companies seek to outsource more of the design, prototyping and manufacturing of their products, we will face increasing competitive
pressures to grow our business in order to maintain our competitive position and we may encounter competition from, and lose customers
to, other companies with design, technological and manufacturing capabilities similar to ours. Some of our potential competitors may
have greater name recognition, greater operating revenues, larger customer bases, longer customer relationships and greater financial,
technical, personnel and marketing resources than we have. If we are unsuccessful competing with our competitors for our existing and
prospective customers&#8217; business, our financial conditions and results of operation may be adversely affected.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Furthermore,
increased competition may reduce our market share and profitability and require us to increase our sales and marketing efforts and capital
commitment in the future, which could negatively affect our results of operations or force us to incur further losses. Although we continually
aim to grow our customer base, there is no assurance that we will be able to continue to do so in the future against current or future
competitors, and such competitive pressures may have a material adverse effect on our business, financial condition and results of operations.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>The
continuing development of our products depends upon our maintaining strong working relationships with our customers, distributors and
independent sales agents.</i></b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
research, development, marketing and sales of our current products and potential new and improved products or future product indications
for which we receive regulatory clearance or approval depend upon our maintaining working relationships with our customers, distributors
and independent sales agents. See &#8220;<i>Our Research and Development</i>&#8221; below. We rely on those professionals to provide
us with considerable knowledge and experience regarding the research, development, marketing and sales of our products. Distributors
and independent sales agents assist us in marketing and sales, as well as collecting customers&#8217; feedbacks and advice related to
our products. Researchers at hospital and medical institution customers keep us informed of their latest requirements and R&amp;D results.
If we cannot maintain our strong working relationships with these professionals and continue to receive their advice and input, the development,
improvement and marketing of our products could suffer, which could have a material adverse effect on our business, financial condition
and results of operations.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Technological
change may adversely affect sales of our products and may cause our products to become obsolete.</i></b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
medical device market is characterized by extensive research and development and rapid technological change. Technological progress or
new developments in our industry could adversely affect sales of our products. Our products could be rendered obsolete because of future
innovations by our competitors or others, which would have a material adverse effect on our business, financial condition and results
of operations.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Consolidation
in the medical device industry could have an adverse effect on our revenue and results of operations.</i></b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Many
medical device companies are consolidating to create new companies with greater market power. As the medical device industry consolidates,
competition to provide goods and services to industry participants will become more intense. These industry participants may try to use
their market power to negotiate price concessions or reductions for our products. If we reduce our prices because of consolidation in
the healthcare industry, our revenue would decrease, which could have a material adverse effect on our business, financial condition
and results of operations.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>If
we fail to identify, acquire and develop other products, we may be unable to grow our business.</i></b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
a significant part of our growth strategy, we intend to develop and commercialize additional products through our research and development
program or by acquiring additional technologies and patents from third parties. The success of this strategy depends upon our ability
to identify, select and acquire the technologies and patents on terms that are acceptable to us.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Any
patents and technology we identify or acquire may require additional development efforts prior to commercial manufacturing and sale,
including approval or clearance by the applicable regulatory authorities. All products are prone to the risks of failure inherent in
medical device product development, including the possibility that the product will not be shown to be sufficiently safe and effective
for approval or clearance by regulatory authorities. In addition, we cannot assure you that any such products that are approved or cleared
will be manufactured or produced economically, successfully commercialized or widely accepted in the marketplace.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
we are unable to develop suitable potential products through internal research programs or by obtaining patents or technologies from
third parties, it could have a material adverse effect on our business, financial condition and results of operations.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>If
we are not able to implement our strategies to achieve our business objectives, our business operations and financial performance will
be adversely affected.</i></b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
business plan and growth strategy are based on currently prevailing circumstances and the assumption that certain circumstances will
or will not occur, as well as the inherent risks and uncertainties involved in various stages of development. However, there is no assurance
that we will be successful in implementing our strategies or that our strategies, even if implemented, will lead to the successful achievement
of our objectives. If we are not able to successfully implement our strategies, our business operations and financial performance will
be adversely affected.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
are dependent upon certain key executives and highly qualified managers and we cannot assure their retention.</i></b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
success depends, in part, upon the continued services of key members of our management team. Our executives&#8217; and managers&#8217;
knowledge of the market, our business and our company represents a key strength of our business, which cannot be easily replicated. The
success of our business strategy and our future growth also depends on our ability to attract, train, retain and motivate skilled managerial,
sales, administration, development and operating personnel.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Although
we have developed a mature production system, a stable and reliable sales network and marketing team, a complete after-sales service
system, and a research and development process and team that keeps us abreast of market needs, and also developed complete management
systems, including personnel management and welfare systems, raw material procurement and supply systems, warehousing systems, safe production
and manufacturing procedures and systems, capital utilization management systems, sales and after-sales service systems, quality assessment,
review and inspection systems, labor safety security system, accountability system for violations of laws and disciplines, and a comprehensive
information feedback system, which ensure the normal business development of the company, if we loss any of our key personnel, there
can be no assurance that our existing personnel will be adequate or qualified to carry out our strategy, or that we will be able to hire
or retain experienced, qualified employees to carry out our strategy. The loss of one or more of our key management or operating personnel,
or the failure to attract and retain additional key personnel, could have a material adverse effect on our business, financial condition
and results of operations.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>If
we fail to adopt new technologies to evolving customer needs or emerging industry standards, our business may be materially and adversely
affected.</i></b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">To
remain competitive, we must continue to stay abreast of the constantly evolving industry trends and enhance and improve our technology
accordingly. Our success will depend, in part, on our ability to identify, develop or acquire leading technologies useful in our business.
There can be no assurance that we will be able to use new technologies effectively or meet customer&#8217;s requirements. If we are unable
to adapt in a cost-effective and timely manner in response to changing market conditions or customer preferences, whether for technical,
legal, financial or other reasons, our business may be materially and adversely affected.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Changes
to our payment terms with both customers and suppliers may materially adversely affect our operating cash flows.</i></b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
may experience significant pressure from our suppliers to reduce the number of days our accounts payable remain outstanding. At the same
time, we may experience pressure from our customers to extend the number of days before paying our accounts receivable. Any failure to
manage our accounts payable and accounts receivable may have a material adverse effect on our business, financial condition and results
of operations.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>If
we are unable to collect account receivables from our customers, our results of operations and cash flows could be adversely affected.</i></b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
business depends on our ability to successfully obtain payment from customers of the amounts they owe us for products sold. As of December
31, 2022 and 2021, our accounts receivable balance amounted to $68,945,792 and $67,101,297, respectively. This growth in receivables
reflects, in part, our growth in sales. If we are unable to timely collect our accounts receivable on a timely and consistent basis,
however, our cash flows and access to operating capital could be adversely affected.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>If
we fail to manage our inventory effectively, our 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; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
we fail to manage our inventory effectively, we may be subject to a heightened risk of inventory obsolescence, a decline in inventory
value, and significant inventory write-downs or write-offs. As of December 31, 2022 and 2021, our inventory balance amounted to $1,122,038
and $1,251,393, respectively.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Economic
recessions could have a significant, adverse impact on our business.</i></b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
revenues are generated from sales of medical devices both domestically and internationally and we anticipate that revenues from such
sales will continue to represent a substantial portion of our total revenues in the near future. Our sales and earnings can also be affected
by changes in the general economy.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
medical device industry historically has experienced cyclical fluctuations in financial results due to economic recession, downturns
in business cycles of our customers, interest rate fluctuations, and other economic factors beyond our control. Deterioration in the
economic environment subjects our business to various risks, which may have a material and adverse impact on our operating results and
cause us to not reach our long-term growth goals. For example, a downturn in the economy could directly affect the discretionary spending
power of our customers and in turn, depress the number of orders for our products.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
may be subject to intellectual property infringement claims, which may be expensive to defend and may disrupt our business and&#160;operations.</i></b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
cannot be certain that our operations or any aspects of our business do not or will not infringe upon or otherwise violate intellectual
property rights held by third parties. For instance, our subsidiary, Jiangsu Huadong was historically a third defendant in an intellectual
property infringement case, under which certain products purchased by Jiangsu Huadong involved patent infringement. As of the date of
this report, such case has been settled and Jiangsu Huadong has permanently stopped purchasing and selling the infringing products and
destroyed the products in stock as requested by court&#8217;s decision. In the future, however, we may be subject to other legal proceedings
and claims relating to the intellectual property rights of others. Such future proceedings could also involve existing intellectual property
of which we are not aware and on which our products may inadvertently infringe. We cannot assure you that holders of intellectual property
purportedly relating to some aspect of our technology or business, if any such holders exist, would not bring such intellectual property
claims or enforcement actions against us in China or any other jurisdiction. If we are found to have violated the intellectual property
rights of others, we may be subject to liability for our infringement activities or may be prohibited from using such intellectual property
going forward, and, in addition, we may incur licensing fees or be forced to develop alternatives of our own. In addition, we may incur
significant expenses, and may be forced to divert management&#8217;s time and other resources from our business and operations to defend
against these infringement claims, regardless of their merits. Successful infringement or licensing claims made against us may result
in significant monetary liabilities and may materially disrupt our business and operations by restricting or prohibiting our use of the
intellectual property in question, and our business, financial position and results of operations could be materially and adversely affected.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Further,
the application and interpretation of China&#8217;s patent laws and the procedures and standards for granting patents in China are still
evolving and uncertain, and we cannot assure you that PRC courts or regulatory authorities would agree with our analysis or interpretation
concerning their implementation.</span></p><div>

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

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
may not be able to prevent others from the unauthorized use of our intellectual property, which could materially harm our business and
competitive position.</i></b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
rely on a combination of trademark, fair trade practice, patent, copyright and trade secret protection laws in China, as well as confidentiality
procedures and contractual provisions, to protect our intellectual property rights. We enter into confidentiality agreements with our
employees that include terms identifying all employee-developed intellectual property as service inventions belonging to the Company.
In addition, we are carful to remain current in our annual patent fee payments. We regard our trademark, patents, know-how, proprietary
technologies, and similar intellectual property as critical to our success. We may become an attractive target to intellectual property
attacks in the future with the increasing recognition of our brand. Any of our intellectual property rights could be challenged, invalidated,
circumvented or misappropriated, or such intellectual property may not be sufficient to provide us with competitive advantages. In addition,
there can be no assurance that (i)&#160;all of our intellectual property rights will be adequately protected, or (ii)&#160;our intellectual
property rights will not be challenged by third parties or found by a judicial authority to be invalid or unenforceable. Intellectual
property protection may not be sufficient in China. Confidentiality agreements may be breached by counterparties, and there may not be
adequate remedies available to us for any such breach. Accordingly, we may not be able to effectively protect our intellectual property
rights or to enforce our contractual rights in China. In addition, policing any unauthorized use of our intellectual property is difficult,
time-consuming and costly and the steps we have taken may be inadequate to prevent the misappropriation of our intellectual property.
In the event that we must resort to litigation to enforce our intellectual property rights, such litigation could result in substantial
costs and a diversion of our managerial and financial resources. We can provide no assurance that we will prevail in such litigation.
In addition, our trade secrets may be leaked or otherwise become available to, or be independently discovered by, our competitors. Any
failure in protecting or enforcing our intellectual property rights could have a material adverse effect on our business, financial condition
and results of operations.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Changes
in U.S. and international trade policies, particularly with regard to China, may adversely impact our business and operating results.</i></b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
U.S. government has recently made statements and taken certain actions that may lead to potential changes to U.S. and international trade
policies, including imposing tariffs affecting certain products manufactured in China. It is unknown whether and to what extent new tariffs
(or other new laws or regulations) will be adopted, or the effect that any such actions would have on us or our industry and customers.
Although cross-border business currently contributes a small portion of our business, as we continue to sell our products internationally
in the future, any unfavorable government policies on international trade, such as capital controls or tariffs, may affect the demand
for our products and services, impact the competitive position of our products or prevent us from being able to sell products in certain
countries. If any new tariffs, legislation and/or regulations are implemented, or if existing trade agreements are renegotiated or, in
particular, if the U.S. government takes retaliatory trade actions due to the recent U.S.-China trade tension, such changes could have
an adverse effect on our business, financial condition, results of operations.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
have no business liability or disruption insurance, which could expose us to significant costs and business disruption.</i></b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
insurance industry in China is still at an early stage of development, and insurance companies in China currently offer limited business-related
insurance products. We do not have any business liability or disruption insurance to cover our operations. We have determined that the
costs of insuring for these risks and the difficulties associated with acquiring such insurance on commercially reasonable terms make
it impractical for us to have such insurance. Any uninsured risks may result in substantial costs and the diversion of resources, which
could adversely affect our results of operations and financial condition.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
may incur liabilities that are not covered by insurance.</i></b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">While
we seek to maintain appropriate levels of insurance, not all claims are insurable and we may experience major incidents of a nature that
are not covered by insurance. We maintain accident insurance for some of our high risk employees, such as electricians. We also provide
social security insurance including pension, medical insurance, unemployment insurance, maternity insurance, on-the-job injury insurance
and housing fund plans through a PRC government-mandated benefit contribution plan for our employees. We do not carry any key-man life
insurance, product liability and professional liability insurance. Even if we were to purchase these kinds of insurance, the insurance
may not fully protect us from the financial impact of defending against product liability or professional liability claims. We have not
purchased any property insurance or business interruption insurance. We have determined that the costs of insuring for related risks
and the difficulties associated with acquiring such insurance on commercially reasonable terms make it impractical. We consider our insurance
coverage to be sufficient for our business operations in China. We maintain an amount of insurance protection that we believe is adequate,
but there can be no assurance that such insurance will continue to be available on acceptable terms or that our insurance coverage will
be sufficient or effective under all circumstances and against all liabilities to which we may be subject. If we were to incur substantial
losses or liabilities due to fire, explosions, floods, other natural disasters or accidents or business interruption, our results of
operations could be materially and adversely affected. We could, for example, be subject to substantial claims for damages upon the occurrence
of several events within one calendar year. In addition, our insurance costs may increase over time in response to any negative development
in our claims history or due to material price increases in the insurance market in general.</span></p><div>

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Pandemics
and epidemics, natural disasters, terrorist activities, political unrest, and other outbreaks could disrupt our delivery and operations,
which could materially and adversely affect our business, financial condition, and results of operations.</i></b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Global
pandemics, epidemics in China or elsewhere in the world, or fear of spread of contagious diseases, such as Ebola virus disease (EVD),
coronavirus disease 2019 (COVID-19), Middle East respiratory syndrome (MERS), severe acute respiratory syndrome (SARS), H1N1 flu, H7N9
flu, and avian flu, as well as hurricanes, earthquakes, tsunamis, or other natural disasters could disrupt our business operations, reduce
or restrict our supply of products and services, incur significant costs to protect our employees and facilities, or result in regional
or global economic distress, which may materially and adversely affect our business, financial condition, and results of operations.
Actual or threatened war, terrorist activities, political unrest, civil strife, and other geopolitical uncertainty could have a similar
adverse effect on our business, financial condition, and results of operations. Any one or more of these events may impede our production
and delivery efforts and adversely affect our sales results, or even for a prolonged period of time, which could materially and adversely
affect our business, financial condition, and results of operations.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are also vulnerable to natural disasters and other calamities. We cannot assure you that we are adequately protected from the effects
of fire, floods, typhoons, earthquakes, power loss, telecommunications failures, break-ins, war, riots, terrorist attacks, or similar
events. Any of the foregoing events may give rise to interruptions, damage to our property, delays in production, breakdowns, system
failures, technology platform failures, or internet failures, which could cause the loss or corruption of data or malfunctions of our
manufacturing facility as well as adversely affect our business, financial condition, and results of operations.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Our
international sales are subject to a variety of risks that could adversely affect our profitability and operating results.</i></b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
sell disposable medical devices internationally. For the fiscal years ended December 31, 2022, 2021, and 2020, our international sales
accounted for 0.48%, 14.22%, and 18.10%, respectively, of our revenues. Although we take measures to minimize risks inherent to our international
sales, the following risks may have a negative effect on our profitability and operating results, impair the performance of our foreign
sales or otherwise disrupt our business:</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></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"></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">fluctuations
in the value of currencies could cause exchange rates to change and impact our profitability;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></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"></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">greater
difficulty in collecting accounts receivable and longer payment cycles, which can be more common in our international sales, could adversely
impact our operating results over a particular fiscal period; and</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></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"></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">changes
in foreign regulations, export duties, taxation and limitations on imports or exports could increase our operational costs, impose fines
or restrictions on our ability to carry on our business or expand our international sales.</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
are subject to a variety of environmental laws that could be costly for us to comply with, and we could incur liability if we fail to
comply with such laws or if we are responsible for releases of contaminants to the environment.</i></b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
operating subsidiaries are all located in PRC. The manufacturing of our products will generate wastewater, exhaust gas, solid waste and
equipment noise. Chinese laws impose various environmental controls on the management, handling, generation, manufacturing, transportation,
storage, use and disposal of wastewater, exhaust gas, solid waste, equipment noise and other materials used or generated in the manufacturing
of our products. If we fail to comply with any present or future environmental laws, we could be subject to fines, corrective action,
other liabilities or the suspension of production.</span></p><div>

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

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
pay great attention to environmental protection and governance and have formulated a systematic environmental protection management system
in the treatment of our wastewater, exhaust gas, solid waste and equipment noise in accordance with national requirements. However, changes
in environmental laws may result in costly compliance requirements or otherwise subject us to future liabilities. To the extent these
changes affect our customers and require changes to their demand in medical devices, our customers may have a reduced need for our products,
and, as a result, our revenue could adversely affect.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
addition, with the implementation of the fund-raising investment project, our pollutant emissions will increase, resulting in the increase
of the environmental protection spending and the difficulty of environmental protection management, which could have an adverse effect
on our financial conditions and results of operations.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of the date of this report, the Company is not aware of any investigations, prosecutions, disputes, claims or other proceedings in respect
of environmental protection, nor has the Company been punished or can foresee any punishment to be made by any environmental administration
authorities of the PRC.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Failure
to keep up with the changes in domestic industry policies or standards could have a material and adverse effect on our reputation, financial
condition and results of operations.</i></b></span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
a medical device manufacturer, the products we manufacture and sell are closely related to human health, which is subject to strict supervision
by relevant Chinese authorities. The related national government authorities have issued a series of regulatory guidelines and industry
policies to ensure the healthy development of the industry. In recent years, as China further deepens the reform of its medical and health
system, relevant government departments have successively implemented a series of regulations and policies regarding industry standards,
bidding, price formation mechanisms, circulation systems and other related fields, which have brought wide and profound impact on the
livelihood and development of pharmaceutical companies.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
April 2016, the General Office of the State Council issued the Notice on Key Tasks for Deepening the Reform of the Pharmaceutical and
Healthcare System in 2016, proposing to actively encourage the implementation of the &#8220;two-invoice system&#8221; in pilot cities
for comprehensive reform of public hospitals. In December 2016, the Medical Reform Office of the State Council promulgated the Opinions
on the Implementation of the &#8220;Two-Invoice System&#8221; in Drug Procurement by Public Medical Institutions (for Trial Implementation),
which means that the &#8220;Two Invoice System&#8221; has been officially launched and will be further promoted nationwide. Under the
&#8220;two-invoice system,&#8221; invoices are issued once when pharmaceutical products are sold from manufacturers to wholesalers; and
then, invoices are issued again when wholesalers resell the products to hospitals. The aim is to shorten circulation links and reduce
hospital procurement costs. Under the &#8220;two-invoice system,&#8221; consumable products manufacturers with advantages of brand and
economies of scale could increase their coverage of terminals. At the same time, the &#8220;two-invoice system&#8221; also presents consumable
products manufacturers with higher requirements for the construction and optimization of marketing channels. Manufacturers will need
to grow their marketing teams, expand sales networks and improve refined service capabilities.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
deepening of the reform of the domestic pharmaceutical industry and the strengthening of supervision may affect our operations and profitability
in the domestic market. If we fail to adapt to the profound changes in industry policies in a timely manner, it could materially and
adversely affect our business, financial condition and results of operations.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
depend on our professional technology research and development talents and we cannot assure their retention.</i></b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
success partly depends upon the retention of our professional technology research and development talents (&#8220;R&amp;D
Talents&#8221;). As a high-tech enterprise in the medical device industry, we have a professional R&amp;D Talents team comprised of
30 employees as of the date of this report, who have expertise in polymer materials, medicine, molds, and mechanical automation and
possess high-level professional technology expertise and profound industry experience. Among those R&amp;D Talents, seven have a
bachelor&#8217;s degree and the other 23 have received an associate degree.&#160; There can be no assurance that our existing
R&amp;D Talents will be adequate or qualified to carry out our strategy, or that we will be able to hire or retain new R&amp;D
Talents to carry out our strategy. The loss of one or more of our R&amp;D Talents, or the failure to attract and retain additional
R&amp;D Talents, could have a material adverse effect on our business, financial condition and results of operations.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
addition, if we fail to establish a competitive incentive mechanism in terms of career prospects, salary, benefits and working environment,
we may face the risk of instability in the scientific research team, which could adversely affect our long-term development.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Loss
of certain procurement bids could have a material and adverse effect on our reputation, financial conditions and results of operations.</i></b></span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">According
to the Notice of the Ministry of Health on Further Strengthening the Management of Centralized Procurement of Medical Devices (Wei Gui
Cai Fa [2007] No. 208), centralized procurement of medical equipment within the large medical equipment management list is required.
For other medical equipment and consumables, the provincial health administrative department shall study and formulate a centralized
procurement catalog at the provincial and prefecture level based on actual conditions. In recent years, China has actively promoted a
provincial-level bidding platform for medical devices with reference to the drug procurement bidding platform. At present, some provinces
and cities have conducted a unified bid for some types of medical devices. According to the Notice of the Office of the National Healthcare
Security Administration on Centralized Pharmaceutical Purchasing and Price Management in 2023 (Yi Bao Ban Han [2023] No. 13) and the
Notice on Key Tasks for Deepening the Reform of the Pharmaceutical and Healthcare System in 2022 (Guo Ban Fa [2022] No. 14)&#65292;it
is a strategy to continually promote the volume-based centralized procurement for medical devices in a long-term period.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Under
the centralized procurement model, the price information becomes more transparent and open, which will put greater downward pressure
on the winning bid price of the product. If we lose a bid to our competitors due to the disadvantage of product price or other reason,
we will lose some hospital customers. If the local procurement platform does not solicit a supplementary bid for a long time or reopen
the bid, it could have a material and adverse effect on our reputation, financial conditions and results of operations.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>If
our employees or customers are involved in improper medical device sales transactions, it could adversely affect our reputation, financial
conditions and results of operations.</i></b></span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have established and improved our internal control system against unfair business practices, to prevent, minimize and eliminate employees
and customers improper behaviors in the medical device sales transactions, including unauthorized rebates. There can be no assurance
that our existing internal control system will be adequate to prevent, minimize and eliminate such improper transactions, that we will
be able to effectively implement our internal control polices, or that we will be able to perfect our internal control system to eliminate
such improper transactions. If any individual employees or downstream customers have improper business practices in the purchase and
sale of medical devices, we may be identified by the relevant regulatory authorities as a violator of relevant laws and regulations and
thus included in the blacklist of commercial records, which could adversely affect our reputation, financial conditions and results of
operations.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>If
we fail to timely renew our medical device licenses or registration certificates, it could adversely affect our reputation, financial
conditions and results of operations.</i></b></span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
a medical device manufacturer with all of our operating subsidiaries located in PRC, all of our manufacturing and sales activities must
comply with relevant Chinese laws and regulations. Pursuant to the Measures for the Administration of Registration of Medical Devices
promulgated on June 27, 2014and effective on October 1, 2014, as amended from time to time and currently amended as Measures for the
Administration of Registration and Recordation of Medical Devices effective on October 1, 2021, Class I medical devices are subject to
recordation administration with Class II and Class III medical devices subject to registration administration. We are in the business
of manufacturing and sales of Class I, II and III medical devices. If we fail to timely record or register our medical devices, our financial
conditions and results of operations will be adversely affected.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of the date of this report, we are current in the recording and/or registration of all of our medical devices.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Risks
Related to Our Corporate Structure</b></span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Our
directors and officers currently own an aggregate of 66.56% of the total voting power of our outstanding Ordinary Shares.</b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Currently,
our directors and officers collectively own an aggregate of 66.56% of the total voting power of our outstanding Ordinary Shares. These
beneficial owners could have significant influence on determining the outcome of any corporate transaction or other matter submitted
to the shareholders for approval, including mergers, consolidations, the election of directors and other significant corporate actions.
In cases where their interests are aligned and they vote together, these beneficial owners will also have the power to prevent or cause
a change in control. Without the consent of some or all of these shareholders, we may be&#160;prevented from entering into transactions
that could be beneficial&#160;to us or our minority shareholders. The interests of these beneficial owners may differ from the interests
of our other shareholders. The concentration in the ownership of our Ordinary Shares may cause a material decline in the value of our
Ordinary Shares.</span></p><div>

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are an exempted company incorporated under the laws of the Cayman Islands. Our corporate affairs are governed by our amended and restated
memorandum and articles of association, the Companies Act (2020 Revision) of the Cayman Islands (the &#8220;Companies Act&#8221;) 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 duties 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 duties 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 has a different 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. There is no statutory recognition in the Cayman
Islands of judgments obtained in the United States, although the courts of the Cayman Islands will in certain circumstances recognize
and enforce a non-penal judgment of a foreign court of competent jurisdiction without retrial on the merits.</span></p><div>

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">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. To the extent we choose to follow home country practice with respect to
corporate governance matters, our shareholders may be afforded less protection than they otherwise would under rules and regulations
applicable to U.S. domestic issuers.</span></p><div>

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

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

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>You
may be unable to present proposals before annual general meetings or extraordinary general meetings not called by shareholders.</i></b></span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Cayman
Islands law provides shareholders with only limited rights to convene a general meeting and does not provide shareholders with any right
to put any proposal before a general meeting. However, these rights may be provided in a company&#8217;s articles of association. Our
articles of association allow our shareholders holding shares representing in aggregate not less than ten percent of our voting share
capital in issue, to convene a general meeting of our shareholders, in which case our directors are obliged to call such meeting. Advance
notice of at least seven days is required for the convening of our general meetings. A quorum required for a meeting of shareholders
consists of at least one shareholder present or by proxy, representing a majority of the paid up voting share capital in the Company.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Recently
introduced economic substance legislation of the Cayman Islands may impact the Company or its operations</i></b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Cayman Islands, together with several other non-European Union jurisdictions, have recently 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. Effective January 1, 2019, the International Tax Co-operation (Economic Substance) Act, 2018 (the &#8220;Substance
Law&#8221;) and issued Regulations and Guidance Notes came into force in the Cayman Islands introducing certain economic substance requirements
for &#8220;relevant entities&#8221; 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 fiscal years commencing July 1, 2019, onwards. A &#8220;relevant entity&#8221;
includes an exempted company incorporated in the Cayman Islands; however, it does not include an entity that is tax resident outside
the Cayman Islands. Accordingly, for so long as the Company is a tax resident outside the Cayman Islands, it is not required to satisfy
the economic substance test under the Substance Law. Although it is presently anticipated that the Substance Law will have little material
impact on the Company or its operations, as the legislation is new and remains subject to further clarification and interpretation it
is not currently possible to ascertain the precise impact of these legislative changes on the Company.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Certain
judgments obtained against us by our shareholders may not be enforceable.</i></b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are a Cayman Islands company and substantially all of our assets are located outside of the United States. Substantially all of our current
operations are conducted in the PRC. In addition, our current officers are nationals and residents of countries other than the United
States. Substantially all of the assets of these persons are 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 the PRC may render you unable to enforce a judgment against our assets or the assets of our directors
and officers.</span></p><div>

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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Because
all of our operations are in China, our business is subject to the complex and rapidly evolving laws and regulations there. The Chinese
government may exercise significant oversight and discretion over the conduct of our business and may intervene in or influence our operations
at any time, which could result in a material change in our operations and/or the value of our Ordinary Shares.</i></b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
a business operating in China, we are subject to the laws and regulations of the PRC, which can be complex and evolve rapidly. The PRC
government has the power to exercise significant oversight and discretion over the conduct of our business, and the regulations to which
we are subject may change rapidly and with little notice to us or our shareholders. As a result, the application, interpretation, and
enforcement of new and existing laws and regulations in the PRC are often uncertain. In addition, these laws and regulations may be interpreted
and applied inconsistently by different agencies or authorities, and inconsistently with our current policies and practices. New laws,
regulations, and other government directives in the PRC may also be costly to comply with, and such compliance or any associated inquiries
or investigations or any other government actions may:</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></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"></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">Delay
or impede our development,</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></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"></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">Result
in negative publicity or increase our operating costs,</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></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"></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">Require
significant management time and attention, and</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></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"></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">Subject
us to remedies, administrative penalties and even criminal liabilities that may harm our business, including fines assessed for our current
or historical operations, or demands or orders that we modify or even cease our business practices.</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
promulgation of new laws or regulations, or the new interpretation of existing laws and regulations, in each case that restrict or otherwise
unfavorably impact the ability or manner in which we conduct our business and could require us to change certain aspects of our business
to ensure compliance, which could decrease demand for our products, reduce revenues, increase costs, require us to obtain more licenses,
permits, approvals or certificates, or subject us to additional liabilities. To the extent any new or more stringent measures are required
to be implemented, our business, financial condition and results of operations could be adversely affected as well as materially decrease
the value of our Ordinary Shares.&#160;</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>If
the Chinese government chooses to exert more oversight and control over offerings that are conducted overseas and/or foreign investment
in China-based issuers, such action could significantly limit or completely hinder our ability to offer or continue to offer securities
to investors outside of China and, as a result, cause the value of such securities to significantly decline or be worthless.</i></b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Recent
statements by the Chinese government have indicated an intent to exert more oversight and control over offerings that are conducted outside
of China and/or foreign investments in China based issuers. The PRC has recently promulgated new rules that require companies collecting
or holding large amounts of data to undergo a cybersecurity review prior to listing in foreign countries, a move that will significantly
tighten oversight over China-based internet giants. The Measures for Cybersecurity Review (2021 version) was promulgated on December
28, 2021 and became effective on February 15, 2022. These measures specify that any &#8220;online platform operators&#8221; controlling
the personal information of more than one million users which seek to list on a foreign stock exchange are subject to prior cybersecurity
review.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
our business belongs to the medical instrument industry in China, and our business does not involve the collection of user data or involve
any other type of restricted industry, our business is generally outside the scope of the Measures for Cybersecurity Review. Based on
the advice of counsel and our understanding of currently applicable PRC laws and regulations, our recent registered initial public offering
in the U.S. was not subject to the review or prior approval of the CAC or the CSRC. Uncertainties still exist, however, due to the possibility
that laws, regulations or policies in the PRC could change or rapidly evolve in the future. Any future action by the PRC government expanding
the categories of industries and companies whose foreign securities offerings are subject to review by the CSRC or the CAC could significantly
limit or completely hinder our ability to offer or continue to offer securities to investors and could cause the value of such securities
to significantly decline or be worthless.</span></p><div>

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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Potential
Chinese governmental and regulatory interference could significantly limit or completely hinder our ability to offer or continue to offer
securities to investors and cause the value of such securities to significantly decline or be worthless.</i></b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
July 6, 2021, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council
jointly issued the &#8220;Opinions on Severely Cracking Down on Illegal Securities Activities According to Law,&#8221; or the Opinions.
The Opinions emphasized the need to strengthen the administration over illegal securities activities, and the need to strengthen the
supervision over overseas listings by Chinese companies. Effective measures, such as promoting the construction of relevant regulatory
systems will be taken to deal with the risks and incidents of China-concept overseas listed companies, and cybersecurity and data privacy
protection requirements and similar matters.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
December 24, 2021, the CSRC released the Administrative Provisions of the State Council Regarding the Overseas Issuance and Listing of
Securities by Domestic Enterprises (Draft for Comments), or the Administration Provisions, and the Measures for the Overseas Issuance
of Securities and Listing Record-Filings by Domestic Enterprises (Draft for Comments), or collectively the Draft Rules Regarding Overseas
Listing, which were published for public comments only with the comment period expired on January 23, 2022. The Draft Rules Regarding
Overseas Listing lay out the filing regulation arrangement for both direct and indirect overseas listing, and clarify the determination
criteria for indirect overseas listing in overseas market.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Draft Rules Regarding Overseas Listing stipulate that the Chinese-based companies, or the issuer, shall fulfill the filing procedures
within three working days after the issuer makes an application for initial public offering and listing in an overseas market. The required
filing materials for an initial public offering and listing should include at least the following: record-filing report and related undertakings;
regulatory opinions, record-filing, approval and other documents issued by competent regulatory authorities of relevant industries (if
applicable); and security assessment opinion issued by relevant regulatory authorities (if applicable); PRC legal opinion; and prospectus.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
addition, an overseas offering and listing is prohibited under any of the following circumstances: (1) if the intended securities offering
and listing is specifically prohibited by national laws and regulations and relevant provisions; (2) if the intended securities offering
and listing may constitute a threat to or endangers national security as reviewed and determined by competent authorities under the State
Council in accordance with law; (3) if there are material ownership disputes over the equity, major assets, and core technology, etc.
of the issuer; (4) if, in the past three years, the domestic enterprise or its controlling shareholders or actual controllers have committed
corruption, bribery, embezzlement, misappropriation of property, or other criminal offenses disruptive to the order of the socialist
market economy, or are currently under judicial investigation for suspicion of criminal offenses, or are under investigation for suspicion
of major violations; (5) if, in past three years, directors, supervisors, or senior executives have been subject to administrative punishments
for severe violations, or are currently under judicial investigation for suspicion of criminal offenses, or are under investigation for
suspicion of major violations; (6) other circumstances as prescribed by the State Council. The Administration Provisions defines the
legal liabilities of breaches such as failure in fulfilling filing obligations or fraudulent filing conducts, imposing a fine between
RMB 1 million and RMB 10 million, and in cases of severe violations, a parallel order to suspend relevant business or halt operation
for rectification, revoke relevant business permits or operational license.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
February 17, 2023, the CSRC promulgated the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies,
or the Trial Measures, and five supporting guidelines, which came into effect on March 31, 2023. The Trial Measures and its supporting
guidelines, reiterate the basic principles of the Draft Rules Regarding Overseas Listing and impose substantially the same requirements
for the overseas securities offering and listing by domestic enterprises. Pursuant to the Trial Measures, domestic companies that seek
to offer or list securities overseas, both directly and indirectly, shall complete the filing procedures with the CSRC pursuant to the
requirements of the Trial Measures within three working days following its submission of initial public offerings or listing application.
If a domestic company fails to complete the required filing procedures or conceals any material fact or falsifies any major content in
its filing documents, such domestic company may be subject to administrative penalties, such as orders to rectify, warnings, fines, and
its controlling shareholders, actual controllers, the person directly in charge and other directly liable persons may also be subject
to administrative penalties, such as warnings and fines.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">According
to the Notice on the Administrative Arrangements for the Filing of the Overseas Securities Offering and Listing by Domestic Companies
from the CSRC, or the CSRC Notice, which was promulgated on February 17, 2023 and became effective on the same day, the domestic companies
that have already been listed overseas before the effective date of the Trial Measures (i.e. March 31, 2023) shall be deemed as existing
issuers (the &#8220;Existing Issuers&#8221;). Existing Issuers are not required to complete the filing procedures immediately, and they
shall be required to file with the CSRC for any subsequent offerings. Further, according to the CSRC Notice, domestic companies obtained
approval from overseas regulatory authorities or securities exchanges (for example, the effectiveness of a registration statement for
offering and listing in the U.S. has been approved) for their indirect overseas offering and listing prior to March 31, 2023 but have
not yet completed their indirect overseas issuance and listing, are granted a six-month transition period from March 31, 2023 to September
30, 2023. Those issuers that complete their indirect overseas offering and listing within such six-month period are deemed as Existing
Issuers and are not required to file with the CSRC for their indirect overseas offerings and listings. Within such six-month transition
period, however, if such domestic companies fail to complete their indirect overseas issuance and listing, they shall complete the filing
procedures with the CSRC.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">However,
since the Trial Measures were newly promulgated, their interpretation, application and enforcement remain unclear. If the filing procedure
with the CSRC under the Trial Measures is required for any subsequent offerings, listing or any other capital raising activities, which
may subject us to additional compliance requirements in the future, we cannot assure you that we will be able to get the clearance of
filing procedures under the Trial Measures on a timely basis, or at all. If we do not complete any required record-filing or if we incorrectly
conclude that record-filing is not required or if the CSRC or other regulatory agencies promulgate new rules, explanations or interpretations
requiring that we obtain their prior approvals or record-filing for any follow-on offering, we may be unable to obtain such approvals
and record-filing which could significantly limit or completely hinder our ability to offer or continue to offer securities to our investors.&#160;</span></p><div>

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Furthermore,
the PRC government authorities may strengthen oversight and control over offerings that are conducted overseas and/or foreign investment
in China-based issuers like us. Such actions taken by the PRC government authorities may intervene or influence our operations at any
time, which are beyond our control. Therefore, any such action may adversely affect our operations and significantly limit or hinder
our ability to offer or continue to offer securities and reduce the value of such securities.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of the date of this report, we and our PRC subsidiaries have not been involved in any investigations on cybersecurity review initiated
by the Cyber Administration of China or related governmental regulatory authorities, and have not received any requirements to obtain
permissions from any PRC authorities to issue our Ordinary Shares to foreign investors or were denied such permissions by any PRC authorities.
However, given the current PRC regulatory environment, it is uncertain when and whether we or our PRC subsidiaries, will be required
to obtain permission from the PRC government to list on U.S. exchanges in the future, and even when such permission is obtained, whether
it will be denied or rescinded.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have been closely monitoring regulatory developments in China regarding any necessary approvals from the CSRC or other PRC governmental
authorities required for overseas listings. As of the date of this report, except for the potential uncertainties disclosed above, we
have not received any inquiry, notice, warning, sanctions or regulatory objection from the CSRC or other PRC governmental authorities.
However, there remains significant uncertainty as to the enactment, interpretation and implementation of regulatory requirements related
to overseas securities offerings and other capital markets activities.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; 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
and operations.</i></b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Substantially
all of our assets and operations are located in the PRC. Accordingly, our business, financial condition, results of operations and prospects
may be influenced to a significant degree by political, economic and social conditions in the PRC generally. The Chinese economy differs
from the economies of most developed countries in many respects, including the level of government involvement, development, growth rate,
control of foreign exchange and allocation of resources. Although the Chinese 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 the PRC 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 the PRC&#8217;s economic growth through allocating resources, controlling payment
of foreign currency-denominated obligations, setting monetary policy and providing preferential treatment to particular industries or
companies.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">While
the Chinese economy has experienced significant growth over past decades, growth has been uneven, both geographically and among various
sectors of the economy. Any adverse changes in economic conditions in the PRC, in the policies of the Chinese government or in the laws
and regulations in the PRC could have a material adverse effect on the overall economic growth of the PRC. Such developments could adversely
affect our business and operating results, lead to a reduction in demand for our services and adversely affect our competitive position.
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 nonetheless 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 adjustment, to control the pace
of economic growth. These measures may cause decreased economic activity in the PRC, which may adversely affect our business and operating
results.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Non-compliance
with labor-related laws and regulations of the PRC may have an adverse impact on our financial condition and results of operation.</i></b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
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 fund, medical insurance, work-related injury insurance, unemployment insurance
and childbearing insurance to designated government agencies for the benefit of our employees. Pursuant to the PRC Labor Contract Law,
or the Labor Contract Law, that became effective in January 2008 and its implementing rules that became effective in September 2008 and
was amended in July 2013, employers are subject to stricter requirements in terms of signing labor contracts, minimum wages, paying remuneration,
determining the term of employees&#8217; probation and unilaterally terminating labor contracts. In the event that we decide to terminate
some of our employees or otherwise change our employment or labor practices, the Labor Contract Law and its implementation rules may
limit our ability to effect those changes in a desirable or cost-effective manner, which could adversely affect our business and results
of operations. We believe our current practice complies with the Labor Contract Law and its amendments. However, the relevant governmental
authorities may take a different view and impose fines on us.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
the interpretation and implementation of labor-related laws and regulations are still evolving, we cannot assure you that our employment
practice does not and will not violate labor-related laws and regulations in China, which may subject us to labor disputes or government
investigations. If we are deemed to have violated relevant labor laws and regulations, we could be required to provide additional compensation
to our employees and our business, financial condition 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; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>PRC&#8217;s
economic, political and social conditions, as well as changes in any government policies, laws and regulations, could have a material
adverse effect on our business. </i></b></span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">All
of our operations are located in the PRC and substantially of our net revenues are derived from customers where the contracting entity
is located in the PRC. Accordingly, our business, financial condition, results of operations, prospects and certain transactions we may
undertake may be subject, to a significant extent, to economic, political and legal developments in the PRC.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">PRC&#8217;s
economy differs from the economies of most developed countries in many respects, including the amount of government involvement, level
of development, growth rate, control of foreign exchange and allocation of resources. Although the PRC&#8217;s economy has been transitioning
from a planned economy to a more market-oriented economy since the late 1970s, the PRC government continues to play a significant role
in regulating industry development by imposing industrial policies. The PRC government also exercises significant control over the PRC&#8217;s
economic growth through allocating resources, controlling the incurrence and payment of foreign currency-denominated obligations, setting
monetary policy and providing preferential treatment to particular industries or companies. Changes in any of these policies, laws and
regulations could adversely affect the economy in the PRC and could have a material adverse effect on our business.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
PRC government has implemented various measures to encourage foreign investment and sustainable economic growth and to guide the allocation
of financial and other resources. However, we cannot assure you that the PRC government will not repeal or alter these measures or introduce
new measures that will have a negative effect on us. PRC&#8217;s social and political conditions may change and become unstable. Any
sudden changes to PRC&#8217;s political system or the occurrence of widespread social unrest could have a material adverse effect on
our business and results of operations.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Uncertainties
with respect to the PRC legal system could adversely affect us.</i></b></span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
PRC legal system is a civil law system based on written statutes. Unlike the common law system, prior court decisions under the civil
law system may be cited for reference but have limited precedential value.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
1979, the PRC government began to promulgate a comprehensive system of laws and regulations governing economic matters generally. The
overall effect of legislation over the past three decades has significantly enhanced the protections afforded to various forms of foreign
investments in the PRC. However, the PRC has not developed a fully integrated legal system, and recently enacted laws and regulations
may not sufficiently cover all aspects of economic activities in the PRC. In particular, the interpretation and enforcement of these
laws and regulations involve uncertainties. Since PRC administrative and court authorities have significant discretion in interpreting
and implementing statutory provisions and contractual terms, it may be difficult to evaluate the outcome of administrative and court
proceedings and the level of legal protection we enjoy. These uncertainties may affect our judgment on the relevance of legal requirements
and our ability to enforce our contractual rights or tort claims. In addition, these regulatory uncertainties may be exploited through
unmerited or frivolous legal actions or threats in attempts to extract payments or benefits from us.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Furthermore,
the PRC legal system is based in part on government policies and internal rules, some of which are not published on a timely basis or
at all and may have a retroactive effect. As a result, we may not be aware of our violation of any of these policies and rules until
sometime after the violation. In addition, any administrative and court proceedings in the PRC may be protracted, resulting in substantial
costs and diversion of resources and management attention.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>You
may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing actions in the PRC against
us or our management named in the report based on foreign laws.</i></b></span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
conduct substantially all of our operations in the PRC, and substantially all of our assets are located in the PRC. In addition, our
current officers reside within PRC and are PRC nationals. As a result, it may be difficult for our shareholders to effect service of
process upon us or those persons inside the PRC. In addition, the PRC does not have treaties providing for the reciprocal recognition
and enforcement of judgments of courts with the Cayman Islands and many other countries and regions. Therefore, recognition and enforcement
in the PRC of judgments of a court in any of these non-PRC jurisdictions in relation to any matter not subject to a binding arbitration
provision may be difficult or impossible.</span></p><div>

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

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
rely principally on dividends and other distributions on equity from our PRC subsidiaries for our cash requirements, including for services
of any debt we may incur.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
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, determined in accordance
with PRC accounting standards and regulations. In addition, each of our PRC subsidiaries, as a Foreign Invested Enterprise, or FIE, are
required to draw 10% of its after-tax profits each year, if any, to fund a common reserve, which may stop drawing its after-tax profits
if the aggregate balance of the common reserve has already accounted for over 50 percent of its registered capital. These reserves are
not distributable as cash dividends. If our PRC subsidiaries incur debt on their own behalf in the future, the instruments governing
the debt may restrict their ability to pay dividends or make other payments to us. Any limitation on the ability of our PRC subsidiaries
to distribute dividends or other payments to their respective shareholders could materially and adversely limit our ability to grow,
make investments or acquisitions that could be beneficial to our business, pay dividends or otherwise fund and conduct our business.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
addition, the Enterprise Income Tax Law and its implementation rules provide that a withholding tax rate of up to 10% will be applicable
to dividends payable by Chinese companies to non-PRC-resident enterprises unless otherwise exempted or reduced according to treaties
or arrangements between the PRC central government and governments of other countries or regions where the non-PRC resident enterprises
are incorporated.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>PRC
regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion
may delay us from using the proceeds of future securities offerings to make loans or additional capital contributions to our PRC subsidiaries,
which could materially and adversely affect our liquidity and our ability to fund and expand our business.</i></b></span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Any
funds we transfer to our PRC subsidiaries, either as a shareholder loan or as an increase in registered capital, are subject to approval
by or registration with relevant governmental authorities in the PRC. According to the relevant PRC regulations on foreign-invested enterprises,
or FIEs, in the PRC, capital contributions to our PRC subsidiaries are subject to the approval of or filing with the Ministry of Commerce,
or MOFCOM or its local branches and registration with a local bank authorized by the State Administration of Foreign Exchange, or SAFE.
In addition, (i) a foreign loan of less one year duration procured by our PRC subsidiaries is required to be registered with SAFE or
its local branches and (ii) a foreign loan of one year duration or more procured by our PRC subsidiaries is required to be applied to
the NDRC in advance for undergoing recordation registration formalities. Any medium or long-term loan to be provided by us to our PRC
operating subsidiaries, must be registered with the NDRC and the SAFE or its local branches. We may not be able to complete such registrations
on a timely basis, with respect to future capital contributions or foreign loans by us to our PRC subsidiaries. If we fail to complete
such registrations, our ability to use the proceeds of any future securities offerings and to capitalize our PRC operations may be negatively
affected, which could adversely affect our liquidity and our ability to fund and expand our business.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
March 30, 2015, the SAFE promulgated the Circular on Reforming the Management Approach Regarding the Foreign Exchange Capital Settlement
of Foreign-Invested Enterprises, or SAFE Circular 19, which took effect as of June 1, 2015. SAFE Circular 19 launched a nationwide reform
of the administration of the settlement of the foreign exchange capitals of FIEs and allows FIEs to settle their foreign exchange capital
at their discretion, but continues to prohibit FIEs from using the Renminbi fund converted from their foreign exchange capital for expenditure
beyond their business scopes, providing entrusted loans or repaying loans between nonfinancial enterprises. The SAFE issued the Circular
on Reforming and Regulating Policies on the Control over Foreign Exchange Settlement of Capital Accounts, or SAFE Circular 16, effective
in June 2016. Pursuant to SAFE Circular 16, enterprises registered in China may also convert their foreign debts from foreign currency
to Renminbi on a self-discretionary basis. SAFE Circular 16 provides an integrated standard for conversion of foreign exchange under
capital account items (including but not limited to foreign currency capital and foreign debts) on a self-discretionary basis which applies
to all enterprises registered in China. SAFE Circular 16 reiterates the principle that Renminbi converted from foreign currency-denominated
capital of a company may not be directly or indirectly used for purposes beyond its business scope or prohibited by PRC laws or regulations,
while such converted Renminbi shall not be provided as loans to its non-affiliated entities. On October 23, 2019, the SAFE issued the
Notice of the State Administration of Foreign Exchange on Further Facilitating Cross-border Trade and Investment, or the SAFE Circular
28, which, among other things, expanded the use of foreign exchange capital to domestic equity investment area. The foreign-invested
enterprises, whose business scope do not include equity investment, are allowed to lawfully make domestic equity investments by using
their capital on the premise without violation to prevailing special administrative measures for access of foreign investments (negative
list) and the authenticity and compliance with the regulations of domestic investment projects. As this circular is relatively new, there
remains uncertainty as to its interpretation and application and any other future foreign exchange related rules. Violations of these
Circulars could result in severe monetary or other penalties. SAFE Circular 19, SAFE Circular 16 and SAFE Circular 28 may significantly
limit our ability to use Renminbi converted from the net proceeds of future securities offerings to fund our PRC subsidiaries, to invest
in or acquire any other PRC companies through our PRC subsidiaries, which may adversely affect our business, financial condition and
results of operations.&#160;&#160;</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Although
the audit report included in this report was issued by U.S. auditors who are currently inspected by the PCAOB, if it is later determined
that the PCAOB is unable to inspect or investigate our auditor completely, investors would be deprived of the benefits of such inspection
and our Ordinary Shares may be delisted or prohibited from trading.</i></b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The audit report included in this report for our 2022 and 2021 fiscal
year was issued by Kreit &amp; Chiu CPA LLP (&#8220;KC&#8221;), a U.S.-based accounting firm that is registered with the PCAOB and can
be inspected by the PCAOB. The audit report included in this report for our 2020 fiscal year was issued by Briggs &amp; Veselka Co. (&#8220;B&amp;V&#8221;),
which was also a U.S.-based accounting firm that was registered with the PCAOB and can be inspected by the PCAOB. We have no intention
of engaging any auditor not based in the U.S. and not subject to regular inspection by the PCAOB. As an auditor of companies that are
registered with the SEC and publicly traded in the United States and a firm registered with the PCAOB, KC is required under the laws of
the United States to undergo regular inspections by the PCAOB to assess its compliance with the laws of the United States and professional
standards. If we were to engage a different auditor at any time in the future, we would engage an auditor that is U.S.-based and subject
to full PCAOB inspection with all materials related to the audit of our financial statements accessible to the PCAOB. There is no guarantee,
however, that any future auditor engaged by the Company would remain subject to full PCAOB inspection during the entire term of our engagement.
In such case, we will engage a new qualified and fully inspected auditor, which may result in us delaying or restating our financial statements.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
PCAOB was unable to conduct inspections in the PRC without the approval of Chinese government authorities. If it is later determined
that the PCAOB is unable to inspect or investigate our auditor completely, investors may be deprived of the benefits of such inspection.
Any audit reports not issued by auditors that are completely inspected by the PCAOB, or a lack of PCAOB inspections of audit work undertaken
in the PRC that prevents the PCAOB from regularly evaluating our auditors&#8217; audits and their quality control procedures, could result
in a lack of assurance that our financial statements and disclosures are adequate and accurate.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
part of a continued regulatory focus in the U. S. on access to audit and other information currently protected by national law, in particular
PRC&#8217;s, in June 2019, a bipartisan group of lawmakers introduced bills in both houses of the U.S. Congress which , if passed, would
require the SEC to maintain a list of issuers for which PCAOB was not able to inspect or investigate the audit work performed by a foreign
public accounting firm completely. The proposed Ensuring Quality Information and Transparency for Abroad-Based Listings on our Exchanges
(&#8220;EQUITABLE&#8221;) Act prescribes increased disclosure requirements for these issuers and, beginning in 2025, the delisting from
U.S. national securities exchanges such as the Nasdaq of issuers included on the SEC&#8217;s list for three consecutive years. It is
unclear if this proposed legislation will be enacted. Furthermore, there have been recent deliberations within the U.S. government regarding
potentially limiting or restricting China-based companies from accessing U.S. capital markets. On May 20, 2020, the U.S. Senate passed
the Holding Foreign Companies Accountable Act (the &#8220;HFCAA&#8221;), which includes requirements for the SEC to identify issuers
whose audit work is performed by auditors that the PCAOB is unable to inspect or investigate completely because of a restriction imposed
by a non-U.S. authority in the auditor&#8217;s local jurisdiction. The U.S. House of Representatives passed the HFCAA on December 2,
2020, and the HFCAA was signed into law on December 18, 2020. Additionally, in July 2020, the U.S. President&#8217;s Working Group on
Financial Markets issued recommendations for actions that can be taken by the executive branch, the SEC, the PCAOB or other federal agencies
and department with respect to Chinese companies listed on U.S. stock exchanges and their audit firms, in an effort to protect investors
in the United States. In response, on November 23, 2020, the SEC issued guidance highlighting certain risks (and their implications to
U.S. investors) associated with investments in China-based issuers and summarizing enhanced disclosures the SEC recommends China-based
issuers make regarding such risks. On December 2, 2021, the SEC adopted final rules relating to the implementation of certain disclosure
and documentation requirements of the HFCAA. We will be required to comply with these rules if the SEC identifies us as having a &#8220;non-inspection&#8221;
year (as defined in the interim final rules) under a process to be subsequently established by the SEC. The SEC is assessing how to implement
other requirements of the HFCAA, including the listing and trading prohibition requirements described above. Under the HFCAA, our securities
may be prohibited from trading on the Nasdaq or other U.S. stock exchanges if our auditor is not inspected by the PCAOB for three consecutive
years, and this ultimately could result in our Ordinary Shares being delisted. Furthermore, on June 22, 2021, the U.S. Senate passed
the Accelerating Holding Foreign Companies Accountable Act (&#8220;AHFCAA&#8221;), which, if enacted, would amend the HFCAA and 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 instead of three. 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 PCAOB is unable to inspect or investigate
completely registered public accounting firms located in a foreign jurisdiction because of a position taken by one or more authorities
in that jurisdiction. On December 16, 2021, the PCAOB issued a Determination Report which found that the PCAOB is unable to inspect or
investigate completely registered public accounting firms headquartered in: (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. On December 23, 2022, the AHFCAA was enacted, which
amended the HFCAA by requiring 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 instead of three, thus reducing the time period for triggering the prohibition
on trading. On August 26, 2022, the China Securities Regulatory Commission (the &#8220;CSRC&#8221;), 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 the PCAOB 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 will consider the need to issue a new determination.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Should
the PCAOB be unable to fully conduct inspection of our auditor&#8217;s work papers in the PRC, it will make it difficult to evaluate
the effectiveness of our auditor&#8217;s audit or quality control procedures. Investors may consequently lose confidence in our reported
financial information and procedures or quality of the financial statements, which would adversely affect us and our securities.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
are a &#8220;controlled company&#8221; within the meaning of the Nasdaq listing rules, and may follow certain exemptions from certain
corporate governance requirements that could adversely affect our public shareholders.</i></b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
largest shareholder, Mr. Yongjun Liu, owns more than a majority of the voting power of our outstanding Ordinary Shares. Under the Nasdaq
listing rules, a company of which more than 50% of the voting power is held by an individual, group, or another company is a &#8220;controlled
company&#8221; and is permitted to phase in its compliance with the independent committee requirements. Although we do not intend to
rely on the &#8220;controlled company&#8221; exemptions under the Nasdaq listing rules even if we are deemed a &#8220;controlled company,&#8221;
we could elect to rely on these exemptions in the future. If we were to elect to rely on the &#8220;controlled company&#8221; exemptions,
a majority of the members of our board of directors might not be independent directors and our nominating and corporate governance and
compensation committees might not consist entirely of independent directors. Accordingly, if we rely on the exemptions, during the period
we remain a controlled company and during any transition period following a time when we are no longer a controlled company, you would
not have the same protections afforded to shareholders of companies that are subject to all of the corporate governance requirements
of Nasdaq.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Fluctuations
in exchange rates could have a material and adverse effect on our results of operations and the value of your investment.</i></b></span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
value of the Renminbi against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in political
and economic conditions and the foreign exchange policy adopted by the PRC government. It is difficult to predict how long such appreciation
of RMB against the U.S. dollar may last and when and how the relationship between the RMB and the U.S.&#160;dollar may change again.
All of our revenues and substantially all of our costs are denominated in Renminbi. We rely on dividends paid by our operating subsidiaries
in China for our cash needs. Any significant revaluation of Renminbi may materially and adversely affect our results of operations and
financial position reported in Renminbi when translated into U.S. dollars, and the value of, and any dividends payable on, the Ordinary
Shares in U.S. dollars. To the extent that we need to convert U.S. dollars into Renminbi for our operations, appreciation of the Renminbi
against the U.S. dollar would have an adverse effect on the Renminbi amount we would receive. Conversely, if we decide to convert our
Renminbi into U.S. dollars for the purpose of making payments for dividends on our Ordinary Shares or for other business purposes, appreciation
of the U.S. dollar against the Renminbi would have a negative effect on the U.S. dollar amount.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Governmental
control of currency conversion may limit our ability to utilize our revenues effectively and affect the value of your investment.</i></b></span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
PRC government imposes controls on the convertibility of the Renminbi into foreign currencies and, in certain cases, the remittance of
currency out of China. We receive substantially all of our revenues in Renminbi. Under our current corporate structure, we primarily
rely on dividend payments from our PRC subsidiaries to fund any cash and financing requirements we may have. Under existing PRC foreign
exchange regulations, payments of current account items, including profit distributions, interest payments and trade and service-related
foreign exchange transactions, can be made in foreign currencies without prior approval of SAFE by complying with certain procedural
requirements. Specifically, under the existing exchange restrictions, without prior approval of SAFE, cash generated from the operations
of our PRC subsidiaries in China may be used to pay dividends to our company. However, approval from or registration with appropriate
government authorities is required, in principle, where RMB is to be converted into foreign currency and remitted out of China to pay
capital expenses such as the repayment of loans denominated in foreign currencies. As a result, we need to obtain SAFE approval to use
cash generated from the operations of our PRC subsidiaries to pay off their respective debt in a currency other than Renminbi owed to
entities outside China, or to make other capital expenditure payments outside China in a currency other than Renminbi. The PRC government
may at its discretion restrict access to foreign currencies for current account transactions in the future. If the foreign exchange control
system prevents us from obtaining sufficient foreign currencies to satisfy our foreign currency demands, we may not be able to pay dividends
in foreign currencies to our shareholders, including holders of the Ordinary Shares.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Certain
PRC regulations may make it more difficult for us to pursue growth through acquisitions.</i></b></span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Among
other things, the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors (&#8220;M&amp;A Rules&#8221;)
and Anti-Monopoly Law of the People&#8217;s Republic of China promulgated by the Standing Committee of the NPC which became effective
in 2008 and amended in 2022 (&#8220;Anti-Monopoly Law&#8221;), established additional procedures and requirements that could make merger
and acquisition activities by foreign investors more time-consuming and complex. Such regulation requires, among other things, that State
Administration for Market Regulation (&#8220;SAMR&#8221;) be notified in advance of any change-of-control transaction in which a foreign
investor acquires control of a PRC domestic enterprise or a foreign company with substantial PRC operations, if certain thresholds under
the Provisions of the State Council on the Standard for Declaration of Concentration of Business Operators, issued by the State Council
in 2008 and amended in 2018, are triggered. Moreover, the Anti-Monopoly Law requires that transactions which involve the national security,
the examination on the national security shall also be conducted according to the relevant provisions of the State. In addition, PRC
Measures for the Security Review of Foreign Investment which became effective in January 2021 require acquisitions by foreign investors
of PRC companies engaged in military-related or certain other industries that are crucial to national security be subject to security
review before consummation of any such acquisition. We may pursue potential strategic acquisitions that are complementary to our business
and operations.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Complying
with the requirements of these regulations to complete such transactions could be time-consuming, and any required approval processes,
including obtaining approval or clearance from the MOFCOM, 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; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>PRC
regulations relating to the establishment of offshore special purpose 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, limit our PRC
subsidiaries&#8217; ability to increase their registered capital or distribute profits to us, or may otherwise adversely affect us.</i></b></span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
July 2014, 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, to replace the Notice on Relevant
Issues Concerning Foreign Exchange Administration for Domestic Residents&#8217; Financing and Roundtrip Investment Through Offshore Special
Purpose Vehicles, or SAFE Circular 75, which ceased to be effective upon the promulgation of SAFE Circular 37. 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 make in the future.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; 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, will be 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 filed 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. If any PRC shareholder of such SPV fails to make
the required registration or to update the previously filed 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 subsidiary in China. On February&#160;13, 2015, the SAFE promulgated
a Notice on Further Simplifying and Improving Foreign Exchange Administration Policy on Direct Investment, or SAFE Notice 13, which became
effective on June&#160;1, 2015. Under SAFE Notice 13, applications for foreign exchange registration of inbound foreign direct investments
and outbound overseas direct investments, including those required under SAFE Circular 37, will be filed with qualified banks instead
of SAFE. The qualified banks will directly examine the applications and accept registrations under the supervision of SAFE.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Certain
of our shareholders that we are aware of are subject to SAFE regulations, and we expect all of these shareholders will have completed
all necessary registrations with the local SAFE branch or qualified banks as required by SAFE Circular 37. We cannot assure you, however,
that all of these shareholders will continue to make required filings or updates in a timely manner, or at all. We can provide no assurance
that we are or will in the future continue to be informed of identities of all PRC residents holding direct or indirect interest in our
company. Any failure or inability by such shareholders to comply with SAFE regulations may subject us to fines or legal sanctions, such
as restrictions on our cross-border investment activities or our PRC subsidiaries&#8217; ability to distribute dividends to, or obtain
foreign exchange-denominated loans from, our company or prevent us from making distributions or paying dividends. As a result, our business
operations and our ability to make distributions to you 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; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Furthermore,
as these foreign exchange regulations are still relatively new and their interpretation and implementation have been constantly evolving,
it is unclear how these regulations, and any future regulation concerning offshore or cross-border 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. 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; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of the date of this disclosure, to our knowledge these PRC resident shareholders &#160;&#160;have applied for foreign exchange registration
under the SAFE Circular 37 and other related rules. Although they are in the process of making foreign exchange registration, they may
still face the above said possible fines in accordance with the PRC Laws.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Failure
to make adequate contributions to various employee benefit plans and withhold individual income tax on employees&#8217; salaries as required
by PRC regulations may subject us to&#160;penalties.</i></b></span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Companies
operating in the PRC are required to participate in various government-mandated employee benefit contribution plans, including certain
social insurance, housing funds and other welfare-oriented payment obligations, and contribute to the plans in amounts equal to certain
percentages of salaries, including bonuses and allowances, of our employees up to a maximum amount specified by the local government
from time to time at locations where we operate our businesses. The requirement of employee benefit contribution plans has not been implemented
consistently by the local governments in the PRC given the different levels of economic development in different locations. Companies
operating in the PRC are also required to withhold individual income tax on employees&#8217; salaries based on the actual salary of each
employee upon payment. We may be subject to late fees and fines in relation to the underpaid employee benefits and under-withheld individual
income tax, our financial condition and results of operations may be adversely affected.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Any
failure to comply with PRC regulations regarding the registration requirements for employee stock incentive plans may subject the PRC
plan participants or us to fines and other legal or administrative sanctions.</i></b></span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pursuant
to the Notices on Issues Concerning the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plan
of Overseas Publicly-Listed Company, promulgated by SAFE in 2012, or SAFE Notices No.&#160;7, PRC citizens and non-PRC citizens who reside
in China for a continuous period of no less than one year who participate in any stock incentive plan of an overseas publicly listed
company offered to the director, supervisor, senior management and other employees of, and any individual who has labor relationship
with its domestic affiliated entities are required to register with SAFE through a domestic qualified agent, which could be a PRC subsidiary
of such overseas listed company, and complete certain other procedures. In addition, an overseas entrusted institution must be retained
to handle matters in connection with the exercise or sale of stock options and the purchase or sale of shares and interests. We and our
directors, executive officers and other employees who are PRC citizens or who reside in the PRC for a continuous period of no less than
one year and who have been granted stock options are subject to these regulations. Failure to complete the SAFE registrations for our
employee incentive plans may subject them to fines and legal sanctions and may also limit our ability to contribute additional capital
into our PRC subsidiaries and limit our PRC subsidiaries&#8217; ability to distribute dividends to us. We also face regulatory uncertainties
that could restrict our ability to adopt additional incentive plans for our directors, executive officers and employees under PRC&#160;law.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
addition, the State Administration of Taxation, or SAT, has issued certain circulars concerning employee stock options and restricted
shares. Under these circulars, our employees working in the PRC who exercise stock options or are granted restricted shares will be subject
to PRC individual income tax. Our PRC subsidiaries have obligations to file documents related to employee stock options or restricted
shares with relevant tax authorities and to withhold individual income taxes of those employees who exercise their share options or are
granted with restricted shares. If our employees fail to pay or we fail to withhold their income taxes according to relevant laws and
regulations, we may face sanctions imposed by the tax authorities or other PRC governmental authorities.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>U.S.
regulatory bodies may be limited in their ability to conduct investigations or inspections of our operations in the PRC.</i></b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Any
disclosure of documents or information located in the PRC by foreign agencies may be subject to jurisdiction constraints and must comply
with the PRC&#8217;s state secrecy laws, which broadly define the scope of &#8220;state secrets&#8221; to include matters involving economic
interests and technologies. There is no guarantee that requests from U.S. federal or state regulators or agencies to investigate or inspect
our operations will be honored by us, by entities who provide services to us or with whom we associate, without violating PRC legal requirements,
especially as those entities are located in the PRC. Furthermore, under the current PRC laws, an on-site inspection of our facilities
by any of these regulators may be limited or prohibited.</span></p><div>

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>If
we are classified as a PRC resident enterprise for PRC income tax purposes, such classification could result in unfavorable tax consequences
to us and our non-PRC shareholders.</i></b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Under
the PRC Enterprise Income Tax Law and its implementation rules, an enterprise established outside of the PRC with its &#8220;<i>de facto</i>&#160;management
body&#8221; within the PRC is considered a &#8220;resident enterprise&#8221; and will be subject to the enterprise income tax on its
global income at the rate of 25%. The implementation rules define the term &#8220;<i>de facto</i>&#160;management body&#8221; as the
body that exercises full and substantial control and overall management over the business, productions, personnel, accounts and properties
of an enterprise. In 2009, the State Administration of Taxation, or SAT, issued a circular, known as SAT Circular 82, which provides
certain specific criteria for determining whether the &#8220;<i>de facto</i>&#160;management body&#8221; of a PRC-controlled enterprise
that is incorporated offshore is located in China. Although this circular applies only to offshore enterprises controlled by PRC enterprises
or PRC enterprise groups, not those 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;<i>de facto</i>&#160;management body&#8221; text should be applied in determining the
tax resident status of all offshore enterprises. According to SAT Circular 82, an offshore incorporated enterprise controlled by a PRC
enterprise or a PRC enterprise group will be regarded as a PRC tax resident by virtue of having its &#8220;<i>de facto</i>&#160;management
body&#8221; in China, and will be subject to PRC enterprise income tax on its global income only if all of the following conditions are
met: (i)&#160;the primary location of the day-to-day operational management is in the PRC; (ii)&#160;decisions relating to the enterprise&#8217;s
financial and human resource matters are made or are subject to approval by organizations or personnel in the PRC; (iii)&#160;the enterprise&#8217;s
primary assets, accounting books and records, company seals, and board of directors and shareholder resolutions are located or maintained
in the PRC; and (iv)&#160;at least 50% of voting board members or senior executives habitually reside in the PRC.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
believe our company is not a PRC resident enterprise for PRC tax purposes. 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;<i>de facto</i>&#160;management
body.&#8221; If the PRC tax authorities determine that our company is a PRC resident enterprise for enterprise income tax purposes, we
would be subject to PRC enterprise income on our worldwide income at the rate of 25%. Furthermore, we would be required to withhold a
10% tax from dividends we pay to our shareholders that are non-resident enterprises. In addition, non-resident enterprise shareholders
may be subject to PRC tax on gains realized on the sale or other disposition of the Ordinary Shares, if such income is treated as sourced
from within the PRC. Furthermore, if we are deemed a PRC resident enterprise, dividends paid to our non-PRC individual shareholders and
any gain realized on the transfer of the Ordinary Shares by such shareholders may be subject to PRC tax at a rate of 20% (which, in the
case of dividends, may be withheld at source by us). These rates may be reduced by an applicable tax treaty, but it is unclear whether
non-PRC shareholders of our company would be able to claim the benefits of any tax treaties between their country of tax residence and
the PRC in the event that we are treated as a PRC resident enterprise. Any such tax may reduce the returns on your investment in our
Ordinary Shares.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
face uncertainty with respect to indirect transfers of equity interests in PRC resident enterprises by their non-PRC holding companies.</i></b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
February&#160;3, 2015, the SAT issued the Public Notice Regarding Certain Corporate Income Tax Matters on Indirect Transfer of Properties
by Non-Tax Resident Enterprises, or SAT Bulletin 7. SAT Bulletin 7 extends its tax jurisdiction to transactions involving the transfer
of taxable assets through offshore transfer of a foreign intermediate holding company. In addition, SAT Bulletin 7 has introduced safe
harbors for internal group restructurings and the purchase and sale of equity through a public securities market. SAT Bulletin 7 also
brings challenges to both foreign transferor and transferee (or other person who is obligated to pay for the transfer) of taxable assets,
as such persons need to determine whether their transactions are subject to these rules and whether any withholding obligation applies.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
October&#160;17, 2017, the 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 enterprise income tax.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Where
a non-resident enterprise transfers taxable assets indirectly by disposing of the equity interests of an overseas holding company, which
is an &#8220;Indirect Transfer,&#8221; 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 may be
subject to PRC enterprise income tax, and the transferee or other person who pays for the transfer is obligated to withhold the applicable
taxes currently at a rate of 10% for the transfer of equity interests in a PRC resident enterprise. 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>

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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
face uncertainties as to the reporting and other implications of certain past and future transactions where PRC taxable assets are involved,
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 Bulletin 7 and/or SAT Bulletin 37. For transfer of shares in our company by investors who
are non-PRC resident enterprises, our PRC subsidiaries may be requested to assist in the filing under SAT Bulletin 7 and/or SAT Bulletin
37. As a result, we may be required to expend valuable resources to comply with SAT Bulletin 7 and/or SAT Bulletin 37 or to request the
relevant transferors from whom we purchase taxable assets to comply with these circulars, or to establish that our company should not
be taxed under these circulars, which may have a material adverse effect on our financial condition and results of operations.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Risks
Related to Our Ordinary Shares</b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>The
market price for our Ordinary Shares may be volatile.</i></b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
trading prices of our Ordinary Shares are likely to be volatile and could fluctuate widely due to factors beyond our control. This may
happen because of broad market and industry factors, like the performance and fluctuation in the market prices or the underperformance
or deteriorating financial results of internet or other companies based in China that have listed their securities in the United States
in recent years. The securities of some of these companies have experienced significant volatility since their initial public offerings,
including, in some cases, substantial price declines in their trading prices. The trading performances of other Chinese companies&#8217;
securities after their offerings, including internet and e-commerce companies, may affect the attitudes of investors toward Chinese companies
listed in the United&#160;States, which consequently may impact the trading performance of our Ordinary Shares, regardless of our actual
operating performance. In addition, any negative news or perceptions about inadequate corporate governance practices or fraudulent accounting,
corporate structure or 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 conducted any inappropriate activities. In addition, securities markets
may from time to time experience significant price and volume fluctuations that are not related to our operating performance, such as
the large decline in share prices in the United&#160;States, China and other jurisdictions in late 2008, early 2009 and the second half
of 2011, which may have a material adverse effect on the market price of our&#160;Ordinary Shares.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
addition to the above factors, the price and trading volume of our Ordinary Shares may be highly volatile due to multiple factors, including
the&#160;following:</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></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"></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">regulatory
developments affecting us, our consumers, or our industry;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></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"></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">conditions
in the medical supplies business and the public perception of the legitimacy and ethics of certain business practices of our competitors
or other market players within the&#160;industry;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></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"></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">announcements
of studies and reports relating to the quality of our product and service offerings or those of our competitors;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></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"></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">changes
in the economic performance or market valuations of other medical supplies businesses;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></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"></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">actual
or anticipated fluctuations in our quarterly results of operations and changes or revisions of our expected results;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></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"></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">changes
in financial estimates by securities research analysts;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></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"></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">announcements
by us or our competitors of new product and service offerings, acquisitions, strategic relationships, joint ventures or capital commitments;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></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"></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">additions
to or departures of our senior management;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></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"></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">detrimental
negative publicity about us, our management or our industry;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></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"></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">fluctuations
of exchange rates between the Renminbi and the U.S.&#160;dollar;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></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"></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">release
or expiry of lock-up or other transfer restrictions on our outstanding Ordinary Shares;&#160;and</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></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"></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">sales
or perceived potential sales of additional Ordinary Shares.</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"></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"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->24<!-- 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; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
trading market for our Ordinary Shares will depend in part on the research and reports that securities or industry analysts publish about
us or our business. If research analysts do not establish and maintain adequate research coverage or if one or more of the analysts who
cover us downgrade shares or publish inaccurate or unfavorable research about our business, the market price for our Ordinary Shares
would likely decline. If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, we could
lose visibility in the financial markets, which, in turn, could cause the market price or trading volume for our Ordinary Shares to&#160;decline.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><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 Ordinary Shares, the market price for our Ordinary Shares and trading volume could decline.</i></b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
trading market for our Ordinary Shares are influenced by research or reports that industry or securities analysts publish about our business.
If industry or securities analysts decide to cover us and in the future downgrade our Ordinary Shares, the market price for our 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 Ordinary Shares to decline.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Because
we do not expect to pay dividends in the foreseeable future, you must rely on price appreciation of our Ordinary Shares for return on
your investment.</i></b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">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 our Ordinary Shares as a source for any future dividend income.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
board of directors has discretion as to whether to distribute dividends, subject to certain restrictions under Cayman Islands law, namely
that our company may only pay dividends out of profits or share premium; 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. In addition, our
shareholders may by ordinary resolution declare a dividend, but no dividend may exceed the amount recommended by our board of directors.
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 subsidiaries, our financial condition, contractual restrictions and other factors deemed relevant by
our board of directors. Accordingly, the return on your investment in our Ordinary Shares will likely depend entirely upon any future
price appreciation of our Ordinary Shares. There is no guarantee that our Ordinary Shares will appreciate in value or even maintain the
price at which you purchased our Ordinary Shares. You may not realize a return on your investment in our Ordinary Shares and you may
even lose your entire investment in our&#160;Ordinary Shares.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Substantial
future sales or perceived potential sales of Ordinary Shares in the public market could cause the price of our Ordinary Shares to&#160;decline.</i></b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Sales
of Ordinary Shares in the public market, or the perception that these sales could occur, could cause the market price of our Ordinary
Shares to decline. As of the date of this report, we have&#160;23,940,000&#160;Ordinary Shares outstanding. All of the 3,940,000 Ordinary
Shares sold in our recent initial public offering are freely transferable without restriction or additional registration under the Securities
Act of 1933, as amended, or the Securities Act. All of our executive officers and directors and shareholders holding at least ten percent
of our Ordinary Shares have agreed not to sell our Ordinary Shares for a period of 365 days following the effective date of our recent
IPO, subject to extension under specified circumstances. Ordinary Shares subject to these lock-up agreements become eligible for sale
in the public market upon expiration of these lock-up agreements, subject to volume and other restrictions as applicable under Rules&#160;144
and&#160;701 under the Securities Act. To the extent shares are released before the expiration of the lock-up period and sold into the
market, the market price of our Ordinary Shares could&#160;decline. Moreover, the perceived risk of this potential dilution could cause
shareholders to attempt to sell their shares and investors to short our Ordinary Shares. These sales also may make it more difficult
for us to sell equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate.</span></p><div>

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
may need additional capital and may sell additional Ordinary Shares or other equity securities or incur indebtedness, which could result
in additional dilution to our shareholders or increase our debt service obligations.</i></b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
may require additional cash resources due to changed business conditions or other future developments, including any investments or acquisitions
we may decide to pursue. If our cash resources are insufficient to satisfy our cash requirements, we may seek to sell additional equity
or debt securities or obtain a credit facility. The sale of additional equity securities or equity-linked debt securities could result
in additional dilution to our shareholders. The incurrence of indebtedness would result in debt service obligations and could result
in operating and financing covenants that would restrict our operations. We cannot assure you that financing will be available in amounts
or terms acceptable to us, if at&#160;all.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Certain
existing shareholders have substantial influence over our company and their interests may not be aligned with the interests of our other
shareholders.</i></b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
directors and officers collectively own an aggregate of 66.56% of the total voting power of our outstanding Ordinary Shares. As a result,
they have substantial influence over our business, including significant corporate actions such as mergers, consolidations, election
of directors and other significant corporate actions.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">They
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 deprive our shareholders of an opportunity to receive a premium for their
shares as part of a sale of our company and may reduce the price of our Ordinary Shares. These actions may be taken even if they are
opposed by our other shareholders. In addition, the significant concentration of share ownership may adversely affect the trading price
of our Ordinary Shares due to investors&#8217; perception that conflicts of interest may exist or arise.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
are an emerging growth company within the meaning of the Securities Act and may take advantage of certain reduced reporting requirements.</i></b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are an &#8220;emerging growth company,&#8221; as defined in the JOBS Act, and we may take advantage of certain exemptions from various
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 of the Sarbanes-Oxley Act of 2002 so long as we are an emerging
growth company. As a result, if we elect not to comply with such auditor attestation requirements, our investors may not have access
to certain information they may deem&#160;important.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
addition, under the JOBS Act, emerging growth companies can also delay adopting new or revised accounting standards until such time as
those standards apply to private companies. We have elected to avail ourselves of an exemption that allows us to delay adopting new or
revised accounting standards until such time as those standards apply to private companies. As a result, we will not be subject to the
same new or revised accounting standards as other public companies that comply with the public company effective dates. We have also
elected to take advantage of certain of the reduced disclosure obligations and may elect to take advantage of other reduced reporting
requirements in future filings. As a result of these elections, the information that we provide to our stockholders may be different
than you might receive from other public reporting companies.</span></p><div>

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><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 U.S. domestic public companies.</i></b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Because
we qualify as a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the securities rules and regulations
in the United&#160;States that are applicable to U.S. domestic issuers, including:</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></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"></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">the
rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form&#160;10-Q or&#160;current reports on Form&#160;8-K;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></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"></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">the
sections of the Exchange Act regulating the solicitation of proxies, consents, or authorizations in respect of a security registered
under the Exchange&#160;Act;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></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"></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">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;&#160;and</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></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"></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">the
selective disclosure rules by issuers of material nonpublic information under Regulation&#160;FD.</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are required to file an annual report on Form&#160;20-F within four months of the end of each fiscal year. In addition, we intend to
publish our financial results on a semi-annual basis in the form of press releases, distributed pursuant to the rules and regulations
of the Nasdaq Global 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 SEC will be less extensive and less timely compared to that required
to be filed with the SEC by U.S.&#160;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.&#160;domestic issuer.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
a company incorporated in the Cayman Islands, we are permitted to adopt certain home country practices in relation to corporate governance
matters that differ significantly from the Nasdaq Global Market corporate governance requirements; these practices may afford less protection
to shareholders than they would enjoy if we complied fully with the Nasdaq Global Market corporate governance requirements. However,
presently, we do not have any immediate plans to rely on home country practice with respect to our corporate governance.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>We
may lose our foreign private issuer status in the future, which could result in significant additional costs and&#160;expenses.</i></b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
discussed above, we are a foreign private issuer and, therefore, we are not required to comply with all of the periodic disclosure and
current reporting requirements of the Exchange Act. The determination of foreign private issuer status is made annually on the last business
day of an issuer&#8217;s most recently completed second fiscal quarter. We would lose our foreign private issuer status if, for example,
more than 50% of our Ordinary Shares are directly or indirectly held by residents of the U.S. and we fail to meet additional requirements
necessary to maintain our foreign private issuer status. In the future, if we lose our foreign private issuer status as of the last date
of our second fiscal quarter, we would be required to file with the SEC periodic reports and registration statements on U.S. domestic
issuer forms beginning on the following January&#160;1, which are more detailed and extensive than the forms available to us as a foreign
private issuer. In such case, we would also have to comply with U.S.&#160;federal proxy requirements, and our officers, directors and
principal shareholders would become subject to the short-swing profit disclosure and recovery provisions of Section&#160;16 of the Exchange
Act. In addition, we would lose our ability to rely upon exemptions from certain corporate governance requirements under the Nasdaq Global
Market listing rules. As a U.S.&#160;listed public company that is not a foreign private issuer, we would incur significant additional
legal, accounting and other expenses that we do not presently incur as a foreign private issuer listed on a U.S.&#160;securities exchange.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>If
we fail to establish and maintain proper internal financial reporting controls, our ability to produce accurate financial statements
or comply with applicable regulations could be impaired.</i></b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Prior
to our initial public offering in February of 2022, we were a private company with limited accounting personnel and other resources with
which to address our internal controls and procedures. Since then, we have been in a continuing process to develop, establish, and put
in place a system to maintain internal controls and procedures that will allow our management to report on, and our independent registered
public accounting firm to attest to, our internal controls over financial reporting if and when required to do so under Section 404 of
the Sarbanes-Oxley Act of 2002. Although our independent registered public accounting firm is not required to attest to the effectiveness
of our internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act until the date we are no longer
an emerging growth company, our management will be required to report on our internal controls over financial reporting under Section
404.</span></p><div>

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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of December 31, 2022, our management assessed the effectiveness of our internal control over financial reporting. The material weaknesses
relate to the fact that the Company does not have accounting personnel with sufficient knowledge of U.S. GAAP and SEC reporting procedures.
Management concluded that as of December 31, 2022, our internal control over financial reporting were ineffective.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
order to address and resolve the foregoing material weakness, we have implemented measures designed to improve our internal control over
financial reporting to remediate this material weakness, including hiring Shanghai Bluehill Advisory Co., Ltd. as our consultant and
who has the requisite training and experience in the preparation of financial statements in compliance with applicable SEC requirements.
With the assistance of our consultant, we are currently in compliance with U.S. GAAP and SEC reporting requirements. In addition to hiring
an outside consultant, we also plan to take remedial measures including (i) hiring more qualified accounting personnel 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; (ii) implementing regular and continuous U.S. GAAP accounting and financial reporting training programs for
our accounting and financial reporting personnel; and (iii) setting up an internal audit function as well as engaging an external consulting
firm to assist us with assessment of Sarbanes-Oxley compliance requirements and improvement of overall internal control.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
implementation of these measures may not fully address the material weaknesses in our internal control over financial reporting, and
we cannot conclude that they have been fully remedied. Our failure to correct theses material weaknesses or our failure to discover and
address any other material weaknesses could result in inaccuracies in our financial statements and could also impair our ability to comply
with applicable financial reporting requirements and related regulatory filings on a timely basis. As a result, our business, financial
condition, results of operations and prospects, as well as the trading price of our Ordinary Shares, may be materially and adversely
affected. Moreover, ineffective internal control over financial reporting significantly hinders our ability to prevent fraud. In addition,
once we cease to be an &#8220;emerging growth company&#8221; as such term is defined in the JOBS Act, our independent registered public
accounting firm must attest to and report on the effectiveness of our internal control over financial reporting. Our management may conclude
that our internal control over financial reporting is not effective. Moreover, even if our management concludes that our internal control
over financial reporting is effective, our independent registered public accounting firm, after conducting its own independent testing,
may issue a report that is qualified if it is not satisfied with our internal controls or the level at which our controls are documented,
designed, operated or reviewed, or if it interprets the relevant requirements differently from us. In addition, as a public company,
our reporting obligations may place a significant strain on our management, operational and financial resources and systems for the foreseeable
future. We may be unable to timely complete our evaluation testing and any required remediation.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; 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-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>ITEM
4. INFORMATION ON THE COMPANY</b></span></p><div>


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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>A. History and Development of the Company</b></span></p><div>


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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are a holding company incorporated under the laws of Cayman Islands on November 10, 2020, by shareholder Yongjun Liu. Our direct subsidiary
is Kang Fu International Medical, a Hong Kong company. Kang Fu International Medical was incorporated on October 13, 2015 by four shareholders,
Yongjun Liu, Yin Liu, Ace Capital Limited and King Tai International Holding Limited. On November 22, 2019, Yongjun Liu acquired 9,300,000
shares from Ace Capital Limited and 4,500,000 shares from King Tai International Holding Limited, respectively. Upon consummation of
such share transfer, Yongjun Liu and Yin Liu constituted all of the shareholders of Kang Fu International Medical, holding 100% shares
of Kang Fu International Medical. On December 21, 2020, we in turn acquired 41,400,000 shares (69%) from Yongjun Liu and 18,600,000 shares
(31%) from Yin Liu, respectively,&#160;resulting in Kang Fu International Medical becoming our wholly owned subsidiary. In exchange for
our acquisition on Kang Fu, we issued a total of 15,935,000 Ordinary Shares to Mr. and Mrs. Liu, who in turn transferred their shares
to a holding company, Bright Accomplish Limited, on December 21, 2020. Bright Accomplish Limited is our controlling shareholder, holding
approximately 66.56% of our Ordinary Shares as of the date of this report.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
operate our business through our indirect subsidiaries in China. Below is a list of our operating subsidiaries in China:</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></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"></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">Yangzhou
Huada Medical Device Co., Ltd., or Yangzhou Huada: a subsidiary wholly owned by Kang Fu International Medical and established in Yangzhou,
Jiangsu Province, PRC on December 24, 2001 with a registered capital of $602,400, which manufactures and sells Class I disposable medical
devices under our own brands, and distributes Class I and Class II disposable medical devices sourced from other manufacturers, to our
domestic customers. Specifically, Yangzhou Huada mainly focuses on the manufacturing, sales and distributions of non-bottled products,
such as brushes, ID bracelets for domestic sales.</span></td>
</tr></table><div>
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</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"></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">Jiangsu
Yada Technology Group Co., Ltd., or Jiangsu Yada: a subsidiary wholly owned by Yangzhou Huada and established in Yangzhou, Jiangsu Province,
PRC on December 5, 1991 with a registered capital of RMB51,390,000, which manufactures and sells Class I and Class II disposable medical
devices under our own brands, and distributes Class I and Class II disposable medical devices sourced from other manufacturers, to our
domestic and overseas customers. Specifically, Jiangsu Yada mainly focuses on overseas sales.</span></td>
</tr></table><div>
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</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"></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">Jiangsu
Huadong Medical Device Industrial Co., Ltd., or Jiangsu Huadong: a subsidiary wholly owned by Jiangsu Yada and established in Yangzhou,
Jiangsu Province, PRC on November 18, 2000 with a registered capital of RMB50,000,000, which manufactures and sells Class I, II and III
disposable medical devices under our own brands, and distributes Class I, II and III disposable medical devices sourced from other manufacturers,
to our domestic and overseas customers. Specifically, Jiangsu Huadong mainly focuses on the manufacturing, sales and distributions of
polyethylene bottled products, such as eye drop bottles and tablet bottles.</span></td>
</tr></table><div>
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</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"></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">Yangzhou
Guanghui Medical Technology Co., Ltd., or Guanghui: a subsidiary wholly owned by Jiangsu Huadong was established in Yangzhou, China on
December 22, 2020 with a registered capital of RMB1,000,000, to mainly manufactures and sells Class II disposable medical devices. Guanghui
has not conduct real business.</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt">&#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"></td><td style="width: 0.25in; text-align: left">&#9679;</td><td style="text-align: justify">Hainan Guoxie Technology Group Co., Ltd., or Hainan Guoxie:
a subsidiary of which 55% of registered capital (subscribed but unpaid registered capital) was acquired by Kang Fu International Medical
from an individual Qin Wang with nil consideration on July 6, 2022, in order to conduct local business activities in Hainan. Hainan Guoxie
was established in Qionghai, Hainan Province, China on October 7, 2021 with a registered capital of RMB100,000,000. Further disclosure
will be made in 6-K regarding the new controlling subsidiary.</td>
</tr></table><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Meihua owns 100% of Kang Fu International Medical.
Kang Fu International Medical owns 100% of Yangzhou Huada and 55% of Hainan Guoxie. Yangzhou Huada owns 100% of Jiangsu Yada. Jiangsu
Yada, in turn, owns 100% of Jiangsu Huadong. Jiangsu Huadong, in turn, owns 100% of the equity interests of Guanghui. The following diagram
illustrates our corporate structure as of the date of this report, including our principal subsidiary and their respective principal subsidiaries.</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><img alt="" src="img_001.jpg"/></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
structure of cash flows within our organization, and a summary of the applicable regulations, is as follows:</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">1.
Our equity structure is a direct holding structure, pursuant to which the overseas entity listed in the U.S., Meihua International Medical
Technologies Co., Ltd. (&#8220;Meihua International&#8221;), directly controls Yangzhou Huada Medical Device Co., Ltd (&#8220;Yangzhou
Huada&#8221;) (the &#8220;WFOE&#8221;) and other domestic operating entities which are directly owned through the Hong Kong company,
Kang Fu International Medical Co., Limited (&#8220;Kang Fu&#8221;).</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">2.
Within our direct holding structure, the cross-border transfer of funds within our corporate group is legal and compliant with the laws
and regulations of the PRC. After foreign investors&#8217; funds enter Meihua International at the close of securities offerings, the
funds can be directly transferred to Kang Fu, and then transferred to subordinate operating entities through the WFOE.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
the Company intends to distribute dividends, the Company will transfer the dividends to Kang Fu in accordance with the laws and regulations
of the PRC, and then Kang Fu will transfer the dividends to Meihua International, and the dividends will be distributed from Meihua International
to all shareholders respectively in proportion to the shares they hold, regardless of whether the shareholders are U.S. investors or
investors in other countries or regions.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">3.
In the reporting periods presented in this annual report, no cash and other asset transfers have occurred among the Company and its subsidiaries;
and no dividends or distributions of a subsidiary has been made to the Company. On February 18, 2022, the Company closed its initial
public offering of Ordinary Shares and received approximately USD 35 million. In March and April 2022, US$17 million was transferred
to Kang Fu, these funds were used to increase the capital of Huada. For the foreseeable future, the Company intends to use the earnings
for research and development, to develop new products and to expand its production capacity. As a result, we do not expect to pay any
cash dividends.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.
Our 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, determined in accordance
with PRC accounting standards and regulations. In addition, each of our PRC subsidiaries is required to set aside at least 10% of its
after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of each of their registered capitals.
These reserves are not distributable as cash dividends. See &#8220;<i>Regulations Relating to Dividend Distributions</i>&#8221; for more
information.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">To
address persistent capital outflows and the RMB&#8217;s depreciation against the U.S. dollar in the fourth quarter of 2016, the People&#8217;s
Bank of China and the State Administration of Foreign Exchange, or SAFE, have implemented a series of capital control measures in the
subsequent months, including stricter vetting procedures for China-based companies to remit foreign currency for overseas acquisitions,
dividend payments and shareholder loan repayments. The PRC government may continue to strengthen its capital controls and our PRC subsidiaries&#8217;
dividends and other distributions may be subject to tightened scrutiny in the future. The PRC government also imposes controls on the
conversion of RMB into foreign currencies and the remittance of currencies out of the PRC. Therefore, we may experience difficulties
in completing the administrative procedures necessary to obtain and remit foreign currency for the payment of dividends from our profits,
if any. Furthermore, if our subsidiaries in the PRC incur debt on their own in the future, the instruments governing the debt may restrict
their ability to pay dividends or make other payments.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
addition, the Enterprise Income Tax Law and its implementation rules provide that a withholding tax at a rate of 10% will be applicable
to dividends payable by Chinese companies to non-PRC-resident enterprises unless reduced under treaties or arrangements between the PRC
central government and the governments of other countries or regions where the non-PRC resident enterprises are tax resident. Pursuant
to the tax agreement between Mainland China and the Hong Kong Special Administrative Region, the withholding tax rate in respect to the
payment of dividends by a PRC enterprise to a Hong Kong enterprise may be reduced to 5% from a standard rate of 10%. However, if the
relevant tax authorities determine that our transactions or arrangements are for the primary purpose of enjoying a favorable tax treatment,
the relevant tax authorities may adjust the favorable withholding tax in the future. Accordingly, there is no assurance that the reduced
5% withholding rate will apply to dividends received by our Hong Kong subsidiary from our PRC subsidiaries. This withholding tax will
reduce the amount of dividends we may receive from our PRC subsidiaries.</span></p><div>

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

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Completion
of the Initial Public Offering (&#8220;IPO&#8221;)</i></b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
February 18, 2022, we closed our initial public offering (&#8220;IPO&#8221;) of 3,940,000 Ordinary Shares, par value US$0.0005 per share
at a public offering price of $10.00 per share, and our Ordinary Shares started to trade on the Nasdaq Global Market under the ticker
symbol &#8220;MHUA&#8221; on February 16, 2022. We sold 3,600,000 shares pursuant to our underwriters&#8217; firm commitment, together
with an additional 340,000 shares sold pursuant to the underwriters&#8217; partial exercise of their over-allotment option.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
total net proceeds to the Company from the IPO, after deducting discounts, expense allowance, and expenses, were approximately $34,576,000.
At the closing of the IPO, the Company deposited $500,000 from the gross proceeds from the IPO into an escrow account established by
Wilmington Trust, National Association, as escrow agent, for purpose of covering potential legal actions against Prime Number Capital
LLC, as a representative of the Underwriters, pursuant to an indemnification escrow agreement.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
a result of certain developments related to the IPO, the Company may face certain legal liabilities and exposure. Specifically, during
the roadshow leading up to the IPO, a Hong Kong investment company named Tai He was referred to the Company by Shengang, the Company&#8217;s
co-underwriter based in the PRC. Tai He, through negotiations with Shengang, asserted that it would participate in the IPO as an investor.
As a development stage PRC medical device company, the Company&#8217;s management had no experience in the U.S. capital markets and relied
on its investment bankers and underwriters in providing guidance and advice concerning its U.S. public offering. Accordingly, the Company
was unaware of the actual motives of Tai He. Based on the Company&#8217;s trust in Shengang and given the circumstances that the Company
was unable to make further verification, the Company hastily entered into the Tai He Agreements.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pursuant
to the Tai He Agreements, Tai He agreed to invest a minimum of $35 million in the IPO subject to the Company making a $7.0 million refundable
deposit and advancing a $3.0 million service fee for investor relations and other services (together, the &#8220;Services&#8221;) payable
to Tai He. The Company, its affiliates and individual shareholders paid the $7.0 million Refundable Deposit and $3.0 million service
fee to Tai He in several installments from January 27, 2022 to March 11, 2022. After March 11, 2022, the Company has made no other payments
to, nor had any direct interaction with, Tai He, and, in actuality, the Company never directly communicated with Tai He during the negotiations,
only communicating about Tai He and the Tai He Agreements through Shengang.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">After
the IPO, through the Company&#8217;s internal risk control process, the Company learned that Tai He does not appear to be an investor
in the Company and, when the Company attempted to inquire about it, Tai He refused to speak with the Company. Based on the facts as investigated
and understood by the Company, the Company believes that it was defrauded by Tai He and that Tai He never actually invested $35 million
in the IPO. In fact, the Company learned that Tai He made no investments in the Company at all, and Tai He has no involvement in the
Company&#8217;s IPO matters. In addition, the Refundable Deposit has not been repaid to the Company and no Services have been provided
to the Company by Tai He. As a result, the Company believes that the Tai He Agreements may be deemed a fraud perpetrated by Tai He and
Shengang against the Company by Tai He taking advantage of asymmetric information, including the Company&#8217;s lack of knowledge and
understanding of the US markets, IPO rules and processes, and the trust of the Company.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">After
consultation with professionals, the Company is now aware that the Tai He Agreements were required to be disclosed to the public and
the Company believes that the agreements themselves are fraudulent and non-enforceable, and therefore the Company is disclosing the Tai
He Agreements to meet the compliance requirements of the SEC. Further, the Company acknowledges that it had improperly relied on the
advice, direction and counsel of Shengang when entering into the Tai He Agreements. The Company is now proactively working to terminate
the Tai He Agreements and recover the monies already paid to Tai He by the Company. Due to uncertainty of collection, the Company has
written off approximately $4.8 million deposit and fully expensed $2.3 million service fee paid by the Company to Tai He in the year ended December 31, 2022. The Company and its executive management team
intends to cooperate with the SEC, as well as any other relevant authorities, to ensure that its investors&#8217; interests are protected
while such matters are resolved.</span></p><div>

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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
principal executive offices are located at 88 Tongda Road, Touqiao Town, Guangling District, Yangzhou, PRC. Our telephone number at this
address is +86-0514-89800199. Our registered office in the Cayman Islands is currently located at the office of Sertus Incorporations
(Cayman) Limited, Sertus Chambers, Governors Square, Suite #5-204, 23 Lime Tree Bay Avenue, P.O. Box 2547, Grand Cayman, KY1-1104, Cayman
Islands, which may be changed from time to time at the discretion of directors. Our agent for service of process in the United&#160;States&#160;is
The Crone Law Group P.C., 500 Fifth Ave, Suite 938, New York, NY 10110.</span></p><div>

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

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

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


</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>B. Business Overview</b></span></p><div>


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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Meihua
International is a Cayman Islands exempted company incorporated on November 10, 2020. Kang Fu International is our wholly owned subsidiary
formed in Hong Kong on October 13, 2015. We operate our business through our operating subsidiaries in China, namely 1) Yangzhou Huada,
a wholly foreign owned subsidiary of Kang Fu International Medical, formed on December 24, 2001, located in Yangzhou, Jiangsu Province,
PRC; 2) Jiangsu Yada, a wholly owned subsidiary of Yangzhou Huada, formed on December 5, 1991, located in Yangzhou, Jiangsu Province,
PRC; 3) Jiangsu Huadong, a wholly owned subsidiary of Jiangsu Yada, formed on November 18, 2000, located in Yangzhou, Jiangsu Province,
PRC; and 4) Guanghui, a wholly owned subsidiary of Jiangsu Huadong, formed December 22, 2020.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Through
our operating subsidiaries in the PRC, Yangzhou Huada, Jiangsu Yada and Jiangsu Huadong, we are mainly specialized in the research, development,
manufacturing and sales of Class I, Class II and Class III disposable medical devices both domestically and internationally.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pursuant
to the Regulations on the Supervision and Administration of Medical Devices promulgated on January 4, 2000, which is effective on June
1, 2014 and amended by the State Council on May 4, 2017, medical devices are classified into the following three categories based on
the degree of risk.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; 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="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; width: 8%; border-bottom: black 1.5pt solid; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Class</b></span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; width: 1%; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; width: 91%; border-bottom: black 1.5pt solid; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Standard
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  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">I</span></td>
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  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: White">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">II</span></td>
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    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Class
    II medical devices shall refer to those devices with moderate risks that must be strictly controlled and regulated to ensure their
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  <tr style="font: 10pt Times New Roman, Times, Serif; background-color: rgb(204,238,255)">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">III</span></td>
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    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Class
    III medical devices shall refer to those devices with relatively high risks that must be strictly controlled and regulated through
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
provide our customers with one-stop solution for a variety of safety and quality disposable medical devices. The safety and quality of
disposable medical devices are always our core values. We attribute our success to our sustainable and organic growth driven by our capacity
expansion based on market demand, our deep understanding of our target end markets and our sound relationships with our customers, distributors,
independent sales agents, and suppliers.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i><span style="text-decoration:underline">Our
Revenue Model</span></i></b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
generate revenues through 1) manufacturing and sales of Class I, II, III disposable medical devices under our own brands, 2) resales
of Class I, II, III disposable medical devices sourced by us from other manufacturers. For the fiscal years ended December 31, 2022,
2021, and 2020, we recognized $103,346,341, $104,037,710, and $89,061,010, respectively, in revenues, of which our own brand sales accounted
for 48.88%, 46.19%, and 49.94%, respectively, and the resales of sourced disposable medical devices from other manufactures accounted
for 51.12%, 53.81%, and 50.06%, respectively.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
disposable medical devices reach end users both domestically and internationally. For the fiscal years ended December 31, 2022, 2021,
and 2020, our total sales to domestic direct end users customers and domestic distributor customers accounted for 99.52%, 85.78%, and
81.90% of our revenues, respectively. For the fiscal years ended December 31, 2022, 2021, and 2020, our sales to overseas distributing
customers accounted for 0.48%, 14.22%, and 18.10%, respectively, of our revenues.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
sell disposable medical devices through our direct sales force and distributors. For the fiscal years ended December 31, 2022, 2021,
and 2020, our sales through direct sale channels accounted for 9.16%, 9.13%, and10.59%, respectively, of our revenues, and our sales
through distributors accounted for 90.84%, 90.87%, and 89.41%, respectively, of our revenues, of which domestic distributors accounted
for 90.36%, 76.65%, and 71.31%, respectively, and exporting distributors accounted for 0.48%,14.22%, and 18.10%, respectively, of our
revenues.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i><span style="text-decoration:underline">Our
Products</span></i></b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
products cover all regions of PRC. Internationally, our products are exported to more than 30 countries, including Europe, North America,
South America, Asia, Africa, and Oceania.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
current product portfolio (consisting of both self-manufactured and out-sourced products) includes: 1) Class I disposable medical devices,
such as, disposable medical X-ray films, medical dry films, dry laser imagers, gauze bandages, examination gloves, pharmaceutical packaging
materials and containers, low-density polyethylene (LDPE) bottles for eye drops, high-density polyethylene (HDPE) bottles for tablets,
etc.; 2) Class II disposable medical devices, such as, disposable full anesthesia kits, medical brush, woman&#8217;s examination kits,
urethral catheterization kits, gynecological examination kits, endotracheal intubation, medical masks, anal bags, and suction connecting
tube, etc.; and 3) Class III disposable medical devices, such as disposable infusion pumps, anesthesia puncture kits, electronic pumps,
etc.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As of the date of this report, we have a total of 1,063 products in
our product portfolio, including 937 products for domestic sales and 126 products for overseas sales.</p><div>

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
top 20 products for the fiscal years ended December 31, 2022 and 2021 were as follows:</span></p><div>

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

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    <td style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Image</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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    <td style="text-align: left; padding-left: 0pt; vertical-align: top">&#160;</td><td>&#160;</td>
    <td style="padding-left: 0pt">&#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; padding-left: 0pt; vertical-align: top">&#160;</td><td>&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

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

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

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

</div><!-- Field: Page; Sequence: 39; 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"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->35<!-- Field: /Sequence --></span></p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></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; padding-left: 0pt">&#160;</td><td>&#160;</td>
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    <td style="text-align: left; padding-left: 0pt">Disposable humidified nasal oxygen tube</td><td>&#160;</td>
    <td style="text-align: center; padding-left: 0pt"><img alt="" src="img_019.jpg"/>&#160;</td><td>&#160;</td>
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    <td style="text-align: center; padding-left: 0pt">&#160;</td><td>&#160;</td>
    <td style="text-align: center; padding-left: 0pt">&#160;</td><td>&#160;</td>
    <td style="text-align: center; padding-left: 0pt">&#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; padding-left: 0pt">Medical disposable protective clothing</td><td>&#160;</td>
    <td style="text-align: center; padding-left: 0pt"><img alt="" src="img_020.jpg"/>&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-left: 0pt; vertical-align: top">&#160;</td><td>&#160;</td>
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    <td style="text-align: center; padding-left: 0pt">&#160;</td><td>&#160;</td>
    <td style="text-align: center; padding-left: 0pt">&#160;</td><td>&#160;</td>
    <td style="text-align: center; padding-left: 0pt">&#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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    <td style="text-align: center; padding-left: 0pt"><img alt="" src="img_021.jpg"/>&#160;</td><td>&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

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

</div><!-- Field: Page; Sequence: 40; 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"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->36<!-- 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"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
a medical device manufacturing and sales company, we are subject to extensive government regulation and supervision in the PRC. Pursuant
to PRC laws, we must obtain production license for Class II and III disposable medical devices, operation license for Class III disposable
medical devices, and filing or registration certificates for certain Class I, II or Class III disposable medical devices. As of the date
of this report, we are current on all licenses and certificates and have obtained Class I, II and III disposable medical device qualifications
in the PRC. Meanwhile, we have established a sound quality assurance system. We have received international &#8220;CE&#8221; certification
and ISO 13485 system certification. We have also registered with the FDA (registration number: 3006554788) for over 20 products as of
the date hereof, including but not limited to ID bracelets, surgical tapes, elastic and adhesive bandages, which are all FDA Class I
products.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
operating subsidiaries in the PRC focus on the manufacturing and sales of the disposable medical devices as follows:</span></p><div>

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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Yangzhou
Huada mainly manufactures and sells Class I disposable medical devices, such as disposable pharmaceutical packaging materials and containers
using LDPE for eye drops and high-density polyethylene (&#8220;HDPE&#8221;) bottles for tablets, as well as disposable plastic baby bottles,
NB/PSN rubber covers and 8.2mL folded spoons for tools and containers, etc.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Additionally,
Yangzhou Huada is also engaged in the resales of Class I and II disposable medical devices sourced from other manufacturers when we provide
one-stop shopping experience to our customers.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of the date of this report, Yangzhou Huada has no manufacturing activities for Class II and III disposable medical devices and its sales
are limited to our domestic customers.</span></p><div>

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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Jiangsu
Yada mainly manufactures and sells both domestically and internationally 1) Class I disposable medical devices, such as medical dry imaging
films; and 2) Class II disposable medical devices, such as disposable woman&#8217;s examination kits, suction connecting tubes, and Class
II 6866 medical polymer materials and products (including but not limited to transfusion equipment and pipelines, endotracheal intubation
for respiratory anesthesia or ventilation), etc.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
addition to above, Jiangsu Yada is also engaged in the domestic and international resales of 1) Class I and Class II disposable medical
devices sourced from other manufacturers when we provide one-stop shopping experience to our customers.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of the date of this report, Jiangsu Yada has no manufacturing and sales activities for Class III disposable medical devices.</span></p><div>

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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Jiangsu
Huadong mainly manufactures and sales both domestically and internationally 1) Class I medical devices, such as medical x-ray films,
multi-functional self-extracting X-ray film machines, dry films for medical use, gauze bandages, examination gloves, etc.; 2) Class II
medical devices, such as disposable full anesthesia kits, urethral catheterization kits, gynecological examination kits, endotracheal
intubation, medical masks, and various tubes, etc.; and 3) Class III medical devices, such as disposable infusion pumps, anesthesia puncture
kits, electronic pumps, etc.</span></p><div>

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In addition to above, Jiangsu Huadong is also
engaged in the domestic and international resales of Class I, II and III medical devices sourced from other manufacturers when we provide
one-stop shopping experience to our customers.</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>COVID-19 Pandemic 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">With the impact of the coronavirus disease 2019
(COVID-19) outbreak commencing in the first half of 2020, demand in products related to virus prevention and control surged worldwide.
Although these products were not our mainstream products previously, we witnessed order surges and demand outstripped supply for several
months starting in February 2020. For the fiscal year ended December 31, 2020, orders for masks and gloves were valued at $10.1 million
and $2.4 million, 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">As of the date of this report, although the current
market demand for certain virus prevention products is not as strong as that in 2020 in China due to the ongoing recovery from the COVID-19,
awareness of protection against COVID-19 and other similarly situated droplet transmission diseases is to some extent rooted among people
in China, resulting in continuing high demand among people for virus prevention and control products compared to previous years. Internationally,
except for China, other countries are still in high demand of certain virus prevention products for the prevention and control of COVID-19.
According to a COVID-19 vaccines update released by World Health Organization in December 2020, there are three COVID-19 vaccines for
which certain national regulatory authorities have authorized the use. None have yet received WHO EUL/PQ authorization. The impact of
COVID-19 vaccines on the pandemic will depend on several factors, such as the effectiveness of the vaccines; how quickly they are approved,
manufactured, and delivered; and how many people get vaccinated. Most scientists anticipate that, like most other vaccines, COVID-19 vaccines
will not be 100% effective. (Source: https://www.who.int/news-room/q-a-detail/coronavirus-disease-(covid-19)-vaccines?adgroupsurvey={adgroupsurvey}&amp;gclid=CjwKCAiA_eb-BRB2EiwAGBnXXrbZVR1ojK9i13YVEq7Hg5YBAULf8ii7IRf8kxKBu3fQQVpzJ8iD9hoCtHUQAvD_BwE).
As a result, we believe certain virus prevention products will still be in high demand due to the uncertainty surrounding the future severity
of COVID-19 and the awareness of the general public towards the virus prevention. To anticipate and adapt to this new normal phase, the
Company was building a 2,550 square meter of new factory for expanding the production scale of exporting products, located in Jiangsu
Yada&#8217;s factory plant. The Company received government approval on December 22, 2020 and has started construction. The Company has
completed construction during the current year, with a total cost of approximately $1.2 million. The source of funds for the new factory
comes mainly from bank loans. The Company has placed an order for 12 production lines, which will be installed in the new factory when
construction is complete. The new production lines have an estimated cost of $3.71 million and will be used to produce medical and civil
non-woven products for outbreak prevention, including masks, protective clothing and testing papers. The annual production capacity of
the new production lines includes approximately 45 million masks, 2.7 million insulation suits, 1.5 million protection suits, 90 million
testing papers, 0.6 million Minimally invasive high-value consumables. Starting from February 2020, we began to gradually add to the production
line for masks and increase the production of masks. However, as the sales of masks is declining, our eight mask production lines have
been shut down in the past year. Sales of masks for the year ended December 31, 2022, 2021, and 2020 were approximately $0.53 million,
$1.02 million, and $10.1 million, 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">As the epidemic gradually flattens out, the needs
for masks decreased. We have not generated material cost consumption on the production of masks and masks are not our main sales product.
Accordingly, the decrease of demand for masks in 2022 and 2021 not have a material adverse effect on our revenue.</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">With additional capacity and a broad spectrum
of product offerings, we are capable of providing tailored &#8220;one-stop&#8221; services to our customers, ranging from wound care,
surgical auxiliary supplies to disease prevention.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; 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; 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 One-stop Service</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">Our operating subsidiaries are located in Touqiao
Town, Yangzhou City, Jiangsu Province, PRC (&#8220;Touqiao Town&#8221;), one of the four medical device centers in PRC. Touqiao Town is
conferred on &#8220;Hometown of Medical Device &amp; Consumables in China&#8221; by China Medical Device Industry Association and granted
by the Jiangsu local government as one of the 25 nationally certified &#8220;Chinese Towns with Special Features&#8221; on medical devices.
Hundreds of disposable medical device manufacturers have their facilities or offices in Touqiao Town and provide a variety of product
offerings to more than 100 countries and areas, including United States, Europe, Africa, India, Brazil, etc. Lots of medical device professionals,
including R&amp;D and technology professionals and thousands of independent sales agents are also based in Touqiao Town, providing sufficient
labor to local medical device companies.</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">Due to our unique geographical advantage, we are
capable of providing one-stop service to our customers. By placing one single order with us, our customers will receive all products on
their order even if there are more than 100 to 1000 different kinds of products on such order and some products are not in our product
portfolio. Upon receipt of such orders, we are able to quickly fulfill the orders by including our own brand products in addition to qualified
products sourced from other manufacturers in Touqiao Town.</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">Our one-stop service not only bring benefits and
conveniences to our customers, but also reduces our procurement costs, such as transportation fee and travel fee, and mitigates the impact
of raw material price fluctuations in the market, thus increasing our profit margins.</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 Customers</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">We have three types of customers, i) direct end
user customers, which includes hospitals, pharmacies, and medical institutions, ii) domestic distributor customers, which distribute our
products to end-user customers in China, and iii) export distributor customers, which distribute our products to end users customers in
North America, Asia, South America, Africa and Oceania. As of December 31, 2022, the company had a total of 3,853 customers, of which
525 are direct end user customers, 3,004 are domestic distributors customers, and 324 are export distributors customers. Our direct end
user customers, as well as substantially all of our domestic distributor customers and our export distributor customers, are based in
China.</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">We do not have long-term written sales agreements
with our customers. Each customer sale is typically governed by a brief purchase-order based sales agreement. The key terms of the sales
agreements (including those agreements with our top customers) include:</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%">
  <tr style="vertical-align: top">
    <td style="width: 0.25in; font-size: 10pt">&#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">The product&#8217;s name, type, quantity and price.</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">
    <td style="width: 0.25in">&#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">Quality standard - medical device qualifications, including business license, medical device production and operation licenses, medical device registration certificates, inspection report, etc. Lack of one of the qualifications will result in termination of the agreements.</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">
    <td style="width: 0.25in">&#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">Delivery method and payment terms. Payments are typically due within 90 days after delivery.</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">
    <td style="width: 0.25in">&#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">Breach of contract terms, including refund and return of products. Purchasers are entitled to refunds and may return the product if the wrong product is delivered or the product does not meet agreed quality standards.</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">
    <td style="width: 0.25in">&#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">Shipping costs are typically borne by the seller.</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">
    <td style="width: 0.25in">&#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">Dispute solutions, including bringing a lawsuit at the local People&#8217;s court if negotiations are unsuccessful.</span></td></tr>
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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">For the fiscal years ended December 31, 2022,
2021, and 2020, the revenues generated from our direct end user customers and domestic distributor customers amounted to $102,845,751,
$89,240,394, and $72,941,380, respectively, constituting approximately 99.52%, 85.78%, and 81.90%, respectively, of our total revenues,
with export distributor customers accounting for $500,590, $14,797,316, and $16,119,630, respectively, constituting approximately 0.48%,
14.22%, and 18.10%, respectively, of our total revenues.</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">As we provide our products to export distributor customers based upon
their regional coverage, we do not have country-specific information on end-users overseas. Substantially all end users who acquire our
products through domestic distributors are based in China. End users who acquire our products through licensed export distributors have
two types &#8211; foreign distributors from other countries and end users from other countries. For the fiscal year ended December 31,
2022, our total sales to the top two customers accounted for 27.63% and 10.97% of our revenues, respectively. The top two customers for
the fiscal year ended December 31, 2022 were Customer A (a domestic distributor customer) and Customer C (a domestic distributor customer).
Our top two customers for the years ended December 31, 2021 and 2020 were the same for both years. They were Customer A (a domestic distributor
customer) and Customer B (an export distributor customer). For the year ended December 31, 2021, our total sales to the top two customers
accounted for 21.91% and 11.26% of our revenues, respectively. For the year ended December 31, 2020, our total sales to the top two customers
accounted for 17.68% and 12.71% of our revenues, 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><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">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Our Suppliers</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">We source our suppliers through multiple channels:
(i) through referrals from local medical device industry associations, (ii) through industry exhibitions/expos, (iii) through our distributors,
and (iv) through open bids.</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">Our suppliers are divided into two categories: (1) those providing
raw materials for the manufacturing of our products, and (2) those providing products for our resales.</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">Our raw and auxiliary materials include rubber,
chemical polyethylene (PE), polyethylene, polypropylene, nylon and non-woven fabrics, all of which are purchased from certified and qualified
suppliers in China. Our raw materials supply has been very stable for many years and are easily sourced due to our unique geographical
location.</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">We distribute products sourced from certain suppliers
when it comes to our one-stop service. We from time to time receive orders from our customers with a variety of products not in our product
portfolio. Through our suppliers, we are capable of accommodating our customers&#8217; need and providing one-stop service to our customers.</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">We do not have long-term written purchase agreements
with our suppliers. We do not consider any of our suppliers to be material to our business. As of the date of this report, we have a total
number of 71 suppliers. We can utilize any supplier we determine at our sole discretion. Although we can utilize any supplier we determine,
we believe that we established healthy and stable relationships with our significant suppliers through years of cooperation. These significant
suppliers, in the aggregate, accounted for over 25% of our raw material purchases for the year ended December 31, 2022, 2021, and 2020.
For the year ended December 31, 2022, our three significant suppliers are Yangzhou Tianyi Medical Instrument Co., Ltd., Yangzhou Xiaguang
Medical Instrument Co., Ltd. and Yangzhou Jiangzhou Medical Instrument Co., Ltd. representing 11.93%, 7.58% and 7.01% of our total purchase
respectively. For the year ended December 31, 2021, our three significant suppliers are Yangzhou Tianyi Medical Instrument Co., Ltd.,
Jiangsu Changfeng Medical Industry Co., Ltd. and Yangzhou Jiangzhou Medical Instrument Co., Ltd. representing 9.42%, 8.88% and 8.33% of
our total purchase respectively. For the year ended December 31, 2020, our three significant suppliers are Yangzhou Xiaguang Medical Instrument
Co., Ltd., Yangzhou Jiangzhou Medical Instrument Co., Ltd. Ltd. and Yangzhou Tianyi Medical Instrument Co., Ltd. representing 9.25%, 8.13%
and 8.09% of our total purchase respectively. There are no minimum purchase requirements with any of our suppliers, including these significant
ones. Each supplier order is typically governed by a brief purchase-order based purchase agreement. The key terms of the supplier purchase
agreements (including those agreements with our significant suppliers) include:</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%">
  <tr style="vertical-align: top">
    <td style="width: 0.25in; 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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</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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</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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</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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</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: 0.25in; text-align: justify">&#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: 0.25in; 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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  </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"></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"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->40<!-- Field: /Sequence --></span></p></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>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Marketing and Sales</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">We market and sell our products through multiple
channels: (1) through direct sales force, including our own employees and independent sales agents, and (ii) through distribution network,
including our domestic and exporting distributors.</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><span style="text-decoration:underline">Direct Sales Force</span></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"><i>Our Sales Team</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">As of the date of this report, we have a direct
sales team consisting of 81 employees. Our sales team provides us with direct access to our customers and is capable of addressing our
customers&#8217; needs in a fast and efficient way. They also coordinate with our distributors and independent sales agents in marketing
and sales of our products.</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">The compensation package for our sales team includes
fixed base salaries and commissions of 0.5%-1.0% based on the revenues or collection they achieve. We provide our sales team with regular
training and internally developed systems to assist them in quickly becoming proficient and productive sales personnel.</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"><i>Independent Sales Agents</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">As of the date of this report, we have a large
number of independent sales agents for the marketing and sales of our products in the Chinese market, covering all regions of the PRC.
Our independent sale agents market and sell our products in the regions where they are located.</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">We have no written sale agent agreements with
our independent sale agents and we are connected with them via oral agreements. Upon successful sales of our products to customers secured
by them, they settle their commission with our customers. We do not provide any commission or make any payments to them.</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">Our direct sales force has secured a total of
525 domestic customers, including hospitals and medical institutions. We will continue to work with existing, and identify and secure
new, independent sales agents, to expand our customer base and enhance our brand recognition across China.</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><span style="text-decoration:underline">Distribution Network</span></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">As of the date of this report, we have 3,004 domestic
distributors and 324 exporting distributors. Distributors usually purchase products from us at a lower price and then resell our products
to end customers both domestically and internationally at a comparatively higher price and earn the price difference.</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">Our domestic distributors cover 32 provincial-level
administrative regions of PRC for the resales of our products in the Chinese market. They market and distribute our products in the regions
where they locate and have secured approximately 5,884 domestic customers for us, including hospitals and medical institutions.</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">Our exporting distributors are limited to our
overseas sales. Each of our exporting distributor usually sells medical devices to at least three overseas customers. We therefore estimate
conservatively that the total number of established direct and indirect customer relationships established overseas through our exporting
distributors in Europe, North America, South America, Asia, Africa, and Oceania to be about 915.</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">Distributors must have related qualifications
in order to distribute our products. Upon our verification and approval by inspecting their qualification materials, such as business
license, disposable medical device operation license, and medical device exporting license, etc., and verifying their sales channels,
distribution capacity and business reputation, distributors are authorized to distribute our products to their domestic and overseas customers.</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="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"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->41<!-- 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">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We do not have long-term written agreements with
our distributors. Each distributor order is typically governed by a brief purchase-order based sales agreement. The key terms of the distributor
purchase agreements include:</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%">
  <tr style="vertical-align: top">
    <td style="width: 0.25in; 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">The product&#8217;s name, type, quantity and price.</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: 0.25in; 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">Quality standard - medical device qualifications, including business license, medical device production and operation licenses, medical device registration certificates, inspection report, etc. Lack of one of the qualifications will result in termination of the agreements.</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: 0.25in; 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">Delivery method and payment terms; payment is typically due within 90 days after delivery Shipping costs re typically borne by us.</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: 0.25in; 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">Breach of contract terms, including refund and return of products. Distributors are entitled to refunds and may return the product if the wrong product is delivered or the product does not meet agreed quality standards.</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: 0.25in; 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">Dispute solutions, including bringing a lawsuit at the local People&#8217;s court.</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">Our distributors have secured a total of approximately
6,799 customers for us both domestically and internationally. We will continue to work with existing distributors, and identify and secure
new distributors, to expand our customer base and enhance our brand recognition both in PRC and abroad.</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><span style="text-decoration:underline">Our Research and Development (&#8220;R&amp;D&#8221;)</span></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">We invest in R&amp;D efforts that advance our
technology with the goal to expand new products and improve upon our existing product offerings. Our R&amp;D expenses totaled approximately
$3.0 million, $2.7 million, and $2.5 million, for the years ended December 31, 2022, 2021, and 2020, respectively. R&amp;D expenses mainly
consist of applicable personnel, design, sample testing and materials expenses. As of the date of this report, we had a total of 30 employees
in the R&amp;D department. In the future, we expect R&amp;D expenses to increase in absolute dollars as we continue to develop new products,
enhance existing products and technologies and perform activities related to obtaining additional regulatory approval.</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">We adhere to a market-oriented R&amp;D approach
and actively cooperate with universities, hospitals, medical institutions, distributors and independent sales agents in sorting out our
R&amp;D orientation based on the real market demand. Our market-oriented R&amp;D approach includes the following:</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%">
  <tr style="vertical-align: top">
    <td style="width: 0.25in; 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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  </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: 0.25in; 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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</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: 0.25in; 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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  </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">By continuously upgrading and improving products
and technologies that tailed to our customers&#8217; requirements, we have further strengthened our customer&#8217;s loyalty.</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: 46; 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"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->42<!-- 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">&#160;</p><div>

</div><p style="text-align: justify; margin: 0pt 0; font: 10pt Times New Roman, Times, Serif">As of the date of this report, we have 27
registered patents. Faced with the ever-changing market demands, we continue to abandon and phase out unsuitable patents and
technologies, and simultaneously invest in acquiring new patents and technologies that tailored to our customer&#8217;s fast
changing requirements.</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">We believe our ability to rapidly develop innovative
products is attributable to the dynamic product innovation process that we have implemented, the versatility and leveragability of our
core technology and the management philosophy behind that process. We have recruited and retained professionals with significant experience
in the development and improvement of medical devices. We have a pipeline of products in various stages of development that are expected
to provide additional commercial opportunities. Our research and development efforts are based at our operating subsidiaries in PRC.</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>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">The medical device industry is intensely competitive,
subject to rapid change and significantly affected by new product introductions and other market activities of industry participants.
We compete or plan to compete with manufacturers of disposable medical devices. Some of these competitors are large, well-capitalized
companies with significantly greater market share and resources than we have. As a consequence, they are able to spend more on product
development, marketing, sales and other product initiatives than we can. We also compete with smaller medical device companies that have
single products or a limited range of products. Some of our competitors have:</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%">
  <tr style="vertical-align: top">
    <td style="width: 0.25in; 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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  </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: 0.25in; 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">broader or deeper relations with healthcare professionals, customers and third-party payers;</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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  <tr style="vertical-align: top">
    <td style="width: 0.25in; 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">more established distribution networks;</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: 0.25in; 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">additional lines of products and the ability to offer rebates or bundle products to offer greater discounts or other incentives to gain a competitive advantage;</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: 0.25in; 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">greater experience in conducting research and development, manufacturing, clinical trials, marketing and obtaining regulatory clearance or approval for products; 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%">
  <tr style="vertical-align: top">
    <td style="width: 0.25in; 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">greater financial and human resources for product development, sales and marketing and patent prosecution.</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">The Company believes that it competes favorably
with respect to these factors, although there can be no assurance that the Company will be able to continue to compete successfully in
the future.</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">We believe the following companies may be our
competitors:</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%">
  <tr style="vertical-align: top">
    <td style="width: 0.25in; 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">Shandong Weigao Group Medical Polymer Co., Limited, is principally engaged in the research and development, production and sale of single-use medical devices. The Group has a wide range of products, which includes: i) consumables (infusion sets, syringes, medical needles, blood bags, pre-filled syringes, blood sampling products, and other consumables); ii) orthopedic materials and iii) blood purification consumables and equipment. Currently, its sales are mainly conducted in the PRC market, but it is actively exploring opportunities in international markets, with products having been exported to 30 countries and regions, including the United States, Germany, Romania, Australia and the United Kingdom. (Source: http://en.weigaogroup.com/gfccontentEn/Enterpr.aspx)</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: 0.25in; 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">Jiangxi Hongda Medical Equipment Group Ltd. specializes in manufacturing sterile medical devices for single use. Their products cover nine categories, such as infusion sets, blood transfusion equipment, injection equipment, puncture sets, examination and assistant supplies, anesthesia appliances, catheters, medical equipment, cardiovascular intervention, blood purification products, etc. It is a major supplier of sterile medical equipment for a lot of countries, such as the United States, Europe, Africa, the Middle East and the Southeast Asia. It is also one of biggest manufacturers to produce and process medical disposables, with nearly a quarter of the total market share in China alone. (Source: http://en.jxhd.cn/comcontent_detail.html)</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>

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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"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->43<!-- 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%">
  <tr style="vertical-align: top">
    <td style="width: 0.25in; 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">Henan Tuoren Medical Device Co., Ltd., founded in 2004, is a healthcare solutions provider, focusing on medical consumables and extending to electronic medical devices, surgery devices and biomedical materials. It is dedicated to designing, developing and distributing medical devices to its customers, covering 220 kinds of products with over 1880 specifications mainly in the field of anesthesia, pain management, nursing, diagnostics, surgery, hemodialysis and intervention. Its products have been sold to more than 70 countries and regions around the world, with international subsidiaries established in the United States and India. (Source: http://www.tuoren.com/en/index.php?s=/about/history.html)</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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  <tr style="vertical-align: top">
    <td style="width: 0.25in; 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">Allmed Medical Products Co., Ltd., founded in 1992, is the largest OEM (original equipment manufacturer) manufacturer and exporter of wound care products in China, providing a worldwide range of traditional wound care products, including gauze swabs, non-woven swabs, lap sponges, fluffy bandages, abdominal pads, non-stick pads, adhesive bandages, elastic bandages, medical kits and disposable drapes, etc. Compared with our products, their products are very limited. (Source: http://www.allmed-china.com/index.php?m=content&amp;c=index&amp;a=lists&amp;catid=11)</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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  <tr style="vertical-align: top">
    <td style="width: 0.25in; 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">Jiangxi Sanxin Medtec Co., Ltd., founded in 1997, is a listed company in China, focusing on researching and developing, manufacturing and marketing of medical devices.&#160;It is the first listed company in the field of syringe and infusion. Their main products are &#8220;catheter tubing series,&#8221; &#8220;blood purification series,&#8221; &#8220;syringe series&#8221; and &#8220;infusion &amp; transfusion series,&#8221; totally four series products with over 30 types of more than 1000 specifications. Its products are sold both domestically and internationally, covering more than 30 provinces in China and more than 60 countries and regions nationwide. (Source: http://www.sanxin-med.com/category/Category/index/cid/295)</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: 0.25in; 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">Jiangxi 3L Products Group Co., Ltd., founded in 1990, combines the scientific research, production and marketing of single use medicinal macromolecular products and equipment, medical purification equipment sales, and maintenance and installation work into one. It established trade abroad with more than 20 countries and regions. It also has branch offices in Hong Kong, South Africa, Russia, etc. In the past few years, their surgical towels comprised of more than 90% of the domestic market share in China, and their combined sales have taken over half of the nationwide total product needs in the domestic market in China. (Source: http://www2.3l.com.cn/web/2.htm)</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><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our main competitors from other provinces and
cities are Shandong Weigao Group, Jiangxi Hongda Group, Henan Tuoren Group, and Hubei Allmed Co., Ltd. These companies are our competitors
as well as our partners. For example, Weigao Group in Shandong Province distributes disposable infusion pumps, medical kits, and other
products produced by our Huodong subsidiary, while our Huadong subsidiary distributes the detained needle products of Weigao Group in
our Yangzhou area; Tuoren Group distributes nitrile glove products of our Huadong subsidiary in Henan Province, while our Huadong subsidiary
distributes Tuoren&#8217;s medical guidewires and catheters in our Jiangsu Province. Another example is Hubei Allmed Co., Ltd., 80% of
whose products are exported with 20% are domestically distributed (in comparison to our 80% domestic sales and 20% indirect exporting
sales). The disposable stainless steel medical brushes it exports are exclusively supplied by our Yada subsidiary, so we regard company
not only our domestic client, but also our competitor in the international market. Because of the huge market in China and in the world,
there are tens of thousands of varieties of medical consumables. Not a single company in the world can dominate the entire market. While
competing in the market, we more often cooperate with each other. Under the guidance of industry associations and local governments, we
have formed an industry alliance to continuously exchange ideas with each other, discuss market development needs, and to build a common
development platform. It should be noted that in the face of the sudden outbreak of the epidemic last year and this year, we shared information,
supported each other with epidemic prevention materials, raw materials, and auxiliary materials, as well as production equipment, thus
achieving win-win cooperation with fruitful outcomes.</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">A demand for one-stop service for medical consumables
is an inevitable development in the medical consumables industry. There are several reasons why our company has achieved steady development
over its more than 30 years history. One of the most important reasons is our one-stop service system, through which we can supply all
disposable medical devices required by the client, combining products manufactured by us with products outsourced from others but passed
through our quality control scrutiny. Through market research, we have learned that our competitors are also developing a one-stop service
system and are in one of the following levels of progress: first, some companies have established a one-stop service system; second, some
companies have established a one-stop service system, but their system is underperforming and needs improvement; and third, some companies
are still undergoing development of a one-stop service system.</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><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">There are currently 385 manufacturers and distributors
of medical consumables where the company is located in Touqiao Town, which is known as the &#8220;Hometown of Medical Consumables in China.&#8221;
As a top player in the region, the Company&#8217;s revenues accounted for approximately 10% of the total revenues generated from all medical
device manufactures in Touqiao Town. Our total sales in 2020 were more than RMB600 million (approximately ($89 million), with more than
10,000 product types. By comparison, our research indicates that the annual sales of the second- and third-ranking&#160;companies in Touqiao
Town are just over RMB100 million, while the annual sales of the fourth- and fifth-ranking companies are in the range of RMB80 million
to RMB90 million, with a lesser variety of product types. Since our production scale and number of product types far surpass those of
other companies in Touqiao Town, we consider other local companies to be our partners more than our competitors. We supply each other&#8217;s
needs in terms of production, procurement, and distribution. At the same time, these local enterprises in Touqiao Town are not able to
provide customers with the same one-stop service that we provide due to their limited scale and product types. The total output value
of the top 20 companies in Touqiao Town, including our company, was about RMB2.3 billion in 2020. Our company&#8217;s output value in
2020 was RMB610 million, accounting for about 26.5% of the total output value, while the other four next-largest companies in Touqiao
Town had a total output value of about RMB400 million in 2020, accounting for 17.4% of the total output value.</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>Competitive Strengths</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">We are dedicated to serving our customers. We
believe that the following strengths contribute to our success and are the differentiating factors that set us apart from our peers:</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%">
  <tr style="vertical-align: top">
    <td style="width: 0.25in; 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"><b><i><span style="text-decoration:underline">Cost-effective
    methods to address customers&#8217; significant needs with a variety of products.</span></i></b> As of the date of this report, we have
    a total of 1063 products in our product portfolio covering all Class I, II, and III disposable medical devices, including 937
    products for domestic sales and 126 products for overseas sales. Through sales of different products to our customers via our
    one-stop service, we are able to cost-effectively address our client&#8217;s needs.</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">
    <td style="width: 0.25in; 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"><b><i><span style="text-decoration:underline">Massive distribution network of clients, distributors, and suppliers.</span></i></b> Through both direct sales and our massive distribution network, our products are sold to hospitals, pharmacies and medical institutions both domestically and internationally. As of the date of this report, we have 81 employees in our sales department and 5,000 independent sales agents, 3,004 distributors for domestic sales and 324 exporting distributors for overseas sales. We not only have accumulated a substantial domestic customer base and forged strong relationships with these customers, but also established good long-term cooperative relationships with well-known foreign medical equipment brand companies, which extends our reach world-wide. We believe that these customers will continue to be a source of business as well as a good referral source to new customers.</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">
    <td style="width: 0.25in">&#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"><b><i><span style="text-decoration:underline">Geographical advantages allow us to provide one-stop service to our customers at reduced cost.</span></i></b> Hospitals and other medical institutions normally have lists of over a hundred or even a thousand of different kinds of disposable medical devices which they must procure on a regular basis. Our PRC operating subsidiaries and primary operations are located in Touqiao Town, Yangzhou City, Jiangsu Province, one of the four medical device centers in PRC. Dubbed the &#8220;Hometown of Medical Devices &amp; Consumables in China,&#8221; Touqiao Town hosts hundreds of disposable medical device manufacturers manufacturing all different kinds of products. In addition to our own products, we are qualified to distribute products sourced from other manufacturers. As a result, our clients are able to receive all required products by placing just a single order with us. When we receive an order from our hospital clients or distributors, we are able to quickly fulfill the order by including our own branded products and qualified products sourced from other manufacturers in Touqiao Town. There are also large numbers of medical device professionals, including research and development, or &#8220;R&amp;D,&#8221; and technology professionals, and thousands of independent sales agents based near our primary operations. We are therefore able to procure high quality raw materials and products of other brands at a comparatively low price within a short period of time and to obtain sufficient labor and support to our one-stop service and manufacturing.</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"></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"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->45<!-- 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%">
  <tr style="vertical-align: top">
    <td style="width: 0.25in; 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"><b><i><span style="text-decoration:underline">Economies of scale and automation provide significant cost advantages</span></i><span style="text-decoration:underline">.</span></b> The scale of our production is regional-leading within Yangtze River Delta region of China. The disposable medical devices we manufacture and sell are mainly low value-added products, which, however, are largely consumed and in huge demand every day in hospitals, medical institutions, and other health related industry entities. Through scaled production, we are able to increase our profits margin. In the procurement process, the production scale reduces our procurement costs and mitigate the impact of raw material price fluctuations. In the manufacturing process, we retrofitted equipment and introduced automation to improve production efficiency. At present, we have 12 purification plants covering a total area of approximately 110,352 square feet (10,252 square meters).</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: 0.25in; 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"><b><i><span style="text-decoration:underline">Leading competitive position maintained by high quality standard systems.</span></i></b> Quality and safety are always our core value. Applying information acquired during our long-term business transactions with major medical institutions across China, we have developed a sophisticated quality management system, as well as a strict and effective internal control standard system. All of our products, either self-manufactured or sourced, fall within our quality control system subject to our quality inspection before delivery (See the section entitled &#8220;Quality Contro<i>l</i>&#8221; in Business).</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: 0.25in; 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"><b><i><span style="text-decoration:underline">Market-driven
    research and development allow for continual improvement and long-term client loyalty</span></i><span style="text-decoration:underline">. </span></b>As of the date of this
    report, we have an R&amp;D team of 78 people, accounting for 12.46% of our total employees. For the fiscal year ended December 31,
    2022, we have invested a total of $2,962,904 in the products and technologies R&amp;D. For the fiscal years ended December 31, 2021
    and 2020, we have invested a total of $2,725,014&#160;and $2,492,059 in the products and technologies R&amp;D. We adhere to a
    market-oriented R&amp;D approach and actively cooperate with universities, hospitals, medical institutions, distributors and
    independent sales agents in sorting out our R&amp;D orientation based on the real market demand. We continuously upgrade and improve
    our products and technologies to better suit our 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%">
  <tr style="vertical-align: top">
    <td style="width: 0.25in; 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>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i><span style="text-decoration:underline">Visionary and experienced management
    team</span></i></b></p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Building a trusted brand and always doing the right thing for people
has been at the heart of our founding management team since day one. Our company culture, strategic vision and operational execution are
driven by our visionary founder, Yongjun Liu. Mr. Liu is a successful entrepreneur who has been engaged in the medical device industry
for more than 40 years and has accumulated extensive experiences and led his businesses to make remarkable achievements. He has been awarded
as Excellent Entrepreneur, Honest Entrepreneur Representative and Medical Device Industry Representative on multiple occasions. At the
same time, he is keen on public welfare undertakings. He has also sponsored a lot of splendid undertakings such as road reconstruction
in towns and villages, donations to the Red Cross Society, reconstruction of nursing homes, poverty alleviation and aid for students.
Our company culture mirrors our founder&#8217;s mission to empower and serve those who serve others.</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"><b><i>Quality Control</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">All of our products, either self-manufactured
or sourced, fall within our quality control system subject to our quality inspection before delivery. For sourced products, they must
first be shipped to us for quality inspection, upon passing inspection, be packaged, labeled and shipped to our customers.</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">Medical device and equipment are medical products
directly applied to the human body, which is closely related to the life and health of users. Quality and safety are always our core value.
Reliable, safe and stable product quality is an important driving factor for maintaining market competitiveness. Through long-term business
dealings with major hospitals and medical institutions across China, we believe that we have developed a sophisticated quality control
management system as well as a strict and effective internal control system in accordance with the requirements of Chinese laws and regulations.</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">We prioritize product quality management and are
committed to strengthening the professional ethics and cultivating quality consciousness of our employees, forming a strict quality management
system, which we believe is in line with international standards.</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">Our rigorous quality control management programs
have earned us a number of quality-related manufacturing designations. Our manufacturing facilities are ISO 13485 compliant with ISO 13485:2016
edition certification achieved in 2020. In 2018, we achieved compliance with European Union&#8217;s CE certification, allowing certain
of our products (such as Disposable Amniotic Membrane Perforators, Disposable Medical Suction Connecting Tubes and Disposable Gynecologic
Samplers) to be CE marked. In April 2020, we renewed registration of certain products with the FDA, including ID bracelet, surgical tapes,
elastic, adhesive bandages, etc., allowing our products to enter U.S. market. We have more than 60 categories of products passed the quality
system inspections administered by the China Food and Drug Administration and local authorities in Yangzhou City.</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">We have annual quality targets, which are distributed
to our employees and all departments annually. We conduct monthly follow-ups and quarterly evaluations on execution of the plans held
to ensure that the annual quality targets are met.</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: 50; 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"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->46<!-- 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">However, despite our quality control management
system, we cannot eliminate all risks of errors, defects or failures. We may fail to detect or cure defects as a result of a number of
factors, many of which are outside our control, including:</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%">
  <tr style="vertical-align: top">
    <td style="width: 0.25in; 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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  </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: 0.25in; 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">human error or malfeasance by our quality control personnel;</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: 0.25in; 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">tampering by third parties; 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%">
  <tr style="vertical-align: top">
    <td style="width: 0.25in; 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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  </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">Failure to detect quality defects in our products
could result in patient injury, customer dissatisfaction, or other problems that could seriously harm our reputation and business, expose
us to liability, and adversely affect our revenue and profitability.</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">In 2018, our PRC subsidiaries Jiangsu Yada and
Jiangsu Huadong got fined of immaterial amount for noncompliance with the local laws and regulations. Upon receipt of the fine notices,
we promptly reacted to the comments from the related local government, rectified the noncompliance situation, recalled all noncompliance
products and paid the fines in full. As a result, we took some measures to avoid future noncompliance.</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">Specific rectification measures and the impacts
on our products and business are as follows:</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: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>No.</b></span></td>
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    <td style="border-bottom: black 1.5pt solid; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Misconduct for penalized</b></span></td>
    <td style="text-align: center">&#160;</td>
    <td style="border-bottom: black 1.5pt solid; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Regulatory <br/>
measures after<br/>
 rectification</b></span></td>
    <td style="text-align: center">&#160;</td>
    <td style="border-bottom: black 1.5pt solid; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Effect on<br/>
 products/business</b></span></td></tr>
  <tr style="background-color: #CCEEFF">
    <td style="width: 5%; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">1</span></td>
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    <td style="width: 19%; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(Yangzhou) Shi Yao Jian Xie Fa [2017] No. 48 / (Yangzhou) Shi Yao Jian Xie Fa [2018] No. 23</span></td>
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    <td style="width: 32%; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Medical surgical film does not label the texture of the transparent plastic film/ providing fake registration product criterion to the Food and Drug regulatory authority that supervises and inspects products</span></td>
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    <td style="width: 19%; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Canceling registration certificates and stopping producing such related products</span></td>
    <td style="vertical-align: bottom; width: 1%">&#160;</td>
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  <tr>
    <td style="text-align: center">&#160;</td>
    <td style="vertical-align: bottom">&#160;</td>
    <td style="text-align: center">&#160;</td>
    <td style="vertical-align: bottom">&#160;</td>
    <td style="text-align: center">&#160;</td>
    <td style="vertical-align: bottom">&#160;</td>
    <td style="text-align: center">&#160;</td>
    <td style="vertical-align: bottom">&#160;</td>
    <td style="text-align: center">&#160;</td></tr>
  <tr style="background-color: #CCEEFF">
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">2</span></td>
    <td style="vertical-align: bottom">&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(Yangzhou) Shi Yao Jian Xie Fa [2017] No. 46</span></td>
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    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Production of inspection gloves that fail to meet the compulsory standards [model specification: 7.5] (Production date of glossy powder: 20170108) (The reason for the insufficient tension is that the rubber supplier has not followed the specifications standards during production)</span></td>
    <td style="vertical-align: bottom">&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Enhancing the random inspection of the supplier&#8217;s production specification standards when accepting outsourced materials, as well as promoting the proportion of random inspections</span></td>
    <td style="vertical-align: bottom">&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Such administrative penalty has not adversely affected products and the Company&#8217;s business.</span></td></tr>
  <tr>
    <td style="text-align: center">&#160;</td>
    <td style="vertical-align: bottom">&#160;</td>
    <td style="text-align: center">&#160;</td>
    <td style="vertical-align: bottom">&#160;</td>
    <td style="text-align: center">&#160;</td>
    <td style="vertical-align: bottom">&#160;</td>
    <td style="text-align: center">&#160;</td>
    <td style="vertical-align: bottom">&#160;</td>
    <td style="text-align: center">&#160;</td></tr>
  <tr style="background-color: #CCEEFF">
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">3</span></td>
    <td style="vertical-align: bottom">&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(Yangzhou) Shi Yao Jian Xie Fa [2018] No. 16</span></td>
    <td style="vertical-align: bottom">&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#8220;ultraviolet absorbance&#8221; test of disposable infusion pumps has failed (The main reason that caused the product&#8217;s UV absorbance to exceed the standard is the secondary vulcanization time and vulcanization temperature of the liquid storage bag has not met the specified requirements. The liquid storage bag is an outsourcing material, and the original supplier does not strictly follow its production process specifications during production, which shortens the secondary vulcanization time and vulcanization temperature, causing UV absorbance to exceed the standard.)</span></td>
    <td style="vertical-align: bottom">&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">1. Switch to another supplier of the liquid storage bag; <br/>
&#160; <br/>
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    <td style="vertical-align: bottom">&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Such administrative penalty has not adversely affected products and the Company&#8217;s business.</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">For the fiscal year of 2022 and as of the date
of this report, we are not aware of any investigations, prosecutions, disputes, claims or other proceedings in respect of quality issues,
nor has the Company been punished or can foresee any punishment to be made by any related government authorities of the PRC.</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: 51; 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"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->47<!-- 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>Class I, II, and III Medical Device Approval
Process in China</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">&#8220;Class I&#8221; medical devices in China
refers to sanitary and civilian products with extremely low risk, which do not need to be disinfected. To record this type of product
in the official catalogue, a recordation application must be submitted on the website of the National Medical Products Administration.
The application must clarify relevant information about product standard, the scope of use, production technologies, and instructions
for the use of material. The device may then be produced and distributed after obtaining the online approval of the National Medical Products
Administration. The application and approval process for Class I devices is as follows:</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-top: 0pt; margin-bottom: 0pt; text-align: center"><b>Schedule 1 Flow Chart of the Application Procedures
for Recordation of the Medical Devices of Class I</b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>(statutory time limit: on-the-spot conclusion)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#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="img_022.jpg"/></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">[Chart derived from regulations on the supervision
and administration of medical devices (Order No. 650 of the State Council of the PRC) and the Measures for the supervision and administration
of the operation of medical devices (Order No. 8 of the State Food and Drug Administration)].</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-top: 0pt; margin-right: 0; margin-bottom: 0pt; text-align: left"></p><div>

</div><!-- Field: Page; Sequence: 52; 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"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->48<!-- 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-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">&#8220;Class II&#8221; and &#8220;Class III&#8221;
medical devices in China refer to medical-grade products with higher risk. The application procedures for recordation of these two types
of products in China are as follows: First, the products are submitted for inspection with various materials. After the submitted materials
are reviewed by the experts to their satisfaction, the National Medical Products Administration will organize a team of experts to visit
the factory for on-site inspection and acceptance. After passing the on-site acceptance, the products with higher risk are required to
be clinically tested. Only after the clinical report and other application documents are submitted to the National Medical Products Administration,
which approves these materials and issues the product registration certificate, shall the enterprise be allowed to produce and distribute
the product. The application and approval process for Class II and III devices is as follows:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#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="img_023.jpg"/></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; text-align: center"></p><div>

</div><!-- Field: Page; Sequence: 53; 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"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->49<!-- 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><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">[Chart derived from regulations on the supervision
and administration of medical devices (Order No. 650 of the State Council of the PRC) and the Measures for the supervision and administration
of the operation of medical devices (Order No. 8 of the State Food and Drug Administration)].</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">The chart below summarizes the classification,
approval dates, and current approval terms of our top 20 products:</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: top">
    <td style="border-bottom: black 1.5pt solid; vertical-align: bottom; text-align: left; width: 5%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>No.</b></span></td>
    <td style="vertical-align: bottom; text-align: center; width: 1%">&#160;</td>
    <td style="vertical-align: bottom; border-bottom: black 1.5pt solid; text-align: center; width: 25%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Product Name</b></span></td>
    <td style="vertical-align: bottom; text-align: center; width: 1%">&#160;</td>
    <td style="vertical-align: bottom; border-bottom: black 1.5pt solid; text-align: center; width: 20%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Remarks</b></span></td>
    <td style="vertical-align: bottom; text-align: center; width: 1%">&#160;</td>
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    <td>&#160;</td>
    <td>&#160;</td>
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    <td>&#160;</td>
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    <td>&#160;</td>
    <td style="text-align: center">&#160;</td>
    <td>&#160;</td>
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    <td>&#160;</td>
    <td style="text-align: center">&#160;</td>
    <td>&#160;</td>
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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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    <td>&#160;</td>
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    <td>&#160;</td>
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    <td>&#160;</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"><b>Competitive Challenges</b></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%">
  <tr style="vertical-align: top">
    <td style="width: 0.25in; 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%">
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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: 0.25in; text-align: justify">&#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><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 54; 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"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->50<!-- 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>Manufacturing</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">Our production is comprised of both in-house manufacturing
and outsourcing to third parties. Except for purchases according to the requirement of bid clients, all third party manufactures shall
ship products to us for our inspection first, and upon passing our inspection, we will label and assemble, and then ship them to clients
per orders.</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"><i>In-house Manufacturing</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">All of our in-house production is located at our
facilities in Yangzhou, Jiangsu Province, PRC. At those facilities, we produce products and stock inventory of raw materials, components
and finished goods at our facilities pursuant to the market demand, orders we receive or plan to receive, our production plan and capacity,
procurement information from our direct sales force and our distributors. Our in-house per-order production model is as follows:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#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="img_024.jpg"/></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">Due to the nature of the products, all products
must be produced in the dust-free purification workshops and must be sterilized. This production process is subject to continuous review
and monitoring by the quality control team to ensure that finished products are of the highest quality and meet customer requirements
and ISO 13485 medical device quality management systems standard.</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">In order to the maintain product safety and a
high standard of product quality, we implement a strict set of quality control policies and inspection protocols. These policies and protocols
are enforced by our quality control team, senior management and officers along every step of the production to post-production process.</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: 55; 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"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->51<!-- 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"><i>Outsourcin</i>g</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">Our outsourcing of products, which to some extent
expands our production capacity, are produced by third party manufacturers by either 1) using qualified raw material suppliers designated
by us and completing the production in accordance with our standards, or 2) using their own selection of raw materials and production
standards in line with our quality control requirements.</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">Given our unique geographical location, we are
able to procure qualified raw materials, and locate qualified third party manufacturers and suppliers locally at a cost-effective way
such as lower price and save of transportation costs in a shorten period, thus realizing scale production, reducing our production costs
and increasing profit margin. By outsourcing some semi-finished product processing to the local consigned manufacturers in Touqiao Town,
we not only expand our production capacity and improve our production efficiency, but also reduce production costs while meeting clients&#8217;
demands for products of various specifications.</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>Environmental</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">Due to the nature of the Company&#8217;s products,
the Company&#8217;s PRC subsidiaries do not generate industrial wastewater and wastes, the wastewater they generate is sanitary wastewater
which can be disposed directly into municipal pipelines. The generated corner wastes shall be cleaned and collected by the cleaning personnel
on time, and then transported to the municipal garbage disposal site for treatment by the local sanitation department. Solid wastes generated
during operation shall be collected and sent to relevant manufacturers for recycling. If new products are developed in the future and
environmental measures are needed according to law, the Company will take corresponding environmental protection measures according to
relevant laws and regulations. The waste discharge fees for fiscal years of 2022, 2021, and 2020 were $4,384, $4,890, and $5,009, respectively,
which has been paid in full.</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">The Company and its subsidiaries passed the environmental
inspection and evaluation by the Environmental Protection Bureau of Yangzhou Guangling District in 2020, which determined that no waste,
hazardous substances or wastewater were produced during manufacturing.</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">As of the date of this report, our waste discharge
is in compliance with the local laws and regulations and we are not aware of any warning, investigations, prosecutions, disputes, claims
or other proceedings in respect of environmental protection, nor have we been punished or can foresee any punishment to be made by any
government authorities of the PRC.</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>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">Our business is dependent on a combination of
trademarks, patents, copy rights, domain names, trade names, trade secrets and other proprietary rights in order to protect our intellectual
property rights. As of the date of this report, we have two (2) registered trademark, twenty-seven (27) registered patents and two (2)
copyrights in the PRC.</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: 56; 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"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->52<!-- 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>Trademarks</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">Set forth below is a detailed description of our
registered trademarks:</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">
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Registration No.</b></span></td>
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Name</b></span></td>
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Registration <br/>
Date</b></span></td>
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Classes</b></span></td>
    <td style="width: 1%; text-align: justify">&#160;</td>
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Owner</b></span></td>
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Term</b></span></td>
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Status</b></span></td>
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    <td style="vertical-align: top; text-align: justify">&#160;</td>
    <td style="vertical-align: top; text-align: center"><img alt="" src="img_025.jpg"/>&#160;</td>
    <td style="vertical-align: top; text-align: justify">&#160;</td>
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    <td style="vertical-align: top; text-align: justify">&#160;</td>
    <td style="vertical-align: top; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">10</span></td>
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    <td style="vertical-align: top; text-align: justify">&#160;</td>
    <td style="vertical-align: top; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Registered</span></td>
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    <td style="vertical-align: top; text-align: justify">&#160;</td>
    <td style="vertical-align: top; text-align: center"><img alt="" src="img_027.jpg"/>&#160;</td>
    <td style="vertical-align: top; text-align: justify">&#160;</td>
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    <td style="vertical-align: top; text-align: justify">&#160;</td>
    <td style="vertical-align: top; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Yada</span></td>
    <td style="vertical-align: top; text-align: justify">&#160;</td>
    <td style="vertical-align: top; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">07/14/2000</span></td>
    <td style="vertical-align: top; text-align: justify">&#160;</td>
    <td style="vertical-align: top; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">6</span></td>
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    <td style="vertical-align: top; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Jiangsu Yada</span></td>
    <td style="vertical-align: top; text-align: justify">&#160;</td>
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    <td style="vertical-align: top; text-align: justify">&#160;</td>
    <td style="vertical-align: top; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Registered</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"><b><i><span style="text-decoration:underline">Patents</span></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">China&#8217;s patent law stipulates that there
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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%">
  <tr style="vertical-align: top">
    <td style="width: 0.25in">&#160;</td>
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    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">A patent for invention refers to a new technical solution for a product, a method or an improvement thereof.</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">
    <td style="width: 0.25in">&#160;</td>
    <td style="width: 0.25in"><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">
    <td style="width: 0.25in">&#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">Design patent refers to the new design of product shape, pattern, color or their combination, which is aesthetic and suitable for industrial application.</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">Set forth below is a detailed description of our
registered patents:</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="width: 10%; border-bottom: black 1.5pt solid; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Country</b></span></td>
    <td style="width: 1%; text-align: justify">&#160;</td>
    <td style="width: 15%; border-bottom: black 1.5pt solid; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Patent No.</b></span></td>
    <td style="width: 1%; text-align: justify">&#160;</td>
    <td style="width: 30%; border-bottom: black 1.5pt solid; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Patent Name </b></span></td>
    <td style="width: 1%; text-align: justify">&#160;</td>
    <td style="width: 8%; border-bottom: black 1.5pt solid; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Patent<br/>
Publication <br/>
Date</b></span></td>
    <td style="width: 1%; text-align: justify">&#160;</td>
    <td style="width: 8%; border-bottom: black 1.5pt solid; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Patent <br/>
Type</b></span></td>
    <td style="width: 1%; text-align: justify">&#160;</td>
    <td style="width: 11%; border-bottom: black 1.5pt solid; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Patent<br/>
Validity <br/>
Period</b></span></td>
    <td style="width: 1%; text-align: justify">&#160;</td>
    <td style="width: 11%; border-bottom: black 1.5pt solid"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Patent Status</b></span></td>
    <td style="width: 1%">&#160;</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
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    <td style="text-align: justify">&#160;</td>
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    <td style="text-align: justify">&#160;</td>
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    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">09/09/2015</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">Invention</span></td>
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    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">20 years from the application date (11/03/2013)</span></td>
    <td style="text-align: justify">&#160;</td>
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Renewed and effective</span></td>
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  <tr style="vertical-align: top; background-color: White">
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">China</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">ZL201420092814.8</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">Nano-crystalline cellulose dressing for treating extensive burns</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">2/25/2015</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">Utility model</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">10 years from the application date (3/3/2014)</span></td>
    <td style="text-align: justify">&#160;</td>
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Registered and effective</span></td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">China</span></td>
    <td style="text-align: justify">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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</table><div>

</div><p style="margin: 0">&#160;</p><div>

</div><p style="margin: 0"></p><div>

</div><!-- Field: Page; Sequence: 58; Value: 1 --><div>
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</div><p style="margin: 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: 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="vertical-align: top; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Utility model</span></td>
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    <td style="text-align: left; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Registered and effective</span></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; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Registered and effective</span></td>
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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">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our currently registered patents do not relate to our top 20 products,
which are mature products. Instead, our registered patents represent the phased achievements of our R&amp;D department, which will serve
as the basis for future research and the planned development of new products.</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">Currently, we have 27 registered and effective
patents, and we have not signed any royalty or licensing agreements with any third parties with respect to these patents. Currently, however,
we are working under a collaboration agreement to develop and register a patented product for production and sale. The patent relates
to a tracheal tube kit capable of pulverization and dosing by a tube wall fan spraying concurrently, and it is a utility model patent
issued in China with a validity period of ten years from May 29, 2019. A utility model patent is issued for a new technical scheme suitable
for practical use based on the shape, structure or combination of the products used. Moreover, to be suitable for a utility model patent,
an invention must possess novelty, creativity and practicability. We are authorized by the patent owner to develop a new use for his patent
and to file a medical device registration certificate for the developed product. Under our agreement with the patent owner, once the product
is in production and sales, we will distribute 25% of the profit after tax to him. Under the agreement, the patent owner has the right
to request an accounting of profits at his own expense. If the patent owner wishes to transfer the patent in the future, he can only transfer
it to us. For this collaboration agreement, we have completed the development of the new use of the patented product, and we are in the
process of applying for medical device registration certificate. Because the new product has not been put into production and has not
generated any sales yet, we have not distributed any profit to the patent owner and no other fees have been paid or received under the
agreement. The collaboration agreement and the profit-sharing arrangement are for a perpetual term. The collaboration agreement may be
terminated, however, in the event that we are unable to provide an accurate accounting of profits for the product to the patent owner.
In that case, all rights to the patent may be returned to the patent owner and we will be liable for damages in the amount of an additional
10% of net profits received from the product.</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: 59; 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"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->55<!-- Field: /Sequence --></span></p></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>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Copyrights</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">Set forth below is a detailed description of our
registered copyrights:</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>
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    <td style="vertical-align: bottom; width: 15%; border-bottom: black 1.5pt solid; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Copyright No.</b></span></td>
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    <td style="vertical-align: bottom; width: 30%; border-bottom: black 1.5pt solid; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Copyright Name </b></span></td>
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    <td style="vertical-align: bottom; width: 8%; border-bottom: black 1.5pt solid; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Copyright <br/>
Publication <br/>
Date</b></span></td>
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    <td style="vertical-align: bottom; width: 8%; border-bottom: black 1.5pt solid; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Copyright <br/>
Type</b></span></td>
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    <td style="vertical-align: bottom; width: 11%; border-bottom: black 1.5pt solid; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Copyright <br/>
Application <br/>
Date</b></span></td>
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    <td style="vertical-align: bottom; width: 11%; border-bottom: black 1.5pt solid; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Copyright <br/>
Status</b></span></td>
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  <tr style="vertical-align: top; background-color: #CCEEFF">
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    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">2019SR0829585</span></td>
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    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Self-service printing terminal control system software of image diagnostic film (V1.0)</span></td>
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    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">8/9/2019</span></td>
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    <td style="text-align: justify">&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">6/13/2019</span></td>
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    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Registered and effective</span></td>
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  <tr style="vertical-align: top">
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    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">2019SR0813645</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">Intelligent Medical film image printing output system software (V1.0)</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">8/6/2019</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">software copyright</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">6/20/2019</span></td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Registered and effective</span></td>
    <td>&#160;</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>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">We maintain Group Life Insurance for some of our
high-risk employees, such as electricians, plumbers and tooling operators. We also provide social security insurance including pension,
medical insurance, unemployment insurance, maternity insurance, on-the-job injury insurance and housing fund plans through a PRC government-mandated
benefit contribution plan for our employees. We do not carry any key-man life insurance, product liability and professional liability
insurance. Even if we purchase these kinds of insurance, the insurance may not fully protect us from the financial impact of defending
against product liability or professional liability claims. We have not purchased any property insurance or business interruption insurance.
We have determined that the costs of insuring for related risks and the difficulties associated with acquiring such insurance on commercially
reasonable terms make it impractical. We consider our insurance coverage to be sufficient for our business operations in China.</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>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">We may from time to time be subject to
various legal or administrative claims and proceedings arising in the ordinary course of business. Litigation or any other legal or
administrative proceeding, regardless of the outcome, is likely to result in substantial cost and diversion of our resources,
including our management&#8217;s time and attention.</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">With the exception of the following proceedings, we are currently not a party
to any material legal or administrative proceedings:</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%">
  <tr style="vertical-align: top">
    <td style="width: 0.25in">&#160;</td>
    <td style="width: 0.25in"><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><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>REGULATIONS</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; text-align: justify">We operate our business in the PRC under a legal
regime consisting of the National People&#8217;s Congress, which is the country&#8217;s highest legislative body, the State Council, which
is the highest authority of the executive branch of the PRC central government, and several ministries and agencies under its authority,
including the State Administration of Foreign Exchange, or SAFE, the Ministry of Commerce, or MOFCOM, the National Development and Reform
Commission, or NDRC, the State Administration for Market Regulation, or SAMR, formerly known as the State Administration for Industry
and Commerce, or SAIC,&#160;the Ministry of Civil Affairs, or MCA, and their respective authorized local counterparts.</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">This section sets forth a summary of the most
significant rules and regulations that affect our business activities in the PRC.</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="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"><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>
    </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>Regulation Relating to Foreign Investment</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">All limited liability companies incorporated and
operating in the PRC are governed by the&#160;<i>Company Law of the People&#8217;s Republic of China</i>, or the Company Law, which was
amended and promulgated by the Standing Committee of the National People&#8217;s Congress on October 26, 2018. However, on December 24,
2021, the Standing Committee of the National People&#8217;s Congress issued the Company Law of the People&#8217;s Republic of China (Draft
for Comments) (the &#8220;Revised Company Law&#8221;), which is now open for public comments. The Revised Company Law further stipulates
the establishment and withdrawal of the company, the organizational structure and the capital system of the company, and strengthens the
responsibilities of shareholders and management personnel and Corporate Social Responsibility. Foreign invested projects must also comply
with the Company Law, with exceptions as specified in foreign investment laws.</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">The Foreign Investment Law of the People&#8217;s
Republic of China (the &#8220;Foreign Investment Law&#8221;) was adopted by the second meeting of the 13th National People&#8217;s Congress
on March 15, 2019, which became effective on January 1, 2020. On December 26, 2019, the State Council promulgated Regulation for Implementing
the Foreign Investment Law of the People&#8217;s Republic of China (the &#8220;Regulation&#8221;), which became effective on January 1,
2020.</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">The Foreign Investment Law and the Regulation
apply the administrative system of pre-establishment national treatment plus negative list to foreign investment and clarify the state
shall develop a catalogue of industries for encouraging foreign investment to specify the industries, fields, and regions where foreign
investors are encouraged and directed to invest. The MOFCOM and NDRC promulgated the Special Administrative Measures for the Access of
Foreign Investment (Negative List) (2021 Version) (the &#8220;2021 Negative List&#8221;) on December 27, 2021, which became effective
on January 1, 2022. The 2021 Negative List replaced the Special Administrative Measures for the Access of Foreign Investment (2020 Version)
and serves as the main basis for management and guidance for the MOFCOM to manage and supervise foreign investments. The restricted and
prohibited industry categories have shareholding requirements as prescribed in the 2021 Negative List. Those industries not set out on
the 2021 Negative List shall be classified as industries permitted for foreign investment. None of our businesses are on the 2021 Negative
List, nor on the 2020 Negative List. Therefore, the Company is able to conduct its business through its wholly owned PRC Subsidiaries
without being subject to restrictions imposed by the foreign investment laws and regulations of the PRC. In addition, the version of the
Catalogue of Industries for Encouraged Foreign Investment currently in force was amended in 2022 and became effective on January 1, 2023,
which replaced the Catalogue of Industries for Encouraged Foreign Investment (2020 version).</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>Regulation Relating to Wholly Foreign-owned
Enterprises</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">The abovementioned Company Law of the People&#8217;s
Republic of China provides that companies established in the PRC may take the form of company of limited liability or company limited
by shares. Each company has the status of a legal person and owns its assets itself. Assets of a company may be used in full for the company&#8217;s
liability. The Company Law applies to foreign-invested companies unless relevant laws provide otherwise.</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">The Foreign Investment Law replaced Law of the
People&#8217;s Republic of China on Wholly Foreign-owned Enterprises. It stipulates that the PRC implements a system of pre-establishment
national treatment plus negative list for the administration of foreign investment. Foreign investors are not allowed to invest in fields
or sectors prohibited in the market access negative list for foreign investment. Foreign investors that intend to invest in the fields
subject to access restrictions stipulated in market access negative list for foreign investment shall satisfy the conditions stipulated
in such negative list. The PRC policies supporting enterprise development are equally applicable to foreign-invested enterprises. The
PRC does not impose expropriation on foreign investment. Under special circumstances, if it requires imposing expropriation on foreign
investment due to the need of public interest, expropriation shall be imposed according to legal procedures, and the foreign-invested
enterprises concerned shall receive fair and reasonable compensation. Foreign-invested enterprises can raise funds through public issuance
of stocks, corporate bonds and other securities in accordance with the law. Overall, The Foreign Investment Law establishes the clear
principle of applying national treatment to FIEs except those engaged in industries on the 2020 Negative List. Since our current and planned
business is not on the 2021 Negative List, to the best of our knowledge, it will not create any material adverse effect to our Company&#8217;s
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><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>Regulations Relating to 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"><b><i>Copyright </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">China has adopted comprehensive legislation governing
intellectual property rights, including trademarks and copyrights. China is a signatory to the primary international conventions on intellectual
property rights and has been a member of the Agreement on Trade Related Aspects of Intellectual Property Rights since its accession to
the WTO in December 2001.</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">In September&#160;1990, the SCNPC promulgated
the Copyright Law of the People&#8217;s Republic of China, effective in June 1991 and amended in 2001, 2010 and 2020 respectively. The
amended Copyright Law extends copyright protection to internet activities, products disseminated over the internet and software products.
In addition, there is a voluntary registration system administered by the Copyright Protection Centre of China.</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">In order to further implement the Computer Software
Protection Regulations, promulgated by the State Council in December 2001 and amended in 2011 and 2013 respectively, the National Copyright
Administration issued Computer Software Copyright Registration Procedures in February 2002, which specify detailed procedures and requirements
with respect to the registration of software copyrights.</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>Trademark</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">According to the Trademark Law of the People&#8217;s
Republic of China, promulgated by the SCNPC in August 1982, and amended in 1993, 2001, 2013 and 2019 respectively, the Trademark Office
of China National Intellectual Property Administration is responsible for the registration and administration of trademarks and is also
responsible for resolving trademark disputes in China. Registered trademarks are valid for ten years from the date the registration is
approved. A registrant may apply to renew a registration within twelve months before the expiration date of the registration. If the registrant
fails to apply in a timely manner, a grace period of six additional months may be granted. If the registrant fails to apply before the
grace period expires, the registered trademark shall be deregistered. Renewed registrations are valid for ten years. In April 2014, the
State Council issued the revised Implementation of the Trademark Law, which specified the requirements of applying for trademark registration
and review.</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>Patent</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">According to the Patent Law of the People&#8217;s
Republic of China promulgated by the SCNPC in 1984 and amended in 1992, 2000, 2008 and 2020, respectively, a patentable invention or a
utility model must meet three criteria: novelty, inventiveness and practicability. A patent is valid for a twenty-year term for an invention
and a ten-year term for a utility model or design, starting from the application date.</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>Domain Names</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">In May&#160;2012, the China Internet Network Information
Center issued the Implementing Rules for Domain Name Registration setting forth the detailed rules for registration of domain names. In
August 2017, China&#8217;s Ministry of Industry and Information Technology promulgated the Administrative Measures on Internet Domain
Names, or the Domain Name Measures. The Domain Name Measures regulate the registration of domain names, such as the top-level domain name
&#8220;.cn&#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"><b>Regulations on Offshore Parent Holding Companies&#8217;
Direct Investment in and Loans to Their PRC Subsidiaries</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">An offshore company may invest equity in a PRC
company, which will become the PRC subsidiary of the offshore holding company after investment. Such equity investment is subject to a
series of laws and regulations generally applicable to any foreign-invested enterprise in China, all as amended from time to time, and
their respective implementing rules; the Administrative Provisions on Foreign Exchange in Domestic Direct Investment by Foreign Investors;
and the Notice of the State Administration on Foreign Exchange on Further Improving and Adjusting Foreign Exchange Administration Policies
for Direct Investment. Under the aforesaid laws and regulations, the increase of the registered capital of a foreign-invested enterprise
is subject to the prior approval by the original approval authority of its establishment. In addition, the increase of registered capital
and total investment amount shall both be registered with SAIC and SAFE. Shareholder loans made by offshore parent holding companies to
their PRC subsidiaries are regarded as foreign debts in China for regulatory purpose, which is subject to a number of PRC laws and regulations,
including the PRC Foreign Exchange Administration Regulations, the Interim Measures on Administration on Foreign Debts, the Tentative
Provisions on the Statistics Monitoring of Foreign Debts and its implementation rules, and the Administration Rules on the Settlement,
Sale and Payment of Foreign Exchange. Under these regulations, the shareholder loans made by offshore parent holding companies to their
PRC subsidiaries shall be registered with SAFE.</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><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Regulations Relating to Foreign Exchange</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">Pursuant to the&#160;Foreign Exchange Administration
Regulations, as amended in August 2008, the RMB is freely convertible for current account items, including the distribution of dividends,
interest payments, trade and service-related foreign exchange transactions, but not for capital account items, such as direct investments,
loans, repatriation of investments and investments in securities outside the PRC, unless SAFE&#8217;s prior approval is obtained and prior
registration with SAFE is made. In May 2013 SAFE promulgated the&#160;Circular of the SAFE on Printing and Distributing the Administrative
Provision on Foreign Exchange in Domestic Direct Investment by Foreign Investors and Relevant Supporting Documents&#160;which provides
for and simplifies the operational steps and regulations on foreign exchange matters related to direct investment by foreign investors,
including foreign exchange registration, account opening and use, receipt and payment of funds, and settlement and sales of foreign exchange.</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">Pursuant to the&#160;Circular on Relevant Issues
concerning Foreign Exchange Administration of Overseas Investment and Financing and Return Investments Conducted by Domestic Residents
through Overseas Special Purpose Vehicles&#160;or the SAFE Circular&#160;37, promulgated by SAFE and which became effective on July&#160;4,
2014, (a)&#160;a PRC resident shall register with the local SAFE branch before he or she contributes assets or equity interests in an
overseas special purpose vehicle, or Overseas Special Purpose Vehicles (SPV), that is directly established or controlled by the PRC Resident
for the purpose of conducting investment or financing; and (b)&#160;following the initial registration, the PRC Resident is also required
to register with the local SAFE branch for any major change, in respect of the Overseas SPV, including, among other things, a change of
the Overseas SPV&#8217;s PRC Resident shareholder(s), name of the Overseas SPV, term of operation, or any increase or reduction of the
Overseas SPV&#8217;s registered capital, share transfer or swap, and merger or division. Pursuant to SAFE Circular&#160;37, failure to
comply with these registration procedures may result in penalties.</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">Pursuant to the Circular of the State Administration
of Foreign Exchange on Further Simplifying and Improving the Direct Investment-related Foreign Exchange Administration Policies, or the
SAFE Notice 13, which was promulgated on February 13, 2015 and with effect from June 1, 2015, the foreign exchange registration under
domestic direct investment and the foreign exchange registration under overseas direct investment is directly reviewed and handled by
banks in accordance with the SAFE Notice 13, and the SAFE and its branches shall perform indirect regulation over the foreign exchange
registration via banks.</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>Regulations Relating to Dividend Distributions</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">According to the PRC Company Law and Foreign Investment
Law, each of our PRC subsidiaries, as a foreign invested enterprise, or FIE, are required to draw 10% of its after-tax profits each year,
if any, to fund a common reserve, which may stop drawing its after-tax profits if the aggregate balance of the common reserve has already
accounted for over 50% of its registered capital. These reserves are not distributable as cash dividends. Furthermore, under the EIT Law,
which became effective in January 2008, the maximum tax rate for the withholding tax imposed on dividend payments from PRC foreign invested
companies to their overseas investors that are not regarded as &#8220;resident&#8221; for tax purposes is 20%. The rate was reduced to
10% under the Implementing Regulations for the EIT Law issued by the State Council. However, a lower withholding tax rate might be applied
if there is a tax treaty between China and the jurisdiction of the foreign holding companies, such as tax rate of 5% in the case of Hong
Kong companies that holds at least 25% of the equity interests in the foreign-invested enterprise, and certain requirements specified
by PRC tax authorities are satisfied.</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>Regulations Relating to Overseas Listings</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">On July 6, 2021, the General Office of the Central
Committee of the Communist Party of China and the General Office of the State Council jointly issued the &#8220;Opinions on Severely Cracking
Down on Illegal Securities Activities According to Law,&#8221; or the Opinions. The Opinions emphasized the need to strengthen the administration
over illegal securities activities, and the need to strengthen the supervision over overseas listings by Chinese companies. Effective
measures, such as promoting the construction of relevant regulatory systems will be taken to deal with the risks and incidents of China-concept
overseas listed companies, and cybersecurity and data privacy protection requirements and similar matters.</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">On December 24, 2021, the China Securities Regulatory
Commission, or the CSRC, issued Provisions of the State Council on the Administration of Overseas Securities Offering and Listing by Domestic
Companies (Draft for Comments) (the &#8220;Administration Provisions&#8221;), and the Measures for the Overseas Issuance of Securities
and Listing Record-Filings by Domestic Enterprises (Draft for Comments) (the &#8220;Measures&#8221;), which were published for public
comments only, for which the comment period expired on January 23, 2022.</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><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Administration Provisions and Measures (collectively,
the &#8220;Draft Rules Regarding Overseas Listing&#8221;) for overseas listings lay out specific requirements for filing documents and
include unified regulation management, strengthening regulatory coordination, and cross-border regulatory cooperation. Domestic companies
seeking to list abroad must carry out relevant security screening procedures if their businesses involve such supervision. Companies endangering
national security are among those off-limits for overseas listings.</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">On February 17, 2023, the CSRC promulgated the
Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies, or the Trial Measures, and five supporting
guidelines, which came into effect on March 31, 2023. The Trial Measures and its supporting guidelines, reiterate the basic principles
of the Draft Rules Regarding Overseas Listing and impose substantially the same requirements for the overseas securities offering and
listing by domestic enterprises. Pursuant to the Trial Measures, domestic companies that seek to offer or list securities overseas, both
directly and indirectly, shall complete filing procedures with the CSRC pursuant to the requirements of the Trial Measures within three
working days following its submission of initial public offerings or listing application. If a domestic company fails to complete the
required filing procedures or conceals any material fact or falsifies any major content in its filing documents, such domestic company
may be subject to administrative penalties, such as orders to rectify, warnings, fines, and its controlling shareholders, actual controllers,
the person directly in charge and other directly liable persons may also be subject to administrative penalties, such as warnings and
fines.</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">According to the Notice on the Administrative
Arrangements for the Filing of the Overseas Securities Offering and Listing by Domestic Companies from the CSRC, or the CSRC Notice, which
was promulgated on February 17, 2023 and became effective on the same day, the domestic companies that have already been listed overseas
before the effective date of the Overseas Listing Trial Measures (i.e. March 31, 2023) shall be deemed as existing issuers (the &#8220;Existing
Issuers&#8221;). Existing Issuers are not required to complete the filing procedures immediately, and they shall be required to file with
the CSRC for any subsequent offerings. Further, according to the CSRC Notice, domestic company obtained approval from overseas regulatory
authorities or securities exchanges (for example, the effectiveness of a registration statement for offering and listing in the U.S. has
been approved) for their indirect overseas offering and listing prior March 31, 2023 but have not yet completed their indirect overseas
issuance and listing, are granted a six-month transition period from March 31, 2023 to September 30, 2023. Those issuers that complete
their indirect overseas offering and listing within such six-month period are deemed as Existing Issuers and are not required to file
with the CSRC for their indirect overseas offerings and listings. Within such six-month transition period, however, if such domestic companies
fail to complete their indirect overseas issuance and listing, they shall complete the filing procedures with the CSRC.</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">The Opinions, the Trial Measures and any related
implementing rules to be enacted may subject us to additional compliance requirements in the future financial activities. See &#8220;Risk
Factors - Risks Relating to Doing Business in the PRC - The Chinese governmental and regulatory interference could significantly limit
or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly
decline or be worthless.&#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">In August 2006, six PRC regulatory authorities,
including the CSRC, jointly adopted the&#160;Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or
the M&amp;A Rules, amended in June 2009. The M&amp;A Rules, among other things, require that if an overseas company established or controlled
by PRC companies or individuals, or PRC Citizens, intends to acquire equity interests or assets of any other PRC domestic company affiliated
with the PRC Citizens, such acquisition must be submitted to the MOFCOM for approval. The M&amp;A Rules also require that an Overseas
SPV formed for overseas listing purposes and controlled directly or indirectly by the PRC Citizens shall obtain the approval of the CSRC
prior to overseas listing and trading of such Overseas SPV&#8217;s securities on an overseas stock exchange.</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">Our PRC legal counsel, Dentons Shanghai, has advised
us that, based on its understanding of the current PRC laws and regulations, our corporate structure and arrangements are not subject
to the M&amp;A Rules. However, our PRC legal counsel has further advised us that there are substantial uncertainties as to how the M&amp;A
Rules will be interpreted or implemented in the context of an overseas offering, and its opinions summarized above are subject to any
new laws, rules and regulations or detailed implementations and interpretations in any form relating to the M&amp;A Rules.</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><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Regulations Relating to Employment</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">The Labor Law of the People&#8217;s Republic of
China, or the Labor Law, which became effective in January 1995 and was amended in 2018, and the Employment Contract Law of the People&#8217;s
Republic of China, or the Employment Contract Law, effective in January 2008 and amended in 2012, require employers to provide written
contracts to their employees, restrict the use of temporary workers and aim to give employees long-term job security. Employers must pay
their employees&#8217; wages equal to or above local minimum wage standards, establish labor safety and workplace sanitation systems,
comply with state labor rules and standards and provide employees with appropriate training on workplace safety. In September 2008, the
State Council promulgated the Implementing Regulations for the PRC Employment Contract Law which became effective immediately and interprets
and supplements the provisions of the Employment Contract Law.</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">Under the Labor Contract Law, an employer shall
limit the number of dispatched workers so that they do not exceed a certain percentage of its total number of workers. In January 2014,
the MOHRSS issued the Interim Provisions on Labor Dispatching, which became effective in March 2014, pursuant to which it provides that
the number of dispatched workers used by an employer shall not exceed 10% of the total number of its employees.</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">The PRC governmental authorities have passed a
variety of laws and regulations regarding social insurance and housing funds from time to time, including, among others, the Social Insurance
Law of the People&#8217;s Republic of China, the Regulation of Insurance for Labor Injury, the Regulations of Insurance for Unemployment,
the Provisional Insurance Measures for Maternal Employees, the Interim Administrative Provisions on Registration of Social Insurance and
the Administrative Regulations on the Housing Provident Fund. Pursuant to these laws and regulations, enterprises in the PRC shall provide
their employees with welfare schemes covering pension insurance, unemployment insurance, maternity insurance, occupational injury insurance
and medical insurance, as well as housing fund and other welfare plans. Failure to comply with such laws and regulations may result in
various fines and legal sanctions and supplemental contributions to the local social insurance and housing fund regulatory authorities.</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>Regulations Relating to Environmental Protection</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>Environmental Protection Law</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">The Environmental Protection Law of the PRC, or
the Environmental Protection Law, was promulgated and effective on December 26, 1989, and most recently amended on April 24, 2014. This
Environmental Protection Law has been formulated for the purpose of protecting and improving both the living environment and the ecological
environment, preventing and controlling pollution, other public hazards and safeguarding people&#8217;s health.</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">According to the provisions of the Environmental
Protection Law, in addition to other relevant laws and regulations of the PRC, the Ministry of Environmental Protection and its local
counterparts take charge of administering and supervising said environmental protection matters. Pursuant to the Environmental Protection
Law, the environmental impact statement on any construction project must assess the pollution that the project is likely to produce and
its impact on the environment, and stipulate preventive and curative measures; the statement shall be submitted to the competent administrative
department of environmental protection for approval. Installations for the prevention and control of pollution in construction projects
must be designed, built and commissioned together with the principal part of the project.</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">Permission to commence production at or utilize
any construction project shall not be granted until its installations for the prevention and control of pollution have been examined and
confirmed to meet applicable standards by the appropriate administrative department of environmental protection that examined and approved
the environmental impact statement. Installations for the prevention and control of pollution shall not be dismantled or left idle without
authorization. Where it is absolutely necessary to dismantle any such installation or leave it idle, prior approval shall be obtained
from the competent local administrative department of environmental protection.</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><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The&#160;Environmental Protection Law&#160;makes
it clear that the legal liabilities of any violation of said law include warning, fine, rectification within a time limit, compulsory
cease operation, compulsory reinstallation of dismantled installations of the prevention and control of pollution or compulsory reinstallation
of those left idle, compulsory shutout or closedown, or even criminal punishment.</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">As of the date of this report, we are not aware
of any warning, investigations, prosecutions, disputes, claims or other proceedings in respect of environmental protection, nor have we
been punished or can foresee any punishment to be made by any government authorities of the PRC.</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>Order on Ecosystem by the Ministry of Ecology
and Environment 2019 Classification-based Management on Fixed Pollutant Source</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">Pursuant to the Catalog of Classified Management
of Pollutant Discharge Permits for Stationary Pollution Sources, which was promulgated by the Ministry of Ecology and Environment on July
28, 2017 and most recently amended on December 20, 2019. The Ministry of Ecology and Environment implements a classification-based management
on the environmental impact assessment, or EIA, of pollutants according to pollutant amount and the impact of the pollutants on the environment
as below:</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%">
  <tr style="vertical-align: top">
    <td style="width: 0.25in; 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">For those pollutant discharge units with large amount of pollutants and significant environmental impacts, the key management on a pollutant discharge permit is required;</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">For those pollutant discharge units with small amount of pollutants and small environmental impacts, the simplified management on a pollutant discharge permit is required; 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"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For those pollutant discharge units with very small amount of pollutants and very small environmental impacts, the pollutant discharge registration form is required.</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">The medical device manufacturing is classified
as to fill in a Registration Form. Upon submission of all required documentation, we are registered under the new system by filling in
Pollution Source Registration Form.</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"><b>Regulations Relating to Customer Rights Protection</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">The&#160;PRC Customer Rights and Interests Protection
Law, or Customer Protection Law, as amended on October&#160;25, 2013 and effective on March&#160;15, 2014, sets out the obligations of
business operators and the rights and interests of the customers. Pursuant to this law, business operators must guarantee that the commodities
they sell satisfy the requirements for personal or property safety, provide customers with authentic information about the commodities,
and guarantee the quality, function, usage and term of validity of the commodities. Failure to comply with the Customer Protection Law
may subject business operators to civil liabilities such as refunding purchase prices, exchange of commodities, repairing, ceasing damages,
compensation, and restoring reputation, and even subject the business operators or the responsible individuals to criminal penalties if
business operators commit crimes by infringing the legitimate rights and interests of customers.</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>Regulations Relating to Tax in 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"><b><i>Income 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">The&#160;PRC Enterprise Income Tax Law&#160;was
promulgated in March 2007 and was most recently amended in December 2018. The&#160;PRC Enterprise Income Tax Law&#160;applies a uniform
25% enterprise income tax rate to both foreign-invested enterprises and domestic enterprises, except where tax incentives are granted
to special industries and projects. Under the&#160;PRC Enterprise Income Tax Law, an enterprise established outside China with &#8220;de
facto&#160;management bodies&#8221; within China is considered a &#8220;resident enterprise&#8221; for PRC enterprise income tax purposes
and is generally subject to a uniform 25% enterprise income tax rate on its worldwide income. Under the implementation regulations to
the&#160;PRC Enterprise Income Tax Law, a &#8220;de facto&#160;management body&#8221; is defined as the body that exercises full and substantial
control and overall management over the business, productions, 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">&#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; text-align: justify">In April 2009, the Ministry of Finance, or MOF,
and SAT jointly issued the&#160;Notice on Issues Concerning Process of Enterprise Income Tax in Enterprise Restructuring Business,&#160;or
the Circular 59. In December 2009, SAT issued the&#160;Notice on Strengthening Administration of Enterprise Income Tax for Share Transfers
by Non-PRC Resident Enterprises,&#160;or the Circular 698. Both Circular 59 and Circular 698 became effective retroactively as of January
2008. In March 2011, SAT issued the&#160;Notice on Several Issues Regarding the Income Tax of Non-PRC Resident Enterprises,&#160;or the
SAT Circular 24, effective in April 2011. By promulgating and implementing these circulars, the PRC tax authorities have enhanced their
scrutiny over the direct or indirect transfer of equity interests in a PRC resident enterprise by a non-resident enterprise.</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">In February 2015, SAT issued the&#160;Notice on
Certain Corporate Income Tax Matters on Indirect Transfer of Properties by Non-PRC Resident Enterprises,&#160;or the SAT Circular 7, to
supersede existing provisions in relation to the indirect transfer as set forth in Circular 698, while the other provisions of Circular
698 remain in force. SAT Circular 7 introduces a new tax regime that is significantly different from that under Circular 698. SAT Circular
7 extends its tax jurisdiction to capture not only indirect transfers as set forth under Circular 698 but also transactions involving
transfer of immovable property in China and assets held under the establishment, and placement in China, of a foreign company through
the offshore transfer of a foreign intermediate holding company. SAT Circular 7 also addresses transfer of the equity interest in a foreign
intermediate holding company broadly. In addition, SAT Circular 7 provides clearer criteria than Circular 698 on how to assess reasonable
commercial purposes and introduces safe harbor scenarios applicable to internal group restructurings. However, it also brings challenges
to both the foreign transferor and transferee of the indirect transfer as they have to determine whether the transaction should be subject
to PRC tax and to file or withhold the PRC tax accordingly. In October 2017, SAT issued&#160;the Announcement on Issues Relating to Withholding
at Source of Income Tax of Non-resident Enterprises,&#160;or the SAT Circular 37, amended in June 2018. The SAT Circular 37 superseded
the Non-resident Enterprises Measures and SAT Circular 698 as a whole and partially amended some provisions in SAT Circular 24 and SAT
Circular 7. SAT Circular 37 purports to clarify certain issues in the implementation of the above regime, by providing, among others,
the definition of equity transfer income and tax basis, the foreign exchange rate to be used in the calculation of withholding amount,
and the date of occurrence of the withholding obligation. Specifically, SAT Circular 37 provides that where the transfer income subject
to withholding at source is derived by a non-PRC resident enterprise in installments, the installments 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">&#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></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">The PRC Provisional Regulations on Value-Added
Tax were promulgated by the State Council on December 13, 1993, which became effective on January 1, 1994 and were subsequently amended
from time to time. The Detailed Rules for the Implementation of the PRC Provisional Regulations on Value-Added Tax (2011 Revision) was
promulgated by the Ministry of Finance on December 25, 1993 and subsequently amended on December 15, 2008 and October 28, 2011. On November
19, 2017, the State Council promulgated the Decisions on Abolishing the PRC Provisional Regulations on Business Tax and Amending the PRC
Provisional Regulations on Value-Added Tax. Pursuant to these regulations, rules and decisions, all enterprises and individuals engaged
in sale of goods, provision of processing, repair, and replacement services, sales of services, intangible assets, real property, and
the importation of goods within the PRC territory are VAT taxpayers. On March 21, 2019, the Ministry of Finance, the SAT, and the General
Administration of Customs jointly issued the Announcement on Relevant Policies on Deepen the Reform of Value-Added Tax. Sales revenue
represents the invoiced value of goods, net of VAT. The VAT is based on gross sales price, starting from April 1, 2019, VAT rate was lowered
to 13%.</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"><b>LAWS AND REGULATIONS RELATING TO MEDICAL DEVICES</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>Regulation and Classification of Medical Devices</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">Pursuant to the Regulations on the Supervision
and Administration of Medical Devices promulgated on January 4, 2000, effective on June 1, 2014, amended by the State Council on May 4,
2017 and now effective, and then amended on February 9, 2021 effective on June 1, 2021 (&#8220;Regulation on Supervision and Administration
of Medical Devices&#8221;), the Food and Drug Administration of the State Council shall be responsible for the national administration
and supervision of medical devices of the PRC and its local counterparts take charge of the local administration and supervision of medical
devices of the PRC.</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: 67; 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"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->63<!-- 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">Under this regulation, medical devices have been
classified into three categories based on the degree of risk. Class I medical devices shall refer to those devices with low level of risks
and whose safety and effectiveness can be ensured through routine administration. Class II medical devices shall refer to those devices
with moderate risks that must be strictly controlled and regulated to ensure their safety and effectiveness. Class III medical devices
shall refer to those devices with relatively high risks that must be strictly controlled and regulated through special measures to ensure
their safety and effectiveness.</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">The products we currently manufacture and sell
include Class I, II and III disposable medical devices.</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>Registration and Filings of Medical Devices</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">Pursuant to the Regulations on the Supervision
and Administration of Medical Devices and the Administrative Measures for the Registration of Medical Devices promulgated by CFDA on July
30, 2014 and came into effect on October 1, 2014 (&#8220;the Supervision and Administration of Medical Devices&#8221; was amended and
came into effect on May 4, 2017; and which was then amended on February 9, 2021 and came into effect on June 1, 2021), Class I medical
devices are subject to filing administration, and Class II and Class III medical devices are subject to pre-approval registration administration.
A registration certificate for Class II and Class III medical devices are issued upon approval, which is valid for five years and may
be renewed six months prior to its expiration date.</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">Clinical trials are not required for the filing
of the Class I medical devices, but necessary for the registration of Class II and Class III medical device with certain exceptions.</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">As of the date of this report, we are current
on the registration and filing of medical devices.</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>Production License for Medical Devices</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">Pursuant to the Regulation on the Supervision
and Administration of Medical Devices promulgated on July 30, 2014 and came into effect on October 1, 2014, as amended in 2017 and came
into effect on May 4, 2017 (amended on February 9, 2021, came into effect on June 1, 2021), and the Administrative Measures on the Production
Supervision of Medical Devices promulgated on July 30, 2014 and came into effect on October 1, 2014, as amended in 2017 and came into
effect on November 11, 2017, manufacturers engaged in the manufacturing of Class I medical devices are subject to production filing administration
and receive production filing certificates upon satisfaction of filing requirements; while those engaged in the manufacturing of Class
II and Class III medical devices are subject to pre-approval licensing administration and receive medical device production licenses upon
receipt of approval for licensing. A medical device production license is valid for five years and may be renewed six months prior to
its expiration date.</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">In addition, a manufacturer of medical devices
shall satisfy the following conditions:</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%">
  <tr style="vertical-align: top">
    <td style="width: 0.25in">&#160;</td>
    <td style="width: 0.25in"><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">possessing production sites, environmental conditions, production equipment and professional technicians that are suitable for such medical device produced;</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">
    <td style="width: 0.25in">&#160;</td>
    <td style="width: 0.25in"><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">possessing organizations or professional examination staff and examination equipment that carry out quality examination for such medical device produced;</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">
    <td style="width: 0.25in">&#160;</td>
    <td style="width: 0.25in"><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">formulating a management system which ensures the quality of such medical device;</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">
    <td style="width: 0.25in">&#160;</td>
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(4)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">having capability of after-sale services that is suitable for such medical device produced; (5) satisfying the requirements as prescribed in production R&amp;D and production technique documents.</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">As of the date of this report, we are current
on the production filing and licensing of the medical devices.</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>Production and Quality Management of Medical
Devices</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">Pursuant to the Administrative Measures on the
Supervision of the Production of Medical Devices promulgated on December 29, 2014 and came into effect on March 1, 2015, as amended in
2017 and came into effect on November 17, 2017, and the Standards on Production and Quality Management of Medical Devices promulgated
by the CFDA on December 29, 2014 and came into effect on March 1, 2015, an enterprise engaged in the production of medical devices shall
establish and effectively maintain a quality control system in accordance to the requirements of the Standards on Production and Quality
Management of Medical Devices. The enterprise engaged in the production of medical devices shall regularly conduct comprehensive self-inspection
on the operation of quality management system and submit this report to the local food and drug supervision and administration authorities
before the end of every year. The enterprise shall also establish its procurement control procedure and assess its suppliers by establishing
an examination system to ensure the purchased products are in compliance with the statutory requirements. The enterprise shall apply risk
management to the whole process of design and development, production, sales and after-sale services.</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><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; text-align: justify">Pursuant to The Notice of Four Guidelines including
On-site Inspection Guidelines for the standards on Production and Quality Management of Medical Devices promulgated by the CFDA on September
25, 2015 and came into effect on September 25, 2015, during the course of on-site verification of the registration of medical devices
and on-site inspection of production license t(including change production license), the inspection team shall, in accordance with the
guidelines, issue recommended conclusions for on-site inspections, which shall be divided into &#8220;Passed,&#8221; &#8220;Failed&#8221;
and &#8220;Reassessment after rectification.&#8221; During the supervision and inspection, if it is found that the requirements of the
key items or ordinary items that may have direct impact on product quality are not satisfied, the enterprise shall suspend production
and go through rectification. If it is found that the requirements of the ordinary items are not satisfied, and it does not directly affect
product quality, the enterprise shall rectify in a prescribed time. The regulatory authorities will examine and verify the recommended
conclusions and on-site inspection materials submitted by the inspection group and issue the final inspection results.</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">The inspection team has conducted several on-site
inspections on our standards of production and quality management of medical devices during the track record period, the recommended conclusions
issued by the inspection team were &#8220;Passed&#8221; or &#8220;Rectification within the prescribed period.&#8221; The matters with
respect to &#8220;Rectification within the prescribed period&#8221; have been rectified within the prescribed period and submitted to
the inspection team.</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">According to the on-site inspections on our standards
of production and quality management conducted by competent authorities, we are in compliance with the requirements of the standards on
production and quality management of medical devices.</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>Good Clinical Practice for Medical Devices</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">On March 1, 2016, the CFDA and the National Health
and Family Planning Commission jointly promulgated the Good Clinical Practice for Medical Devices, which became effective as of June 1,
2016. The regulation includes full procedures of clinical trial of medical devices, including, among others, the protocol design, conduction,
monitoring, verification, inspection, and data collection, recording, analysis and conclusion and reporting procedure of a clinical trial.</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">For conducting clinical trials of medical devices,
an applicant shall organize to formulate scientific and reasonable clinical trial protocol based on the categories, risks and intended
use of the medical devices for the clinical study. The applicant shall be responsible for organizing to develop and revise of the researcher&#8217;s
manual, clinical trial protocol, informed consent form, case report form, relevant standard operating procedures and other relevant documents,
and shall be responsible for organizing necessary trainings for the clinical trials. The applicant shall select the clinical trial institutions
and its researchers from the qualified medical device clinical trial institutions according to the characteristics of the medical devices
to be used in the clinical study.</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">As an applicant for clinical trials of medical
devices, we are responsible for initiating, applying, organizing and monitoring such clinical trials, and shall be responsible for the
authenticity and reliability of the clinical trials.</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>Operation License for Medical Device</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">Pursuant to the Regulations on the Supervision
and Administration of Medical Devices and the Administrative Measures on the Operation Supervision of Medical Devices, promulgated on
July 30, 2014 and came into effect on October 1, 2014 and last amended on March 10, 2022, filing and licensing are not required for the
operation of Class I medical devices. Operators engaged in the operation of Class II medical devices are subject to filing administration
and will receive medical device operation filing certificate upon satisfaction of filing requirement, while operators engaged in the operation
of Class III medical devices are subject to pre-approval licensing administration and will receive medical device operation license upon
receipt of approval for licensing. A medical device operation license is valid for five years and may be renewed six months prior to its
expiration date.</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">To engage in business operations of medical devices,
the following requirements shall be met:</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%">
  <tr style="vertical-align: top">
    <td style="width: 0.25in">&#160;</td>
    <td style="width: 0.25in; 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">Having a quality control institution or staff corresponding to the business scope and scale, and the staff shall have relevant education or professional titles certified by the state.</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">
    <td style="width: 0.25in">&#160;</td>
    <td style="width: 0.25in; font-size: 10pt"><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">Having an operation and storage premise corresponding to the business scope and scale.</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">
    <td style="width: 0.25in">&#160;</td>
    <td style="width: 0.25in; font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">3.</span></td>
    <td style="text-align: justify; font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Having storage conditions corresponding to the business scope and scale; warehouses are not required if all storage is commissioned to other operators of medical devices.</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">
    <td style="width: 0.25in">&#160;</td>
    <td style="width: 0.25in; font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.</span></td>
    <td style="text-align: justify; font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Having a quality control system corresponding to the medical devices concerned.</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">
    <td style="width: 0.25in">&#160;</td>
    <td style="width: 0.25in; font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">5.</span></td>
    <td style="text-align: justify; font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Possessing the capability of professional guidance, technical training and after-sale service corresponding to the medical devices it operates; or it has come into an agreement on technical support with a relevant institution.</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">An enterprise to be engaged in business operations
of Category III medical devices shall also have a computerized information management system compliant with quality standards to ensure
traceability of products. An enterprise to be engaged in business operations of Category I or Category II medical devices is encouraged
to set up such a system.</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">As of the date of this report, we are current
on the operation filing and licensing of the medical devices.</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="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"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->65<!-- 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>Special Procedures for Examination and Approval
of Innovative Medical Devices</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">On October 2017, the General Office of the CPC
Central Committee and the General Office of the State Council issued the Opinions on Deepening the Reform of the Evaluation and Approval
Systems and Encouraging Innovation on Drugs and Medical Devices, which aims to encourage the innovation for medical devices.</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">Pursuant to the Opinions, the priority review
and approval will be applicable to innovative medical devices supported by the National Science and Technology Major Projects and the
National Key R&amp;D Program of China, and the clinical trials of which having been conducted by the National Clinical Research Center,
and approved by the management department of National Clinical Research Center. Pursuant to the Special Procedures for Examination and
Approval of Innovative Medical Devices which were promulgated by the NMPA on November 2, 2018 and came into effect on December 1, 2018,
special procedures shall be applicable to the examination and approval for medical devices in the following circumstances:</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%">
  <tr style="vertical-align: top">
    <td style="width: 0.25in">&#160;</td>
    <td style="width: 0.25in; 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">if the applicant legally owns the invention patent of the core technology of the product through its technological innovation activities in the PRC, or legally obtained the invention patent or the right of use thereof through transfer in the PRC, and that the interval between the date of application for the special examination and approval of innovative medical devices to the date of authorized publication should not exceed five years; or the patent administration department of the State Council has disclosed the application for the invention patent of the core technology and the Patent Search and Consultation Center of the National Intellectual Property Administration of the PRC has issued the patent search report setting out the novelty and innovation of the core technology solution of the product;</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">
    <td style="width: 0.25in">&#160;</td>
    <td style="width: 0.25in; font-size: 10pt"><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">the applicant has developed the prototype product and completed the preliminary research under a true and controllable process that generated complete and traceable data;</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">
    <td style="width: 0.25in">&#160;</td>
    <td style="width: 0.25in; font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(3)</span></td>
    <td style="text-align: justify; font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">the product has major working mechanism or mechanism of action which is the first of its kind in the PRC, has fundamental improvement in product performance or safety compared with similar products, is of an internationally leading standard in terms of techniques and has significant clinical value. The Center for Medical Device Evaluation of the NMPA should give priority to the innovative medical devices in their technical review upon receiving the registration application, after which the NMPA will give priority to the product in their administrative approval.</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>Advertisements of Medical Devices</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">Pursuant to the Regulations on Tentative Measures
for the Censorship of Advertisement for Drugs, Medical Devices, Dietary Supplements, Food Formula for Special Medical Purpose promulgated
by SAMR on December 24, 2019 and came into effect on March 1, 2020, the State Administration for Market Regulation is responsible for
organizing and guiding the review of advertisements for drugs, medical devices, health foods and formula foods for special medical purposes.
The administrations for market regulation and drug administrations (hereinafter referred to as the &#8220;advertisement review authorities&#8221;)
of all provinces, autonomous regions and centrally administered municipalities shall be responsible for the review of advertisements for
drugs, medical devices, health food and formula food for special medical purposes, and may entrust other administrative authorities to
implement review of advertisements pursuant to the law.</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">The validity period of the advertisement approval
number for drugs, medical devices, health food and formula food for special medical purposes shall be consistent with the shortest validity
period of the product registration certificate, filing certificate or production license. If no valid period is prescribed in the product
registration certificate, filing certificate or production license, the valid period of the advertisement approval number shall be two
years.</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">Advertisements for drugs, medical devices, health
food and formula food for special medical purposes shall be true and legitimate and shall not contain any false or misleading contents.
Advertisers shall be responsible for the veracity and legitimacy of the contents of advertisements for drugs, medical devices, health
food and formula food for special medical purposes.</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: 70; 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"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->66<!-- 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>National Medical Insurance Program</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">The national medical insurance program was adopted
pursuant to the Decision of the State Council on the Establishment of the Urban Employee Basic Medical Insurance Program issued by the
State Council on December 14, 1998, under which all employers in urban cities are required to enroll their employees in the Urban Employee
Basic Medical Insurance Program and the insurance premium is jointly contributed by the employers and employees. Pursuant to the Opinions
on the Establishment of the New Rural Cooperative Medical System forwarded by the General Office of the State Council on January 16, 2003,
China launched the New Rural Cooperative Medical System to provide medical insurance for rural residents in selected areas which has since
spread to the whole nation. The State Council promulgated the Guiding Opinions of the State Council about the Pilot Urban Resident Basic
Medical Insurance on July 10, 2007, under which urban residents of the pilot district, rather than urban employees, may voluntarily join
Urban Resident Basic Medical Insurance. In 2015, the PRC government announced the Outline for the Planning of the National Medical and
Health Service System (2015-2020) which aims to establish a basic medical and health care system that covers both rural and urban citizens
by 2020. On January 3, 2016, the State Council issued the Opinions on Integrating the Basic Medical Insurance Systems for Urban and Rural
Residents to integrate the Urban Resident Basic Medical Insurance and the New Rural Cooperative Medical System and the establishment of
a unified Basic Medical Insurance for Urban and Rural Residents, which will cover all urban and rural non-working residents expect for
rural migrant workers and persons in flexible employment arrangements who participate in the basic medical insurance for urban employees.</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">With regard to reimbursement for medical devices
and diagnostic tests, the Notice of Opinion on the Diagnosis and Treatment Management, Scope and Payment Standards of Medical Service
Facilities Covered by the National Urban Employees Basic Medical Insurance Scheme (Lao She Bu Fa [1999] No. 22) prescribes the coverage
of diagnostic and treatment devices and diagnostic tests where part of the fees is paid through the basic medical insurance scheme. It
also includes a negative list that precludes certain devices and medical services from governmental reimbursement. Detailed reimbursement
coverage and rate for medical devices and medical services (including diagnostic tests and kits) are subject to each province&#8217;s
local policies.</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>Export Registration</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">Pursuant to the Regulation on the Supervision
and Administration of Medical Devices and the Measures for the Supervision and Administration of Medical Device Production promulgated
by the CFDA and amended on November 11, 2017 and March 10, 2022, CFDA, in accordance with the spirit of the Notice of Guo Ban Fa [94]
No. 66 of the State Council, conducts inspections of safety and legality of the exported products manufactured by domestic enterprises,
grants legitimate production license in China (if these products are sold within Chinese territory). In accordance with international
practice, the quality of exported medical devices is mainly supervised by the importing countries. However, some importing countries/regions
may require exporting enterprises to provide Medical Device Product Export Sales Certificates issued by the CFDA. Pursuant to Announcement
on Issuing the Provisions on the Administration of Medical Device Product Export Sales Certificates, promulgated by the CFDA and effective
on September 1, 2015, such exporting enterprises may apply to the provincial departments of the CFDA at the places where enterprises are
located for Medical Device Product Export Sales Certificates.</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">The premise of obtaining Medical Device Product
Export Sales Certificates is that the relevant production enterprises have obtained medical device product registration certificates and
production licenses or have undergone the formalities for recordation and production recordation of medical device products in China.
The valid period of Medical Device Product Export Sales Certificates, except being specified for one time use, shall not expire after
the earliest deadline of any certificate among various certificates submitted by the enterprise amid the application materials, and shall
be no longer than two years. Where the relevant materials submitted by an enterprise change, the enterprise shall report to the certificate
issuing department in a timely manner. Where the relevant materials change, or the Medical Device Product Export Sales Certificate still
needs to be used after its expiration, the enterprise shall apply for a new Medical Device Product Export Sales Certificate. Where the
CFDA find that any relevant enterprises fail to meet the requirements of relevant regulations on production, they shall downgrade the
credit ratings of such enterprises to lower levels; or, when any enterprises are considered failing to meet the requirements for issuance
of certificates anymore, or the relevant materials submitted by the enterprises change, the provincial CFDA departments shall notify the
relevant information in a timely manner.</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: 71; 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"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->67<!-- 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>Two-invoice System</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">According to the Notice of Publishing Opinions
on Implementing Two-invoice System in Drug Procurement Among Public Medical Institutions (For Trial Implementation) which was issued on
December 26, 2016, the &#8220;two-invoice system&#8221; refers to the system that requires one invoice to be issued from pharmaceutical
manufacturers to pharmaceutical distributors and the other invoice to be issued from pharmaceutical distributors to medical institutions.
The wholly owned or holding commercial company (only one commercial company is permitted in the whole country) or the domestic general
agent for overseas drugs (only one domestic agent is permitted in the whole country) established by a pharmaceutical manufacturer or a
group enterprise integrating science, industry and trade may be regarded as a manufacturer. The allocation of drugs between a pharmaceutical
distribution group enterprise and its wholly owned (holding) subsidiaries or among its wholly owned (holding) subsidiaries may not be
regarded as a process for which an invoice should be issued, but one invoice is allowed to be issued at most.</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">Currently, some provinces in the PRC have formulated
relevant rules and regulations to implement the &#8220;two-invoice system&#8221; in the field of medical consumables, for instance, the
Notice on the Sharing of Transparent Procurement Results of Medical Devices (Medical Consumables) across the Province promulgated by the
Fujian Provincial Medical Security Management Committee Office in July 2018, the Notice on Further Promoting the &#8220;Two Invoice System&#8221;
on Medicines and Medical Consumables issued by eight local government departments of Shaanxi Province including Deepen Medical and Healthcare
System Reform Leading Group Office of Shaanxi Province in July 2018, and the Opinions on Implementation of the &#8220;Two Invoice System&#8221;
in Medical Consumables Procurement by Public Medical Institutions in Anhui Province (for Trial Implementation) issued by five local government
departments of Anhui Province including Food and Drug Administration of Anhui Province in November 2017.</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"><b>LAWS AND REGULATIONS RELATING TO LAND USE</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>Overview of relevant PRC Laws and Regulations
on Land Use Rights</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">Pursuant to relevant PRC land laws and stipulations,
there are two kinds of land in China: 1) collectively owned land, which is normally owned by the farmers or village for agricultural use;
and 2) state owned land which is sub-divided into allocated and granted land use rights. Allocated land are land rights granted by the
Chinese government to an entity for a particular purpose (e.g., research, military, medical etc.). These allocated rights are inferior
in that they must be used for the specified purpose and cannot be transferred, leased or mortgaged. Granted land, on the other hand, is
paid for and can be used for commercial and industrial purposes. These land use rights are the preferred land use rights for foreign investors
as they are freely transferable (subject normally to the land being developed, as undeveloped land cannot normally be sold), leased and
mortgaged. Land may be designated for commercial, industrial, residential or other purposes and may not be used for any non-designated
purpose. The land authorities may impose administrative sanctions, including fines, injunction orders or even confiscation of the land
use rights, for any breach of this provision. The term of land use rights varies depending on the designated purpose. A land user may
extend the term by entering into a contract to extend the term and pay an additional land grant fee to the land authorities. Upon the
execution of a land use rights grant contract and payment of the land grant fee, owners of land use rights will be issued a State-owned
land use certificate, which sets forth, among other things: (i) the nature (granted or allocated); (ii) designated purpose; (iii) term
of the land use rights; (iv) the location and area of the land; and (v) whether the land use rights are subject to any security interest.
This certificate is the primary evidence of legal and valid land use rights.</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>Overview of relevant PRC Laws and Regulations
on Buildings</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">It is required under the PRC law to obtain relevant
permits from different authorities before commencing the construction of a building. The required permits are, inter alia, a State-owned
Land Use Certificate, a Planning Permit of Land for Construction Use, a Planning Permit of Construction Project, and a Commencement Permit
of Construction Project (except for those projects where the construction investment is less than RMB 300,000 or the construction area
is less than 300 square meters). After the completion of construction, the owner shall also apply at relevant authorities for inspection
and acceptance of the construction project and then obtain a Certificate for Completion Acceptance of Construction Project as well as
a Title Certificate for Building. Further, pursuant to relevant PRC laws and regulations, the premises title certificate is the only legal
certificate by which the owner legally has the ownership in respect of the building and thereby exercises rights to possess, utilize,
profit from and dispose of the premises. Without such certificate, it is not permitted to transfer the premises.</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: 72; 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"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->68<!-- 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">According to the Urban and Rural Planning Law
of the PRC, if a rural construction planning permit is not obtained in accordance with the law or construction is not carried out in accordance
with the provisions of the rural construction planning permit, the township or town people&#8217;s government shall order the construction
to stop and make corrections within a time limit.</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">Not all the buildings of Jiangsu Yada and Jiangsu
Huadong attached on the land have appropriate title certificates. The buildings not granted title certificate are at a risk of being dismantled
or other administrative penalties if they are identified as illegal buildings due to the violation of the PRC Land Administration Law,
the PRC Law on Urban and Rural Planning, and other relevant laws and regulations.</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"><b>Regulation and Classification of Land Allocation</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">According to the PRC Land Administration Law,
the State legally adopts the system of compensation for the use of land owned by the State, except where the State allocates the right
to use state-owned land within the bounds of the law; A construction project developer utilizing state-owned land shall generally obtain
the use right of state owned land through paid means such as granting for compensation. The following categories of land may be directly
allocated with the lawful approval of the people&#8217;s governments at or above the county level: (1) land for use by government institutions
or the military; (2) land for urban infrastructure or public welfare projects; (3) land for energy, transportation. and water conservancy
projects as well as other infrastructure projects supported by the government; and (4) other land as provided for by laws or administrative
regulations. In addition, according to the Provisions on the Economical and Intensive Use of Land (promulgated by Order No.61 of the Ministry
of Natural Resources on May 22, 2014 and amended in accordance with the Decision of the Ministry of Natural Resources on the First Group
of Repealed and Amended Departmental Rules adopted at the 2nd executive meeting of the Ministry of Natural Resources on July 16, 2019),
except that land for military use, affordable housing, or other special purposes such as national security or public order may be supplied
without consideration by means of allocation, payment is required for land used for business purposes, including land used for office
space of state authorities, transportation, energy, or water conservancy and other infrastructure (industry), urban infrastructure and
various social undertakings; the land user and land prices for commercial use shall be determined by means of bidding, auction, or listing.
The acquisition and use of allocated land by enterprises shall comply with the special restrictions as prescribed by laws and regulations.</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">Pursuant to Interim Regulations of the People&#8217;s
Republic of China Concerning the Assignment and Transfer of the Right to the Use of the State-owned Land in the Urban Areas, promulgated
by the State Council and amended on November 29, 2020, the allocated right to the use of the land may not be transferred, leased, or mortgaged,
with the exception of cases as specified in following cases and subject to the approval of the land administration departments and the
housing administration departments under the people&#8217;s governments at the municipal and county levels: (i) the land users are companies,
enterprises, or other economic organizations, or individuals; (ii) a certificate for the use of state-owned land had been obtained; (iii)
possessing legitimate certificates of property rights to the above-ground buildings and other attached objects; and (iv) a contract for
assigning the right to the use of land is signed in accordance with the regulations and the land user makes up for the payment of the
assignment fee to the local municipal or county people&#8217;s government or uses the proceeds resulting from the transfer, lease or mortgage
to pay the assignment fee. Any units or individuals that transfer, lease or mortgage the allocated right to the use of the land without
authorization shall have their illegal incomes thus secured confiscated by the land administration departments under the people&#8217;s
governments at the municipal and county levels and shall be fined in accordance with the seriousness of the case.</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: 73; 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"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->69<!-- 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-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>C. Organizational Structure</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; text-align: justify; text-indent: 0pt">See &#8220;&#8212;A. History
and Development of the Company.&#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-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>D. Property, Plants and Equipment </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>Property, Plants, and Equipment</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">Our PRC headquarters, manufacturing facilities
and office spaces are located in Yangzhou, Jiangsu Province, PRC.</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">Land Use Rights We Obtained</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">We obtained the following land use rights for
the construction of our headquarters, manufacturing facilities and office spaces, which cover an aggregate lot area of approximately 383,172
square feet (equivalent to 35,597.84 square meters), with the breakdown of land use set forth in the table below:</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="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="font-weight: bold; text-align: left; border-bottom: Black 1.5pt solid">Land User</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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    <td style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Description/Use</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Location</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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    <td style="width: 11%; text-align: left; padding-left: 0pt">Industrial land</td><td style="width: 1%">&#160;</td>
    <td style="width: 48%; text-align: left; padding-left: 0pt">Tongda Road, Touqiao Town, Hanjiang District,&#160;Yangzhou</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">6,700.24</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-left: 0pt">Jiangsu Yada</td><td>&#160;</td>
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    <td style="text-align: left; padding-left: 0pt">Industrial land</td><td>&#160;</td>
    <td style="text-align: left; padding-left: 0pt">Xinqiao Village, Touqiao Town, Guangling District, Yangzhou</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">15,991.00</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: 0pt">Jiangsu Huadong</td><td>&#160;</td>
    <td style="padding-left: 0pt">Allocation</td><td>&#160;</td>
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    <td style="text-align: left; padding-left: 0pt">No.88 Tongda Road, Touqiao Town, Guangling District, Yangzhou</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">11,717.44</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)">
    <td style="padding-bottom: 4pt; padding-left: 0pt">Total</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="padding-bottom: 4pt; padding-left: 0pt">&#160;</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="padding-bottom: 4pt; padding-left: 0pt">&#160;</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="padding-bottom: 4pt; padding-left: 0pt">&#160;</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">&#160;</td><td style="border-bottom: Black 4pt double; text-align: right">35,597.84</td><td style="padding-bottom: 4pt; text-align: left">&#160;</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"><i>Properties We Own</i>&#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">We own the premises of our headquarters, manufacturing
facilities and office spaces, which cover an aggregate building area of approximately 246,538 square feet (equivalent to 22,904.12 square
meters), with the breakdown of square footage set forth in the table below:</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="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="border-bottom: Black 1.5pt solid; vertical-align: bottom; text-indent: -0.125in; padding-left: 0.125in; font-weight: bold; text-align: left">Description/Use</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; vertical-align: bottom; font-weight: bold; text-align: left">Owner</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Location</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)">
    <td style="vertical-align: top; text-indent: -0.125in; text-align: left; padding-left: 0.125in">Manufacturing facility</td><td>&#160;</td>
    <td style="vertical-align: top; text-align: left; padding-left: 0pt">Jiangsu Yada</td><td>&#160;</td>
    <td style="text-align: left; padding-left: 0pt">No.58 Yada Road, Touqiao Town</td><td>&#160;</td>
    <td style="text-align: left; padding-left: 0pt">Land Lot Area 15,991.00/ Building Area 3,545.09 (Floors 1-4)</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="vertical-align: top; text-indent: -0.125in; text-align: left; padding-left: 0.125in">Manufacturing facility</td><td>&#160;</td>
    <td style="vertical-align: top; text-align: left; padding-left: 0pt">Jiangsu Yada</td><td>&#160;</td>
    <td style="text-align: left; padding-left: 0pt">No.58 Yada Road, Touqiao Town</td><td>&#160;</td>
    <td style="text-align: left; padding-left: 0pt">Land Lot Area 15,991.00/ Building Area 394.62 (Floor 1)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="vertical-align: top; text-indent: -0.125in; text-align: left; padding-left: 0.125in">Manufacturing facility</td><td>&#160;</td>
    <td style="vertical-align: top; text-align: left; padding-left: 0pt">Jiangsu Yada</td><td>&#160;</td>
    <td style="text-align: left; padding-left: 0pt">No.58 Yada Road, Touqiao Town</td><td>&#160;</td>
    <td style="text-align: left; padding-left: 0pt">Land Lot Area 15,991.00/ Building Area 2,412.30</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="vertical-align: top; text-indent: -0.125in; text-align: left; padding-left: 0.125in">Manufacturing facility</td><td>&#160;</td>
    <td style="vertical-align: top; text-align: left; padding-left: 0pt">Jiangsu Yada</td><td>&#160;</td>
    <td style="text-align: left; padding-left: 0pt">No.58 Yada Road, Touqiao Town</td><td>&#160;</td>
    <td style="text-align: left; padding-left: 0pt">Land Lot Area 15,991.00/ Building Area 428.79 (Floor 1)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="vertical-align: top; text-indent: -0.125in; text-align: left; padding-left: 0.125in">Manufacturing facility</td><td>&#160;</td>
    <td style="vertical-align: top; text-align: left; padding-left: 0pt">Yangzhou Huada</td><td>&#160;</td>
    <td style="text-align: left; padding-left: 0pt">No.1 East Tongda Road, Touqiao Town</td><td>&#160;</td>
    <td style="text-align: left; padding-left: 0pt">Land Lot Area 6,700.24/ Building Area 2,109.77 (Floors 1-2)</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="vertical-align: top; text-indent: -0.125in; text-align: left; padding-left: 0.125in">Office space &amp; manufacturing facility</td><td>&#160;</td>
    <td style="vertical-align: top; text-align: left; padding-left: 0pt">Yangzhou Huada</td><td>&#160;</td>
    <td style="text-align: left; padding-left: 0pt">No.2,3,4 East Tongda Road, Touqiao Town</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="vertical-align: top; text-indent: -0.125in; width: 20%; text-align: left; padding-left: 0.125in">Manufacturing facility</td><td style="width: 1%">&#160;</td>
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    <td style="text-align: left; padding-left: 0pt">3,023.2</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="vertical-align: top; text-indent: -0.125in; text-align: left; padding-left: 0.125in">Manufacturing facility</td><td>&#160;</td>
    <td style="vertical-align: top; text-align: left; padding-left: 0pt">Jiangsu Huadong</td><td>&#160;</td>
    <td style="text-align: left; padding-left: 0pt">No.88 Tongda Road, Touqiao Town</td><td>&#160;</td>
    <td style="text-align: left; padding-left: 0pt">Land Lot Area 11717.44/ Building Area 3,709.93 (Floors 1-2)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="vertical-align: top; padding-bottom: 1.5pt; text-indent: -0.125in; text-align: left; padding-left: 0.125in">Manufacturing facility</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="vertical-align: top; padding-bottom: 1.5pt; text-align: left; padding-left: 0pt">Jiangsu Huadong</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="padding-bottom: 1.5pt; text-align: left; padding-left: 0pt">No.88 Tongda Road, Touqiao Town</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left; padding-left: 0pt">Land Lot Area 11717.44/ Building Area 4,586.04
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 4pt; text-indent: -0.125in; padding-left: 0.125in; vertical-align: top">Total</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="text-align: left; padding-bottom: 4pt; padding-left: 0pt; vertical-align: top">&#160;</td><td style="padding-bottom: 4pt">&#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><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></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"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->70<!-- Field: /Sequence --></span></p></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>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Properties We Lease</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">In addition to the above-mentioned properties
that we own, we currently lease several properties in Yangzhou for an aggregate area of approximately 85,241 square feet (equivalent to
7,919 square meters) from our PRC subsidiaries for processing shops and office space. All leases are subject to renewal upon approval
of the lessors, subject to the lessor receiving renewal requests at least three months in advance. Presently, the leases have been renewed
through 2023.</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">The breakdown of the leased properties is as follows:&#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: 11pt Calibri, Helvetica, Sans-Serif; width: 100%; border-collapse: collapse">
  <tr>
    <td style="vertical-align: bottom; width: 12%; border-bottom: black 1.5pt solid"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Lessor/Rental <br/>
Cost&#160;per&#160;month</b></span></td>
    <td style="vertical-align: bottom; width: 1%; text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; width: 12%; border-bottom: black 1.5pt solid; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Lessee</b></span></td>
    <td style="vertical-align: bottom; width: 1%; text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; width: 20%; border-bottom: black 1.5pt solid; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Location</b></span></td>
    <td style="vertical-align: bottom; 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>Area <br/>
(Square <br/>
Meter)</b></span></td>
    <td style="vertical-align: bottom; width: 1%; text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; width: 14%; border-bottom: black 1.5pt solid; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Annual <br/>
Rent</b></span></td>
    <td style="vertical-align: bottom; width: 1%; text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; width: 14%; border-bottom: black 1.5pt solid; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Term</b></span></td>
    <td style="vertical-align: bottom; width: 1%; text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; width: 12%; border-bottom: black 1.5pt solid; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Use</b></span></td>
    <td style="width: 1%">&#160;</td></tr>
  <tr style="background-color: #CCEEFF">
    <td style="vertical-align: top; padding-left: 9pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Jiangsu Huadong</span></td>
    <td style="vertical-align: bottom; text-align: justify">&#160;</td>
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    <td style="vertical-align: bottom; text-align: justify">&#160;</td>
    <td style="vertical-align: top; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">No.88 Tongda Road, Guangling District, Yangzhou</span></td>
    <td style="vertical-align: bottom; text-align: justify">&#160;</td>
    <td style="vertical-align: top; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">670</span></td>
    <td style="vertical-align: bottom; text-align: justify">&#160;</td>
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    <td style="vertical-align: bottom; text-align: justify">&#160;</td>
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    <td style="vertical-align: top; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Processing Workshop</span></td>
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  <tr>
    <td style="vertical-align: top; padding-left: 9pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Jiangsu Yada</span></td>
    <td style="vertical-align: bottom; text-align: justify">&#160;</td>
    <td style="vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Yangzhou Huada</span></td>
    <td style="vertical-align: bottom; text-align: justify">&#160;</td>
    <td style="vertical-align: top; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">No.88 Tongda Road, Guangling District, Yangzhou</span></td>
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    <td style="vertical-align: bottom; text-align: justify">&#160;</td>
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    <td style="vertical-align: bottom; text-align: justify">&#160;</td>
    <td style="vertical-align: top; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Office</span></td>
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  <tr style="background-color: #CCEEFF">
    <td style="vertical-align: top; padding-left: 9pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Jiangsu Huadong</span></td>
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    <td style="vertical-align: bottom; text-align: justify">&#160;</td>
    <td style="vertical-align: top; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">No.88 Tongda Road, Guangling District, Yangzhou</span></td>
    <td style="vertical-align: bottom; text-align: justify">&#160;</td>
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    <td style="vertical-align: bottom; text-align: justify">&#160;</td>
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    <td style="vertical-align: bottom; text-align: justify">&#160;</td>
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    <td style="vertical-align: bottom; text-align: justify">&#160;</td>
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  <tr>
    <td style="vertical-align: top; padding-left: 9pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Yangzhou Huada</span></td>
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    <td style="vertical-align: bottom; text-align: justify">&#160;</td>
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    <td>&#160;</td></tr>
  <tr style="background-color: #CCEEFF">
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    <td style="vertical-align: bottom; text-align: justify">&#160;</td>
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    <td style="vertical-align: bottom; text-align: justify">&#160;</td>
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    <td style="vertical-align: bottom; text-align: justify">&#160;</td>
    <td style="vertical-align: top; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Office</span></td>
    <td>&#160;</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: 0.25in; 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">Zhu Yi is not a related party to the Company.</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><div><a id="a_006"></a></div><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>ITEM 4A. UNRESOLVED STAFF COMMENTS</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">Not applicable.</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: 75; 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"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->71<!-- 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><div><a id="a_007"></a></div><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS</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">The following discussion of our financial condition
and results of operations is based upon and should be read in conjunction with our consolidated financial statements and their related
notes included in this annual report. This report contains forward-looking statements. In evaluating our business, you should carefully
consider the information provided under the caption &#8220;Item 3. Key Information&#8212;D. Risk Factors&#8221; in this annual report.
We caution you that our businesses and financial performance are subject to substantial risks and uncertainties.</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-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>A. Operating Results</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: center"><b>Business Overview</b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Meihua International Medical Technologies Co.,
Ltd., through its operating subsidiaries, is mainly engaged in the manufacture, research and development and sales of Class I, II and
III medical devices. It has a history of more than 30 years and has a multiple product categories, with more than 800 domestic products
and more than 120 export products. The main product lines include disposable infusion pumps, anesthesia puncture kits, electronic pumps,
full anesthesia kits, urethral catheterization kits, gynecological examination kits, endotracheal intubation, dressing applications and
various tubes. It is the leading enterprise in China&#8217;s medical consumables industry. The Company has received qualification to manufacture
and produce China&#8217;s first, second and third type of medical device consumables and, at the same time, the Company has acquired FDA registration
and the European Union&#8217;s CE certification. Relevant permissions have been obtained in major sales markets to meet local regulatory
requirements.</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">The Company&#8217;s distribution network covers
major global markets. Internationally, the Company mainly exports medical devices through exporting distributors. To date, the Company
has 324 exporting distributors responsible for distributing its products to end users in Europe, North America, Asia, South America, Africa,
and Oceania. In the Chinese market, the Company sells products under its own brand to customers all over the country. The Company&#8217;s
product permeation for mainland China has reached major medical institutions and pharmacies through some 3,004 distributors. At the same
time, the Company has established a cooperative network with more than 525 hospitals through its own direct sales channels.</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">Revenues decreased by $691,369, or approximately
1%, to $103,346,341 for the year ended December 31, 2022 from $104,037,710 for the year ended December 31, 2021. The decrease was mainly
due to a decline in demand for customer orders.</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">Net income decreased by $14,771,875, or approximately 71%, to $6,177,704
for the year ended December 31, 2022 from $20,949,579 for the year ended December 31, 2021. The decrease was mainly due to a sharp increase
in service expenses and the write-off of the Tai He deposit.</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">Revenues increased by $14,976,700, or approximately
17%, to $104,037,710 for the year ended December 31, 2021 from $89,061,010 for the year ended December 31, 2020. The increase was mainly
due to the Company&#8217;s business expansion, research and development of new products and development of new customers.</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">Net income increased by $1,904,324, or approximately
10%, to $20,949,579 for the year ended December 31, 2021 from $19,045,255 for the year ended December 31, 2020.</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: center"><b>Coronavirus (COVID-19) Update</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">On January 30, 2020, the World Health Organization
declared the outbreak of the corona-virus disease (COVID-19) a &#8220;Public Health Emergency of International Concern,&#8221; and on
March 11, 2020, the World Health Organization characterized the outbreak as a &#8220;pandemic.&#8221; Governments in affected countries
have imposed travel bans, quarantines and other emergency public health measures, which have caused material disruption to businesses
globally and result in an economic slowdown. These measures, though temporary in nature, may continue and increase depending on developments
in the COVID-19&#8217;s outbreak.</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">In fiscal year 2020, COVID-19 had a significant
impact on our business and results of operations as the sales volume of masks rose sharply, while at the same time sales of products other
than masks declined due to a decrease in market demand. In fiscal year 2021, as circumstances surrounding the COVID-19 epidemic stabilized
within the PRC, the market for masks was no longer in urgent shortage compared to the same period in 2020, and the production of other
epidemic prevention products resumed normal production levels. In general, with the precise control of the epidemic in the PRC, our production
and operations recovered smoothly, and the demand for other products has increased gradually. &#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">After the initial outbreak of COVID-19, from time
to time, some instances of COVID-19 infections have emerged in various regions of China, including the infections caused by the Omicron
variants in 2022. For example, a wave of infections caused by the Omicron variants emerged in Shanghai in 2022, and a series of restrictions
and quarantines were implemented to contain the spread.</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">Many of the restrictive measures previously adopted
by the PRC governments at various levels to control the spread of the COVID-19 virus have been revoked or replaced with more flexible
measures since December 2022. While the revocation or replacement of the restrictive measures to contain the COVID-19 pandemic could have
a positive impact on our normal operations, the extent of the impact on the Company&#8217;s future financial results will be dependent
on future developments such as the length and severity of the crisis, the potential resurgence of the crisis, future government actions
in response to the crisis and the overall impact of the COVID-19 pandemic on the global economy and capital markets, among many other
factors, all of which remain highly uncertain and unpredictable. Given this uncertainty, the Company is currently unable to quantify the
expected impact of the COVID-19 pandemic on its future operations, financial condition, liquidity and results of operations if the current
situation continues.</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">In preparing these consolidated financial statements,
the Company has evaluated events and transactions for potential recognition or disclosure through December 31, 2022, the date the consolidated
financial statements were available to be issued. No events require additional adjustment to or disclosure in the consolidated financial
statements.</p><div>

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

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

</div><!-- Field: Page; Sequence: 76; 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"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->72<!-- Field: /Sequence --></span></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>Results of Operations</b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The following table sets forth a summary of our
consolidated results of operations for the periods presented. This information should be read together with our consolidated financial
statements and related notes included elsewhere in this annual report. The results of operations in any period are not necessarily indicative
of our future trends.</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: center">(Amounts expressed in U.S. dollars, except share
data and per share data, or otherwise noted)</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><span style="text-decoration:underline">Years Ended December 31, 2022, 2021 and
2020</span></i></b></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="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="text-align: center; font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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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; 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">2,725,014</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: 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>
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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>
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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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  <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">&#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
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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>Revenues</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">Revenues decreased by $691,369, or approximately
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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>Cost of revenues</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">Cost of revenues primarily include cost of materials,
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Cost of revenues increased by $1,015,395, or approximately 2%, to $65,247,864 for the year ended December 31, 2022 from $64,232,469 for
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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"></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"><b>Gross profit margin</b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The following table sets forth the overall gross
profit margin of the Company:</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="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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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Gross profit decreased by $1,706,764, or approximately
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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"><b>Operating costs and expenses</b></p><div>

</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">Our operating costs and expenses consist of selling
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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"><b>Selling</b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The following table sets forth a breakdown of
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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"><b><i><span style="text-decoration:underline">Years Ended December 31, 2022 and 2021</span></i></b></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="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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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Selling expenses increased by $651,723, or approximately
10%, to $7,109,524 for the year ended December 31, 2022 from $6,457,801 for the year ended December 31, 2021. The increase was mainly
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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">
    <td style="width: 24px; font-size: 10pt">&#160;</td>
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year ended December 31, 2022 from $774,298 for the year ended December 31, 2021. Conference expenses are mainly related to the company&#8217;s
market expansion, business development, business negotiation, medical expo, and exhibition affairs. These expenditures helped the Company
promote its products, develop markets and channels, strengthen customer communication, and establish long-term and stable cooperative
relations;</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><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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14%, to $1,468,247 for the year ended December 31, 2022 from $1,287,436 for the year ended December 31, 2021. The increase was mainly
attributable to the fact that the COVID-19 pandemic in China had been largely brought under control and the local government cancelling
the related social insurance relief policy.</p></td></tr>
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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><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">&#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"><b>General and administrative </b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>&#160;</i></b></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><span style="text-decoration:underline">Years Ended December 31, 2022 and 2021</span></i></b></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="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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    <td style="text-align: left">&#160;</td><td style="text-align: right">226,763</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">153,911</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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    <td style="text-align: left">&#160;</td><td style="text-align: right">131,872</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">118,113</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">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">22,196</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">7,515</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: left">&#160;</td><td style="text-align: right">108,146</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: White">
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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">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">General and administrative expenses increased
by $8,107,079, or approximately 186%, to $12,468,551 for the year ended December 31, 2022, from $4,361,472 for the year ended December
31, 2021. The increase was primarily due to (a) service expenses increasing by approximately $7.0 million from approximately $0.2 million
for the year ended December 31, 2021 to approximately $7.2 million for the year ended December 31, 2022, (b) entertainment expenses increasing
by $414,360 or 51% from approximately $0.8 million for the year ended December 31, 2021 to approximately $1.2 million for the year ended
December 31, 2022, (c) conference fee expenses increasing by approximately $0.3 million from approximately $0.5 million for the year ended
December 31, 2021 to approximately $0.8 million for the year ended December 31, 2022, and (d) salaries and benefits increasing by approximately
$0.1 million from approximately $1.2 million for the year ended December 31, 2021 to approximately $1.4 million for the year ended December
31, 2022.</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>Research and development</b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The following table sets forth a breakdown of
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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"><b><i><span style="text-decoration:underline">Years Ended December 31, 2022 and 2021</span></i></b></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="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: 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">&#160;</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"></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">The research and development expenses increased
by $237,890, or approximately 9%, to $2,962,904 for the year ended December 31, 2022, from $2,725,014 for the year ended December 31,
2021. The increase was mainly due to the increase in salaries and benefits expenses which was mainly attributable to that the pandemic
in China had been brought under control and the local government had canceled the social insurance relief policy.</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>Income from operations</b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As a result of the factors described above, our
income from operations decreased by $15,458,992, or approximately 59%, to $10,801,962 for the year ended December 31, 2022 from $26,260,954
for the year ended December 31, 2021.</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>Income tax expense</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">The provision for income taxes decreased by $564,919,
or approximately 11%, to $4,713,543 for the year ended December 31, 2022, from $5,278,462 for the year ended December 31, 2021. The decrease
was mainly due to the decrease of profit before provision for income taxes in 2021.</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>Net income </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">As a result of the factors described above, our
net income decreased by $14,771,875, or approximately 71%, to $6,177,704 for the fiscal year ended December 31, 2022 from $20,949,579
for the fiscal year ended December 31, 2021.</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>Unrealized foreign currency translation adjustment</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">The Company&#8217;s reporting currency is the
United States dollar (&#8220;US$&#8221;). The Company&#8217;s operations are primarily conducted through the PRC subsidiaries where the
local currency is the functional currency. The functional currency of Kang Fu HK is the Hong Kong dollar and the functional currency of
Huada, Yada, Huadong and Guanghui is the Renminbi (&#8220;RMB&#8221;). Results of operations and cash flows are translated at average
exchange rates during the period, assets and liabilities are translated at the unified exchange rate at the end of the period and equity
is translated at historical exchange rates. Translation adjustments resulting from the process of translating the financial statements
denominated in RMB into U.S. dollars are included in other comprehensive income. Our foreign currency translation loss for the fiscal
year ended December 31, 2022 was $9,155,028, compared to the foreign currency translation gain of $2,083,243 for the fiscal year ended
December 31, 2021. The change was primarily due to the exchange rate fluctuation of RMB against the U.S. dollars.</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>Year ended December 31, 2021 compared to
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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>Revenues</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">Revenues increased by $14,976,700, or approximately
17%, to $104,037,710 for the year ended December 31, 2021 from $89,061,010 for the year ended December 31, 2020. The increase was mainly
due to the Company&#8217;s business expansion, research and development of new products and development of new customers.</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>Cost of revenues</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">Cost of revenues primarily include cost of materials,
direct labors, overhead, and other related incidental expenses that are directly attributable to the Company&#8217;s principal operations.
Cost of revenue increased by $12,331,646, or approximately 24%, to $64,232,469 for the year ended December 31, 2021 from $51,900,823 for
the year ended December 31, 2020. The increase was mainly attributable to an overall increase in sales during fiscal year 2021.</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"><b>Gross profit margin</b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The following table sets forth the overall gross
profit margin of the Company:</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="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">
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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">Gross profit increased by $2,645,054, or approximately
7%, to $39,805,241 for the year ended December 31, 2021 from $37,160,187 for the year ended December 31, 2020. Gross profit margin decreased
from 42% for the year ended December 31, 2020 to 38% for the year ended December 31, 2021. The higher gross profit margin in fiscal 2020
was mainly attributable to much higher selling price and gross margin for medical masks as a result of COVID-19 in fiscal year 2020. The
price of medical mask fell back to normal level as a result of increased supply in fiscal 2021, which brought down the overall gross profit
margin.</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>Operating costs and expenses</b></p><div>

</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">Our operating costs and expenses consist of selling
expenses, general and administrative expenses and research and development expenses.</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>Selling</b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The following table sets forth a breakdown of
the selling expenses of the Company:</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><span style="text-decoration:underline">Years Ended December 31, 2021 and 2020</span></i></b></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="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; 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">1,110,441</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">869,591</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Conference expenses</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">774,298</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">805,832</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">341,165</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">266,518</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: left">&#160;</td><td style="text-align: right">168,832</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">191,860</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">53,770</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: left">&#160;</td><td style="text-align: right">579,357</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="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">275,666</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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    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">6,457,801</td><td style="padding-bottom: 4pt; text-align: left">&#160;</td><td style="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">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Selling expenses decreased by $166,531, or approximately
3%, to $6,457,801 for the year ended December 31, 2021 from $6,624,332 for the year ended December 31, 2020. The decrease was mainly attributable
to the combined effects of the followings:</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%">
  <tr style="vertical-align: top">
    <td style="width: 0.25in">&#160;</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><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">&#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: 0.25in">&#160;</td>
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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><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><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"><b>General and administrative </b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">General and administrative expenses primarily
consist of the following expenses:</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><span style="text-decoration:underline">Years Ended December 31, 2021 and 2020</span></i></b></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>
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    <td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">147,522</span></td>
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  <tr>
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    <td>&#160;</td>
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    <td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">94,686</span></td>
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    <td>&#160;</td>
    <td>&#160;</td>
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    <td>&#160;</td></tr>
  <tr style="background-color: #CCEEFF">
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    <td>&#160;</td>
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    <td>&#160;</td>
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  <tr style="background-color: #CCEEFF">
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    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">20,349</span></td>
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    <td>&#160;</td></tr>
  <tr>
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    <td>&#160;</td>
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    <td>&#160;</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">General and administrative expenses decreased
by $216,098, or approximately 5%, to $4,361,472 for the year ended December 31, 2021, from $4,577,570 for the year ended December 31,
2020. The decrease was mainly due to a decrease of $0.2 million service expenses in fiscal year 2021.</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>Research and development</b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The following table sets forth a breakdown of
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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"><b><i><span style="text-decoration:underline">Years Ended December 31, 2021 and 2020</span></i></b></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="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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    <td style="text-align: left">&#160;</td><td style="text-align: right">8,161</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: White">
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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">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Research and development expenses increased by
$232,955, or approximately 9%, to $2,725,014 for the year ended December 31, 2021, from $2,492,059 for the year ended December 31, 2020.
The increase was mainly due to the increase in salaries and benefits expenses which was mainly attributable to that the pandemic in China
had been brought under control and the local government had canceled the social insurance relief policy.</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>Income from operations</b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">As a result of the factors described above, our
income from operations increased by $2,794,728, or approximately 12%, to $26,260,954 for the year ended December 31, 2021 from $23,466,226
for the year ended December 31, 2020.</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>Income tax expense</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">Provision for income taxes increased by $590,141,
or approximately 13%, to $5,278,462 for the year ended December 31, 2021, from $4,688,321 for the year ended December 31, 2020. The increase
was mainly due to the increase of profit before provision for income taxes in 2021.</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"><b>Net income </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">As a result of the factors described above, our
net income increased by $1,904,324, or approximately 10%, to $20,949,579 for the fiscal year ended December 31, 2021 from $19,045,255
for the fiscal year ended December 31, 2020.</p><div>

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

</div><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>B. Liquidity and Capital Resources</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"><b>Cash Flows and Working Capital</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">As of December 31, 2022 and 2021, we had cash
of $26,736,700, and $8,149,276, respectively. We believe that our current cash, cash to be generated from our operations and access to
capital market will be sufficient to meet our working capital needs for at least the next twelve months. We do not have any amounts committed
to be provided by our related party. We are also not dependent upon future financing to meet our liquidity needs for the next twelve months.
In order to implement our growth strategies, we plan to expand our business. With additional capacity, and varied product offerings, the
Company will provide tailored &#8220;one-stop&#8221; services from wound care, to surgical auxiliary supplies, to disease prevention.
To do so, we may need more capital through equity financing to expand our production and meet market demands.</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">Substantially all of our operations are conducted
in China and all of our revenues, expense and cash are denominated in RMB. RMB is subject to the exchange control regulation in China,
and, as a result, we may have difficulty in distributing any dividends outside of China due to PRC exchange control regulations which
restrict the ability to convert RMB into U.S. Dollars.</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">Under applicable PRC regulations, foreign-invested
enterprises in China may pay dividends only out of their accumulated profits, if any, determined in accordance with PRC accounting standards
and regulations. In addition, a foreign-invested enterprise in China is required to set aside at least 10% of its after-tax profit every
year as its general reserves based on PRC accounting standards until the accumulative amount of such reserves reaches 50% of its registered
capital. These reserves can&#8217;t be distributed as cash dividends. The board of directors of a foreign-invested enterprise has the
discretion to allocate a portion of its after-tax profits to staff welfare and bonus funds, which can&#8217;t be distributed to equity
owners except liquidation. Under PRC law, RMB can be converted into U.S. Dollars under the company&#8217;s &#8220;current account&#8221;
(including dividends, trade and service-related foreign exchange transactions) rather than the &#8220;capital account&#8221; (including
foreign direct investments and loans, without the prior approval of the SAFE).</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">For retained earnings accrued after such date,
the board of directors will declare dividends after taking into account our operations, earnings, financial condition, the demand for
cash and availability and other relevant factors. Any declaration, payment and amount of dividends should be subject to our By-laws, charter
and applicable Chinese and U.S. state and federal laws and regulations, including the approval from the shareholders of each subsidiary
which intends to declare such dividends, if applicable.</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">We have limited financial obligations dominated
in U.S. dollars, thus the foreign currency restrictions and regulations in PRC on the dividends distribution will not have a material
impact on the liquidity, financial condition and results of operations of our Company.</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>Cash Flow Summary</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"><b><span style="text-decoration:underline">Years Ended December 31, 2022, 2021 and 2020</span></b></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="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="text-align: justify">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2022</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="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">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="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2020</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 64%; text-align: justify">Net Cash (Used in) Provided by Operating Activities</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">(9,163,038</td><td style="width: 1%; text-align: left">)</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">(54,663</td><td style="width: 1%; text-align: left">)</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">5,325,996</td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: justify">&#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: justify">Net Cash Used in Investing Activities</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(8,620,292</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(833,817</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(16,094,404</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: justify">&#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: justify">Net Cash Provided by Financing Activities</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">37,245,500</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">1,860,234</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">1,706,750</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: justify">&#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: justify">Effect of Exchange Rate Changes on Cash</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(874,746</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(9,812</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">218,137</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: justify">&#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: justify">Cash at Beginning of Year</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">8,149,276</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">7,187,334</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">16,030,855</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: justify">&#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: justify">Cash at End of Year</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">26,736,700</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">8,149,276</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">7,187,334</td><td style="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><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We had a balance of cash of $26,736,700, $8,149,276
and $7,187,334, respectively as of December 31, 2022, 2021, and 2020.</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: 83; 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"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->79<!-- Field: /Sequence --></span></p></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>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i><span style="text-decoration:underline">Years Ended December 31, 2022 and 2021</span></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"><b>Cash Flow in Operating Activities </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">Net cash used in operating activities was $9,163,038
for the year ended December 31, 2022, compared to net cash used in operating activities of $54,663 for the year ended December 31, 2021,
representing a $9,108,375, or a 16,663% increase, in the net cash inflow used in operating activities. The increase in net cash used in
operating activities was primarily due to the following:</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%">
  <tr style="vertical-align: top">
    <td style="width: 0.25in; 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">a)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Change in bank acceptance receivables was approximately $4.3 million net cash outflow for the year ended December 31, 2022. For the year ended December 31, 2021, change in bank acceptance receivables was approximately $6.5 million net cash outflow, which led to approximately $2.2 million decrease in net cash outflow from operating activities;</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">
    <td style="width: 0.25in; 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">b)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Change in accounts receivable was approximately $7.1 million net cash outflow for the year ended December 31, 2022. For the year ended December 31, 2021, change in accounts receivable was approximately $20.1 million net cash outflow, which led to approximately $12.9 million decrease in net cash outflow from operating activities;</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">
    <td style="width: 0.25in; 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">c)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Change in accounts payables was approximately $3.4 million net cash inflow for the year ended December 31, 2022. For the year ended December 31, 2021, change in accounts payables was approximately $4.9 million net cash outflow, which led to approximately $8.3 million increase in net cash inflow from operating activities;&#160;</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">d)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Change in taxes payable was approximately $0.8 million net cash inflow for the year ended December 31, 2022. For the year ended December 31, 2021, change in taxes payable was approximately $0.3 million net cash outflow, which let to approximately $1.1 million increase in net cash inflow from operating activities;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left">&#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; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">e)</span></td>
    <td style="text-align: justify">Write-off of the Tai He deposit resulted in approximately $4.8 million
and $nil net cash outflow for the year ended December 31, 2022 and 2021, respectively, which led to an approximately $4.8 million increase
in net cash outflow from operating activities. During the IPO, the Company entered into a series of agreements (the &#8220;Agreements&#8221;)
with Tai He International Group Limited (&#8220;Tai He&#8221;), a Hong Kong investment company. Pursuant to the Agreements, Tai He agreed
to invest a minimum of $35 million in the IPO subject to the Company making a $7.0 million refundable deposit and advancing a $3.0 million
service fee for investor relations and other services payable to Tai He. The Company paid an approximately $4.8 million deposit and $2.3
million service fee to Tai He in 2022. The Company&#8217;s affiliates and individual shareholders paid the rest of the agreed amount.
Later the Company learned that Tai He did not invest in the IPO or provide services to the Company related to the IPO. The Company is
now proactively working to terminate the Tai He Agreements and recover the amount paid to Tai He by the Company. Due to the uncertainty
of collection, the Company has written off the approximately $4.8 million deposit and fully expensed the $2.3 million service fee paid
by the Company to Tai He in the year ended December 31, 2022.</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">f)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Net cash used in operating activities for the year ended December 31, 2022 consisted of net income of approximately $6.2 million, noncash adjustments of approximately $5.1 million. Net cash used in operating activities for the year ended December 31, 2021 consisted of net income of approximately $20.9 million, noncash adjustments of approximately $0.6 million </span></td></tr>
  </table><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Cash Flow in Investing Activities </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">Net cash used in investing activities was $8,620,292
for the year ended December 31, 2022. It consisted of purchases of property and equipment of $2,698,729, long term investment acquisition
of $5,944,709 and proceeds from disposal of fixed assets of $23,146.</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">Net cash used in investing activities was $833,817
for the year ended December 31, 2021. It consisted of purchases of property and equipment of $850,231 and proceeds from disposal of fixed
assets of $16,414.</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>Cash Flow in Financing Activities </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">For the year ended December 31, 2022, the Company
had net cash provided by financing activities of $37,245,500, which consisted of the proceeds from short-term bank loans of $7,579,135,
repayments of short-term bank loans of $6,241,641, proceeds from long-term bank loans of $743,052, capital contributed by non-controlling
shareholders of $635,310 and proceeds from IPO of $34,529,644.</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">For the year ended December 31, 2021, the Company
had net cash provided by financing activities of $1,860,234, which consisted of the proceeds from short-term bank loans of $6,510,820,
and repayments of short-term bank loans of $4,650,586.</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"></p><div>

</div><!-- Field: Page; Sequence: 84; 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"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->80<!-- Field: /Sequence --></span></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"><b><i><span style="text-decoration:underline">Years Ended December 31, 2021 and 2020</span></i></b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Cash Flow in Operating Activities </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">Net cash used in operating activities was $54,663
for the year ended December 31, 2021, compared to net cash generated from operating activities of $5,325,996 for the year ended December
31, 2020, representing a $5,380,659, or a 101% decrease, in the net cash inflow generated from operating activities. The decrease in net
cash generated from operating activities was primarily due to the following:</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%">
  <tr style="vertical-align: top">
    <td style="width: 0.25in; 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">a)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Change in bank acceptance receivables was approximately $6.5 million net cash outflow for the year ended December 31, 2021. For the year ended December 31, 2020, change in bank acceptance receivables was approximately $5.8 million net cash outflow, which led to approximately $0.8 million increase in net cash outflow from operating activities;</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">
    <td style="width: 0.25in; 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">b)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Change in accounts receivable was approximately $20.1 million net cash outflow for the year ended December 31, 2021. For the year ended December 31, 2020, change in accounts receivable was approximately $13.6 million net cash outflow, which led to approximately $6.5 million increase in net cash outflow from operating activities;</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">
    <td style="width: 0.25in; 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">c)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Change in due from related party was approximately $0.4 million net cash inflow for the year ended December 31, 2021. For the year ended December 31, 2020, change in due from related party was approximately $0.2 million net cash outflow, which led to approximately $0.6 million increase in net cash inflow from operating activities;</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">d)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Change in inventories was approximately $0.1 million net cash inflow for the year ended December 31, 2021. For the year ended December 31, 2020, change in inventory was approximately $0.2 million net cash outflow, which let to approximately $0.3 million decrease in net cash outflow from operating activities; and</span></td></tr>
  </table><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="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0.25in; 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">e)</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Change in deferred IPO costs and other current assets was approximately $0.9 million net cash outflow for the year ended December 31, 2021. For the year ended December 31, 2020, change in deferred IPO costs and other current assets was approximately $0.4 million net cash outflow, which led to approximately $0.5 million increase in net cash outflow from operating activities.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Cash Flow in Investing Activities </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">Net cash used in investing activities was $833,817
for the year ended December 31, 2021. It consisted of purchases of property and equipment of $850,231 and proceeds from disposal of fixed
assets of $16,414.</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">Net cash used in investing activities was $16,094,404
for the year ended December 31, 2020. It consisted of payments for long-term deposits for building of $12,311,347, purchases of property
and equipment of $3,808,259 and proceeds from disposal of fixed assets of $25,202.</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>Cash Flow in Financing Activities </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">For the year ended December 31, 2021, the Company
had net cash provided by financing activities of $1,860,234, which consisted of the proceeds from short-term bank loans of $6,510,820,
and repayments of short-term bank loans of $4,650,586.</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">For the year ended December 31, 2020, the Company
had net cash provided by financing activities of $1,706,750, which consisted of the proceeds from short-term bank loans of $4,359,665,
the proceeds from subscriptions receivable of $1,272,232, and repayments of short-term bank loans of $3,925,147.</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: 85; 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"><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">&#160;&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Off-Balance Sheet Arrangements</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">As of December 31, 2022 and
2021, there were no off-balance sheet arrangements.<b>&#160;</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-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>C. Research and Development, Patents and Licenses, etc.</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">Please see Item 4.A. &#8220;Information on the
Company&#8212;Business Overview&#8212;Intellectual Property,&#8221; above.</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-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>D. Trend Information</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">Other than as disclosed elsewhere in this annual
report, we are not aware of any trends, uncertainties, demands, commitments or events for the year ended December 31, 2022 that are reasonably
likely to have a material adverse 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="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>E. Critical Accounting Estimates</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">Our discussion and analysis
of our financial condition and results of operations are based upon our consolidated financial statements. These financial statements
are prepared in accordance with U.S. GAAP, which requires us to make estimates and assumptions that affect the reported amounts of our
assets and liabilities and revenue and expenses, to disclose contingent assets and liabilities on the date of the consolidated financial
statements, and to disclose the reported amounts of revenue and expenses incurred during the financial reporting period. The most significant
estimates and assumptions include the collection of accounts receivable, the useful lives and impairment of our long-lived assets, and
the provisions for income taxes. We continue to evaluate these estimates and assumptions that we believe to be reasonable under the circumstances.
We rely on these evaluations as the basis for making judgments about the carrying values of assets and liabilities that are not readily
apparent from other sources. Since the use of estimates is an integral component of the financial reporting process, actual results could
differ from those estimates. Some of our accounting policies require higher degrees of judgment than others in their application. We believe
critical accounting policies as disclosed in this report reflect the more significant judgments and estimates used in preparation of our
consolidated financial statements. We believe there have been no material changes to our critical accounting policies and estimates.</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">A full list of our critical
accounting estimates is included in Note 2 of our consolidated financial statements included elsewhere in this report.</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"><span style="background-color: white"><b><i>Use
of Estimates</i></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">The preparation of consolidated
financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the amounts
reported and disclosed in the consolidated financial statements and related notes.</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">The most significant estimates
and judgments include allowance for bad debts, the valuation of inventory, useful life of property, plant and equipment and income taxes
related to realization of deferred tax assets and uncertain tax position. Actual amounts could differ from those 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"></p><div>

</div><!-- Field: Page; Sequence: 86; 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"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->82<!-- 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"><span style="background-color: white"><b><i>Fair
Value Measurement</i></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; text-indent: 0.25in">Fair value is the price that
would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement
date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the
Company considers the principal or most advantageous market in which it would transact, and it considers assumptions that market participants
would use when pricing the asset or liability.</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: 0.25in">The Company adopted the guidance
of Accounting Standards Codification (&#8220;ASC&#8221;) 820 for fair value measurements which clarifies the definition of fair value,
prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value
as follows:</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="width: 0.25in">&#160;</td>
    <td style="vertical-align: top; width: 0.65in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Level&#160;1:</span></td>
    <td style="vertical-align: bottom; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.</span></td></tr>
  <tr>
    <td>&#160;</td>
    <td style="vertical-align: top; text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: justify">&#160;</td></tr>
  <tr>
    <td>&#160;</td>
    <td style="vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Level&#160;2:</span></td>
    <td style="vertical-align: bottom; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data.</span></td></tr>
  <tr>
    <td>&#160;</td>
    <td style="vertical-align: top; text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: justify">&#160;</td></tr>
  <tr>
    <td>&#160;</td>
    <td style="vertical-align: top; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Level&#160;3:</span></td>
    <td style="vertical-align: bottom; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Inputs are unobservable inputs which reflect the reporting entity&#8217;s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="background-color: white">&#160;&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="background-color: white"><b><i>Cash</i></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; text-indent: 0.25in">Cash consists of petty cash
on hand and cash held in banks, which are highly liquid and are unrestricted as to withdrawal or use.</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"><span style="background-color: white"><b><i>Bank
Acceptance Receivable</i></b>s</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; text-indent: 0.25in">Bank acceptance receivables
are issued by bank under the request of the Company&#8217;s customers, to pay for the purchased goods. The Company can choose to hold
acceptance notes until maturity and receive the face value payment from the bank, or sell (exchange) the acceptance notes at a discount
to another party willing to wait until maturity to receive the bank&#8217;s promised payment. The maturity date of the receivables is
all within one year of the original issuance date and carried at face value. The Company is not lending money, it just sells goods to
the customers (customers can pay the purchased goods by cash, accounts receivable or bank acceptance receivables). The receivables mature
within one year and are non-interest bearing. As bank acceptance receivables are issued by the banks, payments are guaranteed.&#160;&#160;&#160;</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="background-color: white"><b><i>Accounts
Receivable and Allowance for Doubtful Accounts</i></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; text-indent: 0.25in">Accounts receivable represent
trade receivables and are recognized initially at fair value and subsequently adjusted for any allowance for doubtful accounts or impairment.</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: 0.25in">The Company records impairment
losses for accounts receivable based on assessments of the recoverability of the trade and other receivables and individual account analysis,
including the current creditworthiness and the past collection history of each debtor. Impairments arise when there is objective evidence
indicating that the balances may not be collectible. The identification of bad and doubtful debts, in particular of a loss event, requires
the use of judgment and estimates, which involve the estimates of specific losses on individual exposures, as well as a provision on historical
trends of collections. Based on management of customers&#8217; credit and ongoing relationship, management makes conclusions whether any
balances outstanding at the end of the period will be deemed non-collectible on an individual basis and on aging analysis basis. The provision
is recorded against accounts receivables balances, with a corresponding charge recorded in the consolidated statements of operations and
comprehensive income. Delinquent account balances are written-off against the allowance for doubtful accounts after management has determined
that the likelihood of collection is not probable.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="background-color: white"><b><i>Inventories</i></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; text-indent: 0.25in">Inventories are valued using
the lower of cost or net realizable value. Cost is principally determined using the weighted-average method. The Company records adjustments
to inventory for excess quantities, obsolescence, or impairment, when appropriate, to reflect inventory at net realizable value. These
adjustments are based upon a combination of factors including current sales volume, market conditions, lower of cost or market analysis
and expected realizable value of the inventory.</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: 87; 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"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->83<!-- 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_008"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES</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-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>A. Directors and Senior Management</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; text-indent: 0.25in">The following table sets
forth certain information regarding our directors and senior management, as well as employees upon whose work we are dependent, 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">&#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="border-bottom: Black 1.5pt solid; text-align: left; vertical-align: top; width: 30%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Directors and Executive Officers</b></span></td>
    <td style="width: 1%">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; vertical-align: bottom; width: 9%; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Age</b></span></td>
    <td style="width: 1%">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; vertical-align: bottom; width: 59%; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Position/Title</b></span></td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Yongjun Liu</span></td>
    <td>&#160;</td>
    <td style="vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">65</span></td>
    <td>&#160;</td>
    <td style="vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Chairman of the board of directors</span></td></tr>
  <tr style="vertical-align: top; background-color: White">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Xin Wang</span></td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">34</span></td>
    <td>&#160;</td>
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Chief Executive Officer and Director</span></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Lianzhang Zhao</span></td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">55</span></td>
    <td>&#160;</td>
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Chief Financial Officer</span></td></tr>
  <tr style="vertical-align: top; background-color: White">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Xiaoming E</span></td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">61</span></td>
    <td>&#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: rgb(204,238,255)">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Huijuan Zhao </span></td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">34</span></td>
    <td>&#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: White">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Wenzhang Jia</span></td>
    <td>&#160;</td>
    <td style="text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">57</span></td>
    <td>&#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">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt">The following is a brief
biography of each of our executive officers and directors:</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>Yongjun Liu - Chairman of the 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; text-align: justify; text-indent: 0pt">Mr. Liu, aged 64, has been
our Company&#8217;s Chairman of the board of directors since October, 2020, Chairman and General Manager of Kang Fu International Medical
since October 2015, Chairman and General Manager of Yangzhou Huada since December 2001, Chairman and General Manager of Jiangsu Huadong
since November 2000, and Chairman and General Manager of Jiangsu Yada since December 1990. In October 2015, Mr. Liu co-founded Kang Fu
International Medical with several other co-founders, In December 2001, November 2000 and December 1990, he founded Yangzhou Huada, Jiangsu
Huadong and Jiangsu Yada, respectively.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt">From October 1998 to present,
Mr. Liu has been the Chairman of Yangzhou Medical Device Industry Association and Chamber of Commerce and Industry of Touqiao County.
From November 2013 to present, Mr. Liu is the Deputy to The People&#8217;s Congress of Guangling district, Yangzhou City. In December
2018, Mr. Liu was awarded the &#8220;Outstanding Entrepreneurs of Guangling District&#8221; in Yangzhou. Mr. Liu is a successful entrepreneur
with over 40 years&#8217; experience in the medical device industry. Mr. Liu is a successful entrepreneur with over 40 years of experience
in the medical device industry. He has been awarded as Excellent Entrepreneur, Honest Entrepreneur Representative and Medical Device Industry
Representative many times. Mr. Liu participates in philanthropic activities, including public welfare undertakings and has sponsored various
impactful undertakings, such as road reconstruction in towns and villages, donations to the Red Cross Society, reconstruction of nursing
homes, poverty alleviation, and aid for students.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt">As the founder of the Company
and based on his extensive experience in the medical device industry, we believe that Mr. Liu is qualified to serve as a director.</p><div>

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

</div><p style="text-indent: 0pt; font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><b><i>Xin Wang &#8211; Chief Executive Officer
and Director</i></b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt">Mr. Xin Wang has been our
Chief Executive Officer and Director since December 1, 2022. Prior to his appointment as CEO and director of MHUA, from 2021 to 2022,
Mr. Wang was CEO of the Jiangsu Yada. In addition, Mr. Wang served as Vice General Manager of Shanghai New Asia (Group) Co., Ltd., a pharmaceutical
company, where he led production management, market expansion, research and development of proprietary Chinese traditional medicines from
2020 to 2021. From 2018 to 2020, Mr. Wang held a key position at Panda Group, Inc., a franchise restaurant corporation based in California,
where he was in charge of large commercial projects related to expanding its business operations and upgrading its brand strategy in the
U.S. market. In addition, Mr. Wang previously worked as a financial analyst at Morgan Stanley and an area manager at Citibank, N.A., thus
providing him insight into global investment banking and U.S. financial markets. Mr. Wang obtained his bachelor&#8217;s degree from the
University of California Santa Barbara, where he double majored in Financial Mathematics &amp; Statistics Analysis and Computer Science.
He also obtained his master&#8217;s degree in Actuarial Science in 2012 from University of California Santa Barbara.</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; text-align: justify; text-indent: 0pt">We believe that Mr. Wang
is qualified to serve as our CEO and a director because of his extensive knowledge and management experience in the area of the financial
market and his experience in the pharmaceutical industry.</p><div>

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

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

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

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


</div><p style="text-indent: 0pt; font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><b><i>Lianzhang Zhao&#8211; Chief Financial Officer</i></b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt">Mr. Lianzhang Zhao has been
our Chief Financial Officer since December 1, 2022. Prior to his appointment as CFO of MHUA, Mr. Lianzhang Zhao was a Senior Partner at
Yangzhou Hanrui Accounting Firm, a PRC accounting firm, from 2013 to 2022. Prior to that, from 2000 to 2013, Mr. Zhao served as the chief
financial officer of Yangzhou Guolian Garment Factory Co., which is a Sino-U.S. joint venture company in China. Mr. Zhao is a certified
public accountant (&#8220;CPA&#8221;) in China, allowing him to draw on his diverse financial accounting experience across multiple international
markets to support MHUA&#8217;s financial reporting matters. Mr. Zhao received his bachelor&#8217;s degree in Financial Accounting and
Economic Management in 1990 from Yangzhou University.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt">We believe that Mr. Zhao
is qualified to serve as our CFO because of his expertise as a CPA and his extensive knowledge and experience in the financial industry.</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>Xiaoming E &#8211; Independent Director</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; text-align: justify; text-indent: 0pt">Mr. E, aged 60, has been
a director of our Company since February 15, 2022. From January 2010 to present, he has served as Chairman and General Manager of Jiangsu
Changfeng Medical Industry Co., Ltd. From May 2004 to present, he has been Vice Chairman of the Yangzhou Guangling District Medical Device
Industry Association. From July 1998 to May 2004, he served as Vice Chairman of Yangzhou Sanitary Product Association. He earned a college
degree from Yangzhou Education College in economic management in March 2004.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt">We believe that Mr. E is
qualified to serve as a director because of his experience in the medical device industry.</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>Huijuan Zhao &#8211; Independent Director</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; text-align: justify; text-indent: 0pt">Ms. Huijuan Zhao has been
a director of our Company since December 1, 2022. Ms. Huijuan Zhao served as a member of the management team at Ping&#8217;An Bank, where
she oversaw services for high net wealth clients and risk control practices from 2019 to 2022. In her prior role as head of marketing
and risk control operations at two Jiangsu-based privately owned businesses operating in the business and financial service sectors, positions
she held from 2013 to 2019, Ms. Zhao helped build out market expansion and risk control protocols and playbook and played critical supervisory
and coaching roles to the growth and expansion of both businesses. She holds a bachelor&#8217;s degree in Financial English from Suzhou
University, which she received in 2012.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt">We believe that Ms. Zhao
is qualified to serve as director because of her experience in risk control practice. We believe she can provide valuable guidance and
oversight to the Company.</p><div>

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

</div><p style="text-indent: 0pt; font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><b><i>Wenzhang Jia &#8211; Independent Director</i></b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt">Mr. Wenzhang Jia, aged 56,
has been a director of our Company, and the chairman of our audit committee, since June 10, 2022. Mr. Jia is the chairman and chief financial
officer of Jiangsu Xibei Electronic Network Co., a company that produces and sells wire and cable, cable TV equipment and network communications
equipment, a position he has served in since February of 2000. Mr. Jia received his Bachelor&#8217;s degree in finance in 2004 from Yangzhou
Institute of Commerce and Industry and pursued post-graduate studies in business administration at Tsinghua University in 2007. Mr. Jia
has been president of the Yangzhou Electrical Appliance Industry Association since 2007.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt">As a result of Mr. Jia&#8217;s
knowledge and experience in business and finance, we believe Mr. Jia is qualified to serve as a director on our board of directors and
will provide us with valuable oversight and guidance.</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><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"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->85<!-- 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-top: 0pt; margin-right: 0; margin-bottom: 0pt; text-align: left"><b>Board Diversity</b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt">The table below provides
certain information regarding the diversity of our board of directors as of the date of this annual report.</p><div>

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

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; background-color: white; border-collapse: collapse">
  <tr style="vertical-align: top">
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  <tr style="vertical-align: top">
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  <tr style="vertical-align: top">
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  <tr style="vertical-align: top">
    <td style="border-right: black 1pt solid; border-bottom: black 1pt solid; border-left: black 1pt solid; padding-top: 0.25pt; padding-right: 0.5pt; padding-left: 0.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Disclosure Prohibited under Home Country Law</span></td>
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  <tr style="vertical-align: top">
    <td style="border-right: black 1pt solid; border-bottom: black 1pt solid; border-left: black 1pt solid; padding-top: 0.25pt; padding-right: 0.5pt; padding-left: 0.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Total Number of Directors</span></td>
    <td colspan="4" style="border-right: black 1pt solid; border-bottom: black 1pt solid; padding-top: 0.25pt; padding-right: 0.5pt; padding-left: 0.25pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">5</span></td></tr>
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    <td style="vertical-align: bottom; width: 13%; border-bottom: black 1pt solid; border-right: black 1pt solid; padding-top: 0.25pt; padding-right: 0.5pt; padding-left: 0.25pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Female</b></span></td>
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    <td style="text-align: center; width: 10%; border-bottom: black 1pt solid; padding: 0.25pt 0.5pt 0.5pt 0.25pt; border-right: black 1pt solid; vertical-align: bottom">
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Non-</b></p>
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    <td style="vertical-align: bottom; width: 10%; border-bottom: black 1pt solid; border-right: black 1pt solid; padding-top: 0.25pt; padding-right: 0.5pt; padding-left: 0.25pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Did Not<br/>
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Gender</b></span></td></tr>
  <tr style="vertical-align: top; background-color: #D9D9D9">
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  <tr style="vertical-align: top; background-color: #D9D9D9">
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  <tr style="vertical-align: top">
    <td style="border-right: black 1pt solid; border-bottom: black 1pt solid; border-left: black 1pt solid; padding-top: 0.25pt; padding-right: 0.5pt; padding-left: 0.5pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Underrepresented Individual in Home Country Jurisdiction</span></td>
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  <tr style="vertical-align: top">
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</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; background-color: white"><b>Family Relationships</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; text-align: justify; text-indent: 0pt">None of our directors or
executive officers has a family relationship as defined in Item 401 of Regulation S-K.</p><div>

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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt">Mr. Yongjun Liu, our chairman
of the board of directors, currently beneficially owns approximately 66.56% of the aggregate voting power of our outstanding Ordinary
Shares. As a result, we are a &#8220;controlled company&#8221; within the meaning of the Nasdaq listing rules. As a controlled company,
we are permitted to elect to rely on certain exemptions from the obligations to comply with certain corporate governance requirements,
including:</p><div>

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

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; background-color: white">
  <tr style="vertical-align: top">
    <td style="width: 0.25in">&#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">the requirement that a majority of the board of directors consist 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">the requirement that our director nominees be selected or recommended solely by independent directors; and</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">the requirement that we have a nominating and corporate governance committee and a compensation committee that are composed entirely of independent directors with a written charter addressing the purposes and responsibilities of the committees.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt">Although we do not intend
to rely on the controlled company exemptions under the Nasdaq listing rules even if we are a controlled company, we could elect to rely
on these exemptions in the future, and if so, you would not have the same protection afforded to shareholders of companies that are subject
to all of the corporate governance requirements of Nasdaq.</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>

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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-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>B. Compensation</b></span></p><div>


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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt">Set forth below is the compensation
paid during the fiscal year ended December 31, 2022 to each of our executive officers and directors:</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="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="padding-bottom: 1.5pt; font-weight: bold">Name</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<br/> Compensation</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 88%; text-align: left">Yongjun Liu</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">50,020</td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td>Xin Wang (2)</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">27,547</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>Yulin Wang (2)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">37,261</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Lianzhang Zhao (2)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">4,350</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">Tongying Zhang (1)</td><td>&#160;</td>
    <td style="text-align: left">$</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="text-align: left">Xiaoming E</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">11,599</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>Huijuan Zhao (3)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">3,625</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Wenzhang Jia</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>
  </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: 0.25in"><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 Company had entered
    into an acting CFO agreement with Cheng Du Milly Bay Consultant Ltd. (&#8220;Milly Bay&#8221;), pursuant to which Tongying Zhang was
    assigned by Milly Bay to act as CFO of the Company and the compensation was paid to Milly Bay. Tongying Zhang resigned from her
    position as our CFO on April 26, 2022. Since that time, Yulin Wang, our then CEO and director, has served as our Interim CFO. </span></td></tr>
  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(2)</span></td>
    <td style="text-align: justify">Following the November 30, 2022 conclusion of the Company&#8217;s employment
contract with Mr. Yulin Wang, the Company appointed Mr. Xin Wang to serve as the Company&#8217;s CEO and Mr. Lianzhang Zhao as the Company&#8217;s
CFO since December 1, 2022.</td></tr>
  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(3)</span></td>
    <td>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On November 30, 2022, Mr. Xu Han resigned from his position as a member
of the board of directors due to personal reasons. On December 1, 2022, the Company appointed Ms. Huijuan Zhao to serve as an independent
member of our board of director.</p></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-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>C. Board Practices</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>Term of Office</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; text-align: justify; text-indent: 0pt">Our directors are each appointed
for a one-year term to hold office until the next annual general meeting of our shareholders or until removed from office in accordance
with our articles of association.</p><div>

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

</div><p style="text-indent: 0pt; font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><b>Employment Agreement with our Chief Executive
Officer and Chief Financial Officer</b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt">Following the November 30,
2022 conclusion of the Company&#8217;s employment contract with Mr. Yulin Wang, who had served as the Company&#8217;s CEO and interim
CFO, effective December 1, 2022, the Company appointed Mr. Xin Wang to serve as the Company&#8217;s CEO and a director and Mr. Lianzhang
Zhao to serve as the Company&#8217;s CFO.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt">In conjunction with his appointment
as CEO of MHUA, Mr. Wang entered into a three-year employment agreement with MHUA. In conjunction with his appointment as CFO of MHUA,
Mr. Zhao entered into an employment agreement with MHUA.</p><div>

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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt">On February 18, 2022, we
entered into Director Service Agreements (the &#8220;Agreements&#8221;) with each of our independent directors, Xiaoming E, Xu Han (who
resigned from his position as an independent director since November 30, 2022) and Heung Ming Wong (whose service terminated on June 10,
2022). The Agreements each feature a one-year term with annual renewals. Mr. E and Mr. Han would each receive a monthly stipend of &#165;8,000
(approximately $1,265) per month during their terms of service. Mr. Wong, who served as the Chairman of the Audit Committee of the board
of directors, received a monthly stipend of $2,500 per month during his term of service. In addition, Mr. Wong received options to purchase
1,000 Ordinary Shares of the Company, at an exercise price of $8.90 per share, representing a value of $10,000, as determined by reference
to the Company&#8217;s IPO price. The options were to vest in equal monthly installments over Mr. Wong&#8217;s initial year of service
and were exercisable for a term of ten years. Upon annual renewals of his service agreement, Mr. Wong was to receive additional options
valued at $10,000, with the number of options granted to be determined with reference to the volume weighted average price for the Company&#8217;s
Ordinary Shares during the thirty (30) trading days preceding the annual renewal date.&#160;We entered into a similar agreement with Mr.
Jia following his appointment to the board of directors, and as chair of the Audit Committee, on June 28, 2022, pursuant to which Mr.
Jia received $10,000, or 1,886, of our Ordinary Shares, exercisable at $5.30 per share, which was the closing price of our Ordinary Shares
on the date of grant and which options vest in substantially equal monthly installments over a period of 12 months. Mr. Jia also receive
a cash fee of $2,500 per month during his term of service.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt">On December 1, 2022, in
conjunction with her appointment as a director, Ms. Zhao entered into a letter agreement with the Company outlining the terms of her
service as a director. Ms. Zhao, who serves as a member of audit committee and the chairwoman of the nominating committee, will receive
a monthly stipend of $2,500 per month during her term of service. In addition, Ms. Zhao will receive stock options to purchase 740 of
the Company&#8217;s Ordinary Shares, par value $0.0005 per share, at an exercise price of $13.51. The options will vest and become exercisable
in equal monthly installments over the course of Ms. Zhao&#8217;s initial year of service, that is over a 12 month period.</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"></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">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Committees of the Board</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; text-align: justify; text-indent: 0pt">We have established and will
maintain three committees under the board of directors: an audit committee, a compensation committee, and a nominating and corporate governance
committee. We have adopted the charter for each of the three committees. Each committee&#8217;s members and functions are described below.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt"><b><i>Audit Committee.</i></b>
Our audit committee consists of Wenzhang Jia, Xiaoming E and Huijuan Zhao, and is chaired by Mr. Jia. Wenzhang Jia, Xiaoming E and Huijuan
Zhao each satisfies the &#8220;independence&#8221; requirements of Rule&#160;5605(c)(2) of the Listing Rules of the Nasdaq Stock Market
and meets the independence standards under Rule&#160;10A-3 under the Exchange Act. We have determined that&#160;Wenzhang Jia qualifies
as an &#8220;audit committee financial expert.&#8221; The audit committee will oversee our accounting and financial reporting processes
and the audits of the financial statements of our company. The audit committee is responsible for, among other things:</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%">
  <tr style="vertical-align: top">
    <td style="width: 0.25in; 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">selecting the independent registered public accounting firm and pre-approving all auditing and non-auditing services permitted to be performed by the independent registered public accounting firm;</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: 0.25in; 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">reviewing with the independent registered public accounting firm any audit problems or difficulties and management&#8217;s response;</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: 0.25in; 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">reviewing and approving all proposed related party transactions, as defined in Item&#160;404 of Regulation&#160;S-K under the Securities Act;</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: 0.25in; 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">discussing the annual audited financial statements with management and the independent registered public accounting firm;</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: 0.25in; 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">reviewing major issues as to the adequacy of our internal controls and any special audit steps adopted in light of material control deficiencies;</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: 0.25in; 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">annually reviewing and reassessing the adequacy of our audit committee charter;</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: 0.25in; 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">meeting separately and periodically with management and the independent registered public accounting firm; 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%">
  <tr style="vertical-align: top">
    <td style="width: 0.25in; 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">reporting regularly to the board of directors.</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; text-align: justify; text-indent: 0pt"><b><i>Compensation Committee.
</i></b>Our compensation committee consists of Wenzhang Jia, Xiaoming E and Huijuan Zhao, and is chaired by Huijuan Zhao. The compensation
committee will assist the board of directors 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 upon. The compensation committee is responsible for, among other things:</p><div>

</div><p style="text-indent: 0pt; font: 10pt Times New Roman, Times, Serif; margin: 0pt; 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: 0.25in; 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">reviewing the total compensation package for our executive officers and making recommendations to the board of directors with respect to it;</span></td></tr>
  </table><div>
</div><p style="text-indent: 0pt; font: 10pt Times New Roman, Times, Serif; margin: 0pt">&#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: 0.25in; 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">reviewing the compensation of our non-employee directors and making recommendations to the board of directors with respect to it; and</span></td></tr>
  </table><div>
</div><p style="text-indent: 0pt; font: 10pt Times New Roman, Times, Serif; margin: 0pt">&#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: 0.25in; 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">periodically reviewing and approving any long-term incentive compensation or equity plans, programs or similar arrangements, annual bonuses, and employee pension and welfare benefit plans.</span></td></tr>
  </table><div>
</div><p style="text-indent: 0pt; font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt"><b><i>Nominating Committee.</i></b>&#160;Our
nominating committee consists of Wenzhang Jia, Xiaoming E and Huijuan Zhao, and is chaired by Huijuan Zhao. The nominating committee will
assist the board of directors in selecting individuals qualified to become our directors and in determining the composition of the board
of directors and its committees. The nominating committee is responsible for, among other things:</p><div>

</div><p style="text-indent: 0pt; font: 10pt Times New Roman, Times, Serif; margin: 0pt; 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: 0.25in; 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">recommending nominees to the board of directors for election or re-election to the board of directors, or for appointment to fill any vacancy on the board of directors;</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: 92; 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"><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>
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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: 0.25in; 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">reviewing annually with the board of directors the current composition of the board of directors with regards to characteristics such as independence, age, skills, experience and availability of service to us;</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: 0.25in; 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">selecting and recommending to the board of directors the names of directors to serve as members of the audit committee and the compensation committee, as well as of the nominating committee itself; 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%">
  <tr style="vertical-align: top">
    <td style="width: 0.25in; 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">monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance.</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>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; text-align: justify; text-indent: 0pt">Under Cayman Islands law,
our directors owe fiduciary duties to our company, including a duty of loyalty, a duty to act honestly, and a duty to act in a manner
they consider in good faith to be in our best interests. Our directors must also exercise their powers only for a proper purpose. Our
directors also owe to our company a duty to act with skill and care. It was previously considered that a director need not exhibit in
the performance of his duties a greater degree of skill than may reasonably be expected from a person of his knowledge and experience.
However, English and Commonwealth courts have moved towards an objective standard with regard to the required skill and care and these
authorities are likely to be followed in the Cayman Islands. In fulfilling their duty of care to us, our directors must ensure compliance
with our memorandum and articles of association, as amended and restated from time to time. We have the right to seek damages if a duty
owed by our directors is breached. In limited exceptional circumstances, a shareholder may have the right to seek damages in our name
if a duty owed by our directors is breached.</p><div>

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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt">Our directors may be elected
by a resolution of our board of directors, or by an ordinary resolution of our shareholders. Our directors are not subject to a term of
office and hold office until such time as they are removed from office by ordinary resolution of the shareholders. A director will cease
to be a director if, among other things, the director (i)&#160;becomes bankrupt or makes any arrangement or composition with his creditors;
(ii)&#160;dies or is found by our company to be or becomes of unsound mind, (iii)&#160;resigns his office by notice in writing to the
company, or (iv)&#160;without special leave of absence from our board of directors, is absent from three consecutive board meetings and
our directors resolve that his office be vacated.</p><div>

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

</div><p style="text-indent: 0pt; font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><b>Code of Business Conduct and Ethics</b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt">Our board of directors has
adopted a code of business conduct and ethics that applies to our directors, officers and employees. A copy of this code is available
on our website. We intend to disclose on our website any amendments to the Code of Business Conduct and Ethics and any waivers of the
Code of Business Conduct and Ethics that apply to our principal executive officer, principal financial officer, principal accounting officer,
controller, or persons performing similar functions.</p><div>

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

</div><p style="margin: 0pt; font: 10pt Times New Roman, Times, Serif; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>D. Employees</b></span></p><div>


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

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

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

</div><p style="text-align: justify; margin: 0pt 0; font: 10pt Times New Roman, Times, Serif">We had 626, 622 and 647 full-time employees
as of December 31, 2022, 2021 and 2020, respectively. The following table sets forth the number of full-time employees based on
category of employment and place of employment as of December 31, 2022:</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="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)">
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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">36</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">36</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">0</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">41</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">37</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: left">&#160;</td><td style="text-align: right">95</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">Subtotal Total</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt; text-align: right">89</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">
    <td style="font-weight: bold; padding-bottom: 4pt">Total</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="padding-bottom: 4pt; text-align: left">&#160;</td><td style="padding-bottom: 4pt; text-align: right">&#160;</td><td style="padding-bottom: 4pt; text-align: left">&#160;</td><td style="font-weight: bold; padding-bottom: 4pt">&#160;</td>
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    <td style="padding-bottom: 4pt; text-align: left">&#160;</td><td style="padding-bottom: 4pt; text-align: right">&#160;</td><td style="padding-bottom: 4pt; text-align: left">&#160;</td></tr>
  </table><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; text-align: justify; text-indent: 0pt">Our success depends on our
ability to attract, motivate, train and retain qualified personnel. We believe we offer our employees competitive compensation packages
and an environment that encourages self-development and, as a result, have generally been able to attract and retain qualified personnel
and maintain a stable core management team.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt">As required by laws and regulations
in China, we participate in various employee social security plans that are organized by municipal and provincial governments including,
among other things, pension, medical insurance, unemployment insurance, maternity insurance, on-the-job injury insurance and housing fund
plans through a PRC government-mandated benefit contribution plan. We are required under PRC law to make contributions to employee benefit
plans at specified percentages of the salaries, bonuses and certain allowances of our employees, up to a maximum amount specified by the
local government from time to time.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt">We believe we maintain a
good working relationship with our employees, and we have not experienced any material labor disputes. None of our employees is represented
by a labor union.</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-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>E. Share Ownership</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; text-align: justify; text-indent: 0pt">The following table sets
forth, as of the date of this report, the beneficial ownership of our Ordinary Shares by each executive officer and director, by each
person known by us to beneficially own more than 5% of our Ordinary Shares and by the executive officers and directors as a group. Except
as otherwise indicated, all shares are owned directly and the percentage shown is based on 23,940,000 shares of Ordinary Shares issued
and outstanding.</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="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Title of class</td><td style="padding-bottom: 1.5pt; text-align: center; font-weight: bold">&#160;</td>
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    <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"><b>Amount
of<br/>
beneficial ownership</b></p></td><td style="padding-bottom: 1.5pt; text-align: center">&#160;</td><td style="padding-bottom: 1.5pt; text-align: center">&#160;</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"><b>Percent<br/>
of
class</b></p></td><td style="padding-bottom: 1.5pt; text-align: center">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="font-weight: bold">Current Executive Officers and Directors</td><td>&#160;</td>
    <td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: right">&#160;</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: right">&#160;</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 55%">Ordinary Shares</td><td style="width: 1%">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td>Ordinary Shares</td><td>&#160;</td>
    <td style="text-align: left">Xin Wang</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">%</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>Ordinary Shares</td><td>&#160;</td>
    <td style="text-align: left">Lianzhang Zhao</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>Ordinary Shares</td><td>&#160;</td>
    <td style="text-align: left">Tongying Zhang</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">%</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>Ordinary Shares</td><td>&#160;</td>
    <td style="text-align: left">Xiaoming E</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">%</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td>Ordinary Shares</td><td>&#160;</td>
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Huijuan Zhao<sup>(3)</sup></span></td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">%</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>Ordinary Shares</td><td>&#160;</td>
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Wenzhang Jia<sup>(2)</sup></span></td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="font-weight: bold; text-align: left">Total of All Current Officers and Directors:</td><td>&#160;</td>
    <td>&#160;</td><td style="font-weight: bold">&#160;</td>
    <td style="font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold; text-align: right">15,936,886</td><td style="font-weight: bold; text-align: left">&#160;</td><td style="font-weight: bold">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-align: left">&#8805; 5% Beneficial Owners </td><td>&#160;</td>
    <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: White">
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    <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>
  </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%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><sup>(1)</sup></span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Mr. Liu holds these shares through Bright Accomplish Limited, a holding company controlled jointly by Mr. Liu and his wife, Yin Liu.</span></td></tr>
  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><sup>(2)</sup></span></td>
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  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><sup>(3)</sup></span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Represents options to purchase 740 Ordinary Shares of the Company, at an exercise price of $13.51 per share. The options vest in equal monthly installments over Ms. Zhao&#8217;s initial year of service and are exercisable for a term of ten years. As of the date of this report, no options are vested.</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; text-align: justify; text-indent: 0pt">As used in this table, &#8220;beneficial
ownership&#8221; means the sole or shared power to vote, or to direct the voting of, a security, or the sole or shared investment power
with respect to a security (i.e., the power to dispose of, or to direct the disposition of, a security). In addition, for purposes of
this table, a person is deemed, as of any date, to have &#8220;beneficial ownership&#8221; of any security that such person has the right
to acquire within 60 days after such date.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt">The persons named above have
full voting and investment power with respect to the shares indicated. Under the rules of the Securities and Exchange Commission, a person
(or group of persons) is deemed to be a &#8220;beneficial owner&#8221; of a security if he or she, directly or indirectly, has or shares
the power to vote or to direct the voting of such security, or the power to dispose of or to direct the disposition of such security.
Accordingly, more than one person may be deemed to be a beneficial owner of the same security. A person is also deemed to be a beneficial
owner of any security, which that person has the right to acquire within 60 days, such as options or warrants to purchase our Ordinary
Shares.</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"><span style="text-decoration:underline">Major Shareholders</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; text-align: justify; text-indent: 0pt">Other than as set forth above,
there are no beneficial owners of 5% or more of our voting securities. The company is not directly or indirectly owned or controlled by
another corporation(s) or by any foreign government. There are no arrangements, known to us, the operation of which may at a subsequent
date result in a change in control of the company.</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"></p><div>

</div><!-- Field: Page; Sequence: 94; 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"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->90<!-- 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_009"></a></div><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS</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-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>A. Major Shareholders</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; text-align: justify; text-indent: 0pt">See Item 6 &#8220;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">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>B. Related Party Transactions</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; text-align: justify; text-indent: 0pt">Except for the transactions
set forth below, during our preceding three financial years up to the date of this report, there have been no transactions or loans between
the company and (a) enterprises that directly or indirectly through one or more intermediaries, control or are controlled by, or are under
common control with, the company; (b) associates; (c) individuals owning, directly or indirectly, an interest in the voting power of the
company that gives them significant influence over the company, and close members of any such individual&#8217;s family; (d) key management
personnel, that is, those persons having authority and responsibility for planning, directing and controlling the activities of the company,
including directors and senior management of companies and close members of such individuals&#8217; families; and (e) enterprises in which
a substantial interest in the voting power is owned, directly or indirectly, by any person described in (c) or (d) or over which such
a person is able to exercise significant influence.</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>Transaction with Yangzhou Meihua Import
and Export Co., Ltd.</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; text-align: justify; text-indent: 0pt">We sell products at market
price to Yangzhou Meihua Import and Export Co., Ltd., an affiliate controlled by Kai Liu, the son of Yongjun Liu, our Chairman and shareholder.
For the fiscal years ended December 31, 2022 and 2021, the sales amount was $18,780 and $51,750, respectively, and as of December 31,
2022 and December 31, 2021, the amount due from Yangzhou Meihua Import and Export Co., Ltd. both were nil. The main business of Yangzhou
Meihua Import and Export Co., Ltd. is the import and export of medical consumables, and the main types of products it purchases from the
Company are dressing wounds and wiping wounds, Yang Ke Tou (Suction tube), disposable urinary swab, disposable umbilical cord clamp, disposable
suction connection pipe, disposable medical gauze, medical urine cup, medical disinfection dressing surgical kit and round head steel
needles.</p><div>

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

</div><p style="text-indent: 0pt; font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><b><i>Transaction with Yangzhou Yada Powder Metallurgy
Co., Ltd.</i></b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt">We sell products at market
price to Yangzhou Yada Powder Metallurgy Co., Ltd., an affiliate controlled by Kai Liu, the son of Yongjun Liu, our Chairman and shareholder.
For the fiscal years ended December 31, 2022 and 2021, the sales amount was $nil and $347,737, respectively, and as of December 31, 2022
and December 31, 2021, the amount due from Yangzhou Yada Powder Metallurgy Co., Ltd. both were nil. The main business of Yangzhou Yada
Powder Metallurgy Co., Ltd. is gear and metal accessories processing, and the main types of products it purchases from the Company are
One-way seat fittings, Gear 2 accessories, Gear 3 accessories, Steel needle, Crank fittings, Universal joint seat fittings, Cylindrical
pin, Axle sleeve, Axle pin and Bevel gear fittings.</p><div>

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

</div><p style="text-indent: 0pt; font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><b><i>Transaction with Shanghai Xinya Pharmaceutical
Hanjiang Co., Ltd.</i></b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt">We sell products at market
price to Shanghai Xinya Pharmaceutical Hanjiang Co., Ltd., an affiliate controlled by Kai Liu, the son of Yongjun Liu, our Chairman and
shareholder. For the fiscal years ended December 31, 2022 and 2021, the sales amount was $10,416 and $176,414, respectively, and as of
December 31, 2022 and December 31, 2021, the amount due from Xinya Pharmaceutical Hanjiang Co., Ltd. both were nil. The main business
of Shanghai Xinya Pharmacy Hanjiang Co., Ltd. is drug production and sales, and the main types of products it purchases from the Company
are oral solid medical high-density polyethylene bottles and disposable masks.</p><div>

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

</div><p style="text-indent: 0pt; font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><b><i>Share Exchange Agreement with Kang Fu International
Medical Co., Ltd. and its Shareholders</i></b></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt">On December 21, 2020, we
entered into a Share Exchange Agreement with Kang Fu International Medical Co., Ltd. (&#8220;Kang Fu&#8221;) and its shareholders, Yongjun
Liu (our Chairman and Director) and Yin Liu (his wife). Under the Share Exchange Agreement, we issued a total of 15,933,000 Ordinary Shares
to Mr. and Mrs. Liu, and in turn acquired 41,400,000 shares (69%) of Kang Fu from Yongjun Liu and 18,600,000 shares (31%) of Kang Fu from
Yin Liu, respectively, resulting in Kang Fu becoming our wholly owned subsidiary. Mr. and Mrs. Liu subsequently transferred the 15,935,000
Ordinary Shares received in this transaction to their holding company, Bright Accomplish Limited.&#160;</p><div>

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

</div><p style="margin: 0pt; font: 10pt Times New Roman, Times, Serif; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>C. Interests of Experts and Counsel</b></span></p><div>


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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt">Not applicable.</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"></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"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->91<!-- 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><div><a id="a_010"></a></div><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>ITEM 8. FINANCIAL INFORMATION</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-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>A. Consolidated Statements and Other Financial Information</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><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; text-align: justify; text-indent: 0pt">We have appended consolidated
financial statements filed as part of this report. See Item 18 &#8220;Financial Statements.&#8221;</p><div>

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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt">See Item 4 &#8211;B &#8220;Business
Overview&#8221; above, under &#8220;Legal Proceedings.&#8221;</p><div>

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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt">To date, we have not paid
any cash dividends on our shares. As a Cayman Islands company, we may only declare and pay dividends except when the corporation is insolvent
or would thereby be made insolvent or when the declaration or payment would be contrary to any restrictions contained in our Articles
of Association. Dividends may be declared and paid out of surplus only; but in case there is no surplus, dividends may be declared or
paid out of the net profits for the fiscal year in which the dividend is declared and for the preceding fiscal year. We currently anticipate
that we will retain any available funds to finance the growth and operation of our business and we do not anticipate paying any cash dividends
in the foreseeable future. Additionally, our cash held in foreign countries may be subject to certain control limitations or repatriation
requirements, limiting our ability to use this cash to pay dividends.</p><div>

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

</div><p style="margin: 0pt; font: 10pt Times New Roman, Times, Serif; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>B. Significant Changes</b></span></p><div>


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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt">No significant change has
occurred since the date of our consolidated financial statements filed as part of this annual report.</p><div>

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

</div><div><a id="a_011"></a></div><p style="margin: 0pt; text-align: justify; font: 10pt Times New Roman, Times, Serif; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>ITEM 9. THE OFFER AND LISTING</b></span></p><div>


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

</div><p style="margin: 0pt; font: 10pt Times New Roman, Times, Serif; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>A. Offer and Listing Details</b></span></p><div>


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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt">Our Ordinary Shares is listed
on the Nasdaq Global Market and trade under the symbol &#8220;MHUA.&#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-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>B. Plan of Distribution</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; text-align: justify; text-indent: 0pt">Not applicable.</p><div>

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

</div><p style="margin: 0pt; font: 10pt Times New Roman, Times, Serif; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>C. Markets</b></span></p><div>


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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt">See our disclosures above
under &#8220;A. Offer and Listing Details.&#8221;</p><div>

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

</div><p style="margin: 0pt; font: 10pt Times New Roman, Times, Serif; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>D. Selling Shareholders</b></span></p><div>


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

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

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

</div><p style="margin: 0pt; font: 10pt Times New Roman, Times, Serif; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>E. Dilution</b></span></p><div>


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

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

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

</div><p style="margin: 0pt; font: 10pt Times New Roman, Times, Serif; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>F. Expenses of the Issue</b></span></p><div>


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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt">Not applicable.</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="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"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->92<!-- 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><div><a id="a_012"></a></div><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>ITEM 10. ADDITIONAL INFORMATION</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-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>A. Share Capital</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; text-align: justify; text-indent: 0pt">Not applicable.</p><div>

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

</div><p style="margin: 0pt; font: 10pt Times New Roman, Times, Serif; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>B. Memorandum and Articles of Association</b></span></p><div>


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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt">The following are summaries
of material provisions of our memorandum and articles of association and of the Companies Law, insofar as they relate to the material
terms of our Ordinary Shares.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt"><b><i>Purpose and Objectives
of Our Company.</i></b> Under our amended and restated memorandum and articles of association, the purpose and objectives of our company
are unrestricted and we have the full power and authority to carry out any objective not prohibited by the law of the Cayman Islands.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt"><b><i>Ordinary Shares.</i></b>
Our Ordinary Shares are issued in registered form and are issued when registered in our register of members. Our shareholders who are
non-residents of the Cayman Islands may freely hold and vote their shares.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt"><b><i>Dividends. </i></b>The
holders of our Ordinary Shares are entitled to such dividends as may be declared by our board of directors. In addition, our shareholders
may by ordinary resolution declare a final dividend, but no dividend may exceed the amount recommended by our directors. Our amended and
restated articles of association provide that dividends may be declared and paid out of our profits, realized or unrealized, or from any
reserve set aside from profits which our board of directors determine is no longer needed. Dividends may also be declared and paid out
of share premium account or any other fund or account which can be authorized for this purpose subject to the restrictions of the Companies
Act, provided that in no circumstances may we pay a dividend if this would result in our company being unable to pay its debts as they
fall due in the ordinary course of business.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt"><b><i>Voting Rights.</i></b>
Any action required or permitted to be taken by the shareholders must be taken at a duly called and quorate annual or extraordinary general
meeting of the shareholders entitled to vote on such action, or in lieu of a general meeting, be effected by a resolution in writing.
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 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 unless a poll is demanded. A poll may be demanded by the chairman of such meeting or one or more shareholders present
in person or by proxy entitled to vote and who together hold not less than 10 percent of the paid-up voting share capital for the Company.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt">A quorum required for a meeting
of shareholders consists of one or more shareholders present and holding at least a majority of the votes of the issued and outstanding
voting shares in our company. Shareholders may be present in person or by proxy or, if the shareholder is a legal entity, by its duly
authorized representative. Shareholders&#8217; meetings may be convened by our board of directors on its own initiative or upon a request
to the directors by shareholders holding no less than 10 percent of our paid voting share capital. Advance notice of at least seven days
is required for the convening of our annual general shareholders&#8217; meeting and any other general shareholders&#8217; meeting.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt">An ordinary resolution to
be passed at a meeting by the shareholders requires the affirmative vote of a simple majority of the votes attaching to the Ordinary Shares
cast at a meeting, while a special resolution requires the affirmative vote of no less than two-thirds of the votes cast attaching to
the outstanding Ordinary Shares at a meeting. A special resolution will be required for important matters such as a change of name or
making changes to our amended and restated memorandum and articles of association. Holders of the Ordinary Shares may, among other things,
divide or combine their shares by ordinary resolution.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt"><b><i>Election of directors.
</i></b>Directors may be appointed by an ordinary resolution of our shareholder or by a resolution of the directors of the Company.</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: 97; 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; text-align: justify; text-indent: 0pt"><b><i>Meetings of directors.
</i></b>At any meeting of directors, a quorum will be present if two directors are present, unless otherwise fixed by the directors. If
there is a sole director, that director shall be a quorum. A person who holds office as an alternate director shall be counted in the
quorum. A director who also acts as an alternate director shall be counted twice towards the quorum. An action that may be taken by the
directors at a meeting may also be taken by a resolution of directors consented to in writing by all of the directors.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt"><b><i>Transfer of Ordinary
Shares.</i></b> Any of our shareholders may transfer all or any of his or her Ordinary Shares by an instrument of transfer in the usual
or common form or any other form approved by our board of directors.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt">Our board of directors may,
in its absolute discretion, decline to register any transfer of any Ordinary Share whether or not it is fully paid up without assigning
any reason for doing so.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt">If our directors refuse to
register a transfer they shall, within two 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="text-indent: 0pt; font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt">The registration of transfers
of our Ordinary Shares may be suspended and the register closed at such times and for such periods as our board of directors may from
time to time determine, provided, however, that the registration of transfers shall not be suspended nor the register closed for more
than 45 days in any year as our board of directors may determine.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt"><b><i>Liquidation. </i></b>On
a return of capital on winding up or otherwise (other than on conversion, redemption or purchase of shares), assets available for distribution
among the holders of Ordinary Shares shall be distributed among the holders of our shares on a pro rata basis. If our assets available
for distribution are insufficient to repay all of the paid-up capital, the assets will be distributed so that the losses are borne by
our shareholders proportionately.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt"><b><i>Calls on Shares and
Forfeiture of Shares.</i></b> Our board of directors may from time to time make calls upon shareholders for any amounts unpaid on their
shares in a notice served to such shareholders at least 14 days prior to the specified time and place of payment. The shares that have
been called upon and remain unpaid are subject to forfeiture.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt"><b><i>Redemption of Shares.</i></b>
The Companies Act and our amended and restated articles of association permit us to purchase, redeem or otherwise acquire our own shares,
subject to certain restrictions and requirements under the Companies Act, our amended and restated memorandum and articles of association
and any applicable requirements imposed from time to time by the Nasdaq, the Securities and Exchange Commission. In accordance with our
articles of association and provided the necessary shareholders or board of director approval have been obtained, we may issue shares
on terms that are subject to redemption, at our option or at the option of the holders of these shares, on such terms and in such manner,
including out of capital, as may be determined by our board of directors. Under the Companies Act, the repurchase of any share may be
paid out of our company&#8217;s profits, out of our share capital account or out of the proceeds of a fresh issue of shares made for the
purpose of such repurchase, or, subject to certain conditions, out of capital. If the repurchase proceeds are paid out of our Company&#8217;s
capital, our Company must, immediately following such payment, be able to pay its debts as they fall due in the ordinary course of business.
In addition, under the Companies Act, no such share may be repurchased (1) unless it is fully paid up, (2) if such repurchase would result
in there being no shares outstanding, and (3) unless the manner of purchase (if not so authorized under the amended and restated memorandum
and articles of association) has first been authorized by a resolution of our shareholders. In addition, under the Companies Act, our
Company may accept the surrender of any fully paid share for no consideration unless, as a result of the surrender, the surrender would
result in there being no shares outstanding (other than shares held as treasury shares).</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt"><b><i>Variations of Rights
of Shares.</i></b> The rights attached to any class or series of shares (unless otherwise provided by the terms of issue of the shares
of that class or series), whether or not our company is being wound-up, may be varied with the consent in writing of the holders of two-thirds
of the issued shares of that class or series or with the sanction of a special resolution passed at a separate meeting of the holders
of the shares of the class or series. The rights conferred upon the holders of the shares of any class issued shall not, unless otherwise
expressly provided by the terms of issue of the shares of that class, be deemed to be varied by the creation 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">&#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: 98; Value: 1 --><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; text-align: justify; text-indent: 0pt"><b><i>Changes in the number
of shares we are authorized to issue and those in issue. </i></b>We may from time to time by resolution of shareholders in the requisite
majorities:</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%">
  <tr style="vertical-align: top">
    <td style="width: 0.25in; 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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  </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: 0.25in; 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">subdivide our authorized and issued shares into a larger number of shares; 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: 0.25in; 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">consolidate our authorized and issued shares into a smaller number of shares.</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; text-align: justify; text-indent: 0pt"><b><i>Issuance of Additional
Shares.</i></b> Our amended and restated memorandum and articles of association authorizes our board of directors to issue additional
Ordinary Shares from time to time as our board of directors shall determine, to the extent of available authorized but unissued shares.</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt"><b><i>Inspection of Books
and Records.</i></b> Holders of our Ordinary Shares will have no general right under Cayman Islands law to inspect or obtain copies of
our list of shareholders or our corporate records. However, we will provide our shareholders with annual audited financial statements.</p><div>

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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt">As at the date of this report,
we have not issued any preferred shares. Under the amended and restated articles of association, before any Preferred Shares of any series
are issued, our directors shall fix, by resolution of directors, the following provisions of such series:</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%">
  <tr style="vertical-align: top">
    <td style="width: 0.25in; 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">the designation of such series and the number of Preferred Shares to constitute such 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%">
  <tr style="vertical-align: top">
    <td style="width: 0.25in; 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">whether the shares of such series shall have voting rights, in addition to any voting rights provided by Companies Act, and, if so, the terms of such voting rights, which may be general or limited;</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: 0.25in; 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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  </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: 0.25in; 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">whether the Preferred Shares or such series shall be subject to redemption by the Company, and, if so, the times, prices and other conditions of such redemption;</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: 0.25in; 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">the amount or amounts payable upon Preferred Shares of such series upon, and the rights of the holders of such series in, a voluntary or involuntary liquidation, dissolution or winding up, or upon any distribution of the assets, of the Company;</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: 0.25in; 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">whether the Preferred Shares of such series shall be subject to the operation of a retirement or sinking fund and, if so, the extent to and manner in which any such retirement or sinking fund shall be applied to the purchase or redemption of the Preferred Shares of such series for retirement or other corporate purposes and the terms and provisions relative to the operation of the retirement or sinking fund;</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: 24px; 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">whether the Preferred Shares of such series shall be convertible into, or exchangeable for, Shares of any other class of Shares or any other series of Preferred Shares or any other securities and, if so, the price or prices or the rate or rates of conversion or exchange and the method, if any, of adjusting the same, and any other terms and conditions of conversion or exchange;</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: 0.25in; 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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  </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%">
  <tr style="vertical-align: top">
    <td style="width: 0.25in; 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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  </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: 0.25in; 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">any other powers, preferences and relative, participating, optional and other special rights, and any qualifications, limitations and restrictions of any other class of Shares or any other series of Preferred Shares.</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"></p><div>

</div><!-- Field: Page; Sequence: 99; 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"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->95<!-- Field: /Sequence --></span></p></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>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Exempted Company</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; text-align: justify; text-indent: 0pt">We are an exempted company
incorporated with limited liability under the Companies Act of the Cayman Islands. The Companies Act of the Cayman Islands distinguishes
between ordinary resident companies and exempted companies. Any company that is registered in the Cayman Islands but conducts business
mainly outside of the Cayman Islands may apply to be registered as an exempted company. The requirements for an exempted company are essentially
the same as for an ordinary company except that, for an exempted company that does not hold a license to carry on business in the Cayman
Islands:</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%">
  <tr style="vertical-align: top">
    <td style="width: 0.25in; 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">an exempted company does not have to file an annual return of its shareholders with the Registrar of Companies of the Cayman Islands;</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: 0.25in; 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">an exempted company&#8217;s register of members is not required to be open to inspection;</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: 0.25in; 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">an exempted company does not have to hold an annual general meeting;</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">an exempted company is prohibited from making any invitation to the public in the Cayman Islands to subscribe for any of its securities;</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: 0.25in; 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">an exempted company may not issue negotiable or bearer shares;</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: 0.25in; 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">an exempted company may obtain an undertaking against the imposition of any future taxation (such undertakings are usually given for 20&#160;years in the first instance);</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: 0.25in; 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">an exempted company may register by way of continuation in another jurisdiction and be deregistered in the Cayman Islands;</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: 0.25in; 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">an exempted company may register as an exempted limited duration company; 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%">
  <tr style="vertical-align: top">
    <td style="width: 0.25in; 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">an exempted company may register as a segregated portfolio company.</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; text-align: justify; text-indent: 0pt">&#8220;Limited liability&#8221;
means that the liability of each shareholder is limited to the amount unpaid by the shareholder on that shareholder&#8217;s shares of
the company.</p><div>

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

</div><p style="margin: 0pt; font: 10pt Times New Roman, Times, Serif; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>C. Material Contracts</b></span></p><div>


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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt">We have not entered into
any material contracts other than in the ordinary course of business and other than those described in Item 4 &#8220;Information on the
Company,&#8221; Item 5 &#8220;Operating and Financial Review and Prospects&#8212;F. Tabular Disclosure of Contractual Obligations,&#8221;
Item 7 &#8220;Major Shareholders and Related Party Transactions,&#8221; or filed (or incorporated by reference) as exhibits to this annual
report or otherwise described or referenced in this annual report.</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-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>D. Exchange Controls</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><i>Cayman Islands Exchange 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; text-align: justify; text-indent: 0pt">There are no material exchange
controls restrictions on payment of dividends, interest or other payments to the holders of our Ordinary Shares or on the conduct of our
operations in the Cayman Islands, where we were incorporated. There are no material Cayman Islands laws that impose any material exchange
controls on us or that affect the payment of dividends, interest or other payments to nonresident holders of our Ordinary Shares. Cayman
Islands law and our memorandum and articles of association do not impose any material limitations on the right of non-residents or foreign
owners to hold or vote our Ordinary Shares.</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>PRC Exchange 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"><span style="text-decoration:underline">Regulations on Foreign Currency Exchange</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; text-align: justify; text-indent: 0pt">Under the PRC Foreign Currency
Administration Rules promulgated on January 29, 1996 and last amended on August 5, 2008 and various regulations issued by SAFE and other
relevant PRC government authorities, payment of current account items in foreign currencies, such as trade and service payments, payment
of interest and dividends can be made without prior approval from SAFE by following the appropriate procedural requirements. By contrast,
the conversion of RMB into foreign currencies and remittance of the converted foreign currency outside the PRC for the purpose of capital
account items, such as direct equity investments, loans and repatriation of investment, requires prior approval from SAFE or its local
office.</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: 100; 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"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
February 13, 2015, SAFE promulgated the Circular on Simplifying and Improving the Foreign Currency Management Policy on Direct Investment,
effective from June 1, 2015, which cancels the requirement for obtaining approvals of foreign exchange registration of foreign direct
investment and overseas direct investment from SAFE. The application for the registration of foreign exchange for the purpose of foreign
direct investment and overseas direct investment may be filed with qualified banks, which, under the supervision of SAFE, may review
the application and process the registration.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Circular of the SAFE on Reforming the Management Approach regarding the Settlement of Foreign Capital of Foreign-invested Enterprise,
or SAFE Circular 19, was promulgated on March 30, 2015 and became effective on June 1, 2015. According to SAFE Circular 19, a foreign-invested
enterprise may, according to its actual business needs, settle with a bank the portion of the foreign exchange capital in its capital
account for which the relevant foreign exchange bureau has confirmed monetary contribution rights and interests (or for which the bank
has registered the account-crediting of monetary contribution). For the time being, foreign-invested enterprises are allowed to settle
100% of their foreign exchange capitals on a discretionary basis; a foreign-invested enterprise shall truthfully use its capital for
its own operational purposes within the scope of business; where an ordinary foreign-invested enterprise makes domestic equity investment
with the amount of foreign exchanges settled, the invested enterprise shall first go through domestic re-investment registration and
open a corresponding Account for Foreign Exchange Settlement Pending Payment with the foreign exchange bureau (bank) at the place of
registration. The Circular of the SAFE on Reforming and Regulating Policies on the Control over Foreign Exchange Settlement of Capital
Accounts, or SAFE Circular 16, was promulgated and became effective on June 9, 2016. According to SAFE Circular 16, enterprises registered
in PRC may also convert their foreign debts from foreign currency into Renminbi on self-discretionary basis. SAFE Circular 16 provides
an integrated standard for conversion of foreign exchange under capital account items (including but not limited to foreign currency
capital and foreign debts) on self&#8212;discretionary basis, which applies to all enterprises registered in the PRC. SAFE Circular 16
reiterates the principle that Renminbi converted from foreign currency-denominated capital of a company may not be directly or indirectly
used for purposes beyond its business scope and may not be used for investments in securities or other investment with the exception
of bank financial products that can guarantee the principal within the PRC unless otherwise specifically provided. Besides, the converted
Renminbi shall not be used to make loans for related enterprises unless it is within the business scope or to build or to purchase any
real estate that is not for the enterprise own use with the exception for the real estate enterprise. On October 23, 2019, the SAFE issued
the Notice of the State Administration of Foreign Exchange on Further Facilitating Cross-border Trade and Investment, or the SAFE Circular
28, which, among other things, expanded the use of foreign exchange capital to domestic equity investment area. Non-investment foreign-funded
enterprises are allowed to lawfully make domestic equity investments by using their capital on the premise without violation to prevailing
special administrative measures for access of foreign investments (negative list) and the authenticity and compliance with the regulations
of domestic investment projects.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
January 26, 2017, SAFE promulgated the Circular on Further Improving Reform of Foreign Exchange Administration and Optimizing Genuineness
and Compliance Verification, or SAFE Circular 3, which stipulates several capital control measures with respect to the outbound remittance
of profits from domestic entities to offshore entities, including (i) banks must check whether the transaction is genuine by reviewing
board resolutions regarding profit distribution, original copies of tax filing records and audited financial statements, and (ii) domestic
entities must retain income to account for previous years&#8217; losses before remitting any profits. Moreover, pursuant to SAFE Circular
3, domestic entities must explain in detail the sources of capital and how the capital will be used, and provide board resolutions, contracts
and other proof as a part of the registration procedure for outbound investment.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span style="text-decoration:underline">Regulations
on Foreign Exchange Registration of Overseas Investment by PRC Residents</span></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">SAFE
issued the Circular on Relevant Issues Relating to Domestic Resident&#8217;s Investment and Financing and Roundtrip Investment through
Special Purpose Vehicles, or SAFE Circular 37, which became effective in July 2014, to replace the Circular of the State Administration
of Foreign Exchange on Issues Concerning the Regulation of Foreign Exchange in Equity Finance and Roundtrip Investments by Domestic Residents
through Offshore Special Purpose Vehicles, to regulate foreign exchange matters in relation to the use of special purpose vehicles, or
SPVs, by PRC residents or entities to seek offshore investment and financing or conduct round trip investment in China. SAFE Circular
37 defines a SPV as an offshore entity established or controlled, directly or indirectly, by PRC residents or entities for the purpose
of seeking offshore financing or making offshore investment, using legitimate onshore or offshore assets or interests, while &#8220;round
trip investment&#8221; is defined as direct investment in China by PRC residents or entities through SPVs, namely, establishing foreign-invested
enterprises to obtain the ownership, control rights and management rights. SAFE Circular 37 stipulates that, prior to making contributions
into an SPV, PRC residents or entities be required to complete foreign exchange registration with SAFE or its local branch. In addition,
SAFE promulgated the Notice on Further Simplifying and Improving the Administration of the Foreign Exchange Concerning Direct Investment
in February 2015, which amended SAFE Circular 37 and became effective on June 1, 2015, requiring PRC residents or entities to register
with qualified banks rather than SAFE in connection with their establishment or control of an offshore entity established for the purpose
of overseas investment or financing.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">PRC
residents or entities who had contributed legitimate onshore or offshore interests or assets to SPVs but had not obtained registration
as required before the implementation of the SAFE Circular 37 must register their ownership interests or control in the SPVs with qualified
banks. An amendment to the registration is required if there is a material change with respect to the SPV registered, such as any change
of basic information (including change of the PRC residents, name and operation term), increases or decreases in investment amount, transfers
or exchanges of shares, and mergers or divisions. Failure to comply with the registration procedures set forth in SAFE Circular 37 and
the subsequent notice, or making misrepresentation on or failure to disclose controllers of the foreign-invested enterprise that is established
through round-trip investment, may result in restrictions being imposed on the foreign exchange activities of the relevant foreign-invested
enterprise, including payment of dividends and other distributions, such as proceeds from any reduction in capital, share transfer or
liquidation, to its offshore parent or affiliate, and the capital inflow from the offshore parent, and may also subject relevant PRC
residents or entities to penalties under PRC foreign exchange administration regulations. See &#8220;Risk Factors&#8212;Risks Related
to Doing Business in China&#8212;PRC regulations relating to the establishment of offshore special purpose 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, limit our PRC subsidiaries&#8217; ability to increase its registered capital or distribute profits to us,
or may otherwise adversely affect us.&#8221;</span></p><div>

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><span style="text-decoration:underline">Regulations
on Dividend Distribution</span></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Distribution
of dividends of foreign investment enterprises are mainly governed by the Foreign Investment Enterprise Law, issued in 1986 and amended
in 2000 and 2016 respectively, and the Implementation Rules under the Foreign Investment Enterprise Law, issued in 1990 and amended in
2001 and 2014 respectively. Under these regulations, foreign investment enterprises in the PRC may distribute dividends only out of their
accumulative profits, if any, determined in accordance with PRC accounting standards and regulations. In addition, no less than 10% of
the accumulated profits of the foreign investment enterprises in the PRC are required to be allocated to fund certain reserve funds each
year unless these reserves have reached 50% of the registered capital of the enterprises. A PRC company is not permitted to distribute
any profits until any losses from previous fiscal years have been offset. Profits retained from prior fiscal years may be distributed
together with distributable profits from the current fiscal year. Under our current corporate structure, our BVI holding company may
rely on dividend payments from our wholly foreign-owned enterprise incorporated in China to fund any cash and financing requirements
we may have. Limitation on the ability of our operating subsidiaries to make remittance to our WOFEs and on the ability of our WOFEs
to pay dividends to us could limit our ability to access cash generated by the operations of those entities.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>E. Taxation</b></span></p><div>


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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following summary of the material Cayman Islands, PRC and U.S. federal income tax consequences of an investment in our 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.
This summary does not deal with all possible tax consequences relating to an investment in our 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.</span></p><div>

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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">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 investors 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 with the United Kingdom in
2010 but is otherwise is not party to any double tax treaties which are applicable to any payments made to or by our company. There are
no exchange control regulations or currency restrictions in the Cayman Islands.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Payments
of dividends and capital in respect of Ordinary Shares will not be subject to taxation in the Cayman Islands and no withholding will
be required under Cayman Islands laws on the payment of a dividend or capital to any holder of Ordinary Shares, nor will gains derived
from the disposal of Ordinary Shares be subject to Cayman Islands income or corporation tax.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">No
stamp duty is payable in the Cayman Islands in respect of the issue of our Ordinary Shares or on an instrument of transfer in respect
of our Ordinary Shares except those which hold interests in land in the Cayman Islands.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>People&#8217;s
Republic of China Taxation</b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Under
the PRC EIT Law and its implementation rules, an enterprise established outside the PRC with a &#8220;de facto management body&#8221;
within the PRC is considered a resident enterprise and will be subject to the enterprise income tax at the rate of 25% on its global
income. The implementation rules define the term &#8220;de facto management body&#8221; as the body that exercises full and substantial
control over and overall management of the business, production, personnel, accounts and properties of an enterprise. In April 2009,
the SAT issued the Circular of the SAT on Issues Relating to Identification of PRC-Controlled Overseas Registered Enterprises as Resident
Enterprises in Accordance With the De Facto Standards of Organizational Management, or SAT 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 located in China. Although this circular only applies to offshore enterprises controlled by PRC enterprises or PRC enterprise groups,
not those 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.
According to SAT Circular 82, an offshore incorporated enterprise controlled by a PRC enterprise or a PRC enterprise group will be regarded
as a PRC tax resident by virtue of having its &#8220;de facto management body&#8221; in the PRC only if all of the following conditions
are met: (i) the primary location of the day-to-day operational management is in the PRC; (ii) decisions relating to the enterprise&#8217;s
financial and human resource matters are made or are subject to approval by organizations or personnel in the PRC; (iii) the enterprise&#8217;s
primary assets, accounting books and records, company seals, and board and shareholder resolutions, are located or maintained in the
PRC; and (iv) at least 50% of voting board members or senior executives habitually reside in the PRC.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Further
to SAT Circular 82, the SAT issued the SAT Bulletin 45, which took effect in September 2011, to provide more guidance on the implementation
of SAT Circular 82. SAT Bulletin 45 provides for procedures and administration details of determination on resident status and administration
on post-determination matters. Our Company is a company incorporated outside the PRC. As a holding company, its sole asset is its share
ownership of its direct subsidiary, a Hong Kong company, 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 the PRC. 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. 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 us. If the PRC tax authorities determine that our Cayman Islands holding company is a PRC resident enterprise for PRC enterprise
income tax purposes, a number of unfavorable PRC tax consequences could follow. For example, a 10% withholding tax would be imposed on
dividends we pay to our non-PRC enterprise shareholders. In addition, nonresident enterprise shareholders may be subject to PRC tax on
gains realized on the sale or other disposition of Ordinary Shares, as if such income is treated as sourced from within the PRC. Furthermore,
if we are deemed a PRC resident enterprise, dividends paid to our non-PRC individual shareholders and any gain realized on the transfer
of Ordinary Shares by such shareholders may be subject to PRC tax at a rate of 20% (which, in the case of dividends, may be withheld
at source by us). These rates may be reduced by an applicable tax treaty, but it is unclear whether in practice non-PRC shareholders
of our Company would be able to obtain the benefits of any tax treaties between their country of tax residence and the PRC in the event
that we are treated as a PRC resident enterprise. See &#8220;Risk Factors&#8212;Risks Related to Doing Business in China&#8212;If we
are classified as a PRC resident enterprise for PRC income tax purposes, such classification could result in unfavorable tax consequences
to us and our non-PRC shareholders.&#8221;</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Notwithstanding
the foregoing, our PRC subsidiaries, Jiangsu Huadong enjoy preferential income tax rate of 15% until December 31, 2021, due to its treatment
as &#8220;National High-Tech Enterprises&#8221; in China. Prior to the expiration date of such treatment, it may submit applications
for renewal and continue enjoying the preferential income tax rate if granted.</span></p><div>

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following discussion is a summary of United&#160;States federal income tax considerations generally applicable to the ownership and disposition
of our Ordinary Shares by a U.S.&#160;holder (as&#160;defined below) that acquires our Ordinary Shares and holds our Ordinary Shares
as &#8220;capital assets&#8221; (generally, property held for investment) under the United&#160;States Internal Revenue Code of 1986,
as amended (the &#8220;Code&#8221;). This discussion is based upon existing United&#160;States federal income tax law, which is subject
to differing interpretations and may be changed, possibly with retroactive effect. No ruling has been sought from the Internal Revenue
Service (the &#8220;IRS&#8221;) with respect to any United&#160;States 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 United&#160;States
federal income taxation that may be important to particular investors in light of their individual circumstances, including investors
subject to special tax rules (for&#160;example, certain financial institutions, insurance companies, broker-dealers, traders in securities
that have elected the mark-to-market method of accounting for their securities, partnerships and their partners, regulated investment
companies, real estate investment trusts, and tax-exempt organizations (including private foundations)), investors who are not U.S.&#160;holders,
investors who own (directly, indirectly, or constructively) 10% or more of our stock (by&#160;vote or value), investors that will hold
their Ordinary Shares as part of a straddle, hedge, conversion, constructive sale, or other integrated transaction for United&#160;States
federal income tax purposes, investors required to accelerate the recognition of any item of gross income with respect to our Ordinary
Shares as a result of such income being recognized on an applicable financial statement, or investors that have a functional currency
other than the United&#160;States dollar, all of whom may be subject to tax rules that differ significantly from those summarized below.
In addition, this discussion does not discuss any non-United&#160;States, alternative minimum tax, state, or local tax or any non-income
tax (such as the U.S.&#160;federal gift or estate tax) considerations, or the Medicare tax on net investment income. Each U.S.&#160;holder
is urged to consult its tax advisor regarding the United&#160;States federal, state, local, and non-United&#160;States income and other
tax considerations of an investment in our Ordinary Shares.</span></p><div>

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
purposes of this discussion, a &#8220;U.S.&#160;holder&#8221; is a beneficial owner of our Ordinary Shares that is, for United&#160;States
federal income tax purposes, (i)&#160;an individual who is a citizen or resident of the United&#160;States, (ii)&#160;a corporation (or&#160;other
entity treated as a corporation for United&#160;States federal income tax purposes) created in, or organized under the laws of, the United&#160;States
or any state thereof or the District of Columbia, (iii)&#160;an estate the income of which is subject to United&#160;States federal income
taxation regardless of its source, or (iv)&#160;a trust (A)&#160;the administration of which is subject to the primary supervision of
a United&#160;States court and which has one or more United&#160;States persons who have the authority to control all substantial decisions
of the trust or (B)&#160;that has otherwise elected to be treated as a United&#160;States person under the Code or applicable United&#160;States
Treasury regulations.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
a partnership (or&#160;other entity or arrangement treated as a partnership for United&#160;States federal income tax purposes) is a
beneficial owner of our Ordinary Shares, the tax treatment of a partner in the partnership will generally depend upon the status of the
partner and the activities of the partnership. Partnerships holding our Ordinary Shares and partners in such partnerships are urged to
consult their tax advisors as to the particular United&#160;States federal income tax consequences of an investment in our Ordinary Shares.</span></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Sale
or Other Disposition of Ordinary Shares</i></b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Subject
to the PFIC rules discussed below, a U.S.&#160;holder will generally recognize capital gain or loss upon the sale or other disposition
of Ordinary Shares in an amount equal to the difference between the amount realized upon the disposition and the U.S.&#160;holder&#8217;s
adjusted tax basis in such Ordinary Shares. Any capital gain or loss will be long-term if our Ordinary Shares have been held for more
than one year and will generally be United&#160;States source gain or loss for United&#160;States foreign tax credit purposes. Long-term
capital gain of individuals and other non-corporate U.S.&#160;holders is generally eligible for a reduced rate of taxation. The deductibility
of a capital loss may be subject to limitations.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
the event that we are treated as a PRC &#8220;resident enterprise&#8221; under the Enterprise Income Tax Law and gain from the disposition
of our Ordinary Shares is subject to tax in the PRC, a U.S.&#160;holder that is eligible for the benefits of the income tax treaty between
the United&#160;States and the PRC may elect to treat the gain as PRC source income. If a U.S.&#160;holder is not eligible for the benefits
of the income tax treaty or fails to make the election to treat any gain as foreign source, then such U.S.&#160;holder may not be able
to use the foreign tax credit arising from any PRC tax imposed on the disposition of our Ordinary Shares unless such credit can be applied
(subject to applicable limitations) against U.S.&#160;federal income tax due on other income derived from foreign sources in the same
income category (generally, the passive category). U.S.&#160;holders are advised to consult their tax advisors regarding the tax consequences
if a foreign tax is imposed on a disposition of our Ordinary Shares, including the availability of the foreign tax credit under their
particular circumstances and the election to treat any gain as PRC source.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Passive
Foreign Investment Company Rules</i></b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
we are a PFIC for any taxable year during which a U.S.&#160;holder holds our Ordinary Shares, and unless the U.S.&#160;holder makes a
mark-to-market election (as&#160;described below), the U.S.&#160;holder will generally be subject to special tax rules that have a penalizing
effect, regardless of whether we remain a PFIC, for subsequent taxable years, on (i)&#160;any excess distribution that we make to the
U.S.&#160;holder (which generally means any distribution paid during a taxable year to a U.S.&#160;holder that is greater than 125% of
the average annual distributions paid in the three preceding taxable years or, if shorter, the U.S.&#160;holder&#8217;s holding period
for our Ordinary Shares), and (ii)&#160;any gain realized on the sale or other disposition, including, under certain circumstances, a
pledge, of Ordinary Shares. Under the PFIC rules:</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></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"></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">such
excess distribution and/or gain will be allocated ratably over the U.S.&#160;holder&#8217;s holding period for our Ordinary Shares;</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></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"></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">such
amount allocated to the current taxable year and any taxable years in the U.S.&#160;holder&#8217;s holding period prior to the first
taxable year in which we are a PFIC, or 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; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></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"></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">such
amount allocated to each prior taxable year, other than a pre-PFIC year, will be subject to tax at the highest tax rate in effect for
that year; and</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></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"></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">an
interest charge generally applicable to underpayments of tax will be imposed on the tax attributable to each prior taxable year, other
than a pre-PFIC year.</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
we are a PFIC for any taxable year during which a U.S.&#160;holder holds our Ordinary Shares and any of our non-United&#160;States subsidiaries
is also a PFIC, such U.S.&#160;holder would be treated as owning a proportionate amount (by&#160;value) of the shares of the lower-tier
PFIC for purposes of the application of these rules. U.S.&#160;holders are advised to consult their tax advisors regarding the application
of the PFIC rules to any of our subsidiaries.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
an alternative to the foregoing rules, a U.S.&#160;holder of &#8220;marketable stock&#8221; in a PFIC may make a mark-to-market election
with respect to our Ordinary Shares, provided that our Ordinary Shares are regularly traded on the Nasdaq Global Market.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Because
a mark-to-market election cannot be made for any lower-tier PFICs that a PFIC may own, a U.S.&#160;holder who makes a mark-to-market
election with respect to our Ordinary Shares will generally continue to be subject to the general PFIC rules with respect to such U.S.&#160;holder&#8217;s
indirect interest in any investments held by us that are treated as an equity interest in a PFIC for United&#160;States federal income
tax purposes. If a mark-to-market election is made, the U.S.&#160;holder will generally (i)&#160;include as ordinary income for each
taxable year that we are a PFIC the excess, if any, of the fair market value of Ordinary Shares held at the end of the taxable year over
the adjusted tax basis of such Ordinary Shares and (ii)&#160;deduct as an ordinary loss the excess, if any, of the adjusted tax basis
of our Ordinary Shares over the fair market value of such 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.&#160;holder&#8217;s adjusted tax
basis in our Ordinary Shares would be adjusted to reflect any income or loss resulting from the mark-to-market election. If a U.S.&#160;holder
makes an effective mark-to-market election, in each year that we are a PFIC any gain recognized upon the sale or other disposition of
our Ordinary Shares will be treated as ordinary income and 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. If a U.S.&#160;holder makes a mark-to-market election it will
be effective for the taxable year for which the election is made and all subsequent taxable years unless our Ordinary Shares are no longer
regularly traded on a qualified exchange or the IRS consents to the revocation of the election.</span></p><div>

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
a U.S.&#160;holder makes a mark-to-market election in respect of a PFIC and such corporation ceases to be a PFIC, the U.S.&#160;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 a PFIC.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
do not intend to provide information necessary for U.S.&#160;holders to make qualified electing fund elections, which, if available,
would result in tax treatment different from (and&#160;generally less adverse than) the general tax treatment for PFICs described above.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
a U.S.&#160;holder owns our Ordinary Shares during any taxable year that we are a PFIC, such holder would generally be required to file
an annual IRS Form&#160;8621. Each U.S.&#160;holder is advised to consult its tax advisors regarding the potential tax consequences to
such holder if we are or become a PFIC, including the possibility of making a mark-to-market election.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>F. Dividends and Paying Agents</b></span></p><div>


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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>G. Statement by Experts</b></span></p><div>


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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>H. Documents on Display</b></span></p><div>


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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have filed this annual report on Form 20-F with the SEC under the Exchange Act. Statements made in this report as to the contents of
any document referred to are not necessarily complete. With respect to each such document filed as an exhibit to this report, reference
is made to the exhibit for a more complete description of the matter involved, and each such statement shall be deemed qualified in its
entirety by such reference.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are subject to the informational requirements of the Exchange Act as a foreign private issuer and file reports and other information
with the SEC. Reports and other information filed by us with the SEC including this report, may be inspected and copied at the public
reference room of the SEC at 100 F Street, N.E., Washington D.C. 20549. You can also obtain copies of this report by mail from the Public
Reference Section of the SEC, 100 F. Street, N.E., Washington D.C. 20549, at prescribed rates. Additionally, copies of this material
may be obtained from the SEC&#8217;s Internet site at http://www.sec.gov. The SEC&#8217;s telephone number is 1-800-SEC-0330. In accordance
with Nasdaq Stock Market Rule 5250(d), we will also post this annual report on Form 20-F on our website at www.kbsfashion.com.</span></p><div>

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

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

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

</div><p style="margin: 0pt; font: 10pt Times New Roman, Times, Serif; text-align: justify; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>I. Subsidiary Information</b></span></p><div>


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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">See
&#8220;Item 4.A, Information on the Company &#8211; History and Development of the Company&#8221; above.</span></p><div>

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

</div><div><a id="a_013"></a></div><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK</b></span></p><div>


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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Foreign
Exchange Risk</i></b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Foreign
currency risk arises from future commercial transactions, recognized assets and liabilities and net investments in foreign operations.
Substantially all of our revenue-generating transactions, and a majority of our expense-related transactions, are denominated in Renminbi,
which is the functional currency of our operations. We do not hedge against currency risk.</span></p><div>

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

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

</div><!-- Field: Page; Sequence: 105; 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"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->101<!-- 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; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
value of the Renminbi against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in political
and economic conditions. To the extent that we need to convert U.S. dollars into Renminbi for our operations, appreciation of the Renminbi
against the U.S. dollar would reduce the Renminbi amount we receive from the conversion. Conversely, if we decide to convert Renminbi
into U.S. dollars for the purpose of making payments for dividends on our Ordinary Shares, servicing outstanding debts, or for other
business purposes, appreciation of the U.S. dollar against the Renminbi would reduce the U.S. dollar amounts available to us.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
functional currency is the RMB, and our financial statements are presented in U.S. dollars. The RMB appreciated by 8.23% and 2.34% for
the year ended December 31, 2022 and 2021, respectively. It is difficult to predict how market forces or PRC or U.S. government policy
may impact the exchange rate between the RMB and the U.S. dollar in the future. The change in the value of the RMB relative to the U.S.
dollar may affect our financial results reported in the U.S. dollar terms without giving effect to any underlying changes in our business
or results of operations. Currently, our assets, liabilities, revenues and costs are denominated in RMB.</span></p><div>

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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are not currently exposed to interest rate risk. We do not own any interest-bearing instruments and our interest-bearing debt carries
a fixed rate.</span></p><div>

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

</div><p style="text-indent: 0pt; font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Market
Price Risk</i></b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
are not currently exposed to commodity price risk or market price risk.</span></p><div>

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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Inflation
does not materially affect our business or the results of our operations.</span></p><div>

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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Seasonality
does not materially affect our business or the results of our operations.</span></p><div>

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

</div><div><a id="a_014"></a></div><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES</b></span></p><div>


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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>A. Debt Securities</b></span></p><div>


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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>B. Warrants and Rights</b></span></p><div>


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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of the date of this annual report, we had the following warrants and options outstanding:</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
independent director, Wenzhang Jia, holds options to purchase 1,886 Ordinary Shares of the Company, exercisable at a price of $5.30 per
share, which options vest in equal monthly installments over the course of Mr. Jia&#8217;s initial year of service and are exercisable
for a term of 10 years.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
independent director, Huijuan Zhao, holds options to purchase 740 Ordinary Shares of the Company, exercisable at a price of $13.51 per
share, which options vest in equal monthly installments over the course of Ms. Zhao&#8217;s initial year of service and are exercisable
for a term of 10 years.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
former independent director, Heung Ming Wong, presently holds options to purchase 361 Ordinary Shares of the Company, at an exercise
price of $8.90 per share. The options vested in equal monthly installments over Mr. Wong&#8217;s initial year of service and are exercisable
for a term of ten years. At the time of his resignation, on June 10, 2022, all unvested Ordinary Shares held by Mr. Wong were forfeited.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>C. Other Securities</b></span></p><div>


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

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>D. American Depositary Shares</b></span></p><div>


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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
do not have any American Depositary Shares.</span></p><div>

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

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

</div><!-- Field: Page; Sequence: 106; 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"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->102<!-- 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; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><div><a id="a_015"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>PART
II</b></span></p><div>

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

</div><div><a id="a_016"></a></div><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES</b></span></p><div>


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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">None.</span></p><div>

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

</div><div><a id="a_017"></a></div><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS</b></span></p><div>


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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">None.</span></p><div>

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

</div><div><a id="a_018"></a></div><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>ITEM 15. CONTROLS AND PROCEDURES</b></span></p><div>


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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>A. Disclosure Controls and Procedures</b></span></p><div>


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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of December 31, 2022, our management assessed the effectiveness of our internal control over financial reporting. In the course of auditing
our consolidated financial statements for the year ended December 31, 2022, we identified a material weakness&#160;in our internal control
over financial reporting as of December 31, 2022. 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.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
material weaknesses identified to date relate to a lack of accounting staff and resources with appropriate knowledge of generally accepted
accounting principles in the United States (&#8220;U.S. GAAP&#8221;) and SEC reporting and compliance requirements.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
a result of the above material weaknesses, management has concluded that our internal control over financial reporting was ineffective
as of December 31, 2022.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
order to address and resolve the foregoing material weakness, we have begun to implement measures designed to improve our internal control
over financial reporting to remediate this material weakness. We plan to take remedial measures including (i) hiring more qualified accounting
personnel 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; (ii) implementing regular and continuous U.S. GAAP accounting and financial reporting
training programs for our accounting and financial reporting personnel; and (iii) setting up an internal audit function as well as engaging
an external consulting firm to assist us with assessment of Sarbanes-Oxley compliance requirements and improvement of overall internal
control. Finally, we intend to use approximately $1,000,000 from the net proceeds of our recent IPO to improve the internal control system,
including adopting ERP system (Enterprise Resource Planning Administration) and robot management.&#160;</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>B. Management&#8217;s Annual Report on Internal Control Over Financial Reporting</b></span></p><div>


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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined
in Exchange Act Rule 13a-15(f). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP.
Under the supervision and with the participation of our management, including our chief executive officer and chief financial officer,
we conducted an assessment of the effectiveness of our internal control over financial reporting as of December 31, 2022. The assessment
was based on criteria established in the framework Internal Control&#8212;Integrated Framework (2013), issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Based on this assessment, management concluded that our internal control over financial reporting
was not effective as of December 31, 2022. Our management identified the material weakness(es) in our internal control over financial
reporting as insufficient in-house personnel in our accounting department with sufficient knowledge of the U.S. GAAP and SEC reporting
rules.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Because
of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of
any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions
or because the degree of compliance with policies or procedures may deteriorate.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>C. Attestation Report of the Registered Public Accounting Firm</b></span></p><div>


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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Because
the Company is a non-accelerated filer and an emerging growth company, this annual report does not include an attestation report of our
registered public accounting firm regarding internal control over financial reporting. Management&#8217;s report was not subject to attestation
by our registered public accounting firm pursuant to rules&#160;of the SEC where domestic and foreign registrants that are non-accelerated
filers, which we are, and &#8220;emerging growth companies,&#8221; which we also are, are not required to provide the auditor attestation
report.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>D. Changes in Internal Controls over Financial Reporting</b></span></p><div>


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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Other
than as described above, there were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) of the
Exchange Act) 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.</span></p><div>

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

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

</div><!-- Field: Page; Sequence: 107; 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"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->103<!-- 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; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><div><a id="a_019"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>ITEM
16. [RESERVED]</b></span></p><div>

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

</div><div><a id="a_020"></a></div><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT</b></span></p><div>


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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
audit committee of our board of directors currently consists of three members, Wenzhang Jia, Xiaoming E and Huijuan Zhao. Our board of
directors has determined that all of our audit committee members are &#8220;independent&#8221; under the Exchange Act and have the requisite
financial knowledge and experience to serve as members of our audit committee. In addition, our board of directors has determined that
Wenzhang Jia is an &#8220;audit committee financial expert&#8221; as defined in Item 16A of the Instructions to Form 20-F and meets Nasdaq&#8217;s
financial sophistication requirements due to his current and past experience in various companies in which he was responsible for, amongst
others, the financial oversight responsibilities.</span></p><div>

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

</div><div><a id="a_021"></a></div><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>ITEM 16B. CODE OF ETHICS</b></span></p><div>


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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have adopted a Code of Business Conduct and Ethics (the &#8220;Code of Ethics&#8221;) that applies to all of the directors, officers
and employees of the Company and its subsidiaries, including our principal executive officer, principal financial officer and principal
accounting officer. The Code of Ethics addresses, among other things, honesty and ethical conduct, conflicts of interest, compliance
with laws, regulations and policies, including disclosure requirements under the federal securities laws, confidentiality, trading on
inside information, and reporting of violations of the code. A copy of the Code of Ethics is filed as Exhibit 14.1 to our amended registration
statement on Form F-1 filed on August 10, 2021. During the fiscal year ended December 31, 2022, there were no waivers of our Code of
Ethics.</span></p><div>

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

</div><div><a id="a_022"></a></div><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES</b></span></p><div>


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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following table sets forth the aggregate fees by categories specified below in connection with services rendered by our principal external
auditors for the periods indicated.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</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">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="6" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Fiscal Year Ended <br/> 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">2022</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></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 76%; text-align: left">Audit Fees*</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">522,272</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">220,000</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; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></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: 0in"></td><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">&#8220;Audit
Fees&#8221; consisted of the aggregate fees billed for professional services rendered for the audit of our annual financial statements
or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements.</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Our
Audit Committee pre-approves all auditing services and permitted non-audit services to be performed for us by our independent auditor,
including the fees and terms thereof (subject to the de minimums exceptions for non-audit services described in Section 10A(i)(l)(B)
of the Exchange Act that are approved by our Audit Committee prior to the completion of the audit).</span></p><div>

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

</div><div><a id="a_023"></a></div><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES</b></span></p><div>


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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
applicable</span></p><div>

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

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

</div><div><a id="a_024"></a></div><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS</b></span></p><div>


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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">There
were no purchases of equity securities made by or on behalf of us or any &#8220;affiliated purchaser&#8221; as defined in Rule 10b-18
of the Exchange Act during the period covered by this annual report.</span></p><div>

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

</div><div><a id="a_025"></a></div><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>ITEM 16F. CHANGES IN REGISTRANT&#8217;S CERTIFYING ACCOUNTANT</b></span></p><div>


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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">None.</span></p><div>

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

</div><div><a id="a_026"></a></div><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>ITEM 16G. CORPORATE GOVERNANCE</b></span></p><div>


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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
were incorporated in the Cayman Islands and our corporate governance practices are governed by applicable Cayman Islands law and our
Memorandum and Articles. In addition, because our common stock is listed on Nasdaq, we are subject to Nasdaq&#8217;s corporate governance
requirements.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
a Cayman Islands company listed on the Nasdaq Global Market, we are subject to the Nasdaq corporate governance listing standards. Nasdaq
rules, however,&#160;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.</span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.25in; background-color: white"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Nasdaq
Listing Rule 5605(b)(1) requires listed companies to have, among other things, a majority of its board members be independent. As a foreign
private issuer, however, we are permitted to, and we may follow home country practice in lieu of the above requirements. The corporate
governance practice in our home country, the Cayman Islands, does not require a majority of our board to consist of independent directors.
Currently, a majority of our board members are independent. However, if we change our board composition such that independent directors
do not constitute a majority of our board of directors, our shareholders may be afforded less protection than they would otherwise enjoy
under Nasdaq&#8217;s corporate governance requirements applicable to U.S. domestic issuers.</span></p><div>

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

</div><div><a id="a_027"></a></div><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>ITEM 16H. MINE SAFETY DISCLOSURE</b></span></p><div>


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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
applicable.</span></p><div>

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

</div><div><a id="a_028"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>ITEM 16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS</b></span></p><div>


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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Not
applicable.</span></p><div>

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

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

</div><!-- Field: Page; Sequence: 109; 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"><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; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><div><a id="a_029"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>PART
III</b></span></p><div>

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

</div><div><a id="a_030"></a></div><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>ITEM 17. FINANCIAL STATEMENTS</b></span></p><div>


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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">We
have elected to provide financial statements pursuant to Item 18.</span></p><div>

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

</div><div><a id="a_031"></a></div><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>ITEM 18. FINANCIAL STATEMENTS</b></span></p><div>


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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
financial statements are filed as part of this annual report beginning on page F-1.</span></p><div>

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

</div><div><a id="a_032"></a></div><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>ITEM 19. EXHIBITS</b></span></p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; 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="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom">
    <td style="border-bottom: Black 1.5pt solid; text-align: left; font: 10pt Times New Roman, Times, Serif; padding-top: 0pt; width: 9%; padding-right: 0pt; padding-left: 0pt; vertical-align: bottom"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Exhibit<br/>
    Number</b></span></td>
    <td style="padding: 0pt 0pt 1.5pt; font: 10pt Times New Roman, Times, Serif; width: 1%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: justify; padding-top: 0pt; width: 90%; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Description</b></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; padding-right: 0pt; padding-left: 0pt; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">1.1</span></td>
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="text-align: justify; padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; padding-right: 0pt; padding-left: 0pt"><a href="https://www.sec.gov/Archives/edgar/data/1835615/000121390021041150/ea145152ex3-1i_meihua.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Certificate of Incorporation of Meihua International Medical Technologies Co., Ltd., dated November 10, 2020 (Incorporated by reference to Registration Statement on Form F-1 filed August 10, 2021)</span></a></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; padding-right: 0pt; padding-left: 0pt; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">1.2</span></td>
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="text-align: justify; padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; padding-right: 0pt; padding-left: 0pt"><a href="https://www.sec.gov/Archives/edgar/data/1835615/000121390021041150/ea145152ex3-1ii_meihua.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Amended and Restated Articles of Association of Meihua International Medical Technologies Co., Ltd., dated December 21, 2020 (Incorporated by reference to Registration Statement on Form F-1 filed August 10, 2021) </span></a></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; padding-right: 0pt; padding-left: 0pt; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">1.3</span></td>
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="text-align: justify; padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; padding-right: 0pt; padding-left: 0pt"><a href="https://www.sec.gov/Archives/edgar/data/1835615/000121390021041150/ea145152ex3-1iii_meihua.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Amended and Restated Memorandum of Association of Meihua International Medical Technologies Co., Ltd., dated December 21, 2020 (Incorporated by reference to Registration Statement on Form F-1 filed August 10, 2021)</span></a></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; padding-right: 0pt; padding-left: 0pt; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">2.1</span></td>
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="text-align: justify; padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; padding-right: 0pt; padding-left: 0pt"><a href="https://www.sec.gov/Archives/edgar/data/1835615/000121390021047519/ea147139ex4-1_meihuainter.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Registrant&#8217;s Specimen Certificate for Ordinary Shares (Incorporated by reference to Registration Statement on Form F-1 /A filed September 13, 2021)</span></a></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; padding-right: 0pt; padding-left: 0pt; vertical-align: top">2.2</td>
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; padding-right: 0pt; padding-left: 0pt">&#160;</td>
    <td style="text-align: justify; padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; padding-right: 0pt; padding-left: 0pt"><a href="f20f2022ex2-2_meihua.htm">Description of Securities*</a></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; padding-right: 0pt; padding-left: 0pt; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.1</span></td>
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="text-align: justify; padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; padding-right: 0pt; padding-left: 0pt"><a href="https://www.sec.gov/Archives/edgar/data/1835615/000121390021041150/ea145152ex2-1_meihua.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Share Exchange Agreement by and among Meihua International Medical Technologies Co., Ltd., Kang Fu International Medical Co., Limited, and shareholders of Kang Fu International Medical Co., Limited, dated December 21, 2020 (Incorporated by reference to Registration Statement on Form F-1 filed August 10, 2021)</span></a></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; padding-right: 0pt; padding-left: 0pt; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.2</span></td>
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="text-align: justify; padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; padding-right: 0pt; padding-left: 0pt"><a href="https://www.sec.gov/Archives/edgar/data/1835615/000121390021047519/ea147139ex10-1i_meihuainter.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">English Translation of Employment Agreement between Meihua International Medical Technologies Co., Ltd. and its CEO Yulin Wang (Incorporated by reference to Registration Statement on Form F-1 /A filed September 13, 2021)</span></a></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: White">
    <td style="text-align: left; padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; padding-right: 0pt; padding-left: 0pt; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.3</span></td>
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; text-align: justify; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-top: 0pt; text-align: justify; padding-right: 0pt; padding-left: 0pt"><a href="https://www.sec.gov/Archives/edgar/data/1835615/000121390021041150/ea145152ex10-2_meihua.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">English Translation of Form of Sales Agreement between Jiangsu Huadong Medical Device Industrial Co., Ltd. and our customer (Incorporated by reference to Registration Statement on Form F-1 filed August 10, 2021)</span></a></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; padding-right: 0pt; padding-left: 0pt; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.4</span></td>
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; text-align: justify; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-top: 0pt; text-align: justify; padding-right: 0pt; padding-left: 0pt"><a href="https://www.sec.gov/Archives/edgar/data/1835615/000121390021041150/ea145152ex10-3_meihua.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">English Translation of Form of Purchase Agreement between Jiangsu Huadong Medical Device Industrial Co., Ltd. and our supplier (Incorporated by reference to Registration Statement on Form F-1 filed August 10, 2021)</span></a></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: White">
    <td style="text-align: left; padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; padding-right: 0pt; padding-left: 0pt; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.5</span></td>
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; text-align: justify; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-top: 0pt; text-align: justify; padding-right: 0pt; padding-left: 0pt"><a href="https://www.sec.gov/Archives/edgar/data/1835615/000121390021041150/ea145152ex10-4_meihua.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">English Translation of Form of Distributor Purchase Agreement between Jiangsu Yada Technology Group Co., Ltd and our distributor (Incorporated by reference to Registration Statement on Form F-1 filed August 10, 2021) </span></a></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; padding-right: 0pt; padding-left: 0pt; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.6</span></td>
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; text-align: justify; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-top: 0pt; text-align: justify; padding-right: 0pt; padding-left: 0pt"><a href="https://www.sec.gov/Archives/edgar/data/1835615/000121390021041150/ea145152ex10-5_meihua.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">English Translation of Loan Agreement between Jiangsu Huadong Medical Device Industrial Co., Ltd as borrower, and Bank of Communications Limited Yangzhou Branch as lender, dated August 24, 2020 (Incorporated by reference to Registration Statement on Form F-1 filed August 10, 2021)</span></a></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: White">
    <td style="text-align: left; padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; padding-right: 0pt; padding-left: 0pt; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.7</span></td>
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; text-align: justify; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-top: 0pt; text-align: justify; padding-right: 0pt; padding-left: 0pt"><a href="https://www.sec.gov/Archives/edgar/data/1835615/000121390021041150/ea145152ex10-6_meihua.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">English Translation of Loan Agreement between Jiangsu Huadong Medical Device Industrial Co., Ltd and Yongjun Liu as borrowers&#160;and Agricultural Bank of China Yangzhou Runyang Branch as lender,&#160;and Mortgage Agreement between Jiangsu Huadong Medical Device Industrial Co., Ltd as&#160;mortgagor&#160;and Agricultural Bank of China Yangzhou Runyang Branch as mortgagee, dated December 3, 2019 (Incorporated by reference to Registration Statement on Form F-1 filed August 10, 2021)</span></a></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; padding-right: 0pt; padding-left: 0pt; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.8</span></td>
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; text-align: justify; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-top: 0pt; text-align: justify; padding-right: 0pt; padding-left: 0pt"><a href="https://www.sec.gov/Archives/edgar/data/1835615/000121390021041150/ea145152ex10-7i_meihua.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">English Translation of Lease Agreement between Zhu Yi and Yangzhou Huada Medical Device Co., Ltd, dated November 20, 2020 (Incorporated by reference to Registration Statement on Form F-1 filed August 10, 2021) </span></a></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: White">
    <td style="text-align: left; padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; padding-right: 0pt; padding-left: 0pt; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.9</span></td>
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; text-align: justify; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-top: 0pt; text-align: justify; padding-right: 0pt; padding-left: 0pt"><a href="https://www.sec.gov/Archives/edgar/data/1835615/000121390021041150/ea145152ex10-7ii_meihua.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">English Translation of Lease Agreement between Jiangsu Huadong Medical Device Industrial Co., Ltd and Yangzhou Huada Medical Device Co., Ltd, dated December 7, 2020 (Incorporated by reference to Registration Statement on Form F-1 filed August 10, 2021)</span></a></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; padding-right: 0pt; padding-left: 0pt; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.10</span></td>
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; text-align: justify; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-top: 0pt; text-align: justify; padding-right: 0pt; padding-left: 0pt"><a href="https://www.sec.gov/Archives/edgar/data/1835615/000121390021041150/ea145152ex10-7iii_meihua.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">English Translation of Lease Agreement between Yangzhou Huada Medical Device Co., Ltd and Jiangsu Huadong Medical Device Industrial Co., Ltd, dated December 7, 2020 (Incorporated by reference to Registration Statement on Form F-1 filed August 10, 2021)</span></a></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: White">
    <td style="text-align: left; padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; padding-right: 0pt; padding-left: 0pt; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.11</span></td>
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; text-align: justify; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-top: 0pt; text-align: justify; padding-right: 0pt; padding-left: 0pt"><a href="https://www.sec.gov/Archives/edgar/data/1835615/000121390021041150/ea145152ex10-7iv_meihua.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">English Translation of Lease Agreement between Jiangsu Huadong Medical Device Industrial Co., Ltd and Jiangsu Yada Technology Group Co., Ltd, dated December 7, 2020 (Incorporated by reference to Registration Statement on Form F-1 filed August 10, 2021)</span></a></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; padding-right: 0pt; padding-left: 0pt; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.12</span></td>
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; text-align: justify; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-top: 0pt; text-align: justify; padding-right: 0pt; padding-left: 0pt"><a href="https://www.sec.gov/Archives/edgar/data/1835615/000121390021041150/ea145152ex10-7v_meihua.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">English Translation of Lease Agreement between Jiangsu Yada Technology Group Co., Ltd and Yangzhou Huada Medical Device Co., Ltd, dated December 7, 2020 (Incorporated by reference to Registration Statement on Form F-1 filed August 10, 2021)</span></a></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: White">
    <td style="text-align: left; padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; padding-right: 0pt; padding-left: 0pt; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.13</span></td>
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; text-align: justify; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-top: 0pt; text-align: justify; padding-right: 0pt; padding-left: 0pt"><a href="https://www.sec.gov/Archives/edgar/data/1835615/000121390021041150/ea145152ex10-7vi_meihua.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">English Translation of Lease Agreement between Jiangsu Yada Technology Group Co., Ltd and Jiangsu Huadong Medical Device Industrial Co., Ltd, dated December 7, 2020 (Incorporated by reference to Registration Statement on Form F-1 filed August 10, 2021)</span></a></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; padding-right: 0pt; padding-left: 0pt; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.14</span></td>
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; text-align: justify; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-top: 0pt; text-align: justify; padding-right: 0pt; padding-left: 0pt"><a href="https://www.sec.gov/Archives/edgar/data/1835615/000121390021041150/ea145152ex10-8_meihua.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">English Translation of Agreement of Persons Acting-in-concert&#160;(Incorporated by reference to Registration Statement on Form F-1 filed August 10, 2021)</span></a></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: White">
    <td style="text-align: left; padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; padding-right: 0pt; padding-left: 0pt; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.15</span></td>
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; text-align: justify; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-top: 0pt; text-align: justify; padding-right: 0pt; padding-left: 0pt"><a href="https://www.sec.gov/Archives/edgar/data/1835615/000121390021045895/ea146654ex10-9_meihuainter.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Collaboration Agreement with Zhong Jiang&#160;(Incorporated by reference to Registration Statement on Form F-1/A filed August 31, 2021)</span></a></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; padding-right: 0pt; padding-left: 0pt; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.16</span></td>
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; text-align: justify; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-top: 0pt; text-align: justify; padding-right: 0pt; padding-left: 0pt"><a href="https://www.sec.gov/Archives/edgar/data/1835615/000121390021062899/ea151563ex10-10_meihua.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Form of Indemnification Escrow Agreement&#160;<sup>0</sup>(Incorporated by reference to Registration Statement on Form F-1/A filed December 2, 2021) </span></a></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: White">
    <td style="text-align: left; padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; padding-right: 0pt; padding-left: 0pt; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.17</span></td>
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; text-align: justify; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-top: 0pt; text-align: justify; padding-right: 0pt; padding-left: 0pt"><a href="https://www.sec.gov/Archives/edgar/data/1835615/000121390021062899/ea151563ex1-1_meihua.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Form of Lock-up Agreement (included as Exhibit A to Underwriting Agreement)&#160;(Incorporated by reference to Registration Statement on Form F-1/A filed December 2, 2021)</span></a></td></tr>
</table><div>

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</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: rgb(204,238,255)">
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; padding-right: 0pt; padding-left: 0pt; width: 9%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.18</span></td>
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; text-align: justify; padding-right: 0pt; padding-left: 0pt; width: 1%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-top: 0pt; text-align: justify; padding-right: 0pt; padding-left: 0pt; width: 90%"><a href="https://www.sec.gov/Archives/edgar/data/1835615/000121390022009232/ea156129ex10-1_meihuainter.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Director Service Agreement with Heung Ming Wong (Incorporated by reference to Current Report on Form 6-K filed February 24, 2022)</span></a></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: White">
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.19</span></td>
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; text-align: justify; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-top: 0pt; text-align: justify; padding-right: 0pt; padding-left: 0pt"><a href="https://www.sec.gov/Archives/edgar/data/1835615/000121390022009232/ea156129ex10-2_meihuainter.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Director Service Agreement with Xiaoming E (Incorporated by reference to Current Report on Form 6-K filed February 24, 2022)</span></a></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: rgb(204,238,255)">
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.20</span></td>
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; text-align: justify; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-top: 0pt; text-align: justify; padding-right: 0pt; padding-left: 0pt"><a href="https://www.sec.gov/Archives/edgar/data/1835615/000121390022009232/ea156129ex10-3_meihuainter.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Director Service Agreement with Xu Han (Incorporated by reference to Current Report on Form 6-K filed February 24, 2022) </span></a></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: White">
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.21</span></td>
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; text-align: justify; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-top: 0pt; text-align: justify; padding-right: 0pt; padding-left: 0pt"><a href="https://www.sec.gov/Archives/edgar/data/1835615/000121390022035399/ea162192ex10-1_meihua.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Form of Director Service Agreement with Wenzhang Jia (Incorporated by reference to Current Report on Form 6-K filed June 28, 2022)</span></a></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: rgb(204,238,255)">
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.22</span></td>
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; text-align: justify; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-top: 0pt; text-align: justify; padding-right: 0pt; padding-left: 0pt"><a href="https://www.sec.gov/Archives/edgar/data/1835615/000121390023015057/ea174081ex99-1_meihuainter.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Form of Indemnification Agreement with the Meihua International Medical Technologies Co., Ltd. directors and officers (Incorporated by reference to Current Report on Form 6-K filed February 28, 2023) &#160;</span></a></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: White">
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.23</span></td>
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; text-align: justify; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-top: 0pt; text-align: justify; padding-right: 0pt; padding-left: 0pt"><a href="https://www.sec.gov/Archives/edgar/data/1835615/000121390022077472/ea169604ex10-1_meihuainter.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Employment Agreement, effective December 1, 2022, between Meihua International Medical Technologies Co., Ltd. and Xin Wang. (Incorporated by reference to Exhibit 10.1 of Current Report on Form 6-K filed December&#160;5, 2022) </span></a></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: rgb(204,238,255)">
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.24</span></td>
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; text-align: justify; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-top: 0pt; text-align: justify; padding-right: 0pt; padding-left: 0pt"><a href="https://www.sec.gov/Archives/edgar/data/1835615/000121390022077472/ea169604ex10-2_meihuainter.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Employment Agreement, effective December 1, 2022, between Meihua International Medical Technologies Co., Ltd. and Lianzhang Zhao. (Incorporated by reference to Exhibit 10.2 of Current Report on Form 6-K filed December 5, 2022)</span></a></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: White">
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.25</span></td>
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; text-align: justify; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-top: 0pt; text-align: justify; padding-right: 0pt; padding-left: 0pt"><a href="https://www.sec.gov/Archives/edgar/data/1835615/000121390022077472/ea169604ex10-3_meihuainter.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Director Offer Letter, effective December 1, 2022, between Meihua International Medical Technologies Co., Ltd. and Huijuan Zhao. (Incorporated by reference to Exhibit 10.3 of Current Report on Form 6-K filed December 5, 2022)</span></a></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: rgb(204,238,255)">
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">4.26</span></td>
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; text-align: justify; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-top: 0pt; text-align: justify; padding-right: 0pt; padding-left: 0pt"><a href="https://www.sec.gov/Archives/edgar/data/1835615/000121390023015057/ea174081ex99-1_meihuainter.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Form of Indemnification Agreement with Registrant&#8217;s Directors and Officers (Incorporated by reference to Exhibit 99.1 of Current Report on Form 6-K filed February 28, 2023)</span></a></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: White">
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; text-align: justify; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">8.1</span></td>
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; text-align: justify; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-top: 0pt; text-align: justify; padding-right: 0pt; padding-left: 0pt"><a href="https://www.sec.gov/Archives/edgar/data/1835615/000121390022042817/f20f2021ex8-1_meihua.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">List of Subsidiaries (Incorporated by reference to Exhibit 8.1 of Annual Report on Form 20-F filed July 29, 2022) </span></a></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: rgb(204,238,255)">
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">11.1</span></td>
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; text-align: justify; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-top: 0pt; text-align: justify; padding-right: 0pt; padding-left: 0pt"><a href="https://www.sec.gov/Archives/edgar/data/1835615/000121390021041150/ea145152ex14-1_meihua.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Code of Business Conduct and Ethics of the Registrant&#160;(Incorporated by reference to Registration Statement on Form F-1 filed August 10, 2021)</span></a></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: White">
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">12.1</span></td>
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; text-align: justify; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-top: 0pt; text-align: justify; padding-right: 0pt; padding-left: 0pt"><a href="f20f2022ex12-1_meihua.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Certifications of Chief Executive Officer Pursuant to Rule 13a-14(a) or Rule 15d-1(a)(3)*</span></a></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: rgb(204,238,255)">
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">12.2</span></td>
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; text-align: justify; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-top: 0pt; text-align: justify; padding-right: 0pt; padding-left: 0pt"><a href="f20f2022ex12-2_meihua.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Certifications of Chief Financial Officer Pursuant to Rule 13a-14(a) or Rule 15d-1(a)(3)*</span></a></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: White">
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">13.1</span></td>
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; text-align: justify; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-top: 0pt; text-align: justify; padding-right: 0pt; padding-left: 0pt"><a href="f20f2022ex13-1_meihua.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Certifications of Chief Executive Officer Pursuant to Rule 13a-14(b) (17 CFR 240.13a-14(b)) or Rule 15d-14(b) (17 CFR 240.15d-14(b)) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350).**</span></a></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: rgb(204,238,255)">
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">13.2</span></td>
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; text-align: justify; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-top: 0pt; text-align: justify; padding-right: 0pt; padding-left: 0pt"><a href="f20f2022ex13-2_meihua.htm"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Certifications of Chief Financial Officer Pursuant to Rule 13a-14(b) (17 CFR 240.13a-14(b)) or Rule 15d-14(b) (17 CFR 240.15d-14(b)) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350).**</span></a></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: White">
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; padding-right: 0pt; padding-left: 0pt">99.1</td>
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; text-align: justify; padding-right: 0pt; padding-left: 0pt">&#160;</td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-top: 0pt; text-align: justify; padding-right: 0pt; padding-left: 0pt"><a href="f20f2022ex99-1_meihua.htm">Earnings
    Press Release, dated April 14, 2023*</a></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: rgb(204,238,255)">
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">101.INS</span></td>
    <td style="padding-top: 0pt; font: 10pt Times New Roman, Times, Serif; text-align: justify; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; padding-top: 0pt; text-align: justify; padding-right: 0pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Inline
XBRL Instance Document*</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; background-color: White">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>SIGNATURE</b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-align: justify; text-indent: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">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 report on its behalf.</span></p><div>

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</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="font: 10pt Times New Roman, Times, Serif; width: 60%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Date:
    April 14, 2023</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 40%"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt; text-transform: uppercase"><b>MEIHUA
    INTERNATIONAL MEDICAL TECHNOLOGIES Limited</b></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; border-bottom: black 1.5pt solid"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>/s/
    Xin Wang</i></span></td></tr>
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Xin
                                            Wang</span></p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Chief
    Executive Officer</span></p></td></tr>
  </table><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0; margin-bottom: 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>INDEX
TO THE CONSOLIDATED FINANCIAL STATEMENTS </b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; 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-family: Times New Roman, Times, Serif; font-size: 10pt"><b>MEIHUA
INTERNATIONAL MEDICAL TECHNOLOGIES CO., LTD.</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: -0.05pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>CONSOLIDATED
FINANCIAL STATEMENTS</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: -0.05pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: -0.05pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>AS
OF AND FOR THE YEARS ENDED</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: -0.05pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: -0.05pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>DECEMBER
31, 2022 AND 2021</b></span></p><div>

</div><p style="text-align: center; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; 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-family: Times New Roman, Times, Serif; 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: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</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; background-color: White"> <td style="padding-left: 0.125in; text-indent: -0.125in; padding-bottom: 1.5pt">&#160;</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td> <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Page</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="padding-left: 0.125in; text-indent: -0.125in; font-weight: bold; text-align: left">Consolidated Financial Statements as of and for the years ended December 31, 2022 and 2021</td><td>&#160;</td> <td style="text-align: center">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="padding-left: 0.125in; text-indent: -0.125in">&#160;</td><td>&#160;</td> <td style="text-align: center">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-left: 0.125in; text-indent: -0.125in; width: 89%; text-align: left"><a href="#fin_001">Report of Independent Registered Public Accounting Firm (PCAOB ID: <ix:nonNumeric contextRef="c0" name="dei:AuditorFirmId">6651</ix:nonNumeric>)</a></td><td style="width: 1%">&#160;</td> <td style="width: 10%; text-align: center">F-2</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left">&#160;</td><td>&#160;</td> <td style="text-align: center">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left"><a href="#fin_007">Report of Independent Registered Public Accounting Firm (PCAOB ID: 2982)</a></td><td>&#160;</td> <td style="text-align: center">F-3</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="padding-left: 0.125in; text-indent: -0.125in">&#160;</td><td>&#160;</td> <td style="text-align: center">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-left: 0.125in; text-indent: -0.125in"><a href="#fin_002">Consolidated Balance Sheets as of December 31, 2022 and 2021</a></td><td>&#160;</td> <td style="text-align: center">F-4</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="padding-left: 0.125in; text-indent: -0.125in">&#160;</td><td>&#160;</td> <td style="text-align: center">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left"><a href="#fin_003">Consolidated Statements of Income and Comprehensive Income for the years ended December 31, 2022, 2021 and 2020</a></td><td>&#160;</td> <td style="text-align: center">F-5</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="padding-left: 0.125in; text-indent: -0.125in">&#160;</td><td>&#160;</td> <td style="text-align: center">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left"><a href="#fin_004">Consolidated Statements of Changes in Shareholders&#8217; Equity for the years ended December 31, 2022, 2021 and 2020</a></td><td>&#160;</td> <td style="text-align: center">F-6</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="padding-left: 0.125in; text-indent: -0.125in">&#160;</td><td>&#160;</td> <td style="text-align: center">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left"><a href="#fin_005">Consolidated Statements of Cash Flows for the years ended December 31, 2022, 2021 and 2020</a></td><td>&#160;</td> <td style="text-align: center">F-7</td></tr> <tr style="vertical-align: bottom; background-color: White"> <td style="padding-left: 0.125in; text-indent: -0.125in">&#160;</td><td>&#160;</td> <td style="text-align: center">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left"><a href="#fin_006">Notes to the Consolidated Financial Statements</a></td><td>&#160;</td> <td style="text-align: center">F-8</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; 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: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p><div>

</div><div><a id="fin_001"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Report
of Independent Registered Public Accounting Firm</b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">To the Board of Directors and Shareholders of</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Meihua International Medical Technologies Co., Ltd.</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>Opinion on the Financial Statements</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 Meihua International Medical Technologies Co., Ltd. (the &#8220;Company&#8221;) as of December 31, 2022 and 2021, and
the related consolidated statements of income and comprehensive income, changes in shareholders&#8217; equity, and cash flows for each
of the two years in the period ended December 31, 2022, and the related notes to the financial statements (collectively referred to as
the &#8220;financial statements&#8221;). In our opinion, the consolidated financial statements present fairly, in all material respects,
the consolidated 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 two years in the 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>Basis for Opinion</b></p><div>

</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">These financial statements are the responsibility
of the entity&#8217;s management. Our responsibility is to express an opinion on the entity&#8217;s financial statements based on our
audit. 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.</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">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 entity&#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; text-align: justify">&#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">/s/ <ix:nonNumeric contextRef="c0" name="dei:AuditorName">Kreit &amp; Chiu CPA LLP</ix:nonNumeric></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">(Formerly Paris, Kreit &amp; Chiu CPA LLP)</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">We have served as the Company's auditor since 2022.</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"><ix:nonNumeric contextRef="c0" name="dei:AuditorLocation">New York, New York</ix:nonNumeric></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">April 14, 2023</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; 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: 114; 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-<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: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><div><a id="fin_007"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM</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">To the Board of Directors and</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Stockholders of Meihua International
Medical Technologies Co., Ltd</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>Opinion on the Financial Statements </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 sheet of Meihua International Medical Technologies Co., Ltd and subsidiaries (collectively, the &#8220;Company&#8221;) as of December
31, 2020, and the related consolidated statements of income and comprehensive income, changes in shareholders&#8217; equity, and cash
flows for the year then ended, 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, 2020 and the results of
its operations and its cash flows for the year then ended, 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; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Basis for Opinion </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">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
audit. 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.</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">We conducted our audit in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding
of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company&#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; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our audit included performing procedures to assess
the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures
that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the
financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management,
as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for
our opinion.</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; text-align: justify">/s/ Briggs &amp; Veselka Co.</p><div>

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

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt">June 4, 2021</p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt">We have served as the Company&#8217;s auditor since 2021.</p><div>

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

</div><!-- Field: Page; Sequence: 115; 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-<span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->3<!-- 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"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p><div>

</div><div><a id="fin_002"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>MEIHUA
INTERNATIONAL MEDICAL TECHNOLOGIES CO., LTD.</b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>As
of December 31, 2022 and 2021</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(US$,
except share data or otherwise noted)</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</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; padding-left: 0.125in">&#160;</td><td style="text-align: center; font-weight: bold">&#160;</td>
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    <td colspan="2">&#160;</td><td>&#160;</td><td>&#160;</td>
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    <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">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="padding-left: 0.125in; text-indent: -0.125in">&#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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  <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"><div style="-sec-ix-hidden: hidden-fact-4">-</div></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="padding-left: 0.125in; text-indent: -0.125in">&#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></tr>
  <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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    <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: 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">
    <td style="padding-left: 0.125in; text-indent: -0.125in">&#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="padding-left: 0.125in; text-indent: -0.125in; font-weight: bold; text-align: left">Total liabilities and shareholders&#8217; equity</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"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>&#160;</i></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>The
accompanying notes form an integral part of these consolidated financial statements.</i>&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; 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: 116; 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-<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; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>&#160;</b></span></p><div>

</div><div><a id="fin_003"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>MEIHUA
INTERNATIONAL MEDICAL TECHNOLOGIES CO., LTD.</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>CONSOLIDATED
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>For
the years ended December 31, 2022, 2021 and 2020</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(US$,
except share data or otherwise noted)</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</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">&#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">For the Years Ended December&#160;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>
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  <tr style="vertical-align: bottom">
    <td style="font-weight: bold">Revenues</td><td>&#160;</td>
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    <td colspan="2" style="text-align: center">&#160;</td><td>&#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-indent: -0.125in; padding-left: 0.125in">&#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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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -0.125in; padding-left: 0.125in">&#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: 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"><ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:SellingExpense" scale="0" unitRef="usd">7,109,524</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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  <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:ResearchAndDevelopmentExpense" scale="0" unitRef="usd">2,962,904</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="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-16">-</div></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="font-weight: bold; text-align: left; padding-bottom: 1.5pt; text-indent: -0.125in; padding-left: 0.125in">Total operating expenses</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:OperatingExpenses" scale="0" unitRef="usd">27,296,515</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">
    <td style="text-indent: -0.125in; padding-left: 0.125in">&#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; text-indent: -0.125in; padding-left: 0.125in">Income from operations</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:OperatingIncomeLoss" scale="0" unitRef="usd">10,801,962</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">
    <td style="text-indent: -0.125in; padding-left: 0.125in">&#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; text-indent: -0.125in; padding-left: 0.125in">Other (income) expense:</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; text-indent: -0.125in; padding-left: 0.25in">Interest expense</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:InterestIncomeExpenseNet" scale="0" unitRef="usd">194,667</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="c4" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:InterestIncomeExpenseNet" scale="0" unitRef="usd">180,744</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: -0.125in; padding-left: 0.25in">Interest income</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:InvestmentIncomeInvestmentExpense" scale="0" unitRef="usd">63,725</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; text-indent: -0.125in; padding-left: 0.25in">Currency exchange gain</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; text-indent: -0.125in; padding-left: 0.25in">Other expense, net</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:OtherOperatingIncomeExpenseNet" scale="0" unitRef="usd">53,205</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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    <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: 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><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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  </table><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; 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-family: Times New Roman, Times, Serif; font-size: 10pt"><i>The
accompanying notes form an integral part of these consolidated financial statements.</i></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; 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: 117; 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-<span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->5<!-- 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="fin_004"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>MEIHUA
INTERNATIONAL MEDICAL TECHNOLOGIES CO., LTD.</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>CONSOLIDATED
STATEMENTS OF CHANGES IN SHAREHOLDERS&#8217; EQUITY</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>For
the years ended December 31, 2022, 2021 and 2020</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>(US$,
except share data)</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><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">
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    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">-</span></td><td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td><span style="font-size: 8pt">&#160;</span></td>
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    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="-sec-ix-hidden: hidden-fact-31; font-size: 8pt">-</span></td><td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td><span style="font-size: 8pt">&#160;</span></td>
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    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="-sec-ix-hidden: hidden-fact-35; font-size: 8pt">-</span></td><td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="-sec-ix-hidden: hidden-fact-36; font-size: 8pt">-</span></td><td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td><span style="font-size: 8pt">&#160;</span></td>
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    <td style="text-indent: -0.125in; padding-left: 0.125in"><span style="font-size: 8pt">&#160;</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td><span style="font-size: 8pt">&#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: -0.125in; padding-left: 0.125in"><span style="font-size: 8pt">Currency
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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"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td><span style="font-size: 8pt">&#160;</span></td>
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    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td><span style="font-size: 8pt">&#160;</span></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: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">-</span></td><td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">-</span></td><td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td><span style="font-size: 8pt">&#160;</span></td>
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    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td><span style="font-size: 8pt">&#160;</span></td>
    <td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: right"><span style="font-size: 8pt">&#160;</span></td><td style="text-align: left"><span style="font-size: 8pt">&#160;</span></td><td><span style="font-size: 8pt">&#160;</span></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; text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="border-bottom: Black 4pt double; text-align: right"><span style="font-size: 8pt">-</span></td><td style="padding-bottom: 4pt; text-align: left"><span style="font-size: 8pt">&#160;</span></td><td style="padding-bottom: 4pt"><span style="font-size: 8pt">&#160;</span></td>
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  </table><div>




</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; 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-family: Times New Roman, Times, Serif; font-size: 10pt"><i>The
accompanying notes form an integral part of these consolidated financial statements.</i></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; 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: 118; 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-<span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->6<!-- 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"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><div><a id="fin_005"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>MEIHUA
INTERNATIONAL MEDICAL TECHNOLOGIES CO., LTD.</b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>For
the years ended December 31, 2022, 2021 and 2020</b></span></p><div>

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

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><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="padding-left: 0.125in; text-align: center">&#160;</td><td style="text-align: center; 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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    <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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    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="mhua:BankAcceptanceReceivables" scale="0" unitRef="usd">4,284,515</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:IncreaseDecreaseInPrepaidDeferredExpenseAndOtherAssets" scale="0" unitRef="usd">4,932,145</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: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left">Due to related parties</td><td>&#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-78">-</div></td><td style="text-align: left">&#160;</td><td>&#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-79">-</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="padding-left: 0.125in; text-indent: -0.125in; text-align: left">Net cash (used in) provided by operating activities</td><td>&#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:NetCashProvidedByUsedInOperatingActivities" scale="0" sign="-" unitRef="usd">9,163,038</ix:nonFraction></td><td style="text-align: left">)</td><td>&#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="c5" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NetCashProvidedByUsedInOperatingActivities" scale="0" unitRef="usd">5,325,996</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in">&#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="padding-left: 0.125in; text-indent: -0.125in; text-align: left"><b>Cash flows from investing activities:</b></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="padding-left: 0.125in; text-indent: -0.125in; text-align: left">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:PaymentsToAcquirePropertyPlantAndEquipment" scale="0" unitRef="usd">2,698,729</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="c4" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PaymentsToAcquirePropertyPlantAndEquipment" scale="0" unitRef="usd">850,231</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="c5" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PaymentsToAcquirePropertyPlantAndEquipment" scale="0" unitRef="usd">3,808,259</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left">Payments for long-term deposits for buildings</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>
    <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">(<ix:nonFraction contextRef="c5" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PaymentsToAcquireLongtermInvestments" scale="0" unitRef="usd">12,311,347</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: 0.125in; text-indent: -0.125in; text-align: left">Long 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="mhua:LongTermInvestment" scale="0" unitRef="usd">5,944,709</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-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></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left">Proceeds from disposal of property, plant and equipment</td><td>&#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:ProceedsFromSaleOfPropertyPlantAndEquipment" scale="0" unitRef="usd">23,146</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#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="c4" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProceedsFromSaleOfPropertyPlantAndEquipment" scale="0" unitRef="usd">16,414</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#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="c5" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProceedsFromSaleOfPropertyPlantAndEquipment" scale="0" unitRef="usd">25,202</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left">Net cash used in investing activities</td><td>&#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:NetCashProvidedByUsedInInvestingActivities" scale="0" sign="-" unitRef="usd">8,620,292</ix:nonFraction></td><td style="text-align: left">)</td><td>&#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="c4" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NetCashProvidedByUsedInInvestingActivities" scale="0" sign="-" unitRef="usd">833,817</ix:nonFraction></td><td style="text-align: left">)</td><td>&#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="c5" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NetCashProvidedByUsedInInvestingActivities" scale="0" sign="-" unitRef="usd">16,094,404</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 0.125in; text-indent: -0.125in">&#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="padding-left: 0.125in; text-indent: -0.125in; text-align: left"><b>Cash flows from financing activities:</b></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-left: 0.125in; text-indent: -0.125in; text-align: left">Proceeds from short-term bank borrowings</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:ProceedsFromShortTermDebt" scale="0" unitRef="usd">7,579,135</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="c4" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProceedsFromShortTermDebt" scale="0" unitRef="usd">6,510,820</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="c5" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProceedsFromShortTermDebt" scale="0" unitRef="usd">4,359,665</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left">Proceeds from long-term bank loans</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:ProceedsFromIssuanceOfLongTermDebt" scale="0" unitRef="usd">743,052</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-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"><div style="-sec-ix-hidden: hidden-fact-85">-</div></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left">Capital contributed by non-controlling shareholders</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="mhua:CapitalContributedByNoncontrollingShareholders" scale="0" unitRef="usd">635,310</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-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"><div style="-sec-ix-hidden: hidden-fact-87">-</div></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left">Proceeds from initial public offering</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:ProceedsFromIssuanceInitialPublicOffering" scale="0" unitRef="usd">34,529,644</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-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></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 0.125in; text-indent: -0.125in">Proceeds from issuance of shares</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-90">&#160;</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-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"><ix:nonFraction contextRef="c5" decimals="0" format="ixt:num-dot-decimal" name="mhua:ProceedsFromIssuanceOfShares" scale="0" sign="-" unitRef="usd">1,272,232</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left">Repayments of short-term bank borrowings</td><td>&#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:RepaymentsOfOtherShortTermDebt" scale="0" unitRef="usd">6,241,641</ix:nonFraction></td><td style="text-align: left">)</td><td>&#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="c4" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:RepaymentsOfOtherShortTermDebt" scale="0" unitRef="usd">4,650,586</ix:nonFraction></td><td style="text-align: left">)</td><td>&#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="c5" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:RepaymentsOfOtherShortTermDebt" scale="0" unitRef="usd">3,925,147</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left">Net cash provided by financing activities</td><td>&#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:NetCashProvidedByUsedInFinancingActivities" scale="0" unitRef="usd">37,245,500</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#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="c4" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NetCashProvidedByUsedInFinancingActivities" scale="0" unitRef="usd">1,860,234</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#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="c5" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NetCashProvidedByUsedInFinancingActivities" scale="0" unitRef="usd">1,706,750</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in">&#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="padding-left: 0.125in; text-indent: -0.125in; text-align: left"><b>Effect of foreign exchange rate changes</b></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:EffectOfExchangeRateOnCashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents" scale="0" sign="-" unitRef="usd">874,746</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="c4" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:EffectOfExchangeRateOnCashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents" scale="0" sign="-" unitRef="usd">9,812</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="c5" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:EffectOfExchangeRateOnCashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents" scale="0" unitRef="usd">218,137</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left"><b>Net increase (decrease) in cash</b></td><td>&#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:CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalentsPeriodIncreaseDecreaseIncludingExchangeRateEffect" scale="0" unitRef="usd">18,587,424</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#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="c4" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalentsPeriodIncreaseDecreaseIncludingExchangeRateEffect" scale="0" unitRef="usd">961,942</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#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="c5" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalentsPeriodIncreaseDecreaseIncludingExchangeRateEffect" scale="0" sign="-" unitRef="usd">8,843,521</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left"><b>Cash, beginning of year</b></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="padding-left: 0.125in; text-indent: -0.125in">&#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: 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"><div style="-sec-ix-hidden: hidden-fact-93">&#160;</div></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: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>&#160;</i></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>The
accompanying notes form an integral part of these consolidated financial statements.</i></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; 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: 119; 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-<span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->7<!-- 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"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><div><a id="fin_006"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>MEIHUA
INTERNATIONAL MEDICAL TECHNOLOGIES CO., LTD.</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; 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-family: Times New Roman, Times, Serif; font-size: 10pt"><b>NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></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-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>1. Organization and principal activities</b></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:nonNumeric><div>


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

</div><div>

</div><ix:continuation continuedAt="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_3" id="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-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; font-size: 10pt">Meihua
International Medical Technologies Co., Ltd. (&#8220;Meihua&#8221;) was incorporated on November 10, 2020 in the Cayman Islands. It is
a holding company with no operations. Meihua produces and sells medical consumables through its wholly owned subsidiaries located in
People&#8217;s Republic of China (&#8220;PRC&#8221; or &#8220;China&#8221;). Below is Meihua&#8217;s organizational chart, as well as
a description of the ownership structure.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><img alt="" src="img_028.jpg"/></p><div>

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

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

</div><!-- Field: Page; Sequence: 120; 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; text-align: center; margin-top: 0pt; margin-bottom: 0pt">&#160;</p><div>

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

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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; background-color: rgb(204,238,255)">
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</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"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Kang
Fu was incorporated on October 13, 2015 with a registered capital of HKD <ix:nonFraction contextRef="c52" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CapitalUnitsNetAmount" scale="0" unitRef="hkd">53,911,815</ix:nonFraction> ($<ix:nonFraction contextRef="c52" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CapitalUnitsNetAmount" scale="0" unitRef="usd">6,911,771</ix:nonFraction>). Kang Fu is a holding company with no
operations. The following operating entities (Huada, Yada and Huadong) are all directly and indirectly <ix:nonFraction contextRef="c53" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:EquityMethodInvestmentOwnershipPercentage" scale="-2" unitRef="pure">100</ix:nonFraction>% owned by Kang Fu for all
the periods presented.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></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"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Huada
is a subsidiary wholly owned by Kang Fu and established in Yangzhou, China on December 24, 2001 with a registered capital of $ <ix:nonFraction contextRef="c54" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CapitalUnitsNetAmount" scale="0" unitRef="usd">17,193,021</ix:nonFraction>.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_7" id="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_6"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Yada
is a subsidiary wholly owned by Huada and was established in Yangzhou, China on December 5, 1991 with a registered capital of RMB<ix:nonFraction contextRef="c55" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CapitalUnitsNetAmount" scale="0" unitRef="cny">51,390,000</ix:nonFraction>.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation><div>

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</div><ix:continuation continuedAt="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_8" id="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_7"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Huadong
is a subsidiary wholly owned by Yada and was established in Yangzhou, China on November 18, 2000 with a registered capital of RMB<ix:nonFraction contextRef="c56" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CapitalUnitsNetAmount" scale="0" unitRef="cny">50,000,000</ix:nonFraction>.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_9" id="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_8"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Those
three subsidiaries primarily manufacture and sell Class I, II and III disposable medical devices under the Company&#8217;s own brands,
and distribute Class I, II and III disposable medical devices sourced from other manufacturers to our domestic and overseas customers.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation><div>

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</div><ix:continuation continuedAt="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_10" id="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_9"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Guanghui
is a subsidiary wholly owned by Huadong and was established in Yangzhou, China on December 22, 2020 with a registered capital of RMB<ix:nonFraction contextRef="c57" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CapitalUnitsNetAmount" scale="0" unitRef="cny">1,000,000</ix:nonFraction>.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation><div>

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</div><ix:continuation continuedAt="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_11" id="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_10"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Hainan
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RMB<ix:nonFraction contextRef="c59" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CapitalUnitsNetAmount" scale="0" unitRef="usd">100,000,000</ix:nonFraction>. </span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation><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"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><ix:continuation continuedAt="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_12" id="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_11"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Reorganization
and Share Issuance</b></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation><div>

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</div><ix:continuation continuedAt="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_13" id="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-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; font-size: 10pt">On
November 10, 2020, Meihua was incorporated in the Cayman Islands and issued <ix:nonFraction contextRef="c60" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:SharesIssued" scale="0" unitRef="shares">50,000</ix:nonFraction> ordinary shares at par value of $<ix:nonFraction contextRef="c60" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:NetAssetValuePerShare" scale="0" unitRef="usdPershares">1.00</ix:nonFraction> to Yongjun Liu.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation><div>

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</div><ix:continuation continuedAt="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_14" id="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_13"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
December 21, 2020, <ix:nonNumeric contextRef="c61" name="mhua:DescriptionOfYongjunLiuSurrenderedShares">Yongjun Liu surrendered 49,999 shares to the Company for cancellation. The Company subdivided each existing share
with a par value of $1.00 into 2,000 shares with a par value of $0.0005 par value and created a new class of preferred shares. Upon completion
of the share capital changes, the Company&#8217;s share capital includes 80,000,000 ordinary shares with a par value of $0.0005 per share
and 20,000,000 preferred shares with a par value of $0.0005 per share.</ix:nonNumeric></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation><div>

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</div><ix:continuation continuedAt="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_15" id="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_14"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Also
on December 21, 2020, <ix:nonNumeric contextRef="c61" name="mhua:DescriptionOfCorporateReorganization">the Company engaged in a corporate reorganization to combine the controlled entities (now referred to as the subsidiaries)
into one legal corporation (the Company). The specific transactions related to this reorganization are outlined below. The Company entered
into a share exchange agreement with Kang Fu to issue an aggregate of 15,933,000 ordinary shares to Yongjun Liu and Yin Liu in exchange
for 100% ownership of Kang Fu, and allotted 2,640,000 ordinary shares at $0.0005 par value to three BVI companies held by founders of
the Company for no consideration. On December 22, 2020, Guanghui was incorporated for the purpose of foreign exchange registration under
the laws of the People&#8217;s Republic of China as there was no substantive business of Guanghui. The shares of Guanghui are owned by
13 natural persons (the &#8220;Guanghui Shareholders&#8221;) and on May 10, 2021, all of the Guanghui Shareholders agreed to transfer
all their shares held in Guanghui to Huadong (an indirect subsidiary of the Company) for no consideration.</ix:nonNumeric> Through such transaction,
Guanghui then became a wholly owned subsidiary of Huadong.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation><div>

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</div><ix:continuation continuedAt="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_16" id="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_15"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
December 18, 2020, Yongjun Liu and Yin Liu and other shareholders (collectively, the &#8220;Parties&#8221;) executed an Acting-in-Concert
Agreement. The major terms of this agreement are:</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_17" id="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_16"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;
    </span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
    Parties shall inform and discuss with each other and reach a consensus before exercising voting rights in the Company&#8217;s decision
    making. </span></td></tr>
  </table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation><div>
</div><div>

</div><ix:continuation continuedAt="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_18" id="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_17"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top">
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;
    </span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If
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</div><div>

</div><ix:continuation continuedAt="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_19" id="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_18"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
a result of the Acting-in-Concert agreement, Yongjun Liu and Yin Liu together have the ultimate control of the Company.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_20" id="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_19"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Acting-in-Concert Agreement that establishes the common control between Meihua International and Kang Fu is treated as though it was
effective for all periods presented as&#160;during the years presented in these financial statements, the control of the entities has
never changed (always under the control of Yongjun Liu and Yin Liu who are a couple). Accordingly, the combination has been treated as
a corporate restructuring (reorganization) of entities under common control and thus the current capital structure has been retroactively
presented in prior periods as if such structure existed at that time and in accordance with ASC 805-50-45-5, the entities under common
control are presented on a combined basis for all periods to which such entities were under common control. Since all of the subsidiaries
were under common control for the entirety of the years ended December 31, 2020, the results of these subsidiaries are included
in the financial statements for all periods.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_21" id="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_20"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">After
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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: 122; 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-<span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->10<!-- 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: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><ix:continuation continuedAt="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_22" id="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_21"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
discussion and presentation of financial statements herein assumes the completion of the restructuring, which is accounted for retroactively
as if it occurred on January 1, 2020, and the equity has been restated to reflect the change as well.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation><div>

</div><div>

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in a private offering. The consideration was received by Huada due to Meihua not having been incorporated at the time of payments received.
The timing of the payments received is listed below:</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation><div>

</div><div>

</div><ix:continuation id="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_23"><ix:nonNumeric contextRef="c0" escape="true" name="mhua:ScheduleOfPaymentsReceivedTableTextBlock"><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"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

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</div><div>

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

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_3" id="_SignificantAccountingPoliciesTextBlock-c0_cont_2"><ix:continuation id="_BasisOfAccountingPolicyPolicyTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
consolidated financial statements include all accounts of Meihua and its subsidiaries (collectively, the &#8220;Company&#8221;)
and have been prepared in accordance with accounting principles generally accepted in the United&#160;States of America (&#8220;U.S.&#160;GAAP&#8221;).
All inter-company transactions have been eliminated.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_4" id="_SignificantAccountingPoliciesTextBlock-c0_cont_3"><ix:nonNumeric contextRef="c0" continuedAt="_UseOfEstimates-c0_cont_1" escape="true" name="us-gaap:UseOfEstimates"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Use
of Estimates</i></b></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:nonNumeric></ix:continuation><div>

</div><div>

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preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions
that affect the amounts reported and disclosed in the consolidated financial statements and related notes.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation></ix:continuation><div>

</div><div>

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most significant estimates and judgments include allowance for bad debts, the valuation of inventory, useful life of property, plant
and equipment and income taxes related to realization of deferred tax assets and uncertain tax position. Actual amounts could differ
from those estimates.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_7" id="_SignificantAccountingPoliciesTextBlock-c0_cont_6"><ix:nonNumeric contextRef="c0" continuedAt="mhua_NoncontrollingInterestsPolicyTextBlock-c0_cont_1" escape="true" name="mhua:NoncontrollingInterestsPolicyTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Non-controlling
interests</i></b></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:nonNumeric></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_8" id="_SignificantAccountingPoliciesTextBlock-c0_cont_7"><ix:continuation id="mhua_NoncontrollingInterestsPolicyTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Non-controlling
interest represents the portion of the net assets of subsidiaries attributable to interests that are not owned or controlled by the Company.
The non-controlling interest is presented in the consolidated balance sheets, separately from equity attributable to the shareholders
of the Company. Non-controlling interest&#8217;s operating results are presented on the face of the consolidated statements of income
and comprehensive income as an allocation of the total income for the year between non-controlling shareholders and the shareholders
of the Company. As of December 31, 2022, non-controlling interests represent one non-controlling shareholders&#8217; proportionate share
of equity interests in Hainan Guoxie.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_9" id="_SignificantAccountingPoliciesTextBlock-c0_cont_8"><ix:nonNumeric contextRef="c0" continuedAt="_ForeignCurrencyTransactionsAndTranslationsPolicyTextBlock-c0_cont_1" escape="true" name="us-gaap:ForeignCurrencyTransactionsAndTranslationsPolicyTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Functional
Currency and Foreign Currency Translation</i></b></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:nonNumeric></ix:continuation><div>

</div><div>

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Company&#8217;s reporting currency is the United States dollar (&#8220;US$&#8221;). The Company&#8217;s operations are principally conducted
through the PRC subsidiaries where the local currency is the functional currency. Therefore, the functional currency of Kang Fu is the
Hong Kong dollar and the functional currency of Huada, Yada, Huadong and Guanghui is the Renminbi (&#8220;RMB&#8221;).</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation></ix:continuation><div>

</div><div>

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denominated in currencies other than the functional currencies are translated into the functional currency of the entity at the exchange
rates prevailing on the transaction dates. Monetary assets and liabilities denominated in currencies other than the applicable functional
currency are translated into the functional currency at the prevailing rates of exchange at the balance date. The resulting exchange
differences are reported in the consolidated statements of income and comprehensive income.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></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; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

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assets and liabilities of the Company are translated at the exchange spot rate at the balance sheet date, stockholders&#8217; equity
is translated at the historical rates and the revenues and expenses are translated at the average exchange rates for the periods. The
resulting translation adjustments are reported under other comprehensive income in the consolidated statements of income and comprehensive
income in accordance with Financial Accounting Standards Board (&#8220;FASB&#8221;) Accounting Standards Codification (&#8220;ASC&#8221;)
220, <i>Comprehensive Income</i>. The following are the exchange rates that were used in translating the Company&#8217;s PRC subsidiaries&#8217;
financial statements into the consolidated financial statements:</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation></ix:continuation><div>

</div><div>

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    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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  <tr style="font: 10pt Times New Roman, Times, Serif">
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; padding-left: 9pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: bottom; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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    <td style="font: 10pt Times New Roman, Times, Serif; vertical-align: top; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></td>
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</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_14" id="_SignificantAccountingPoliciesTextBlock-c0_cont_13"><ix:continuation id="_ForeignCurrencyTransactionsAndTranslationsPolicyTextBlock-c0_cont_5"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
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in Hong Kong. This pegged rate was used to translate Kang Fu&#8217;s balance sheets, income statement items and cash flow items for both
the years ended December 31, 2022, 2021 and 2020.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_15" id="_SignificantAccountingPoliciesTextBlock-c0_cont_14"><ix:nonNumeric contextRef="c0" continuedAt="_ConcentrationRiskCreditRisk-c0_cont_1" escape="true" name="us-gaap:ConcentrationRiskCreditRisk"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Certain
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</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_16" id="_SignificantAccountingPoliciesTextBlock-c0_cont_15"><ix:continuation continuedAt="_ConcentrationRiskCreditRisk-c0_cont_2" id="_ConcentrationRiskCreditRisk-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
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located in Hong Kong and the PRC, which management considers to be of high credit quality.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation></ix:continuation><div>

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

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_20" id="_SignificantAccountingPoliciesTextBlock-c0_cont_19"><ix:nonNumeric contextRef="c0" continuedAt="_FairValueMeasurementPolicyPolicyTextBlock-c0_cont_1" escape="true" name="us-gaap:FairValueMeasurementPolicyPolicyTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Fair
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</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_21" id="_SignificantAccountingPoliciesTextBlock-c0_cont_20"><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"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Fair
value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to
be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact, and it considers
assumptions that market participants would use when pricing the asset or liability.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation></ix:continuation><div>

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</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_22" id="_SignificantAccountingPoliciesTextBlock-c0_cont_21"><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"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company adopted the guidance of Accounting Standards Codification (&#8220;ASC&#8221;) 820 for fair value measurements which clarifies
the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs
used in measuring fair value as follows:</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_23" id="_SignificantAccountingPoliciesTextBlock-c0_cont_22"><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; width: 100%; border-collapse: collapse">
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</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_24" id="_SignificantAccountingPoliciesTextBlock-c0_cont_23"><ix:continuation continuedAt="_FairValueMeasurementPolicyPolicyTextBlock-c0_cont_5" id="_FairValueMeasurementPolicyPolicyTextBlock-c0_cont_4"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
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</div><div>

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Company noted no transfers between levels during any of the periods presented. The Company did not have any instruments that were measured
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</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_26" id="_SignificantAccountingPoliciesTextBlock-c0_cont_25"><ix:nonNumeric contextRef="c0" continuedAt="_CashAndCashEquivalentsPolicyTextBlock-c0_cont_1" escape="true" name="us-gaap:CashAndCashEquivalentsPolicyTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Cash</i></b></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:nonNumeric></ix:continuation><div>

</div><div>

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</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_28" id="_SignificantAccountingPoliciesTextBlock-c0_cont_27"><ix:nonNumeric contextRef="c0" continuedAt="mhua_BankAcceptancesReceivablesPolicyTextBlock-c0_cont_1" escape="true" name="mhua:BankAcceptancesReceivablesPolicyTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Bank
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</div><div>

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the face value payment from the bank, or sell (exchange) the acceptance notes at a discount to another party willing to wait until maturity
to receive the bank&#8217;s promised payment. The maturity date of the receivables is all within one year of the original issuance date
and carried at face value. The Company is not lending money, it just sells goods to the customers (customers can pay the purchased goods
by cash, accounts receivable or bank acceptance receivables). The receivables mature within one year, and are non-interest bearing. As
bank acceptance receivables are issued by the banks and payments are guaranteed. The Company has not discounted any bank acceptances and
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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; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

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</div><div>

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receivable represent trade receivables and are recognized initially at fair value and subsequently adjusted for any allowance for doubtful
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</div><div>

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Company records impairment losses for accounts receivable based on assessments of the recoverability of the trade and other receivables
and individual account analysis, including the current creditworthiness and the past collection history of each debtor. Impairments arise
when there is objective evidence indicating that the balances may not be collectible. The identification of bad and doubtful debts, in
particular of a loss event, requires the use of judgment and estimates, which involve the estimates of specific losses on individual
exposures, as well as a provision on historical trends of collections. Based on management of customers&#8217; credit and ongoing relationship,
management makes conclusions whether any balances outstanding at the end of the period will be deemed non-collectible on an individual
basis and on aging analysis basis. The provision is recorded against accounts receivables balances, with a corresponding charge recorded
in the consolidated statements of operations and comprehensive income. Delinquent account balances are written-off against the allowance
for doubtful accounts after management has determined that the likelihood of collection is not probable.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_33" id="_SignificantAccountingPoliciesTextBlock-c0_cont_32"><ix:continuation id="_TradeAndOtherAccountsReceivablePolicy-c0_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company historically has not had material bad debts in accounts receivable. There were no bad debt expenses related to accounts
receivable for the years ended December 31, 2022, 2021 and 2020 and there was no provision for doubtful accounts as of December 31,
2022 and 2021.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation></ix:continuation><div>

</div><div>

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</div><div>

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are valued using the lower of cost or net realizable value. Cost is principally determined using the weighted-average method. Manufactured
inventories included cost of materials, labor and overhead expenses. The Company records adjustments to inventory for excess quantities,
obsolescence, or impairment, when appropriate, to reflect inventory at net realizable value. These adjustments are based upon a combination
of factors including current sales volume, market conditions, lower of cost or market analysis and expected realizable value of the inventory.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation></ix:continuation><div>

</div><div>

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were no write-downs recognized of inventories as of December 31, 2022 and 2021.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation></ix:continuation><div>

</div><div>

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and other current assets</i></b></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:nonNumeric></ix:continuation><div>

</div><div>

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</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_39" id="_SignificantAccountingPoliciesTextBlock-c0_cont_38"><ix:continuation continuedAt="mhua_PrepaymentsAndOtherCurrentAssetsPolicyTextBlock-c0_cont_3" id="mhua_PrepaymentsAndOtherCurrentAssetsPolicyTextBlock-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; font-size: 10pt">Prepayment
and other assets primarily consist of deferred IPO costs, loans to third-parties, refundable tax credits and receivables, security deposits
made to customers, advances to employees and land use right receivable, which are presented net of allowance for doubtful accounts. These
balances are unsecured and are reviewed periodically to determine whether their carrying value has become impaired. The Company considers
the balances to be impaired if the utilization or refund of the balances becomes doubtful. The Company uses the aging method to estimate the
allowance for uncollectible balances. The allowance is also based on management&#8217;s best estimate of specific losses on individual
exposures, as well as a provision on historical trends of collections and utilizations. Actual amounts received or utilized may differ
from management&#8217;s estimate of credit worthiness and the economic environment. Delinquent account balances are written off against
allowance for doubtful accounts after management has determined that the likelihood of collection is not probable. The allowance for
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</div><div>

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IPO costs represent the incremental costs incurred for the Company&#8217;s initial public offering (&#8220;IPO&#8221;). These costs has
been charged against the gross proceeds of the IPO in 2022 (see Note 14).&#160; Deferred IPO costs primary include specific legal, audit
and professional consulting costs. &#160;As of December 31, 2022 and 2021, the deferred IPO costs were $<span style="-sec-ix-hidden: hidden-fact-97">nil</span> and $<ix:nonFraction contextRef="c4" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PaymentsForRepurchaseOfInitialPublicOffering" scale="0" unitRef="usd">1,277,152</ix:nonFraction>, respectively.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></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: 126; Value: 1 --><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

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</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_42" id="_SignificantAccountingPoliciesTextBlock-c0_cont_41"><ix:continuation continuedAt="_PropertyPlantAndEquipmentPolicyTextBlock-c0_cont_2" id="_PropertyPlantAndEquipmentPolicyTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Property,
plant and equipment items are recorded at their historic cost, less accumulated depreciation and impairment losses. The Company calculates
depreciation using the straight-line method, after consideration of the estimated residual values, over the following estimated useful
lives:</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_43" id="_SignificantAccountingPoliciesTextBlock-c0_cont_42"><ix:nonNumeric contextRef="c0" escape="true" name="us-gaap:ScheduleOfPublicUtilityPropertyPlantAndEquipmentTextBlock"><ix:continuation continuedAt="_PropertyPlantAndEquipmentPolicyTextBlock-c0_cont_3" id="_PropertyPlantAndEquipmentPolicyTextBlock-c0_cont_2"><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: White">
    <td style="text-align: left; text-indent: 0pt; padding-left: 0pt">Electronic Equipment</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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</div><div>

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improvements are capitalized and expenditures for maintenance and repairs are expensed as incurred. Construction in progress represents
property, plant and equipment under construction or being installed. Costs include original cost, installation, construction and other
direct costs. Interest expenses directly related to construction in progress would be capitalized. Construction in progress is transferred
to the appropriate fixed asset account and depreciation commences when the asset has been substantially completed and placed in service.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation></ix:continuation><div>

</div><div>

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</div><div>

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assets are non-monetary assets without physical substance. These items are initially measured at cost and subsequently carried at cost
less any accumulated amortization and impairment losses. Intangible assets with finite useful lives are amortized on a straight-line
basis over their estimated useful lives. Amortization of finite-lived intangible assets is computed using the straight-line method over
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</div><div>

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</div><div>

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</div><div>

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Company accounts for impairment of long-lived assets in accordance with Accounting Standards Codification (&#8220;ASC&#8221;) 360, <i>Property,
Plant and Equipment</i>. (&#8220;ASC 360&#8221;). Long-lived assets consist primarily of property, plant and equipment, and intangible
assets. In accordance with ASC 360, the Company evaluates the carrying value of long-lived assets when it determines a triggering event
has occurred, or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. When
indicators exist, recoverability of assets is measured by a comparison of the carrying value of the asset group to the estimated undiscounted
future net cash flows expected to be generated by the asset. Examples of such triggering events include a significant disposal of a portion
of such assets, and adverse change in the market involving the business employing the related assets. If such assets are determined not
to be recoverable, the Company performs an analysis of the fair value of the asset group and will recognize an impairment loss when the
fair value is less than the carrying amounts of such assets. The fair value, based on reasonable and supportable assumptions and projections,
require subjective judgments. Depending on the assumptions and estimates used, the appraised fair value projected in the evaluation of
long-lived assets can vary within a range of outcomes. The Company considers the likelihood of possible outcomes in determining the best
estimate for the fair value of the assets. The Company did not record any impairment charges for the years ended December 31, 2022, 2021 and
2020. There can be no assurance that future events will not have impact on company revenue or financial position which could result in
impairment in the future.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></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; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

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</div><div>

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accordance with Financial Accounting Standards Board (&#8220;FASB&#8221;) ASC 321, &#8220;Investment-Equity Securities,&#8221; the Company
accounts for non-marketable securities on a prospective basis. Equity investments that do not have readily determinable fair values and
do not qualify for the net asset value practical expedient are eligible for the measurement alternative.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation></ix:continuation><div>

</div><div>

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March 3, 2011, Yada invested in Yangzhou Juyuan Guarantee Co., Ltd (&#8220;Juyuan&#8221;) and obtained <ix:nonFraction contextRef="c94" decimals="2" format="ixt:num-dot-decimal" name="mhua:EquityInterestPercentage" scale="-2" unitRef="pure">12</ix:nonFraction>% equity interest of Juyuan.
For the Company&#8217;s passive and without significant influence or control equity investment in private company which do not have readily
determinable fair values, the Company has elected the measurement alternative defined as cost, less impairment, plus or minus adjustments
resulting from observable price changes in orderly transactions for the identical or a similar investment of the Company. The investment
is reviewed periodically to determine if its value has been impaired and adjustments are recorded as necessary in profit or loss for
the period.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation></ix:continuation><div>

</div><div>

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in entities in which the Company can exercise significant influence but does not own a majority equity interest or control are accounted
for using the equity method of accounting in accordance with ASC 323, Investments-Equity Method and Joint Ventures (&#8220;ASC 323&#8221;).
Under the equity method, the Company initially records its investment at cost and the difference between the cost of the equity investee
and the amount of the underlying equity in the net assets of the equity investee is accounted for as if the investee were a consolidated
subsidiary. The share of earnings or losses of the investee are recognized in the consolidated statements of comprehensive loss. Equity
method adjustments include the Company&#8217;s proportionate share of investee income or loss, adjustments to recognize certain differences
between the Company&#8217;s carrying value and its equity in net assets of the investee at the date of investment, impairments, and other
adjustments required by the equity method. The Company assesses its equity investment for other-than-temporary impairment by considering
factors as well as all relevant and available information including, but not limited to, current economic and market conditions, the
operating performance of the investees including current earnings trends, the general market conditions in the investee&#8217;s industry
or geographic area, factors related to the investee&#8217;s ability to remain in business, such as the investee&#8217;s liquidity, debt
ratios, and cash burn rate and other company-specific information.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation></ix:continuation><div>

</div><div>

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in equity securities without readily determinable fair values are measured at cost minus impairment adjusted by observable price changes
in orderly transactions for the identical or a similar investment of the same issuer. These investments are measured at fair value on
a nonrecurring basis when there are events or changes in circumstances that may have a significant adverse effect. An impairment loss
is recognized in the consolidated statements of comprehensive loss equal to the amount by which the carrying value exceeds the fair value
of the investment. Prior to the adoption of ASU 2016-01 on January 1, 2019, these investments were accounted for using the cost method
of accounting, measured at cost less other-than-temporary impairment.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation></ix:continuation><div>

</div><div>

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December 1, 2022, Huadong invested RMB <ix:nonFraction contextRef="c95" decimals="-6" format="ixt:num-dot-decimal" name="us-gaap:OtherInvestments" scale="6" unitRef="cny">40</ix:nonFraction> million into Jiangsu Zhongxiangxin
International Science and Technology Innovation Park Co., Ltd. (&#8220;Zhongxiangxin&#8221;), and obtained <ix:nonFraction contextRef="c96" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:VariableInterestEntityOwnershipPercentage" scale="-2" unitRef="pure">25</ix:nonFraction>% ownership interest of
Zhongxiangxin. Zhongxiangxin manufactures and sells medical materials in the PRC. The Company accounted for the investments using equity
method, because the Company has significant influence but does not own a majority equity interest or otherwise control over the equity
investee. Under the equity method, the Company adjusts the carrying amount of the investment and recognizes investment income or loss
for its share of the earnings or loss of the investee after the date of investment. When the Company&#8217;s share of losses in the equity
investee equals or exceeds its interest in the equity investee, the Company does not recognize further losses, unless the Company has
incurred obligations or made payments or guarantees on behalf of the equity investee. For the year ended December 31, 2022, the investment
gain from Zhongxiangxin was $<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:GainLossOnSaleOfOtherInvestments" scale="0" unitRef="usd">290</ix:nonFraction>.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation></ix:continuation><div>

</div><div>

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

</div><!-- Field: Page; Sequence: 128; Value: 1 --><div>
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</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; font-size: 10pt">&#160;</span></p><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_56" id="_SignificantAccountingPoliciesTextBlock-c0_cont_55"><ix:continuation continuedAt="_InvestmentPolicyTextBlock-c0_cont_7" id="_InvestmentPolicyTextBlock-c0_cont_6"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company continually reviews its investments in equity investees to determine whether a decline in fair value below the carrying value
is other-than-temporary. The primary factors the Company considers in its determination include the financial condition, operating performance
and the prospects of the equity investee; other company specific information such as recent financing rounds; the geographic region,
market and industry in which the equity investee operates; and the length of time that the fair value of the investment is below its
carrying value. If the decline in fair value is deemed to be other-than-temporary, the carrying value of the equity investee is written
down to fair value.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation></ix:continuation><div>

</div><div>

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the years ended December 31, 2022, 2021 and 2020, no impairment indicators were identified and no loss related to revaluation of its
investment in the private company was recorded.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>&#160;</i></b></span></p></ix:continuation></ix:continuation><div>

</div><div>

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</div><div>

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taxes (&#8220;VAT&#8221;) collected from customers relating to product sales and remitted to governmental authorities are presented on
a net basis. VAT collected from customers is excluded from revenue which is recorded in VAT payable. The Company is subject to a VAT
rate of <ix:nonFraction contextRef="c97" decimals="2" format="ixt:num-dot-decimal" name="mhua:CurrentVatRatePercentage" scale="-2" unitRef="pure">13</ix:nonFraction>%. The VAT payable
may be offset by VAT paid by the Company on raw materials and other materials included in the cost of producing or acquiring its finished
products.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation></ix:continuation><div>

</div><div>

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

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_61" id="_SignificantAccountingPoliciesTextBlock-c0_cont_60"><ix:continuation id="mhua_RelatedPartiesPolicyTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Parties
are considered to be related to the Company if the parties, directly or indirectly, through one or more intermediaries, control, are
controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management,
members of the immediate families of principal owners of the Company and its management and other parties with which the Company may
deal with if one party controls or can significantly influence the management or operating policies of the other to an extent that one
of the transacting parties might be prevented from fully pursuing its own separate interests. The Company discloses all significant related
party transactions.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation></ix:continuation><div>

</div><div>

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

</div><div>

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January 1, 2018, the Company adopted ASC Topic 606 using the modified retrospective adoption method. Based on the requirements of ASC
Topic 606, revenue is recognized when control of the promised goods or services is transferred to the customers in an amount that reflects
the consideration the Company expects to be entitled to receive in exchange for those goods or services. The Company primarily sells
its products to hospitals and medical equipment companies. Revenue is recognized when the following 5-step revenue recognition criteria
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</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_76" id="_SignificantAccountingPoliciesTextBlock-c0_cont_75"><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; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Earnings
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</div><div>

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is computed by dividing the net income (loss) attributable to shareholders of the Company by the weighted average number of ordinary
shares outstanding during the year. Diluted earnings per ordinary share is computed in accordance with the treasury stock method and
based on the weighted average number of ordinary shares and dilutive ordinary share equivalents. Dilutive ordinary share equivalents
are excluded from the computation of diluted earnings per ordinary share if their effects would be anti-dilutive.&#160;There is no ordinary
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</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_78" id="_SignificantAccountingPoliciesTextBlock-c0_cont_77"><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="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Comprehensive
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</div><div>

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220, Comprehensive Income (&#8220;ASC 220&#8221;) establishes rules for reporting and display of comprehensive income and its components.
ASC 220 requires that unrealized gains and losses on the Company&#8217;s foreign currency translation adjustments be included in comprehensive
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</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_80" id="_SignificantAccountingPoliciesTextBlock-c0_cont_79"><ix:nonNumeric contextRef="c0" continuedAt="_AdvertisingCostsPolicyTextBlock-c0_cont_1" escape="true" name="us-gaap:AdvertisingCostsPolicyTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Advertising
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</div><div>

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</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_82" id="_SignificantAccountingPoliciesTextBlock-c0_cont_81"><ix:nonNumeric contextRef="c0" continuedAt="_ResearchAndDevelopmentExpensePolicy-c0_cont_1" escape="true" name="us-gaap:ResearchAndDevelopmentExpensePolicy"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Research
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</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_83" id="_SignificantAccountingPoliciesTextBlock-c0_cont_82"><ix:continuation id="_ResearchAndDevelopmentExpensePolicy-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Research
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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: 130; Value: 1 --><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_84" id="_SignificantAccountingPoliciesTextBlock-c0_cont_83"><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="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Income
Tax</i></b></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:nonNumeric></ix:continuation><div>

</div><div>

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income taxes are provided on the basis of net profit for financial reporting purposes, adjusted for income and expense items which are
not assessable or deductible for income tax purposes, in accordance with the regulations of the relevant tax jurisdictions.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation></ix:continuation><div>

</div><div>

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income taxes are recognized for temporary differences between the tax bases of assets and liabilities and their reported amounts in the
consolidated financial statements, net operating loss carry forwards and credits. 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 provided in accordance with the laws of the relevant taxing authorities. Deferred tax assets and liabilities
are measured using enacted rates expected to apply to taxable income in which temporary differences are expected to be reversed or settled.
The effect on deferred tax assets and liabilities of changes in tax rates is recognized in the statement of comprehensive income in the
period of the enactment of the change.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation></ix:continuation><div>

</div><div>

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Company considers positive and negative evidence when determining whether a portion or all of its deferred tax assets will more likely
than not be realized. This assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses,
forecasts of future profitability, the duration of statutory carry-forward periods, its experience with tax attributes expiring unused,
and its tax planning strategies. The ultimate realization of deferred tax assets is dependent upon its ability to generate sufficient
future taxable income within the carry-forward periods provided for in the tax law and during the periods in which the temporary differences
become deductible. When assessing the realization of deferred tax assets, the Company has considered possible sources of taxable income
including (i)&#160;future reversals of existing taxable temporary differences, (ii)&#160;future taxable income exclusive of reversing
temporary differences and carryforwards, (iii)&#160;future taxable income arising from implementing tax planning strategies, and (iv)&#160;specific
known trend of profits expected to be reflected within the industry.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_88" id="_SignificantAccountingPoliciesTextBlock-c0_cont_87"><ix:continuation id="_IncomeTaxPolicyTextBlock-c0_cont_4"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company recognizes a tax benefit associated with an uncertain tax position when, in its judgment, it is more likely than not that the
position will be sustained upon examination by a taxing authority. For a tax position that meets the more-likely-than-not recognition
threshold, the Company initially and subsequently measures the tax benefit as the largest amount that the Company judges to have a greater
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unrecognized tax benefits is adjusted periodically due to changing circumstances, such as the progress of tax audits, case law developments
and new or emerging legislation. Such adjustments are recognized entirely in the period in which they are identified. The Company&#8217;s
effective tax rate includes the net impact of changes in the liability for unrecognized tax benefits and subsequent adjustments as considered
appropriate by management. The Company classifies interest and penalties recognized on the liability for unrecognized tax benefits as
income tax expense.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_89" id="_SignificantAccountingPoliciesTextBlock-c0_cont_88"><ix:nonNumeric contextRef="c0" continuedAt="_SegmentReportingPolicyPolicyTextBlock-c0_cont_1" escape="true" name="us-gaap:SegmentReportingPolicyPolicyTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Segment
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</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_90" id="_SignificantAccountingPoliciesTextBlock-c0_cont_89"><ix:continuation continuedAt="_SegmentReportingPolicyPolicyTextBlock-c0_cont_2" id="_SegmentReportingPolicyPolicyTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">FASB
280, &#8220;Segment Reporting,&#8221; establishes standards for reporting information about operating segments on a basis consistent
with the Company&#8217;s internal organizational structure as well as information of the Company&#8217;s business segments, geographical
areas, segments and major customers. The Company uses the &#8220;management approach&#8221; 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 chief
operating decision maker is the Company&#8217;s president and Chief Executive Officer (&#8220;CEO&#8221;). Management, including the
chief operating decision maker, reviews operating results of different products at revenue level with no allocation of operating costs.
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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: 131; Value: 1 --><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

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Company has disclosed the type of revenue by government category as follows.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></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" escape="true" name="mhua:ScheduleOfDisclosedTheTypeOfRevenueByGovernmentCategoryTableTextBlock"><ix:continuation continuedAt="_SegmentReportingPolicyPolicyTextBlock-c0_cont_4" id="_SegmentReportingPolicyPolicyTextBlock-c0_cont_3"><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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  <tr style="vertical-align: bottom; background-color: White">
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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: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_100" id="_SignificantAccountingPoliciesTextBlock-c0_cont_99"><ix:nonNumeric contextRef="c0" continuedAt="mhua_OutbreakOfCOVID19PolicyTextBlock-c0_cont_1" escape="true" name="mhua:OutbreakOfCOVID19PolicyTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>The
Outbreak of COVID-19</i></b></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:nonNumeric></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_101" id="_SignificantAccountingPoliciesTextBlock-c0_cont_100"><ix:continuation continuedAt="mhua_OutbreakOfCOVID19PolicyTextBlock-c0_cont_2" id="mhua_OutbreakOfCOVID19PolicyTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
January 30, 2020, the World Health Organization declared the outbreak of the coronavirus disease (COVID-19) a &#8220;Public Health Emergency
of International Concern,&#8221; and on March 11, 2020, the World Health Organization characterized the outbreak as a &#8220;pandemic.&#8221;
COVID-19 has had a severe and negative impact on the Chinese and the global economy and such impact persists as of the date of this annual
report.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_102" id="_SignificantAccountingPoliciesTextBlock-c0_cont_101"><ix:continuation continuedAt="mhua_OutbreakOfCOVID19PolicyTextBlock-c0_cont_3" id="mhua_OutbreakOfCOVID19PolicyTextBlock-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; font-size: 10pt">In
fiscal year 2020, COVID-19 had a significant impact on our business and results of operations as the sales volume of masks rose sharply
while the sales of products other than masks declined due to an overall decrease in market demand. In fiscal year 2021, with the stable
control of the domestic epidemic in China, the market of masks was no longer in urgent shortage compared to the same period in 2020,
and the production of epidemic prevention products resumed more normal production levels. In general, with the precise control of the
epidemic in China, our production and operations have recovered smoothly, and the demand for other products has increased gradually.
After the initial outbreak of COVID-19, from time to time, some instances of COVID-19 infections have emerged in various regions of China,
including the infections caused by the Omicron variants in 2022. For example, a wave of infections caused by the Omicron variants emerged
in Shanghai in 2022, and a series of restrictions and quarantines were implemented to contain the spread.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_103" id="_SignificantAccountingPoliciesTextBlock-c0_cont_102"><ix:continuation id="mhua_OutbreakOfCOVID19PolicyTextBlock-c0_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Many
of the restrictive measures previously adopted by the PRC governments at various levels to control the spread of the COVID-19 virus have
been revoked or replaced with more flexible measures since December 2022. While the revocation or replacement of the restrictive measures
to contain the COVID-19 pandemic could have a positive impact on our normal operations, the extent of the impact on the Company&#8217;s
future financial results will be dependent on future developments such as the length and severity of the crisis, the potential resurgence
of the crisis, future government actions in response to the crisis and the overall impact of the COVID-19 pandemic on the global economy
and capital markets, among many other factors, all of which remain highly uncertain and unpredictable. Given this uncertainty, the Company
is currently unable to quantify the expected impact of the COVID-19 pandemic on its future operations, financial condition, liquidity
and results of operations if the current situation continues.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_104" id="_SignificantAccountingPoliciesTextBlock-c0_cont_103"><ix:nonNumeric contextRef="c0" continuedAt="mhua_RecentlyAdoptedAccountingStandardsPolicyTextBlock-c0_cont_1" escape="true" name="mhua:RecentlyAdoptedAccountingStandardsPolicyTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Recently
adopted Accounting Standards</i></b></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:nonNumeric></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_105" id="_SignificantAccountingPoliciesTextBlock-c0_cont_104"><ix:continuation continuedAt="mhua_RecentlyAdoptedAccountingStandardsPolicyTextBlock-c0_cont_2" id="mhua_RecentlyAdoptedAccountingStandardsPolicyTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Effective
January 1, 2020, the Company adopted ASU 2016-13, Financial Instruments &#8211; Credit Losses (Topic 326),&#160;Measurement of Credit
Losses on Financial Instruments. The new standard replaces the &#8216;incurred loss methodology&#8217; credit impairment model with a
new forward-looking &#8220;methodology that reflects expected credit losses and requires consideration of a broader range of reasonable
and supportable information to inform credit loss estimates.&#8221; In applying the new standard, the Company has adopted the loss rate
methodology to estimate historical losses on accounts receivables. The Company has adopted the aging methodology to estimate the credit
losses on accounts receivables. The historical data is adjusted to account for forecasted changes in the macroeconomic environment in
order to calculate the current expected credit loss. The Company&#8217;s adoption of ASC 326 did not result in a material change in the
carrying values of the Company&#8217;s financial assets on the transition date.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_106" id="_SignificantAccountingPoliciesTextBlock-c0_cont_105"><ix:continuation continuedAt="mhua_RecentlyAdoptedAccountingStandardsPolicyTextBlock-c0_cont_3" id="mhua_RecentlyAdoptedAccountingStandardsPolicyTextBlock-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; font-size: 10pt">In
February 2016, FASB issued ASU No. 2016&#8211;02, Leases (Topic 842), ASC 842, and subsequently amended the guidance relating largely
to transition considerations under the standard in July 2018. The new guidance, which creates new accounting and reporting guidelines
for leasing arrangements, requires organizations that lease assets to recognize assets and liabilities on the balance sheet related to
the rights and obligations created by those leases, regardless of whether they are classified as finance or operating leases. Consistent
with current guidance, the recognition, measurement, and presentation of expenses and cash flows arising from a lease primarily will
depend on its classification as a finance or operating lease. The guidance also requires new disclosures to help financial statement
users better understand the amount, timing, and uncertainty of cash flows arising from leases. The new standard is effective for public
business entities for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period,
with early application permitted. In March 2019, the FASB issued&#160;ASU 2019-01,&#160;Leases (Topic 842) Codification Improvements,
which further clarifies the determination of fair value of the underlying asset by lessors that are not manufacturers or dealers and
modifies transition disclosure requirements for changes in accounting principles and other technical updates.&#160;The amendments in
ASU 2019-01 amend Topic 842 and the effective date of those amendments is for fiscal years beginning December 15, 2019, and interim periods
within those fiscal years for public business entities.&#160;For all other entities, ASC 842 is effective for annual periods beginning
after December 15, 2021. For the year ended December 31, 2022, the Company only had an operating lease of office space from January 1,
2022 to December 31, 2022, and the Company did not have any finance lease. The adoption of this guidance did not have a material impact
on the Company&#8217;s consolidated financial statements.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation></ix:continuation><div>

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</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_107" id="_SignificantAccountingPoliciesTextBlock-c0_cont_106"><ix:continuation continuedAt="mhua_RecentlyAdoptedAccountingStandardsPolicyTextBlock-c0_cont_4" id="mhua_RecentlyAdoptedAccountingStandardsPolicyTextBlock-c0_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes, which removes specific exceptions to the general
principles in Topic 740 and to simplifies accounting for income taxes. The guidance is effective for public business entities for fiscal
years beginning after December 15, 2020 and for interim periods within those fiscal years. For all other entities, the amendments are
effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022.
The adoption of this guidance did not have a material impact on the Company&#8217;s consolidated financial statements.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation></ix:continuation><div>

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</div><!-- Field: Page; Sequence: 133; Value: 1 --><div>
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</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; font-size: 10pt">&#160;</span></p><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_108" id="_SignificantAccountingPoliciesTextBlock-c0_cont_107"><ix:continuation id="mhua_RecentlyAdoptedAccountingStandardsPolicyTextBlock-c0_cont_4"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
January 2020, the FASB issued ASU 2020-01, Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic
323), and Derivatives and Hedging (Topic 815): Clarifying the Interactions between Topic 321, Topic 323, and Topic 815, which clarifies
the interaction of the accounting for equity investments under Topic 321 and investments accounted for under the equity method of accounting
in Topic 323 and the accounting for certain forward contracts and purchased options accounted for under Topic 815. The guidance is effective
for public business entities for fiscal years beginning after December 15, 2021 and for interim periods within those fiscal years. The
adoption of this guidance did not have a material impact on the Company&#8217;s consolidated financial statements.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_109" id="_SignificantAccountingPoliciesTextBlock-c0_cont_108"><ix:nonNumeric contextRef="c0" continuedAt="_NewAccountingPronouncementsPolicyPolicyTextBlock-c0_cont_1" escape="true" name="us-gaap:NewAccountingPronouncementsPolicyPolicyTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Recently
Issued Accounting Standards</i></b></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:nonNumeric></ix:continuation><div>

</div><div>

</div><ix:continuation id="_SignificantAccountingPoliciesTextBlock-c0_cont_109"><ix:continuation id="_NewAccountingPronouncementsPolicyPolicyTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In
October 2021, the FASB issued ASU No. 2021-08, &#8220;&#8216;Business Combinations (Topic 805): Accounting for Contract Assets and Contract
Liabilities from Contracts with Customers&#8221; (&#8220;ASU 2021-08&#8221;). This ASU requires entities to apply Topic 606 to recognize
and measure contract assets and contract liabilities in a business combination. The amendments improve comparability after the business
combination by providing consistent recognition and measurement guidance for revenue contracts with customers acquired in a business
combination and revenue contracts with customers not acquired in a business combination. The amendments are effective for the Company
beginning after December 15, 2023, and are applied prospectively to business combinations that occur after the effective date. The Company
does not expect the adoption of ASU 2021-04 will have a material effect on the consolidated financial statements.</span></p></ix:continuation></ix:continuation><div>

</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; font-size: 10pt">&#160;</span></p><div>

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


</div><div>

</div><ix:continuation continuedAt="_OtherCurrentAssetsTextBlock-c0_cont_2" id="_OtherCurrentAssetsTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Prepayments
and other current assets consist of the following:</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_OtherCurrentAssetsTextBlock-c0_cont_3" id="_OtherCurrentAssetsTextBlock-c0_cont_2"><ix:nonNumeric contextRef="c0" continuedAt="_ScheduleOfRecognizedIdentifiedAssetsAcquiredAndLiabilitiesAssumedTableTextBlock-c0_cont_1" escape="true" name="us-gaap:ScheduleOfRecognizedIdentifiedAssetsAcquiredAndLiabilitiesAssumedTableTextBlock"><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="padding-left: 0.125in; text-align: center"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: center; font-weight: bold"><span style="font-family: Times New Roman, Times, Serif">&#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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    tax</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PrepaidTaxes" scale="0" unitRef="usd">250,410</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="-sec-ix-hidden: hidden-fact-98; font-family: Times New Roman, Times, Serif">-</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Prepaid
    for land use right (1)</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" id="ix_0_fact" name="mhua:PrepaidForLandUseRight" scale="0" unitRef="usd">15,948,501</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="-sec-ix-hidden: hidden-fact-99; font-family: Times New Roman, Times, Serif">-</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Prepaid
    for property (2)</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" id="ix_1_fact" name="mhua:PrepaidForProperty" scale="0" unitRef="usd">12,323,842</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="-sec-ix-hidden: hidden-fact-100; font-family: Times New Roman, Times, Serif">-</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Deferred
    IPO cost</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="-sec-ix-hidden: hidden-fact-101; font-family: Times New Roman, Times, Serif">-</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c3" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OtherDeferredCostsNet" scale="0" unitRef="usd">1,277,150</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 0.125in; text-indent: -0.125in"><span style="font-family: Times New Roman, Times, Serif">Total</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OtherAssets" scale="0" unitRef="usd">28,761,901</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c3" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OtherAssets" scale="0" unitRef="usd">1,394,539</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Less:
    non-current portion</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="mhua:LessNoncurrentPortion" scale="0" unitRef="usd">12,333,122</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="-sec-ix-hidden: hidden-fact-102; font-family: Times New Roman, Times, Serif">-</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Prepayments
    and other current assets</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 4pt double; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 4pt double; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PrepaidExpenseAndOtherAssetsNoncurrent" scale="0" unitRef="usd">16,428,779</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 4pt double; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 4pt double; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c3" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PrepaidExpenseAndOtherAssetsNoncurrent" scale="0" unitRef="usd">1,394,539</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  </table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:nonNumeric></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_OtherCurrentAssetsTextBlock-c0_cont_4" id="_OtherCurrentAssetsTextBlock-c0_cont_3"><ix:continuation continuedAt="_ScheduleOfRecognizedIdentifiedAssetsAcquiredAndLiabilitiesAssumedTableTextBlock-c0_cont_2" id="_ScheduleOfRecognizedIdentifiedAssetsAcquiredAndLiabilitiesAssumedTableTextBlock-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: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(1)</span></td><td style="text-align: justify"><ix:footnote id="ix_0_footnote" xml:lang="en-US">On October 22, 2018, <ix:nonNumeric contextRef="c199" name="mhua:LandUseRightAgreements">the Company signed a land use right agreement with the government of Touqiao Town, Yangzhou City and paid RMB 50 million ($7.25 million) and RMB 60 million ($8.70 million), respectively, in 2018 and 2019 according to the agreement.</ix:nonNumeric> As a result of COVID-19, the land use right had not been transferred to the Company as scheduled. Both parties agreed to cancel the transaction and the funds that were prepaid for land use right will be returned to the Company before December 31, 2023. The balance was reclassified from deposits to prepayments and other current assets. (see Note 8)</ix:footnote> </td></tr><tr style="vertical-align: top; text-align: justify"><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr> </table></ix:continuation></ix:continuation><div>

</div><ix:continuation id="_OtherCurrentAssetsTextBlock-c0_cont_4"><ix:continuation id="_ScheduleOfRecognizedIdentifiedAssetsAcquiredAndLiabilitiesAssumedTableTextBlock-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">
<td style="width: 0.25in; text-align: left"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">(2)</span></td><td style="text-align: justify"><ix:footnote id="ix_1_footnote" xml:lang="en-US"><span style="font-family: Times New Roman, Times, Serif">On
April 20, 2020, the Company signed a factory building purchase agreement with Jiangsu Qionghua Group Co., Ltd. and paid deposit of RMB
<ix:nonFraction contextRef="c200" decimals="-6" format="ixt:num-dot-decimal" name="us-gaap:DepositsPaidForSecuritiesBorrowedAtCarryingValue" scale="6" unitRef="cny">85</ix:nonFraction> million ($<ix:nonFraction contextRef="c200" decimals="-4" format="ixt:num-dot-decimal" name="us-gaap:DepositsPaidForSecuritiesBorrowedAtCarryingValue" scale="6" unitRef="usd">12.32</ix:nonFraction> million). As a result of COVID-19, the factory building had not been completed as scheduled. Both parties agreed to
cancel the transaction and that the deposit for the building would be returned to the Company on or before December 31, 2025, with such
deposit accumulating interest at an annual interest rate of <ix:nonFraction contextRef="c200" decimals="3" format="ixt:num-dot-decimal" name="us-gaap:InvestmentInterestRate" scale="-2" unitRef="pure">3.5</ix:nonFraction>%. The balance was reclassified from deposits to prepayments and other
current assets. (see Note 8)</span></ix:footnote></td>
</tr></table></ix:continuation></ix:continuation><div>



</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></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="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->22<!-- 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"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

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

</div><ix:nonNumeric contextRef="c0" continuedAt="_InventoryDisclosureTextBlock-c0_cont_1" escape="true" name="us-gaap:InventoryDisclosureTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>4.
Inventories</b></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:nonNumeric><div>


</div><div>

</div><ix:continuation continuedAt="_InventoryDisclosureTextBlock-c0_cont_2" id="_InventoryDisclosureTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Inventories
consist of the following:</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_InventoryDisclosureTextBlock-c0_cont_3" id="_InventoryDisclosureTextBlock-c0_cont_2"><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">
  <tr style="vertical-align: bottom">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: center"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="font-weight: bold; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center"><span style="font-family: Times New Roman, Times, Serif">December&#160;31,<br/>
    2022</span></td><td style="padding-bottom: 1.5pt; font-weight: bold"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="font-weight: bold; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center"><span style="font-family: Times New Roman, Times, Serif">December&#160;31,<br/>
    2021</span></td><td style="padding-bottom: 1.5pt; font-weight: bold"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: center"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="font-weight: bold"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td colspan="2" style="font-weight: bold; text-align: center"><span style="font-family: Times New Roman, Times, Serif">US$</span></td><td style="font-weight: bold"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="font-weight: bold"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td colspan="2" style="font-weight: bold; text-align: center"><span style="font-family: Times New Roman, Times, Serif">US$</span></td><td style="font-weight: bold"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; width: 76%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Raw
    material</span></td><td style="width: 1%"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="width: 9%; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:InventoryRawMaterials" scale="0" unitRef="usd">177,474</ix:nonFraction></span></td><td style="width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="width: 1%"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="width: 9%; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c3" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:InventoryRawMaterials" scale="0" unitRef="usd">305,408</ix:nonFraction></span></td><td style="width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 0.125in; text-indent: -0.125in"><span style="font-family: Times New Roman, Times, Serif">Work-in-process</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:InventoryWorkInProcess" scale="0" unitRef="usd">343,795</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c3" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:InventoryWorkInProcess" scale="0" unitRef="usd">224,694</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Finished
    goods</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:InventoryFinishedGoods" scale="0" unitRef="usd">560,119</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c3" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:InventoryFinishedGoods" scale="0" unitRef="usd">682,699</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">Low-value
    consumables</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:InventoryRawMaterialsAndSupplies" scale="0" unitRef="usd">40,650</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c3" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:InventoryRawMaterialsAndSupplies" scale="0" unitRef="usd">38,592</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; padding-bottom: 4pt"><span style="font-family: Times New Roman, Times, Serif">Total</span></td><td style="padding-bottom: 4pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 4pt double; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 4pt double; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OtherInvestments" scale="0" unitRef="usd">1,122,038</ix:nonFraction></span></td><td style="padding-bottom: 4pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 4pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 4pt double; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 4pt double; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c3" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OtherInvestments" scale="0" unitRef="usd">1,251,393</ix:nonFraction></span></td><td style="padding-bottom: 4pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  </table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:nonNumeric></ix:continuation><div>

</div><div>

</div><ix:continuation id="_InventoryDisclosureTextBlock-c0_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
the years ended December 31, 2022, 2021 and 2020, there were no writes-down of inventories.</span></p></ix:continuation><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></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-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>5.
Property, Plant and Equipment</b></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:nonNumeric><div>


</div><div>

</div><ix:continuation continuedAt="_PropertyPlantAndEquipmentDisclosureTextBlock-c0_cont_2" id="_PropertyPlantAndEquipmentDisclosureTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Property,
plant and equipment consisted of the following:</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation><div>

</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="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: center"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="font-weight: bold; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center"><span style="font-family: Times New Roman, Times, Serif">December&#160;31,<br/>
    2022</span></td><td style="padding-bottom: 1.5pt; font-weight: bold"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="font-weight: bold; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center"><span style="font-family: Times New Roman, Times, Serif">December&#160;31,<br/>
    2021</span></td><td style="padding-bottom: 1.5pt; font-weight: bold"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: center"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="font-weight: bold"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td colspan="2" style="font-weight: bold; text-align: center"><span style="font-family: Times New Roman, Times, Serif">US$</span></td><td style="font-weight: bold"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="font-weight: bold"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; width: 76%"><span style="font-family: Times New Roman, Times, Serif">Buildings</span></td><td style="width: 1%"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="width: 9%; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c100" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PropertyPlantAndEquipmentGross" scale="0" unitRef="usd">7,343,492</ix:nonFraction></span></td><td style="width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="width: 1%"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="width: 9%; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c201" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PropertyPlantAndEquipmentGross" scale="0" unitRef="usd">9,552,700</ix:nonFraction></span></td><td style="width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Machinery
    and equipment</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c102" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PropertyPlantAndEquipmentGross" scale="0" unitRef="usd">2,732,336</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c202" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PropertyPlantAndEquipmentGross" scale="0" unitRef="usd">2,897,846</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Motor
    vehicles</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c203" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PropertyPlantAndEquipmentGross" scale="0" unitRef="usd">678,112</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c204" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PropertyPlantAndEquipmentGross" scale="0" unitRef="usd">574,006</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Electronic
    equipment</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c205" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PropertyPlantAndEquipmentGross" scale="0" unitRef="usd">238,856</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c206" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PropertyPlantAndEquipmentGross" scale="0" unitRef="usd">239,005</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Office
    equipment</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c108" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PropertyPlantAndEquipmentGross" scale="0" unitRef="usd">43,413</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c207" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PropertyPlantAndEquipmentGross" scale="0" unitRef="usd">46,987</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Inspection
    equipment</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c110" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PropertyPlantAndEquipmentGross" scale="0" unitRef="usd">104,993</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c208" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PropertyPlantAndEquipmentGross" scale="0" unitRef="usd">94,683</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">Construction
    in progress</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c209" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PropertyPlantAndEquipmentGross" scale="0" unitRef="usd">1,394,146</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c210" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PropertyPlantAndEquipmentGross" scale="0" unitRef="usd">657,880</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 0.125in; text-indent: -0.125in"><span style="font-family: Times New Roman, Times, Serif">Total</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PropertyPlantAndEquipmentGross" scale="0" unitRef="usd">12,535,348</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c3" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PropertyPlantAndEquipmentGross" scale="0" unitRef="usd">14,063,107</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">Less:
    accumulated depreciation</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AccumulatedDepreciationDepletionAndAmortizationPropertyPlantAndEquipment" scale="0" unitRef="usd">3,777,301</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c3" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AccumulatedDepreciationDepletionAndAmortizationPropertyPlantAndEquipment" scale="0" unitRef="usd">6,585,363</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left; padding-bottom: 4pt"><span style="font-family: Times New Roman, Times, Serif">Property
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    <td style="border-bottom: Black 4pt double; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 4pt double; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PropertyPlantAndEquipmentNet" scale="0" unitRef="usd">8,758,047</ix:nonFraction></span></td><td style="padding-bottom: 4pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 4pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
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  </table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:nonNumeric></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_PropertyPlantAndEquipmentDisclosureTextBlock-c0_cont_4" id="_PropertyPlantAndEquipmentDisclosureTextBlock-c0_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Depreciation
expense was $<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:Depreciation" scale="0" unitRef="usd">541,265</ix:nonFraction>, $<ix:nonFraction contextRef="c4" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:Depreciation" scale="0" unitRef="usd">595,522</ix:nonFraction> and $<ix:nonFraction contextRef="c5" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:Depreciation" scale="0" unitRef="usd">497,238</ix:nonFraction> for the years ended December 31, 2022, 2021 and 2020, respectively.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation><div>

</div><div>

</div><ix:continuation id="_PropertyPlantAndEquipmentDisclosureTextBlock-c0_cont_4"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of December 31, 2022 and 2021, the Company pledged buildings to secure bank borrowings to the Company as disclosed in Note 8.</span></p></ix:continuation><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; 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: 135; 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-<span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->23<!-- 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"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><ix:nonNumeric contextRef="c0" continuedAt="_IntangibleAssetsDisclosureTextBlock-c0_cont_1" escape="true" name="us-gaap:IntangibleAssetsDisclosureTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>6.
Intangible Assets</b></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:nonNumeric><div>


</div><div>

</div><ix:continuation continuedAt="_IntangibleAssetsDisclosureTextBlock-c0_cont_2" id="_IntangibleAssetsDisclosureTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Intangible
assets consisted of the following:</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_IntangibleAssetsDisclosureTextBlock-c0_cont_3" id="_IntangibleAssetsDisclosureTextBlock-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">
    <td style="padding-left: 0.125in; text-align: center"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: center; font-weight: bold"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; width: 76%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Land
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    <td style="width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="width: 9%; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c211" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:FiniteLivedIntangibleAssetsGross" scale="0" unitRef="usd">752,887</ix:nonFraction></span></td><td style="width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="width: 1%"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 0.125in; text-indent: -0.125in"><span style="font-family: Times New Roman, Times, Serif">Patents</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in"><span style="font-family: Times New Roman, Times, Serif">Software</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c214" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:FiniteLivedIntangibleAssetsGross" scale="0" unitRef="usd">9,424</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c215" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:FiniteLivedIntangibleAssetsGross" scale="0" unitRef="usd">10,201</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 0.125in; text-indent: -0.125in; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">Trademarks</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c114" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:FiniteLivedIntangibleAssetsGross" scale="0" unitRef="usd">121,789</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c216" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:FiniteLivedIntangibleAssetsGross" scale="0" unitRef="usd">131,814</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in"><span style="font-family: Times New Roman, Times, Serif">Total</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">Less:
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    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="mhua:LessAccumulatedAmortization" scale="0" unitRef="usd">415,497</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c4" decimals="0" format="ixt:num-dot-decimal" name="mhua:LessAccumulatedAmortization" scale="0" unitRef="usd">426,263</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left; padding-bottom: 4pt"><span style="font-family: Times New Roman, Times, Serif">Intangible
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    <td style="border-bottom: Black 4pt double; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 4pt double; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="mhua:IntangibleAssetsNet" scale="0" unitRef="usd">497,600</ix:nonFraction></span></td><td style="padding-bottom: 4pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 4pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 4pt double; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 4pt double; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c3" decimals="0" format="ixt:num-dot-decimal" name="mhua:IntangibleAssetsNet" scale="0" unitRef="usd">562,001</ix:nonFraction></span></td><td style="padding-bottom: 4pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  </table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:nonNumeric></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_IntangibleAssetsDisclosureTextBlock-c0_cont_4" id="_IntangibleAssetsDisclosureTextBlock-c0_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Amortization
expense was $<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AmortizationOfIntangibleAssets" scale="0" unitRef="usd">22,196</ix:nonFraction>, $<ix:nonFraction contextRef="c4" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AmortizationOfIntangibleAssets" scale="0" unitRef="usd">26,951</ix:nonFraction> and $<ix:nonFraction contextRef="c5" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AmortizationOfIntangibleAssets" scale="0" unitRef="usd">26,195</ix:nonFraction> for the years ended December 31, 2022, 2021 and 2020, respectively.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_IntangibleAssetsDisclosureTextBlock-c0_cont_5" id="_IntangibleAssetsDisclosureTextBlock-c0_cont_4"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following table sets forth the Company&#8217;s amortization expenses for the twelve months ending December 31 of the following years:</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_IntangibleAssetsDisclosureTextBlock-c0_cont_6" id="_IntangibleAssetsDisclosureTextBlock-c0_cont_5"><ix:nonNumeric contextRef="c0" escape="true" name="us-gaap:FiniteLivedIntangibleAssetsAmortizationExpenseTableTextBlock"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 88%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">2023</span></td><td style="width: 1%"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">$</span></td><td style="width: 9%; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:FiniteLivedIntangibleAssetsAmortizationExpenseNextRollingTwelveMonths" scale="0" unitRef="usd">15,058</ix:nonFraction></span></td><td style="width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">2024</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:FiniteLivedIntangibleAssetsAmortizationExpenseRollingYearTwo" scale="0" unitRef="usd">15,058</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">2025</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
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  <tr style="vertical-align: bottom; background-color: White">
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    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:FiniteLivedIntangibleAssetsAmortizationExpenseRollingYearFour" scale="0" unitRef="usd">15,058</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:FiniteLivedIntangibleAssetsAmortizationExpenseRollingYearFive" scale="0" unitRef="usd">15,058</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
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    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:FiniteLivedIntangibleAssetsAmortizationExpenseRollingAfterYearFive" scale="0" unitRef="usd">422,310</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 4pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 4pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 4pt double; text-align: left"><span style="font-family: Times New Roman, Times, Serif">$</span></td><td style="border-bottom: Black 4pt double; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:FiniteLivedIntangibleAssetsNet" scale="0" unitRef="usd">497,600</ix:nonFraction></span></td><td style="padding-bottom: 4pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  </table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:nonNumeric></ix:continuation><div>

</div><div>

</div><ix:continuation id="_IntangibleAssetsDisclosureTextBlock-c0_cont_6"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
of December 31, 2022 and 2021, the Company pledged land use rights to secure bank borrowings to the Company as disclosed in Note 8.</span></p></ix:continuation><div>

</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; font-size: 10pt">&#160;</span></p><div>

</div><ix:nonNumeric contextRef="c0" continuedAt="_InvestmentTextBlock-c0_cont_1" escape="true" name="us-gaap:InvestmentTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>7.
Investment</b></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:nonNumeric><div>


</div><div>

</div><ix:continuation continuedAt="_InvestmentTextBlock-c0_cont_2" id="_InvestmentTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On
March 3, 2011, Yada invested RMB <ix:nonFraction contextRef="c217" decimals="-6" format="ixt:num-dot-decimal" name="us-gaap:Investments" scale="6" unitRef="cny">6</ix:nonFraction> million into Yangzhou Juyuan Guarantee Co., Ltd. (&#8220;Juyuan&#8221;) and obtained <ix:nonFraction contextRef="c218" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:BusinessCombinationStepAcquisitionEquityInterestInAcquireePercentage" scale="-2" unitRef="pure">12</ix:nonFraction>% equity interest
of Juyuan. Juyuan mainly provides financing guarantee services and relevant consulting services to customers. Juyuan has only one executive
director and one supervisor. Neither the executive director nor supervisor is related to Yada. Therefore, Yada has neither control nor
significant influence over Juyuan. For the Company&#8217;s passive and without significant influence or control equity investment in
a private company which does not have readily determinable fair values, the Company has elected the measurement alternative defined as
cost, less impairment, plus or minus adjustments resulting from observable price changes in orderly transactions for the identical or
a similar investment of the same issuer.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_InvestmentTextBlock-c0_cont_3" id="_InvestmentTextBlock-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">On
December 1, 2022, Huadong invested RMB <ix:nonFraction contextRef="c219" decimals="-6" format="ixt:num-dot-decimal" name="us-gaap:Investments" scale="6" unitRef="cny">40</ix:nonFraction> million into Zhongxiangxin, and obtained <ix:nonFraction contextRef="c220" decimals="2" format="ixt:num-dot-decimal" name="mhua:OwnershipInterestPercentage" scale="-2" unitRef="pure">25</ix:nonFraction>% ownership interest of Zhongxiangxin. Zhongxiangxin
manufactures and sells medical materials in the PRC. The Company accounted for the investments using the equity method, because the Company
has significant influence but does not own a majority equity interest or otherwise control over the equity investee. Under the equity
method, the Company adjusts the carrying amount of the investment and recognizes investment income or loss for its share of the earnings
or loss of the investee after the date of investment. When the Company&#8217;s share of losses in the equity investee equals or exceeds
its interest in the equity investee, the Company does not recognize further losses, unless the Company has incurred obligations or made
payments or guarantees on behalf of the equity investee. For the year ended December 31, 2022, the investment gain from Zhongxiangxin
was $<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:GainLossOnInvestments" scale="0" unitRef="usd">290</ix:nonFraction>.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation><div>

</div><div>

</div><ix:continuation id="_InvestmentTextBlock-c0_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">For
the years ended December 31, 2022, 2021 and 2020, no impairment indicators were identified and no loss related to revaluation of its
investment in the private company was recorded.</span></p></ix:continuation><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; 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: 136; 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-<span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->24<!-- 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"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><ix:nonNumeric contextRef="c0" continuedAt="_DepositLiabilitiesDisclosuresTextBlock-c0_cont_1" escape="true" name="us-gaap:DepositLiabilitiesDisclosuresTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>8.
Deposits</b></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:nonNumeric><div>


</div><div>

</div><ix:continuation continuedAt="_DepositLiabilitiesDisclosuresTextBlock-c0_cont_2" id="_DepositLiabilitiesDisclosuresTextBlock-c0_cont_1"><ix:nonNumeric contextRef="c0" escape="true" name="mhua:ScheduleOfDepositsTableTextBlock"><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="padding-left: 0.125in; text-indent: -0.125in; text-align: center"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: center; font-weight: bold; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center"><span style="font-family: Times New Roman, Times, Serif">December&#160;31,<br/>
    2022</span></td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: center; font-weight: bold; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center"><span style="font-family: Times New Roman, Times, Serif">December&#160;31,<br/>
    2021</span></td><td style="text-align: center; padding-bottom: 1.5pt; font-weight: bold"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: center"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: center; font-weight: bold"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td colspan="2" style="font-weight: bold; text-align: center"><span style="font-family: Times New Roman, Times, Serif">US$</span></td><td style="text-align: center; font-weight: bold"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: center; font-weight: bold"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td colspan="2" style="font-weight: bold; text-align: center"><span style="font-family: Times New Roman, Times, Serif">US$</span></td><td style="text-align: center; font-weight: bold"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; width: 76%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Deposits
    for land use right</span></td><td style="width: 1%"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="width: 9%; text-align: right"><span style="-sec-ix-hidden: hidden-fact-103; font-family: Times New Roman, Times, Serif">&#160;&#160;&#160;&#160;&#160;&#160;-</span></td><td style="width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="width: 1%"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="width: 9%; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c226" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DepositsAssets" scale="0" unitRef="usd">17,261,400</ix:nonFraction></span></td><td style="width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">Deposits
    for buildings</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="-sec-ix-hidden: hidden-fact-104; font-family: Times New Roman, Times, Serif">-</span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c228" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DepositsAssets" scale="0" unitRef="usd">13,338,355</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; padding-bottom: 4pt"><span style="font-family: Times New Roman, Times, Serif">Total</span></td><td style="padding-bottom: 4pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 4pt double; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 4pt double; text-align: right"><span style="-sec-ix-hidden: hidden-fact-105; font-family: Times New Roman, Times, Serif">-</span></td><td style="padding-bottom: 4pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 4pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 4pt double; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 4pt double; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c3" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DepositsAssets" scale="0" unitRef="usd">30,599,755</ix:nonFraction></span></td><td style="padding-bottom: 4pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  </table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:nonNumeric></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_DepositLiabilitiesDisclosuresTextBlock-c0_cont_3" id="_DepositLiabilitiesDisclosuresTextBlock-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; font-size: 10pt">On
October 22, 2018, the Company signed a land use right agreement with the government of Touqiao Town, Yangzhou City and paid RMB <ix:nonFraction contextRef="c221" decimals="-6" format="ixt:num-dot-decimal" name="us-gaap:Cash" scale="6" unitRef="cny">50</ix:nonFraction> million
($<ix:nonFraction contextRef="c221" decimals="-4" format="ixt:num-dot-decimal" name="us-gaap:Cash" scale="6" unitRef="usd">7.85</ix:nonFraction> million) and RMB <ix:nonFraction contextRef="c222" decimals="-6" format="ixt:num-dot-decimal" name="us-gaap:Cash" scale="6" unitRef="cny">60</ix:nonFraction> million ($<ix:nonFraction contextRef="c222" decimals="-4" format="ixt:num-dot-decimal" name="us-gaap:Cash" scale="6" unitRef="usd">9.42</ix:nonFraction> million), respectively, in 2018 and 2019 according to the agreement. This contract is terminated
and the payment is to be recovered. The balance was reclassified to prepayments and other current assets. (see Note 3)</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_DepositLiabilitiesDisclosuresTextBlock-c0_cont_4" id="_DepositLiabilitiesDisclosuresTextBlock-c0_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">On
April 20, 2020, the Company signed a factory building purchase agreement with Jiangsu Qionghua Group Co., Ltd. and paid deposit of RMB
<ix:nonFraction contextRef="c223" decimals="-6" format="ixt:num-dot-decimal" name="us-gaap:Deposits" scale="6" unitRef="cny">85</ix:nonFraction> million ($<ix:nonFraction contextRef="c223" decimals="-4" format="ixt:num-dot-decimal" name="us-gaap:Deposits" scale="6" unitRef="usd">13.34</ix:nonFraction> million). This contract is terminated and the payment is to be recovered. The balance was reclassified to prepayments
and other noncurrent assets. (see Note 3)</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></p></ix:continuation><div>

</div><div>

</div><ix:continuation id="_DepositLiabilitiesDisclosuresTextBlock-c0_cont_4"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During the IPO, the Company entered into a series of agreements with
Tai He International Group Limited (&#8220;Tai He&#8221;), a Hong Kong investment company. Pursuant to the agreements, Tai He agreed to
invest a minimum of $<ix:nonFraction contextRef="c2" decimals="-6" format="ixt:num-dot-decimal" name="us-gaap:Investments" scale="6" unitRef="usd">35</ix:nonFraction> million in the IPO subject to the Company making a $<ix:nonFraction contextRef="c2" decimals="-5" format="ixt:num-dot-decimal" name="us-gaap:Deposits" scale="6" unitRef="usd">7.0</ix:nonFraction> million refundable deposit and advancing a $<ix:nonFraction contextRef="c224" decimals="-5" format="ixt:num-dot-decimal" name="mhua:ServiceFee" scale="6" unitRef="usd">3.0</ix:nonFraction> million
service fee for investor relations and other services payable to Tai He. The Company paid approximately $<ix:nonFraction contextRef="c0" decimals="-5" format="ixt:num-dot-decimal" name="us-gaap:OtherExpenses" scale="6" unitRef="usd">4.8</ix:nonFraction> million to Tai He in 2022.
The Company&#8217;s affiliates and individual shareholders paid the rest of the agreed amount. Later the Company learned that Tai He did
not invest in the IPO or provide any service to the Company. The Company is now proactively working to terminate the Tai He Agreements
and recover the amount paid to Tai He by the Company. Due to the uncertainty of collection, the Company has written off the approximately
$<ix:nonFraction contextRef="c0" decimals="-5" format="ixt:num-dot-decimal" name="us-gaap:PaymentsForOtherDeposits" scale="6" unitRef="usd">4.8</ix:nonFraction> million deposit and fully expensed the $<ix:nonFraction contextRef="c0" decimals="-5" format="ixt:num-dot-decimal" name="mhua:ServiceFee" scale="6" unitRef="usd">2.3</ix:nonFraction> million service fee paid by the Company to Tai He in the year ended December 31, 2022.</p></ix:continuation><div>

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

</div><ix:nonNumeric contextRef="c0" continuedAt="_ShortTermDebtTextBlock-c0_cont_1" escape="true" name="us-gaap:ShortTermDebtTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>9.
Bank Borrowings</b></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:nonNumeric><div>


</div><div>

</div><ix:continuation continuedAt="_ShortTermDebtTextBlock-c0_cont_2" id="_ShortTermDebtTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Bank
borrowings are working capital loans from banks in China. Short-term bank borrowings as of December 31, 2022 consisted of the following:&#160;</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_ShortTermDebtTextBlock-c0_cont_3" id="_ShortTermDebtTextBlock-c0_cont_2"><ix:nonNumeric contextRef="c0" continuedAt="_ScheduleOfShortTermDebtTextBlock-c0_cont_1" escape="true" name="us-gaap:ScheduleOfShortTermDebtTextBlock"><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="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center"><span style="font-family: Times New Roman, Times, Serif">Company</span></td><td style="font-weight: bold; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid"><span style="font-family: Times New Roman, Times, Serif">Rate</span></td><td style="padding-bottom: 1.5pt; font-weight: bold"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="font-weight: bold; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid"><span style="font-family: Times New Roman, Times, Serif">Issuance
    Date</span></td><td style="font-weight: bold; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid"><span style="font-family: Times New Roman, Times, Serif">Expiration
    Date</span></td><td style="font-weight: bold; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
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    RMB</span></td><td style="padding-bottom: 1.5pt; font-weight: bold"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="font-weight: bold; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid"><span style="font-family: Times New Roman, Times, Serif">Amount-<br/>
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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="padding: 0pt 0pt 0pt 0.125in; text-indent: -0.125in; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Jiangsu
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif">Bank of China</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: center; padding-left: 0pt"><ix:nonNumeric contextRef="c235" name="mhua:ShortTermBankBorrowingsCompany"><span style="font-family: Times New Roman, Times, Serif">Huadong</span></ix:nonNumeric></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
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    <td style="text-align: center; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif"><ix:nonNumeric contextRef="c235" format="ixt:date-month-day-year" name="us-gaap:LineOfCreditFacilityExpirationDate1">1/19/2023</ix:nonNumeric>*</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c236" decimals="0" format="ixt:num-dot-decimal" name="mhua:ShortTermBorrowings1" scale="0" unitRef="cny">5,000,000</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c236" decimals="0" format="ixt:num-dot-decimal" name="mhua:ShortTermBorrowings1" scale="0" unitRef="usd">724,932</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding: 0pt; text-indent: 0pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Agricultural
    Bank of China</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: center; padding-left: 0pt"><ix:nonNumeric contextRef="c237" name="mhua:ShortTermBankBorrowingsCompany"><span style="font-family: Times New Roman, Times, Serif">Yada</span></ix:nonNumeric></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c238" decimals="4" format="ixt:num-dot-decimal" name="us-gaap:ShortTermDebtPercentageBearingFixedInterestRate" scale="-2" unitRef="pure">3.60</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">%</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: center; padding-left: 0pt"><ix:nonNumeric contextRef="c237" format="ixt:date-month-day-year" name="us-gaap:LineOfCreditFacilityInitiationDate1"><span style="font-family: Times New Roman, Times, Serif">12/8/2022</span></ix:nonNumeric></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: center; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif"><ix:nonNumeric contextRef="c237" format="ixt:date-month-day-year" name="us-gaap:LineOfCreditFacilityExpirationDate1">12/6/2023</ix:nonNumeric>*</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c238" decimals="0" format="ixt:num-dot-decimal" name="mhua:ShortTermBorrowings1" scale="0" unitRef="cny">10,000,000</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c238" decimals="0" format="ixt:num-dot-decimal" name="mhua:ShortTermBorrowings1" scale="0" unitRef="usd">1,449,864</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding: 0pt 0pt 0pt 0.125in; text-indent: -0.125in; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Industrial
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    <td style="text-align: center; padding-bottom: 1.5pt; padding-left: 0pt"><ix:nonNumeric contextRef="c239" name="mhua:ShortTermBankBorrowingsCompany"><span style="font-family: Times New Roman, Times, Serif">Yada</span></ix:nonNumeric></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 1.5pt; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c240" decimals="4" format="ixt:num-dot-decimal" name="us-gaap:ShortTermDebtPercentageBearingFixedInterestRate" scale="-2" unitRef="pure">3.70</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">%</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: center; padding-bottom: 1.5pt; padding-left: 0pt"><ix:nonNumeric contextRef="c239" format="ixt:date-month-day-year" name="us-gaap:LineOfCreditFacilityInitiationDate1"><span style="font-family: Times New Roman, Times, Serif">2/18/2022</span></ix:nonNumeric></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: center; padding-bottom: 1.5pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif"><ix:nonNumeric contextRef="c239" format="ixt:date-month-day-year" name="us-gaap:LineOfCreditFacilityExpirationDate1">2/21/2023</ix:nonNumeric>*</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c240" decimals="0" format="ixt:num-dot-decimal" name="mhua:ShortTermBorrowings1" scale="0" unitRef="cny">9,000,000</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c240" decimals="0" format="ixt:num-dot-decimal" name="mhua:ShortTermBorrowings1" scale="0" unitRef="usd">1,304,877</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding: 0pt; text-indent: 0pt"><span style="font-family: Times New Roman, Times, Serif">Total</span></td><td style="padding-bottom: 4pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: center; padding-bottom: 4pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 4pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="padding-bottom: 4pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 4pt; text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 4pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 4pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: center; padding-bottom: 4pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 4pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: center; padding-bottom: 4pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 4pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 4pt double; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 4pt double; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="mhua:ShortTermBorrowings1" scale="0" unitRef="cny">42,000,000</ix:nonFraction></span></td><td style="padding-bottom: 4pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 4pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 4pt double; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 4pt double; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="mhua:ShortTermBorrowings1" scale="0" unitRef="usd">6,089,428</ix:nonFraction></span></td><td style="padding-bottom: 4pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  </table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:nonNumeric></ix:continuation><div>



</div><div>

</div><ix:continuation continuedAt="_ShortTermDebtTextBlock-c0_cont_4" id="_ShortTermDebtTextBlock-c0_cont_3"><ix:continuation continuedAt="_ScheduleOfShortTermDebtTextBlock-c0_cont_2" id="_ScheduleOfShortTermDebtTextBlock-c0_cont_1"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"> <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"> <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">*</span></td> <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><ix:footnote id="ix_2_footnote" xml:lang="en-US"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">These loans were renewed upon maturity.</span></ix:footnote></td></tr> </table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation></ix:continuation><div>
</div><div>

</div><ix:continuation continuedAt="_ShortTermDebtTextBlock-c0_cont_5" id="_ShortTermDebtTextBlock-c0_cont_4"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Short-term
bank borrowings as of December 31, 2021 consisted of the following:</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_ShortTermDebtTextBlock-c0_cont_6" id="_ShortTermDebtTextBlock-c0_cont_5"><ix:continuation id="_ScheduleOfShortTermDebtTextBlock-c0_cont_2"><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="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center"><span style="font-family: Times New Roman, Times, Serif">Company</span></td><td style="font-weight: bold; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></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-indent: -0.25in; text-align: left; padding-bottom: 1.5pt; padding-left: 0.25in"><span style="font-family: Times New Roman, Times, Serif">Industrial
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-indent: -0.125in; padding-bottom: 4pt; padding-left: 0.125in"><span style="font-family: Times New Roman, Times, Serif">Total</span></td><td style="padding-bottom: 4pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: center; padding-bottom: 4pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 4pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="padding-bottom: 4pt; text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 4pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 4pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: center; padding-bottom: 4pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 4pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: center; padding-bottom: 4pt; padding-left: 0pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 4pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
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    <td style="border-bottom: Black 4pt double; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 4pt double; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c3" decimals="0" format="ixt:num-dot-decimal" name="mhua:ShortTermBorrowings1" scale="0" unitRef="usd">5,178,420</ix:nonFraction></span></td><td style="padding-bottom: 4pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  </table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_ShortTermDebtTextBlock-c0_cont_7" id="_ShortTermDebtTextBlock-c0_cont_6"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Interest
expense was $<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:InterestExpenseDebt" scale="0" unitRef="usd">191,198</ix:nonFraction>, $<ix:nonFraction contextRef="c4" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:InterestExpenseDebt" scale="0" unitRef="usd">180,744</ix:nonFraction> and $<ix:nonFraction contextRef="c5" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:InterestExpenseDebt" scale="0" unitRef="usd">137,160</ix:nonFraction> for the years ended December 31, 2022, 2021 and 2020, respectively.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_ShortTermDebtTextBlock-c0_cont_8" id="_ShortTermDebtTextBlock-c0_cont_7"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company&#8217;s short-term bank borrowings are pledged by the Company&#8217;s assets and guaranteed by the Company&#8217;s major shareholders
Yongjun Liu, Yin Liu, Kai Liu and its subsidiary Yada.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></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: 137; 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-<span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->25<!-- 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"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><ix:continuation continuedAt="_ShortTermDebtTextBlock-c0_cont_9" id="_ShortTermDebtTextBlock-c0_cont_8"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
carrying values of the Company&#8217;s pledged assets to secure short-term borrowings by the Company are as follows:</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation><div>

</div><div>

</div><ix:continuation id="_ShortTermDebtTextBlock-c0_cont_9"><ix:nonNumeric contextRef="c0" escape="true" name="mhua:ScheduleOfTheCarryingValuesOfTheCompanysPledgedAssetsToSecureShorttermBorrowingsTableTextBlock"><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 colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center"><span style="font-family: Times New Roman, Times, Serif">December&#160;31,<br/>
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    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center"><span style="font-family: Times New Roman, Times, Serif">December&#160;31,<br/>
    2021</span></td><td style="padding-bottom: 1.5pt; font-weight: bold"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: center"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="font-weight: bold"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; width: 76%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Buildings,
    net</span></td><td style="width: 1%"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">Land
    use right, net</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; padding-bottom: 4pt"><span style="font-family: Times New Roman, Times, Serif">Total</span></td><td style="padding-bottom: 4pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 4pt double; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 4pt double; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AssetsHeldInTrust" scale="0" unitRef="usd">2,873,795</ix:nonFraction></span></td><td style="padding-bottom: 4pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 4pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 4pt double; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 4pt double; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c3" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:AssetsHeldInTrust" scale="0" unitRef="usd">2,793,713</ix:nonFraction></span></td><td style="padding-bottom: 4pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  </table></ix:nonNumeric></ix:continuation><div>

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

</div><ix:nonNumeric contextRef="c0" continuedAt="_LongTermDebtTextBlock-c0_cont_1" escape="true" name="us-gaap:LongTermDebtTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>10.
Long-term bank loan</b></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:nonNumeric><div>


</div><div>

</div><ix:continuation continuedAt="_LongTermDebtTextBlock-c0_cont_2" id="_LongTermDebtTextBlock-c0_cont_1"><ix:nonNumeric contextRef="c0" escape="true" name="us-gaap:ScheduleOfDebtInstrumentsTextBlock"><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="padding-left: 0.125in; text-indent: -0.125in; border-bottom: Black 1.5pt solid; font-weight: bold"><span style="font-family: Times New Roman, Times, Serif">Lender</span></td><td style="font-weight: bold; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
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    <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center"><span style="font-family: Times New Roman, Times, Serif">Issuance<br/>
    Date</span></td><td style="font-weight: bold; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center"><span style="font-family: Times New Roman, Times, Serif">Expiration
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    US$</span></td><td style="padding-bottom: 1.5pt; font-weight: bold"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 1.5pt; padding-left: 0.125in; text-indent: -0.125in; width: 28%"><span style="font-family: Times New Roman, Times, Serif">Bank
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    <td style="padding-bottom: 1.5pt; width: 1%; text-align: center"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 1.5pt; width: 9%; text-align: center"><ix:nonNumeric contextRef="c253" name="mhua:CompanyName"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Huadong</span></ix:nonNumeric></td><td style="padding-bottom: 1.5pt; width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 1.5pt; width: 1%"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; width: 9%; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c253" decimals="4" format="ixt:num-dot-decimal" name="mhua:LongTermBankLoanRate" scale="-2" unitRef="pure">3.50</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">%</span></td><td style="padding-bottom: 1.5pt; width: 1%"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
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    <td style="padding-bottom: 1.5pt; width: 11%; text-align: center"><ix:nonNumeric contextRef="c253" format="ixt:date-month-day-year" name="mhua:ExpirationDate"><span style="font-family: Times New Roman, Times, Serif">4/25/2024</span></ix:nonNumeric></td><td style="padding-bottom: 1.5pt; width: 1%"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; width: 9%; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c254" decimals="0" format="ixt:num-dot-decimal" name="mhua:LongTermBankLoanTotal" scale="0" unitRef="cny">5,000,000</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 1.5pt; width: 1%"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; width: 9%; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c254" decimals="0" format="ixt:num-dot-decimal" name="mhua:LongTermBankLoanTotal" scale="0" unitRef="usd">724,932</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 0.125in; text-indent: -0.125in; padding-bottom: 4pt"><span style="font-family: Times New Roman, Times, Serif">Total</span></td><td style="padding-bottom: 4pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="padding-bottom: 4pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 4pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 4pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 4pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="padding-bottom: 4pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 4pt; text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 4pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 4pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: center; padding-bottom: 4pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 4pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: center; padding-bottom: 4pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 4pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 4pt double; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 4pt double; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="mhua:LongTermBankLoanTotal" scale="0" unitRef="cny">5,000,000</ix:nonFraction></span></td><td style="padding-bottom: 4pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 4pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 4pt double; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 4pt double; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="mhua:LongTermBankLoanTotal" scale="0" unitRef="usd">724,932</ix:nonFraction></span></td><td style="padding-bottom: 4pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  </table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:nonNumeric></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_LongTermDebtTextBlock-c0_cont_3" id="_LongTermDebtTextBlock-c0_cont_2"><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">On
November 3, 2022, the Company signed a loan agreement with Bank of Communications to obtain a two-year loan of RMB <ix:nonFraction contextRef="c251" decimals="-6" format="ixt:num-dot-decimal" name="mhua:LoanAgreement" scale="6" unitRef="cny">5</ix:nonFraction> million ($<ix:nonFraction contextRef="c251" decimals="0" format="ixt:num-dot-decimal" name="mhua:LoanAgreement" scale="0" sign="-" unitRef="usd">724,932</ix:nonFraction>).
The loan bears a floating interest rate of a benchmark rate (<ix:nonFraction contextRef="c252" decimals="4" format="ixt:num-dot-decimal" name="mhua:FloatingInterestRate" scale="-2" unitRef="pure">3.50</ix:nonFraction>%). Huada mortgages the property and land for guaranteed repayment of
the loan. The principal shall be repaid on April 25, 2024.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation><div>

</div><div>

</div><ix:continuation id="_LongTermDebtTextBlock-c0_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Interest
expense was $<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:InterestExpenseOther" scale="0" unitRef="usd">3,468</ix:nonFraction>, <span style="-sec-ix-hidden: hidden-fact-106">nil</span> and <span style="-sec-ix-hidden: hidden-fact-107">nil</span> for the years ended December 31, 2022, 2021 and 2020, respectively.</span></p></ix:continuation><div>

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

</div><ix:nonNumeric contextRef="c0" continuedAt="mhua_TaxesPayableTextBlock-c0_cont_1" escape="true" name="mhua:TaxesPayableTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>11.
Taxes Payable</b></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:nonNumeric><div>


</div><div>

</div><ix:continuation continuedAt="mhua_TaxesPayableTextBlock-c0_cont_2" id="mhua_TaxesPayableTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Taxes
payable consisted of the following:</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation><div>

</div><div>

</div><ix:continuation id="mhua_TaxesPayableTextBlock-c0_cont_2"><ix:nonNumeric contextRef="c0" escape="true" name="us-gaap:OtherLiabilitiesTableTextBlock"><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="padding-left: 0.125in; text-indent: -0.125in; text-align: center"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="font-weight: bold; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
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    2021</span></td><td style="padding-bottom: 1.5pt; font-weight: bold"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: center"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="font-weight: bold"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; width: 76%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">VAT
    payable</span></td><td style="width: 1%"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="width: 9%; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:SalesAndExciseTaxPayableCurrentAndNoncurrent" scale="0" unitRef="usd">380,926</ix:nonFraction></span></td><td style="width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="width: 1%"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="width: 9%; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c3" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:SalesAndExciseTaxPayableCurrentAndNoncurrent" scale="0" unitRef="usd">488,443</ix:nonFraction></span></td><td style="width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Income
    tax payable</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:IncomeTaxesPaidNet" scale="0" unitRef="usd">690,824</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">Other
    tax payable</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:TaxesOther" scale="0" unitRef="usd">59,526</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c4" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:TaxesOther" scale="0" unitRef="usd">72,042</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 0.125in; text-indent: -0.125in; padding-bottom: 4pt"><span style="font-family: Times New Roman, Times, Serif">Total</span></td><td style="padding-bottom: 4pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 4pt double; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 4pt double; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:TaxesPayableCurrentAndNoncurrent" scale="0" unitRef="usd">1,131,276</ix:nonFraction></span></td><td style="padding-bottom: 4pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 4pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
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  </table></ix:nonNumeric></ix:continuation><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></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-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>12.
Income Taxes</b></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></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"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Cayman
Islands</i></b></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></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"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Under
the current laws of the Cayman Islands, the Company is not subject to tax on income or capital gain. Additionally, upon payments of dividends
to the shareholders, no Cayman Islands withholding tax is imposed.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></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"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Hong
Kong</i></b></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></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"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Under
the current Hong Kong Inland Revenue Ordinance, the Company&#8217;s Hong Kong subsidiary, Kang Fu, is subject to <ix:nonFraction contextRef="c0" decimals="3" format="ixt:num-dot-decimal" name="mhua:RevenuesPercentage" scale="-2" unitRef="pure">16.5</ix:nonFraction>% income tax on
its taxable income generated from operations in Hong Kong. On December 29, 2017, Hong Kong government announced a two-tiered profit tax
rate regime. Under the two-tiered tax rate regime, the first HK$<ix:nonFraction contextRef="c255" decimals="-5" format="ixt:num-dot-decimal" name="mhua:AssessableProfits" scale="6" unitRef="hkd">2.0</ix:nonFraction> million assessable profits will be subject to an <ix:nonFraction contextRef="c255" decimals="4" format="ixt:num-dot-decimal" name="mhua:LowerTaxPercentage" scale="-2" unitRef="pure">8.25</ix:nonFraction>% lower tax
rate and the remaining taxable income will continue to be taxed at the existing <ix:nonFraction contextRef="c256" decimals="3" format="ixt:num-dot-decimal" name="mhua:RemainingTaxableIncomePercentage" scale="-2" unitRef="pure">16.5</ix:nonFraction>% tax rate. The two-tiered tax regime becomes effective
from the assessment year of 2018 and 2019, which is on or after April 1, 2018. The application of the two-tiered rates is restricted
to only one nominated enterprise among connected entities. Kang Fu is nominated by the Company as the entity to apply the two-tiered
rates among the group for the assessment years of 2022, 2021 and 2020.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation><div>

</div><div>

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

</div><!-- Field: Page; Sequence: 138; 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-<span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->26<!-- 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-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><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"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>PRC</i></b></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></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"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Provisions
for income tax are as follows:</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_IncomeTaxDisclosureTextBlock-c0_cont_8" id="_IncomeTaxDisclosureTextBlock-c0_cont_7"><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">
  <tr style="vertical-align: bottom">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: center"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="font-weight: bold; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center"><span style="font-family: Times New Roman, Times, Serif">December&#160;31,<br/>
    2022</span></td><td style="padding-bottom: 1.5pt; font-weight: bold"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="font-weight: bold; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center"><span style="font-family: Times New Roman, Times, Serif">December&#160;31,<br/>
    2021</span></td><td style="padding-bottom: 1.5pt; font-weight: bold"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="font-weight: bold; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center"><span style="font-family: Times New Roman, Times, Serif">December&#160;31,<br/>
    2020</span></td><td style="padding-bottom: 1.5pt; font-weight: bold"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: center"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="font-weight: bold"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td colspan="2" style="font-weight: bold; text-align: center"><span style="font-family: Times New Roman, Times, Serif">US$</span></td><td style="font-weight: bold"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="font-weight: bold"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td colspan="2" style="font-weight: bold; text-align: center"><span style="font-family: Times New Roman, Times, Serif">US$</span></td><td style="font-weight: bold"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="font-weight: bold"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td colspan="2" style="font-weight: bold; text-align: center"><span style="font-family: Times New Roman, Times, Serif">US$</span></td><td style="font-weight: bold"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; width: 64%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Provisions
    for current income tax</span></td><td style="width: 1%"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="width: 9%; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CurrentIncomeTaxExpenseBenefit" scale="0" unitRef="usd">4,713,543</ix:nonFraction></span></td><td style="width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="width: 1%"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="width: 9%; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c4" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CurrentIncomeTaxExpenseBenefit" scale="0" unitRef="usd">5,278,462</ix:nonFraction></span></td><td style="width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="width: 1%"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="width: 9%; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c5" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:CurrentIncomeTaxExpenseBenefit" scale="0" unitRef="usd">4,688,321</ix:nonFraction></span></td><td style="width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">Provisions
    for deferred income tax</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="-sec-ix-hidden: hidden-fact-108; font-family: Times New Roman, Times, Serif">-</span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="-sec-ix-hidden: hidden-fact-109; font-family: Times New Roman, Times, Serif">-</span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="-sec-ix-hidden: hidden-fact-110; font-family: Times New Roman, Times, Serif">-</span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; padding-bottom: 4pt"><span style="font-family: Times New Roman, Times, Serif">Total</span></td><td style="padding-bottom: 4pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 4pt double; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 4pt double; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DeferredIncomeTaxesAndTaxCredits" scale="0" unitRef="usd">4,713,543</ix:nonFraction></span></td><td style="padding-bottom: 4pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 4pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 4pt double; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 4pt double; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c4" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DeferredIncomeTaxesAndTaxCredits" scale="0" unitRef="usd">5,278,462</ix:nonFraction></span></td><td style="padding-bottom: 4pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 4pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 4pt double; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 4pt double; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c5" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DeferredIncomeTaxesAndTaxCredits" scale="0" unitRef="usd">4,688,321</ix:nonFraction></span></td><td style="padding-bottom: 4pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  </table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:nonNumeric></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"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
following is a reconciliation of the Company&#8217;s total income tax expense to the income before income taxes for the years ended December
31, 2022, 2021 and 2020, respectively:</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_IncomeTaxDisclosureTextBlock-c0_cont_10" id="_IncomeTaxDisclosureTextBlock-c0_cont_9"><ix:nonNumeric contextRef="c0" continuedAt="_ScheduleOfEffectiveIncomeTaxRateReconciliationTableTextBlock-c0_cont_1" escape="true" name="us-gaap:ScheduleOfEffectiveIncomeTaxRateReconciliationTableTextBlock"><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="padding-left: 0.125in; text-indent: -0.125in; text-align: center"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="font-weight: bold; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
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  <tr style="vertical-align: bottom">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: center"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="font-weight: bold"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td colspan="2" style="font-weight: bold; text-align: center"><span style="font-family: Times New Roman, Times, Serif">US$</span></td><td style="font-weight: bold"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="font-weight: bold"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td colspan="2" style="font-weight: bold; text-align: center"><span style="font-family: Times New Roman, Times, Serif">US$</span></td><td style="font-weight: bold"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="font-weight: bold"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td colspan="2" style="font-weight: bold; text-align: center"><span style="font-family: Times New Roman, Times, Serif">US$</span></td><td style="font-weight: bold"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></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_11" id="_IncomeTaxDisclosureTextBlock-c0_cont_10"><ix:continuation id="_ScheduleOfEffectiveIncomeTaxRateReconciliationTableTextBlock-c0_cont_1"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"> <tr style="font: 10pt Times New Roman, Times, Serif; vertical-align: top"> <td style="font: 10pt Times New Roman, Times, Serif; width: 0.25in"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">*</span></td> <td style="font: 10pt Times New Roman, Times, Serif; text-align: justify"><ix:footnote id="ix_3_footnote" xml:lang="en-US"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">According to PRC tax regulations, an additional of <ix:nonFraction contextRef="c0" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:EffectiveIncomeTaxRateReconciliationTaxCreditsOther" scale="-2" unitRef="pure">100</ix:nonFraction>% of current year R&amp;D expenses may be deducted from tax income.</span></ix:footnote></td></tr> </table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation></ix:continuation><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-<span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->27<!-- 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: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><ix:continuation continuedAt="_IncomeTaxDisclosureTextBlock-c0_cont_12" id="_IncomeTaxDisclosureTextBlock-c0_cont_11"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Under
the Enterprise Income Tax Law (&#8220;EIT Law&#8221;), Foreign Investment Enterprises (&#8220;FIEs&#8221;) and domestic companies are
subject to Enterprise Income Tax (&#8220;EIT&#8221;) at a uniform rate of <ix:nonFraction contextRef="c2" decimals="2" format="ixt:num-dot-decimal" name="mhua:EnterpriseIncomeTaxPercentage" scale="-2" unitRef="pure">25</ix:nonFraction>%.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation><div>

</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"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Huadong
was entitled High and New Technology Enterprise (&#8220;HNTE&#8221;) certificate and enjoyed preferential tax rate of <ix:nonFraction contextRef="c257" decimals="2" format="ixt:num-dot-decimal" name="mhua:PreferentialTaxPercentage" scale="-2" unitRef="pure">15</ix:nonFraction>% for a three-year
validity period from November 30, 2016 and the HNTE certificate was renewed on November 22, 2019 with a three-year validity period. Thus,
Huadong is eligible for a <ix:nonFraction contextRef="c3" decimals="2" format="ixt:num-dot-decimal" name="mhua:PreferentialTaxPercentage" scale="-2" unitRef="pure">15</ix:nonFraction>% preferential tax rate from January 1, 2016 to December 31, 2021.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></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"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
EIT Law also provides that an enterprise established under the laws of a foreign country or region but whose &#8220;de facto management
body&#8221; is located in the PRC be treated as a resident enterprise for PRC tax purposes and consequently be subject to the PRC income
tax at the rate of <ix:nonFraction contextRef="c0" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:EffectiveIncomeTaxRateReconciliationChangeInEnactedTaxRate" scale="-2" unitRef="pure">25</ix:nonFraction>% for its global income. The Implementing Rules of the EIT Law define the location of the &#8220;de facto management
body&#8221; as &#8220;the place where the exercising, in substance, of the overall management and control of the production and business
operation, personnel, accounting, properties, etc., of a non-PRC company is located.&#8221; Based on a review of surrounding facts and
circumstances, the Company does not believe that it is likely that its entities registered outside of the PRC should be considered as
resident enterprises for the PRC tax purposes.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_IncomeTaxDisclosureTextBlock-c0_cont_15" id="_IncomeTaxDisclosureTextBlock-c0_cont_14"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
EIT Law also imposes a withholding income tax on dividends distributed by a FIE to its immediate holding company outside of the PRC.
Kang Fu, which is the parent of Huada, Yada and Huadong, is therefore subject to a maximum withholding tax of <ix:nonFraction contextRef="c0" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardFairValueAssumptionsExpectedDividendRate" scale="-2" unitRef="pure">10</ix:nonFraction>% on dividends distributed
by Huada, Yada and Huadong. In accordance with accounting guidance, all undistributed earnings are presumed to be transferred to the
parent company and are subject to the withholding taxes. The presumption may be overcome if the Company has sufficient evidence to demonstrate
that the undistributed dividends will be re-invested and the remittance of the dividends will be postponed indefinitely. As of December
31, 2022, the Company has determined that the undistributed earnings in Huada, Yada and Huadong will be re-invested into the subsidiary
for the expansion of the Company&#8217;s business in mainland China and hence the remittance of the dividends will be postponed indefinitely.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation><div>

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

</div><div>

</div><ix:continuation id="_IncomeTaxDisclosureTextBlock-c0_cont_16"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company evaluates each uncertain tax position (including the potential application of interest and penalties) based on the technical
merits, and measure the unrecognized benefits associated with the tax positions. As of December 31, 2022, 2021 and 2020, the Company
did not have any significant unrecognized uncertain tax positions.</span></p></ix:continuation><div>

</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; font-size: 10pt">&#160;</span></p><div>

</div><ix:nonNumeric contextRef="c0" continuedAt="_CommitmentsAndContingenciesDisclosureTextBlock-c0_cont_1" escape="true" name="us-gaap:CommitmentsAndContingenciesDisclosureTextBlock"><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>13.
Commitments and Contingencies</b></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></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"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Operating
lease</i></b></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></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"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company has an operating lease to rent an office space in Shanghai. The lease term is <ix:nonNumeric contextRef="c2" format="ixt-sec:durmonth" name="us-gaap:LesseeOperatingLeaseTermOfContract">12</ix:nonNumeric> months, with the option to renew annually. Rent
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and 2020, respectively. The Company has renewed the same operating lease with a term from January 1, 2023 to December 31, 2023, with
all other lease contents remaining the same.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></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"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Other
commitments</i></b></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></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"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company did not have other significant commitments, long-term obligations, or guarantees as of December 31, 2022, 2021 and 2020.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></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; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Contingencies</i></b></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_CommitmentsAndContingenciesDisclosureTextBlock-c0_cont_7" id="_CommitmentsAndContingenciesDisclosureTextBlock-c0_cont_6"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company is subject to legal proceedings and regulatory actions in the ordinary course of business. The results of such proceedings cannot
be predicted with certainty, but the Company does not anticipate that the final outcome arising out of any such matter will have a material
adverse effect on our consolidated business, financial position, cash flows or results of operations taken as a whole. </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 id="_CommitmentsAndContingenciesDisclosureTextBlock-c0_cont_7"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On February 4, 2022, Macias Gini &amp; O&#8217;Connell, LLP (&#8220;Plaintiff&#8221;)
initiated a lawsuit in San Francisco Superior Court. Plaintiff, a certified public accounting firm based in the U.S., was hired by Kang
Fu International Medical Co, and subsequently by Meihua International Medical Technologies Co, Ltd. (collectively, &#8220;Meihua&#8221;),
to audit Meihua&#8217;s consolidated financial statements for the 2018 and 2019 calendar years. Plaintiff seeks damages from Meihua for
its alleged failure to pay for services rendered in the amount of $<ix:nonFraction contextRef="c258" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PaymentsForProceedsFromLoansReceivable" scale="0" unitRef="usd">210,000</ix:nonFraction>, plus interest and attorneys&#8217; fees. Although Meihua denies
plaintiff&#8217;s allegations, on August 29, 2022, Meihua provided an initial settlement offer to Plaintiff. To date, Plaintiff has not
substantively responded. The Court has set and continued multiple case management conferences based on Plaintiff&#8217;s requests for
continuances while the parties attempt to informally resolve the matter. No contingent liability has been recognized in relation to this
matter since the outcome of the litigation is highly uncertain.</p></ix:continuation><div>

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

</div><ix:nonNumeric contextRef="c0" continuedAt="_GoodwillAndIntangibleAssetsDisclosureTextBlock-c0_cont_1" escape="true" name="us-gaap:GoodwillAndIntangibleAssetsDisclosureTextBlock"><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>14.
Statutory Surplus Reserves and Restricted Net Assets</b></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></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; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Pursuant
to laws applicable to entities incorporated in the PRC, the Company is required to make appropriations to certain reserve funds, comprising
the statutory surplus reserve and the discretionary surplus reserve, based on after-tax net income determined in accordance with generally
accepted accounting principles of the PRC (&#8220;PRC GAAP&#8221;). Appropriations to the statutory surplus reserve are required to be
at least <ix:nonFraction contextRef="c0" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:EffectiveIncomeTaxRateReconciliationAtFederalStatutoryIncomeTaxRate" scale="-2" unitRef="pure">10</ix:nonFraction>% of the after-tax net income determined in accordance with PRC GAAP until the reserve is equal to <ix:nonFraction contextRef="c2" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:CapitalLeasesOfLessorContingentRentalsBasisSpreadOnVariableRate" scale="-2" unitRef="pure">50</ix:nonFraction>% of the entity&#8217;s
registered capital. Appropriations to the discretionary surplus reserve are made at the discretion of the Board of Directors. And as
of December 31, 2022 and 2021, the Company did not have a discretionary surplus reserve. As of December 31, 2022, all of the Company&#8217;s
PRC subsidiaries reserves had reached <ix:nonFraction contextRef="c2" decimals="2" format="ixt:num-dot-decimal" name="mhua:ReserveTaxProfit" scale="-2" unitRef="pure">50</ix:nonFraction>% of their registered capital threshold and, as a result, the Company stopped being required
to allocate after-tax profits to this reserve.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_GoodwillAndIntangibleAssetsDisclosureTextBlock-c0_cont_3" id="_GoodwillAndIntangibleAssetsDisclosureTextBlock-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; font-size: 10pt">As
a result of these 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 and the statutory reserves of the Company&#8217;s PRC subsidiaries. The aggregate
amounts of capital and statutory reserves restricted which represented the amount of net assets of the relevant subsidiaries in the Company
not available for distribution was $<ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NetRegulatoryAssets" scale="0" unitRef="usd">15,665,860</ix:nonFraction> and $<ix:nonFraction contextRef="c3" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:NetRegulatoryAssets" scale="0" unitRef="usd">15,178,467</ix:nonFraction> as of December 31, 2022 and 2021, respectively.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation><div>

</div><div>

</div><ix:continuation id="_GoodwillAndIntangibleAssetsDisclosureTextBlock-c0_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Under
PRC laws and regulations, statutory surplus reserves are restricted to set-off against losses, expansion of production and operation
and increasing registered capital of the respective company and are not distributable other than upon liquidation. The reserves are not
allowed to be transferred to the Company in terms of cash dividends, loans or advances, nor allowed for distribution except under liquidation.</span></p></ix:continuation><div>

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

</div><ix:nonNumeric contextRef="c0" continuedAt="_RelatedPartyTransactionsDisclosureTextBlock-c0_cont_1" escape="true" name="us-gaap:RelatedPartyTransactionsDisclosureTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>15.
Related Party Transactions and Balances</b></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:nonNumeric><div>


</div><div>

</div><ix:continuation continuedAt="_RelatedPartyTransactionsDisclosureTextBlock-c0_cont_2" id="_RelatedPartyTransactionsDisclosureTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Related
Parties:</i></b></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_RelatedPartyTransactionsDisclosureTextBlock-c0_cont_3" id="_RelatedPartyTransactionsDisclosureTextBlock-c0_cont_2"><ix:nonNumeric contextRef="c0" escape="true" name="us-gaap:ScheduleOfRelatedPartyTransactionsTableTextBlock"><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_4" id="_RelatedPartyTransactionsDisclosureTextBlock-c0_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Related
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</div><div>

</div><ix:continuation continuedAt="_RelatedPartyTransactionsDisclosureTextBlock-c0_cont_5" id="_RelatedPartyTransactionsDisclosureTextBlock-c0_cont_4"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
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</div><div>

</div><ix:continuation continuedAt="_RelatedPartyTransactionsDisclosureTextBlock-c0_cont_6" id="_RelatedPartyTransactionsDisclosureTextBlock-c0_cont_5"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Sales:</b></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation><div>

</div><div>

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

</div><ix:continuation id="_RelatedPartyTransactionsDisclosureTextBlock-c0_cont_6"><ix:nonNumeric contextRef="c0" escape="true" name="mhua:ScheduleOfRelatedPartiesSalesTableTextBlock"><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: 64%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Yangzhou Meihua Import and Export
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    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif">-</span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></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"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c269" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OtherReceivables" scale="0" unitRef="usd">176,414</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c270" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OtherReceivables" scale="0" unitRef="usd">67,101</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">Jiangsu Zhida Pharmaceutical
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    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="-sec-ix-hidden: hidden-fact-111; font-family: Times New Roman, Times, Serif">-</span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif">-</span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c272" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OtherReceivables" scale="0" unitRef="usd">8,038</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 4pt"><span style="font-family: Times New Roman, Times, Serif">Total</span></td><td style="padding-bottom: 4pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 4pt double; text-align: left"><span style="font-family: Times New Roman, Times, Serif">$</span></td><td style="border-bottom: Black 4pt double; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OtherReceivables" scale="0" unitRef="usd">29,196</ix:nonFraction></span></td><td style="padding-bottom: 4pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 4pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 4pt double; text-align: left"><span style="font-family: Times New Roman, Times, Serif">$</span></td><td style="border-bottom: Black 4pt double; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c3" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OtherReceivables" scale="0" unitRef="usd">575,901</ix:nonFraction></span></td><td style="padding-bottom: 4pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 4pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 4pt double; text-align: left"><span style="font-family: Times New Roman, Times, Serif">$</span></td><td style="border-bottom: Black 4pt double; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c26" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:OtherReceivables" scale="0" unitRef="usd">816,607</ix:nonFraction></span></td><td style="padding-bottom: 4pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  </table></ix:nonNumeric></ix:continuation><div>



</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; 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: 141; 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-<span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->29<!-- 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-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></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-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>16.
Subsequent Events</b></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:nonNumeric><div>


</div><div>

</div><ix:continuation continuedAt="_SubsequentEventsTextBlock-c0_cont_2" id="_SubsequentEventsTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The
Company has evaluated the impact of events that have occurred subsequent to December 31, 2022, through the date the consolidated financial
statements were available to be issued, and concluded that no subsequent events have occurred that would require recognition in the consolidated
financial statements or disclosure in the notes to the consolidated financial statements, except as follow:</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SubsequentEventsTextBlock-c0_cont_3" id="_SubsequentEventsTextBlock-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; font-size: 10pt"><b><i>Bank
borrowing</i></b></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SubsequentEventsTextBlock-c0_cont_4" id="_SubsequentEventsTextBlock-c0_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">As
the date these consolidated financial statements were available to be issued, the Company has new bank borrowings in the amount of $<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProceedsFromBankDebt" scale="0" unitRef="usd">2,609,755</ix:nonFraction>
(RMB <ix:nonFraction contextRef="c0" decimals="-6" format="ixt:num-dot-decimal" name="us-gaap:ProceedsFromBankDebt" scale="6" unitRef="cny">18</ix:nonFraction> million) with interest rates ranging from <ix:nonFraction contextRef="c273" decimals="4" format="ixt:num-dot-decimal" name="us-gaap:FederalHomeLoanBankAdvancesInterestRate" scale="-2" unitRef="pure">3.45</ix:nonFraction>-<ix:nonFraction contextRef="c274" decimals="4" format="ixt:num-dot-decimal" name="us-gaap:FederalHomeLoanBankAdvancesInterestRate" scale="-2" unitRef="pure">3.95</ix:nonFraction>% and has bank loan repayment of $<ix:nonFraction contextRef="c0" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:RepaymentsOfFederalHomeLoanBankBorrowings" scale="0" unitRef="usd">2,609,755</ix:nonFraction> (RMB <ix:nonFraction contextRef="c0" decimals="-6" format="ixt:num-dot-decimal" name="us-gaap:RepaymentsOfFederalHomeLoanBankBorrowings" scale="6" unitRef="cny">18</ix:nonFraction> million).</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SubsequentEventsTextBlock-c0_cont_5" id="_SubsequentEventsTextBlock-c0_cont_4"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>New
bank borrowing</i></b></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SubsequentEventsTextBlock-c0_cont_6" id="_SubsequentEventsTextBlock-c0_cont_5"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Subsequent
new bank borrowings consisted of the following:</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SubsequentEventsTextBlock-c0_cont_7" id="_SubsequentEventsTextBlock-c0_cont_6"><ix:nonNumeric contextRef="c0" escape="true" name="mhua:ScheduleOfBankBorrowingstableTextBlock"><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="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center"><span style="font-family: Times New Roman, Times, Serif">Company</span></td><td style="padding-bottom: 1.5pt; font-weight: bold"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="font-weight: bold; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center"><span style="font-family: Times New Roman, Times, Serif">Rate</span></td><td style="padding-bottom: 1.5pt; font-weight: bold"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="font-weight: bold; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center"><span style="font-family: Times New Roman, Times, Serif">Issuance
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    <td style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center"><span style="font-family: Times New Roman, Times, Serif">Collateral/Security</span></td><td style="font-weight: bold; padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; width: 29%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Jiangsu
    Yangzhou Rural Commercial Bank</span></td><td style="width: 1%"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="width: 9%; text-align: center"><ix:nonNumeric contextRef="c275" name="mhua:ShortTermBankBorrowingsCompany"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Huadong</span></ix:nonNumeric></td><td style="width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="width: 1%"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="width: 9%; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c275" decimals="4" format="ixt:num-dot-decimal" name="mhua:BankBorrowingsRate" scale="-2" unitRef="pure">3.95</ix:nonFraction></span></td><td style="width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">%</span></td><td style="width: 1%"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="width: 11%; text-align: center"><ix:nonNumeric contextRef="c275" format="ixt:date-month-day-year" name="us-gaap:DebtInstrumentIssuanceDate1"><span style="font-family: Times New Roman, Times, Serif">1/30/2023</span></ix:nonNumeric></td><td style="width: 1%"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="width: 11%; text-align: center"><ix:nonNumeric contextRef="c275" name="mhua:CollateralSecurity"><span style="font-family: Times New Roman, Times, Serif">Yada, Yongjun Liu</span></ix:nonNumeric></td><td style="width: 1%"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="width: 9%; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c275" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProceedsFromShortTermDebt" scale="0" unitRef="cny">5,000,000</ix:nonFraction></span></td><td style="width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="width: 1%"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="width: 9%; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c275" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProceedsFromShortTermDebt" scale="0" unitRef="usd">724,932</ix:nonFraction></span></td><td style="width: 1%; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left"><span style="font-family: Times New Roman, Times, Serif">Industrial
    and Commercial Bank of China</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: center"><ix:nonNumeric contextRef="c276" name="mhua:ShortTermBankBorrowingsCompany"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Yada</span></ix:nonNumeric></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c276" decimals="4" format="ixt:num-dot-decimal" name="mhua:BankBorrowingsRate" scale="-2" unitRef="pure">3.45</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">%</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: center"><ix:nonNumeric contextRef="c276" format="ixt:date-month-day-year" name="us-gaap:DebtInstrumentIssuanceDate1"><span style="font-family: Times New Roman, Times, Serif">2/17/2023</span></ix:nonNumeric></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: center"><ix:nonNumeric contextRef="c276" name="mhua:CollateralSecurity"><span style="font-family: Times New Roman, Times, Serif">Properties of Yada</span></ix:nonNumeric></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c276" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProceedsFromShortTermDebt" scale="0" unitRef="cny">9,000,000</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c276" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProceedsFromShortTermDebt" scale="0" unitRef="usd">1,304,877</ix:nonFraction></span></td><td style="text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-left: 0.125in; text-indent: -0.125in; padding-bottom: 1.5pt; vertical-align: top"><span style="font-family: Times New Roman, Times, Serif">Bank
    of Communications</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="padding-bottom: 1.5pt; text-align: center"><ix:nonNumeric contextRef="c277" name="mhua:ShortTermBankBorrowingsCompany"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Huadong</span></ix:nonNumeric></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 1.5pt; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c277" decimals="4" format="ixt:num-dot-decimal" name="mhua:BankBorrowingsRate" scale="-2" unitRef="pure">3.50</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">%</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: center; padding-bottom: 1.5pt"><ix:nonNumeric contextRef="c277" format="ixt:date-month-day-year" name="us-gaap:DebtInstrumentIssuanceDate1"><span style="font-family: Times New Roman, Times, Serif">1/19/2023</span></ix:nonNumeric></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="text-align: center; padding-bottom: 1.5pt"><ix:nonNumeric contextRef="c277" name="mhua:CollateralSecurity"><span style="font-family: Times New Roman, Times, Serif">Yongjun Liu, Yin Liu, Yada</span></ix:nonNumeric></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c277" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProceedsFromShortTermDebt" scale="0" unitRef="cny">4,000,000</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 1.5pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="border-bottom: Black 1.5pt solid; text-align: right"><span style="font-family: Times New Roman, Times, Serif"><ix:nonFraction contextRef="c277" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ProceedsFromShortTermDebt" scale="0" unitRef="usd">579,946</ix:nonFraction></span></td><td style="padding-bottom: 1.5pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 0.125in; text-indent: -0.125in; padding-bottom: 4pt"><span style="font-family: Times New Roman, Times, Serif">Total</span></td><td style="padding-bottom: 4pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="padding-bottom: 4pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 4pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 4pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
    <td style="padding-bottom: 4pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 4pt; text-align: right"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 4pt; text-align: left"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td><td style="padding-bottom: 4pt"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></td>
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</div><div>

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

</div><ix:continuation continuedAt="_SubsequentEventsTextBlock-c0_cont_8" id="_SubsequentEventsTextBlock-c0_cont_7"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Repayment</i></b></span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SubsequentEventsTextBlock-c0_cont_9" id="_SubsequentEventsTextBlock-c0_cont_8"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Subsequent
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</div><div>

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

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

</div><p style="text-align: center; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif">F-30</span></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"><span style="font-family: Times New Roman, Times, Serif">&#160;</span></div></div><!-- Field: /Rule-Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-family: Times New Roman, Times, Serif; 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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UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
20-F
(Mark
One)
☐
REGISTRATION
STATEMENT PURSUANT TO SECTION 12(b) OR 12(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:
001-41291
MEIHUA
INTERNATIONAL MEDICAL TECHNOLOGIES cO., LTD.
(Exact
Name of Registrant as Specified in Its Charter)
Not
Applicable
(Translation
of Registrant's Name Into English)
Cayman
Islands
(Jurisdiction
of Incorporation or Organization)
88
Tongda Road
,
Touqiao Town
Guangling
District
,
Yangzhou
,
225000
People's
Republic of
China
(Address
of Principal Executive Offices)
Xin
Wang
, Chief Executive Officer
88
Tongda Road
,
Touqiao Town
Guangling
District
,
Yangzhou
,
225000
People's
Republic of
China
Tel:
+
86-0514-89800199
secretary@meihuamed.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
Ordinary Share, $0.0005 par value
MHUA
Nasdaq
Global 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 or common stock as of the close of the period covered
by the annual report (December 31, 2022):
23,940,000
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 (§232.405 of this chapter) 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.
☐
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:
U.S. 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
☒
Annual
Report on Form 20-F
Year
Ended December 31, 2022
TABLE
OF CONTENTS
Page
PART I
1
ITEM
    1.
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
1
ITEM
    2.
OFFER STATISTICS AND EXPECTED TIMETABLE
1
ITEM
    3.
KEY INFORMATION
1
ITEM
    4.
INFORMATION ON THE COMPANY
28
ITEM
    4A.
UNRESOLVED STAFF COMMENTS
71
ITEM
    5.
OPERATING AND FINANCIAL REVIEW AND PROSPECTS
72
ITEM
    6.
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
84
ITEM
    7.
MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
91
ITEM
    8.
FINANCIAL INFORMATION
92
ITEM
    9.
THE OFFER AND LISTING
92
ITEM
    10.
ADDITIONAL INFORMATION
93
ITEM
    11.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
101
ITEM
    12.
DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
102
PART II
103
ITEM
    13.
DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
103
ITEM
    14.
MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
103
ITEM
    15.
CONTROLS AND PROCEDURES
103
ITEM
    16
[RESERVED]
104
ITEM
    16A.
AUDIT COMMITTEE FINANCIAL EXPERT
104
ITEM
    16B.
CODE OF ETHICS
104
ITEM
    16C.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
104
ITEM
    16D.
EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
104
ITEM
    16E.
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
105
ITEM
    16F.
CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
105
ITEM
    16G.
CORPORATE GOVERNANCE
105
ITEM
    16H.
MINE SAFETY DISCLOSURE
105
ITEM
    16I.
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
105
PART III
106
ITEM
    17.
FINANCIAL STATEMENTS
106
ITEM
    18
FINANCIAL STATEMENTS
106
ITEM
    19
EXHIBITS
106
i
INTRODUCTORY
NOTES
Use
of Certain Defined Terms
Except
as otherwise indicated by the context and for the purposes of this report only, references in this report to:
●
"China"
    or the "PRC" refers to the People's Republic of China, excluding Taiwan and the special administrative regions
    of Hong Kong and Macau for the purposes of this report only;
●
Depending
on the context, "we," "us," "our company," "our," "the Company," and "Meihua
International" refer to Meihua International Medical Technologies Co., Ltd., 美华国际医疗科技有限公司,
a Cayman Islands company, its subsidiaries, Kang Fu International Medical Co., Limited ("Kang Fu International Medical"),
Yangzhou Huada Medical Device Co., Ltd ("Yangzhou Huada"), Jiangsu Yada Technology Group Co., Ltd ("Jiangsu Yada"),
Jiangsu Huadong Medical Device Industrial Co., Ltd ("Jiangsu Huadong"), and Yangzhou Guanghui Medical Technology Co., Ltd
("Guanghui");
●
"Kang
Fu International Medical" refers to Kang Fu International Medical Co., Limited, a limited company organized under the laws of Hong
Kong and a wholly owned subsidiary of Meihua International;
●
"Yangzhou
Huada" refers to Yangzhou Huada Medical Device Co., Ltd, a limited liability company organized under the laws of China, which is
wholly owned by Kang Fu International Medical;
●
"Jiangsu
Yada" refers to Jiangsu Yada Technology Group Co., Ltd, a limited liability company organized under the laws of China, which is
wholly owned by Yangzhou Huada;
●
"Jiangsu
Huadong" refers to Jiangsu Huadong Medical Device Industrial Co., Ltd, a limited liability company organized under the laws of
China and a wholly owned subsidiary of Jiangsu Yada;
●
"Guanghui"
refers to Yangzhou Guanghui Medical Technology Co., Ltd, a limited liability company organized under the laws of China, which is wholly
owned by Jiangsu Huadong.
●
"shares,"
"Shares" or "Ordinary Shares" refer to the Ordinary Shares of Meihua International Medical Technologies Co.,
Ltd., par value $0.0005 per share;
●
"RMB"
or "Chinese Yuan" refers to the legal currency of China;
●
"U.S.
dollars," "dollars," "USD" or "$" refers to the legal currency of the United States;
●
"HKD"
refers to the official currency of Hong Kong.
●
"GMV"
refers to the total value of all orders shipped for products sold under our sales model, net of returns;
●
"medical
professionals" refer to doctors, pharmacists and medical assistants;
●
"SKU,"
refers to stock keeping unit;
●
"Websites"
refers to our websites at http://meihuamed.com and http://ir.meihuamed.com.
Cautionary
Note Regarding Forward-Looking Statements
In
addition to historical information, this report contains forward-looking statements within the meaning of Section 27A of the Securities
Act and Section 21E of the Exchange Act. We use words such as "believe," "expect," "anticipate,"
"project," "target," "plan," "optimistic," "intend," "aim," "will"
or similar expressions which are intended to identify forward-looking statements. Such statements include, among others, those concerning
market and industry segment growth and demand and acceptance of new and existing products; any projections of sales, earnings, revenue,
margins or other financial items; any statements of the plans, strategies and objectives of management for future operations; and any
statements regarding future economic conditions or performance, as well as all assumptions, expectations, predictions, intentions or
beliefs about future events. Investors are cautioned that any such forward-looking statements are not guarantees of future performance
and involve risks and uncertainties, as well as assumptions, which, if they were to ever materialize or prove incorrect, could cause
the results of the Company to differ materially from those expressed or implied by such forward-looking statements. Potential risks and
uncertainties include, among other things, the possibility that we may not be able to maintain or increase our net revenues and profits
due to our failure to anticipate consumer preferences and develop new menswear products, our failure to execute our business expansion
plan, changes in domestic and foreign laws, regulations and taxes, changes in economic conditions, uncertainties related to China's
legal system and economic, political and social events in China, a general economic downturn, a downturn in the securities markets, and
other risks and uncertainties which are generally set forth under "Item 3. Key information—D. Risk Factors" and elsewhere
in this report.
Readers
are urged to carefully review and consider the various disclosures made by us in this report and our other filings with the SEC. These
reports attempt to advise interested parties of the risks and factors that may affect our business, financial condition and results of
operations and prospects. The forward-looking statements made in this report speak only as of the date hereof and we disclaim any obligation,
except as required by law, to provide updates, revisions or amendments to any forward-looking statements to reflect changes in our expectations
or future events.
ii
PART
I
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
A. Directors and Senior Management
Not
applicable.
B. Advisors
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
A. [Reserved]
B. Capitalization and Indebtedness
Not
applicable.
C. Reasons for the Offer and Use of Proceeds
Not
applicable.
D. Risk Factors
An
investment in our capital stock involves a high degree of risk. You should carefully consider the risks described below, together with
all of the other information included in this annual report, before making an investment decision. If any of the following risks actually
occurs, our business, financial condition or results of operations could suffer. In that case, the trading price of our Ordinary Shares
could decline, and you may lose all or part of your investment.
1
Risks
Related to Our Business and Industry
In
connection with the initial public offering of our Ordinary Shares in February 2022, we entered into certain agreements with a Hong Kong
entity pursuant to which we believe we were defrauded of in excess of $10 million; because we failed to disclose such agreements at the
time of the initial public offering, regardless of the arguably fraudulent nature of such agreements, we may be subject to potential
liabilities or litigation exposure as a result of such agreements.
The
Company closed its initial public offering (the "IPO") of its ordinary shares (the "Ordinary Shares") on February
18, 2022, through which the Company raised $39.4 million through the sale of 3,940,000 Ordinary Shares at a purchase price of $10.00
per share. During the roadshow leading up to the IPO, a Hong Kong investment company named Tai He International Group Limited ("Tai
He") was referred to the Company by Shengang Securities Company Limited ("Shengang"), the Company's co-underwriter
based in the People's Republic of China ("PRC"). Tai He, through negotiations with Shengang, asserted that it would
participate in the IPO as an investor. As a development stage PRC medical device company, the Company's management had no experience
in the U.S. capital markets and relied on its investment bankers and underwriters in providing guidance and advice concerning its U.S.
public offering. Accordingly, the Company was unaware of the actual motives of Tai He. Based on the Company's trust in Shengang
and given the circumstances that the Company was unable to make further verification, the Company hastily entered into a series of agreements
with Tai He (the "Tai He Agreements").
Pursuant
to the Tai He Agreements, Tai He agreed to invest a minimum of $35 million in the IPO subject to the Company making a $7.0 million refundable
deposit (the "Refundable Deposit") and advancing a $3.0 million service fee for investor relations and other services (together,
the "Services") payable to Tai He. The Company, its affiliates and individual shareholders paid the $7.0 million Refundable
Deposit and $3.0 million service fee to Tai He in several installments from January 27, 2022 to March 11, 2022. After March 11, 2022,
the Company has made no other payments to, nor had any direct interaction with, Tai He, and, in actuality, the Company never directly
communicated with Tai He during the negotiations, only communicating about Tai He and the Tai He Agreements through Shengang.
After
the IPO, through the Company's internal risk control process, the Company learned that Tai He does not appear to be an investor
in the Company and, when the Company attempted to inquire about it, Tai He refused to speak with the Company. Based on the facts as investigated
and understood by the Company, the Company believes that it was defrauded by Tai He and that Tai He never actually invested $35 million
in the IPO. In fact, the Company learned that Tai He made no investments in the Company at all, and Tai He has no involvement in the
Company's IPO matters. In addition, the Refundable Deposit has not been repaid to the Company and no Services have been provided
to the Company by Tai He. As a result, the Company believes that the Tai He Agreements may be deemed a fraud perpetrated by Tai He and
Shengang against the Company by Tai He taking advantage of asymmetric information, including the Company's lack of knowledge and
understanding of the U.S. markets, IPO rules and processes, and the trust of the Company.
After
consultation with professionals, the Company is now aware that the Tai He Agreements were required to be disclosed to the public and
the Company believes that the agreements themselves are fraudulent and non-enforceable, and therefore the Company is disclosing the Tai
He Agreements to meet the compliance requirements of the Securities and Exchange Commission ("SEC"). Further, the Company
acknowledges that it had improperly relied on the advice, direction and counsel of Shengang when entering into the Tai He Agreements.
The Company is now proactively working to terminate the Tai He Agreements and recover the monies already paid to Tai He by the Company.
Due to the uncertainty of collection, the Company has written off approximately $4.8 million deposit and fully expensed $2.3 million service fee paid by the Company to Tai He in the year ended December
31, 2022. The Company and its executive management team intends to cooperate with the SEC, as well as any other relevant authorities,
to ensure that its investors' interests are protected while such matters are resolved. Nonetheless, the existence of the Tai He
Agreements and the Company's failure to disclose them could expose the Company potential shareholder litigation and/or SEC enforcement
or other regulatory action.
Our
operating history may not be indicative of our future growth or financial results and we may not be able to sustain our historical growth
rates.
Our
operating history may not be indicative of our future growth or financial results. There is no assurance that we will be able to grow
our revenues in future periods. Our growth rates may decline for any number of possible reasons, and some of them are beyond our control,
including decreasing customer demand, increasing competition, declining growth of the medical device industry in general, emergence of
alternative business models, or changes in government policies or general economic conditions. We will continue to expand our sales network
and product offerings to bring greater convenience to our customers and to increase our customer base and number of transactions. However,
the execution of our expansion plan is subject to uncertainty and the total number of items sold and number of transacting customers
may not grow at the rate we expect for the reasons stated above. If our growth rates decline, investors' perceptions of our business
and prospects may be adversely affected and the market price of our Ordinary Shares could decline.
2
Failure
to maintain the quality and safety of our products could have a material and adverse effect on our reputation, financial condition and
results of operations.
The
quality and safety of our products, whether self-manufactured or outsourced, are critical to our success. As a medical device manufacturer
with a history of over 30 years, and a management team with more than 40 years of industry experience, quality and safety are maintained
as our core value. Our medical devices are directly used on the human body and are essential to human health. We pay close attention
to quality control, monitoring each step in the process from procurement to production and from warehouse to delivery. Maintaining consistent
product quality depends significantly on the effectiveness of our quality control system, which in turn depends on a number of factors,
including but not limited to the design of our quality control system, employee training to ensure that our employees adhere to and implement
our quality control policies and procedures and the effectiveness of monitoring of any potential violation(s) of our quality control
policies and procedures. There can be no assurance that our quality control system will always prove to be effective.
In
addition, the quality of the products or services provided by our suppliers or business partners is subject to factors beyond our control,
including the effectiveness and the efficiency of their quality control system, among others. There can be no assurance that our suppliers
or business partners will always be able to adopt appropriate quality control systems and meet our stringent quality control requirements
in respect of the products or services they provide. Any failure of our suppliers or business partners to provide satisfactory products
or services could harm our reputation and adversely impact our operations. In addition, we may be unable to receive sufficient compensation
from suppliers and business partners for the losses caused by them.
As
of the date of this report, we are unaware of any material accidents related to the quality or safety of our products.
Any
failure to maintain effective quality control over our products and services could materially adversely affect our business.
The
quality of our services and products is critical to the success of our business, and such quality to a large extent depends on the effectiveness
of our quality control system. We have developed a rigorous quality control system that enables us to monitor each stage of the production
process.
However,
despite our quality control management system, we cannot eliminate all risks of errors, defects or failures. We may fail to detect or
cure defects as a result of a number of factors, many of which are outside our control, including:
●
technical
or mechanical malfunctions in the production process;
●
human
error or malfeasance by our quality control personnel;
●
tampering
by third parties; and
●
defective
raw materials or equipment.
Failure
to detect quality defects in our products could result in patient injury, customer dissatisfaction, or other problems that could seriously
harm our reputation and business, expose us to liability, and adversely affect our revenue and profitability.
In
2018, our PRC subsidiaries Jiangsu Yada and Jiangsu Huadong were fined an immaterial amount for noncompliance with certain local laws
and regulations, which non-compliance was cured by us in the same year.
For
the fiscal year of 2022 and as of the date of report, we are not aware of any material investigations, prosecutions, disputes, claims
or other proceedings relating to quality or quality control issues, nor has the Company received any notices of, been punished for, nor
can we foresee any punishment being made by any related government authorities of the PRC as of the date of this report.
Due
to the nature of our business, we may experience or be exposed to significant liability claims or complaints from customers, doctors,
patients or hospitals, litigation and regulatory investigations and proceedings, such as claims arising in relation to medical device
safety, or adverse publicity involving our products, which could adversely affect our financial condition and results of operations.
We
face an inherent risk of liability claims or complaints related to the use of our products by our customers, doctors, patients and hospitals.
We take those complaints and claims seriously and endeavor to reduce such complaints by implementing various remedial measures. Nevertheless,
we cannot assure you that we can successfully prevent or address all such complaints.
3
Any
complaints or claims against us, even if meritless and unsuccessful, may divert management's attention and other resources from
our business and adversely affect our business and operations. Such complaints or claims may cause customers to lose confidence in us
and our brand, which may adversely affect our business and results of operations. Furthermore, negative publicity including but not limited
to negative online reviews on social media and crowd-sourced review platforms, industry findings or media reports related to medical
device quality and safety, public health concerns, illness, injuries, whether or not accurate, and whether or not concerning our products,
can adversely affect our business, results of operations and reputation.
We
face potential liability, expenses for legal claims and exposure to other harm due to the nature of our business. For example, customers
could assert legal claims against us in connection with personal injuries or illness related to the use of medical devices we sell. The
PRC government, media outlets and public advocacy groups have been increasingly focused on customer protection in recent years. Selling
of defective products may expose us to liabilities associated with customer protection laws. We may be deemed responsible for compensating
customer losses even if personal injuries or illness are not directly caused by us. Such liability could arise through the actions of
our suppliers or business partners. Thus, we may be held liable if our suppliers or other business partners fail to comply with applicable
product quality and safety related rules and regulations. In such a situation, though we can ask the responsible parties to indemnify
us for such liability, even if we receive full indemnification our reputation could still be adversely affected.
We
may face additional exposure to claims and lawsuits. These claims could divert management time and attention away from our business and
result in significant costs to investigate and defend, regardless of the merits of the claims. In some instances, we may elect or be
forced to pay substantial damages if we are unsuccessful in our efforts to defend against these claims, which could harm our business,
financial condition and results of operations. In addition, our directors, management and employees may from time to time be subject
to litigation and regulatory investigations and proceedings or otherwise face potential liability and expense in relation to medical
device quality and safety, commercial, labor, employment, securities or other matters, which could adversely affect our reputation and
results of operations.
As
of the date of this report, we are not aware of any notices, warnings, investigations, prosecutions, disputes, claims or other proceedings
related to customer rights protection having been brought against us, nor have we been punished or fined or can we foresee any punishment
or fines to be made by any government authorities of the PRC or any other jurisdiction.
We
face the risk of fluctuations in the cost, availability and quality of our raw materials, which could adversely affect our results of
operations.
The
cost, availability and quality of our principal raw materials, such as rubber, chemical PE, polyethylene, polypropylene, nylon, non-woven
fabrics and other bulk commodities, are important to our operations. After years of development, we have established long-term cooperative
relationships with numerous raw material suppliers under a positive price negotiation and adjustment mechanism. However, if the cost
of raw materials increases due to policy changes, large market price fluctuations or any other reasons, our business and results of operations
could be adversely affected.
Lack
of availability of raw materials, whether due to shortages in supply, delays or interruptions in processing, failure of timely deliver
materials or otherwise, could interrupt our operations and adversely affect our financial results.
Defective
raw materials or raw materials with quality issues could subject us to product liability claims or legal actions, which could adversely
affect our financial conditions and results of operations.
A
significant interruption in the operations of our third-party suppliers and other business partners could potentially disrupt our operations.
We
have limited control over the operations of our third-party suppliers and other business partners and any significant interruption in
their operations may have an adverse impact on our operations. For example, a significant interruption in the operations of our supplier's
manufacturing facilities could cause delay or termination of shipment of the raw materials to us, which may cause delay or termination
of shipment of ordered products to our customers, resulting in damage to our customer relationships. If we could not solve the impact
of the interruptions of operations of our third-party suppliers, our business operations and financial results may be materially and
adversely affected.
Although
we believe that we could establish alternate sources from other suppliers for most of our raw materials, any delay in locating and establishing
relationships with other sources could result in shortages or back orders for such raw materials. There can be no assurance that such
replacement suppliers will provide the raw materials that are needed by us in the quantities that we request or at the prices that we
are willing to pay. Any shortage in quantities or increase in prices could adversely affect our financial conditions and results of operations.
4
As
the relevant land plots are of allocated land use right, we may be required to pay the land granting fees to convert such allocated land
use rights to granted land use rights.
Allocated
land use rights may only be held by Chinese state-owned enterprises, government authorities and public entities or used for certain prescribed
purposes - for example, military installations and infrastructure projects. Allocated lands may be requisitioned by the state at any
time and without compensation. An allocated land use right may be converted to a granted land use rights by the payment of land
granting fees to the land authority. Therefore, we might be required to convert the land use rights of the relevant land plots from "allocated"
to "granted" by payment of the land granting fees.
While
we utilize numerous suppliers, we do not have long term contracts with any of those suppliers and they could reduce order quantities
or terminate their sales to us at any time.
While
we utilize numerous suppliers, we do not have long term contracts with any of those suppliers. As a result, at any time, our suppliers
could reduce the quantities of products they sell to us or cease selling products to us altogether. Such reductions or terminations could
have a material adverse impact on our revenues, profits and financial condition.
Overall
tightening of the labor market, increases in labor costs or any possible labor unrest may adversely affect our business and results of
operations.
Our
business requires a substantial number of personnel. Any failure to retain and maintain stable and dedicated workforce by us may lead
to disruption to our business operations. Although we have not experienced any labor shortages to date, we have observed an overall tightening
and increasingly competitive labor market. We have experienced, and expect to continue to experience, increases in labor costs due to
increases in salary, social benefits and employee headcount. We compete with other companies in our industry and other labor-intensive
industries for labor, and we may not be able to offer competitive remuneration and benefits compared to them. If we are unable to manage
and control our labor costs, our business, financial condition and results of operations may be materially and adversely affected.
We
are dependent on our top customers. If we fail to acquire new customers or retain existing customers in a cost-effective manner, our
business, financial condition and results of operations may be materially and adversely affected.
Maintaining
existing customers and developing new customers are always essential to our success. Although we are not heavily dependent on one or
two customers, we are still dependent on our top customers. For the years ended December 31, 2022, 2021 and 2020, our top five customers
contributed approximately 56.53%, 56.96%, and 53.47%, respectively, to our revenue.
Our
ability to cost-effectively attract new customers and retain existing customers, especially our top customers, is crucial to driving
net revenues growth and achieving profitability. We have invested significantly in branding, sales and marketing to acquire and retain
customers since our inception. For example, we attend domestic and international expos and exhibitions in marketing our products and
attracting new customers. We also expect to continue to invest significantly to acquire new customers and retain existing ones, especially
our top customers. There can be no assurance that new customers will stay with us, or the net revenues from new customers we acquire
will ultimately exceed the cost of acquiring those customers. In addition, if our existing customers, especially our existing top customers
no longer find our products appealing, or if our competitors offer more attractive products, prices, discounts or better customer services,
our existing customers may lose interest in us, decrease their orders or even stop ordering from us. If we are unable to retain our existing
customers, especially our top customers or to acquire new customers in a cost-effective manner, our revenues may decrease and our results
of operations will be adversely affected.
If
we are unable to build and maintain sufficient sales and distribution network to meet increasing demand of our products, our ability
to execute on our business plan as outlined in this report will be impaired.
We
sell our products through our direct sales force and distribution channel. As of the date of this report, we have 81 employees in our
sales department and 5,000 independent sales agents, 3,004 distributors for domestic sales and 324 exporting distributors for overseas
sales. Each of the aforementioned 324 exporting distributors may sell medical devices to at least three overseas customers. We have also
established a cooperative network with more than 525 hospitals through our direct sales network. For the years ended December 31, 2022,
2021, and 2020, our direct sales force contributed 9.16%, 9.13%, and 10.59% a, respectively, to our revenues, and distributors contributed
90.84%, 90.87%, and 89.41%, respectively, to our revenues.
5
Although
our sales and distribution satisfy our existing business needs, they might be insufficient to meet demand for our products as we continue
to grow our business, which could result in harm to our sales and business operations, financial condition and results of operations.
To mitigate such risk, we intent to invest our internally generated cash from operations and capital to be raised to add additional teams
to our direct sales force, expand our geographic reach with new distribution channels into other provinces within China and overseas.
If our planned efforts to expand our direct sales force and distribution channels are not effective, our ability to execute on our business
plan and to realize continued growth with be impaired.
If
we fail to provide a one-stop solution to our customers, we may lose customers, which would cause our financial conditions and results
of operations to be adversely affected.
We
sell our own brand of products and the products of other brands. For the fiscal year ended December 31, 2022, 2021, and 2020, we recognized
total revenues of $103,346,341, $104,037,710, and $89,061,010, respectively, of which our own brand sales accounted for 48.88%, 46.19%,
and 49.94%, respectively, and the resales of sourced disposable medical devices from other manufacturers accounted for 51.12%, 53.81%,
and 50.06%, respectively.
When
we receive an order containing products out of our product portfolio, we may procure such products per the specific order requirements
from other manufacturers and provide our customers with a one-stop shopping experience. Lack of availability of these products from other
manufacturers, whether due to shortages in supply, delays or interruptions in processing, failure of timely delivery or otherwise, could
interrupt our operations and adversely affect our financial results.
Our
industry is intensely competitive. We may face competition from, and we may be unable to compete successfully against, new entrants and
established companies with greater resources.
The
medical device industry is intensely competitive and includes thousands of companies both domestically and internationally. As more medical
device companies seek to outsource more of the design, prototyping and manufacturing of their products, we will face increasing competitive
pressures to grow our business in order to maintain our competitive position and we may encounter competition from, and lose customers
to, other companies with design, technological and manufacturing capabilities similar to ours. Some of our potential competitors may
have greater name recognition, greater operating revenues, larger customer bases, longer customer relationships and greater financial,
technical, personnel and marketing resources than we have. If we are unsuccessful competing with our competitors for our existing and
prospective customers' business, our financial conditions and results of operation may be adversely affected.
Furthermore,
increased competition may reduce our market share and profitability and require us to increase our sales and marketing efforts and capital
commitment in the future, which could negatively affect our results of operations or force us to incur further losses. Although we continually
aim to grow our customer base, there is no assurance that we will be able to continue to do so in the future against current or future
competitors, and such competitive pressures may have a material adverse effect on our business, financial condition and results of operations.
The
continuing development of our products depends upon our maintaining strong working relationships with our customers, distributors and
independent sales agents.
The
research, development, marketing and sales of our current products and potential new and improved products or future product indications
for which we receive regulatory clearance or approval depend upon our maintaining working relationships with our customers, distributors
and independent sales agents. See "
Our Research and Development
" below. We rely on those professionals to provide
us with considerable knowledge and experience regarding the research, development, marketing and sales of our products. Distributors
and independent sales agents assist us in marketing and sales, as well as collecting customers' feedbacks and advice related to
our products. Researchers at hospital and medical institution customers keep us informed of their latest requirements and R&D results.
If we cannot maintain our strong working relationships with these professionals and continue to receive their advice and input, the development,
improvement and marketing of our products could suffer, which could have a material adverse effect on our business, financial condition
and results of operations.
Technological
change may adversely affect sales of our products and may cause our products to become obsolete.
The
medical device market is characterized by extensive research and development and rapid technological change. Technological progress or
new developments in our industry could adversely affect sales of our products. Our products could be rendered obsolete because of future
innovations by our competitors or others, which would have a material adverse effect on our business, financial condition and results
of operations.
Consolidation
in the medical device industry could have an adverse effect on our revenue and results of operations.
Many
medical device companies are consolidating to create new companies with greater market power. As the medical device industry consolidates,
competition to provide goods and services to industry participants will become more intense. These industry participants may try to use
their market power to negotiate price concessions or reductions for our products. If we reduce our prices because of consolidation in
the healthcare industry, our revenue would decrease, which could have a material adverse effect on our business, financial condition
and results of operations.
6
If
we fail to identify, acquire and develop other products, we may be unable to grow our business.
As
a significant part of our growth strategy, we intend to develop and commercialize additional products through our research and development
program or by acquiring additional technologies and patents from third parties. The success of this strategy depends upon our ability
to identify, select and acquire the technologies and patents on terms that are acceptable to us.
Any
patents and technology we identify or acquire may require additional development efforts prior to commercial manufacturing and sale,
including approval or clearance by the applicable regulatory authorities. All products are prone to the risks of failure inherent in
medical device product development, including the possibility that the product will not be shown to be sufficiently safe and effective
for approval or clearance by regulatory authorities. In addition, we cannot assure you that any such products that are approved or cleared
will be manufactured or produced economically, successfully commercialized or widely accepted in the marketplace.
If
we are unable to develop suitable potential products through internal research programs or by obtaining patents or technologies from
third parties, it could have a material adverse effect on our business, financial condition and results of operations.
If
we are not able to implement our strategies to achieve our business objectives, our business operations and financial performance will
be adversely affected.
Our
business plan and growth strategy are based on currently prevailing circumstances and the assumption that certain circumstances will
or will not occur, as well as the inherent risks and uncertainties involved in various stages of development. However, there is no assurance
that we will be successful in implementing our strategies or that our strategies, even if implemented, will lead to the successful achievement
of our objectives. If we are not able to successfully implement our strategies, our business operations and financial performance will
be adversely affected.
We
are dependent upon certain key executives and highly qualified managers and we cannot assure their retention.
Our
success depends, in part, upon the continued services of key members of our management team. Our executives' and managers'
knowledge of the market, our business and our company represents a key strength of our business, which cannot be easily replicated. The
success of our business strategy and our future growth also depends on our ability to attract, train, retain and motivate skilled managerial,
sales, administration, development and operating personnel.
Although
we have developed a mature production system, a stable and reliable sales network and marketing team, a complete after-sales service
system, and a research and development process and team that keeps us abreast of market needs, and also developed complete management
systems, including personnel management and welfare systems, raw material procurement and supply systems, warehousing systems, safe production
and manufacturing procedures and systems, capital utilization management systems, sales and after-sales service systems, quality assessment,
review and inspection systems, labor safety security system, accountability system for violations of laws and disciplines, and a comprehensive
information feedback system, which ensure the normal business development of the company, if we loss any of our key personnel, there
can be no assurance that our existing personnel will be adequate or qualified to carry out our strategy, or that we will be able to hire
or retain experienced, qualified employees to carry out our strategy. The loss of one or more of our key management or operating personnel,
or the failure to attract and retain additional key personnel, could have a material adverse effect on our business, financial condition
and results of operations.
If
we fail to adopt new technologies to evolving customer needs or emerging industry standards, our business may be materially and adversely
affected.
To
remain competitive, we must continue to stay abreast of the constantly evolving industry trends and enhance and improve our technology
accordingly. Our success will depend, in part, on our ability to identify, develop or acquire leading technologies useful in our business.
There can be no assurance that we will be able to use new technologies effectively or meet customer's requirements. If we are unable
to adapt in a cost-effective and timely manner in response to changing market conditions or customer preferences, whether for technical,
legal, financial or other reasons, our business may be materially and adversely affected.
7
Changes
to our payment terms with both customers and suppliers may materially adversely affect our operating cash flows.
We
may experience significant pressure from our suppliers to reduce the number of days our accounts payable remain outstanding. At the same
time, we may experience pressure from our customers to extend the number of days before paying our accounts receivable. Any failure to
manage our accounts payable and accounts receivable may have a material adverse effect on our business, financial condition and results
of operations.
If
we are unable to collect account receivables from our customers, our results of operations and cash flows could be adversely affected.
Our
business depends on our ability to successfully obtain payment from customers of the amounts they owe us for products sold. As of December
31, 2022 and 2021, our accounts receivable balance amounted to $68,945,792 and $67,101,297, respectively. This growth in receivables
reflects, in part, our growth in sales. If we are unable to timely collect our accounts receivable on a timely and consistent basis,
however, our cash flows and access to operating capital could be adversely affected.
If
we fail to manage our inventory effectively, our operations and financial condition may be materially and adversely affected.
If
we fail to manage our inventory effectively, we may be subject to a heightened risk of inventory obsolescence, a decline in inventory
value, and significant inventory write-downs or write-offs. As of December 31, 2022 and 2021, our inventory balance amounted to $1,122,038
and $1,251,393, respectively.
Economic
recessions could have a significant, adverse impact on our business.
Our
revenues are generated from sales of medical devices both domestically and internationally and we anticipate that revenues from such
sales will continue to represent a substantial portion of our total revenues in the near future. Our sales and earnings can also be affected
by changes in the general economy.
The
medical device industry historically has experienced cyclical fluctuations in financial results due to economic recession, downturns
in business cycles of our customers, interest rate fluctuations, and other economic factors beyond our control. Deterioration in the
economic environment subjects our business to various risks, which may have a material and adverse impact on our operating results and
cause us to not reach our long-term growth goals. For example, a downturn in the economy could directly affect the discretionary spending
power of our customers and in turn, depress the number of orders for our products.
We
may be subject to intellectual property infringement claims, which may be expensive to defend and may disrupt our business and operations.
We
cannot be certain that our operations or any aspects of our business do not or will not infringe upon or otherwise violate intellectual
property rights held by third parties. For instance, our subsidiary, Jiangsu Huadong was historically a third defendant in an intellectual
property infringement case, under which certain products purchased by Jiangsu Huadong involved patent infringement. As of the date of
this report, such case has been settled and Jiangsu Huadong has permanently stopped purchasing and selling the infringing products and
destroyed the products in stock as requested by court's decision. In the future, however, we may be subject to other legal proceedings
and claims relating to the intellectual property rights of others. Such future proceedings could also involve existing intellectual property
of which we are not aware and on which our products may inadvertently infringe. We cannot assure you that holders of intellectual property
purportedly relating to some aspect of our technology or business, if any such holders exist, would not bring such intellectual property
claims or enforcement actions against us in China or any other jurisdiction. If we are found to have violated the intellectual property
rights of others, we may be subject to liability for our infringement activities or may be prohibited from using such intellectual property
going forward, and, in addition, we may incur licensing fees or be forced to develop alternatives of our own. In addition, we may incur
significant expenses, and may be forced to divert management's time and other resources from our business and operations to defend
against these infringement claims, regardless of their merits. Successful infringement or licensing claims made against us may result
in significant monetary liabilities and may materially disrupt our business and operations by restricting or prohibiting our use of the
intellectual property in question, and our business, financial position and results of operations could be materially and adversely affected.
Further,
the application and interpretation of China's patent laws and the procedures and standards for granting patents in China are still
evolving and uncertain, and we cannot assure you that PRC courts or regulatory authorities would agree with our analysis or interpretation
concerning their implementation.
8
We
may not be able to prevent others from the unauthorized use of our intellectual property, which could materially harm our business and
competitive position.
We
rely on a combination of trademark, fair trade practice, patent, copyright and trade secret protection laws in China, as well as confidentiality
procedures and contractual provisions, to protect our intellectual property rights. We enter into confidentiality agreements with our
employees that include terms identifying all employee-developed intellectual property as service inventions belonging to the Company.
In addition, we are carful to remain current in our annual patent fee payments. We regard our trademark, patents, know-how, proprietary
technologies, and similar intellectual property as critical to our success. We may become an attractive target to intellectual property
attacks in the future with the increasing recognition of our brand. Any of our intellectual property rights could be challenged, invalidated,
circumvented or misappropriated, or such intellectual property may not be sufficient to provide us with competitive advantages. In addition,
there can be no assurance that (i) all of our intellectual property rights will be adequately protected, or (ii) our intellectual
property rights will not be challenged by third parties or found by a judicial authority to be invalid or unenforceable. Intellectual
property protection may not be sufficient in China. Confidentiality agreements may be breached by counterparties, and there may not be
adequate remedies available to us for any such breach. Accordingly, we may not be able to effectively protect our intellectual property
rights or to enforce our contractual rights in China. In addition, policing any unauthorized use of our intellectual property is difficult,
time-consuming and costly and the steps we have taken may be inadequate to prevent the misappropriation of our intellectual property.
In the event that we must resort to litigation to enforce our intellectual property rights, such litigation could result in substantial
costs and a diversion of our managerial and financial resources. We can provide no assurance that we will prevail in such litigation.
In addition, our trade secrets may be leaked or otherwise become available to, or be independently discovered by, our competitors. Any
failure in protecting or enforcing our intellectual property rights could have a material adverse effect on our business, financial condition
and results of operations.
Changes
in U.S. and international trade policies, particularly with regard to China, may adversely impact our business and operating results.
The
U.S. government has recently made statements and taken certain actions that may lead to potential changes to U.S. and international trade
policies, including imposing tariffs affecting certain products manufactured in China. It is unknown whether and to what extent new tariffs
(or other new laws or regulations) will be adopted, or the effect that any such actions would have on us or our industry and customers.
Although cross-border business currently contributes a small portion of our business, as we continue to sell our products internationally
in the future, any unfavorable government policies on international trade, such as capital controls or tariffs, may affect the demand
for our products and services, impact the competitive position of our products or prevent us from being able to sell products in certain
countries. If any new tariffs, legislation and/or regulations are implemented, or if existing trade agreements are renegotiated or, in
particular, if the U.S. government takes retaliatory trade actions due to the recent U.S.-China trade tension, such changes could have
an adverse effect on our business, financial condition, results of operations.
We
have no business liability or disruption insurance, which could expose us to significant costs and business disruption.
The
insurance industry in China is still at an early stage of development, and insurance companies in China currently offer limited business-related
insurance products. We do not have any business liability or disruption insurance to cover our operations. We have determined that the
costs of insuring for these risks and the difficulties associated with acquiring such insurance on commercially reasonable terms make
it impractical for us to have such insurance. Any uninsured risks may result in substantial costs and the diversion of resources, which
could adversely affect our results of operations and financial condition.
We
may incur liabilities that are not covered by insurance.
While
we seek to maintain appropriate levels of insurance, not all claims are insurable and we may experience major incidents of a nature that
are not covered by insurance. We maintain accident insurance for some of our high risk employees, such as electricians. We also provide
social security insurance including pension, medical insurance, unemployment insurance, maternity insurance, on-the-job injury insurance
and housing fund plans through a PRC government-mandated benefit contribution plan for our employees. We do not carry any key-man life
insurance, product liability and professional liability insurance. Even if we were to purchase these kinds of insurance, the insurance
may not fully protect us from the financial impact of defending against product liability or professional liability claims. We have not
purchased any property insurance or business interruption insurance. We have determined that the costs of insuring for related risks
and the difficulties associated with acquiring such insurance on commercially reasonable terms make it impractical. We consider our insurance
coverage to be sufficient for our business operations in China. We maintain an amount of insurance protection that we believe is adequate,
but there can be no assurance that such insurance will continue to be available on acceptable terms or that our insurance coverage will
be sufficient or effective under all circumstances and against all liabilities to which we may be subject. If we were to incur substantial
losses or liabilities due to fire, explosions, floods, other natural disasters or accidents or business interruption, our results of
operations could be materially and adversely affected. We could, for example, be subject to substantial claims for damages upon the occurrence
of several events within one calendar year. In addition, our insurance costs may increase over time in response to any negative development
in our claims history or due to material price increases in the insurance market in general.
9
Pandemics
and epidemics, natural disasters, terrorist activities, political unrest, and other outbreaks could disrupt our delivery and operations,
which could materially and adversely affect our business, financial condition, and results of operations.
Global
pandemics, epidemics in China or elsewhere in the world, or fear of spread of contagious diseases, such as Ebola virus disease (EVD),
coronavirus disease 2019 (COVID-19), Middle East respiratory syndrome (MERS), severe acute respiratory syndrome (SARS), H1N1 flu, H7N9
flu, and avian flu, as well as hurricanes, earthquakes, tsunamis, or other natural disasters could disrupt our business operations, reduce
or restrict our supply of products and services, incur significant costs to protect our employees and facilities, or result in regional
or global economic distress, which may materially and adversely affect our business, financial condition, and results of operations.
Actual or threatened war, terrorist activities, political unrest, civil strife, and other geopolitical uncertainty could have a similar
adverse effect on our business, financial condition, and results of operations. Any one or more of these events may impede our production
and delivery efforts and adversely affect our sales results, or even for a prolonged period of time, which could materially and adversely
affect our business, financial condition, and results of operations.
We
are also vulnerable to natural disasters and other calamities. We cannot assure you that we are adequately protected from the effects
of fire, floods, typhoons, earthquakes, power loss, telecommunications failures, break-ins, war, riots, terrorist attacks, or similar
events. Any of the foregoing events may give rise to interruptions, damage to our property, delays in production, breakdowns, system
failures, technology platform failures, or internet failures, which could cause the loss or corruption of data or malfunctions of our
manufacturing facility as well as adversely affect our business, financial condition, and results of operations.
Our
international sales are subject to a variety of risks that could adversely affect our profitability and operating results.
We
sell disposable medical devices internationally. For the fiscal years ended December 31, 2022, 2021, and 2020, our international sales
accounted for 0.48%, 14.22%, and 18.10%, respectively, of our revenues. Although we take measures to minimize risks inherent to our international
sales, the following risks may have a negative effect on our profitability and operating results, impair the performance of our foreign
sales or otherwise disrupt our business:
●
fluctuations
in the value of currencies could cause exchange rates to change and impact our profitability;
●
greater
difficulty in collecting accounts receivable and longer payment cycles, which can be more common in our international sales, could adversely
impact our operating results over a particular fiscal period; and
●
changes
in foreign regulations, export duties, taxation and limitations on imports or exports could increase our operational costs, impose fines
or restrictions on our ability to carry on our business or expand our international sales.
We
are subject to a variety of environmental laws that could be costly for us to comply with, and we could incur liability if we fail to
comply with such laws or if we are responsible for releases of contaminants to the environment.
Our
operating subsidiaries are all located in PRC. The manufacturing of our products will generate wastewater, exhaust gas, solid waste and
equipment noise. Chinese laws impose various environmental controls on the management, handling, generation, manufacturing, transportation,
storage, use and disposal of wastewater, exhaust gas, solid waste, equipment noise and other materials used or generated in the manufacturing
of our products. If we fail to comply with any present or future environmental laws, we could be subject to fines, corrective action,
other liabilities or the suspension of production.
10
We
pay great attention to environmental protection and governance and have formulated a systematic environmental protection management system
in the treatment of our wastewater, exhaust gas, solid waste and equipment noise in accordance with national requirements. However, changes
in environmental laws may result in costly compliance requirements or otherwise subject us to future liabilities. To the extent these
changes affect our customers and require changes to their demand in medical devices, our customers may have a reduced need for our products,
and, as a result, our revenue could adversely affect.
In
addition, with the implementation of the fund-raising investment project, our pollutant emissions will increase, resulting in the increase
of the environmental protection spending and the difficulty of environmental protection management, which could have an adverse effect
on our financial conditions and results of operations.
As
of the date of this report, the Company is not aware of any investigations, prosecutions, disputes, claims or other proceedings in respect
of environmental protection, nor has the Company been punished or can foresee any punishment to be made by any environmental administration
authorities of the PRC.
Failure
to keep up with the changes in domestic industry policies or standards could have a material and adverse effect on our reputation, financial
condition and results of operations.
As
a medical device manufacturer, the products we manufacture and sell are closely related to human health, which is subject to strict supervision
by relevant Chinese authorities. The related national government authorities have issued a series of regulatory guidelines and industry
policies to ensure the healthy development of the industry. In recent years, as China further deepens the reform of its medical and health
system, relevant government departments have successively implemented a series of regulations and policies regarding industry standards,
bidding, price formation mechanisms, circulation systems and other related fields, which have brought wide and profound impact on the
livelihood and development of pharmaceutical companies.
In
April 2016, the General Office of the State Council issued the Notice on Key Tasks for Deepening the Reform of the Pharmaceutical and
Healthcare System in 2016, proposing to actively encourage the implementation of the "two-invoice system" in pilot cities
for comprehensive reform of public hospitals. In December 2016, the Medical Reform Office of the State Council promulgated the Opinions
on the Implementation of the "Two-Invoice System" in Drug Procurement by Public Medical Institutions (for Trial Implementation),
which means that the "Two Invoice System" has been officially launched and will be further promoted nationwide. Under the
"two-invoice system," invoices are issued once when pharmaceutical products are sold from manufacturers to wholesalers; and
then, invoices are issued again when wholesalers resell the products to hospitals. The aim is to shorten circulation links and reduce
hospital procurement costs. Under the "two-invoice system," consumable products manufacturers with advantages of brand and
economies of scale could increase their coverage of terminals. At the same time, the "two-invoice system" also presents consumable
products manufacturers with higher requirements for the construction and optimization of marketing channels. Manufacturers will need
to grow their marketing teams, expand sales networks and improve refined service capabilities.
The
deepening of the reform of the domestic pharmaceutical industry and the strengthening of supervision may affect our operations and profitability
in the domestic market. If we fail to adapt to the profound changes in industry policies in a timely manner, it could materially and
adversely affect our business, financial condition and results of operations.
We
depend on our professional technology research and development talents and we cannot assure their retention.
Our
success partly depends upon the retention of our professional technology research and development talents ("R&D
Talents"). As a high-tech enterprise in the medical device industry, we have a professional R&D Talents team comprised of
30 employees as of the date of this report, who have expertise in polymer materials, medicine, molds, and mechanical automation and
possess high-level professional technology expertise and profound industry experience. Among those R&D Talents, seven have a
bachelor's degree and the other 23 have received an associate degree.  There can be no assurance that our existing
R&D Talents will be adequate or qualified to carry out our strategy, or that we will be able to hire or retain new R&D
Talents to carry out our strategy. The loss of one or more of our R&D Talents, or the failure to attract and retain additional
R&D Talents, could have a material adverse effect on our business, financial condition and results of operations.
In
addition, if we fail to establish a competitive incentive mechanism in terms of career prospects, salary, benefits and working environment,
we may face the risk of instability in the scientific research team, which could adversely affect our long-term development.
11
Loss
of certain procurement bids could have a material and adverse effect on our reputation, financial conditions and results of operations.
According
to the Notice of the Ministry of Health on Further Strengthening the Management of Centralized Procurement of Medical Devices (Wei Gui
Cai Fa [2007] No. 208), centralized procurement of medical equipment within the large medical equipment management list is required.
For other medical equipment and consumables, the provincial health administrative department shall study and formulate a centralized
procurement catalog at the provincial and prefecture level based on actual conditions. In recent years, China has actively promoted a
provincial-level bidding platform for medical devices with reference to the drug procurement bidding platform. At present, some provinces
and cities have conducted a unified bid for some types of medical devices. According to the Notice of the Office of the National Healthcare
Security Administration on Centralized Pharmaceutical Purchasing and Price Management in 2023 (Yi Bao Ban Han [2023] No. 13) and the
Notice on Key Tasks for Deepening the Reform of the Pharmaceutical and Healthcare System in 2022 (Guo Ban Fa [2022] No. 14)，it
is a strategy to continually promote the volume-based centralized procurement for medical devices in a long-term period.
Under
the centralized procurement model, the price information becomes more transparent and open, which will put greater downward pressure
on the winning bid price of the product. If we lose a bid to our competitors due to the disadvantage of product price or other reason,
we will lose some hospital customers. If the local procurement platform does not solicit a supplementary bid for a long time or reopen
the bid, it could have a material and adverse effect on our reputation, financial conditions and results of operations.
If
our employees or customers are involved in improper medical device sales transactions, it could adversely affect our reputation, financial
conditions and results of operations.
We
have established and improved our internal control system against unfair business practices, to prevent, minimize and eliminate employees
and customers improper behaviors in the medical device sales transactions, including unauthorized rebates. There can be no assurance
that our existing internal control system will be adequate to prevent, minimize and eliminate such improper transactions, that we will
be able to effectively implement our internal control polices, or that we will be able to perfect our internal control system to eliminate
such improper transactions. If any individual employees or downstream customers have improper business practices in the purchase and
sale of medical devices, we may be identified by the relevant regulatory authorities as a violator of relevant laws and regulations and
thus included in the blacklist of commercial records, which could adversely affect our reputation, financial conditions and results of
operations.
If
we fail to timely renew our medical device licenses or registration certificates, it could adversely affect our reputation, financial
conditions and results of operations.
As
a medical device manufacturer with all of our operating subsidiaries located in PRC, all of our manufacturing and sales activities must
comply with relevant Chinese laws and regulations. Pursuant to the Measures for the Administration of Registration of Medical Devices
promulgated on June 27, 2014and effective on October 1, 2014, as amended from time to time and currently amended as Measures for the
Administration of Registration and Recordation of Medical Devices effective on October 1, 2021, Class I medical devices are subject to
recordation administration with Class II and Class III medical devices subject to registration administration. We are in the business
of manufacturing and sales of Class I, II and III medical devices. If we fail to timely record or register our medical devices, our financial
conditions and results of operations will be adversely affected.
As
of the date of this report, we are current in the recording and/or registration of all of our medical devices.
Risks
Related to Our Corporate Structure
Our
directors and officers currently own an aggregate of 66.56% of the total voting power of our outstanding Ordinary Shares.
Currently,
our directors and officers collectively own an aggregate of 66.56% of the total voting power of our outstanding Ordinary Shares. These
beneficial owners could have significant influence on determining the outcome of any corporate transaction or other matter submitted
to the shareholders for approval, including mergers, consolidations, the election of directors and other significant corporate actions.
In cases where their interests are aligned and they vote together, these beneficial owners will also have the power to prevent or cause
a change in control. Without the consent of some or all of these shareholders, we may be prevented from entering into transactions
that could be beneficial to us or our minority shareholders. The interests of these beneficial owners may differ from the interests
of our other shareholders. The concentration in the ownership of our Ordinary Shares may cause a material decline in the value of our
Ordinary Shares.
12
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.
We
are an exempted company incorporated under the laws of the Cayman Islands. Our corporate affairs are governed by our amended and restated
memorandum and articles of association, the Companies Act (2020 Revision) of the Cayman Islands (the "Companies Act") 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 duties 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 duties 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 has a different 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. There is no statutory recognition in the Cayman
Islands of judgments obtained in the United States, although the courts of the Cayman Islands will in certain circumstances recognize
and enforce a non-penal judgment of a foreign court of competent jurisdiction without retrial on the merits.
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 of association 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. To the extent we choose to follow home country practice with respect to
corporate governance matters, our shareholders may be afforded less protection than they otherwise would under rules and regulations
applicable to U.S. domestic issuers.
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.
You
may be unable to present proposals before annual general meetings or extraordinary general meetings not called by shareholders.
Cayman
Islands law provides shareholders with only limited rights to convene a general meeting and does not provide shareholders with any right
to put any proposal before a general meeting. However, these rights may be provided in a company's articles of association. Our
articles of association allow our shareholders holding shares representing in aggregate not less than ten percent of our voting share
capital in issue, to convene a general meeting of our shareholders, in which case our directors are obliged to call such meeting. Advance
notice of at least seven days is required for the convening of our general meetings. A quorum required for a meeting of shareholders
consists of at least one shareholder present or by proxy, representing a majority of the paid up voting share capital in the Company.
Recently
introduced economic substance legislation of the Cayman Islands may impact the Company or its operations
The
Cayman Islands, together with several other non-European Union jurisdictions, have recently 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. Effective January 1, 2019, the International Tax Co-operation (Economic Substance) Act, 2018 (the "Substance
Law") and issued Regulations and Guidance Notes came into force in the Cayman Islands introducing certain economic substance requirements
for "relevant 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 fiscal years commencing July 1, 2019, onwards. A "relevant entity"
includes an exempted company incorporated in the Cayman Islands; however, it does not include an entity that is tax resident outside
the Cayman Islands. Accordingly, for so long as the Company is a tax resident outside the Cayman Islands, it is not required to satisfy
the economic substance test under the Substance Law. Although it is presently anticipated that the Substance Law will have little material
impact on the Company or its operations, as the legislation is new and remains subject to further clarification and interpretation it
is not currently possible to ascertain the precise impact of these legislative changes on the Company.
13
Certain
judgments obtained against us by our shareholders may not be enforceable.
We
are a Cayman Islands company and substantially all of our assets are located outside of the United States. Substantially all of our current
operations are conducted in the PRC. In addition, our current officers are nationals and residents of countries other than the United
States. Substantially all of the assets of these persons are 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 the PRC may render you unable to enforce a judgment against our assets or the assets of our directors
and officers.
Risks
Related to Doing Business in China
Because
all of our operations are in China, our business is subject to the complex and rapidly evolving laws and regulations there. The Chinese
government may exercise significant oversight and discretion over the conduct of our business and may intervene in or influence our operations
at any time, which could result in a material change in our operations and/or the value of our Ordinary Shares.
As
a business operating in China, we are subject to the laws and regulations of the PRC, which can be complex and evolve rapidly. The PRC
government has the power to exercise significant oversight and discretion over the conduct of our business, and the regulations to which
we are subject may change rapidly and with little notice to us or our shareholders. As a result, the application, interpretation, and
enforcement of new and existing laws and regulations in the PRC are often uncertain. In addition, these laws and regulations may be interpreted
and applied inconsistently by different agencies or authorities, and inconsistently with our current policies and practices. New laws,
regulations, and other government directives in the PRC may also be costly to comply with, and such compliance or any associated inquiries
or investigations or any other government actions may:
●
Delay
or impede our development,
●
Result
in negative publicity or increase our operating costs,
●
Require
significant management time and attention, and
●
Subject
us to remedies, administrative penalties and even criminal liabilities that may harm our business, including fines assessed for our current
or historical operations, or demands or orders that we modify or even cease our business practices.
The
promulgation of new laws or regulations, or the new interpretation of existing laws and regulations, in each case that restrict or otherwise
unfavorably impact the ability or manner in which we conduct our business and could require us to change certain aspects of our business
to ensure compliance, which could decrease demand for our products, reduce revenues, increase costs, require us to obtain more licenses,
permits, approvals or certificates, or subject us to additional liabilities. To the extent any new or more stringent measures are required
to be implemented, our business, financial condition and results of operations could be adversely affected as well as materially decrease
the value of our Ordinary Shares.
If
the Chinese government chooses to exert more oversight and control over offerings that are conducted overseas and/or foreign investment
in China-based issuers, such action could significantly limit or completely hinder our ability to offer or continue to offer securities
to investors outside of China and, as a result, cause the value of such securities to significantly decline or be worthless.
Recent
statements by the Chinese government have indicated an intent to exert more oversight and control over offerings that are conducted outside
of China and/or foreign investments in China based issuers. The PRC has recently promulgated new rules that require companies collecting
or holding large amounts of data to undergo a cybersecurity review prior to listing in foreign countries, a move that will significantly
tighten oversight over China-based internet giants. The Measures for Cybersecurity Review (2021 version) was promulgated on December
28, 2021 and became effective on February 15, 2022. These measures specify that any "online platform operators" controlling
the personal information of more than one million users which seek to list on a foreign stock exchange are subject to prior cybersecurity
review.
As
our business belongs to the medical instrument industry in China, and our business does not involve the collection of user data or involve
any other type of restricted industry, our business is generally outside the scope of the Measures for Cybersecurity Review. Based on
the advice of counsel and our understanding of currently applicable PRC laws and regulations, our recent registered initial public offering
in the U.S. was not subject to the review or prior approval of the CAC or the CSRC. Uncertainties still exist, however, due to the possibility
that laws, regulations or policies in the PRC could change or rapidly evolve in the future. Any future action by the PRC government expanding
the categories of industries and companies whose foreign securities offerings are subject to review by the CSRC or the CAC could significantly
limit or completely hinder our ability to offer or continue to offer securities to investors and could cause the value of such securities
to significantly decline or be worthless.
14
Potential
Chinese governmental and regulatory interference could significantly limit or completely hinder our ability to offer or continue to offer
securities to investors and cause the value of such securities to significantly decline or be worthless.
On
July 6, 2021, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council
jointly issued the "Opinions on Severely Cracking Down on Illegal Securities Activities According to Law," or the Opinions.
The Opinions emphasized the need to strengthen the administration over illegal securities activities, and the need to strengthen the
supervision over overseas listings by Chinese companies. Effective measures, such as promoting the construction of relevant regulatory
systems will be taken to deal with the risks and incidents of China-concept overseas listed companies, and cybersecurity and data privacy
protection requirements and similar matters.
On
December 24, 2021, the CSRC released the Administrative Provisions of the State Council Regarding the Overseas Issuance and Listing of
Securities by Domestic Enterprises (Draft for Comments), or the Administration Provisions, and the Measures for the Overseas Issuance
of Securities and Listing Record-Filings by Domestic Enterprises (Draft for Comments), or collectively the Draft Rules Regarding Overseas
Listing, which were published for public comments only with the comment period expired on January 23, 2022. The Draft Rules Regarding
Overseas Listing lay out the filing regulation arrangement for both direct and indirect overseas listing, and clarify the determination
criteria for indirect overseas listing in overseas market.
The
Draft Rules Regarding Overseas Listing stipulate that the Chinese-based companies, or the issuer, shall fulfill the filing procedures
within three working days after the issuer makes an application for initial public offering and listing in an overseas market. The required
filing materials for an initial public offering and listing should include at least the following: record-filing report and related undertakings;
regulatory opinions, record-filing, approval and other documents issued by competent regulatory authorities of relevant industries (if
applicable); and security assessment opinion issued by relevant regulatory authorities (if applicable); PRC legal opinion; and prospectus.
In
addition, an overseas offering and listing is prohibited under any of the following circumstances: (1) if the intended securities offering
and listing is specifically prohibited by national laws and regulations and relevant provisions; (2) if the intended securities offering
and listing may constitute a threat to or endangers national security as reviewed and determined by competent authorities under the State
Council in accordance with law; (3) if there are material ownership disputes over the equity, major assets, and core technology, etc.
of the issuer; (4) if, in the past three years, the domestic enterprise or its controlling shareholders or actual controllers have committed
corruption, bribery, embezzlement, misappropriation of property, or other criminal offenses disruptive to the order of the socialist
market economy, or are currently under judicial investigation for suspicion of criminal offenses, or are under investigation for suspicion
of major violations; (5) if, in past three years, directors, supervisors, or senior executives have been subject to administrative punishments
for severe violations, or are currently under judicial investigation for suspicion of criminal offenses, or are under investigation for
suspicion of major violations; (6) other circumstances as prescribed by the State Council. The Administration Provisions defines the
legal liabilities of breaches such as failure in fulfilling filing obligations or fraudulent filing conducts, imposing a fine between
RMB 1 million and RMB 10 million, and in cases of severe violations, a parallel order to suspend relevant business or halt operation
for rectification, revoke relevant business permits or operational license.
On
February 17, 2023, the CSRC promulgated the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies,
or the Trial Measures, and five supporting guidelines, which came into effect on March 31, 2023. The Trial Measures and its supporting
guidelines, reiterate the basic principles of the Draft Rules Regarding Overseas Listing and impose substantially the same requirements
for the overseas securities offering and listing by domestic enterprises. Pursuant to the Trial Measures, domestic companies that seek
to offer or list securities overseas, both directly and indirectly, shall complete the filing procedures with the CSRC pursuant to the
requirements of the Trial Measures within three working days following its submission of initial public offerings or listing application.
If a domestic company fails to complete the required filing procedures or conceals any material fact or falsifies any major content in
its filing documents, such domestic company may be subject to administrative penalties, such as orders to rectify, warnings, fines, and
its controlling shareholders, actual controllers, the person directly in charge and other directly liable persons may also be subject
to administrative penalties, such as warnings and fines.
According
to the Notice on the Administrative Arrangements for the Filing of the Overseas Securities Offering and Listing by Domestic Companies
from the CSRC, or the CSRC Notice, which was promulgated on February 17, 2023 and became effective on the same day, the domestic companies
that have already been listed overseas before the effective date of the Trial Measures (i.e. March 31, 2023) shall be deemed as existing
issuers (the "Existing Issuers"). Existing Issuers are not required to complete the filing procedures immediately, and they
shall be required to file with the CSRC for any subsequent offerings. Further, according to the CSRC Notice, domestic companies obtained
approval from overseas regulatory authorities or securities exchanges (for example, the effectiveness of a registration statement for
offering and listing in the U.S. has been approved) for their indirect overseas offering and listing prior to March 31, 2023 but have
not yet completed their indirect overseas issuance and listing, are granted a six-month transition period from March 31, 2023 to September
30, 2023. Those issuers that complete their indirect overseas offering and listing within such six-month period are deemed as Existing
Issuers and are not required to file with the CSRC for their indirect overseas offerings and listings. Within such six-month transition
period, however, if such domestic companies fail to complete their indirect overseas issuance and listing, they shall complete the filing
procedures with the CSRC.
However,
since the Trial Measures were newly promulgated, their interpretation, application and enforcement remain unclear. If the filing procedure
with the CSRC under the Trial Measures is required for any subsequent offerings, listing or any other capital raising activities, which
may subject us to additional compliance requirements in the future, we cannot assure you that we will be able to get the clearance of
filing procedures under the Trial Measures on a timely basis, or at all. If we do not complete any required record-filing or if we incorrectly
conclude that record-filing is not required or if the CSRC or other regulatory agencies promulgate new rules, explanations or interpretations
requiring that we obtain their prior approvals or record-filing for any follow-on offering, we may be unable to obtain such approvals
and record-filing which could significantly limit or completely hinder our ability to offer or continue to offer securities to our investors.
15
Furthermore,
the PRC government authorities may strengthen oversight and control over offerings that are conducted overseas and/or foreign investment
in China-based issuers like us. Such actions taken by the PRC government authorities may intervene or influence our operations at any
time, which are beyond our control. Therefore, any such action may adversely affect our operations and significantly limit or hinder
our ability to offer or continue to offer securities and reduce the value of such securities.
As
of the date of this report, we and our PRC subsidiaries have not been involved in any investigations on cybersecurity review initiated
by the Cyber Administration of China or related governmental regulatory authorities, and have not received any requirements to obtain
permissions from any PRC authorities to issue our Ordinary Shares to foreign investors or were denied such permissions by any PRC authorities.
However, given the current PRC regulatory environment, it is uncertain when and whether we or our PRC subsidiaries, will be required
to obtain permission from the PRC government to list on U.S. exchanges in the future, and even when such permission is obtained, whether
it will be denied or rescinded.
We
have been closely monitoring regulatory developments in China regarding any necessary approvals from the CSRC or other PRC governmental
authorities required for overseas listings. As of the date of this report, except for the potential uncertainties disclosed above, we
have not received any inquiry, notice, warning, sanctions or regulatory objection from the CSRC or other PRC governmental authorities.
However, there remains significant uncertainty as to the enactment, interpretation and implementation of regulatory requirements related
to overseas securities offerings and other capital markets activities.
Changes
in China's economic, political or social conditions or government policies could have a material adverse effect on our business
and operations.
Substantially
all of our assets and operations are located in the PRC. Accordingly, our business, financial condition, results of operations and prospects
may be influenced to a significant degree by political, economic and social conditions in the PRC generally. The Chinese economy differs
from the economies of most developed countries in many respects, including the level of government involvement, development, growth rate,
control of foreign exchange and allocation of resources. Although the Chinese 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 the PRC 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 the PRC's economic growth through allocating resources, controlling 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 past decades, growth has been uneven, both geographically and among various
sectors of the economy. Any adverse changes in economic conditions in the PRC, in the policies of the Chinese government or in the laws
and regulations in the PRC could have a material adverse effect on the overall economic growth of the PRC. Such developments could adversely
affect our business and operating results, lead to a reduction in demand for our services and adversely affect our competitive position.
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 nonetheless 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 adjustment, to control the pace
of economic growth. These measures may cause decreased economic activity in the PRC, which may adversely affect our business and operating
results.
Non-compliance
with labor-related laws and regulations of the PRC may have an adverse impact on our financial condition and results of operation.
We
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 fund, medical insurance, work-related injury insurance, unemployment insurance
and childbearing insurance to designated government agencies for the benefit of our employees. Pursuant to the PRC Labor Contract Law,
or the Labor Contract Law, that became effective in January 2008 and its implementing rules that became effective in September 2008 and
was amended in July 2013, employers are subject to stricter requirements in terms of signing labor contracts, minimum wages, paying remuneration,
determining the term of employees' probation and unilaterally terminating labor contracts. In the event that we decide to terminate
some of our employees or otherwise change our employment or labor practices, the Labor Contract Law and its implementation rules may
limit our ability to effect those changes in a desirable or cost-effective manner, which could adversely affect our business and results
of operations. We believe our current practice complies with the Labor Contract Law and its amendments. However, the relevant governmental
authorities may take a different view and impose fines on us.
16
As
the interpretation and implementation of labor-related laws and regulations are still evolving, we cannot assure you that our employment
practice does not and will not violate labor-related laws and regulations in China, which may subject us to labor disputes or government
investigations. If we are deemed to have violated relevant labor laws and regulations, we could be required to provide additional compensation
to our employees and our business, financial condition and results of operations could be materially and adversely affected.
PRC's
economic, political and social conditions, as well as changes in any government policies, laws and regulations, could have a material
adverse effect on our business.
All
of our operations are located in the PRC and substantially of our net revenues are derived from customers where the contracting entity
is located in the PRC. Accordingly, our business, financial condition, results of operations, prospects and certain transactions we may
undertake may be subject, to a significant extent, to economic, political and legal developments in the PRC.
PRC's
economy differs from the economies of most developed countries in many respects, including the amount of government involvement, level
of development, growth rate, control of foreign exchange and allocation of resources. Although the PRC's economy has been transitioning
from a planned economy to a more market-oriented economy since the late 1970s, the PRC government continues to play a significant role
in regulating industry development by imposing industrial policies. The PRC government also exercises significant control over the PRC's
economic growth through allocating resources, controlling the incurrence and payment of foreign currency-denominated obligations, setting
monetary policy and providing preferential treatment to particular industries or companies. Changes in any of these policies, laws and
regulations could adversely affect the economy in the PRC and could have a material adverse effect on our business.
The
PRC government has implemented various measures to encourage foreign investment and sustainable economic growth and to guide the allocation
of financial and other resources. However, we cannot assure you that the PRC government will not repeal or alter these measures or introduce
new measures that will have a negative effect on us. PRC's social and political conditions may change and become unstable. Any
sudden changes to PRC's political system or the occurrence of widespread social unrest could have a material adverse effect on
our business and results of operations.
Uncertainties
with respect to the PRC legal system could adversely affect us.
The
PRC legal system is a civil law system based on written statutes. Unlike the common law system, prior court decisions under the civil
law system may be cited for reference but have limited precedential value.
In
1979, the PRC government began to promulgate a comprehensive system of laws and regulations governing economic matters generally. The
overall effect of legislation over the past three decades has significantly enhanced the protections afforded to various forms of foreign
investments in the PRC. However, the PRC has not developed a fully integrated legal system, and recently enacted laws and regulations
may not sufficiently cover all aspects of economic activities in the PRC. In particular, the interpretation and enforcement of these
laws and regulations involve uncertainties. Since PRC administrative and court authorities have significant discretion in interpreting
and implementing statutory provisions and contractual terms, it may be difficult to evaluate the outcome of administrative and court
proceedings and the level of legal protection we enjoy. These uncertainties may affect our judgment on the relevance of legal requirements
and our ability to enforce our contractual rights or tort claims. In addition, these regulatory uncertainties may be exploited through
unmerited or frivolous legal actions or threats in attempts to extract payments or benefits from us.
Furthermore,
the PRC legal system is based in part on government policies and internal rules, some of which are not published on a timely basis or
at all and may have a retroactive effect. As a result, we may not be aware of our violation of any of these policies and rules until
sometime after the violation. In addition, any administrative and court proceedings in the PRC may be protracted, resulting in substantial
costs and diversion of resources and management attention.
You
may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing actions in the PRC against
us or our management named in the report based on foreign laws.
We
conduct substantially all of our operations in the PRC, and substantially all of our assets are located in the PRC. In addition, our
current officers reside within PRC and are PRC nationals. As a result, it may be difficult for our shareholders to effect service of
process upon us or those persons inside the PRC. In addition, the PRC does not have treaties providing for the reciprocal recognition
and enforcement of judgments of courts with the Cayman Islands and many other countries and regions. Therefore, recognition and enforcement
in the PRC of judgments of a court in any of these non-PRC jurisdictions in relation to any matter not subject to a binding arbitration
provision may be difficult or impossible.
17
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.
We
rely principally on dividends and other distributions on equity from our PRC subsidiaries for our cash requirements, including for services
of any debt we may incur.
Our
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, determined in accordance
with PRC accounting standards and regulations. In addition, each of our PRC subsidiaries, as a Foreign Invested Enterprise, or FIE, are
required to draw 10% of its after-tax profits each year, if any, to fund a common reserve, which may stop drawing its after-tax profits
if the aggregate balance of the common reserve has already accounted for over 50 percent of its registered capital. These reserves are
not distributable as cash dividends. If our PRC subsidiaries incur debt on their own behalf in the future, the instruments governing
the debt may restrict their ability to pay dividends or make other payments to us. Any limitation on the ability of our PRC subsidiaries
to distribute dividends or other payments to their respective shareholders could materially and adversely limit our ability to grow,
make investments or acquisitions that could be beneficial to our business, pay dividends or otherwise fund and conduct our business.
In
addition, the Enterprise Income Tax Law and its implementation rules provide that a withholding tax rate of up to 10% will be applicable
to dividends payable by Chinese companies to non-PRC-resident enterprises unless otherwise exempted or reduced according to treaties
or arrangements between the PRC central government and governments of other countries or regions where the non-PRC resident enterprises
are incorporated.
PRC
regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion
may delay us from using the proceeds of future securities offerings to make loans or additional capital contributions to our PRC subsidiaries,
which could materially and adversely affect our liquidity and our ability to fund and expand our business.
Any
funds we transfer to our PRC subsidiaries, either as a shareholder loan or as an increase in registered capital, are subject to approval
by or registration with relevant governmental authorities in the PRC. According to the relevant PRC regulations on foreign-invested enterprises,
or FIEs, in the PRC, capital contributions to our PRC subsidiaries are subject to the approval of or filing with the Ministry of Commerce,
or MOFCOM or its local branches and registration with a local bank authorized by the State Administration of Foreign Exchange, or SAFE.
In addition, (i) a foreign loan of less one year duration procured by our PRC subsidiaries is required to be registered with SAFE or
its local branches and (ii) a foreign loan of one year duration or more procured by our PRC subsidiaries is required to be applied to
the NDRC in advance for undergoing recordation registration formalities. Any medium or long-term loan to be provided by us to our PRC
operating subsidiaries, must be registered with the NDRC and the SAFE or its local branches. We may not be able to complete such registrations
on a timely basis, with respect to future capital contributions or foreign loans by us to our PRC subsidiaries. If we fail to complete
such registrations, our ability to use the proceeds of any future securities offerings and to capitalize our PRC operations may be negatively
affected, which could adversely affect our liquidity and our ability to fund and expand our business.
On
March 30, 2015, the SAFE promulgated the Circular on Reforming the Management Approach Regarding the Foreign Exchange Capital Settlement
of Foreign-Invested Enterprises, or SAFE Circular 19, which took effect as of June 1, 2015. SAFE Circular 19 launched a nationwide reform
of the administration of the settlement of the foreign exchange capitals of FIEs and allows FIEs to settle their foreign exchange capital
at their discretion, but continues to prohibit FIEs from using the Renminbi fund converted from their foreign exchange capital for expenditure
beyond their business scopes, providing entrusted loans or repaying loans between nonfinancial enterprises. The SAFE issued the Circular
on Reforming and Regulating Policies on the Control over Foreign Exchange Settlement of Capital Accounts, or SAFE Circular 16, effective
in June 2016. Pursuant to SAFE Circular 16, enterprises registered in China may also convert their foreign debts from foreign currency
to Renminbi on a self-discretionary basis. SAFE Circular 16 provides an integrated standard for conversion of foreign exchange under
capital account items (including but not limited to foreign currency capital and foreign debts) on a self-discretionary basis which applies
to all enterprises registered in China. SAFE Circular 16 reiterates the principle that Renminbi converted from foreign currency-denominated
capital of a company may not be directly or indirectly used for purposes beyond its business scope or prohibited by PRC laws or regulations,
while such converted Renminbi shall not be provided as loans to its non-affiliated entities. On October 23, 2019, the SAFE issued the
Notice of the State Administration of Foreign Exchange on Further Facilitating Cross-border Trade and Investment, or the SAFE Circular
28, which, among other things, expanded the use of foreign exchange capital to domestic equity investment area. The foreign-invested
enterprises, whose business scope do not include equity investment, are allowed to lawfully make domestic equity investments by using
their capital on the premise without violation to prevailing special administrative measures for access of foreign investments (negative
list) and the authenticity and compliance with the regulations of domestic investment projects. As this circular is relatively new, there
remains uncertainty as to its interpretation and application and any other future foreign exchange related rules. Violations of these
Circulars could result in severe monetary or other penalties. SAFE Circular 19, SAFE Circular 16 and SAFE Circular 28 may significantly
limit our ability to use Renminbi converted from the net proceeds of future securities offerings to fund our PRC subsidiaries, to invest
in or acquire any other PRC companies through our PRC subsidiaries, which may adversely affect our business, financial condition and
results of operations.
18
Although
the audit report included in this report was issued by U.S. auditors who are currently inspected by the PCAOB, if it is later determined
that the PCAOB is unable to inspect or investigate our auditor completely, investors would be deprived of the benefits of such inspection
and our Ordinary Shares may be delisted or prohibited from trading.
The audit report included in this report for our 2022 and 2021 fiscal
year was issued by Kreit & Chiu CPA LLP ("KC"), a U.S.-based accounting firm that is registered with the PCAOB and can
be inspected by the PCAOB. The audit report included in this report for our 2020 fiscal year was issued by Briggs & Veselka Co. ("B&V"),
which was also a U.S.-based accounting firm that was registered with the PCAOB and can be inspected by the PCAOB. We have no intention
of engaging any auditor not based in the U.S. and not subject to regular inspection by the PCAOB. As an auditor of companies that are
registered with the SEC and publicly traded in the United States and a firm registered with the PCAOB, KC is required under the laws of
the United States to undergo regular inspections by the PCAOB to assess its compliance with the laws of the United States and professional
standards. If we were to engage a different auditor at any time in the future, we would engage an auditor that is U.S.-based and subject
to full PCAOB inspection with all materials related to the audit of our financial statements accessible to the PCAOB. There is no guarantee,
however, that any future auditor engaged by the Company would remain subject to full PCAOB inspection during the entire term of our engagement.
In such case, we will engage a new qualified and fully inspected auditor, which may result in us delaying or restating our financial statements.
The
PCAOB was unable to conduct inspections in the PRC without the approval of Chinese government authorities. If it is later determined
that the PCAOB is unable to inspect or investigate our auditor completely, investors may be deprived of the benefits of such inspection.
Any audit reports not issued by auditors that are completely inspected by the PCAOB, or a lack of PCAOB inspections of audit work undertaken
in the PRC that prevents the PCAOB from regularly evaluating our auditors' audits and their quality control procedures, could result
in a lack of assurance that our financial statements and disclosures are adequate and accurate.
As
part of a continued regulatory focus in the U. S. on access to audit and other information currently protected by national law, in particular
PRC's, in June 2019, a bipartisan group of lawmakers introduced bills in both houses of the U.S. Congress which , if passed, would
require the SEC to maintain a list of issuers for which PCAOB was not able to inspect or investigate the audit work performed by a foreign
public accounting firm completely. The proposed Ensuring Quality Information and Transparency for Abroad-Based Listings on our Exchanges
("EQUITABLE") Act prescribes increased disclosure requirements for these issuers and, beginning in 2025, the delisting from
U.S. national securities exchanges such as the Nasdaq of issuers included on the SEC's list for three consecutive years. It is
unclear if this proposed legislation will be enacted. Furthermore, there have been recent deliberations within the U.S. government regarding
potentially limiting or restricting China-based companies from accessing U.S. capital markets. On May 20, 2020, the U.S. Senate passed
the Holding Foreign Companies Accountable Act (the "HFCAA"), which includes requirements for the SEC to identify issuers
whose audit work is performed by auditors that the PCAOB is unable to inspect or investigate completely because of a restriction imposed
by a non-U.S. authority in the auditor's local jurisdiction. The U.S. House of Representatives passed the HFCAA on December 2,
2020, and the HFCAA was signed into law on December 18, 2020. Additionally, in July 2020, the U.S. President's Working Group on
Financial Markets issued recommendations for actions that can be taken by the executive branch, the SEC, the PCAOB or other federal agencies
and department with respect to Chinese companies listed on U.S. stock exchanges and their audit firms, in an effort to protect investors
in the United States. In response, on November 23, 2020, the SEC issued guidance highlighting certain risks (and their implications to
U.S. investors) associated with investments in China-based issuers and summarizing enhanced disclosures the SEC recommends China-based
issuers make regarding such risks. On December 2, 2021, the SEC adopted final rules relating to the implementation of certain disclosure
and documentation requirements of the HFCAA. We will be required to comply with these rules if the SEC identifies us as having a "non-inspection"
year (as defined in the interim final rules) under a process to be subsequently established by the SEC. The SEC is assessing how to implement
other requirements of the HFCAA, including the listing and trading prohibition requirements described above. Under the HFCAA, our securities
may be prohibited from trading on the Nasdaq or other U.S. stock exchanges if our auditor is not inspected by the PCAOB for three consecutive
years, and this ultimately could result in our Ordinary Shares being delisted. Furthermore, on June 22, 2021, the U.S. Senate passed
the Accelerating Holding Foreign Companies Accountable Act ("AHFCAA"), which, if enacted, would amend the HFCAA and require
the SEC to prohibit an issuer's securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections
for two consecutive years instead of three. 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 PCAOB is unable to inspect or investigate
completely registered public accounting firms located in a foreign jurisdiction because of a position taken by one or more authorities
in that jurisdiction. On December 16, 2021, the PCAOB issued a Determination Report which found that the PCAOB is unable to inspect or
investigate completely registered public accounting firms headquartered in: (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. On December 23, 2022, the AHFCAA was enacted, which
amended the HFCAA by requiring the SEC to prohibit an issuer's securities from trading on any U.S. stock exchanges if its auditor
is not subject to PCAOB inspections for two consecutive years instead of three, thus reducing the time period for triggering the prohibition
on trading. On August 26, 2022, the China Securities Regulatory Commission (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 the PCAOB 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 will consider the need to issue a new determination.
Should
the PCAOB be unable to fully conduct inspection of our auditor's work papers in the PRC, it will make it difficult to evaluate
the effectiveness of our auditor's audit or quality control procedures. Investors may consequently lose confidence in our reported
financial information and procedures or quality of the financial statements, which would adversely affect us and our securities.
19
We
are a "controlled company" within the meaning of the Nasdaq listing rules, and may follow certain exemptions from certain
corporate governance requirements that could adversely affect our public shareholders.
Our
largest shareholder, Mr. Yongjun Liu, owns more than a majority of the voting power of our outstanding Ordinary Shares. Under the Nasdaq
listing rules, a company of which more than 50% of the voting power is held by an individual, group, or another company is a "controlled
company" and is permitted to phase in its compliance with the independent committee requirements. Although we do not intend to
rely on the "controlled company" exemptions under the Nasdaq listing rules even if we are deemed a "controlled company,"
we could elect to rely on these exemptions in the future. If we were to elect to rely on the "controlled company" exemptions,
a majority of the members of our board of directors might not be independent directors and our nominating and corporate governance and
compensation committees might not consist entirely of independent directors. Accordingly, if we rely on the exemptions, during the period
we remain a controlled company and during any transition period following a time when we are no longer a controlled company, you would
not have the same protections afforded to shareholders of companies that are subject to all of the corporate governance requirements
of Nasdaq.
Fluctuations
in exchange rates could have a material and adverse effect on our results of operations and the value of your investment.
The
value of the Renminbi against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in political
and economic conditions and the foreign exchange policy adopted by the PRC government. It is difficult to predict how long such appreciation
of RMB against the U.S. dollar may last and when and how the relationship between the RMB and the U.S. dollar may change again.
All of our revenues and substantially all of our costs are denominated in Renminbi. We rely on dividends paid by our operating subsidiaries
in China for our cash needs. Any significant revaluation of Renminbi may materially and adversely affect our results of operations and
financial position reported in Renminbi when translated into U.S. dollars, and the value of, and any dividends payable on, the Ordinary
Shares in U.S. dollars. To the extent that we need to convert U.S. dollars into Renminbi for our operations, appreciation of the Renminbi
against the U.S. dollar would have an adverse effect on the Renminbi amount we would receive. Conversely, if we decide to convert our
Renminbi into U.S. dollars for the purpose of making payments for dividends on our Ordinary Shares or for other business purposes, appreciation
of the U.S. dollar against the Renminbi would have a negative effect on the U.S. dollar amount.
Governmental
control of currency conversion may limit our ability to utilize our revenues effectively and affect the value of your investment.
The
PRC government imposes controls on the convertibility of the Renminbi into foreign currencies and, in certain cases, the remittance of
currency out of China. We receive substantially all of our revenues in Renminbi. Under our current corporate structure, we primarily
rely on dividend payments from our PRC subsidiaries to fund any cash and financing requirements we may have. Under existing PRC foreign
exchange regulations, payments of current account items, including profit distributions, interest payments and trade and service-related
foreign exchange transactions, can be made in foreign currencies without prior approval of SAFE by complying with certain procedural
requirements. Specifically, under the existing exchange restrictions, without prior approval of SAFE, cash generated from the operations
of our PRC subsidiaries in China may be used to pay dividends to our company. However, approval from or registration with appropriate
government authorities is required, in principle, where RMB is to be converted into foreign currency and remitted out of China to pay
capital expenses such as the repayment of loans denominated in foreign currencies. As a result, we need to obtain SAFE approval to use
cash generated from the operations of our PRC subsidiaries to pay off their respective debt in a currency other than Renminbi owed to
entities outside China, or to make other capital expenditure payments outside China in a currency other than Renminbi. The PRC government
may at its discretion restrict access to foreign currencies for current account transactions in the future. If the foreign exchange control
system prevents us from obtaining sufficient foreign currencies to satisfy our foreign currency demands, we may not be able to pay dividends
in foreign currencies to our shareholders, including holders of the Ordinary Shares.
Certain
PRC regulations may make it more difficult for us to pursue growth through acquisitions.
Among
other things, the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors ("M&A Rules")
and Anti-Monopoly Law of the People's Republic of China promulgated by the Standing Committee of the NPC which became effective
in 2008 and amended in 2022 ("Anti-Monopoly Law"), established additional procedures and requirements that could make merger
and acquisition activities by foreign investors more time-consuming and complex. Such regulation requires, among other things, that State
Administration for Market Regulation ("SAMR") be notified in advance of any change-of-control transaction in which a foreign
investor acquires control of a PRC domestic enterprise or a foreign company with substantial PRC operations, if certain thresholds under
the Provisions of the State Council on the Standard for Declaration of Concentration of Business Operators, issued by the State Council
in 2008 and amended in 2018, are triggered. Moreover, the Anti-Monopoly Law requires that transactions which involve the national security,
the examination on the national security shall also be conducted according to the relevant provisions of the State. In addition, PRC
Measures for the Security Review of Foreign Investment which became effective in January 2021 require acquisitions by foreign investors
of PRC companies engaged in military-related or certain other industries that are crucial to national security be subject to security
review before consummation of any such acquisition. We may pursue potential strategic acquisitions that are complementary to our business
and operations.
Complying
with the requirements of these regulations to complete such transactions could be time-consuming, and any required approval processes,
including obtaining approval or clearance from the MOFCOM, may delay or inhibit our ability to complete such transactions, which could
affect our ability to expand our business or maintain our market share.
20
PRC
regulations relating to the establishment of offshore special purpose 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, limit our PRC
subsidiaries' ability to increase their registered capital or distribute profits to us, or may otherwise adversely affect us.
In
July 2014, 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, to replace the Notice on Relevant
Issues Concerning Foreign Exchange Administration for Domestic Residents' Financing and Roundtrip Investment Through Offshore Special
Purpose Vehicles, or SAFE Circular 75, which ceased to be effective upon the promulgation of SAFE Circular 37. 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 make in the future.
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, will be 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 filed 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. If any PRC shareholder of such SPV fails to make
the required registration or to update the previously filed 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 subsidiary in China. On February 13, 2015, the SAFE promulgated
a Notice on Further Simplifying and Improving Foreign Exchange Administration Policy on Direct Investment, or SAFE Notice 13, which became
effective on June 1, 2015. Under SAFE Notice 13, applications for foreign exchange registration of inbound foreign direct investments
and outbound overseas direct investments, including those required under SAFE Circular 37, will be filed with qualified banks instead
of SAFE. The qualified banks will directly examine the applications and accept registrations under the supervision of SAFE.
Certain
of our shareholders that we are aware of are subject to SAFE regulations, and we expect all of these shareholders will have completed
all necessary registrations with the local SAFE branch or qualified banks as required by SAFE Circular 37. We cannot assure you, however,
that all of these shareholders will continue to make required filings or updates in a timely manner, or at all. We can provide no assurance
that we are or will in the future continue to be informed of identities of all PRC residents holding direct or indirect interest in our
company. Any failure or inability by such shareholders to comply with SAFE regulations may subject us to fines or legal sanctions, such
as restrictions on our cross-border investment activities or our PRC subsidiaries' ability to distribute dividends to, or obtain
foreign exchange-denominated loans from, our company or prevent us from making distributions or paying dividends. As a result, our business
operations and our ability to make distributions to you could be materially and adversely affected.
Furthermore,
as these foreign exchange regulations are still relatively new and their interpretation and implementation have been constantly evolving,
it is unclear how these regulations, and any future regulation concerning offshore or cross-border 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. 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.
As
of the date of this disclosure, to our knowledge these PRC resident shareholders   have applied for foreign exchange registration
under the SAFE Circular 37 and other related rules. Although they are in the process of making foreign exchange registration, they may
still face the above said possible fines in accordance with the PRC Laws.
21
Failure
to make adequate contributions to various employee benefit plans and withhold individual income tax on employees' salaries as required
by PRC regulations may subject us to penalties.
Companies
operating in the PRC are required to participate in various government-mandated employee benefit contribution plans, including certain
social insurance, housing funds and other welfare-oriented payment obligations, and contribute to the plans in amounts equal to certain
percentages of salaries, including bonuses and allowances, of our employees up to a maximum amount specified by the local government
from time to time at locations where we operate our businesses. The requirement of employee benefit contribution plans has not been implemented
consistently by the local governments in the PRC given the different levels of economic development in different locations. Companies
operating in the PRC are also required to withhold individual income tax on employees' salaries based on the actual salary of each
employee upon payment. We may be subject to late fees and fines in relation to the underpaid employee benefits and under-withheld individual
income tax, our financial condition and results of operations may be adversely affected.
Any
failure to comply with PRC regulations regarding the registration requirements for employee stock incentive plans may subject the PRC
plan participants or us to fines and other legal or administrative sanctions.
Pursuant
to the Notices on Issues Concerning the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plan
of Overseas Publicly-Listed Company, promulgated by SAFE in 2012, or SAFE Notices No. 7, PRC citizens and non-PRC citizens who reside
in China for a continuous period of no less than one year who participate in any stock incentive plan of an overseas publicly listed
company offered to the director, supervisor, senior management and other employees of, and any individual who has labor relationship
with its domestic affiliated entities are required to register with SAFE through a domestic qualified agent, which could be a PRC subsidiary
of such overseas listed company, and complete certain other procedures. In addition, an overseas entrusted institution must be retained
to handle matters in connection with the exercise or sale of stock options and the purchase or sale of shares and interests. We and our
directors, executive officers and other employees who are PRC citizens or who reside in the PRC for a continuous period of no less than
one year and who have been granted stock options are subject to these regulations. Failure to complete the SAFE registrations for our
employee incentive plans may subject them to fines and legal sanctions and may also limit our ability to contribute additional capital
into our PRC subsidiaries and limit our PRC subsidiaries' ability to distribute dividends to us. We also face regulatory uncertainties
that could restrict our ability to adopt additional incentive plans for our directors, executive officers and employees under PRC law.
In
addition, the State Administration of Taxation, or SAT, has issued certain circulars concerning employee stock options and restricted
shares. Under these circulars, our employees working in the PRC who exercise stock options or are granted restricted shares will be subject
to PRC individual income tax. Our PRC subsidiaries have obligations to file documents related to employee stock options or restricted
shares with relevant tax authorities and to withhold individual income taxes of those employees who exercise their share options or are
granted with restricted shares. If our employees fail to pay or we fail to withhold their income taxes according to relevant laws and
regulations, we may face sanctions imposed by the tax authorities or other PRC governmental authorities.
U.S.
regulatory bodies may be limited in their ability to conduct investigations or inspections of our operations in the PRC.
Any
disclosure of documents or information located in the PRC by foreign agencies may be subject to jurisdiction constraints and must comply
with the PRC's state secrecy laws, which broadly define the scope of "state secrets" to include matters involving economic
interests and technologies. There is no guarantee that requests from U.S. federal or state regulators or agencies to investigate or inspect
our operations will be honored by us, by entities who provide services to us or with whom we associate, without violating PRC legal requirements,
especially as those entities are located in the PRC. Furthermore, under the current PRC laws, an on-site inspection of our facilities
by any of these regulators may be limited or prohibited.
22
If
we are classified as a PRC resident enterprise for PRC income tax purposes, such classification could result in unfavorable tax consequences
to us and our non-PRC shareholders.
Under
the PRC Enterprise Income Tax Law and its implementation rules, an enterprise established outside of the PRC with its "
de facto
management
body" within the PRC is considered a "resident enterprise" and will be subject to the enterprise income tax on its
global income at the rate of 25%. The implementation rules define the term "
de facto
management body" as the
body that exercises full and substantial control and overall management over the business, productions, personnel, accounts and properties
of an enterprise. In 2009, the State Administration of Taxation, or SAT, issued a circular, known as SAT 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 located in China. Although this circular applies only to offshore enterprises controlled by PRC enterprises
or PRC enterprise groups, not those 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" text should be applied in determining the
tax resident status of all offshore enterprises. According to SAT Circular 82, an offshore incorporated enterprise controlled by a PRC
enterprise or a PRC enterprise group will be regarded as a PRC tax resident by virtue of having its "
de facto
management
body" in China, and will be subject to PRC enterprise income tax on its global income only if all of the following conditions are
met: (i) the primary location of the day-to-day operational management is in the PRC; (ii) decisions relating to the enterprise's
financial and human resource matters are made or are subject to approval by organizations or personnel in the PRC; (iii) the enterprise's
primary assets, accounting books and records, company seals, and board of directors and shareholder resolutions are located or maintained
in the PRC; and (iv) at least 50% of voting board members or senior executives habitually reside in the PRC.
We
believe our company is not a PRC resident enterprise for PRC tax purposes. 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." If the PRC tax authorities determine that our company is a PRC resident enterprise for enterprise income tax purposes, we
would be subject to PRC enterprise income on our worldwide income at the rate of 25%. Furthermore, we would be required to withhold a
10% tax from dividends we pay to our shareholders that are non-resident enterprises. In addition, non-resident enterprise shareholders
may be subject to PRC tax on gains realized on the sale or other disposition of the Ordinary Shares, if such income is treated as sourced
from within the PRC. Furthermore, if we are deemed a PRC resident enterprise, dividends paid to our non-PRC individual shareholders and
any gain realized on the transfer of the Ordinary Shares by such shareholders may be subject to PRC tax at a rate of 20% (which, in the
case of dividends, may be withheld at source by us). These rates may be reduced by an applicable tax treaty, but it is unclear whether
non-PRC shareholders of our company would be able to claim the benefits of any tax treaties between their country of tax residence and
the PRC in the event that we are treated as a PRC resident enterprise. Any such tax may reduce the returns on your investment in our
Ordinary Shares.
We
face uncertainty with respect to indirect transfers of equity interests in PRC resident enterprises by their non-PRC holding companies.
On
February 3, 2015, the SAT issued the Public Notice Regarding Certain Corporate Income Tax Matters on Indirect Transfer of Properties
by Non-Tax Resident Enterprises, or SAT Bulletin 7. SAT Bulletin 7 extends its tax jurisdiction to transactions involving the transfer
of taxable assets through offshore transfer of a foreign intermediate holding company. In addition, SAT Bulletin 7 has introduced safe
harbors for internal group restructurings and the purchase and sale of equity through a public securities market. SAT Bulletin 7 also
brings challenges to both foreign transferor and transferee (or other person who is obligated to pay for the transfer) of taxable assets,
as such persons need to determine whether their transactions are subject to these rules and whether any withholding obligation applies.
On
October 17, 2017, the 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 enterprise income tax.
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 may be
subject to PRC enterprise income tax, and the transferee or other person who pays for the transfer is obligated to withhold the applicable
taxes currently at a rate of 10% for the transfer of equity interests in a PRC resident enterprise. 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.
23
We
face uncertainties as to the reporting and other implications of certain past and future transactions where PRC taxable assets are involved,
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 Bulletin 7 and/or SAT Bulletin 37. For transfer of shares in our company by investors who
are non-PRC resident enterprises, our PRC subsidiaries may be requested to assist in the filing under SAT Bulletin 7 and/or SAT Bulletin
37. As a result, we may be required to expend valuable resources to comply with SAT Bulletin 7 and/or SAT Bulletin 37 or to request the
relevant transferors from whom we purchase taxable assets to comply with these circulars, or to establish that our company should not
be taxed under these circulars, which may have a material adverse effect on our financial condition and results of operations.
Risks
Related to Our Ordinary Shares
The
market price for our Ordinary Shares may be volatile.
The
trading prices of our Ordinary Shares are likely to be volatile and could fluctuate widely due to factors beyond our control. This may
happen because of broad market and industry factors, like the performance and fluctuation in the market prices or the underperformance
or deteriorating financial results of internet or other companies based in China that have listed their securities in the United States
in recent years. The securities of some of these companies have experienced significant volatility since their initial public offerings,
including, in some cases, substantial price declines in their trading prices. The trading performances of other Chinese companies'
securities after their offerings, including internet and e-commerce companies, may affect the attitudes of investors toward Chinese companies
listed in the United States, which consequently may impact the trading performance of our Ordinary Shares, regardless of our actual
operating performance. In addition, any negative news or perceptions about inadequate corporate governance practices or fraudulent accounting,
corporate structure or 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 conducted any inappropriate activities. In addition, securities markets
may from time to time experience significant price and volume fluctuations that are not related to our operating performance, such as
the large decline in share prices in the United States, China and other jurisdictions in late 2008, early 2009 and the second half
of 2011, which may have a material adverse effect on the market price of our Ordinary Shares.
In
addition to the above factors, the price and trading volume of our Ordinary Shares may be highly volatile due to multiple factors, including
the following:
●
regulatory
developments affecting us, our consumers, or our industry;
●
conditions
in the medical supplies business and the public perception of the legitimacy and ethics of certain business practices of our competitors
or other market players within the industry;
●
announcements
of studies and reports relating to the quality of our product and service offerings or those of our competitors;
●
changes
in the economic performance or market valuations of other medical supplies businesses;
●
actual
or anticipated fluctuations in our quarterly results of operations and changes or revisions of our expected results;
●
changes
in financial estimates by securities research analysts;
●
announcements
by us or our competitors of new product and service offerings, acquisitions, strategic relationships, joint ventures or capital commitments;
●
additions
to or departures of our senior management;
●
detrimental
negative publicity about us, our management or our industry;
●
fluctuations
of exchange rates between the Renminbi and the U.S. dollar;
●
release
or expiry of lock-up or other transfer restrictions on our outstanding Ordinary Shares; and
●
sales
or perceived potential sales of additional Ordinary Shares.
24
The
trading market for our Ordinary Shares will depend in part on the research and reports that securities or industry analysts publish about
us or our business. If research analysts do not establish and maintain adequate research coverage or if one or more of the analysts who
cover us downgrade shares or publish inaccurate or unfavorable research about our business, the market price for our Ordinary Shares
would likely decline. If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, we could
lose visibility in the financial markets, which, in turn, could cause the market price or trading volume for our Ordinary Shares to decline.
If
securities or industry analysts do not publish research or reports about our business, or if they adversely change their recommendations
regarding our Ordinary Shares, the market price for our Ordinary Shares and trading volume could decline.
The
trading market for our Ordinary Shares are influenced by research or reports that industry or securities analysts publish about our business.
If industry or securities analysts decide to cover us and in the future downgrade our Ordinary Shares, the market price for our 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 Ordinary Shares to decline.
Because
we do not expect to pay dividends in the foreseeable future, you must rely on price appreciation of our 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 our Ordinary Shares as a source for any future dividend income.
Our
board of directors has discretion as to whether to distribute dividends, subject to certain restrictions under Cayman Islands law, namely
that our company may only pay dividends out of profits or share premium; 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. In addition, our
shareholders may by ordinary resolution declare a dividend, but no dividend may exceed the amount recommended by our board of directors.
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 subsidiaries, our financial condition, contractual restrictions and other factors deemed relevant by
our board of directors. Accordingly, the return on your investment in our Ordinary Shares will likely depend entirely upon any future
price appreciation of our Ordinary Shares. There is no guarantee that our Ordinary Shares will appreciate in value or even maintain the
price at which you purchased our Ordinary Shares. You may not realize a return on your investment in our Ordinary Shares and you may
even lose your entire investment in our Ordinary Shares.
Substantial
future sales or perceived potential sales of Ordinary Shares in the public market could cause the price of our Ordinary Shares to decline.
Sales
of Ordinary Shares in the public market, or the perception that these sales could occur, could cause the market price of our Ordinary
Shares to decline. As of the date of this report, we have 23,940,000 Ordinary Shares outstanding. All of the 3,940,000 Ordinary
Shares sold in our recent initial public offering are freely transferable without restriction or additional registration under the Securities
Act of 1933, as amended, or the Securities Act. All of our executive officers and directors and shareholders holding at least ten percent
of our Ordinary Shares have agreed not to sell our Ordinary Shares for a period of 365 days following the effective date of our recent
IPO, subject to extension under specified circumstances. Ordinary Shares subject to these lock-up agreements become eligible for sale
in the public market upon expiration of these lock-up agreements, subject to volume and other restrictions as applicable under Rules 144
and 701 under the Securities Act. To the extent shares are released before the expiration of the lock-up period and sold into the
market, the market price of our Ordinary Shares could decline. Moreover, the perceived risk of this potential dilution could cause
shareholders to attempt to sell their shares and investors to short our Ordinary Shares. These sales also may make it more difficult
for us to sell equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate.
25
We
may need additional capital and may sell additional Ordinary Shares or other equity securities or incur indebtedness, which could result
in additional dilution to our shareholders or increase our debt service obligations.
We
may require additional cash resources due to changed business conditions or other future developments, including any investments or acquisitions
we may decide to pursue. If our cash resources are insufficient to satisfy our cash requirements, we may seek to sell additional equity
or debt securities or obtain a credit facility. The sale of additional equity securities or equity-linked debt securities could result
in additional dilution to our shareholders. The incurrence of indebtedness would result in debt service obligations and could result
in operating and financing covenants that would restrict our operations. We cannot assure you that financing will be available in amounts
or terms acceptable to us, if at all.
Certain
existing shareholders have substantial influence over our company and their interests may not be aligned with the interests of our other
shareholders.
Our
directors and officers collectively own an aggregate of 66.56% of the total voting power of our outstanding Ordinary Shares. As a result,
they have substantial influence over our business, including significant corporate actions such as mergers, consolidations, election
of directors and other significant corporate actions.
They
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 deprive our shareholders of an opportunity to receive a premium for their
shares as part of a sale of our company and may reduce the price of our Ordinary Shares. These actions may be taken even if they are
opposed by our other shareholders. In addition, the significant concentration of share ownership may adversely affect the trading price
of our Ordinary Shares due to investors' perception that conflicts of interest may exist or arise.
We
are an emerging growth company within the meaning of the Securities 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 various
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 of the Sarbanes-Oxley Act of 2002 so long as we are an emerging
growth company. As a result, if we elect not to comply with such auditor attestation requirements, our investors may not have access
to certain information they may deem important.
In
addition, under the JOBS Act, emerging growth companies can also delay adopting new or revised accounting standards until such time as
those standards apply to private companies. We have elected to avail ourselves of an exemption that allows us to delay adopting new or
revised accounting standards until such time as those standards apply to private companies. As a result, we will not be subject to the
same new or revised accounting standards as other public companies that comply with the public company effective dates. We have also
elected to take advantage of certain of the reduced disclosure obligations and may elect to take advantage of other reduced reporting
requirements in future filings. As a result of these elections, the information that we provide to our stockholders may be different
than you might receive from other public reporting companies.
26
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 U.S. domestic public companies.
Because
we qualify as 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 with the SEC of quarterly reports on Form 10-Q or current reports on Form 8-K;
●
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
are required to file an annual report on Form 20-F within four months of the end of each fiscal year. In addition, we intend to
publish our financial results on a semi-annual basis in the form of press releases, distributed pursuant to the rules and regulations
of the Nasdaq Global 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 compared to 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.
As
a company incorporated in the Cayman Islands, we are permitted to adopt certain home country practices in relation to corporate governance
matters that differ significantly from the Nasdaq Global Market corporate governance requirements; these practices may afford less protection
to shareholders than they would enjoy if we complied fully with the Nasdaq Global Market corporate governance requirements. However,
presently, we do not have any immediate plans to rely on home country practice with respect to our corporate governance.
We
may lose our foreign private issuer status in the future, which could result in significant additional costs and expenses.
As
discussed above, we are a foreign private issuer and, therefore, we are not required to comply with all of the periodic disclosure and
current reporting requirements of the Exchange Act. The determination of foreign private issuer status is made annually on the last business
day of an issuer's most recently completed second fiscal quarter. We would lose our foreign private issuer status if, for example,
more than 50% of our Ordinary Shares are directly or indirectly held by residents of the U.S. and we fail to meet additional requirements
necessary to maintain our foreign private issuer status. In the future, if we lose our foreign private issuer status as of the last date
of our second fiscal quarter, we would be required to file with the SEC periodic reports and registration statements on U.S. domestic
issuer forms beginning on the following January 1, which are more detailed and extensive than the forms available to us as a foreign
private issuer. In such case, we would also have to comply with U.S. federal proxy requirements, and our officers, directors and
principal shareholders would become subject to the short-swing profit disclosure and recovery provisions of Section 16 of the Exchange
Act. In addition, we would lose our ability to rely upon exemptions from certain corporate governance requirements under the Nasdaq Global
Market listing rules. As a U.S. listed public company that is not a foreign private issuer, we would incur significant additional
legal, accounting and other expenses that we do not presently incur as a foreign private issuer listed on a U.S. securities exchange.
If
we fail to establish and maintain proper internal financial reporting controls, our ability to produce accurate financial statements
or comply with applicable regulations could be impaired.
Prior
to our initial public offering in February of 2022, we were a private company with limited accounting personnel and other resources with
which to address our internal controls and procedures. Since then, we have been in a continuing process to develop, establish, and put
in place a system to maintain internal controls and procedures that will allow our management to report on, and our independent registered
public accounting firm to attest to, our internal controls over financial reporting if and when required to do so under Section 404 of
the Sarbanes-Oxley Act of 2002. Although our independent registered public accounting firm is not required to attest to the effectiveness
of our internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act until the date we are no longer
an emerging growth company, our management will be required to report on our internal controls over financial reporting under Section
404.
27
As
of December 31, 2022, our management assessed the effectiveness of our internal control over financial reporting. The material weaknesses
relate to the fact that the Company does not have accounting personnel with sufficient knowledge of U.S. GAAP and SEC reporting procedures.
Management concluded that as of December 31, 2022, our internal control over financial reporting were ineffective.
In
order to address and resolve the foregoing material weakness, we have implemented measures designed to improve our internal control over
financial reporting to remediate this material weakness, including hiring Shanghai Bluehill Advisory Co., Ltd. as our consultant and
who has the requisite training and experience in the preparation of financial statements in compliance with applicable SEC requirements.
With the assistance of our consultant, we are currently in compliance with U.S. GAAP and SEC reporting requirements. In addition to hiring
an outside consultant, we also plan to take remedial measures including (i) hiring more qualified accounting personnel 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; (ii) implementing regular and continuous U.S. GAAP accounting and financial reporting training programs for
our accounting and financial reporting personnel; and (iii) setting up an internal audit function as well as engaging an external consulting
firm to assist us with assessment of Sarbanes-Oxley compliance requirements and improvement of overall internal control.
The
implementation of these measures may not fully address the material weaknesses in our internal control over financial reporting, and
we cannot conclude that they have been fully remedied. Our failure to correct theses material weaknesses or our failure to discover and
address any other material weaknesses could result in inaccuracies in our financial statements and could also impair our ability to comply
with applicable financial reporting requirements and related regulatory filings on a timely basis. As a result, our business, financial
condition, results of operations and prospects, as well as the trading price of our Ordinary Shares, may be materially and adversely
affected. Moreover, ineffective internal control over financial reporting significantly hinders our ability to prevent fraud. In addition,
once we cease to be an "emerging growth company" as such term is defined in the JOBS Act, our independent registered public
accounting firm must attest to and report on the effectiveness of our internal control over financial reporting. Our management may conclude
that our internal control over financial reporting is not effective. Moreover, even if our management concludes that our internal control
over financial reporting is effective, our independent registered public accounting firm, after conducting its own independent testing,
may issue a report that is qualified if it is not satisfied with our internal controls or the level at which our controls are documented,
designed, operated or reviewed, or if it interprets the relevant requirements differently from us. In addition, as a public company,
our reporting obligations may place a significant strain on our management, operational and financial resources and systems for the foreseeable
future. We may be unable to timely complete our evaluation testing and any required remediation.
ITEM
4. INFORMATION ON THE COMPANY
A. History and Development of the Company
We
are a holding company incorporated under the laws of Cayman Islands on November 10, 2020, by shareholder Yongjun Liu. Our direct subsidiary
is Kang Fu International Medical, a Hong Kong company. Kang Fu International Medical was incorporated on October 13, 2015 by four shareholders,
Yongjun Liu, Yin Liu, Ace Capital Limited and King Tai International Holding Limited. On November 22, 2019, Yongjun Liu acquired 9,300,000
shares from Ace Capital Limited and 4,500,000 shares from King Tai International Holding Limited, respectively. Upon consummation of
such share transfer, Yongjun Liu and Yin Liu constituted all of the shareholders of Kang Fu International Medical, holding 100% shares
of Kang Fu International Medical. On December 21, 2020, we in turn acquired 41,400,000 shares (69%) from Yongjun Liu and 18,600,000 shares
(31%) from Yin Liu, respectively, resulting in Kang Fu International Medical becoming our wholly owned subsidiary. In exchange for
our acquisition on Kang Fu, we issued a total of 15,935,000 Ordinary Shares to Mr. and Mrs. Liu, who in turn transferred their shares
to a holding company, Bright Accomplish Limited, on December 21, 2020. Bright Accomplish Limited is our controlling shareholder, holding
approximately 66.56% of our Ordinary Shares as of the date of this report.
28
We
operate our business through our indirect subsidiaries in China. Below is a list of our operating subsidiaries in China:
●
Yangzhou
Huada Medical Device Co., Ltd., or Yangzhou Huada: a subsidiary wholly owned by Kang Fu International Medical and established in Yangzhou,
Jiangsu Province, PRC on December 24, 2001 with a registered capital of $602,400, which manufactures and sells Class I disposable medical
devices under our own brands, and distributes Class I and Class II disposable medical devices sourced from other manufacturers, to our
domestic customers. Specifically, Yangzhou Huada mainly focuses on the manufacturing, sales and distributions of non-bottled products,
such as brushes, ID bracelets for domestic sales.
●
Jiangsu
Yada Technology Group Co., Ltd., or Jiangsu Yada: a subsidiary wholly owned by Yangzhou Huada and established in Yangzhou, Jiangsu Province,
PRC on December 5, 1991 with a registered capital of RMB51,390,000, which manufactures and sells Class I and Class II disposable medical
devices under our own brands, and distributes Class I and Class II disposable medical devices sourced from other manufacturers, to our
domestic and overseas customers. Specifically, Jiangsu Yada mainly focuses on overseas sales.
●
Jiangsu
Huadong Medical Device Industrial Co., Ltd., or Jiangsu Huadong: a subsidiary wholly owned by Jiangsu Yada and established in Yangzhou,
Jiangsu Province, PRC on November 18, 2000 with a registered capital of RMB50,000,000, which manufactures and sells Class I, II and III
disposable medical devices under our own brands, and distributes Class I, II and III disposable medical devices sourced from other manufacturers,
to our domestic and overseas customers. Specifically, Jiangsu Huadong mainly focuses on the manufacturing, sales and distributions of
polyethylene bottled products, such as eye drop bottles and tablet bottles.
●
Yangzhou
Guanghui Medical Technology Co., Ltd., or Guanghui: a subsidiary wholly owned by Jiangsu Huadong was established in Yangzhou, China on
December 22, 2020 with a registered capital of RMB1,000,000, to mainly manufactures and sells Class II disposable medical devices. Guanghui
has not conduct real business.
●
Hainan Guoxie Technology Group Co., Ltd., or Hainan Guoxie:
a subsidiary of which 55% of registered capital (subscribed but unpaid registered capital) was acquired by Kang Fu International Medical
from an individual Qin Wang with nil consideration on July 6, 2022, in order to conduct local business activities in Hainan. Hainan Guoxie
was established in Qionghai, Hainan Province, China on October 7, 2021 with a registered capital of RMB100,000,000. Further disclosure
will be made in 6-K regarding the new controlling subsidiary.
Meihua owns 100% of Kang Fu International Medical.
Kang Fu International Medical owns 100% of Yangzhou Huada and 55% of Hainan Guoxie. Yangzhou Huada owns 100% of Jiangsu Yada. Jiangsu
Yada, in turn, owns 100% of Jiangsu Huadong. Jiangsu Huadong, in turn, owns 100% of the equity interests of Guanghui. The following diagram
illustrates our corporate structure as of the date of this report, including our principal subsidiary and their respective principal subsidiaries.
29
The
structure of cash flows within our organization, and a summary of the applicable regulations, is as follows:
1.
Our equity structure is a direct holding structure, pursuant to which the overseas entity listed in the U.S., Meihua International Medical
Technologies Co., Ltd. ("Meihua International"), directly controls Yangzhou Huada Medical Device Co., Ltd ("Yangzhou
Huada") (the "WFOE") and other domestic operating entities which are directly owned through the Hong Kong company,
Kang Fu International Medical Co., Limited ("Kang Fu").
2.
Within our direct holding structure, the cross-border transfer of funds within our corporate group is legal and compliant with the laws
and regulations of the PRC. After foreign investors' funds enter Meihua International at the close of securities offerings, the
funds can be directly transferred to Kang Fu, and then transferred to subordinate operating entities through the WFOE.
If
the Company intends to distribute dividends, the Company will transfer the dividends to Kang Fu in accordance with the laws and regulations
of the PRC, and then Kang Fu will transfer the dividends to Meihua International, and the dividends will be distributed from Meihua International
to all shareholders respectively in proportion to the shares they hold, regardless of whether the shareholders are U.S. investors or
investors in other countries or regions.
3.
In the reporting periods presented in this annual report, no cash and other asset transfers have occurred among the Company and its subsidiaries;
and no dividends or distributions of a subsidiary has been made to the Company. On February 18, 2022, the Company closed its initial
public offering of Ordinary Shares and received approximately USD 35 million. In March and April 2022, US$17 million was transferred
to Kang Fu, these funds were used to increase the capital of Huada. For the foreseeable future, the Company intends to use the earnings
for research and development, to develop new products and to expand its production capacity. As a result, we do not expect to pay any
cash dividends.
4.
Our 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, determined in accordance
with PRC accounting standards and regulations. In addition, each of our PRC subsidiaries is required to set aside at least 10% of its
after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of each of their registered capitals.
These reserves are not distributable as cash dividends. See "
Regulations Relating to Dividend Distributions
" for more
information.
To
address persistent capital outflows and the RMB's depreciation against the U.S. dollar in the fourth quarter of 2016, the People's
Bank of China and the State Administration of Foreign Exchange, or SAFE, have implemented a series of capital control measures in the
subsequent months, including stricter vetting procedures for China-based companies to remit foreign currency for overseas acquisitions,
dividend payments and shareholder loan repayments. The PRC government may continue to strengthen its capital controls and our PRC subsidiaries'
dividends and other distributions may be subject to tightened scrutiny in the future. The PRC government also imposes controls on the
conversion of RMB into foreign currencies and the remittance of currencies out of the PRC. Therefore, we may experience difficulties
in completing the administrative procedures necessary to obtain and remit foreign currency for the payment of dividends from our profits,
if any. Furthermore, if our subsidiaries in the PRC incur debt on their own in the future, the instruments governing the debt may restrict
their ability to pay dividends or make other payments.
In
addition, the Enterprise Income Tax Law and its implementation rules provide that a withholding tax at a rate of 10% will be applicable
to dividends payable by Chinese companies to non-PRC-resident enterprises unless reduced under treaties or arrangements between the PRC
central government and the governments of other countries or regions where the non-PRC resident enterprises are tax resident. Pursuant
to the tax agreement between Mainland China and the Hong Kong Special Administrative Region, the withholding tax rate in respect to the
payment of dividends by a PRC enterprise to a Hong Kong enterprise may be reduced to 5% from a standard rate of 10%. However, if the
relevant tax authorities determine that our transactions or arrangements are for the primary purpose of enjoying a favorable tax treatment,
the relevant tax authorities may adjust the favorable withholding tax in the future. Accordingly, there is no assurance that the reduced
5% withholding rate will apply to dividends received by our Hong Kong subsidiary from our PRC subsidiaries. This withholding tax will
reduce the amount of dividends we may receive from our PRC subsidiaries.
30
Recent
Developments
Completion
of the Initial Public Offering ("IPO")
On
February 18, 2022, we closed our initial public offering ("IPO") of 3,940,000 Ordinary Shares, par value US$0.0005 per share
at a public offering price of $10.00 per share, and our Ordinary Shares started to trade on the Nasdaq Global Market under the ticker
symbol "MHUA" on February 16, 2022. We sold 3,600,000 shares pursuant to our underwriters' firm commitment, together
with an additional 340,000 shares sold pursuant to the underwriters' partial exercise of their over-allotment option.
The
total net proceeds to the Company from the IPO, after deducting discounts, expense allowance, and expenses, were approximately $34,576,000.
At the closing of the IPO, the Company deposited $500,000 from the gross proceeds from the IPO into an escrow account established by
Wilmington Trust, National Association, as escrow agent, for purpose of covering potential legal actions against Prime Number Capital
LLC, as a representative of the Underwriters, pursuant to an indemnification escrow agreement.
As
a result of certain developments related to the IPO, the Company may face certain legal liabilities and exposure. Specifically, during
the roadshow leading up to the IPO, a Hong Kong investment company named Tai He was referred to the Company by Shengang, the Company's
co-underwriter based in the PRC. Tai He, through negotiations with Shengang, asserted that it would participate in the IPO as an investor.
As a development stage PRC medical device company, the Company's management had no experience in the U.S. capital markets and relied
on its investment bankers and underwriters in providing guidance and advice concerning its U.S. public offering. Accordingly, the Company
was unaware of the actual motives of Tai He. Based on the Company's trust in Shengang and given the circumstances that the Company
was unable to make further verification, the Company hastily entered into the Tai He Agreements.
Pursuant
to the Tai He Agreements, Tai He agreed to invest a minimum of $35 million in the IPO subject to the Company making a $7.0 million refundable
deposit and advancing a $3.0 million service fee for investor relations and other services (together, the "Services") payable
to Tai He. The Company, its affiliates and individual shareholders paid the $7.0 million Refundable Deposit and $3.0 million service
fee to Tai He in several installments from January 27, 2022 to March 11, 2022. After March 11, 2022, the Company has made no other payments
to, nor had any direct interaction with, Tai He, and, in actuality, the Company never directly communicated with Tai He during the negotiations,
only communicating about Tai He and the Tai He Agreements through Shengang.
After
the IPO, through the Company's internal risk control process, the Company learned that Tai He does not appear to be an investor
in the Company and, when the Company attempted to inquire about it, Tai He refused to speak with the Company. Based on the facts as investigated
and understood by the Company, the Company believes that it was defrauded by Tai He and that Tai He never actually invested $35 million
in the IPO. In fact, the Company learned that Tai He made no investments in the Company at all, and Tai He has no involvement in the
Company's IPO matters. In addition, the Refundable Deposit has not been repaid to the Company and no Services have been provided
to the Company by Tai He. As a result, the Company believes that the Tai He Agreements may be deemed a fraud perpetrated by Tai He and
Shengang against the Company by Tai He taking advantage of asymmetric information, including the Company's lack of knowledge and
understanding of the US markets, IPO rules and processes, and the trust of the Company.
After
consultation with professionals, the Company is now aware that the Tai He Agreements were required to be disclosed to the public and
the Company believes that the agreements themselves are fraudulent and non-enforceable, and therefore the Company is disclosing the Tai
He Agreements to meet the compliance requirements of the SEC. Further, the Company acknowledges that it had improperly relied on the
advice, direction and counsel of Shengang when entering into the Tai He Agreements. The Company is now proactively working to terminate
the Tai He Agreements and recover the monies already paid to Tai He by the Company. Due to uncertainty of collection, the Company has
written off approximately $4.8 million deposit and fully expensed $2.3 million service fee paid by the Company to Tai He in the year ended December 31, 2022. The Company and its executive management team
intends to cooperate with the SEC, as well as any other relevant authorities, to ensure that its investors' interests are protected
while such matters are resolved.
Corporate
Information
Our
principal executive offices are located at 88 Tongda Road, Touqiao Town, Guangling District, Yangzhou, PRC. Our telephone number at this
address is +86-0514-89800199. Our registered office in the Cayman Islands is currently located at the office of Sertus Incorporations
(Cayman) Limited, Sertus Chambers, Governors Square, Suite #5-204, 23 Lime Tree Bay Avenue, P.O. Box 2547, Grand Cayman, KY1-1104, Cayman
Islands, which may be changed from time to time at the discretion of directors. Our agent for service of process in the United States is
The Crone Law Group P.C., 500 Fifth Ave, Suite 938, New York, NY 10110.
31
B. Business Overview
Overview
Meihua
International is a Cayman Islands exempted company incorporated on November 10, 2020. Kang Fu International is our wholly owned subsidiary
formed in Hong Kong on October 13, 2015. We operate our business through our operating subsidiaries in China, namely 1) Yangzhou Huada,
a wholly foreign owned subsidiary of Kang Fu International Medical, formed on December 24, 2001, located in Yangzhou, Jiangsu Province,
PRC; 2) Jiangsu Yada, a wholly owned subsidiary of Yangzhou Huada, formed on December 5, 1991, located in Yangzhou, Jiangsu Province,
PRC; 3) Jiangsu Huadong, a wholly owned subsidiary of Jiangsu Yada, formed on November 18, 2000, located in Yangzhou, Jiangsu Province,
PRC; and 4) Guanghui, a wholly owned subsidiary of Jiangsu Huadong, formed December 22, 2020.
Through
our operating subsidiaries in the PRC, Yangzhou Huada, Jiangsu Yada and Jiangsu Huadong, we are mainly specialized in the research, development,
manufacturing and sales of Class I, Class II and Class III disposable medical devices both domestically and internationally.
Pursuant
to the Regulations on the Supervision and Administration of Medical Devices promulgated on January 4, 2000, which is effective on June
1, 2014 and amended by the State Council on May 4, 2017, medical devices are classified into the following three categories based on
the degree of risk.
Class
Standard
    (per PRC National Medical Device Management regulations)
I
Class
    I medical devices shall refer to those devices with low level of risks and whose safety and effectiveness can be ensured through
    routine administration.
II
Class
    II medical devices shall refer to those devices with moderate risks that must be strictly controlled and regulated to ensure their
    safety and effectiveness.
III
Class
    III medical devices shall refer to those devices with relatively high risks that must be strictly controlled and regulated through
    special measures to ensure their safety and effectiveness.
We
provide our customers with one-stop solution for a variety of safety and quality disposable medical devices. The safety and quality of
disposable medical devices are always our core values. We attribute our success to our sustainable and organic growth driven by our capacity
expansion based on market demand, our deep understanding of our target end markets and our sound relationships with our customers, distributors,
independent sales agents, and suppliers.
Our
Revenue Model
We
generate revenues through 1) manufacturing and sales of Class I, II, III disposable medical devices under our own brands, 2) resales
of Class I, II, III disposable medical devices sourced by us from other manufacturers. For the fiscal years ended December 31, 2022,
2021, and 2020, we recognized $103,346,341, $104,037,710, and $89,061,010, respectively, in revenues, of which our own brand sales accounted
for 48.88%, 46.19%, and 49.94%, respectively, and the resales of sourced disposable medical devices from other manufactures accounted
for 51.12%, 53.81%, and 50.06%, respectively.
Our
disposable medical devices reach end users both domestically and internationally. For the fiscal years ended December 31, 2022, 2021,
and 2020, our total sales to domestic direct end users customers and domestic distributor customers accounted for 99.52%, 85.78%, and
81.90% of our revenues, respectively. For the fiscal years ended December 31, 2022, 2021, and 2020, our sales to overseas distributing
customers accounted for 0.48%, 14.22%, and 18.10%, respectively, of our revenues.
We
sell disposable medical devices through our direct sales force and distributors. For the fiscal years ended December 31, 2022, 2021,
and 2020, our sales through direct sale channels accounted for 9.16%, 9.13%, and10.59%, respectively, of our revenues, and our sales
through distributors accounted for 90.84%, 90.87%, and 89.41%, respectively, of our revenues, of which domestic distributors accounted
for 90.36%, 76.65%, and 71.31%, respectively, and exporting distributors accounted for 0.48%,14.22%, and 18.10%, respectively, of our
revenues.
Our
Products
Our
products cover all regions of PRC. Internationally, our products are exported to more than 30 countries, including Europe, North America,
South America, Asia, Africa, and Oceania.
Our
current product portfolio (consisting of both self-manufactured and out-sourced products) includes: 1) Class I disposable medical devices,
such as, disposable medical X-ray films, medical dry films, dry laser imagers, gauze bandages, examination gloves, pharmaceutical packaging
materials and containers, low-density polyethylene (LDPE) bottles for eye drops, high-density polyethylene (HDPE) bottles for tablets,
etc.; 2) Class II disposable medical devices, such as, disposable full anesthesia kits, medical brush, woman's examination kits,
urethral catheterization kits, gynecological examination kits, endotracheal intubation, medical masks, anal bags, and suction connecting
tube, etc.; and 3) Class III disposable medical devices, such as disposable infusion pumps, anesthesia puncture kits, electronic pumps,
etc.
As of the date of this report, we have a total of 1,063 products in
our product portfolio, including 937 products for domestic sales and 126 products for overseas sales.
32
Our
top 20 products for the fiscal years ended December 31, 2022 and 2021 were as follows:
Class Category
Product
Name
Image
Own brand /
source from
other
Use
% of
Sales in
2022
% of
Sales in
2021
Class II
Disposable ID bracelet
Own Brand
Identify patients
14.40
%
13.07
%
Class II
Disposable woman's examination kits
Own Brand
Gynecological examination
8.39
%
5.55
%
Class II
Disposable medical brush
Own Brand
Clean the test tube or plastic pipe
8.14
%
7.16
%
Class II
Medical kit
source from other
For operation
4.83
%
3.86
%
Class II
Medical sterile dressing surgical kits
Own brand
Use before operation
4.56
%
3.81
%
33
Class Category
Product
Name
Image
Own brand /
source from
other
Use
% of
Sales in
2021
% of
Sales in
2020
Class II
Medical Brush
source from other
Hand wash before Operation
3.96
%
4.10
%
Class I
High-density polyethylene (HDPE) bottles for tablets
Own brand
Tablet bottles
3.13
%
2.48
%
Class II
Medical catheter
source from other
Use for catheterization
2.83
%
3.46
%
Class II
Uterine tissue suction tube
Own brand
Uterine tissue sampling
2.78
%
3.44
%
Other
Disposable plastic milk bottle
Own brand
Use for feeding
2.34
%
1.49
%
34
Class Category
Product
Name
Image
Own brand /
source from
other
Use
% of
Sales in
2021
% of
Sales in
2020
Class I
Low-density polyethylene (LDPE) bottles for eye drops
Own brand
Eyedrop bottle
2.30
%
2.78
%
Class II
Disposable Gynecological sampler
Own brand
Getting samples during gynecological examination
1.92
%
2.31
%
Class II
Disposable medical brush (type B1)
Own brand
Hand wash before operation
1.48
%
1.24
%
Class II
Disposable anal bag
Own brand
For the rectal colon or ileum anal stoma postoperative patients and patients with urinary incontinence to collect feces and other feces care
1.44
%
1.20
%
35
Class
Category
Product
Name
Image
Own brand /
source from
other
Use
% of
Sales in
2021
% of
Sales in
2020
Class II
Disposable women's examination kits
source from other
Gynecological examination
1.25
%
2.17
%
Other
Nb / PSN rubber cover
Own brand
Use for capping
1.03
%
1.04
%
Class II
Disposable virus sampling tube
source from other
Used to hold test samples
0.74
%
0.09
%
Class II
Disposable humidified nasal oxygen tube
Own brand
Connect with oxygen supply device and used to moisten the patient and inject oxygen
0.58
%
0.61
%
Class II
Medical disposable protective clothing
source from other
protective suit
0.56
%
0.06
%
Class I
Throat strip
source from other
For throat surgery
0.54
%
0.64
%
36
As
a medical device manufacturing and sales company, we are subject to extensive government regulation and supervision in the PRC. Pursuant
to PRC laws, we must obtain production license for Class II and III disposable medical devices, operation license for Class III disposable
medical devices, and filing or registration certificates for certain Class I, II or Class III disposable medical devices. As of the date
of this report, we are current on all licenses and certificates and have obtained Class I, II and III disposable medical device qualifications
in the PRC. Meanwhile, we have established a sound quality assurance system. We have received international "CE" certification
and ISO 13485 system certification. We have also registered with the FDA (registration number: 3006554788) for over 20 products as of
the date hereof, including but not limited to ID bracelets, surgical tapes, elastic and adhesive bandages, which are all FDA Class I
products.
Our
operating subsidiaries in the PRC focus on the manufacturing and sales of the disposable medical devices as follows:
Yangzhou
Huada
Yangzhou
Huada mainly manufactures and sells Class I disposable medical devices, such as disposable pharmaceutical packaging materials and containers
using LDPE for eye drops and high-density polyethylene ("HDPE") bottles for tablets, as well as disposable plastic baby bottles,
NB/PSN rubber covers and 8.2mL folded spoons for tools and containers, etc.
Additionally,
Yangzhou Huada is also engaged in the resales of Class I and II disposable medical devices sourced from other manufacturers when we provide
one-stop shopping experience to our customers.
As
of the date of this report, Yangzhou Huada has no manufacturing activities for Class II and III disposable medical devices and its sales
are limited to our domestic customers.
Jiangsu
Yada
Jiangsu
Yada mainly manufactures and sells both domestically and internationally 1) Class I disposable medical devices, such as medical dry imaging
films; and 2) Class II disposable medical devices, such as disposable woman's examination kits, suction connecting tubes, and Class
II 6866 medical polymer materials and products (including but not limited to transfusion equipment and pipelines, endotracheal intubation
for respiratory anesthesia or ventilation), etc.
In
addition to above, Jiangsu Yada is also engaged in the domestic and international resales of 1) Class I and Class II disposable medical
devices sourced from other manufacturers when we provide one-stop shopping experience to our customers.
As
of the date of this report, Jiangsu Yada has no manufacturing and sales activities for Class III disposable medical devices.
Jiangsu
Huadong
Jiangsu
Huadong mainly manufactures and sales both domestically and internationally 1) Class I medical devices, such as medical x-ray films,
multi-functional self-extracting X-ray film machines, dry films for medical use, gauze bandages, examination gloves, etc.; 2) Class II
medical devices, such as disposable full anesthesia kits, urethral catheterization kits, gynecological examination kits, endotracheal
intubation, medical masks, and various tubes, etc.; and 3) Class III medical devices, such as disposable infusion pumps, anesthesia puncture
kits, electronic pumps, etc.
37
In addition to above, Jiangsu Huadong is also
engaged in the domestic and international resales of Class I, II and III medical devices sourced from other manufacturers when we provide
one-stop shopping experience to our customers.
COVID-19 Pandemic Products
With the impact of the coronavirus disease 2019
(COVID-19) outbreak commencing in the first half of 2020, demand in products related to virus prevention and control surged worldwide.
Although these products were not our mainstream products previously, we witnessed order surges and demand outstripped supply for several
months starting in February 2020. For the fiscal year ended December 31, 2020, orders for masks and gloves were valued at $10.1 million
and $2.4 million, respectively.
As of the date of this report, although the current
market demand for certain virus prevention products is not as strong as that in 2020 in China due to the ongoing recovery from the COVID-19,
awareness of protection against COVID-19 and other similarly situated droplet transmission diseases is to some extent rooted among people
in China, resulting in continuing high demand among people for virus prevention and control products compared to previous years. Internationally,
except for China, other countries are still in high demand of certain virus prevention products for the prevention and control of COVID-19.
According to a COVID-19 vaccines update released by World Health Organization in December 2020, there are three COVID-19 vaccines for
which certain national regulatory authorities have authorized the use. None have yet received WHO EUL/PQ authorization. The impact of
COVID-19 vaccines on the pandemic will depend on several factors, such as the effectiveness of the vaccines; how quickly they are approved,
manufactured, and delivered; and how many people get vaccinated. Most scientists anticipate that, like most other vaccines, COVID-19 vaccines
will not be 100% effective. (Source: https://www.who.int/news-room/q-a-detail/coronavirus-disease-(covid-19)-vaccines?adgroupsurvey={adgroupsurvey}&gclid=CjwKCAiA_eb-BRB2EiwAGBnXXrbZVR1ojK9i13YVEq7Hg5YBAULf8ii7IRf8kxKBu3fQQVpzJ8iD9hoCtHUQAvD_BwE).
As a result, we believe certain virus prevention products will still be in high demand due to the uncertainty surrounding the future severity
of COVID-19 and the awareness of the general public towards the virus prevention. To anticipate and adapt to this new normal phase, the
Company was building a 2,550 square meter of new factory for expanding the production scale of exporting products, located in Jiangsu
Yada's factory plant. The Company received government approval on December 22, 2020 and has started construction. The Company has
completed construction during the current year, with a total cost of approximately $1.2 million. The source of funds for the new factory
comes mainly from bank loans. The Company has placed an order for 12 production lines, which will be installed in the new factory when
construction is complete. The new production lines have an estimated cost of $3.71 million and will be used to produce medical and civil
non-woven products for outbreak prevention, including masks, protective clothing and testing papers. The annual production capacity of
the new production lines includes approximately 45 million masks, 2.7 million insulation suits, 1.5 million protection suits, 90 million
testing papers, 0.6 million Minimally invasive high-value consumables. Starting from February 2020, we began to gradually add to the production
line for masks and increase the production of masks. However, as the sales of masks is declining, our eight mask production lines have
been shut down in the past year. Sales of masks for the year ended December 31, 2022, 2021, and 2020 were approximately $0.53 million,
$1.02 million, and $10.1 million, respectively.
As the epidemic gradually flattens out, the needs
for masks decreased. We have not generated material cost consumption on the production of masks and masks are not our main sales product.
Accordingly, the decrease of demand for masks in 2022 and 2021 not have a material adverse effect on our revenue.
With additional capacity and a broad spectrum
of product offerings, we are capable of providing tailored "one-stop" services to our customers, ranging from wound care,
surgical auxiliary supplies to disease prevention.
38
Our One-stop Service
Our operating subsidiaries are located in Touqiao
Town, Yangzhou City, Jiangsu Province, PRC ("Touqiao Town"), one of the four medical device centers in PRC. Touqiao Town is
conferred on "Hometown of Medical Device & Consumables in China" by China Medical Device Industry Association and granted
by the Jiangsu local government as one of the 25 nationally certified "Chinese Towns with Special Features" on medical devices.
Hundreds of disposable medical device manufacturers have their facilities or offices in Touqiao Town and provide a variety of product
offerings to more than 100 countries and areas, including United States, Europe, Africa, India, Brazil, etc. Lots of medical device professionals,
including R&D and technology professionals and thousands of independent sales agents are also based in Touqiao Town, providing sufficient
labor to local medical device companies.
Due to our unique geographical advantage, we are
capable of providing one-stop service to our customers. By placing one single order with us, our customers will receive all products on
their order even if there are more than 100 to 1000 different kinds of products on such order and some products are not in our product
portfolio. Upon receipt of such orders, we are able to quickly fulfill the orders by including our own brand products in addition to qualified
products sourced from other manufacturers in Touqiao Town.
Our one-stop service not only bring benefits and
conveniences to our customers, but also reduces our procurement costs, such as transportation fee and travel fee, and mitigates the impact
of raw material price fluctuations in the market, thus increasing our profit margins.
Our Customers
We have three types of customers, i) direct end
user customers, which includes hospitals, pharmacies, and medical institutions, ii) domestic distributor customers, which distribute our
products to end-user customers in China, and iii) export distributor customers, which distribute our products to end users customers in
North America, Asia, South America, Africa and Oceania. As of December 31, 2022, the company had a total of 3,853 customers, of which
525 are direct end user customers, 3,004 are domestic distributors customers, and 324 are export distributors customers. Our direct end
user customers, as well as substantially all of our domestic distributor customers and our export distributor customers, are based in
China.
We do not have long-term written sales agreements
with our customers. Each customer sale is typically governed by a brief purchase-order based sales agreement. The key terms of the sales
agreements (including those agreements with our top customers) include:
●
The product's name, type, quantity and price.
●
Quality standard - medical device qualifications, including business license, medical device production and operation licenses, medical device registration certificates, inspection report, etc. Lack of one of the qualifications will result in termination of the agreements.
●
Delivery method and payment terms. Payments are typically due within 90 days after delivery.
●
Breach of contract terms, including refund and return of products. Purchasers are entitled to refunds and may return the product if the wrong product is delivered or the product does not meet agreed quality standards.
●
Shipping costs are typically borne by the seller.
●
Dispute solutions, including bringing a lawsuit at the local People's court if negotiations are unsuccessful.
For the fiscal years ended December 31, 2022,
2021, and 2020, the revenues generated from our direct end user customers and domestic distributor customers amounted to $102,845,751,
$89,240,394, and $72,941,380, respectively, constituting approximately 99.52%, 85.78%, and 81.90%, respectively, of our total revenues,
with export distributor customers accounting for $500,590, $14,797,316, and $16,119,630, respectively, constituting approximately 0.48%,
14.22%, and 18.10%, respectively, of our total revenues.
As we provide our products to export distributor customers based upon
their regional coverage, we do not have country-specific information on end-users overseas. Substantially all end users who acquire our
products through domestic distributors are based in China. End users who acquire our products through licensed export distributors have
two types – foreign distributors from other countries and end users from other countries. For the fiscal year ended December 31,
2022, our total sales to the top two customers accounted for 27.63% and 10.97% of our revenues, respectively. The top two customers for
the fiscal year ended December 31, 2022 were Customer A (a domestic distributor customer) and Customer C (a domestic distributor customer).
Our top two customers for the years ended December 31, 2021 and 2020 were the same for both years. They were Customer A (a domestic distributor
customer) and Customer B (an export distributor customer). For the year ended December 31, 2021, our total sales to the top two customers
accounted for 21.91% and 11.26% of our revenues, respectively. For the year ended December 31, 2020, our total sales to the top two customers
accounted for 17.68% and 12.71% of our revenues, respectively.
39
Our Suppliers
We source our suppliers through multiple channels:
(i) through referrals from local medical device industry associations, (ii) through industry exhibitions/expos, (iii) through our distributors,
and (iv) through open bids.
Our suppliers are divided into two categories: (1) those providing
raw materials for the manufacturing of our products, and (2) those providing products for our resales.
Our raw and auxiliary materials include rubber,
chemical polyethylene (PE), polyethylene, polypropylene, nylon and non-woven fabrics, all of which are purchased from certified and qualified
suppliers in China. Our raw materials supply has been very stable for many years and are easily sourced due to our unique geographical
location.
We distribute products sourced from certain suppliers
when it comes to our one-stop service. We from time to time receive orders from our customers with a variety of products not in our product
portfolio. Through our suppliers, we are capable of accommodating our customers' need and providing one-stop service to our customers.
We do not have long-term written purchase agreements
with our suppliers. We do not consider any of our suppliers to be material to our business. As of the date of this report, we have a total
number of 71 suppliers. We can utilize any supplier we determine at our sole discretion. Although we can utilize any supplier we determine,
we believe that we established healthy and stable relationships with our significant suppliers through years of cooperation. These significant
suppliers, in the aggregate, accounted for over 25% of our raw material purchases for the year ended December 31, 2022, 2021, and 2020.
For the year ended December 31, 2022, our three significant suppliers are Yangzhou Tianyi Medical Instrument Co., Ltd., Yangzhou Xiaguang
Medical Instrument Co., Ltd. and Yangzhou Jiangzhou Medical Instrument Co., Ltd. representing 11.93%, 7.58% and 7.01% of our total purchase
respectively. For the year ended December 31, 2021, our three significant suppliers are Yangzhou Tianyi Medical Instrument Co., Ltd.,
Jiangsu Changfeng Medical Industry Co., Ltd. and Yangzhou Jiangzhou Medical Instrument Co., Ltd. representing 9.42%, 8.88% and 8.33% of
our total purchase respectively. For the year ended December 31, 2020, our three significant suppliers are Yangzhou Xiaguang Medical Instrument
Co., Ltd., Yangzhou Jiangzhou Medical Instrument Co., Ltd. Ltd. and Yangzhou Tianyi Medical Instrument Co., Ltd. representing 9.25%, 8.13%
and 8.09% of our total purchase respectively. There are no minimum purchase requirements with any of our suppliers, including these significant
ones. Each supplier order is typically governed by a brief purchase-order based purchase agreement. The key terms of the supplier purchase
agreements (including those agreements with our significant suppliers) include:
●
The product's name, type, quantity and price.
●
The supply cooperation relationship of the parties. Some suppliers supply finished products for re-sale and others supply raw materials for manufacturing.
●
Quality terms which are typically expressed with reference to national or industry standards.
●
Delivery method and payment terms; typically, payment is due 90 days after delivery. Shipping costs are the responsibility of the supplier
●
Breach of contract terms, including refund and return of products, compensatory damages. If the supplier cannot deliver the product within the time agreed, or if the products do not meet the stated quality standard, the supplier must compensate us for losses caused, including treble damages if the products are defective or counterfeit. In the event we cannot pay timely, liquidated damages are due to the supplier.
●
For some significant supplier agreements, the breaching party is contractually required to pay 10% of the contract amount as liquidated damages if they unilaterally terminate the agreement. If the supplier fails to deliver the products within the time agreed, the supplier is contractually required to pay 5% of the contract amount on a daily basis for each and every date they delay delivery.
40
Marketing and Sales
We market and sell our products through multiple
channels: (1) through direct sales force, including our own employees and independent sales agents, and (ii) through distribution network,
including our domestic and exporting distributors.
Direct Sales Force
Our Sales Team
As of the date of this report, we have a direct
sales team consisting of 81 employees. Our sales team provides us with direct access to our customers and is capable of addressing our
customers' needs in a fast and efficient way. They also coordinate with our distributors and independent sales agents in marketing
and sales of our products.
The compensation package for our sales team includes
fixed base salaries and commissions of 0.5%-1.0% based on the revenues or collection they achieve. We provide our sales team with regular
training and internally developed systems to assist them in quickly becoming proficient and productive sales personnel.
Independent Sales Agents
As of the date of this report, we have a large
number of independent sales agents for the marketing and sales of our products in the Chinese market, covering all regions of the PRC.
Our independent sale agents market and sell our products in the regions where they are located.
We have no written sale agent agreements with
our independent sale agents and we are connected with them via oral agreements. Upon successful sales of our products to customers secured
by them, they settle their commission with our customers. We do not provide any commission or make any payments to them.
Our direct sales force has secured a total of
525 domestic customers, including hospitals and medical institutions. We will continue to work with existing, and identify and secure
new, independent sales agents, to expand our customer base and enhance our brand recognition across China.
Distribution Network
As of the date of this report, we have 3,004 domestic
distributors and 324 exporting distributors. Distributors usually purchase products from us at a lower price and then resell our products
to end customers both domestically and internationally at a comparatively higher price and earn the price difference.
Our domestic distributors cover 32 provincial-level
administrative regions of PRC for the resales of our products in the Chinese market. They market and distribute our products in the regions
where they locate and have secured approximately 5,884 domestic customers for us, including hospitals and medical institutions.
Our exporting distributors are limited to our
overseas sales. Each of our exporting distributor usually sells medical devices to at least three overseas customers. We therefore estimate
conservatively that the total number of established direct and indirect customer relationships established overseas through our exporting
distributors in Europe, North America, South America, Asia, Africa, and Oceania to be about 915.
Distributors must have related qualifications
in order to distribute our products. Upon our verification and approval by inspecting their qualification materials, such as business
license, disposable medical device operation license, and medical device exporting license, etc., and verifying their sales channels,
distribution capacity and business reputation, distributors are authorized to distribute our products to their domestic and overseas customers.
41
We do not have long-term written agreements with
our distributors. Each distributor order is typically governed by a brief purchase-order based sales agreement. The key terms of the distributor
purchase agreements include:
●
The product's name, type, quantity and price.
●
Quality standard - medical device qualifications, including business license, medical device production and operation licenses, medical device registration certificates, inspection report, etc. Lack of one of the qualifications will result in termination of the agreements.
●
Delivery method and payment terms; payment is typically due within 90 days after delivery Shipping costs re typically borne by us.
●
Breach of contract terms, including refund and return of products. Distributors are entitled to refunds and may return the product if the wrong product is delivered or the product does not meet agreed quality standards.
●
Dispute solutions, including bringing a lawsuit at the local People's court.
Our distributors have secured a total of approximately
6,799 customers for us both domestically and internationally. We will continue to work with existing distributors, and identify and secure
new distributors, to expand our customer base and enhance our brand recognition both in PRC and abroad.
Our Research and Development ("R&D")
We invest in R&D efforts that advance our
technology with the goal to expand new products and improve upon our existing product offerings. Our R&D expenses totaled approximately
$3.0 million, $2.7 million, and $2.5 million, for the years ended December 31, 2022, 2021, and 2020, respectively. R&D expenses mainly
consist of applicable personnel, design, sample testing and materials expenses. As of the date of this report, we had a total of 30 employees
in the R&D department. In the future, we expect R&D expenses to increase in absolute dollars as we continue to develop new products,
enhance existing products and technologies and perform activities related to obtaining additional regulatory approval.
We adhere to a market-oriented R&D approach
and actively cooperate with universities, hospitals, medical institutions, distributors and independent sales agents in sorting out our
R&D orientation based on the real market demand. Our market-oriented R&D approach includes the following:
●
Hospitals to Factories
. There is usually a technology department or scientific research department in every hospital in China. Hospitals conduct R&D on innovative products due to their needs, but they normally have no manufacturing capabilities and qualifications. As a disposable medical device manufacturer, to serve our customers better, we from time to time communicate with hospital personnel and keep ourselves informed of their latest demands, including but not limited to acquiring the patents on their IP list required for the manufacturing of certain products, and research, develop and manufacture such products that tailored to their needs.
●
Universities to Factories.
A lot of universities and medical colleges have research centers, where they develop and patent certain R&D results. We from time to time communicate with their research personnel and keep ourselves informed of their latest R&D and patents, and if needed by our customers, purchase patents from them and research, develop and manufacture products with such patents.
●
Customers' Feedbacks from Distributors and Independent Sales Agents
. Distributors and independent sales agents from time to time receive feedbacks and proposals from end use customers and then pass on to us. Upon our internal evaluations on those feedbacks and proposals, we may either research, develop and improve our products accordingly, or entrust university or college research centers for R&D. Once we receive their R&D results, we may improve our products in accordance with their R&D results, including acquiring patents from those centers for manufacturing of our products.
By continuously upgrading and improving products
and technologies that tailed to our customers' requirements, we have further strengthened our customer's loyalty.
42
As of the date of this report, we have 27
registered patents. Faced with the ever-changing market demands, we continue to abandon and phase out unsuitable patents and
technologies, and simultaneously invest in acquiring new patents and technologies that tailored to our customer's fast
changing requirements.
We believe our ability to rapidly develop innovative
products is attributable to the dynamic product innovation process that we have implemented, the versatility and leveragability of our
core technology and the management philosophy behind that process. We have recruited and retained professionals with significant experience
in the development and improvement of medical devices. We have a pipeline of products in various stages of development that are expected
to provide additional commercial opportunities. Our research and development efforts are based at our operating subsidiaries in PRC.
Competition
The medical device industry is intensely competitive,
subject to rapid change and significantly affected by new product introductions and other market activities of industry participants.
We compete or plan to compete with manufacturers of disposable medical devices. Some of these competitors are large, well-capitalized
companies with significantly greater market share and resources than we have. As a consequence, they are able to spend more on product
development, marketing, sales and other product initiatives than we can. We also compete with smaller medical device companies that have
single products or a limited range of products. Some of our competitors have:
●
significantly greater name recognition;
●
broader or deeper relations with healthcare professionals, customers and third-party payers;
●
more established distribution networks;
●
additional lines of products and the ability to offer rebates or bundle products to offer greater discounts or other incentives to gain a competitive advantage;
●
greater experience in conducting research and development, manufacturing, clinical trials, marketing and obtaining regulatory clearance or approval for products; and
●
greater financial and human resources for product development, sales and marketing and patent prosecution.
The Company believes that it competes favorably
with respect to these factors, although there can be no assurance that the Company will be able to continue to compete successfully in
the future.
We believe the following companies may be our
competitors:
●
Shandong Weigao Group Medical Polymer Co., Limited, is principally engaged in the research and development, production and sale of single-use medical devices. The Group has a wide range of products, which includes: i) consumables (infusion sets, syringes, medical needles, blood bags, pre-filled syringes, blood sampling products, and other consumables); ii) orthopedic materials and iii) blood purification consumables and equipment. Currently, its sales are mainly conducted in the PRC market, but it is actively exploring opportunities in international markets, with products having been exported to 30 countries and regions, including the United States, Germany, Romania, Australia and the United Kingdom. (Source: http://en.weigaogroup.com/gfccontentEn/Enterpr.aspx)
●
Jiangxi Hongda Medical Equipment Group Ltd. specializes in manufacturing sterile medical devices for single use. Their products cover nine categories, such as infusion sets, blood transfusion equipment, injection equipment, puncture sets, examination and assistant supplies, anesthesia appliances, catheters, medical equipment, cardiovascular intervention, blood purification products, etc. It is a major supplier of sterile medical equipment for a lot of countries, such as the United States, Europe, Africa, the Middle East and the Southeast Asia. It is also one of biggest manufacturers to produce and process medical disposables, with nearly a quarter of the total market share in China alone. (Source: http://en.jxhd.cn/comcontent_detail.html)
43
●
Henan Tuoren Medical Device Co., Ltd., founded in 2004, is a healthcare solutions provider, focusing on medical consumables and extending to electronic medical devices, surgery devices and biomedical materials. It is dedicated to designing, developing and distributing medical devices to its customers, covering 220 kinds of products with over 1880 specifications mainly in the field of anesthesia, pain management, nursing, diagnostics, surgery, hemodialysis and intervention. Its products have been sold to more than 70 countries and regions around the world, with international subsidiaries established in the United States and India. (Source: http://www.tuoren.com/en/index.php?s=/about/history.html)
●
Allmed Medical Products Co., Ltd., founded in 1992, is the largest OEM (original equipment manufacturer) manufacturer and exporter of wound care products in China, providing a worldwide range of traditional wound care products, including gauze swabs, non-woven swabs, lap sponges, fluffy bandages, abdominal pads, non-stick pads, adhesive bandages, elastic bandages, medical kits and disposable drapes, etc. Compared with our products, their products are very limited. (Source: http://www.allmed-china.com/index.php?m=content&c=index&a=lists&catid=11)
●
Jiangxi Sanxin Medtec Co., Ltd., founded in 1997, is a listed company in China, focusing on researching and developing, manufacturing and marketing of medical devices. It is the first listed company in the field of syringe and infusion. Their main products are "catheter tubing series," "blood purification series," "syringe series" and "infusion & transfusion series," totally four series products with over 30 types of more than 1000 specifications. Its products are sold both domestically and internationally, covering more than 30 provinces in China and more than 60 countries and regions nationwide. (Source: http://www.sanxin-med.com/category/Category/index/cid/295)
●
Jiangxi 3L Products Group Co., Ltd., founded in 1990, combines the scientific research, production and marketing of single use medicinal macromolecular products and equipment, medical purification equipment sales, and maintenance and installation work into one. It established trade abroad with more than 20 countries and regions. It also has branch offices in Hong Kong, South Africa, Russia, etc. In the past few years, their surgical towels comprised of more than 90% of the domestic market share in China, and their combined sales have taken over half of the nationwide total product needs in the domestic market in China. (Source: http://www2.3l.com.cn/web/2.htm)
Our main competitors from other provinces and
cities are Shandong Weigao Group, Jiangxi Hongda Group, Henan Tuoren Group, and Hubei Allmed Co., Ltd. These companies are our competitors
as well as our partners. For example, Weigao Group in Shandong Province distributes disposable infusion pumps, medical kits, and other
products produced by our Huodong subsidiary, while our Huadong subsidiary distributes the detained needle products of Weigao Group in
our Yangzhou area; Tuoren Group distributes nitrile glove products of our Huadong subsidiary in Henan Province, while our Huadong subsidiary
distributes Tuoren's medical guidewires and catheters in our Jiangsu Province. Another example is Hubei Allmed Co., Ltd., 80% of
whose products are exported with 20% are domestically distributed (in comparison to our 80% domestic sales and 20% indirect exporting
sales). The disposable stainless steel medical brushes it exports are exclusively supplied by our Yada subsidiary, so we regard company
not only our domestic client, but also our competitor in the international market. Because of the huge market in China and in the world,
there are tens of thousands of varieties of medical consumables. Not a single company in the world can dominate the entire market. While
competing in the market, we more often cooperate with each other. Under the guidance of industry associations and local governments, we
have formed an industry alliance to continuously exchange ideas with each other, discuss market development needs, and to build a common
development platform. It should be noted that in the face of the sudden outbreak of the epidemic last year and this year, we shared information,
supported each other with epidemic prevention materials, raw materials, and auxiliary materials, as well as production equipment, thus
achieving win-win cooperation with fruitful outcomes.
A demand for one-stop service for medical consumables
is an inevitable development in the medical consumables industry. There are several reasons why our company has achieved steady development
over its more than 30 years history. One of the most important reasons is our one-stop service system, through which we can supply all
disposable medical devices required by the client, combining products manufactured by us with products outsourced from others but passed
through our quality control scrutiny. Through market research, we have learned that our competitors are also developing a one-stop service
system and are in one of the following levels of progress: first, some companies have established a one-stop service system; second, some
companies have established a one-stop service system, but their system is underperforming and needs improvement; and third, some companies
are still undergoing development of a one-stop service system.
44
There are currently 385 manufacturers and distributors
of medical consumables where the company is located in Touqiao Town, which is known as the "Hometown of Medical Consumables in China."
As a top player in the region, the Company's revenues accounted for approximately 10% of the total revenues generated from all medical
device manufactures in Touqiao Town. Our total sales in 2020 were more than RMB600 million (approximately ($89 million), with more than
10,000 product types. By comparison, our research indicates that the annual sales of the second- and third-ranking companies in Touqiao
Town are just over RMB100 million, while the annual sales of the fourth- and fifth-ranking companies are in the range of RMB80 million
to RMB90 million, with a lesser variety of product types. Since our production scale and number of product types far surpass those of
other companies in Touqiao Town, we consider other local companies to be our partners more than our competitors. We supply each other's
needs in terms of production, procurement, and distribution. At the same time, these local enterprises in Touqiao Town are not able to
provide customers with the same one-stop service that we provide due to their limited scale and product types. The total output value
of the top 20 companies in Touqiao Town, including our company, was about RMB2.3 billion in 2020. Our company's output value in
2020 was RMB610 million, accounting for about 26.5% of the total output value, while the other four next-largest companies in Touqiao
Town had a total output value of about RMB400 million in 2020, accounting for 17.4% of the total output value.
Competitive Strengths
We are dedicated to serving our customers. We
believe that the following strengths contribute to our success and are the differentiating factors that set us apart from our peers:
●
Cost-effective
    methods to address customers' significant needs with a variety of products.
As of the date of this report, we have
    a total of 1063 products in our product portfolio covering all Class I, II, and III disposable medical devices, including 937
    products for domestic sales and 126 products for overseas sales. Through sales of different products to our customers via our
    one-stop service, we are able to cost-effectively address our client's needs.
●
Massive distribution network of clients, distributors, and suppliers.
Through both direct sales and our massive distribution network, our products are sold to hospitals, pharmacies and medical institutions both domestically and internationally. As of the date of this report, we have 81 employees in our sales department and 5,000 independent sales agents, 3,004 distributors for domestic sales and 324 exporting distributors for overseas sales. We not only have accumulated a substantial domestic customer base and forged strong relationships with these customers, but also established good long-term cooperative relationships with well-known foreign medical equipment brand companies, which extends our reach world-wide. We believe that these customers will continue to be a source of business as well as a good referral source to new customers.
●
Geographical advantages allow us to provide one-stop service to our customers at reduced cost.
Hospitals and other medical institutions normally have lists of over a hundred or even a thousand of different kinds of disposable medical devices which they must procure on a regular basis. Our PRC operating subsidiaries and primary operations are located in Touqiao Town, Yangzhou City, Jiangsu Province, one of the four medical device centers in PRC. Dubbed the "Hometown of Medical Devices & Consumables in China," Touqiao Town hosts hundreds of disposable medical device manufacturers manufacturing all different kinds of products. In addition to our own products, we are qualified to distribute products sourced from other manufacturers. As a result, our clients are able to receive all required products by placing just a single order with us. When we receive an order from our hospital clients or distributors, we are able to quickly fulfill the order by including our own branded products and qualified products sourced from other manufacturers in Touqiao Town. There are also large numbers of medical device professionals, including research and development, or "R&D," and technology professionals, and thousands of independent sales agents based near our primary operations. We are therefore able to procure high quality raw materials and products of other brands at a comparatively low price within a short period of time and to obtain sufficient labor and support to our one-stop service and manufacturing.
45
●
Economies of scale and automation provide significant cost advantages
.
The scale of our production is regional-leading within Yangtze River Delta region of China. The disposable medical devices we manufacture and sell are mainly low value-added products, which, however, are largely consumed and in huge demand every day in hospitals, medical institutions, and other health related industry entities. Through scaled production, we are able to increase our profits margin. In the procurement process, the production scale reduces our procurement costs and mitigate the impact of raw material price fluctuations. In the manufacturing process, we retrofitted equipment and introduced automation to improve production efficiency. At present, we have 12 purification plants covering a total area of approximately 110,352 square feet (10,252 square meters).
●
Leading competitive position maintained by high quality standard systems.
Quality and safety are always our core value. Applying information acquired during our long-term business transactions with major medical institutions across China, we have developed a sophisticated quality management system, as well as a strict and effective internal control standard system. All of our products, either self-manufactured or sourced, fall within our quality control system subject to our quality inspection before delivery (See the section entitled "Quality Contro
l
" in Business).
●
Market-driven
    research and development allow for continual improvement and long-term client loyalty
.
As of the date of this
    report, we have an R&D team of 78 people, accounting for 12.46% of our total employees. For the fiscal year ended December 31,
    2022, we have invested a total of $2,962,904 in the products and technologies R&D. For the fiscal years ended December 31, 2021
    and 2020, we have invested a total of $2,725,014 and $2,492,059 in the products and technologies R&D. We adhere to a
    market-oriented R&D approach and actively cooperate with universities, hospitals, medical institutions, distributors and
    independent sales agents in sorting out our R&D orientation based on the real market demand. We continuously upgrade and improve
    our products and technologies to better suit our customers.
●
Visionary and experienced management
    team
Building a trusted brand and always doing the right thing for people
has been at the heart of our founding management team since day one. Our company culture, strategic vision and operational execution are
driven by our visionary founder, Yongjun Liu. Mr. Liu is a successful entrepreneur who has been engaged in the medical device industry
for more than 40 years and has accumulated extensive experiences and led his businesses to make remarkable achievements. He has been awarded
as Excellent Entrepreneur, Honest Entrepreneur Representative and Medical Device Industry Representative on multiple occasions. At the
same time, he is keen on public welfare undertakings. He has also sponsored a lot of splendid undertakings such as road reconstruction
in towns and villages, donations to the Red Cross Society, reconstruction of nursing homes, poverty alleviation and aid for students.
Our company culture mirrors our founder's mission to empower and serve those who serve others.
Quality Control
All of our products, either self-manufactured
or sourced, fall within our quality control system subject to our quality inspection before delivery. For sourced products, they must
first be shipped to us for quality inspection, upon passing inspection, be packaged, labeled and shipped to our customers.
Medical device and equipment are medical products
directly applied to the human body, which is closely related to the life and health of users. Quality and safety are always our core value.
Reliable, safe and stable product quality is an important driving factor for maintaining market competitiveness. Through long-term business
dealings with major hospitals and medical institutions across China, we believe that we have developed a sophisticated quality control
management system as well as a strict and effective internal control system in accordance with the requirements of Chinese laws and regulations.
We prioritize product quality management and are
committed to strengthening the professional ethics and cultivating quality consciousness of our employees, forming a strict quality management
system, which we believe is in line with international standards.
Our rigorous quality control management programs
have earned us a number of quality-related manufacturing designations. Our manufacturing facilities are ISO 13485 compliant with ISO 13485:2016
edition certification achieved in 2020. In 2018, we achieved compliance with European Union's CE certification, allowing certain
of our products (such as Disposable Amniotic Membrane Perforators, Disposable Medical Suction Connecting Tubes and Disposable Gynecologic
Samplers) to be CE marked. In April 2020, we renewed registration of certain products with the FDA, including ID bracelet, surgical tapes,
elastic, adhesive bandages, etc., allowing our products to enter U.S. market. We have more than 60 categories of products passed the quality
system inspections administered by the China Food and Drug Administration and local authorities in Yangzhou City.
We have annual quality targets, which are distributed
to our employees and all departments annually. We conduct monthly follow-ups and quarterly evaluations on execution of the plans held
to ensure that the annual quality targets are met.
46
However, despite our quality control management
system, we cannot eliminate all risks of errors, defects or failures. We may fail to detect or cure defects as a result of a number of
factors, many of which are outside our control, including:
●
technical or mechanical malfunctions in the production process;
●
human error or malfeasance by our quality control personnel;
●
tampering by third parties; and
●
defective raw materials or equipment.
Failure to detect quality defects in our products
could result in patient injury, customer dissatisfaction, or other problems that could seriously harm our reputation and business, expose
us to liability, and adversely affect our revenue and profitability.
In 2018, our PRC subsidiaries Jiangsu Yada and
Jiangsu Huadong got fined of immaterial amount for noncompliance with the local laws and regulations. Upon receipt of the fine notices,
we promptly reacted to the comments from the related local government, rectified the noncompliance situation, recalled all noncompliance
products and paid the fines in full. As a result, we took some measures to avoid future noncompliance.
Specific rectification measures and the impacts
on our products and business are as follows:
No.
Penalty decision
Misconduct for penalized
Regulatory
measures after
rectification
Effect on
products/business
1
(Yangzhou) Shi Yao Jian Xie Fa [2017] No. 48 / (Yangzhou) Shi Yao Jian Xie Fa [2018] No. 23
Medical surgical film does not label the texture of the transparent plastic film/ providing fake registration product criterion to the Food and Drug regulatory authority that supervises and inspects products
Canceling registration certificates and stopping producing such related products
The Company has canceled the relevant registration certificates and no longer produced such products. Because the output of these products is minor, which occupies an extremely low proportion of the Company's total products, terminating the production of this product will not exert any adverse effect on the Company's business.
2
(Yangzhou) Shi Yao Jian Xie Fa [2017] No. 46
Production of inspection gloves that fail to meet the compulsory standards [model specification: 7.5] (Production date of glossy powder: 20170108) (The reason for the insufficient tension is that the rubber supplier has not followed the specifications standards during production)
Enhancing the random inspection of the supplier's production specification standards when accepting outsourced materials, as well as promoting the proportion of random inspections
Such administrative penalty has not adversely affected products and the Company's business.
3
(Yangzhou) Shi Yao Jian Xie Fa [2018] No. 16
"ultraviolet absorbance" test of disposable infusion pumps has failed (The main reason that caused the product's UV absorbance to exceed the standard is the secondary vulcanization time and vulcanization temperature of the liquid storage bag has not met the specified requirements. The liquid storage bag is an outsourcing material, and the original supplier does not strictly follow its production process specifications during production, which shortens the secondary vulcanization time and vulcanization temperature, causing UV absorbance to exceed the standard.)
1. Switch to another supplier of the liquid storage bag;
2. Improve the internal control standard requirements for the incoming inspection of liquid storage bags (the ultraviolet absorbance index of the incoming inspection liquid storage bag is ≤ 0.2)
Such administrative penalty has not adversely affected products and the Company's business.
For the fiscal year of 2022 and as of the date
of this report, we are not aware of any investigations, prosecutions, disputes, claims or other proceedings in respect of quality issues,
nor has the Company been punished or can foresee any punishment to be made by any related government authorities of the PRC.
47
Class I, II, and III Medical Device Approval
Process in China
"Class I" medical devices in China
refers to sanitary and civilian products with extremely low risk, which do not need to be disinfected. To record this type of product
in the official catalogue, a recordation application must be submitted on the website of the National Medical Products Administration.
The application must clarify relevant information about product standard, the scope of use, production technologies, and instructions
for the use of material. The device may then be produced and distributed after obtaining the online approval of the National Medical Products
Administration. The application and approval process for Class I devices is as follows:
Schedule 1 Flow Chart of the Application Procedures
for Recordation of the Medical Devices of Class I
(statutory time limit: on-the-spot conclusion)
[Chart derived from regulations on the supervision
and administration of medical devices (Order No. 650 of the State Council of the PRC) and the Measures for the supervision and administration
of the operation of medical devices (Order No. 8 of the State Food and Drug Administration)].
48
"Class II" and "Class III"
medical devices in China refer to medical-grade products with higher risk. The application procedures for recordation of these two types
of products in China are as follows: First, the products are submitted for inspection with various materials. After the submitted materials
are reviewed by the experts to their satisfaction, the National Medical Products Administration will organize a team of experts to visit
the factory for on-site inspection and acceptance. After passing the on-site acceptance, the products with higher risk are required to
be clinically tested. Only after the clinical report and other application documents are submitted to the National Medical Products Administration,
which approves these materials and issues the product registration certificate, shall the enterprise be allowed to produce and distribute
the product. The application and approval process for Class II and III devices is as follows:
49
[Chart derived from regulations on the supervision
and administration of medical devices (Order No. 650 of the State Council of the PRC) and the Measures for the supervision and administration
of the operation of medical devices (Order No. 8 of the State Food and Drug Administration)].
The chart below summarizes the classification,
approval dates, and current approval terms of our top 20 products:
No.
Product Name
Remarks
Date of
approval
Term of validity
Class
1
Disposable ID bracelet
By Yada, CE certified
2020-12-17
2023-12-16
Class II
2
Disposable medical brush
Class II
3
Masks
By Huadong
2021-2-26
2026-2-25
Class II
4
Disposable woman's examination kits
By Huadong
2021-2-25
2026-2-24
Class II
5
Medical Brush
Source from other (No registration certificate is required)
Class II
6
Medical kit
Source from other (No registration certificate is required)
Class II
7
Medical sterile dressing surgical kits
By Yada, CE certified
2020-12-17
2023-12-16
Class II
8
Medical catheter
Source from other (No registration certificate is required)
Class II
9
Uterine tissue suction tube
By Yada, CE certified
2020-12-17
2023-12-16
Class II
10
Low-density polyethylene (LDPE) bottles for eye drops
By Huada, Long term
Class I
11
High-density polyethylene (HDPE) bottles for tablets
By Huada, Long term
Class I
12
Disposable women's examination kits
Source from other (No registration certificate is required)
Class II
13
Disposable Gynecological sampler
By Yada, CE certified
2020-12-17
2023-12-16
Class II
14
Disposable medical brush (type B1)
By Yada, CE certified
2020-12-17
2023-12-16
Class II
15
Disposable anal bag
By Yada, CE certified
2020-12-17
2023-12-16
Class II
16
Inspection gloves
By Yada
2016-2-29
Long term
Class I
17
Disposable humidified nasal oxygen tube
By Huadong
2021-1-27
2026-1-26
Class II
18
Disposable suction connecting tube
By Huadong
2021-3-9
2026-3-8
Class II
19
Medical dressing
By Huadong
2018-4-18
2023-4-17
Class II
20
Electronic pump
By Huadong
2021-3-9
2026-3-8
Class III
Competitive Challenges
●
Our production capacity for certain pandemic prevention products is limited
.
Our existing production capacity for certain products, consisting primarily of some pandemic prevention-related products, is unable to meet the current market demand due to limitations on our funding, production equipment, and facilities. As a result, our ability to expand our market share in this area is limited.
●
To date, limited access to capital has slowed our ability to gain additional market share.
Our various product lines have developed rapidly and are competitive in the market. However, expansion of our production capacity, deepening of our marketing network, and improvement of our research and development efforts require sufficient capital investment. To date, lack of access to sufficient capital has limited some projects with development potential and has tempered our further expansion of market share. The Company needs more capital to expand its operations.
●
We sell primarily low value-added products, which limits our sales margins
.
The Company currently primarily manufactures and sells Class I and Class II medical products, with a lesser proportion of Class III products. The medical device industry is highly competitive, especially in respect of low value-added medical devices, which has low entry requirements subject to rapid change and significantly affected by new product introductions and other activities of industry participants. We face potential competition from major medical device companies worldwide, many of which have longer, more established operating histories, and significantly greater financial, technical, marketing, sales, distribution, and other resources. As a result, we may find it difficult to compete with companies commercializing high-end products and enjoying a higher profit margins per-product.
50
Manufacturing
Our production is comprised of both in-house manufacturing
and outsourcing to third parties. Except for purchases according to the requirement of bid clients, all third party manufactures shall
ship products to us for our inspection first, and upon passing our inspection, we will label and assemble, and then ship them to clients
per orders.
In-house Manufacturing
All of our in-house production is located at our
facilities in Yangzhou, Jiangsu Province, PRC. At those facilities, we produce products and stock inventory of raw materials, components
and finished goods at our facilities pursuant to the market demand, orders we receive or plan to receive, our production plan and capacity,
procurement information from our direct sales force and our distributors. Our in-house per-order production model is as follows:
Due to the nature of the products, all products
must be produced in the dust-free purification workshops and must be sterilized. This production process is subject to continuous review
and monitoring by the quality control team to ensure that finished products are of the highest quality and meet customer requirements
and ISO 13485 medical device quality management systems standard.
In order to the maintain product safety and a
high standard of product quality, we implement a strict set of quality control policies and inspection protocols. These policies and protocols
are enforced by our quality control team, senior management and officers along every step of the production to post-production process.
51
Outsourcin
g
Our outsourcing of products, which to some extent
expands our production capacity, are produced by third party manufacturers by either 1) using qualified raw material suppliers designated
by us and completing the production in accordance with our standards, or 2) using their own selection of raw materials and production
standards in line with our quality control requirements.
Given our unique geographical location, we are
able to procure qualified raw materials, and locate qualified third party manufacturers and suppliers locally at a cost-effective way
such as lower price and save of transportation costs in a shorten period, thus realizing scale production, reducing our production costs
and increasing profit margin. By outsourcing some semi-finished product processing to the local consigned manufacturers in Touqiao Town,
we not only expand our production capacity and improve our production efficiency, but also reduce production costs while meeting clients'
demands for products of various specifications.
Environmental
Due to the nature of the Company's products,
the Company's PRC subsidiaries do not generate industrial wastewater and wastes, the wastewater they generate is sanitary wastewater
which can be disposed directly into municipal pipelines. The generated corner wastes shall be cleaned and collected by the cleaning personnel
on time, and then transported to the municipal garbage disposal site for treatment by the local sanitation department. Solid wastes generated
during operation shall be collected and sent to relevant manufacturers for recycling. If new products are developed in the future and
environmental measures are needed according to law, the Company will take corresponding environmental protection measures according to
relevant laws and regulations. The waste discharge fees for fiscal years of 2022, 2021, and 2020 were $4,384, $4,890, and $5,009, respectively,
which has been paid in full.
The Company and its subsidiaries passed the environmental
inspection and evaluation by the Environmental Protection Bureau of Yangzhou Guangling District in 2020, which determined that no waste,
hazardous substances or wastewater were produced during manufacturing.
As of the date of this report, our waste discharge
is in compliance with the local laws and regulations and we are not aware of any warning, investigations, prosecutions, disputes, claims
or other proceedings in respect of environmental protection, nor have we been punished or can foresee any punishment to be made by any
government authorities of the PRC.
Intellectual Property
Our business is dependent on a combination of
trademarks, patents, copy rights, domain names, trade names, trade secrets and other proprietary rights in order to protect our intellectual
property rights. As of the date of this report, we have two (2) registered trademark, twenty-seven (27) registered patents and two (2)
copyrights in the PRC.
52
Trademarks
Set forth below is a detailed description of our
registered trademarks:
Country
Trademark
Trademark
Registration No.
Trademark
Name
Trademark
Registration
Date
Trademark
Classes
Trademark
Owner
Trademark
Term
Trademark
Status
China
19576090
Hu Jun
08/28/2017
30
Jiangsu Yada
08/28/2017 to 08/27/2027
Registered
China
1415306
Yada
06/28/2000
10
Jiangsu Yada
06/28/2020 to 6/27/2030
Registered
China
1421255
Yada
07/14/2000
6
Jiangsu Yada
07/14/2020 to 07/13/2030
Registered
Patents
China's patent law stipulates that there
are three types of patent protection: invention patent, utility model patent and design patent.
●
A patent for invention refers to a new technical solution for a product, a method or an improvement thereof.
●
Utility model patent refers to a new technical solution suitable for practical use, which is proposed for the shape, structure or combination of the product.
●
Design patent refers to the new design of product shape, pattern, color or their combination, which is aesthetic and suitable for industrial application.
Set forth below is a detailed description of our
registered patents:
Country
Patent No.
Patent Name
Patent
Publication
Date
Patent
Type
Patent
Validity
Period
Patent Status
China
ZL201310537304.7
Wound marginal cell crawling promoting type temperature control swell-shrink type drainage tube
09/09/2015
Invention
20 years from the application date (11/03/2013)
Renewed and effective
China
ZL201420092814.8
Nano-crystalline cellulose dressing for treating extensive burns
2/25/2015
Utility model
10 years from the application date (3/3/2014)
Registered and effective
China
ZL201821229644.8
Bone mineral density instrument with good anti-falling performance
7/5/2019
Utility model
10 years from the application date (8/1/2018)
Registered and effective
China
ZL2019 2235101 2.X
Novel device for gynecological diagnosis and treatment
10/16/2020
Utility model
10 years from the application date (12/24/2019)
Registered and effective
China
ZL202020002206.9
Joint fixation frame for orthopedic surgery
10/23/2020
Utility model
10 years from the application date (01/01/2020)
Registered and effective
China
ZL202020017703.6
Wound debridement device for emergency care
10/16/2020
Utility model
10 years from the application date (01/06/2020)
Registered and effective
53
Country
Patent
    No.
Patent
    Name
Patent
Publication
Date
Patent
Type
Patent
Validity
Period
Patent
    Status
China
ZL2013105373 27.8
Interrupted thread clearance hole wall type injection needle
11/4/2015
Invention
20 years from the application date (11/3/2013)
Registered and effective
China
ZL201922473496.5
Sputum suction tube preventing respiratory mucosa from being damaged
10/20/2020
Utility model
10 years from the application date (12/31/2019)
Registered and effective
China
ZL202020129072.7
High-flow oxygen supply mask drainage and medicine delivery mechanism in the department of respiratory medicine
10/20/2020
Utility model
10 years from the application date (01/20/2020)
Registered and effective
China
ZL201922332612.1
Uterine cavity sampler for gynecological reproductive clinics
10/23/2020
Utility model
10 years from the application date (12/23/2019)
Registered and effective
China
ZL201922412254.5
Disposable intubate package
10/30/2020
Utility model
10 years from the application date (12/28/2019)
Registered and effective
China
ZL201921757111.1
Painless anesthetic needle
11/3/2020
Utility model
10 years from the application date (10/19/2019)
Registered and effective
China
ZL201910037322.6
Neurological rehabilitation adjuvant therapy stimulation device
10/23/2020
Invention
20 years from the application date (01/15/2019)
Registered and effective
China
ZL202023332943.4
Glucometer
10/15/2021
Utility model
10 years from the application date (12/31/2020)
Registered and effective
China
ZL202023296047.7
Portable blood glucose meter
1/7/2022
Utility model
10 years from the application date (12/31/2020)
Registered and effective
China
ZL202023343934.5
Bone density tester
1/14/2022
Utility model
10 years from the application date (12/31/2020)
Registered and effective
China
ZL202023296027.X
Rotatable densitometer
1/18/2022
Utility model
10 years from the application date (12/31/2020)
Registered and effective
China
ZL202023290045.7
Surgical stapler
1/18/2022
Utility model
10 years from the application date (12/31/2020)
Registered and effective
China
ZL202023295973.2
New cutting stapler
3/29/2022
Utility model
10 years from the application date (12/31/2020)
Registered and effective
China
ZL202023313858.3
New medical mask
1/17/2022
Utility model
10 years from the application date (12/31/2020)
Registered and effective
China
ZL202023295982.1
New warm and anti-fog masks
3/29/2022
Utility model
10 years from the application date (12/31/2020)
Registered and effective
54
Country
Patent
    No.
Patent
    Name
Patent
Publication
Date
Patent
Type
Patent
Validity
Period
Patent
    Status
China
ZL202023296016.1
Wrist blood pressure meter
3/29/2022
Utility model
10 years from the application date (12/31/2020)
Registered and effective
China
ZL202023342335.1
Portable blood pressure meter
1/14/2022
Utility model
10 years from the application date (12/31/2020)
Registered and effective
China
ZL202023313904.X
Medical identification wristband
3/29/2022
Utility model
10 years from the application date (12/31/2020)
Registered and effective
China
ZL202023342334.7
Corrective device to prevent myopia
1/18/2022
Utility model
10 years from the application date (12/31/2020)
Registered and effective
China
2018212296448
Bone densitometer with good anti-fall performance
7/26/2019
Utility model
10 years from the application date (8/1/2018)
Registered and effective
China
2014200928148
Nanocellulose dressing for extensive burns
2/25/2015
Utility model
10 years from the application date (3/3/2014)
Registered and effective
Our currently registered patents do not relate to our top 20 products,
which are mature products. Instead, our registered patents represent the phased achievements of our R&D department, which will serve
as the basis for future research and the planned development of new products.
Currently, we have 27 registered and effective
patents, and we have not signed any royalty or licensing agreements with any third parties with respect to these patents. Currently, however,
we are working under a collaboration agreement to develop and register a patented product for production and sale. The patent relates
to a tracheal tube kit capable of pulverization and dosing by a tube wall fan spraying concurrently, and it is a utility model patent
issued in China with a validity period of ten years from May 29, 2019. A utility model patent is issued for a new technical scheme suitable
for practical use based on the shape, structure or combination of the products used. Moreover, to be suitable for a utility model patent,
an invention must possess novelty, creativity and practicability. We are authorized by the patent owner to develop a new use for his patent
and to file a medical device registration certificate for the developed product. Under our agreement with the patent owner, once the product
is in production and sales, we will distribute 25% of the profit after tax to him. Under the agreement, the patent owner has the right
to request an accounting of profits at his own expense. If the patent owner wishes to transfer the patent in the future, he can only transfer
it to us. For this collaboration agreement, we have completed the development of the new use of the patented product, and we are in the
process of applying for medical device registration certificate. Because the new product has not been put into production and has not
generated any sales yet, we have not distributed any profit to the patent owner and no other fees have been paid or received under the
agreement. The collaboration agreement and the profit-sharing arrangement are for a perpetual term. The collaboration agreement may be
terminated, however, in the event that we are unable to provide an accurate accounting of profits for the product to the patent owner.
In that case, all rights to the patent may be returned to the patent owner and we will be liable for damages in the amount of an additional
10% of net profits received from the product.
55
Copyrights
Set forth below is a detailed description of our
registered copyrights:
Country
Copyright No.
Copyright Name
Copyright
Publication
Date
Copyright
Type
Copyright
Application
Date
Copyright
Status
China
2019SR0829585
Self-service printing terminal control system software of image diagnostic film (V1.0)
8/9/2019
software copyright
6/13/2019
Registered and effective
China
2019SR0813645
Intelligent Medical film image printing output system software (V1.0)
8/6/2019
software copyright
6/20/2019
Registered and effective
Insurance
We maintain Group Life Insurance for some of our
high-risk employees, such as electricians, plumbers and tooling operators. We also provide social security insurance including pension,
medical insurance, unemployment insurance, maternity insurance, on-the-job injury insurance and housing fund plans through a PRC government-mandated
benefit contribution plan for our employees. We do not carry any key-man life insurance, product liability and professional liability
insurance. Even if we purchase these kinds of insurance, the insurance may not fully protect us from the financial impact of defending
against product liability or professional liability claims. We have not purchased any property insurance or business interruption insurance.
We have determined that the costs of insuring for related risks and the difficulties associated with acquiring such insurance on commercially
reasonable terms make it impractical. We consider our insurance coverage to be sufficient for our business operations in China.
Legal Proceedings
We may from time to time be subject to
various legal or administrative claims and proceedings arising in the ordinary course of business. Litigation or any other legal or
administrative proceeding, regardless of the outcome, is likely to result in substantial cost and diversion of our resources,
including our management's time and attention.
With the exception of the following proceedings, we are currently not a party
to any material legal or administrative proceedings:
●
Case No. CGC-22-598030, Macias, Gini & O'Connell LLP vs. Meihua International Medical Technologies Co., Ltd., filed April 2, 2022 in the Superior Court of California, County of San Francisco. This is an action filed by a former accounting firm for the collection of allegedly past-due professional fees. We believe the action to be without merit, have responded to the complaint and are defending this action, accordingly.
REGULATIONS
We operate our business in the PRC under a legal
regime consisting of the National People's Congress, which is the country's highest legislative body, the State Council, which
is the highest authority of the executive branch of the PRC central government, and several ministries and agencies under its authority,
including the State Administration of Foreign Exchange, or SAFE, the Ministry of Commerce, or MOFCOM, the National Development and Reform
Commission, or NDRC, the State Administration for Market Regulation, or SAMR, formerly known as the State Administration for Industry
and Commerce, or SAIC, the Ministry of Civil Affairs, or MCA, and their respective authorized local counterparts.
This section sets forth a summary of the most
significant rules and regulations that affect our business activities in the PRC.
56
Regulation Relating to Foreign Investment
All limited liability companies incorporated and
operating in the PRC are governed by the
Company Law of the People's Republic of China
, or the Company Law, which was
amended and promulgated by the Standing Committee of the National People's Congress on October 26, 2018. However, on December 24,
2021, the Standing Committee of the National People's Congress issued the Company Law of the People's Republic of China (Draft
for Comments) (the "Revised Company Law"), which is now open for public comments. The Revised Company Law further stipulates
the establishment and withdrawal of the company, the organizational structure and the capital system of the company, and strengthens the
responsibilities of shareholders and management personnel and Corporate Social Responsibility. Foreign invested projects must also comply
with the Company Law, with exceptions as specified in foreign investment laws.
The Foreign Investment Law of the People's
Republic of China (the "Foreign Investment Law") was adopted by the second meeting of the 13th National People's Congress
on March 15, 2019, which became effective on January 1, 2020. On December 26, 2019, the State Council promulgated Regulation for Implementing
the Foreign Investment Law of the People's Republic of China (the "Regulation"), which became effective on January 1,
2020.
The Foreign Investment Law and the Regulation
apply the administrative system of pre-establishment national treatment plus negative list to foreign investment and clarify the state
shall develop a catalogue of industries for encouraging foreign investment to specify the industries, fields, and regions where foreign
investors are encouraged and directed to invest. The MOFCOM and NDRC promulgated the Special Administrative Measures for the Access of
Foreign Investment (Negative List) (2021 Version) (the "2021 Negative List") on December 27, 2021, which became effective
on January 1, 2022. The 2021 Negative List replaced the Special Administrative Measures for the Access of Foreign Investment (2020 Version)
and serves as the main basis for management and guidance for the MOFCOM to manage and supervise foreign investments. The restricted and
prohibited industry categories have shareholding requirements as prescribed in the 2021 Negative List. Those industries not set out on
the 2021 Negative List shall be classified as industries permitted for foreign investment. None of our businesses are on the 2021 Negative
List, nor on the 2020 Negative List. Therefore, the Company is able to conduct its business through its wholly owned PRC Subsidiaries
without being subject to restrictions imposed by the foreign investment laws and regulations of the PRC. In addition, the version of the
Catalogue of Industries for Encouraged Foreign Investment currently in force was amended in 2022 and became effective on January 1, 2023,
which replaced the Catalogue of Industries for Encouraged Foreign Investment (2020 version).
Regulation Relating to Wholly Foreign-owned
Enterprises
The abovementioned Company Law of the People's
Republic of China provides that companies established in the PRC may take the form of company of limited liability or company limited
by shares. Each company has the status of a legal person and owns its assets itself. Assets of a company may be used in full for the company's
liability. The Company Law applies to foreign-invested companies unless relevant laws provide otherwise.
The Foreign Investment Law replaced Law of the
People's Republic of China on Wholly Foreign-owned Enterprises. It stipulates that the PRC implements a system of pre-establishment
national treatment plus negative list for the administration of foreign investment. Foreign investors are not allowed to invest in fields
or sectors prohibited in the market access negative list for foreign investment. Foreign investors that intend to invest in the fields
subject to access restrictions stipulated in market access negative list for foreign investment shall satisfy the conditions stipulated
in such negative list. The PRC policies supporting enterprise development are equally applicable to foreign-invested enterprises. The
PRC does not impose expropriation on foreign investment. Under special circumstances, if it requires imposing expropriation on foreign
investment due to the need of public interest, expropriation shall be imposed according to legal procedures, and the foreign-invested
enterprises concerned shall receive fair and reasonable compensation. Foreign-invested enterprises can raise funds through public issuance
of stocks, corporate bonds and other securities in accordance with the law. Overall, The Foreign Investment Law establishes the clear
principle of applying national treatment to FIEs except those engaged in industries on the 2020 Negative List. Since our current and planned
business is not on the 2021 Negative List, to the best of our knowledge, it will not create any material adverse effect to our Company's
business.
57
Regulations Relating to Intellectual Property
Copyright
China has adopted comprehensive legislation governing
intellectual property rights, including trademarks and copyrights. China is a signatory to the primary international conventions on intellectual
property rights and has been a member of the Agreement on Trade Related Aspects of Intellectual Property Rights since its accession to
the WTO in December 2001.
In September 1990, the SCNPC promulgated
the Copyright Law of the People's Republic of China, effective in June 1991 and amended in 2001, 2010 and 2020 respectively. The
amended Copyright Law extends copyright protection to internet activities, products disseminated over the internet and software products.
In addition, there is a voluntary registration system administered by the Copyright Protection Centre of China.
In order to further implement the Computer Software
Protection Regulations, promulgated by the State Council in December 2001 and amended in 2011 and 2013 respectively, the National Copyright
Administration issued Computer Software Copyright Registration Procedures in February 2002, which specify detailed procedures and requirements
with respect to the registration of software copyrights.
Trademark
According to the Trademark Law of the People's
Republic of China, promulgated by the SCNPC in August 1982, and amended in 1993, 2001, 2013 and 2019 respectively, the Trademark Office
of China National Intellectual Property Administration is responsible for the registration and administration of trademarks and is also
responsible for resolving trademark disputes in China. Registered trademarks are valid for ten years from the date the registration is
approved. A registrant may apply to renew a registration within twelve months before the expiration date of the registration. If the registrant
fails to apply in a timely manner, a grace period of six additional months may be granted. If the registrant fails to apply before the
grace period expires, the registered trademark shall be deregistered. Renewed registrations are valid for ten years. In April 2014, the
State Council issued the revised Implementation of the Trademark Law, which specified the requirements of applying for trademark registration
and review.
Patent
According to the Patent Law of the People's
Republic of China promulgated by the SCNPC in 1984 and amended in 1992, 2000, 2008 and 2020, respectively, a patentable invention or a
utility model must meet three criteria: novelty, inventiveness and practicability. A patent is valid for a twenty-year term for an invention
and a ten-year term for a utility model or design, starting from the application date.
Domain Names
In May 2012, the China Internet Network Information
Center issued the Implementing Rules for Domain Name Registration setting forth the detailed rules for registration of domain names. In
August 2017, China's Ministry of Industry and Information Technology promulgated the Administrative Measures on Internet Domain
Names, or the Domain Name Measures. The Domain Name Measures regulate the registration of domain names, such as the top-level domain name
".cn".
Regulations on Offshore Parent Holding Companies'
Direct Investment in and Loans to Their PRC Subsidiaries
An offshore company may invest equity in a PRC
company, which will become the PRC subsidiary of the offshore holding company after investment. Such equity investment is subject to a
series of laws and regulations generally applicable to any foreign-invested enterprise in China, all as amended from time to time, and
their respective implementing rules; the Administrative Provisions on Foreign Exchange in Domestic Direct Investment by Foreign Investors;
and the Notice of the State Administration on Foreign Exchange on Further Improving and Adjusting Foreign Exchange Administration Policies
for Direct Investment. Under the aforesaid laws and regulations, the increase of the registered capital of a foreign-invested enterprise
is subject to the prior approval by the original approval authority of its establishment. In addition, the increase of registered capital
and total investment amount shall both be registered with SAIC and SAFE. Shareholder loans made by offshore parent holding companies to
their PRC subsidiaries are regarded as foreign debts in China for regulatory purpose, which is subject to a number of PRC laws and regulations,
including the PRC Foreign Exchange Administration Regulations, the Interim Measures on Administration on Foreign Debts, the Tentative
Provisions on the Statistics Monitoring of Foreign Debts and its implementation rules, and the Administration Rules on the Settlement,
Sale and Payment of Foreign Exchange. Under these regulations, the shareholder loans made by offshore parent holding companies to their
PRC subsidiaries shall be registered with SAFE.
58
Regulations Relating to Foreign Exchange
Pursuant to the Foreign Exchange Administration
Regulations, as amended in August 2008, the RMB is freely convertible for current account items, including the distribution of dividends,
interest payments, trade and service-related foreign exchange transactions, but not for capital account items, such as direct investments,
loans, repatriation of investments and investments in securities outside the PRC, unless SAFE's prior approval is obtained and prior
registration with SAFE is made. In May 2013 SAFE promulgated the Circular of the SAFE on Printing and Distributing the Administrative
Provision on Foreign Exchange in Domestic Direct Investment by Foreign Investors and Relevant Supporting Documents which provides
for and simplifies the operational steps and regulations on foreign exchange matters related to direct investment by foreign investors,
including foreign exchange registration, account opening and use, receipt and payment of funds, and settlement and sales of foreign exchange.
Pursuant to the Circular on Relevant Issues
concerning Foreign Exchange Administration of Overseas Investment and Financing and Return Investments Conducted by Domestic Residents
through Overseas Special Purpose Vehicles or the SAFE Circular 37, promulgated by SAFE and which became effective on July 4,
2014, (a) a PRC resident shall register with the local SAFE branch before he or she contributes assets or equity interests in an
overseas special purpose vehicle, or Overseas Special Purpose Vehicles (SPV), that is directly established or controlled by the PRC Resident
for the purpose of conducting investment or financing; and (b) following the initial registration, the PRC Resident is also required
to register with the local SAFE branch for any major change, in respect of the Overseas SPV, including, among other things, a change of
the Overseas SPV's PRC Resident shareholder(s), name of the Overseas SPV, term of operation, or any increase or reduction of the
Overseas SPV's registered capital, share transfer or swap, and merger or division. Pursuant to SAFE Circular 37, failure to
comply with these registration procedures may result in penalties.
Pursuant to the Circular of the State Administration
of Foreign Exchange on Further Simplifying and Improving the Direct Investment-related Foreign Exchange Administration Policies, or the
SAFE Notice 13, which was promulgated on February 13, 2015 and with effect from June 1, 2015, the foreign exchange registration under
domestic direct investment and the foreign exchange registration under overseas direct investment is directly reviewed and handled by
banks in accordance with the SAFE Notice 13, and the SAFE and its branches shall perform indirect regulation over the foreign exchange
registration via banks.
Regulations Relating to Dividend Distributions
According to the PRC Company Law and Foreign Investment
Law, each of our PRC subsidiaries, as a foreign invested enterprise, or FIE, are required to draw 10% of its after-tax profits each year,
if any, to fund a common reserve, which may stop drawing its after-tax profits if the aggregate balance of the common reserve has already
accounted for over 50% of its registered capital. These reserves are not distributable as cash dividends. Furthermore, under the EIT Law,
which became effective in January 2008, the maximum tax rate for the withholding tax imposed on dividend payments from PRC foreign invested
companies to their overseas investors that are not regarded as "resident" for tax purposes is 20%. The rate was reduced to
10% under the Implementing Regulations for the EIT Law issued by the State Council. However, a lower withholding tax rate might be applied
if there is a tax treaty between China and the jurisdiction of the foreign holding companies, such as tax rate of 5% in the case of Hong
Kong companies that holds at least 25% of the equity interests in the foreign-invested enterprise, and certain requirements specified
by PRC tax authorities are satisfied.
Regulations Relating to Overseas Listings
On July 6, 2021, the General Office of the Central
Committee of the Communist Party of China and the General Office of the State Council jointly issued the "Opinions on Severely Cracking
Down on Illegal Securities Activities According to Law," or the Opinions. The Opinions emphasized the need to strengthen the administration
over illegal securities activities, and the need to strengthen the supervision over overseas listings by Chinese companies. Effective
measures, such as promoting the construction of relevant regulatory systems will be taken to deal with the risks and incidents of China-concept
overseas listed companies, and cybersecurity and data privacy protection requirements and similar matters.
On December 24, 2021, the China Securities Regulatory
Commission, or the CSRC, issued Provisions of the State Council on the Administration of Overseas Securities Offering and Listing by Domestic
Companies (Draft for Comments) (the "Administration Provisions"), and the Measures for the Overseas Issuance of Securities
and Listing Record-Filings by Domestic Enterprises (Draft for Comments) (the "Measures"), which were published for public
comments only, for which the comment period expired on January 23, 2022.
59
The Administration Provisions and Measures (collectively,
the "Draft Rules Regarding Overseas Listing") for overseas listings lay out specific requirements for filing documents and
include unified regulation management, strengthening regulatory coordination, and cross-border regulatory cooperation. Domestic companies
seeking to list abroad must carry out relevant security screening procedures if their businesses involve such supervision. Companies endangering
national security are among those off-limits for overseas listings.
On February 17, 2023, the CSRC promulgated the
Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies, or the Trial Measures, and five supporting
guidelines, which came into effect on March 31, 2023. The Trial Measures and its supporting guidelines, reiterate the basic principles
of the Draft Rules Regarding Overseas Listing and impose substantially the same requirements for the overseas securities offering and
listing by domestic enterprises. Pursuant to the Trial Measures, domestic companies that seek to offer or list securities overseas, both
directly and indirectly, shall complete filing procedures with the CSRC pursuant to the requirements of the Trial Measures within three
working days following its submission of initial public offerings or listing application. If a domestic company fails to complete the
required filing procedures or conceals any material fact or falsifies any major content in its filing documents, such domestic company
may be subject to administrative penalties, such as orders to rectify, warnings, fines, and its controlling shareholders, actual controllers,
the person directly in charge and other directly liable persons may also be subject to administrative penalties, such as warnings and
fines.
According to the Notice on the Administrative
Arrangements for the Filing of the Overseas Securities Offering and Listing by Domestic Companies from the CSRC, or the CSRC Notice, which
was promulgated on February 17, 2023 and became effective on the same day, the domestic companies that have already been listed overseas
before the effective date of the Overseas Listing Trial Measures (i.e. March 31, 2023) shall be deemed as existing issuers (the "Existing
Issuers"). Existing Issuers are not required to complete the filing procedures immediately, and they shall be required to file with
the CSRC for any subsequent offerings. Further, according to the CSRC Notice, domestic company obtained approval from overseas regulatory
authorities or securities exchanges (for example, the effectiveness of a registration statement for offering and listing in the U.S. has
been approved) for their indirect overseas offering and listing prior March 31, 2023 but have not yet completed their indirect overseas
issuance and listing, are granted a six-month transition period from March 31, 2023 to September 30, 2023. Those issuers that complete
their indirect overseas offering and listing within such six-month period are deemed as Existing Issuers and are not required to file
with the CSRC for their indirect overseas offerings and listings. Within such six-month transition period, however, if such domestic companies
fail to complete their indirect overseas issuance and listing, they shall complete the filing procedures with the CSRC.
The Opinions, the Trial Measures and any related
implementing rules to be enacted may subject us to additional compliance requirements in the future financial activities. See "Risk
Factors - Risks Relating to Doing Business in the PRC - The Chinese governmental and regulatory interference could significantly limit
or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly
decline or be worthless."
In August 2006, six PRC regulatory authorities,
including the CSRC, jointly adopted the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or
the M&A Rules, amended in June 2009. The M&A Rules, among other things, require that if an overseas company established or controlled
by PRC companies or individuals, or PRC Citizens, intends to acquire equity interests or assets of any other PRC domestic company affiliated
with the PRC Citizens, such acquisition must be submitted to the MOFCOM for approval. The M&A Rules also require that an Overseas
SPV formed for overseas listing purposes and controlled directly or indirectly by the PRC Citizens shall obtain the approval of the CSRC
prior to overseas listing and trading of such Overseas SPV's securities on an overseas stock exchange.
Our PRC legal counsel, Dentons Shanghai, has advised
us that, based on its understanding of the current PRC laws and regulations, our corporate structure and arrangements are not subject
to the M&A Rules. However, our PRC legal counsel has further advised us that there are substantial uncertainties as to how the M&A
Rules will be interpreted or implemented in the context of an overseas offering, and its opinions summarized above are subject to any
new laws, rules and regulations or detailed implementations and interpretations in any form relating to the M&A Rules.
60
Regulations Relating to Employment
The Labor Law of the People's Republic of
China, or the Labor Law, which became effective in January 1995 and was amended in 2018, and the Employment Contract Law of the People's
Republic of China, or the Employment Contract Law, effective in January 2008 and amended in 2012, require employers to provide written
contracts to their employees, restrict the use of temporary workers and aim to give employees long-term job security. Employers must pay
their employees' wages equal to or above local minimum wage standards, establish labor safety and workplace sanitation systems,
comply with state labor rules and standards and provide employees with appropriate training on workplace safety. In September 2008, the
State Council promulgated the Implementing Regulations for the PRC Employment Contract Law which became effective immediately and interprets
and supplements the provisions of the Employment Contract Law.
Under the Labor Contract Law, an employer shall
limit the number of dispatched workers so that they do not exceed a certain percentage of its total number of workers. In January 2014,
the MOHRSS issued the Interim Provisions on Labor Dispatching, which became effective in March 2014, pursuant to which it provides that
the number of dispatched workers used by an employer shall not exceed 10% of the total number of its employees.
The PRC governmental authorities have passed a
variety of laws and regulations regarding social insurance and housing funds from time to time, including, among others, the Social Insurance
Law of the People's Republic of China, the Regulation of Insurance for Labor Injury, the Regulations of Insurance for Unemployment,
the Provisional Insurance Measures for Maternal Employees, the Interim Administrative Provisions on Registration of Social Insurance and
the Administrative Regulations on the Housing Provident Fund. Pursuant to these laws and regulations, enterprises in the PRC shall provide
their employees with welfare schemes covering pension insurance, unemployment insurance, maternity insurance, occupational injury insurance
and medical insurance, as well as housing fund and other welfare plans. Failure to comply with such laws and regulations may result in
various fines and legal sanctions and supplemental contributions to the local social insurance and housing fund regulatory authorities.
Regulations Relating to Environmental Protection
Environmental Protection Law
The Environmental Protection Law of the PRC, or
the Environmental Protection Law, was promulgated and effective on December 26, 1989, and most recently amended on April 24, 2014. This
Environmental Protection Law has been formulated for the purpose of protecting and improving both the living environment and the ecological
environment, preventing and controlling pollution, other public hazards and safeguarding people's health.
According to the provisions of the Environmental
Protection Law, in addition to other relevant laws and regulations of the PRC, the Ministry of Environmental Protection and its local
counterparts take charge of administering and supervising said environmental protection matters. Pursuant to the Environmental Protection
Law, the environmental impact statement on any construction project must assess the pollution that the project is likely to produce and
its impact on the environment, and stipulate preventive and curative measures; the statement shall be submitted to the competent administrative
department of environmental protection for approval. Installations for the prevention and control of pollution in construction projects
must be designed, built and commissioned together with the principal part of the project.
Permission to commence production at or utilize
any construction project shall not be granted until its installations for the prevention and control of pollution have been examined and
confirmed to meet applicable standards by the appropriate administrative department of environmental protection that examined and approved
the environmental impact statement. Installations for the prevention and control of pollution shall not be dismantled or left idle without
authorization. Where it is absolutely necessary to dismantle any such installation or leave it idle, prior approval shall be obtained
from the competent local administrative department of environmental protection.
61
The Environmental Protection Law makes
it clear that the legal liabilities of any violation of said law include warning, fine, rectification within a time limit, compulsory
cease operation, compulsory reinstallation of dismantled installations of the prevention and control of pollution or compulsory reinstallation
of those left idle, compulsory shutout or closedown, or even criminal punishment.
As of the date of this report, we are not aware
of any warning, investigations, prosecutions, disputes, claims or other proceedings in respect of environmental protection, nor have we
been punished or can foresee any punishment to be made by any government authorities of the PRC.
Order on Ecosystem by the Ministry of Ecology
and Environment 2019 Classification-based Management on Fixed Pollutant Source
Pursuant to the Catalog of Classified Management
of Pollutant Discharge Permits for Stationary Pollution Sources, which was promulgated by the Ministry of Ecology and Environment on July
28, 2017 and most recently amended on December 20, 2019. The Ministry of Ecology and Environment implements a classification-based management
on the environmental impact assessment, or EIA, of pollutants according to pollutant amount and the impact of the pollutants on the environment
as below:
●
For those pollutant discharge units with large amount of pollutants and significant environmental impacts, the key management on a pollutant discharge permit is required;
●
For those pollutant discharge units with small amount of pollutants and small environmental impacts, the simplified management on a pollutant discharge permit is required; and
●
For those pollutant discharge units with very small amount of pollutants and very small environmental impacts, the pollutant discharge registration form is required.
The medical device manufacturing is classified
as to fill in a Registration Form. Upon submission of all required documentation, we are registered under the new system by filling in
Pollution Source Registration Form.
Regulations Relating to Customer Rights Protection
The PRC Customer Rights and Interests Protection
Law, or Customer Protection Law, as amended on October 25, 2013 and effective on March 15, 2014, sets out the obligations of
business operators and the rights and interests of the customers. Pursuant to this law, business operators must guarantee that the commodities
they sell satisfy the requirements for personal or property safety, provide customers with authentic information about the commodities,
and guarantee the quality, function, usage and term of validity of the commodities. Failure to comply with the Customer Protection Law
may subject business operators to civil liabilities such as refunding purchase prices, exchange of commodities, repairing, ceasing damages,
compensation, and restoring reputation, and even subject the business operators or the responsible individuals to criminal penalties if
business operators commit crimes by infringing the legitimate rights and interests of customers.
Regulations Relating to Tax in the PRC
Income Tax
The PRC Enterprise Income Tax Law was
promulgated in March 2007 and was most recently amended in December 2018. The PRC Enterprise Income Tax Law applies a uniform
25% enterprise income tax rate to both foreign-invested enterprises and domestic enterprises, except where tax incentives are granted
to special industries and projects. Under the PRC Enterprise Income Tax Law, an enterprise established outside China with "de
facto management bodies" within China is considered a "resident enterprise" for PRC enterprise income tax purposes
and is generally subject to a uniform 25% enterprise income tax rate on its worldwide income. Under the implementation regulations to
the PRC Enterprise Income Tax Law, a "de facto management body" is defined as the body that exercises full and substantial
control and overall management over the business, productions, personnel, accounts and properties of an enterprise.
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In April 2009, the Ministry of Finance, or MOF,
and SAT jointly issued the Notice on Issues Concerning Process of Enterprise Income Tax in Enterprise Restructuring Business, or
the Circular 59. In December 2009, SAT issued the Notice on Strengthening Administration of Enterprise Income Tax for Share Transfers
by Non-PRC Resident Enterprises, or the Circular 698. Both Circular 59 and Circular 698 became effective retroactively as of January
2008. In March 2011, SAT issued the Notice on Several Issues Regarding the Income Tax of Non-PRC Resident Enterprises, or the
SAT Circular 24, effective in April 2011. By promulgating and implementing these circulars, the PRC tax authorities have enhanced their
scrutiny over the direct or indirect transfer of equity interests in a PRC resident enterprise by a non-resident enterprise.
In February 2015, SAT issued the Notice on
Certain Corporate Income Tax Matters on Indirect Transfer of Properties by Non-PRC Resident Enterprises, or the SAT Circular 7, to
supersede existing provisions in relation to the indirect transfer as set forth in Circular 698, while the other provisions of Circular
698 remain in force. SAT Circular 7 introduces a new tax regime that is significantly different from that under Circular 698. SAT Circular
7 extends its tax jurisdiction to capture not only indirect transfers as set forth under Circular 698 but also transactions involving
transfer of immovable property in China and assets held under the establishment, and placement in China, of a foreign company through
the offshore transfer of a foreign intermediate holding company. SAT Circular 7 also addresses transfer of the equity interest in a foreign
intermediate holding company broadly. In addition, SAT Circular 7 provides clearer criteria than Circular 698 on how to assess reasonable
commercial purposes and introduces safe harbor scenarios applicable to internal group restructurings. However, it also brings challenges
to both the foreign transferor and transferee of the indirect transfer as they have to determine whether the transaction should be subject
to PRC tax and to file or withhold the PRC tax accordingly. In October 2017, SAT issued the Announcement on Issues Relating to Withholding
at Source of Income Tax of Non-resident Enterprises, or the SAT Circular 37, amended in June 2018. The SAT Circular 37 superseded
the Non-resident Enterprises Measures and SAT Circular 698 as a whole and partially amended some provisions in SAT Circular 24 and SAT
Circular 7. SAT Circular 37 purports to clarify certain issues in the implementation of the above regime, by providing, among others,
the definition of equity transfer income and tax basis, the foreign exchange rate to be used in the calculation of withholding amount,
and the date of occurrence of the withholding obligation. Specifically, SAT Circular 37 provides that where the transfer income subject
to withholding at source is derived by a non-PRC resident enterprise in installments, the installments 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.
Value-Added Tax
The PRC Provisional Regulations on Value-Added
Tax were promulgated by the State Council on December 13, 1993, which became effective on January 1, 1994 and were subsequently amended
from time to time. The Detailed Rules for the Implementation of the PRC Provisional Regulations on Value-Added Tax (2011 Revision) was
promulgated by the Ministry of Finance on December 25, 1993 and subsequently amended on December 15, 2008 and October 28, 2011. On November
19, 2017, the State Council promulgated the Decisions on Abolishing the PRC Provisional Regulations on Business Tax and Amending the PRC
Provisional Regulations on Value-Added Tax. Pursuant to these regulations, rules and decisions, all enterprises and individuals engaged
in sale of goods, provision of processing, repair, and replacement services, sales of services, intangible assets, real property, and
the importation of goods within the PRC territory are VAT taxpayers. On March 21, 2019, the Ministry of Finance, the SAT, and the General
Administration of Customs jointly issued the Announcement on Relevant Policies on Deepen the Reform of Value-Added Tax. Sales revenue
represents the invoiced value of goods, net of VAT. The VAT is based on gross sales price, starting from April 1, 2019, VAT rate was lowered
to 13%.
LAWS AND REGULATIONS RELATING TO MEDICAL DEVICES
Regulation and Classification of Medical Devices
Pursuant to the Regulations on the Supervision
and Administration of Medical Devices promulgated on January 4, 2000, effective on June 1, 2014, amended by the State Council on May 4,
2017 and now effective, and then amended on February 9, 2021 effective on June 1, 2021 ("Regulation on Supervision and Administration
of Medical Devices"), the Food and Drug Administration of the State Council shall be responsible for the national administration
and supervision of medical devices of the PRC and its local counterparts take charge of the local administration and supervision of medical
devices of the PRC.
63
Under this regulation, medical devices have been
classified into three categories based on the degree of risk. Class I medical devices shall refer to those devices with low level of risks
and whose safety and effectiveness can be ensured through routine administration. Class II medical devices shall refer to those devices
with moderate risks that must be strictly controlled and regulated to ensure their safety and effectiveness. Class III medical devices
shall refer to those devices with relatively high risks that must be strictly controlled and regulated through special measures to ensure
their safety and effectiveness.
The products we currently manufacture and sell
include Class I, II and III disposable medical devices.
Registration and Filings of Medical Devices
Pursuant to the Regulations on the Supervision
and Administration of Medical Devices and the Administrative Measures for the Registration of Medical Devices promulgated by CFDA on July
30, 2014 and came into effect on October 1, 2014 ("the Supervision and Administration of Medical Devices" was amended and
came into effect on May 4, 2017; and which was then amended on February 9, 2021 and came into effect on June 1, 2021), Class I medical
devices are subject to filing administration, and Class II and Class III medical devices are subject to pre-approval registration administration.
A registration certificate for Class II and Class III medical devices are issued upon approval, which is valid for five years and may
be renewed six months prior to its expiration date.
Clinical trials are not required for the filing
of the Class I medical devices, but necessary for the registration of Class II and Class III medical device with certain exceptions.
As of the date of this report, we are current
on the registration and filing of medical devices.
Production License for Medical Devices
Pursuant to the Regulation on the Supervision
and Administration of Medical Devices promulgated on July 30, 2014 and came into effect on October 1, 2014, as amended in 2017 and came
into effect on May 4, 2017 (amended on February 9, 2021, came into effect on June 1, 2021), and the Administrative Measures on the Production
Supervision of Medical Devices promulgated on July 30, 2014 and came into effect on October 1, 2014, as amended in 2017 and came into
effect on November 11, 2017, manufacturers engaged in the manufacturing of Class I medical devices are subject to production filing administration
and receive production filing certificates upon satisfaction of filing requirements; while those engaged in the manufacturing of Class
II and Class III medical devices are subject to pre-approval licensing administration and receive medical device production licenses upon
receipt of approval for licensing. A medical device production license is valid for five years and may be renewed six months prior to
its expiration date.
In addition, a manufacturer of medical devices
shall satisfy the following conditions:
(1)
possessing production sites, environmental conditions, production equipment and professional technicians that are suitable for such medical device produced;
(2)
possessing organizations or professional examination staff and examination equipment that carry out quality examination for such medical device produced;
(3)
formulating a management system which ensures the quality of such medical device;
(4)
having capability of after-sale services that is suitable for such medical device produced; (5) satisfying the requirements as prescribed in production R&D and production technique documents.
As of the date of this report, we are current
on the production filing and licensing of the medical devices.
Production and Quality Management of Medical
Devices
Pursuant to the Administrative Measures on the
Supervision of the Production of Medical Devices promulgated on December 29, 2014 and came into effect on March 1, 2015, as amended in
2017 and came into effect on November 17, 2017, and the Standards on Production and Quality Management of Medical Devices promulgated
by the CFDA on December 29, 2014 and came into effect on March 1, 2015, an enterprise engaged in the production of medical devices shall
establish and effectively maintain a quality control system in accordance to the requirements of the Standards on Production and Quality
Management of Medical Devices. The enterprise engaged in the production of medical devices shall regularly conduct comprehensive self-inspection
on the operation of quality management system and submit this report to the local food and drug supervision and administration authorities
before the end of every year. The enterprise shall also establish its procurement control procedure and assess its suppliers by establishing
an examination system to ensure the purchased products are in compliance with the statutory requirements. The enterprise shall apply risk
management to the whole process of design and development, production, sales and after-sale services.
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Pursuant to The Notice of Four Guidelines including
On-site Inspection Guidelines for the standards on Production and Quality Management of Medical Devices promulgated by the CFDA on September
25, 2015 and came into effect on September 25, 2015, during the course of on-site verification of the registration of medical devices
and on-site inspection of production license t(including change production license), the inspection team shall, in accordance with the
guidelines, issue recommended conclusions for on-site inspections, which shall be divided into "Passed," "Failed"
and "Reassessment after rectification." During the supervision and inspection, if it is found that the requirements of the
key items or ordinary items that may have direct impact on product quality are not satisfied, the enterprise shall suspend production
and go through rectification. If it is found that the requirements of the ordinary items are not satisfied, and it does not directly affect
product quality, the enterprise shall rectify in a prescribed time. The regulatory authorities will examine and verify the recommended
conclusions and on-site inspection materials submitted by the inspection group and issue the final inspection results.
The inspection team has conducted several on-site
inspections on our standards of production and quality management of medical devices during the track record period, the recommended conclusions
issued by the inspection team were "Passed" or "Rectification within the prescribed period." The matters with
respect to "Rectification within the prescribed period" have been rectified within the prescribed period and submitted to
the inspection team.
According to the on-site inspections on our standards
of production and quality management conducted by competent authorities, we are in compliance with the requirements of the standards on
production and quality management of medical devices.
Good Clinical Practice for Medical Devices
On March 1, 2016, the CFDA and the National Health
and Family Planning Commission jointly promulgated the Good Clinical Practice for Medical Devices, which became effective as of June 1,
2016. The regulation includes full procedures of clinical trial of medical devices, including, among others, the protocol design, conduction,
monitoring, verification, inspection, and data collection, recording, analysis and conclusion and reporting procedure of a clinical trial.
For conducting clinical trials of medical devices,
an applicant shall organize to formulate scientific and reasonable clinical trial protocol based on the categories, risks and intended
use of the medical devices for the clinical study. The applicant shall be responsible for organizing to develop and revise of the researcher's
manual, clinical trial protocol, informed consent form, case report form, relevant standard operating procedures and other relevant documents,
and shall be responsible for organizing necessary trainings for the clinical trials. The applicant shall select the clinical trial institutions
and its researchers from the qualified medical device clinical trial institutions according to the characteristics of the medical devices
to be used in the clinical study.
As an applicant for clinical trials of medical
devices, we are responsible for initiating, applying, organizing and monitoring such clinical trials, and shall be responsible for the
authenticity and reliability of the clinical trials.
Operation License for Medical Device
Pursuant to the Regulations on the Supervision
and Administration of Medical Devices and the Administrative Measures on the Operation Supervision of Medical Devices, promulgated on
July 30, 2014 and came into effect on October 1, 2014 and last amended on March 10, 2022, filing and licensing are not required for the
operation of Class I medical devices. Operators engaged in the operation of Class II medical devices are subject to filing administration
and will receive medical device operation filing certificate upon satisfaction of filing requirement, while operators engaged in the operation
of Class III medical devices are subject to pre-approval licensing administration and will receive medical device operation license upon
receipt of approval for licensing. A medical device operation license is valid for five years and may be renewed six months prior to its
expiration date.
To engage in business operations of medical devices,
the following requirements shall be met:
1.
Having a quality control institution or staff corresponding to the business scope and scale, and the staff shall have relevant education or professional titles certified by the state.
2.
Having an operation and storage premise corresponding to the business scope and scale.
3.
Having storage conditions corresponding to the business scope and scale; warehouses are not required if all storage is commissioned to other operators of medical devices.
4.
Having a quality control system corresponding to the medical devices concerned.
5.
Possessing the capability of professional guidance, technical training and after-sale service corresponding to the medical devices it operates; or it has come into an agreement on technical support with a relevant institution.
An enterprise to be engaged in business operations
of Category III medical devices shall also have a computerized information management system compliant with quality standards to ensure
traceability of products. An enterprise to be engaged in business operations of Category I or Category II medical devices is encouraged
to set up such a system.
As of the date of this report, we are current
on the operation filing and licensing of the medical devices.
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Special Procedures for Examination and Approval
of Innovative Medical Devices
On October 2017, the General Office of the CPC
Central Committee and the General Office of the State Council issued the Opinions on Deepening the Reform of the Evaluation and Approval
Systems and Encouraging Innovation on Drugs and Medical Devices, which aims to encourage the innovation for medical devices.
Pursuant to the Opinions, the priority review
and approval will be applicable to innovative medical devices supported by the National Science and Technology Major Projects and the
National Key R&D Program of China, and the clinical trials of which having been conducted by the National Clinical Research Center,
and approved by the management department of National Clinical Research Center. Pursuant to the Special Procedures for Examination and
Approval of Innovative Medical Devices which were promulgated by the NMPA on November 2, 2018 and came into effect on December 1, 2018,
special procedures shall be applicable to the examination and approval for medical devices in the following circumstances:
(1)
if the applicant legally owns the invention patent of the core technology of the product through its technological innovation activities in the PRC, or legally obtained the invention patent or the right of use thereof through transfer in the PRC, and that the interval between the date of application for the special examination and approval of innovative medical devices to the date of authorized publication should not exceed five years; or the patent administration department of the State Council has disclosed the application for the invention patent of the core technology and the Patent Search and Consultation Center of the National Intellectual Property Administration of the PRC has issued the patent search report setting out the novelty and innovation of the core technology solution of the product;
(2)
the applicant has developed the prototype product and completed the preliminary research under a true and controllable process that generated complete and traceable data;
(3)
the product has major working mechanism or mechanism of action which is the first of its kind in the PRC, has fundamental improvement in product performance or safety compared with similar products, is of an internationally leading standard in terms of techniques and has significant clinical value. The Center for Medical Device Evaluation of the NMPA should give priority to the innovative medical devices in their technical review upon receiving the registration application, after which the NMPA will give priority to the product in their administrative approval.
Advertisements of Medical Devices
Pursuant to the Regulations on Tentative Measures
for the Censorship of Advertisement for Drugs, Medical Devices, Dietary Supplements, Food Formula for Special Medical Purpose promulgated
by SAMR on December 24, 2019 and came into effect on March 1, 2020, the State Administration for Market Regulation is responsible for
organizing and guiding the review of advertisements for drugs, medical devices, health foods and formula foods for special medical purposes.
The administrations for market regulation and drug administrations (hereinafter referred to as the "advertisement review authorities")
of all provinces, autonomous regions and centrally administered municipalities shall be responsible for the review of advertisements for
drugs, medical devices, health food and formula food for special medical purposes, and may entrust other administrative authorities to
implement review of advertisements pursuant to the law.
The validity period of the advertisement approval
number for drugs, medical devices, health food and formula food for special medical purposes shall be consistent with the shortest validity
period of the product registration certificate, filing certificate or production license. If no valid period is prescribed in the product
registration certificate, filing certificate or production license, the valid period of the advertisement approval number shall be two
years.
Advertisements for drugs, medical devices, health
food and formula food for special medical purposes shall be true and legitimate and shall not contain any false or misleading contents.
Advertisers shall be responsible for the veracity and legitimacy of the contents of advertisements for drugs, medical devices, health
food and formula food for special medical purposes.
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National Medical Insurance Program
The national medical insurance program was adopted
pursuant to the Decision of the State Council on the Establishment of the Urban Employee Basic Medical Insurance Program issued by the
State Council on December 14, 1998, under which all employers in urban cities are required to enroll their employees in the Urban Employee
Basic Medical Insurance Program and the insurance premium is jointly contributed by the employers and employees. Pursuant to the Opinions
on the Establishment of the New Rural Cooperative Medical System forwarded by the General Office of the State Council on January 16, 2003,
China launched the New Rural Cooperative Medical System to provide medical insurance for rural residents in selected areas which has since
spread to the whole nation. The State Council promulgated the Guiding Opinions of the State Council about the Pilot Urban Resident Basic
Medical Insurance on July 10, 2007, under which urban residents of the pilot district, rather than urban employees, may voluntarily join
Urban Resident Basic Medical Insurance. In 2015, the PRC government announced the Outline for the Planning of the National Medical and
Health Service System (2015-2020) which aims to establish a basic medical and health care system that covers both rural and urban citizens
by 2020. On January 3, 2016, the State Council issued the Opinions on Integrating the Basic Medical Insurance Systems for Urban and Rural
Residents to integrate the Urban Resident Basic Medical Insurance and the New Rural Cooperative Medical System and the establishment of
a unified Basic Medical Insurance for Urban and Rural Residents, which will cover all urban and rural non-working residents expect for
rural migrant workers and persons in flexible employment arrangements who participate in the basic medical insurance for urban employees.
With regard to reimbursement for medical devices
and diagnostic tests, the Notice of Opinion on the Diagnosis and Treatment Management, Scope and Payment Standards of Medical Service
Facilities Covered by the National Urban Employees Basic Medical Insurance Scheme (Lao She Bu Fa [1999] No. 22) prescribes the coverage
of diagnostic and treatment devices and diagnostic tests where part of the fees is paid through the basic medical insurance scheme. It
also includes a negative list that precludes certain devices and medical services from governmental reimbursement. Detailed reimbursement
coverage and rate for medical devices and medical services (including diagnostic tests and kits) are subject to each province's
local policies.
Export Registration
Pursuant to the Regulation on the Supervision
and Administration of Medical Devices and the Measures for the Supervision and Administration of Medical Device Production promulgated
by the CFDA and amended on November 11, 2017 and March 10, 2022, CFDA, in accordance with the spirit of the Notice of Guo Ban Fa [94]
No. 66 of the State Council, conducts inspections of safety and legality of the exported products manufactured by domestic enterprises,
grants legitimate production license in China (if these products are sold within Chinese territory). In accordance with international
practice, the quality of exported medical devices is mainly supervised by the importing countries. However, some importing countries/regions
may require exporting enterprises to provide Medical Device Product Export Sales Certificates issued by the CFDA. Pursuant to Announcement
on Issuing the Provisions on the Administration of Medical Device Product Export Sales Certificates, promulgated by the CFDA and effective
on September 1, 2015, such exporting enterprises may apply to the provincial departments of the CFDA at the places where enterprises are
located for Medical Device Product Export Sales Certificates.
The premise of obtaining Medical Device Product
Export Sales Certificates is that the relevant production enterprises have obtained medical device product registration certificates and
production licenses or have undergone the formalities for recordation and production recordation of medical device products in China.
The valid period of Medical Device Product Export Sales Certificates, except being specified for one time use, shall not expire after
the earliest deadline of any certificate among various certificates submitted by the enterprise amid the application materials, and shall
be no longer than two years. Where the relevant materials submitted by an enterprise change, the enterprise shall report to the certificate
issuing department in a timely manner. Where the relevant materials change, or the Medical Device Product Export Sales Certificate still
needs to be used after its expiration, the enterprise shall apply for a new Medical Device Product Export Sales Certificate. Where the
CFDA find that any relevant enterprises fail to meet the requirements of relevant regulations on production, they shall downgrade the
credit ratings of such enterprises to lower levels; or, when any enterprises are considered failing to meet the requirements for issuance
of certificates anymore, or the relevant materials submitted by the enterprises change, the provincial CFDA departments shall notify the
relevant information in a timely manner.
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Two-invoice System
According to the Notice of Publishing Opinions
on Implementing Two-invoice System in Drug Procurement Among Public Medical Institutions (For Trial Implementation) which was issued on
December 26, 2016, the "two-invoice system" refers to the system that requires one invoice to be issued from pharmaceutical
manufacturers to pharmaceutical distributors and the other invoice to be issued from pharmaceutical distributors to medical institutions.
The wholly owned or holding commercial company (only one commercial company is permitted in the whole country) or the domestic general
agent for overseas drugs (only one domestic agent is permitted in the whole country) established by a pharmaceutical manufacturer or a
group enterprise integrating science, industry and trade may be regarded as a manufacturer. The allocation of drugs between a pharmaceutical
distribution group enterprise and its wholly owned (holding) subsidiaries or among its wholly owned (holding) subsidiaries may not be
regarded as a process for which an invoice should be issued, but one invoice is allowed to be issued at most.
Currently, some provinces in the PRC have formulated
relevant rules and regulations to implement the "two-invoice system" in the field of medical consumables, for instance, the
Notice on the Sharing of Transparent Procurement Results of Medical Devices (Medical Consumables) across the Province promulgated by the
Fujian Provincial Medical Security Management Committee Office in July 2018, the Notice on Further Promoting the "Two Invoice System"
on Medicines and Medical Consumables issued by eight local government departments of Shaanxi Province including Deepen Medical and Healthcare
System Reform Leading Group Office of Shaanxi Province in July 2018, and the Opinions on Implementation of the "Two Invoice System"
in Medical Consumables Procurement by Public Medical Institutions in Anhui Province (for Trial Implementation) issued by five local government
departments of Anhui Province including Food and Drug Administration of Anhui Province in November 2017.
LAWS AND REGULATIONS RELATING TO LAND USE
Overview of relevant PRC Laws and Regulations
on Land Use Rights
Pursuant to relevant PRC land laws and stipulations,
there are two kinds of land in China: 1) collectively owned land, which is normally owned by the farmers or village for agricultural use;
and 2) state owned land which is sub-divided into allocated and granted land use rights. Allocated land are land rights granted by the
Chinese government to an entity for a particular purpose (e.g., research, military, medical etc.). These allocated rights are inferior
in that they must be used for the specified purpose and cannot be transferred, leased or mortgaged. Granted land, on the other hand, is
paid for and can be used for commercial and industrial purposes. These land use rights are the preferred land use rights for foreign investors
as they are freely transferable (subject normally to the land being developed, as undeveloped land cannot normally be sold), leased and
mortgaged. Land may be designated for commercial, industrial, residential or other purposes and may not be used for any non-designated
purpose. The land authorities may impose administrative sanctions, including fines, injunction orders or even confiscation of the land
use rights, for any breach of this provision. The term of land use rights varies depending on the designated purpose. A land user may
extend the term by entering into a contract to extend the term and pay an additional land grant fee to the land authorities. Upon the
execution of a land use rights grant contract and payment of the land grant fee, owners of land use rights will be issued a State-owned
land use certificate, which sets forth, among other things: (i) the nature (granted or allocated); (ii) designated purpose; (iii) term
of the land use rights; (iv) the location and area of the land; and (v) whether the land use rights are subject to any security interest.
This certificate is the primary evidence of legal and valid land use rights.
Overview of relevant PRC Laws and Regulations
on Buildings
It is required under the PRC law to obtain relevant
permits from different authorities before commencing the construction of a building. The required permits are, inter alia, a State-owned
Land Use Certificate, a Planning Permit of Land for Construction Use, a Planning Permit of Construction Project, and a Commencement Permit
of Construction Project (except for those projects where the construction investment is less than RMB 300,000 or the construction area
is less than 300 square meters). After the completion of construction, the owner shall also apply at relevant authorities for inspection
and acceptance of the construction project and then obtain a Certificate for Completion Acceptance of Construction Project as well as
a Title Certificate for Building. Further, pursuant to relevant PRC laws and regulations, the premises title certificate is the only legal
certificate by which the owner legally has the ownership in respect of the building and thereby exercises rights to possess, utilize,
profit from and dispose of the premises. Without such certificate, it is not permitted to transfer the premises.
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According to the Urban and Rural Planning Law
of the PRC, if a rural construction planning permit is not obtained in accordance with the law or construction is not carried out in accordance
with the provisions of the rural construction planning permit, the township or town people's government shall order the construction
to stop and make corrections within a time limit.
Not all the buildings of Jiangsu Yada and Jiangsu
Huadong attached on the land have appropriate title certificates. The buildings not granted title certificate are at a risk of being dismantled
or other administrative penalties if they are identified as illegal buildings due to the violation of the PRC Land Administration Law,
the PRC Law on Urban and Rural Planning, and other relevant laws and regulations.
Regulation and Classification of Land Allocation
According to the PRC Land Administration Law,
the State legally adopts the system of compensation for the use of land owned by the State, except where the State allocates the right
to use state-owned land within the bounds of the law; A construction project developer utilizing state-owned land shall generally obtain
the use right of state owned land through paid means such as granting for compensation. The following categories of land may be directly
allocated with the lawful approval of the people's governments at or above the county level: (1) land for use by government institutions
or the military; (2) land for urban infrastructure or public welfare projects; (3) land for energy, transportation. and water conservancy
projects as well as other infrastructure projects supported by the government; and (4) other land as provided for by laws or administrative
regulations. In addition, according to the Provisions on the Economical and Intensive Use of Land (promulgated by Order No.61 of the Ministry
of Natural Resources on May 22, 2014 and amended in accordance with the Decision of the Ministry of Natural Resources on the First Group
of Repealed and Amended Departmental Rules adopted at the 2nd executive meeting of the Ministry of Natural Resources on July 16, 2019),
except that land for military use, affordable housing, or other special purposes such as national security or public order may be supplied
without consideration by means of allocation, payment is required for land used for business purposes, including land used for office
space of state authorities, transportation, energy, or water conservancy and other infrastructure (industry), urban infrastructure and
various social undertakings; the land user and land prices for commercial use shall be determined by means of bidding, auction, or listing.
The acquisition and use of allocated land by enterprises shall comply with the special restrictions as prescribed by laws and regulations.
Pursuant to Interim Regulations of the People's
Republic of China Concerning the Assignment and Transfer of the Right to the Use of the State-owned Land in the Urban Areas, promulgated
by the State Council and amended on November 29, 2020, the allocated right to the use of the land may not be transferred, leased, or mortgaged,
with the exception of cases as specified in following cases and subject to the approval of the land administration departments and the
housing administration departments under the people's governments at the municipal and county levels: (i) the land users are companies,
enterprises, or other economic organizations, or individuals; (ii) a certificate for the use of state-owned land had been obtained; (iii)
possessing legitimate certificates of property rights to the above-ground buildings and other attached objects; and (iv) a contract for
assigning the right to the use of land is signed in accordance with the regulations and the land user makes up for the payment of the
assignment fee to the local municipal or county people's government or uses the proceeds resulting from the transfer, lease or mortgage
to pay the assignment fee. Any units or individuals that transfer, lease or mortgage the allocated right to the use of the land without
authorization shall have their illegal incomes thus secured confiscated by the land administration departments under the people's
governments at the municipal and county levels and shall be fined in accordance with the seriousness of the case.
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C. Organizational Structure
See "—A. History
and Development of the Company."
D. Property, Plants and Equipment
Property, Plants, and Equipment
Our PRC headquarters, manufacturing facilities
and office spaces are located in Yangzhou, Jiangsu Province, PRC.
Land Use Rights We Obtained
We obtained the following land use rights for
the construction of our headquarters, manufacturing facilities and office spaces, which cover an aggregate lot area of approximately 383,172
square feet (equivalent to 35,597.84 square meters), with the breakdown of land use set forth in the table below:
Land User
Land Use Type
Description/Use
Location
Lot Area
(Square Meters)
Yangzhou Huada
Allocation
Industrial land
Tongda Road, Touqiao Town, Hanjiang District, Yangzhou
6,700.24
Jiangsu Yada
Assignment
Industrial land
Xinqiao Village, Touqiao Town, Guangling District, Yangzhou
15,991.00
Jiangsu Huadong
Allocation
Industrial land
No.88 Tongda Road, Touqiao Town, Guangling District, Yangzhou
11,717.44
Jiangsu Yada
Allocation
Industrial land
Tongda Road, Touqiao Town, Hanjiang District, Yangzhou
1,189.16
Total
35,597.84
Properties We Own
We own the premises of our headquarters, manufacturing
facilities and office spaces, which cover an aggregate building area of approximately 246,538 square feet (equivalent to 22,904.12 square
meters), with the breakdown of square footage set forth in the table below:
Description/Use
Owner
Location
Area (Square Meters)
Manufacturing facility
Jiangsu Yada
No.58 Yada Road, Touqiao Town
Land Lot Area 15,991.00/ Building Area 3,545.09 (Floors 1-4)
Manufacturing facility
Jiangsu Yada
No.58 Yada Road, Touqiao Town
Land Lot Area 15,991.00/ Building Area 394.62 (Floor 1)
Manufacturing facility
Jiangsu Yada
No.58 Yada Road, Touqiao Town
Land Lot Area 15,991.00/ Building Area 2,412.30
Manufacturing facility
Jiangsu Yada
No.58 Yada Road, Touqiao Town
Land Lot Area 15,991.00/ Building Area 428.79 (Floor 1)
Manufacturing facility
Yangzhou Huada
No.1 East Tongda Road, Touqiao Town
Land Lot Area 6,700.24/ Building Area 2,109.77 (Floors 1-2)
Office space & manufacturing facility
Yangzhou Huada
No.2,3,4 East Tongda Road, Touqiao Town
Land Lot Area 6,700.24 464.2 (Floor 1)；1,224.45 (Floors 1-2)；1,005.73 (Floor 1)
Manufacturing facility
Jiangsu Yada
No.1 Zhu Group, Xuzhuang, Datong Village, Touqiao Town
3,023.2
Manufacturing facility
Jiangsu Huadong
No.88 Tongda Road, Touqiao Town
Land Lot Area 11717.44/ Building Area 3,709.93 (Floors 1-2)
Manufacturing facility
Jiangsu Huadong
No.88 Tongda Road, Touqiao Town
Land Lot Area 11717.44/ Building Area 4,586.04
    (Floors 1-2)
Total
22,904.12
70
Properties We Lease
In addition to the above-mentioned properties
that we own, we currently lease several properties in Yangzhou for an aggregate area of approximately 85,241 square feet (equivalent to
7,919 square meters) from our PRC subsidiaries for processing shops and office space. All leases are subject to renewal upon approval
of the lessors, subject to the lessor receiving renewal requests at least three months in advance. Presently, the leases have been renewed
through 2023.
The breakdown of the leased properties is as follows:
Lessor/Rental
Cost per month
Lessee
Location
Area
(Square
Meter)
Annual
Rent
Term
Use
Jiangsu Huadong
Yangzhou Huada
No.88 Tongda Road, Guangling District, Yangzhou
670
$5,828(RMB40,200.00)
January 1, 2023 to December 31, 2023
Processing Workshop
Jiangsu Yada
Yangzhou Huada
No.88 Tongda Road, Guangling District, Yangzhou
20
$174
(RMB1,200.00)
January 1, 2023 to December 31, 2023
Office
Jiangsu Huadong
Jiangsu Yada
No.88 Tongda Road, Guangling District, Yangzhou
1,100
$9,569 (RMB66,000.00)
December January 1, 2023 to December 31, 2023
Processing Workshop
Yangzhou Huada
Jiangsu Huadong
No.88 Tongda Road, Guangling District, Yangzhou
4,804.15
$41,792 (RMB288,249.00)
January 1, 2023 to December 31, 2023
Processing Workshop
Jiangsu Yada
Jiangsu Huadong
No.88 Tongda Road, Guangling District, Yangzhou
1,325.00
$11,526 (RMB79,500.00)
January 1, 2023 to December 31, 2023
Office
*
Zhu Yi is not a related party to the Company.
ITEM 4A. UNRESOLVED STAFF COMMENTS
Not applicable.
71
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
The following discussion of our financial condition
and results of operations is based upon and should be read in conjunction with our consolidated financial statements and their related
notes included in this annual report. This report contains forward-looking statements. In evaluating our business, you should carefully
consider the information provided under the caption "Item 3. Key Information—D. Risk Factors" in this annual report.
We caution you that our businesses and financial performance are subject to substantial risks and uncertainties.
A. Operating Results
Business Overview
Meihua International Medical Technologies Co.,
Ltd., through its operating subsidiaries, is mainly engaged in the manufacture, research and development and sales of Class I, II and
III medical devices. It has a history of more than 30 years and has a multiple product categories, with more than 800 domestic products
and more than 120 export products. The main product lines include disposable infusion pumps, anesthesia puncture kits, electronic pumps,
full anesthesia kits, urethral catheterization kits, gynecological examination kits, endotracheal intubation, dressing applications and
various tubes. It is the leading enterprise in China's medical consumables industry. The Company has received qualification to manufacture
and produce China's first, second and third type of medical device consumables and, at the same time, the Company has acquired FDA registration
and the European Union's CE certification. Relevant permissions have been obtained in major sales markets to meet local regulatory
requirements.
The Company's distribution network covers
major global markets. Internationally, the Company mainly exports medical devices through exporting distributors. To date, the Company
has 324 exporting distributors responsible for distributing its products to end users in Europe, North America, Asia, South America, Africa,
and Oceania. In the Chinese market, the Company sells products under its own brand to customers all over the country. The Company's
product permeation for mainland China has reached major medical institutions and pharmacies through some 3,004 distributors. At the same
time, the Company has established a cooperative network with more than 525 hospitals through its own direct sales channels.
Revenues decreased by $691,369, or approximately
1%, to $103,346,341 for the year ended December 31, 2022 from $104,037,710 for the year ended December 31, 2021. The decrease was mainly
due to a decline in demand for customer orders.
Net income decreased by $14,771,875, or approximately 71%, to $6,177,704
for the year ended December 31, 2022 from $20,949,579 for the year ended December 31, 2021. The decrease was mainly due to a sharp increase
in service expenses and the write-off of the Tai He deposit.
Revenues increased by $14,976,700, or approximately
17%, to $104,037,710 for the year ended December 31, 2021 from $89,061,010 for the year ended December 31, 2020. The increase was mainly
due to the Company's business expansion, research and development of new products and development of new customers.
Net income increased by $1,904,324, or approximately
10%, to $20,949,579 for the year ended December 31, 2021 from $19,045,255 for the year ended December 31, 2020.
Coronavirus (COVID-19) Update
On January 30, 2020, the World Health Organization
declared the outbreak of the corona-virus disease (COVID-19) a "Public Health Emergency of International Concern," and on
March 11, 2020, the World Health Organization characterized the outbreak as a "pandemic." Governments in affected countries
have imposed travel bans, quarantines and other emergency public health measures, which have caused material disruption to businesses
globally and result in an economic slowdown. These measures, though temporary in nature, may continue and increase depending on developments
in the COVID-19's outbreak.
In fiscal year 2020, COVID-19 had a significant
impact on our business and results of operations as the sales volume of masks rose sharply, while at the same time sales of products other
than masks declined due to a decrease in market demand. In fiscal year 2021, as circumstances surrounding the COVID-19 epidemic stabilized
within the PRC, the market for masks was no longer in urgent shortage compared to the same period in 2020, and the production of other
epidemic prevention products resumed normal production levels. In general, with the precise control of the epidemic in the PRC, our production
and operations recovered smoothly, and the demand for other products has increased gradually.
After the initial outbreak of COVID-19, from time
to time, some instances of COVID-19 infections have emerged in various regions of China, including the infections caused by the Omicron
variants in 2022. For example, a wave of infections caused by the Omicron variants emerged in Shanghai in 2022, and a series of restrictions
and quarantines were implemented to contain the spread.
Many of the restrictive measures previously adopted
by the PRC governments at various levels to control the spread of the COVID-19 virus have been revoked or replaced with more flexible
measures since December 2022. While the revocation or replacement of the restrictive measures to contain the COVID-19 pandemic could have
a positive impact on our normal operations, the extent of the impact on the Company's future financial results will be dependent
on future developments such as the length and severity of the crisis, the potential resurgence of the crisis, future government actions
in response to the crisis and the overall impact of the COVID-19 pandemic on the global economy and capital markets, among many other
factors, all of which remain highly uncertain and unpredictable. Given this uncertainty, the Company is currently unable to quantify the
expected impact of the COVID-19 pandemic on its future operations, financial condition, liquidity and results of operations if the current
situation continues.
In preparing these consolidated financial statements,
the Company has evaluated events and transactions for potential recognition or disclosure through December 31, 2022, the date the consolidated
financial statements were available to be issued. No events require additional adjustment to or disclosure in the consolidated financial
statements.
72
Results of Operations
The following table sets forth a summary of our
consolidated results of operations for the periods presented. This information should be read together with our consolidated financial
statements and related notes included elsewhere in this annual report. The results of operations in any period are not necessarily indicative
of our future trends.
(Amounts expressed in U.S. dollars, except share
data and per share data, or otherwise noted)
Years Ended December 31, 2022, 2021 and
2020
For the Year Ended December 31,
2022
2021
2020
Revenues
Third party sales
$
103,317,145
$
103,461,809
$
88,244,403
Related party sales
29,196
575,901
816,607
Total revenues
103,346,341
104,037,710
89,061,010
Cost of revenues
65,247,864
64,232,469
51,900,823
Gross profit
38,098,477
39,805,241
37,160,187
Operating expenses
Selling
7,109,524
6,457,801
6,624,332
General and administrative
12,468,551
4,361,472
4,577,570
Research and development
2,962,904
2,725,014
2,492,059
Written-off Tai He deposit
4,755,536
-
-
Total operating costs and expenses
27,296,515
13,544,287
13,693,961
Income from operations
10,801,962
26,260,954
23,466,226
Other (income) expense:
Interest expense
194,667
180,744
137,160
Interest income
(63,725
)
(23,855
(36,583
)
Currency exchange gain
(273,432
)
(174,413
)
(393,478
)
Other expense, net
53,205
50,437
25,551
Total other (income) expenses
(89,285
)
32,913
(267,350
)
Income before income tax provision
10,891,247
26,228,041
23,733,576
Income taxes expense
4,713,543
5,278,462
4,688,321
Net income
$
6,177,704
$
20,949,579
$
19,045,255
Year ended December 31, 2022 compared to
year ended December 31, 2021
Revenues
Revenues decreased by $691,369, or approximately
1%, to $103,346,341 for the year ended December 31, 2022 from $104,037,710 for the year ended December 31, 2021. The decrease was mainly
due to a decline in demand for customer orders.
Cost of revenues
Cost of revenues primarily include cost of materials,
direct labor costs, overhead, and other related incidental expenses that are directly attributable to the Company's principal operations.
Cost of revenues increased by $1,015,395, or approximately 2%, to $65,247,864 for the year ended December 31, 2022 from $64,232,469 for
the year ended December 31, 2021. The increase was mainly due to an increase in the price of materials.
73
Gross profit margin
The following table sets forth the overall gross
profit margin of the Company:
For the Year Ended
December, 31
2022
2021
Revenues
$
103,346,341
$
104,037,710
Costs of revenues
65,247,864
64,232,469
Gross profit
$
38,098,477
$
39,805,241
Gross profit margin %
37
%
38
%
Gross profit decreased by $1,706,764, or approximately
4%, to $38,098,477 for the year ended December 31, 2022 from $39,805,241 for the year ended December 31, 2021. Gross profit margin decreased
from 38% for the year ended December 31, 2021 to 37% for the year ended December 31, 2022 due to an increase in the cost of materials.
Operating costs and expenses
Our operating costs and expenses consist of selling
expenses, general and administrative expenses and research and development expenses.
Selling
The following table sets forth a breakdown of
the selling expenses of the Company:
Years Ended December 31, 2022 and 2021
2022
2021
Transportation expenses
$
2,585,485
$
2,802,680
Salaries and benefits
1,468,247
1,287,436
Entertainment expenses
1,178,064
786,226
Conference expenses
1,125,353
774,298
Travel allowance
343,439
341,165
Auto expenses
243,706
168,832
Advertising expenses
95,432
21,498
Other expenses
69,798
275,666
Total
$
7,109,524
$
6,457,801
Selling expenses increased by $651,723, or approximately
10%, to $7,109,524 for the year ended December 31, 2022 from $6,457,801 for the year ended December 31, 2021. The increase was mainly
attributable to the combined effects of the followings:
(a)
Our conference expenses increased by $351,055 to $1,125,353 for the
year ended December 31, 2022 from $774,298 for the year ended December 31, 2021. Conference expenses are mainly related to the company's
market expansion, business development, business negotiation, medical expo, and exhibition affairs. These expenditures helped the Company
promote its products, develop markets and channels, strengthen customer communication, and establish long-term and stable cooperative
relations;
(b)
Our transportation expenses decreased by $217,195, or approximately 8%, to $2,585,485 for the year ended December 31, 2022 from $2,802,680 for the year ended December 31, 2021. The reduction in business travel  was impacted by COVID-19 related controls implemented by local governments in fiscal year 2022;
(c)
Our salaries and benefits expenses increased by $180,811 or approximately
14%, to $1,468,247 for the year ended December 31, 2022 from $1,287,436 for the year ended December 31, 2021. The increase was mainly
attributable to the fact that the COVID-19 pandemic in China had been largely brought under control and the local government cancelling
the related social insurance relief policy.
(d)
Our entertainment expenses increased by $391,838, or approximately 50%, to $1,178,064 for the year ended December 31, 2022 from $786,226 for the year ended December 31, 2021. The increase was mainly attributable to the Company's business expansion and new customer acquisition.
74
General and administrative
General and administrative expenses primarily
consist of the following expenses:
Years Ended December 31, 2022 and 2021
2022
2021
Salaries and benefits
$
1,362,803
$
1,227,228
Entertainment expenses
1,230,556
816,196
Conference fee
846,374
510,267
Auto expenses
226,763
153,911
Maintenance expenses
129,425
126,650
Depreciation expenses
104,295
147,522
Travel allowance
131,872
118,113
Office expenses
102,417
94,686
Surtax expenses
642,748
655,679
Amortization expenses
22,196
26,951
Rental expenses
7,515
20,349
Insurance expenses
108,146
9,743
Service expenses
7,200,839
183,647
Other expenses
352,602
270,530
Total
$
12,468,551
$
4,361,472
General and administrative expenses increased
by $8,107,079, or approximately 186%, to $12,468,551 for the year ended December 31, 2022, from $4,361,472 for the year ended December
31, 2021. The increase was primarily due to (a) service expenses increasing by approximately $7.0 million from approximately $0.2 million
for the year ended December 31, 2021 to approximately $7.2 million for the year ended December 31, 2022, (b) entertainment expenses increasing
by $414,360 or 51% from approximately $0.8 million for the year ended December 31, 2021 to approximately $1.2 million for the year ended
December 31, 2022, (c) conference fee expenses increasing by approximately $0.3 million from approximately $0.5 million for the year ended
December 31, 2021 to approximately $0.8 million for the year ended December 31, 2022, and (d) salaries and benefits increasing by approximately
$0.1 million from approximately $1.2 million for the year ended December 31, 2021 to approximately $1.4 million for the year ended December
31, 2022.
Research and development
The following table sets forth a breakdown of
the research and development expenses of the Company:
Years Ended December 31, 2022 and 2021
2022
2021
Sample manufacturing expenses
$
1,392,350
$
1,205,437
Salaries and benefits
1,161,696
1,093,717
Travel allowance
123,373
116,266
Depreciation expenses
8,309
8,161
Design expenses
98,068
110,265
Material expenses
27,371
46,103
Other expenses
151,737
145,065
Total
$
2,962,904
$
2,725,014
75
The research and development expenses increased
by $237,890, or approximately 9%, to $2,962,904 for the year ended December 31, 2022, from $2,725,014 for the year ended December 31,
2021. The increase was mainly due to the increase in salaries and benefits expenses which was mainly attributable to that the pandemic
in China had been brought under control and the local government had canceled the social insurance relief policy.
Income from operations
As a result of the factors described above, our
income from operations decreased by $15,458,992, or approximately 59%, to $10,801,962 for the year ended December 31, 2022 from $26,260,954
for the year ended December 31, 2021.
Income tax expense
The provision for income taxes decreased by $564,919,
or approximately 11%, to $4,713,543 for the year ended December 31, 2022, from $5,278,462 for the year ended December 31, 2021. The decrease
was mainly due to the decrease of profit before provision for income taxes in 2021.
Net income
As a result of the factors described above, our
net income decreased by $14,771,875, or approximately 71%, to $6,177,704 for the fiscal year ended December 31, 2022 from $20,949,579
for the fiscal year ended December 31, 2021.
Unrealized foreign currency translation adjustment
The Company's reporting currency is the
United States dollar ("US$"). The Company's operations are primarily conducted through the PRC subsidiaries where the
local currency is the functional currency. The functional currency of Kang Fu HK is the Hong Kong dollar and the functional currency of
Huada, Yada, Huadong and Guanghui is the Renminbi ("RMB"). Results of operations and cash flows are translated at average
exchange rates during the period, assets and liabilities are translated at the unified exchange rate at the end of the period and equity
is translated at historical exchange rates. Translation adjustments resulting from the process of translating the financial statements
denominated in RMB into U.S. dollars are included in other comprehensive income. Our foreign currency translation loss for the fiscal
year ended December 31, 2022 was $9,155,028, compared to the foreign currency translation gain of $2,083,243 for the fiscal year ended
December 31, 2021. The change was primarily due to the exchange rate fluctuation of RMB against the U.S. dollars.
Year ended December 31, 2021 compared to
year ended December 31, 2020
Revenues
Revenues increased by $14,976,700, or approximately
17%, to $104,037,710 for the year ended December 31, 2021 from $89,061,010 for the year ended December 31, 2020. The increase was mainly
due to the Company's business expansion, research and development of new products and development of new customers.
Cost of revenues
Cost of revenues primarily include cost of materials,
direct labors, overhead, and other related incidental expenses that are directly attributable to the Company's principal operations.
Cost of revenue increased by $12,331,646, or approximately 24%, to $64,232,469 for the year ended December 31, 2021 from $51,900,823 for
the year ended December 31, 2020. The increase was mainly attributable to an overall increase in sales during fiscal year 2021.
76
Gross profit margin
The following table sets forth the overall gross
profit margin of the Company:
For the Year Ended
December, 31
2021
2020
Revenues
$
104,037,710
$
89,061,010
Costs of revenues
64,232,469
51,900,823
Gross profit
$
39,805,241
$
37,160,187
Gross profit margin %
38
%
42
%
Gross profit increased by $2,645,054, or approximately
7%, to $39,805,241 for the year ended December 31, 2021 from $37,160,187 for the year ended December 31, 2020. Gross profit margin decreased
from 42% for the year ended December 31, 2020 to 38% for the year ended December 31, 2021. The higher gross profit margin in fiscal 2020
was mainly attributable to much higher selling price and gross margin for medical masks as a result of COVID-19 in fiscal year 2020. The
price of medical mask fell back to normal level as a result of increased supply in fiscal 2021, which brought down the overall gross profit
margin.
Operating costs and expenses
Our operating costs and expenses consist of selling
expenses, general and administrative expenses and research and development expenses.
Selling
The following table sets forth a breakdown of
the selling expenses of the Company:
Years Ended December 31, 2021 and 2020
2021
2020
Transportation expenses
$
2,802,680
$
2,473,655
Salaries and benefits
1,287,436
1,110,441
Entertainment expenses
786,226
869,591
Conference expenses
774,298
805,832
Travel allowance
341,165
266,518
Auto expenses
168,832
191,860
Advertising expenses
21,498
53,770
Market research
-
579,357
Other expenses
275,666
273,308
Total
$
6,457,801
$
6,624,332
Selling expenses decreased by $166,531, or approximately
3%, to $6,457,801 for the year ended December 31, 2021 from $6,624,332 for the year ended December 31, 2020. The decrease was mainly attributable
to the combined effects of the followings:
(a)
Our market research expenses decreased by $579,357 to nil for the year ended December 31, 2021 from $579,357 for the year ended December 31, 2020. The decrease was mainly attributable to that the market research conducted in fiscal year 2020 were still valid in fiscal year 2021 and therefore did not conduct additional market research in fiscal 2021.
(b)
Our transportation expenses increased by $329,025, or approximately 13%, to $2,802,680 for the year ended December 31, 2021 from $2,473,655 for the year ended December 31, 2020. The increase was mainly attributable to the increased in sales in fiscal year 2021.
(c)
Our salaries and benefits expenses increased by $176,995 or approximately 16%, to $1,287,436 for the year ended December 31, 2021 from $1,110,441 for the year ended December 31, 2020. The increase was mainly attributable to that the Covid-19 pandemic in China had been brought under control and the local government had canceled the social insurance relief policy.
(d)
Our entertainment expenses decreased by $83,365, or approximately 10%, to $786,226 for the year ended December 31, 2021 from $869,591 for the year ended December 31, 2020. The decrease was mainly attributable to that Yangzhou City in PRC had been under lockdown for some period due to the epidemic in fiscal 2021, so the relevant business entertainment expenses were reduced.
77
General and administrative
General and administrative expenses primarily
consist of the following expenses:
Years Ended December 31, 2021 and 2020
2021
2020
Salaries and benefits
$
1,227,228
$
1,062,041
Entertainment expenses
816,196
998,613
Conference fee
510,267
595,217
Auto expense
153,911
192,148
Maintenance expenses
126,650
153,896
Depreciation expenses
147,522
127,174
Travel allowance
118,113
80,179
Office expenses
94,686
115,204
Surtax expenses
655,679
557,522
Amortization expenses
26,951
26,195
Rental expenses
20,349
19,013
Insurance expenses
9,743
8,444
Service expenses
183,647
426,461
Other expenses
270,530
215,463
Total
$
4,361,472
$
4,577,570
General and administrative expenses decreased
by $216,098, or approximately 5%, to $4,361,472 for the year ended December 31, 2021, from $4,577,570 for the year ended December 31,
2020. The decrease was mainly due to a decrease of $0.2 million service expenses in fiscal year 2021.
Research and development
The following table sets forth a breakdown of
the research and development expenses of the Company:
Years Ended December 31, 2021 and 2020
2021
2020
Sample manufacturing expenses
$
1,205,437
$
1,114,789
Salaries and benefits
1,093,717
931,569
Travel allowance
116,266
105,236
Depreciation expenses
8,161
5,642
Design expenses
110,265
125,199
Material expenses
46,103
50,869
Other expenses
145,065
158,755
Total
$
2,725,014
$
2,492,059
Research and development expenses increased by
$232,955, or approximately 9%, to $2,725,014 for the year ended December 31, 2021, from $2,492,059 for the year ended December 31, 2020.
The increase was mainly due to the increase in salaries and benefits expenses which was mainly attributable to that the pandemic in China
had been brought under control and the local government had canceled the social insurance relief policy.
Income from operations
As a result of the factors described above, our
income from operations increased by $2,794,728, or approximately 12%, to $26,260,954 for the year ended December 31, 2021 from $23,466,226
for the year ended December 31, 2020.
Income tax expense
Provision for income taxes increased by $590,141,
or approximately 13%, to $5,278,462 for the year ended December 31, 2021, from $4,688,321 for the year ended December 31, 2020. The increase
was mainly due to the increase of profit before provision for income taxes in 2021.
78
Net income
As a result of the factors described above, our
net income increased by $1,904,324, or approximately 10%, to $20,949,579 for the fiscal year ended December 31, 2021 from $19,045,255
for the fiscal year ended December 31, 2020.
B. Liquidity and Capital Resources
Cash Flows and Working Capital
As of December 31, 2022 and 2021, we had cash
of $26,736,700, and $8,149,276, respectively. We believe that our current cash, cash to be generated from our operations and access to
capital market will be sufficient to meet our working capital needs for at least the next twelve months. We do not have any amounts committed
to be provided by our related party. We are also not dependent upon future financing to meet our liquidity needs for the next twelve months.
In order to implement our growth strategies, we plan to expand our business. With additional capacity, and varied product offerings, the
Company will provide tailored "one-stop" services from wound care, to surgical auxiliary supplies, to disease prevention.
To do so, we may need more capital through equity financing to expand our production and meet market demands.
Substantially all of our operations are conducted
in China and all of our revenues, expense and cash are denominated in RMB. RMB is subject to the exchange control regulation in China,
and, as a result, we may have difficulty in distributing any dividends outside of China due to PRC exchange control regulations which
restrict the ability to convert RMB into U.S. Dollars.
Under applicable PRC regulations, foreign-invested
enterprises in China may pay dividends only out of their accumulated profits, if any, determined in accordance with PRC accounting standards
and regulations. In addition, a foreign-invested enterprise in China is required to set aside at least 10% of its after-tax profit every
year as its general reserves based on PRC accounting standards until the accumulative amount of such reserves reaches 50% of its registered
capital. These reserves can't be distributed as cash dividends. The board of directors of a foreign-invested enterprise has the
discretion to allocate a portion of its after-tax profits to staff welfare and bonus funds, which can't be distributed to equity
owners except liquidation. Under PRC law, RMB can be converted into U.S. Dollars under the company's "current account"
(including dividends, trade and service-related foreign exchange transactions) rather than the "capital account" (including
foreign direct investments and loans, without the prior approval of the SAFE).
For retained earnings accrued after such date,
the board of directors will declare dividends after taking into account our operations, earnings, financial condition, the demand for
cash and availability and other relevant factors. Any declaration, payment and amount of dividends should be subject to our By-laws, charter
and applicable Chinese and U.S. state and federal laws and regulations, including the approval from the shareholders of each subsidiary
which intends to declare such dividends, if applicable.
We have limited financial obligations dominated
in U.S. dollars, thus the foreign currency restrictions and regulations in PRC on the dividends distribution will not have a material
impact on the liquidity, financial condition and results of operations of our Company.
Cash Flow Summary
Years Ended December 31, 2022, 2021 and 2020
2022
2021
2020
Net Cash (Used in) Provided by Operating Activities
$
(9,163,038
)
$
(54,663
)
$
5,325,996
Net Cash Used in Investing Activities
(8,620,292
)
(833,817
)
(16,094,404
)
Net Cash Provided by Financing Activities
37,245,500
1,860,234
1,706,750
Effect of Exchange Rate Changes on Cash
(874,746
)
(9,812
)
218,137
Cash at Beginning of Year
8,149,276
7,187,334
16,030,855
Cash at End of Year
$
26,736,700
$
8,149,276
$
7,187,334
We had a balance of cash of $26,736,700, $8,149,276
and $7,187,334, respectively as of December 31, 2022, 2021, and 2020.
79
Years Ended December 31, 2022 and 2021
Cash Flow in Operating Activities
Net cash used in operating activities was $9,163,038
for the year ended December 31, 2022, compared to net cash used in operating activities of $54,663 for the year ended December 31, 2021,
representing a $9,108,375, or a 16,663% increase, in the net cash inflow used in operating activities. The increase in net cash used in
operating activities was primarily due to the following:
a)
Change in bank acceptance receivables was approximately $4.3 million net cash outflow for the year ended December 31, 2022. For the year ended December 31, 2021, change in bank acceptance receivables was approximately $6.5 million net cash outflow, which led to approximately $2.2 million decrease in net cash outflow from operating activities;
b)
Change in accounts receivable was approximately $7.1 million net cash outflow for the year ended December 31, 2022. For the year ended December 31, 2021, change in accounts receivable was approximately $20.1 million net cash outflow, which led to approximately $12.9 million decrease in net cash outflow from operating activities;
c)
Change in accounts payables was approximately $3.4 million net cash inflow for the year ended December 31, 2022. For the year ended December 31, 2021, change in accounts payables was approximately $4.9 million net cash outflow, which led to approximately $8.3 million increase in net cash inflow from operating activities;
d)
Change in taxes payable was approximately $0.8 million net cash inflow for the year ended December 31, 2022. For the year ended December 31, 2021, change in taxes payable was approximately $0.3 million net cash outflow, which let to approximately $1.1 million increase in net cash inflow from operating activities;
e)
Write-off of the Tai He deposit resulted in approximately $4.8 million
and $nil net cash outflow for the year ended December 31, 2022 and 2021, respectively, which led to an approximately $4.8 million increase
in net cash outflow from operating activities. During the IPO, the Company entered into a series of agreements (the "Agreements")
with Tai He International Group Limited ("Tai He"), a Hong Kong investment company. Pursuant to the Agreements, Tai He agreed
to invest a minimum of $35 million in the IPO subject to the Company making a $7.0 million refundable deposit and advancing a $3.0 million
service fee for investor relations and other services payable to Tai He. The Company paid an approximately $4.8 million deposit and $2.3
million service fee to Tai He in 2022. The Company's affiliates and individual shareholders paid the rest of the agreed amount.
Later the Company learned that Tai He did not invest in the IPO or provide services to the Company related to the IPO. The Company is
now proactively working to terminate the Tai He Agreements and recover the amount paid to Tai He by the Company. Due to the uncertainty
of collection, the Company has written off the approximately $4.8 million deposit and fully expensed the $2.3 million service fee paid
by the Company to Tai He in the year ended December 31, 2022.
f)
Net cash used in operating activities for the year ended December 31, 2022 consisted of net income of approximately $6.2 million, noncash adjustments of approximately $5.1 million. Net cash used in operating activities for the year ended December 31, 2021 consisted of net income of approximately $20.9 million, noncash adjustments of approximately $0.6 million
Cash Flow in Investing Activities
Net cash used in investing activities was $8,620,292
for the year ended December 31, 2022. It consisted of purchases of property and equipment of $2,698,729, long term investment acquisition
of $5,944,709 and proceeds from disposal of fixed assets of $23,146.
Net cash used in investing activities was $833,817
for the year ended December 31, 2021. It consisted of purchases of property and equipment of $850,231 and proceeds from disposal of fixed
assets of $16,414.
Cash Flow in Financing Activities
For the year ended December 31, 2022, the Company
had net cash provided by financing activities of $37,245,500, which consisted of the proceeds from short-term bank loans of $7,579,135,
repayments of short-term bank loans of $6,241,641, proceeds from long-term bank loans of $743,052, capital contributed by non-controlling
shareholders of $635,310 and proceeds from IPO of $34,529,644.
For the year ended December 31, 2021, the Company
had net cash provided by financing activities of $1,860,234, which consisted of the proceeds from short-term bank loans of $6,510,820,
and repayments of short-term bank loans of $4,650,586.
80
Years Ended December 31, 2021 and 2020
Cash Flow in Operating Activities
Net cash used in operating activities was $54,663
for the year ended December 31, 2021, compared to net cash generated from operating activities of $5,325,996 for the year ended December
31, 2020, representing a $5,380,659, or a 101% decrease, in the net cash inflow generated from operating activities. The decrease in net
cash generated from operating activities was primarily due to the following:
a)
Change in bank acceptance receivables was approximately $6.5 million net cash outflow for the year ended December 31, 2021. For the year ended December 31, 2020, change in bank acceptance receivables was approximately $5.8 million net cash outflow, which led to approximately $0.8 million increase in net cash outflow from operating activities;
b)
Change in accounts receivable was approximately $20.1 million net cash outflow for the year ended December 31, 2021. For the year ended December 31, 2020, change in accounts receivable was approximately $13.6 million net cash outflow, which led to approximately $6.5 million increase in net cash outflow from operating activities;
c)
Change in due from related party was approximately $0.4 million net cash inflow for the year ended December 31, 2021. For the year ended December 31, 2020, change in due from related party was approximately $0.2 million net cash outflow, which led to approximately $0.6 million increase in net cash inflow from operating activities;
d)
Change in inventories was approximately $0.1 million net cash inflow for the year ended December 31, 2021. For the year ended December 31, 2020, change in inventory was approximately $0.2 million net cash outflow, which let to approximately $0.3 million decrease in net cash outflow from operating activities; and
e)
Change in deferred IPO costs and other current assets was approximately $0.9 million net cash outflow for the year ended December 31, 2021. For the year ended December 31, 2020, change in deferred IPO costs and other current assets was approximately $0.4 million net cash outflow, which led to approximately $0.5 million increase in net cash outflow from operating activities.
Cash Flow in Investing Activities
Net cash used in investing activities was $833,817
for the year ended December 31, 2021. It consisted of purchases of property and equipment of $850,231 and proceeds from disposal of fixed
assets of $16,414.
Net cash used in investing activities was $16,094,404
for the year ended December 31, 2020. It consisted of payments for long-term deposits for building of $12,311,347, purchases of property
and equipment of $3,808,259 and proceeds from disposal of fixed assets of $25,202.
Cash Flow in Financing Activities
For the year ended December 31, 2021, the Company
had net cash provided by financing activities of $1,860,234, which consisted of the proceeds from short-term bank loans of $6,510,820,
and repayments of short-term bank loans of $4,650,586.
For the year ended December 31, 2020, the Company
had net cash provided by financing activities of $1,706,750, which consisted of the proceeds from short-term bank loans of $4,359,665,
the proceeds from subscriptions receivable of $1,272,232, and repayments of short-term bank loans of $3,925,147.
81
Off-Balance Sheet Arrangements
As of December 31, 2022 and
2021, there were no off-balance sheet arrangements.
C. Research and Development, Patents and Licenses, etc.
Please see Item 4.A. "Information on the
Company—Business Overview—Intellectual Property," above.
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 year ended December 31, 2022 that are reasonably
likely to have a material adverse 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 Estimates
Our discussion and analysis
of our financial condition and results of operations are based upon our consolidated financial statements. These financial statements
are prepared in accordance with U.S. GAAP, which requires us to make estimates and assumptions that affect the reported amounts of our
assets and liabilities and revenue and expenses, to disclose contingent assets and liabilities on the date of the consolidated financial
statements, and to disclose the reported amounts of revenue and expenses incurred during the financial reporting period. The most significant
estimates and assumptions include the collection of accounts receivable, the useful lives and impairment of our long-lived assets, and
the provisions for income taxes. We continue to evaluate these estimates and assumptions that we believe to be reasonable under the circumstances.
We rely on these evaluations as the basis for making judgments about the carrying values of assets and liabilities that are not readily
apparent from other sources. Since the use of estimates is an integral component of the financial reporting process, actual results could
differ from those estimates. Some of our accounting policies require higher degrees of judgment than others in their application. We believe
critical accounting policies as disclosed in this report reflect the more significant judgments and estimates used in preparation of our
consolidated financial statements. We believe there have been no material changes to our critical accounting policies and estimates.
A full list of our critical
accounting estimates is included in Note 2 of our consolidated financial statements included elsewhere in this report.
Use
of Estimates
The preparation of consolidated
financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the amounts
reported and disclosed in the consolidated financial statements and related notes.
The most significant estimates
and judgments include allowance for bad debts, the valuation of inventory, useful life of property, plant and equipment and income taxes
related to realization of deferred tax assets and uncertain tax position. Actual amounts could differ from those estimates.
82
Fair
Value Measurement
Fair value is the price that
would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement
date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the
Company considers the principal or most advantageous market in which it would transact, and it considers assumptions that market participants
would use when pricing the asset or liability.
The Company adopted the guidance
of Accounting Standards Codification ("ASC") 820 for fair value measurements which clarifies the definition of fair value,
prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value
as follows:
Level 1:
Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.
Level 2:
Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data.
Level 3:
Inputs are unobservable inputs which 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.
Cash
Cash consists of petty cash
on hand and cash held in banks, which are highly liquid and are unrestricted as to withdrawal or use.
Bank
Acceptance Receivable
s
Bank acceptance receivables
are issued by bank under the request of the Company's customers, to pay for the purchased goods. The Company can choose to hold
acceptance notes until maturity and receive the face value payment from the bank, or sell (exchange) the acceptance notes at a discount
to another party willing to wait until maturity to receive the bank's promised payment. The maturity date of the receivables is
all within one year of the original issuance date and carried at face value. The Company is not lending money, it just sells goods to
the customers (customers can pay the purchased goods by cash, accounts receivable or bank acceptance receivables). The receivables mature
within one year and are non-interest bearing. As bank acceptance receivables are issued by the banks, payments are guaranteed.
Accounts
Receivable and Allowance for Doubtful Accounts
Accounts receivable represent
trade receivables and are recognized initially at fair value and subsequently adjusted for any allowance for doubtful accounts or impairment.
The Company records impairment
losses for accounts receivable based on assessments of the recoverability of the trade and other receivables and individual account analysis,
including the current creditworthiness and the past collection history of each debtor. Impairments arise when there is objective evidence
indicating that the balances may not be collectible. The identification of bad and doubtful debts, in particular of a loss event, requires
the use of judgment and estimates, which involve the estimates of specific losses on individual exposures, as well as a provision on historical
trends of collections. Based on management of customers' credit and ongoing relationship, management makes conclusions whether any
balances outstanding at the end of the period will be deemed non-collectible on an individual basis and on aging analysis basis. The provision
is recorded against accounts receivables balances, with a corresponding charge recorded in the consolidated statements of operations and
comprehensive income. Delinquent account balances are written-off against the allowance for doubtful accounts after management has determined
that the likelihood of collection is not probable.
Inventories
Inventories are valued using
the lower of cost or net realizable value. Cost is principally determined using the weighted-average method. The Company records adjustments
to inventory for excess quantities, obsolescence, or impairment, when appropriate, to reflect inventory at net realizable value. These
adjustments are based upon a combination of factors including current sales volume, market conditions, lower of cost or market analysis
and expected realizable value of the inventory.
83
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
A. Directors and Senior Management
The following table sets
forth certain information regarding our directors and senior management, as well as employees upon whose work we are dependent, as of
the date of this annual report.
Directors and Executive Officers
Age
Position/Title
Yongjun Liu
65
Chairman of the board of directors
Xin Wang
34
Chief Executive Officer and Director
Lianzhang Zhao
55
Chief Financial Officer
Xiaoming E
61
Independent Director
Huijuan Zhao
34
Independent Director
Wenzhang Jia
57
Independent Director
The following is a brief
biography of each of our executive officers and directors:
Yongjun Liu - Chairman of the board of directors
Mr. Liu, aged 64, has been
our Company's Chairman of the board of directors since October, 2020, Chairman and General Manager of Kang Fu International Medical
since October 2015, Chairman and General Manager of Yangzhou Huada since December 2001, Chairman and General Manager of Jiangsu Huadong
since November 2000, and Chairman and General Manager of Jiangsu Yada since December 1990. In October 2015, Mr. Liu co-founded Kang Fu
International Medical with several other co-founders, In December 2001, November 2000 and December 1990, he founded Yangzhou Huada, Jiangsu
Huadong and Jiangsu Yada, respectively.
From October 1998 to present,
Mr. Liu has been the Chairman of Yangzhou Medical Device Industry Association and Chamber of Commerce and Industry of Touqiao County.
From November 2013 to present, Mr. Liu is the Deputy to The People's Congress of Guangling district, Yangzhou City. In December
2018, Mr. Liu was awarded the "Outstanding Entrepreneurs of Guangling District" in Yangzhou. Mr. Liu is a successful entrepreneur
with over 40 years' experience in the medical device industry. Mr. Liu is a successful entrepreneur with over 40 years of experience
in the medical device industry. He has been awarded as Excellent Entrepreneur, Honest Entrepreneur Representative and Medical Device Industry
Representative many times. Mr. Liu participates in philanthropic activities, including public welfare undertakings and has sponsored various
impactful undertakings, such as road reconstruction in towns and villages, donations to the Red Cross Society, reconstruction of nursing
homes, poverty alleviation, and aid for students.
As the founder of the Company
and based on his extensive experience in the medical device industry, we believe that Mr. Liu is qualified to serve as a director.
Xin Wang – Chief Executive Officer
and Director
Mr. Xin Wang has been our
Chief Executive Officer and Director since December 1, 2022. Prior to his appointment as CEO and director of MHUA, from 2021 to 2022,
Mr. Wang was CEO of the Jiangsu Yada. In addition, Mr. Wang served as Vice General Manager of Shanghai New Asia (Group) Co., Ltd., a pharmaceutical
company, where he led production management, market expansion, research and development of proprietary Chinese traditional medicines from
2020 to 2021. From 2018 to 2020, Mr. Wang held a key position at Panda Group, Inc., a franchise restaurant corporation based in California,
where he was in charge of large commercial projects related to expanding its business operations and upgrading its brand strategy in the
U.S. market. In addition, Mr. Wang previously worked as a financial analyst at Morgan Stanley and an area manager at Citibank, N.A., thus
providing him insight into global investment banking and U.S. financial markets. Mr. Wang obtained his bachelor's degree from the
University of California Santa Barbara, where he double majored in Financial Mathematics & Statistics Analysis and Computer Science.
He also obtained his master's degree in Actuarial Science in 2012 from University of California Santa Barbara.
We believe that Mr. Wang
is qualified to serve as our CEO and a director because of his extensive knowledge and management experience in the area of the financial
market and his experience in the pharmaceutical industry.
84
Lianzhang Zhao– Chief Financial Officer
Mr. Lianzhang Zhao has been
our Chief Financial Officer since December 1, 2022. Prior to his appointment as CFO of MHUA, Mr. Lianzhang Zhao was a Senior Partner at
Yangzhou Hanrui Accounting Firm, a PRC accounting firm, from 2013 to 2022. Prior to that, from 2000 to 2013, Mr. Zhao served as the chief
financial officer of Yangzhou Guolian Garment Factory Co., which is a Sino-U.S. joint venture company in China. Mr. Zhao is a certified
public accountant ("CPA") in China, allowing him to draw on his diverse financial accounting experience across multiple international
markets to support MHUA's financial reporting matters. Mr. Zhao received his bachelor's degree in Financial Accounting and
Economic Management in 1990 from Yangzhou University.
We believe that Mr. Zhao
is qualified to serve as our CFO because of his expertise as a CPA and his extensive knowledge and experience in the financial industry.
Xiaoming E – Independent Director
Mr. E, aged 60, has been
a director of our Company since February 15, 2022. From January 2010 to present, he has served as Chairman and General Manager of Jiangsu
Changfeng Medical Industry Co., Ltd. From May 2004 to present, he has been Vice Chairman of the Yangzhou Guangling District Medical Device
Industry Association. From July 1998 to May 2004, he served as Vice Chairman of Yangzhou Sanitary Product Association. He earned a college
degree from Yangzhou Education College in economic management in March 2004.
We believe that Mr. E is
qualified to serve as a director because of his experience in the medical device industry.
Huijuan Zhao – Independent Director
Ms. Huijuan Zhao has been
a director of our Company since December 1, 2022. Ms. Huijuan Zhao served as a member of the management team at Ping'An Bank, where
she oversaw services for high net wealth clients and risk control practices from 2019 to 2022. In her prior role as head of marketing
and risk control operations at two Jiangsu-based privately owned businesses operating in the business and financial service sectors, positions
she held from 2013 to 2019, Ms. Zhao helped build out market expansion and risk control protocols and playbook and played critical supervisory
and coaching roles to the growth and expansion of both businesses. She holds a bachelor's degree in Financial English from Suzhou
University, which she received in 2012.
We believe that Ms. Zhao
is qualified to serve as director because of her experience in risk control practice. We believe she can provide valuable guidance and
oversight to the Company.
Wenzhang Jia – Independent Director
Mr. Wenzhang Jia, aged 56,
has been a director of our Company, and the chairman of our audit committee, since June 10, 2022. Mr. Jia is the chairman and chief financial
officer of Jiangsu Xibei Electronic Network Co., a company that produces and sells wire and cable, cable TV equipment and network communications
equipment, a position he has served in since February of 2000. Mr. Jia received his Bachelor's degree in finance in 2004 from Yangzhou
Institute of Commerce and Industry and pursued post-graduate studies in business administration at Tsinghua University in 2007. Mr. Jia
has been president of the Yangzhou Electrical Appliance Industry Association since 2007.
As a result of Mr. Jia's
knowledge and experience in business and finance, we believe Mr. Jia is qualified to serve as a director on our board of directors and
will provide us with valuable oversight and guidance.
85
Board Diversity
The table below provides
certain information regarding the diversity of our board of directors as of the date of this annual report.
Board Diversity Matrix
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
Gender
Part I: Gender Identity
Directors
1
4
0
0
Part II: Demographic Background
Underrepresented Individual in Home Country Jurisdiction
0
LGBTQ+
0
Did Not Disclose Demographic Background
0
Family Relationships
None of our directors or
executive officers has a family relationship as defined in Item 401 of Regulation S-K.
Controlled Company
Mr. Yongjun Liu, our chairman
of the board of directors, currently beneficially owns approximately 66.56% of the aggregate voting power of our outstanding Ordinary
Shares. As a result, we are a "controlled company" within the meaning of the Nasdaq listing rules. As a controlled company,
we are permitted to elect to rely on certain exemptions from the obligations to comply with certain corporate governance requirements,
including:
●
the requirement that a majority of the board of directors consist of independent directors;
●
the requirement that our director nominees be selected or recommended solely by independent directors; and
●
the requirement that we have a nominating and corporate governance committee and a compensation committee that are composed entirely of independent directors with a written charter addressing the purposes and responsibilities of the committees.
Although we do not intend
to rely on the controlled company exemptions under the Nasdaq listing rules even if we are a controlled company, we could elect to rely
on these exemptions in the future, and if so, you would not have the same protection afforded to shareholders of companies that are subject
to all of the corporate governance requirements of Nasdaq.
86
B. Compensation
Set forth below is the compensation
paid during the fiscal year ended December 31, 2022 to each of our executive officers and directors:
Name
2022
Compensation
Yongjun Liu
$
50,020
Xin Wang (2)
$
27,547
Yulin Wang (2)
37,261
Lianzhang Zhao (2)
4,350
Tongying Zhang (1)
$
--
Xiaoming E
11,599
Huijuan Zhao (3)
3,625
Wenzhang Jia
--
(1)
The Company had entered
    into an acting CFO agreement with Cheng Du Milly Bay Consultant Ltd. ("Milly Bay"), pursuant to which Tongying Zhang was
    assigned by Milly Bay to act as CFO of the Company and the compensation was paid to Milly Bay. Tongying Zhang resigned from her
    position as our CFO on April 26, 2022. Since that time, Yulin Wang, our then CEO and director, has served as our Interim CFO.
(2)
Following the November 30, 2022 conclusion of the Company's employment
contract with Mr. Yulin Wang, the Company appointed Mr. Xin Wang to serve as the Company's CEO and Mr. Lianzhang Zhao as the Company's
CFO since December 1, 2022.
(3)
On November 30, 2022, Mr. Xu Han resigned from his position as a member
of the board of directors due to personal reasons. On December 1, 2022, the Company appointed Ms. Huijuan Zhao to serve as an independent
member of our board of director.
C. Board Practices
Term of Office
Our directors are each appointed
for a one-year term to hold office until the next annual general meeting of our shareholders or until removed from office in accordance
with our articles of association.
Employment Agreement with our Chief Executive
Officer and Chief Financial Officer
Following the November 30,
2022 conclusion of the Company's employment contract with Mr. Yulin Wang, who had served as the Company's CEO and interim
CFO, effective December 1, 2022, the Company appointed Mr. Xin Wang to serve as the Company's CEO and a director and Mr. Lianzhang
Zhao to serve as the Company's CFO.
In conjunction with his appointment
as CEO of MHUA, Mr. Wang entered into a three-year employment agreement with MHUA. In conjunction with his appointment as CFO of MHUA,
Mr. Zhao entered into an employment agreement with MHUA.
Directors Service Contracts
On February 18, 2022, we
entered into Director Service Agreements (the "Agreements") with each of our independent directors, Xiaoming E, Xu Han (who
resigned from his position as an independent director since November 30, 2022) and Heung Ming Wong (whose service terminated on June 10,
2022). The Agreements each feature a one-year term with annual renewals. Mr. E and Mr. Han would each receive a monthly stipend of ¥8,000
(approximately $1,265) per month during their terms of service. Mr. Wong, who served as the Chairman of the Audit Committee of the board
of directors, received a monthly stipend of $2,500 per month during his term of service. In addition, Mr. Wong received options to purchase
1,000 Ordinary Shares of the Company, at an exercise price of $8.90 per share, representing a value of $10,000, as determined by reference
to the Company's IPO price. The options were to vest in equal monthly installments over Mr. Wong's initial year of service
and were exercisable for a term of ten years. Upon annual renewals of his service agreement, Mr. Wong was to receive additional options
valued at $10,000, with the number of options granted to be determined with reference to the volume weighted average price for the Company's
Ordinary Shares during the thirty (30) trading days preceding the annual renewal date. We entered into a similar agreement with Mr.
Jia following his appointment to the board of directors, and as chair of the Audit Committee, on June 28, 2022, pursuant to which Mr.
Jia received $10,000, or 1,886, of our Ordinary Shares, exercisable at $5.30 per share, which was the closing price of our Ordinary Shares
on the date of grant and which options vest in substantially equal monthly installments over a period of 12 months. Mr. Jia also receive
a cash fee of $2,500 per month during his term of service.
On December 1, 2022, in
conjunction with her appointment as a director, Ms. Zhao entered into a letter agreement with the Company outlining the terms of her
service as a director. Ms. Zhao, who serves as a member of audit committee and the chairwoman of the nominating committee, will receive
a monthly stipend of $2,500 per month during her term of service. In addition, Ms. Zhao will receive stock options to purchase 740 of
the Company's Ordinary Shares, par value $0.0005 per share, at an exercise price of $13.51. The options will vest and become exercisable
in equal monthly installments over the course of Ms. Zhao's initial year of service, that is over a 12 month period.
87
Committees of the Board
We have established and will
maintain three committees under the board of directors: an audit committee, a compensation committee, and a nominating and corporate governance
committee. We have adopted the charter for each of the three committees. Each committee's members and functions are described below.
Audit Committee.
Our audit committee consists of Wenzhang Jia, Xiaoming E and Huijuan Zhao, and is chaired by Mr. Jia. Wenzhang Jia, Xiaoming E and Huijuan
Zhao each satisfies the "independence" requirements of Rule 5605(c)(2) of the Listing Rules of the Nasdaq Stock Market
and meets the independence standards under Rule 10A-3 under the Exchange Act. We have determined that Wenzhang Jia qualifies
as an "audit committee financial expert." The audit committee will oversee our accounting and financial reporting processes
and the audits of the financial statements of our company. The audit committee is responsible for, among other things:
●
selecting the independent registered public accounting firm and pre-approving all auditing and non-auditing services permitted to be performed by the 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 the independent registered public accounting firm;
●
reviewing major issues as to the adequacy of our internal controls and any special audit steps adopted in light of material control deficiencies;
●
annually reviewing and reassessing the adequacy of our audit committee charter;
●
meeting separately and periodically with management and the independent registered public accounting firm; and
●
reporting regularly to the board of directors.
Compensation Committee.
Our compensation committee consists of Wenzhang Jia, Xiaoming E and Huijuan Zhao, and is chaired by Huijuan Zhao. The compensation
committee will assist the board of directors 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 upon. The compensation committee is responsible for, among other things:
●
reviewing the total compensation package for our executive officers and making recommendations to the board of directors with respect to it;
●
reviewing the compensation of our non-employee directors and making recommendations to the board of directors with respect to it; and
●
periodically reviewing and approving any long-term incentive compensation or equity plans, programs or similar arrangements, annual bonuses, and employee pension and welfare benefit plans.
Nominating Committee.
Our
nominating committee consists of Wenzhang Jia, Xiaoming E and Huijuan Zhao, and is chaired by Huijuan Zhao. The nominating committee will
assist the board of directors in selecting individuals qualified to become our directors and in determining the composition of the board
of directors and its committees. The nominating committee is responsible for, among other things:
●
recommending nominees to the board of directors for election or re-election to the board of directors, or for appointment to fill any vacancy on the board of directors;
88
●
reviewing annually with the board of directors the current composition of the board of directors with regards to characteristics such as independence, age, skills, experience and availability of service to us;
●
selecting and recommending to the board of directors the names of directors to serve as members of the audit committee and the compensation committee, as well as of the nominating committee itself; and
●
monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance.
Duties of Directors
Under Cayman Islands law,
our directors owe fiduciary duties to our company, including a duty of loyalty, a duty to act honestly, and a duty to act in a manner
they consider in good faith to be in our best interests. Our directors must also exercise their powers only for a proper purpose. Our
directors also owe to our company a duty to act with skill and care. It was previously considered that a director need not exhibit in
the performance of his duties a greater degree of skill than may reasonably be expected from a person of his knowledge and experience.
However, English and Commonwealth courts have moved towards an objective standard with regard to the required skill and care and these
authorities are likely to be followed in the Cayman Islands. In fulfilling their duty of care to us, our directors must ensure compliance
with our memorandum and articles of association, as amended and restated from time to time. We have the right to seek damages if a duty
owed by our directors is breached. In limited exceptional circumstances, a shareholder may have the right to seek damages in our name
if a duty owed by our directors is breached.
Terms of Directors
Our directors may be elected
by a resolution of our board of directors, or by an ordinary resolution of our shareholders. Our directors are not subject to a term of
office and hold office until such time as they are removed from office by ordinary resolution of the shareholders. A director will cease
to be a director if, among other things, the director (i) becomes bankrupt or makes any arrangement or composition with his creditors;
(ii) dies or is found by our company to be or becomes of unsound mind, (iii) resigns his office by notice in writing to the
company, or (iv) without special leave of absence from our board of directors, is absent from three consecutive board meetings and
our directors resolve that his office be vacated.
Code of Business Conduct and Ethics
Our board of directors has
adopted a code of business conduct and ethics that applies to our directors, officers and employees. A copy of this code is available
on our website. We intend to disclose on our website any amendments to the Code of Business Conduct and Ethics and any waivers of the
Code of Business Conduct and Ethics that apply to our principal executive officer, principal financial officer, principal accounting officer,
controller, or persons performing similar functions.
D. Employees
Employees
We had 626, 622 and 647 full-time employees
as of December 31, 2022, 2021 and 2020, respectively. The following table sets forth the number of full-time employees based on
category of employment and place of employment as of December 31, 2022:
Function/Department
Yangzhou
Huada
Jiangsu
Huadong
Jiangsu
Yada
Management
12
33
39
Sales and Marketing
9
36
36
Research and Development
0
41
37
Production
68
95
220
Subtotal Total
89
205
332
Total
626
Our success depends on our
ability to attract, motivate, train and retain qualified personnel. We believe we offer our employees competitive compensation packages
and an environment that encourages self-development and, as a result, have generally been able to attract and retain qualified personnel
and maintain a stable core management team.
As required by laws and regulations
in China, we participate in various employee social security plans that are organized by municipal and provincial governments including,
among other things, pension, medical insurance, unemployment insurance, maternity insurance, on-the-job injury insurance and housing fund
plans through a PRC government-mandated benefit contribution plan. We are required under PRC law to make contributions to employee benefit
plans at specified percentages of the salaries, bonuses and certain allowances of our employees, up to a maximum amount specified by the
local government from time to time.
We believe we maintain a
good working relationship with our employees, and we have not experienced any material labor disputes. None of our employees is represented
by a labor union.
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E. Share Ownership
The following table sets
forth, as of the date of this report, the beneficial ownership of our Ordinary Shares by each executive officer and director, by each
person known by us to beneficially own more than 5% of our Ordinary Shares and by the executive officers and directors as a group. Except
as otherwise indicated, all shares are owned directly and the percentage shown is based on 23,940,000 shares of Ordinary Shares issued
and outstanding.
Title of class
Name of
beneficial owner
Amount
of
beneficial ownership
Percent
of
class
Current Executive Officers and Directors
Ordinary Shares
Yongjun Liu
(1)
15,935,000
66.56
%
Ordinary Shares
Xin Wang
-
-
%
Ordinary Shares
Lianzhang Zhao
-
-
Ordinary Shares
Tongying Zhang
-
-
%
Ordinary Shares
Xiaoming E
-
-
%
Ordinary Shares
Huijuan Zhao
(3)
740
-
%
Ordinary Shares
Wenzhang Jia
(2)
1,886
-
%
Total of All Current Officers and Directors:
15,936,886
66.56
%
≥ 5% Beneficial Owners
None.
(1)
Mr. Liu holds these shares through Bright Accomplish Limited, a holding company controlled jointly by Mr. Liu and his wife, Yin Liu.
(2)
Represents options to purchase 1,886 Ordinary Shares of the Company, at an exercise price of $5.30 per share. The options vest in equal monthly installments over Mr. jia's initial year of service and are exercisable for a term of ten years. As of the date of this report, no options are vested.
(3)
Represents options to purchase 740 Ordinary Shares of the Company, at an exercise price of $13.51 per share. The options vest in equal monthly installments over Ms. Zhao's initial year of service and are exercisable for a term of ten years. As of the date of this report, no options are vested.
As used in this table, "beneficial
ownership" means the sole or shared power to vote, or to direct the voting of, a security, or the sole or shared investment power
with respect to a security (i.e., the power to dispose of, or to direct the disposition of, a security). In addition, for purposes of
this table, a person is deemed, as of any date, to have "beneficial ownership" of any security that such person has the right
to acquire within 60 days after such date.
The persons named above have
full voting and investment power with respect to the shares indicated. Under the rules of the Securities and Exchange Commission, a person
(or group of persons) is deemed to be a "beneficial owner" of a security if he or she, directly or indirectly, has or shares
the power to vote or to direct the voting of such security, or the power to dispose of or to direct the disposition of such security.
Accordingly, more than one person may be deemed to be a beneficial owner of the same security. A person is also deemed to be a beneficial
owner of any security, which that person has the right to acquire within 60 days, such as options or warrants to purchase our Ordinary
Shares.
Major Shareholders
Other than as set forth above,
there are no beneficial owners of 5% or more of our voting securities. The company is not directly or indirectly owned or controlled by
another corporation(s) or by any foreign government. There are no arrangements, known to us, the operation of which may at a subsequent
date result in a change in control of the company.
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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
Except for the transactions
set forth below, during our preceding three financial years up to the date of this report, there have been no transactions or loans between
the company and (a) enterprises that directly or indirectly through one or more intermediaries, control or are controlled by, or are under
common control with, the company; (b) associates; (c) individuals owning, directly or indirectly, an interest in the voting power of the
company that gives them significant influence over the company, and close members of any such individual's family; (d) key management
personnel, that is, those persons having authority and responsibility for planning, directing and controlling the activities of the company,
including directors and senior management of companies and close members of such individuals' families; and (e) enterprises in which
a substantial interest in the voting power is owned, directly or indirectly, by any person described in (c) or (d) or over which such
a person is able to exercise significant influence.
Transaction with Yangzhou Meihua Import
and Export Co., Ltd.
We sell products at market
price to Yangzhou Meihua Import and Export Co., Ltd., an affiliate controlled by Kai Liu, the son of Yongjun Liu, our Chairman and shareholder.
For the fiscal years ended December 31, 2022 and 2021, the sales amount was $18,780 and $51,750, respectively, and as of December 31,
2022 and December 31, 2021, the amount due from Yangzhou Meihua Import and Export Co., Ltd. both were nil. The main business of Yangzhou
Meihua Import and Export Co., Ltd. is the import and export of medical consumables, and the main types of products it purchases from the
Company are dressing wounds and wiping wounds, Yang Ke Tou (Suction tube), disposable urinary swab, disposable umbilical cord clamp, disposable
suction connection pipe, disposable medical gauze, medical urine cup, medical disinfection dressing surgical kit and round head steel
needles.
Transaction with Yangzhou Yada Powder Metallurgy
Co., Ltd.
We sell products at market
price to Yangzhou Yada Powder Metallurgy Co., Ltd., an affiliate controlled by Kai Liu, the son of Yongjun Liu, our Chairman and shareholder.
For the fiscal years ended December 31, 2022 and 2021, the sales amount was $nil and $347,737, respectively, and as of December 31, 2022
and December 31, 2021, the amount due from Yangzhou Yada Powder Metallurgy Co., Ltd. both were nil. The main business of Yangzhou Yada
Powder Metallurgy Co., Ltd. is gear and metal accessories processing, and the main types of products it purchases from the Company are
One-way seat fittings, Gear 2 accessories, Gear 3 accessories, Steel needle, Crank fittings, Universal joint seat fittings, Cylindrical
pin, Axle sleeve, Axle pin and Bevel gear fittings.
Transaction with Shanghai Xinya Pharmaceutical
Hanjiang Co., Ltd.
We sell products at market
price to Shanghai Xinya Pharmaceutical Hanjiang Co., Ltd., an affiliate controlled by Kai Liu, the son of Yongjun Liu, our Chairman and
shareholder. For the fiscal years ended December 31, 2022 and 2021, the sales amount was $10,416 and $176,414, respectively, and as of
December 31, 2022 and December 31, 2021, the amount due from Xinya Pharmaceutical Hanjiang Co., Ltd. both were nil. The main business
of Shanghai Xinya Pharmacy Hanjiang Co., Ltd. is drug production and sales, and the main types of products it purchases from the Company
are oral solid medical high-density polyethylene bottles and disposable masks.
Share Exchange Agreement with Kang Fu International
Medical Co., Ltd. and its Shareholders
On December 21, 2020, we
entered into a Share Exchange Agreement with Kang Fu International Medical Co., Ltd. ("Kang Fu") and its shareholders, Yongjun
Liu (our Chairman and Director) and Yin Liu (his wife). Under the Share Exchange Agreement, we issued a total of 15,933,000 Ordinary Shares
to Mr. and Mrs. Liu, and in turn acquired 41,400,000 shares (69%) of Kang Fu from Yongjun Liu and 18,600,000 shares (31%) of Kang Fu from
Yin Liu, respectively, resulting in Kang Fu becoming our wholly owned subsidiary. Mr. and Mrs. Liu subsequently transferred the 15,935,000
Ordinary Shares received in this transaction to their holding company, Bright Accomplish Limited.
C. Interests of Experts and Counsel
Not applicable.
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ITEM 8. FINANCIAL INFORMATION
A. Consolidated Statements and Other Financial Information
Financial Statements
We have appended consolidated
financial statements filed as part of this report. See Item 18 "Financial Statements."
Legal Proceedings
See Item 4 –B "Business
Overview" above, under "Legal Proceedings."
Dividend Policy
To date, we have not paid
any cash dividends on our shares. As a Cayman Islands company, we may only declare and pay dividends except when the corporation is insolvent
or would thereby be made insolvent or when the declaration or payment would be contrary to any restrictions contained in our Articles
of Association. Dividends may be declared and paid out of surplus only; but in case there is no surplus, dividends may be declared or
paid out of the net profits for the fiscal year in which the dividend is declared and for the preceding fiscal year. We currently anticipate
that we will retain any available funds to finance the growth and operation of our business and we do not anticipate paying any cash dividends
in the foreseeable future. Additionally, our cash held in foreign countries may be subject to certain control limitations or repatriation
requirements, limiting our ability to use this cash to pay dividends.
B. Significant Changes
No significant change has
occurred since the date of our consolidated financial statements filed as part of this annual report.
ITEM 9. THE OFFER AND LISTING
A. Offer and Listing Details
Our Ordinary Shares is listed
on the Nasdaq Global Market and trade under the symbol "MHUA."
B. Plan of Distribution
Not applicable.
C. Markets
See our disclosures above
under "A. Offer and Listing Details."
D. Selling Shareholders
Not applicable.
E. Dilution
Not applicable.
F. Expenses of the Issue
Not applicable.
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ITEM 10. ADDITIONAL INFORMATION
A. Share Capital
Not applicable.
B. Memorandum and Articles of Association
The following are summaries
of material provisions of our memorandum and articles of association and of the Companies Law, insofar as they relate to the material
terms of our Ordinary Shares.
Purpose and Objectives
of Our Company.
Under our amended and restated memorandum and articles of association, the purpose and objectives of our company
are unrestricted and we have the full power and authority to carry out any objective not prohibited by the law of the Cayman Islands.
Ordinary Shares.
Our Ordinary Shares are issued in registered form and are issued when registered in our register of members. Our shareholders who are
non-residents of the Cayman Islands may freely hold and vote their shares.
Dividends.
The
holders of our Ordinary Shares are entitled to such dividends as may be declared by our board of directors. In addition, our shareholders
may by ordinary resolution declare a final dividend, but no dividend may exceed the amount recommended by our directors. Our amended and
restated articles of association provide that dividends may be declared and paid out of our profits, realized or unrealized, or from any
reserve set aside from profits which our board of directors determine is no longer needed. Dividends may also be declared and paid out
of share premium account or any other fund or account which can be authorized for this purpose subject to the restrictions of the Companies
Act, provided that in no circumstances may we pay a dividend if this would result in our company being unable to pay its debts as they
fall due in the ordinary course of business.
Voting Rights.
Any action required or permitted to be taken by the shareholders must be taken at a duly called and quorate annual or extraordinary general
meeting of the shareholders entitled to vote on such action, or in lieu of a general meeting, be effected by a resolution in writing.
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 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 unless a poll is demanded. A poll may be demanded by the chairman of such meeting or one or more shareholders present
in person or by proxy entitled to vote and who together hold not less than 10 percent of the paid-up voting share capital for the Company.
A quorum required for a meeting
of shareholders consists of one or more shareholders present and holding at least a majority of the votes of the issued and outstanding
voting shares in our company. Shareholders may be present in person or by proxy or, if the shareholder is a legal entity, by its duly
authorized representative. Shareholders' meetings may be convened by our board of directors on its own initiative or upon a request
to the directors by shareholders holding no less than 10 percent of our paid voting share capital. Advance notice of at least seven days
is required for the convening of our annual general shareholders' meeting and any other general shareholders' meeting.
An ordinary resolution to
be passed at a meeting by the shareholders requires the affirmative vote of a simple majority of the votes attaching to the Ordinary Shares
cast at a meeting, while a special resolution requires the affirmative vote of no less than two-thirds of the votes cast attaching to
the outstanding Ordinary Shares at a meeting. A special resolution will be required for important matters such as a change of name or
making changes to our amended and restated memorandum and articles of association. Holders of the Ordinary Shares may, among other things,
divide or combine their shares by ordinary resolution.
Election of directors.
Directors may be appointed by an ordinary resolution of our shareholder or by a resolution of the directors of the Company.
93
Meetings of directors.
At any meeting of directors, a quorum will be present if two directors are present, unless otherwise fixed by the directors. If
there is a sole director, that director shall be a quorum. A person who holds office as an alternate director shall be counted in the
quorum. A director who also acts as an alternate director shall be counted twice towards the quorum. An action that may be taken by the
directors at a meeting may also be taken by a resolution of directors consented to in writing by all of the directors.
Transfer of Ordinary
Shares.
Any of our shareholders may transfer all or any of his or her Ordinary Shares by an instrument of transfer in the usual
or common form or any other form approved by our board of directors.
Our board of directors may,
in its absolute discretion, decline to register any transfer of any Ordinary Share whether or not it is fully paid up without assigning
any reason for doing so.
If our directors refuse to
register a transfer they shall, within two 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.
The registration of transfers
of our Ordinary Shares may be suspended and the register closed at such times and for such periods as our board of directors may from
time to time determine, provided, however, that the registration of transfers shall not be suspended nor the register closed for more
than 45 days in any year as our board of directors may determine.
Liquidation.
On
a return of capital on winding up or otherwise (other than on conversion, redemption or purchase of shares), assets available for distribution
among the holders of Ordinary Shares shall be distributed among the holders of our shares on a pro rata basis. If our assets available
for distribution are insufficient to repay all of the paid-up capital, the assets will be distributed so that the losses are borne by
our shareholders proportionately.
Calls on Shares and
Forfeiture of Shares.
Our board of directors may from time to time make calls upon shareholders for any amounts unpaid on their
shares in a notice served to such shareholders at least 14 days prior to the specified time and place of payment. The shares that have
been called upon and remain unpaid are subject to forfeiture.
Redemption of Shares.
The Companies Act and our amended and restated articles of association permit us to purchase, redeem or otherwise acquire our own shares,
subject to certain restrictions and requirements under the Companies Act, our amended and restated memorandum and articles of association
and any applicable requirements imposed from time to time by the Nasdaq, the Securities and Exchange Commission. In accordance with our
articles of association and provided the necessary shareholders or board of director approval have been obtained, we may issue shares
on terms that are subject to redemption, at our option or at the option of the holders of these shares, on such terms and in such manner,
including out of capital, as may be determined by our board of directors. Under the Companies Act, the repurchase of any share may be
paid out of our company's profits, out of our share capital account or out of the proceeds of a fresh issue of shares made for the
purpose of such repurchase, or, subject to certain conditions, out of capital. If the repurchase proceeds are paid out of our Company's
capital, our Company must, immediately following such payment, be able to pay its debts as they fall due in the ordinary course of business.
In addition, under the Companies Act, no such share may be repurchased (1) unless it is fully paid up, (2) if such repurchase would result
in there being no shares outstanding, and (3) unless the manner of purchase (if not so authorized under the amended and restated memorandum
and articles of association) has first been authorized by a resolution of our shareholders. In addition, under the Companies Act, our
Company may accept the surrender of any fully paid share for no consideration unless, as a result of the surrender, the surrender would
result in there being no shares outstanding (other than shares held as treasury shares).
Variations of Rights
of Shares.
The rights attached to any class or series of shares (unless otherwise provided by the terms of issue of the shares
of that class or series), whether or not our company is being wound-up, may be varied with the consent in writing of the holders of two-thirds
of the issued shares of that class or series or with the sanction of a special resolution passed at a separate meeting of the holders
of the shares of the class or series. The rights conferred upon the holders of the shares of any class issued shall not, unless otherwise
expressly provided by the terms of issue of the shares of that class, be deemed to be varied by the creation or issue of further shares
ranking
pari passu
with such existing class of shares.
94
Changes in the number
of shares we are authorized to issue and those in issue.
We may from time to time by resolution of shareholders in the requisite
majorities:
●
increase or decrease the authorized share capital of our Company;
●
subdivide our authorized and issued shares into a larger number of shares; and
●
consolidate our authorized and issued shares into a smaller number of shares.
Issuance of Additional
Shares.
Our amended and restated memorandum and articles of association authorizes our board of directors to issue additional
Ordinary Shares from time to time as our board of directors shall determine, to the extent of available authorized but unissued shares.
Inspection of Books
and Records.
Holders of our Ordinary Shares will have no general right under Cayman Islands law to inspect or obtain copies of
our list of shareholders or our corporate records. However, we will provide our shareholders with annual audited financial statements.
Preferred Shares
As at the date of this report,
we have not issued any preferred shares. Under the amended and restated articles of association, before any Preferred Shares of any series
are issued, our directors shall fix, by resolution of directors, the following provisions of such series:
●
the designation of such series and the number of Preferred Shares to constitute such series;
●
whether the shares of such series shall have voting rights, in addition to any voting rights provided by Companies Act, and, if so, the terms of such voting rights, which may be general or limited;
●
the dividends, if any, payable on such series, whether any such dividends shall be cumulative, and, if so, from what dates, the conditions and dates upon which such dividends shall be payable, the preference or relation which such dividends shall bear to the dividends payable on any Shares of any other class of Shares or any other series of Preferred Shares;
●
whether the Preferred Shares or such series shall be subject to redemption by the Company, and, if so, the times, prices and other conditions of such redemption;
●
the amount or amounts payable upon Preferred Shares of such series upon, and the rights of the holders of such series in, a voluntary or involuntary liquidation, dissolution or winding up, or upon any distribution of the assets, of the Company;
●
whether the Preferred Shares of such series shall be subject to the operation of a retirement or sinking fund and, if so, the extent to and manner in which any such retirement or sinking fund shall be applied to the purchase or redemption of the Preferred Shares of such series for retirement or other corporate purposes and the terms and provisions relative to the operation of the retirement or sinking fund;
●
whether the Preferred Shares of such series shall be convertible into, or exchangeable for, Shares of any other class of Shares or any other series of Preferred Shares or any other securities and, if so, the price or prices or the rate or rates of conversion or exchange and the method, if any, of adjusting the same, and any other terms and conditions of conversion or exchange;
●
the limitations and restrictions, if any, to be effective while any Preferred Shares or such series are outstanding upon the payment of dividends or the making of other distributions on, and upon the purchase, redemption or other acquisition by the Company of, the existing Shares or Shares of any other class of Shares or any other series of Preferred Shares;
●
the conditions or restrictions, if any, upon the creation of indebtedness of the Company or upon the issue of any additional Shares, including additional shares of such series or of any other class of Shares or any other series of Preferred Shares; and
●
any other powers, preferences and relative, participating, optional and other special rights, and any qualifications, limitations and restrictions of any other class of Shares or any other series of Preferred Shares.
95
Exempted Company
We are an exempted company
incorporated with limited liability under the Companies Act of the Cayman Islands. The Companies Act of the Cayman Islands distinguishes
between ordinary resident companies and exempted companies. Any company that is registered in the Cayman Islands but conducts business
mainly outside of the Cayman Islands may apply to be registered as an exempted company. The requirements for an exempted company are essentially
the same as for an ordinary company except that, for an exempted company that does not hold a license to carry on business in the Cayman
Islands:
●
an exempted company does not have to file an annual return of its shareholders with the Registrar of Companies of the Cayman Islands;
●
an exempted company's register of members is not required to be open to inspection;
●
an exempted company does not have to hold an annual general meeting;
●
an exempted company is prohibited from making any invitation to the public in the Cayman Islands to subscribe for any of its securities;
●
an exempted company may not issue negotiable or bearer shares;
●
an exempted company may obtain an undertaking against the imposition of any future taxation (such undertakings are usually given for 20 years in the first instance);
●
an exempted company may register by way of continuation in another jurisdiction and be deregistered in the Cayman Islands;
●
an exempted company may register as an exempted limited duration company; and
●
an exempted company may register as a segregated portfolio company.
"Limited liability"
means that the liability of each shareholder is limited to the amount unpaid by the shareholder on that shareholder's shares of
the company.
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," Item 5 "Operating and Financial Review and Prospects—F. Tabular Disclosure of Contractual Obligations,"
Item 7 "Major Shareholders and Related Party Transactions," or filed (or incorporated by reference) as exhibits to this annual
report or otherwise described or referenced in this annual report.
D. Exchange Controls
Cayman Islands Exchange Controls
There are no material exchange
controls restrictions on payment of dividends, interest or other payments to the holders of our Ordinary Shares or on the conduct of our
operations in the Cayman Islands, where we were incorporated. There are no material Cayman Islands laws that impose any material exchange
controls on us or that affect the payment of dividends, interest or other payments to nonresident holders of our Ordinary Shares. Cayman
Islands law and our memorandum and articles of association do not impose any material limitations on the right of non-residents or foreign
owners to hold or vote our Ordinary Shares.
PRC Exchange Controls
Regulations on Foreign Currency Exchange
Under the PRC Foreign Currency
Administration Rules promulgated on January 29, 1996 and last amended on August 5, 2008 and various regulations issued by SAFE and other
relevant PRC government authorities, payment of current account items in foreign currencies, such as trade and service payments, payment
of interest and dividends can be made without prior approval from SAFE by following the appropriate procedural requirements. By contrast,
the conversion of RMB into foreign currencies and remittance of the converted foreign currency outside the PRC for the purpose of capital
account items, such as direct equity investments, loans and repatriation of investment, requires prior approval from SAFE or its local
office.
96
On
February 13, 2015, SAFE promulgated the Circular on Simplifying and Improving the Foreign Currency Management Policy on Direct Investment,
effective from June 1, 2015, which cancels the requirement for obtaining approvals of foreign exchange registration of foreign direct
investment and overseas direct investment from SAFE. The application for the registration of foreign exchange for the purpose of foreign
direct investment and overseas direct investment may be filed with qualified banks, which, under the supervision of SAFE, may review
the application and process the registration.
The
Circular of the SAFE on Reforming the Management Approach regarding the Settlement of Foreign Capital of Foreign-invested Enterprise,
or SAFE Circular 19, was promulgated on March 30, 2015 and became effective on June 1, 2015. According to SAFE Circular 19, a foreign-invested
enterprise may, according to its actual business needs, settle with a bank the portion of the foreign exchange capital in its capital
account for which the relevant foreign exchange bureau has confirmed monetary contribution rights and interests (or for which the bank
has registered the account-crediting of monetary contribution). For the time being, foreign-invested enterprises are allowed to settle
100% of their foreign exchange capitals on a discretionary basis; a foreign-invested enterprise shall truthfully use its capital for
its own operational purposes within the scope of business; where an ordinary foreign-invested enterprise makes domestic equity investment
with the amount of foreign exchanges settled, the invested enterprise shall first go through domestic re-investment registration and
open a corresponding Account for Foreign Exchange Settlement Pending Payment with the foreign exchange bureau (bank) at the place of
registration. The Circular of the SAFE on Reforming and Regulating Policies on the Control over Foreign Exchange Settlement of Capital
Accounts, or SAFE Circular 16, was promulgated and became effective on June 9, 2016. According to SAFE Circular 16, enterprises registered
in PRC may also convert their foreign debts from foreign currency into Renminbi on self-discretionary basis. SAFE Circular 16 provides
an integrated standard for conversion of foreign exchange under capital account items (including but not limited to foreign currency
capital and foreign debts) on self—discretionary basis, which applies to all enterprises registered in the PRC. SAFE Circular 16
reiterates the principle that Renminbi converted from foreign currency-denominated capital of a company may not be directly or indirectly
used for purposes beyond its business scope and may not be used for investments in securities or other investment with the exception
of bank financial products that can guarantee the principal within the PRC unless otherwise specifically provided. Besides, the converted
Renminbi shall not be used to make loans for related enterprises unless it is within the business scope or to build or to purchase any
real estate that is not for the enterprise own use with the exception for the real estate enterprise. On October 23, 2019, the SAFE issued
the Notice of the State Administration of Foreign Exchange on Further Facilitating Cross-border Trade and Investment, or the SAFE Circular
28, which, among other things, expanded the use of foreign exchange capital to domestic equity investment area. Non-investment foreign-funded
enterprises are allowed to lawfully make domestic equity investments by using their capital on the premise without violation to prevailing
special administrative measures for access of foreign investments (negative list) and the authenticity and compliance with the regulations
of domestic investment projects.
On
January 26, 2017, SAFE promulgated the Circular on Further Improving Reform of Foreign Exchange Administration and Optimizing Genuineness
and Compliance Verification, or SAFE Circular 3, which stipulates several capital control measures with respect to the outbound remittance
of profits from domestic entities to offshore entities, including (i) banks must check whether the transaction is genuine by reviewing
board resolutions regarding profit distribution, original copies of tax filing records and audited financial statements, and (ii) domestic
entities must retain income to account for previous years' losses before remitting any profits. Moreover, pursuant to SAFE Circular
3, domestic entities must explain in detail the sources of capital and how the capital will be used, and provide board resolutions, contracts
and other proof as a part of the registration procedure for outbound investment.
Regulations
on Foreign Exchange Registration of Overseas Investment by PRC Residents
SAFE
issued the Circular on Relevant Issues Relating to Domestic Resident's Investment and Financing and Roundtrip Investment through
Special Purpose Vehicles, or SAFE Circular 37, which became effective in July 2014, to replace the Circular of the State Administration
of Foreign Exchange on Issues Concerning the Regulation of Foreign Exchange in Equity Finance and Roundtrip Investments by Domestic Residents
through Offshore Special Purpose Vehicles, to regulate foreign exchange matters in relation to the use of special purpose vehicles, or
SPVs, by PRC residents or entities to seek offshore investment and financing or conduct round trip investment in China. SAFE Circular
37 defines a SPV as an offshore entity established or controlled, directly or indirectly, by PRC residents or entities for the purpose
of seeking offshore financing or making offshore investment, using legitimate onshore or offshore assets or interests, while "round
trip investment" is defined as direct investment in China by PRC residents or entities through SPVs, namely, establishing foreign-invested
enterprises to obtain the ownership, control rights and management rights. SAFE Circular 37 stipulates that, prior to making contributions
into an SPV, PRC residents or entities be required to complete foreign exchange registration with SAFE or its local branch. In addition,
SAFE promulgated the Notice on Further Simplifying and Improving the Administration of the Foreign Exchange Concerning Direct Investment
in February 2015, which amended SAFE Circular 37 and became effective on June 1, 2015, requiring PRC residents or entities to register
with qualified banks rather than SAFE in connection with their establishment or control of an offshore entity established for the purpose
of overseas investment or financing.
PRC
residents or entities who had contributed legitimate onshore or offshore interests or assets to SPVs but had not obtained registration
as required before the implementation of the SAFE Circular 37 must register their ownership interests or control in the SPVs with qualified
banks. An amendment to the registration is required if there is a material change with respect to the SPV registered, such as any change
of basic information (including change of the PRC residents, name and operation term), increases or decreases in investment amount, transfers
or exchanges of shares, and mergers or divisions. Failure to comply with the registration procedures set forth in SAFE Circular 37 and
the subsequent notice, or making misrepresentation on or failure to disclose controllers of the foreign-invested enterprise that is established
through round-trip investment, may result in restrictions being imposed on the foreign exchange activities of the relevant foreign-invested
enterprise, including payment of dividends and other distributions, such as proceeds from any reduction in capital, share transfer or
liquidation, to its offshore parent or affiliate, and the capital inflow from the offshore parent, and may also subject relevant PRC
residents or entities to penalties under PRC foreign exchange administration regulations. See "Risk Factors—Risks Related
to Doing Business in China—PRC regulations relating to the establishment of offshore special purpose 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, limit our PRC subsidiaries' ability to increase its registered capital or distribute profits to us,
or may otherwise adversely affect us."
97
Regulations
on Dividend Distribution
Distribution
of dividends of foreign investment enterprises are mainly governed by the Foreign Investment Enterprise Law, issued in 1986 and amended
in 2000 and 2016 respectively, and the Implementation Rules under the Foreign Investment Enterprise Law, issued in 1990 and amended in
2001 and 2014 respectively. Under these regulations, foreign investment enterprises in the PRC may distribute dividends only out of their
accumulative profits, if any, determined in accordance with PRC accounting standards and regulations. In addition, no less than 10% of
the accumulated profits of the foreign investment enterprises in the PRC are required to be allocated to fund certain reserve funds each
year unless these reserves have reached 50% of the registered capital of the enterprises. A PRC company is not permitted to distribute
any profits until any losses from previous fiscal years have been offset. Profits retained from prior fiscal years may be distributed
together with distributable profits from the current fiscal year. Under our current corporate structure, our BVI holding company may
rely on dividend payments from our wholly foreign-owned enterprise incorporated in China to fund any cash and financing requirements
we may have. Limitation on the ability of our operating subsidiaries to make remittance to our WOFEs and on the ability of our WOFEs
to pay dividends to us could limit our ability to access cash generated by the operations of those entities.
E. Taxation
The
following summary of the material Cayman Islands, PRC and U.S. federal income tax consequences of an investment in our 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.
This summary does not deal with all possible tax consequences relating to an investment in our 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.
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 investors 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 with the United Kingdom in
2010 but is otherwise is not party to any double tax treaties which are applicable to any payments made to or by our company. There are
no exchange control regulations or currency restrictions in the Cayman Islands.
Payments
of dividends and capital in respect of Ordinary Shares will not be subject to taxation in the Cayman Islands and no withholding will
be required under Cayman Islands laws on the payment of a dividend or capital to any holder of Ordinary Shares, nor will gains derived
from the disposal of Ordinary Shares be subject to Cayman Islands income or corporation tax.
No
stamp duty is payable in the Cayman Islands in respect of the issue of our Ordinary Shares or on an instrument of transfer in respect
of our Ordinary Shares except those which hold interests in land in the Cayman Islands.
People's
Republic of China Taxation
Under
the PRC EIT Law and its implementation rules, an enterprise established outside the PRC with a "de facto management body"
within the PRC is considered a resident enterprise and will be subject to the enterprise income tax at the rate of 25% on its global
income. The implementation rules define the term "de facto management body" as the body that exercises full and substantial
control over and overall management of the business, production, personnel, accounts and properties of an enterprise. In April 2009,
the SAT issued the Circular of the SAT on Issues Relating to Identification of PRC-Controlled Overseas Registered Enterprises as Resident
Enterprises in Accordance With the De Facto Standards of Organizational Management, or SAT 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 located in China. Although this circular only applies to offshore enterprises controlled by PRC enterprises or PRC enterprise groups,
not those 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 SAT Circular 82, an offshore incorporated enterprise controlled by a PRC enterprise or a PRC enterprise group will be regarded
as a PRC tax resident by virtue of having its "de facto management body" in the PRC only if all of the following conditions
are met: (i) the primary location of the day-to-day operational management is in the PRC; (ii) decisions relating to the enterprise's
financial and human resource matters are made or are subject to approval by organizations or personnel in the PRC; (iii) the enterprise's
primary assets, accounting books and records, company seals, and board and shareholder resolutions, are located or maintained in the
PRC; and (iv) at least 50% of voting board members or senior executives habitually reside in the PRC.
98
Further
to SAT Circular 82, the SAT issued the SAT Bulletin 45, which took effect in September 2011, to provide more guidance on the implementation
of SAT Circular 82. SAT Bulletin 45 provides for procedures and administration details of determination on resident status and administration
on post-determination matters. Our Company is a company incorporated outside the PRC. As a holding company, its sole asset is its share
ownership of its direct subsidiary, a Hong Kong company, 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 the PRC. 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. 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 us. If the PRC tax authorities determine that our Cayman Islands holding company is a PRC resident enterprise for PRC enterprise
income tax purposes, a number of unfavorable PRC tax consequences could follow. For example, a 10% withholding tax would be imposed on
dividends we pay to our non-PRC enterprise shareholders. In addition, nonresident enterprise shareholders may be subject to PRC tax on
gains realized on the sale or other disposition of Ordinary Shares, as if such income is treated as sourced from within the PRC. Furthermore,
if we are deemed a PRC resident enterprise, dividends paid to our non-PRC individual shareholders and any gain realized on the transfer
of Ordinary Shares by such shareholders may be subject to PRC tax at a rate of 20% (which, in the case of dividends, may be withheld
at source by us). These rates may be reduced by an applicable tax treaty, but it is unclear whether in practice non-PRC shareholders
of our Company would be able to obtain the benefits of any tax treaties between their country of tax residence and the PRC in the event
that we are treated as a PRC resident enterprise. See "Risk Factors—Risks Related to Doing Business in China—If we
are classified as a PRC resident enterprise for PRC income tax purposes, such classification could result in unfavorable tax consequences
to us and our non-PRC shareholders."
Notwithstanding
the foregoing, our PRC subsidiaries, Jiangsu Huadong enjoy preferential income tax rate of 15% until December 31, 2021, due to its treatment
as "National High-Tech Enterprises" in China. Prior to the expiration date of such treatment, it may submit applications
for renewal and continue enjoying the preferential income tax rate if granted.
United States
Federal Income Taxation Considerations
The
following discussion is a summary of United States federal income tax considerations generally applicable to the ownership and disposition
of our Ordinary Shares by a U.S. holder (as defined below) that acquires our Ordinary Shares and holds our Ordinary Shares
as "capital assets" (generally, property held for investment) under the United States Internal Revenue Code of 1986,
as amended (the "Code"). This discussion is based upon existing United States federal income tax law, which is subject
to differing interpretations and may be changed, possibly with retroactive effect. No ruling has been sought from the Internal Revenue
Service (the "IRS") with respect to any United States 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 United States
federal income taxation that may be important to particular investors in light of their individual circumstances, including investors
subject to special tax rules (for example, certain financial institutions, insurance companies, broker-dealers, traders in securities
that have elected the mark-to-market method of accounting for their securities, partnerships and their partners, regulated investment
companies, real estate investment trusts, and tax-exempt organizations (including private foundations)), investors who are not U.S. holders,
investors who own (directly, indirectly, or constructively) 10% or more of our stock (by vote or value), investors that will hold
their Ordinary Shares as part of a straddle, hedge, conversion, constructive sale, or other integrated transaction for United States
federal income tax purposes, investors required to accelerate the recognition of any item of gross income with respect to our Ordinary
Shares as a result of such income being recognized on an applicable financial statement, or investors that have a functional currency
other than the United States dollar, all of whom may be subject to tax rules that differ significantly from those summarized below.
In addition, this discussion does not discuss any non-United States, alternative minimum tax, state, or local tax or any non-income
tax (such as the U.S. federal gift or estate tax) considerations, or the Medicare tax on net investment income. Each U.S. holder
is urged to consult its tax advisor regarding the United States federal, state, local, and non-United States income and other
tax considerations of an investment in our Ordinary Shares.
General
For
purposes of this discussion, a "U.S. holder" is a beneficial owner of our Ordinary Shares that is, for United States
federal income tax purposes, (i) an individual who is a citizen or resident of the United States, (ii) a corporation (or other
entity treated as a corporation for United States federal income tax purposes) created in, or organized under the laws of, the United States
or any state thereof or the District of Columbia, (iii) an estate the income of which is subject to United States federal income
taxation regardless of its source, or (iv) a trust (A) the administration of which is subject to the primary supervision of
a United States court and which has one or more United States persons 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 or applicable United States
Treasury regulations.
If
a partnership (or other entity or arrangement treated as a partnership for United States federal income tax purposes) is a
beneficial owner of our Ordinary Shares, the tax treatment of a partner in the partnership will generally depend upon the status of the
partner and the activities of the partnership. Partnerships holding our Ordinary Shares and partners in such partnerships are urged to
consult their tax advisors as to the particular United States federal income tax consequences of an investment in our Ordinary Shares.
99
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 upon the sale or other disposition
of Ordinary Shares in an amount equal to the difference between the amount realized upon the disposition and the U.S. holder's
adjusted tax basis in such Ordinary Shares. Any capital gain or loss will be long-term if our Ordinary Shares have been held for more
than one year and will generally be United States source gain or loss for United States foreign tax credit purposes. Long-term
capital gain of individuals and other non-corporate U.S. holders is generally eligible for a reduced rate of taxation. The deductibility
of a capital loss may be subject to limitations.
In
the event that we are treated as a PRC "resident enterprise" under the Enterprise Income Tax Law and gain from the disposition
of our Ordinary Shares is subject to tax in the PRC, a U.S. holder that is eligible for the benefits of the income tax treaty between
the United States and the PRC may elect to treat the gain as PRC source income. If a U.S. holder is not eligible for the benefits
of the income tax treaty or fails to make the election to treat any gain as foreign source, then such U.S. holder may not be able
to use the foreign tax credit arising from any PRC tax imposed on the disposition of our Ordinary Shares unless such credit can be applied
(subject to applicable limitations) against U.S. federal income tax due on other income derived from foreign sources in the same
income category (generally, the passive category). U.S. holders are advised to consult their tax advisors regarding the tax consequences
if a foreign tax is imposed on a disposition of our Ordinary Shares, including the availability of the foreign tax credit under their
particular circumstances and the election to treat any gain as PRC source.
Passive
Foreign Investment Company Rules
If
we are a PFIC for any taxable year during which a U.S. holder holds our Ordinary Shares, and unless the U.S. holder makes a
mark-to-market election (as described below), the U.S. holder will generally be subject to special tax rules that have a penalizing
effect, regardless of whether we remain a PFIC, for subsequent taxable years, on (i) any excess distribution that we make to the
U.S. holder (which generally means any distribution paid during a taxable year to a U.S. holder that is greater than 125% of
the average annual distributions paid in the three preceding taxable years or, if shorter, the U.S. holder's holding period
for our Ordinary Shares), and (ii) any gain realized on the sale or other disposition, including, under certain circumstances, a
pledge, of Ordinary Shares. Under the PFIC rules:
●
such
excess distribution and/or gain will be allocated ratably over the U.S. holder's holding period for our Ordinary Shares;
●
such
amount allocated to the current taxable year and any taxable years in the U.S. holder's holding period prior to the first
taxable year in which we are a PFIC, or pre-PFIC year, will be taxable as ordinary income;
●
such
amount allocated to each prior taxable year, other than a pre-PFIC year, will be subject to tax at the highest tax rate in effect for
that year; and
●
an
interest charge generally applicable to underpayments of tax will be imposed on the tax attributable to each prior taxable year, other
than a pre-PFIC year.
If
we are a PFIC for any taxable year during which a U.S. holder holds our Ordinary Shares and any of our non-United States subsidiaries
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. U.S. holders are advised to consult their tax advisors regarding the application
of the PFIC rules to any of our subsidiaries.
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 our Ordinary Shares, provided that our Ordinary Shares are regularly traded on the Nasdaq Global Market.
Because
a mark-to-market election cannot be made for any lower-tier PFICs that a PFIC may own, a U.S. holder who makes a mark-to-market
election with respect to our Ordinary Shares will generally continue to be subject to the general PFIC rules with respect to such U.S. holder's
indirect interest in any investments held by us that are treated as an equity interest in a PFIC for United States federal income
tax purposes. If a mark-to-market election is made, the U.S. holder will generally (i) include as ordinary income for each
taxable year that we are a PFIC the excess, if any, of the fair market value of Ordinary Shares held at the end of the taxable year over
the adjusted tax basis of such Ordinary Shares and (ii) deduct as an ordinary loss the excess, if any, of the adjusted tax basis
of our Ordinary Shares over the fair market value of such 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 our 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 each year that we are a PFIC any gain recognized upon the sale or other disposition of
our Ordinary Shares will be treated as ordinary income and 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. If a U.S. holder makes a mark-to-market election it will
be effective for the taxable year for which the election is made and all subsequent taxable years unless our Ordinary Shares are no longer
regularly traded on a qualified exchange or the IRS consents to the revocation of the election.
100
If
a U.S. holder makes a mark-to-market election in respect of a PFIC and such corporation ceases to be 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 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 (and generally less adverse than) the general tax treatment for PFICs described above.
If
a U.S. holder owns our Ordinary Shares during any taxable year that we are a PFIC, such holder would generally be required to file
an annual IRS Form 8621. Each U.S. holder is advised to consult its tax advisors regarding the potential tax consequences to
such holder if we are or become a PFIC, including the possibility of making a mark-to-market election.
F. Dividends and Paying Agents
Not
applicable.
G. Statement by Experts
Not
applicable.
H. Documents on Display
We
have filed this annual report on Form 20-F with the SEC under the Exchange Act. Statements made in this report as to the contents of
any document referred to are not necessarily complete. With respect to each such document filed as an exhibit to this report, reference
is made to the exhibit for a more complete description of the matter involved, and each such statement shall be deemed qualified in its
entirety by such reference.
We
are subject to the informational requirements of the Exchange Act as a foreign private issuer and file reports and other information
with the SEC. Reports and other information filed by us with the SEC including this report, may be inspected and copied at the public
reference room of the SEC at 100 F Street, N.E., Washington D.C. 20549. You can also obtain copies of this report by mail from the Public
Reference Section of the SEC, 100 F. Street, N.E., Washington D.C. 20549, at prescribed rates. Additionally, copies of this material
may be obtained from the SEC's Internet site at http://www.sec.gov. The SEC's telephone number is 1-800-SEC-0330. In accordance
with Nasdaq Stock Market Rule 5250(d), we will also post this annual report on Form 20-F on our website at www.kbsfashion.com.
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
See
"Item 4.A, Information on the Company – History and Development of the Company" above.
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Foreign
Exchange Risk
Foreign
currency risk arises from future commercial transactions, recognized assets and liabilities and net investments in foreign operations.
Substantially all of our revenue-generating transactions, and a majority of our expense-related transactions, are denominated in Renminbi,
which is the functional currency of our operations. We do not hedge against currency risk.
101
The
value of the Renminbi against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in political
and economic conditions. To the extent that we need to convert U.S. dollars into Renminbi for our operations, appreciation of the Renminbi
against the U.S. dollar would reduce the Renminbi amount we receive from the conversion. Conversely, if we decide to convert Renminbi
into U.S. dollars for the purpose of making payments for dividends on our Ordinary Shares, servicing outstanding debts, or for other
business purposes, appreciation of the U.S. dollar against the Renminbi would reduce the U.S. dollar amounts available to us.
Our
functional currency is the RMB, and our financial statements are presented in U.S. dollars. The RMB appreciated by 8.23% and 2.34% for
the year ended December 31, 2022 and 2021, respectively. It is difficult to predict how market forces or PRC or U.S. government policy
may impact the exchange rate between the RMB and the U.S. dollar in the future. The change in the value of the RMB relative to the U.S.
dollar may affect our financial results reported in the U.S. dollar terms without giving effect to any underlying changes in our business
or results of operations. Currently, our assets, liabilities, revenues and costs are denominated in RMB.
Interest
Rate Risk
We
are not currently exposed to interest rate risk. We do not own any interest-bearing instruments and our interest-bearing debt carries
a fixed rate.
Market
Price Risk
We
are not currently exposed to commodity price risk or market price risk.
Inflation
Inflation
does not materially affect our business or the results of our operations.
Seasonality
Seasonality
does not materially affect our business or the results of our operations.
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
A. Debt Securities
Not
applicable.
B. Warrants and Rights
As
of the date of this annual report, we had the following warrants and options outstanding:
Our
independent director, Wenzhang Jia, holds options to purchase 1,886 Ordinary Shares of the Company, exercisable at a price of $5.30 per
share, which options vest in equal monthly installments over the course of Mr. Jia's initial year of service and are exercisable
for a term of 10 years.
Our
independent director, Huijuan Zhao, holds options to purchase 740 Ordinary Shares of the Company, exercisable at a price of $13.51 per
share, which options vest in equal monthly installments over the course of Ms. Zhao's initial year of service and are exercisable
for a term of 10 years.
Our
former independent director, Heung Ming Wong, presently holds options to purchase 361 Ordinary Shares of the Company, at an exercise
price of $8.90 per share. The options vested in equal monthly installments over Mr. Wong's initial year of service and are exercisable
for a term of ten years. At the time of his resignation, on June 10, 2022, all unvested Ordinary Shares held by Mr. Wong were forfeited.
C. Other Securities
Not
applicable.
D. American Depositary Shares
We
do not have any American Depositary Shares.
102
PART
II
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
None.
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
None.
ITEM 15. CONTROLS AND PROCEDURES
A. Disclosure Controls and Procedures
As
of December 31, 2022, our management assessed the effectiveness of our internal control over financial reporting. In the course of auditing
our consolidated financial statements for the year ended December 31, 2022, we identified a material weakness in our internal control
over financial reporting as of December 31, 2022. 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 weaknesses identified to date relate to a lack of accounting staff and resources with appropriate knowledge of generally accepted
accounting principles in the United States ("U.S. GAAP") and SEC reporting and compliance requirements.
As
a result of the above material weaknesses, management has concluded that our internal control over financial reporting was ineffective
as of December 31, 2022.
In
order to address and resolve the foregoing material weakness, we have begun to implement measures designed to improve our internal control
over financial reporting to remediate this material weakness. We plan to take remedial measures including (i) hiring more qualified accounting
personnel 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; (ii) implementing regular and continuous U.S. GAAP accounting and financial reporting
training programs for our accounting and financial reporting personnel; and (iii) setting up an internal audit function as well as engaging
an external consulting firm to assist us with assessment of Sarbanes-Oxley compliance requirements and improvement of overall internal
control. Finally, we intend to use approximately $1,000,000 from the net proceeds of our recent IPO to improve the internal control system,
including adopting ERP system (Enterprise Resource Planning Administration) and robot management.
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 such term is defined
in Exchange Act Rule 13a-15(f). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP.
Under the supervision and with the participation of our management, including our chief executive officer and chief financial officer,
we conducted an assessment of the effectiveness of our internal control over financial reporting as of December 31, 2022. The assessment
was based on criteria established in the framework Internal Control—Integrated Framework (2013), issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Based on this assessment, management concluded that our internal control over financial reporting
was not effective as of December 31, 2022. Our management identified the material weakness(es) in our internal control over financial
reporting as insufficient in-house personnel in our accounting department with sufficient knowledge of the U.S. GAAP and SEC reporting
rules.
Because
of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of
any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions
or because the degree of compliance with policies or procedures may deteriorate.
C. Attestation Report of the Registered Public Accounting Firm
Because
the Company is a non-accelerated filer and an emerging growth company, this annual report does not include an attestation report of our
registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation
by our registered public accounting firm pursuant to rules of the SEC where domestic and foreign registrants that are non-accelerated
filers, which we are, and "emerging growth companies," which we also are, are not required to provide the auditor attestation
report.
D. Changes in Internal Controls over Financial Reporting
Other
than as described above, there were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) of the
Exchange Act) 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.
103
ITEM
16. [RESERVED]
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
The
audit committee of our board of directors currently consists of three members, Wenzhang Jia, Xiaoming E and Huijuan Zhao. Our board of
directors has determined that all of our audit committee members are "independent" under the Exchange Act and have the requisite
financial knowledge and experience to serve as members of our audit committee. In addition, our board of directors has determined that
Wenzhang Jia is an "audit committee financial expert" as defined in Item 16A of the Instructions to Form 20-F and meets Nasdaq's
financial sophistication requirements due to his current and past experience in various companies in which he was responsible for, amongst
others, the financial oversight responsibilities.
ITEM 16B. CODE OF ETHICS
We
have adopted a Code of Business Conduct and Ethics (the "Code of Ethics") that applies to all of the directors, officers
and employees of the Company and its subsidiaries, including our principal executive officer, principal financial officer and principal
accounting officer. The Code of Ethics addresses, among other things, honesty and ethical conduct, conflicts of interest, compliance
with laws, regulations and policies, including disclosure requirements under the federal securities laws, confidentiality, trading on
inside information, and reporting of violations of the code. A copy of the Code of Ethics is filed as Exhibit 14.1 to our amended registration
statement on Form F-1 filed on August 10, 2021. During the fiscal year ended December 31, 2022, there were no waivers of our 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 services rendered by our principal external
auditors for the periods indicated.
Fiscal Year Ended
December 31,
2022
2021
Audit Fees*
$
522,272
$
220,000
*
"Audit
Fees" consisted of the aggregate fees billed for professional services rendered for the audit of our annual financial statements
or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements.
Our
Audit Committee pre-approves all auditing services and permitted non-audit services to be performed for us by our independent auditor,
including the fees and terms thereof (subject to the de minimums exceptions for non-audit services described in Section 10A(i)(l)(B)
of the Exchange Act that are approved by our Audit Committee prior to the completion of the audit).
ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
Not
applicable
104
ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
There
were no purchases of equity securities made by or on behalf of us or any "affiliated purchaser" as defined in Rule 10b-18
of the Exchange Act during the period covered by this annual report.
ITEM 16F. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
None.
ITEM 16G. CORPORATE GOVERNANCE
We
were incorporated in the Cayman Islands and our corporate governance practices are governed by applicable Cayman Islands law and our
Memorandum and Articles. In addition, because our common stock is listed on Nasdaq, we are subject to Nasdaq's corporate governance
requirements.
As
a Cayman Islands company listed on the Nasdaq Global Market, we are subject to the Nasdaq corporate governance listing standards. Nasdaq
rules, however, 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.
Nasdaq
Listing Rule 5605(b)(1) requires listed companies to have, among other things, a majority of its board members be independent. As a foreign
private issuer, however, we are permitted to, and we may follow home country practice in lieu of the above requirements. The corporate
governance practice in our home country, the Cayman Islands, does not require a majority of our board to consist of independent directors.
Currently, a majority of our board members are independent. However, if we change our board composition such that independent directors
do not constitute a majority of our board of directors, our shareholders may be afforded less protection than they would otherwise enjoy
under Nasdaq's corporate governance requirements applicable to U.S. domestic issuers.
ITEM 16H. MINE SAFETY DISCLOSURE
Not
applicable.
ITEM 16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not
applicable.
105
PART
III
ITEM 17. FINANCIAL STATEMENTS
We
have elected to provide financial statements pursuant to Item 18.
ITEM 18. FINANCIAL STATEMENTS
The
financial statements are filed as part of this annual report beginning on page F-1.
ITEM 19. EXHIBITS
Exhibit
Number
Description
1.1
Certificate of Incorporation of Meihua International Medical Technologies Co., Ltd., dated November 10, 2020 (Incorporated by reference to Registration Statement on Form F-1 filed August 10, 2021)
1.2
Amended and Restated Articles of Association of Meihua International Medical Technologies Co., Ltd., dated December 21, 2020 (Incorporated by reference to Registration Statement on Form F-1 filed August 10, 2021)
1.3
Amended and Restated Memorandum of Association of Meihua International Medical Technologies Co., Ltd., dated December 21, 2020 (Incorporated by reference to Registration Statement on Form F-1 filed August 10, 2021)
2.1
Registrant's Specimen Certificate for Ordinary Shares (Incorporated by reference to Registration Statement on Form F-1 /A filed September 13, 2021)
2.2
Description of Securities*
4.1
Share Exchange Agreement by and among Meihua International Medical Technologies Co., Ltd., Kang Fu International Medical Co., Limited, and shareholders of Kang Fu International Medical Co., Limited, dated December 21, 2020 (Incorporated by reference to Registration Statement on Form F-1 filed August 10, 2021)
4.2
English Translation of Employment Agreement between Meihua International Medical Technologies Co., Ltd. and its CEO Yulin Wang (Incorporated by reference to Registration Statement on Form F-1 /A filed September 13, 2021)
4.3
English Translation of Form of Sales Agreement between Jiangsu Huadong Medical Device Industrial Co., Ltd. and our customer (Incorporated by reference to Registration Statement on Form F-1 filed August 10, 2021)
4.4
English Translation of Form of Purchase Agreement between Jiangsu Huadong Medical Device Industrial Co., Ltd. and our supplier (Incorporated by reference to Registration Statement on Form F-1 filed August 10, 2021)
4.5
English Translation of Form of Distributor Purchase Agreement between Jiangsu Yada Technology Group Co., Ltd and our distributor (Incorporated by reference to Registration Statement on Form F-1 filed August 10, 2021)
4.6
English Translation of Loan Agreement between Jiangsu Huadong Medical Device Industrial Co., Ltd as borrower, and Bank of Communications Limited Yangzhou Branch as lender, dated August 24, 2020 (Incorporated by reference to Registration Statement on Form F-1 filed August 10, 2021)
4.7
English Translation of Loan Agreement between Jiangsu Huadong Medical Device Industrial Co., Ltd and Yongjun Liu as borrowers and Agricultural Bank of China Yangzhou Runyang Branch as lender, and Mortgage Agreement between Jiangsu Huadong Medical Device Industrial Co., Ltd as mortgagor and Agricultural Bank of China Yangzhou Runyang Branch as mortgagee, dated December 3, 2019 (Incorporated by reference to Registration Statement on Form F-1 filed August 10, 2021)
4.8
English Translation of Lease Agreement between Zhu Yi and Yangzhou Huada Medical Device Co., Ltd, dated November 20, 2020 (Incorporated by reference to Registration Statement on Form F-1 filed August 10, 2021)
4.9
English Translation of Lease Agreement between Jiangsu Huadong Medical Device Industrial Co., Ltd and Yangzhou Huada Medical Device Co., Ltd, dated December 7, 2020 (Incorporated by reference to Registration Statement on Form F-1 filed August 10, 2021)
4.10
English Translation of Lease Agreement between Yangzhou Huada Medical Device Co., Ltd and Jiangsu Huadong Medical Device Industrial Co., Ltd, dated December 7, 2020 (Incorporated by reference to Registration Statement on Form F-1 filed August 10, 2021)
4.11
English Translation of Lease Agreement between Jiangsu Huadong Medical Device Industrial Co., Ltd and Jiangsu Yada Technology Group Co., Ltd, dated December 7, 2020 (Incorporated by reference to Registration Statement on Form F-1 filed August 10, 2021)
4.12
English Translation of Lease Agreement between Jiangsu Yada Technology Group Co., Ltd and Yangzhou Huada Medical Device Co., Ltd, dated December 7, 2020 (Incorporated by reference to Registration Statement on Form F-1 filed August 10, 2021)
4.13
English Translation of Lease Agreement between Jiangsu Yada Technology Group Co., Ltd and Jiangsu Huadong Medical Device Industrial Co., Ltd, dated December 7, 2020 (Incorporated by reference to Registration Statement on Form F-1 filed August 10, 2021)
4.14
English Translation of Agreement of Persons Acting-in-concert (Incorporated by reference to Registration Statement on Form F-1 filed August 10, 2021)
4.15
Collaboration Agreement with Zhong Jiang (Incorporated by reference to Registration Statement on Form F-1/A filed August 31, 2021)
4.16
Form of Indemnification Escrow Agreement
0
(Incorporated by reference to Registration Statement on Form F-1/A filed December 2, 2021)
4.17
Form of Lock-up Agreement (included as Exhibit A to Underwriting Agreement) (Incorporated by reference to Registration Statement on Form F-1/A filed December 2, 2021)
106
4.18
Director Service Agreement with Heung Ming Wong (Incorporated by reference to Current Report on Form 6-K filed February 24, 2022)
4.19
Director Service Agreement with Xiaoming E (Incorporated by reference to Current Report on Form 6-K filed February 24, 2022)
4.20
Director Service Agreement with Xu Han (Incorporated by reference to Current Report on Form 6-K filed February 24, 2022)
4.21
Form of Director Service Agreement with Wenzhang Jia (Incorporated by reference to Current Report on Form 6-K filed June 28, 2022)
4.22
Form of Indemnification Agreement with the Meihua International Medical Technologies Co., Ltd. directors and officers (Incorporated by reference to Current Report on Form 6-K filed February 28, 2023)
4.23
Employment Agreement, effective December 1, 2022, between Meihua International Medical Technologies Co., Ltd. and Xin Wang. (Incorporated by reference to Exhibit 10.1 of Current Report on Form 6-K filed December 5, 2022)
4.24
Employment Agreement, effective December 1, 2022, between Meihua International Medical Technologies Co., Ltd. and Lianzhang Zhao. (Incorporated by reference to Exhibit 10.2 of Current Report on Form 6-K filed December 5, 2022)
4.25
Director Offer Letter, effective December 1, 2022, between Meihua International Medical Technologies Co., Ltd. and Huijuan Zhao. (Incorporated by reference to Exhibit 10.3 of Current Report on Form 6-K filed December 5, 2022)
4.26
Form of Indemnification Agreement with Registrant's Directors and Officers (Incorporated by reference to Exhibit 99.1 of Current Report on Form 6-K filed February 28, 2023)
8.1
List of Subsidiaries (Incorporated by reference to Exhibit 8.1 of Annual Report on Form 20-F filed July 29, 2022)
11.1
Code of Business Conduct and Ethics of the Registrant (Incorporated by reference to Registration Statement on Form F-1 filed August 10, 2021)
12.1
Certifications of Chief Executive Officer Pursuant to Rule 13a-14(a) or Rule 15d-1(a)(3)*
12.2
Certifications of Chief Financial Officer Pursuant to Rule 13a-14(a) or Rule 15d-1(a)(3)*
13.1
Certifications of Chief Executive Officer Pursuant to Rule 13a-14(b) (17 CFR 240.13a-14(b)) or Rule 15d-14(b) (17 CFR 240.15d-14(b)) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350).**
13.2
Certifications of Chief Financial Officer Pursuant to Rule 13a-14(b) (17 CFR 240.13a-14(b)) or Rule 15d-14(b) (17 CFR 240.15d-14(b)) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350).**
99.1
Earnings
    Press Release, dated April 14, 2023*
101.INS
Inline
XBRL Instance Document*
101.SCH
Inline
    XBRL Taxonomy Extension Schema Document*
101.CAL
Inline
    XBRL Taxonomy Extension Calculation Linkbase Document*
101.DEF
Inline
    XBRL Taxonomy Extension Definition Linkbase Document*
101.LAB
Inline
    XBRL Taxonomy Extension Label Linkbase Document*
101.PRE
Inline
    XBRL Taxonomy Extension Presentation Linkbase Document*
104
Cover
    Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)*
*
Filed
with this annual report on Form 20-F
**
Furnished
with this annual report on Form 20-F
107
SIGNATURE
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 report on its behalf.
Date:
    April 14, 2023
MEIHUA
    INTERNATIONAL MEDICAL TECHNOLOGIES Limited
/s/
    Xin Wang
Xin
                                            Wang
Chief
    Executive Officer
108
INDEX
TO THE CONSOLIDATED FINANCIAL STATEMENTS
MEIHUA
INTERNATIONAL MEDICAL TECHNOLOGIES CO., LTD.
CONSOLIDATED
FINANCIAL STATEMENTS
AS
OF AND FOR THE YEARS ENDED
DECEMBER
31, 2022 AND 2021
TABLE
OF CONTENTS
Page
Consolidated Financial Statements as of and for the years ended December 31, 2022 and 2021
Report of Independent Registered Public Accounting Firm (PCAOB ID:
6651
)
F-2
Report of Independent Registered Public Accounting Firm (PCAOB ID: 2982)
F-3
Consolidated Balance Sheets as of December 31, 2022 and 2021
F-4
Consolidated Statements of Income and Comprehensive Income for the years ended December 31, 2022, 2021 and 2020
F-5
Consolidated Statements of Changes in Shareholders' Equity for the years ended December 31, 2022, 2021 and 2020
F-6
Consolidated Statements of Cash Flows for the years ended December 31, 2022, 2021 and 2020
F-7
Notes to the Consolidated Financial Statements
F-8
F-
1
Report
of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of
Meihua International Medical Technologies Co., Ltd.
Opinion on the Financial Statements
We have audited the accompanying consolidated
balance sheets of Meihua International Medical Technologies Co., Ltd. (the "Company") as of December 31, 2022 and 2021, and
the related consolidated statements of income and comprehensive income, changes in shareholders' equity, and cash flows for each
of the two years in the period ended December 31, 2022, and the related notes to the financial statements (collectively referred to as
the "financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects,
the consolidated 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 two years in the 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 entity's management. Our responsibility is to express an opinion on the entity's financial statements based on our
audit. 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 entity'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/
Kreit & Chiu CPA LLP
(Formerly Paris, Kreit & Chiu CPA LLP)
We have served as the Company's auditor since 2022.
New York, New York
April 14, 2023
F-
2
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
To the Board of Directors and
Stockholders of Meihua International
Medical Technologies Co., Ltd
Opinion on the Financial Statements
We have audited the accompanying consolidated
balance sheet of Meihua International Medical Technologies Co., Ltd and subsidiaries (collectively, the "Company") as of December
31, 2020, and the related consolidated statements of income and comprehensive income, changes in shareholders' equity, and cash
flows for the year then ended, 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, 2020 and the results of
its operations and its cash flows for the year then ended, 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
audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required
to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations
of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding
of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company's
internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess
the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures
that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the
financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management,
as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for
our opinion.
/s/ Briggs & Veselka Co.
Houston, Texas
June 4, 2021
We have served as the Company's auditor since 2021.
F-
3
MEIHUA
INTERNATIONAL MEDICAL TECHNOLOGIES CO., LTD.
CONSOLIDATED
BALANCE SHEETS
As
of December 31, 2022 and 2021
(US$,
except share data or otherwise noted)
2022
2021
Assets
Current Assets
Cash
$
26,736,700
$
8,149,276
Bank acceptance receivables
22,085,846
19,379,845
Accounts receivable
68,945,792
67,101,297
Inventories
1,122,038
1,251,393
Prepayment and other current assets
16,428,779
1,394,539
Total current assets
135,319,155
97,276,350
Property, plant and equipment
8,758,047
7,477,744
Intangible assets
497,600
562,001
Investment
6,669,655
941,531
Other noncurrent assets
12,333,122
-
Deposits
-
30,599,755
Total assets
$
163,577,579
$
136,857,381
Liabilities and shareholders' equity
Liabilities
Current liabilities
Short-term bank borrowings
$
6,089,428
$
5,178,420
Accounts payable
16,096,165
20,981,041
Taxes payable
1,131,276
2,082,252
Accrued expenses and other current liabilities
856,698
847,066
Total current liabilities
24,173,567
29,088,779
Long term loan
724,932
-
Total liabilities
24,898,499
29,088,779
Commitments and contingencies
Shareholders' equity
Ordinary share, $
0.0005
par value,
80,000,000
shares authorized,
23,940,000
and
20,000,000
shares issued and outstanding as of December 31, 2022 and 2021, respectively
11,970
10,000
Preferred share, $
0.0005
par value,
20,000,000
shares authorized,
no
shares issued and outstanding as of December 31, 2022 and 2021
-
-
Additional paid-in capital
42,967,006
9,716,484
Statutory surplus reserves
15,665,860
15,178,467
Retained earnings
83,330,239
77,574,663
Accumulated other comprehensive income (loss)
(
3,852,138
)
5,288,988
Total shareholders' equity
138,122,937
107,768,602
Non-controlling interest
556,143
-
TOTAL EQUITY
138,679,080
107,768,602
Total liabilities and shareholders' equity
$
163,577,579
$
136,857,381
The
accompanying notes form an integral part of these consolidated financial statements.
F-
4
MEIHUA
INTERNATIONAL MEDICAL TECHNOLOGIES CO., LTD.
CONSOLIDATED
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
For
the years ended December 31, 2022, 2021 and 2020
(US$,
except share data or otherwise noted)
For the Years Ended December 31,
2022
2021
2020
Revenues
Third party sales
$
103,317,145
$
103,461,809
$
88,244,403
Related party sales
29,196
575,901
816,607
Total revenues
103,346,341
104,037,710
89,061,010
Cost of revenues
65,247,864
64,232,469
51,900,823
Gross profit
38,098,477
39,805,241
37,160,187
Operating expenses
Selling
7,109,524
6,457,801
6,624,332
General and administrative
12,468,551
4,361,472
4,577,570
Research and development
2,962,904
2,725,014
2,492,059
Written-off Tai He deposit
4,755,536
-
-
Total operating expenses
27,296,515
13,544,287
13,693,961
Income from operations
10,801,962
26,260,954
23,466,226
Other (income) expense:
Interest expense
194,667
180,744
137,160
Interest income
(
63,725
)
(
23,855
)
(
36,583
)
Currency exchange gain
(
273,432
)
(
174,413
)
(
393,478
)
Other expense, net
53,205
50,437
25,551
Total other (income) expenses
(
89,285
)
32,913
(
267,350
)
Income before income tax provision
10,891,247
26,228,041
23,733,576
Income taxes expense
4,713,543
5,278,462
4,688,321
Net income
6,177,704
$
20,949,579
$
19,045,255
Net loss attributable to non-controlling interests
(
65,265
)
-
-
Net income attributable to shareholders
6,242,969
20,949,579
19,045,255
Foreign currency translation adjustment – gain / (loss)
(
9,155,028
)
2,083,243
4,759,973
Comprehensive (loss) income
$
(
2,977,324
)
$
23,032,822
$
23,805,228
Comprehensive loss attributable to non-controlling interests
(
79,167
)
-
-
Comprehensive (loss) income attributable to shareholders
(
2,898,157
)
23,032,822
23,805,228
Weighted average number of ordinary shares - basic and diluted
23,411,068
20,000,000
20,000,000
Basic & diluted net income per ordinary share
$
0.27
$
1.05
$
0.95
The
accompanying notes form an integral part of these consolidated financial statements.
F-
5
MEIHUA
INTERNATIONAL MEDICAL TECHNOLOGIES CO., LTD.
CONSOLIDATED
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
For
the years ended December 31, 2022, 2021 and 2020
(US$,
except share data)
Ordinary
shares
Ordinary
shares
amount
Additional
paid-in
capital
Ordinary
shares
subscribed
Statutory
surplus
reserves
Retained
earnings
Accumulated
other
comprehensive
income (loss)
Non-
controlling
interests
Total
Equity
Balance
    as of December 31, 2019
18,575,000
$
9,288
$
8,100,225
$
344,739
$
13,308,334
$
39,449,962
$
(
1,554,228
)
-
$
59,658,320
-
Share issuance
1,425,000
712
1,616,259
-
-
-
-
-
1,616,971
-
Ordinary shares subscribed
-
-
-
(
344,739
)
-
-
-
-
(
344,739
)
-
Net income
-
-
-
-
-
19,045,255
-
-
19,045,255
Appropriation of statutory
    reserve
-
-
-
-
1,870,133
(
1,870,133
)
-
-
-
Currency
    translation adjustment
-
-
-
-
-
-
4,759,973
-
4,759,973
Balance as of December
    31, 2020
20,000,000
$
10,000
$
9,716,484
-
$
15,178,467
$
56,625,084
$
3,205,745
-
$
84,735,780
Net income
-
-
-
-
-
20,949,579
-
-
20,949,579
Currency
    translation adjustment
-
-
-
-
-
-
2,083,243
-
2,083,243
Balance as of December 31, 2021
20,000,000
$
10,000
$
9,716,484
-
$
15,178,467
$
77,574,663
$
5,288,988
-
$
107,768,602
Ordinary shares subscribed
3,940,000
1,970
33,250,522
-
-
-
-
-
33,252,492
Shareholders' contribution
-
-
-
-
-
-
-
635,310
635,310
Net income
-
-
-
-
-
6,242,969
(
65,265
)
6,177,704
Appropriation of statutory
    reserve
-
-
-
-
487,393
(
487,393
)
Currency
    translation adjustment
-
-
-
-
-
(
9,141,126
)
(
13,902
)
(
9,155,028
)
Balance as of December
    31, 2022
23,940,000
11,970
42,967,006
-
15,665,860
83,330,239
(
3,852,138
)
556,143
138,679,080
The
accompanying notes form an integral part of these consolidated financial statements.
F-
6
MEIHUA
INTERNATIONAL MEDICAL TECHNOLOGIES CO., LTD.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
For
the years ended December 31, 2022, 2021 and 2020
(US$)
For the Year Ended December 31
2022
2021
2020
Cash Flows from operating activities:
Net income
$
6,177,704
$
20,949,579
$
19,045,255
Adjustments for items not affecting cash:
Depreciation
541,265
595,522
497,238
Amortization
22,196
26,951
26,195
Net loss from disposal of property, plant and equipment
25,023
15,281
2,852
Written-off Tai He deposit
4,755,536
-
-
Currency exchange (gain) loss
(
273,432
)
-
-
Changes in operating assets and liabilities:
-
Bank acceptance receivables
(
4,284,515
)
(
6,533,717
)
(
5,764,940
)
Accounts receivable
(
7,121,889
)
(
20,065,904
)
(
13,644,830
)
Inventories
35,027
105,121
(
219,787
)
Prepayments and other assets
(
4,932,145
)
(
861,799
)
(
367,249
)
Due from related parties
-
396,583
(
222,504
)
Accounts payable
(
3,371,275
)
4,908,971
5,341,710
Taxes payable
(
812,412
)
288,659
598,105
Accrued expenses and other current liabilities
75,879
120,090
102,749
Due to related parties
-
-
(
68,798
)
Net cash (used in) provided by operating activities
(
9,163,038
)
(
54,663
)
5,325,996
Cash flows from investing activities:
Purchases of property, plant and equipment
(
2,698,729
)
(
850,231
)
(
3,808,259
)
Payments for long-term deposits for buildings
-
-
(
12,311,347
)
Long term investment
(
5,944,709
)
-
-
Proceeds from disposal of property, plant and equipment
23,146
16,414
25,202
Net cash used in investing activities
(
8,620,292
)
(
833,817
)
(
16,094,404
)
Cash flows from financing activities:
Proceeds from short-term bank borrowings
7,579,135
6,510,820
4,359,665
Proceeds from long-term bank loans
743,052
-
-
Capital contributed by non-controlling shareholders
635,310
-
-
Proceeds from initial public offering
34,529,644
-
-
Proceeds from issuance of shares
-
1,272,232
Repayments of short-term bank borrowings
(
6,241,641
)
(
4,650,586
)
(
3,925,147
)
Net cash provided by financing activities
37,245,500
1,860,234
1,706,750
Effect of foreign exchange rate changes
(
874,746
)
(
9,812
)
218,137
Net increase (decrease) in cash
18,587,424
961,942
(
8,843,521
)
Cash, beginning of year
8,149,276
7,187,334
16,030,855
Cash, end of year
$
26,736,700
$
8,149,276
$
7,187,334
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
Cash paid during the period for:
Interest
$
194,667
$
180,744
$
137,160
Income taxes
$
5,703,288
$
5,042,816
$
4,362,169
Non-cash transactions
Shareholder contribution through deferred cost
1,277,152
The
accompanying notes form an integral part of these consolidated financial statements.
F-
7
MEIHUA
INTERNATIONAL MEDICAL TECHNOLOGIES CO., LTD.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
1. Organization and principal activities
Principal
Activities:
Meihua
International Medical Technologies Co., Ltd. ("Meihua") was incorporated on November 10, 2020 in the Cayman Islands. It is
a holding company with no operations. Meihua produces and sells medical consumables through its wholly owned subsidiaries located in
People's Republic of China ("PRC" or "China"). Below is Meihua's organizational chart, as well as
a description of the ownership structure.
F-
8
Entity
    Name
Registered
    Location
Percentage
    of ownership
Date
                                            of incorporation
Principal
    activities
Meihua International Medical Technologies Co., Ltd. ("Meihua")
Cayman
Parent
November 10, 2020
Investment holding
康复国际医疗有限公司
Kang Fu International Medical Co., Limited ("Kang Fu")
Hong Kong
100% by Meihua
October 13, 2015
Investment holding
扬州华达医疗器械有限公司
Yangzhou Huada Medical Equipment Co., Ltd. ("Huada")
Yangzhou
100% by Kang Fu
December 24, 2001
Medical Equipment Sales
江苏亚达科技集团有限公司
Jiangsu Yada Technology Group Co., Ltd. ("Yada")
Yangzhou
100% by Huada
December 5, 1991
Medical Equipment Sales
江苏华东医疗器械实业有限公司
Jiangsu Huadong Medical Device Industry Co., Ltd. ("Huadong")
Yangzhou
100% by Yada
November 18, 2000
Medical Equipment Sales
扬州光辉医疗科技有限公司
Yangzhou Guanghui Medical Technology Co., Ltd. ("Guanghui")
Yangzhou
100% by Huadong
December 22, 2020
Medical Equipment Sales
海南国械医疗科技有限公司
Hainan GuoxieTechnology Group Co. Ltd. ("Hainan Guoxie")
Hainan
55% by Kang Fu
October 07,2021
Medical Equipment Sales
Kang
Fu was incorporated on October 13, 2015 with a registered capital of HKD
53,911,815
($
6,911,771
). Kang Fu is a holding company with no
operations. The following operating entities (Huada, Yada and Huadong) are all directly and indirectly
100
% owned by Kang Fu for all
the periods presented.
Huada
is a subsidiary wholly owned by Kang Fu and established in Yangzhou, China on December 24, 2001 with a registered capital of $
17,193,021
.
Yada
is a subsidiary wholly owned by Huada and was established in Yangzhou, China on December 5, 1991 with a registered capital of RMB
51,390,000
.
Huadong
is a subsidiary wholly owned by Yada and was established in Yangzhou, China on November 18, 2000 with a registered capital of RMB
50,000,000
.
Those
three subsidiaries primarily manufacture and sell Class I, II and III disposable medical devices under the Company's own brands,
and distribute Class I, II and III disposable medical devices sourced from other manufacturers to our domestic and overseas customers.
Guanghui
is a subsidiary wholly owned by Huadong and was established in Yangzhou, China on December 22, 2020 with a registered capital of RMB
1,000,000
.
Hainan
Guoxie is a subsidiary
55
% owned by Kang Fu and established in Hainan, China on October 07, 2021 with a registered capital of
RMB
100,000,000
.
F-
9
Reorganization
and Share Issuance
On
November 10, 2020, Meihua was incorporated in the Cayman Islands and issued
50,000
ordinary shares at par value of $
1.00
to Yongjun Liu.
On
December 21, 2020,
Yongjun Liu surrendered 49,999 shares to the Company for cancellation. The Company subdivided each existing share
with a par value of $1.00 into 2,000 shares with a par value of $0.0005 par value and created a new class of preferred shares. Upon completion
of the share capital changes, the Company's share capital includes 80,000,000 ordinary shares with a par value of $0.0005 per share
and 20,000,000 preferred shares with a par value of $0.0005 per share.
Also
on December 21, 2020,
the Company engaged in a corporate reorganization to combine the controlled entities (now referred to as the subsidiaries)
into one legal corporation (the Company). The specific transactions related to this reorganization are outlined below. The Company entered
into a share exchange agreement with Kang Fu to issue an aggregate of 15,933,000 ordinary shares to Yongjun Liu and Yin Liu in exchange
for 100% ownership of Kang Fu, and allotted 2,640,000 ordinary shares at $0.0005 par value to three BVI companies held by founders of
the Company for no consideration. On December 22, 2020, Guanghui was incorporated for the purpose of foreign exchange registration under
the laws of the People's Republic of China as there was no substantive business of Guanghui. The shares of Guanghui are owned by
13 natural persons (the "Guanghui Shareholders") and on May 10, 2021, all of the Guanghui Shareholders agreed to transfer
all their shares held in Guanghui to Huadong (an indirect subsidiary of the Company) for no consideration.
Through such transaction,
Guanghui then became a wholly owned subsidiary of Huadong.
On
December 18, 2020, Yongjun Liu and Yin Liu and other shareholders (collectively, the "Parties") executed an Acting-in-Concert
Agreement. The major terms of this agreement are:
●
The
    Parties shall inform and discuss with each other and reach a consensus before exercising voting rights in the Company's decision
    making.
●
If
    no consensus could be reached by the Parties, the decision made by Yongjun Liu and Yin Liu (who are a couple) prevails.
As
a result of the Acting-in-Concert agreement, Yongjun Liu and Yin Liu together have the ultimate control of the Company.
The
Acting-in-Concert Agreement that establishes the common control between Meihua International and Kang Fu is treated as though it was
effective for all periods presented as during the years presented in these financial statements, the control of the entities has
never changed (always under the control of Yongjun Liu and Yin Liu who are a couple). Accordingly, the combination has been treated as
a corporate restructuring (reorganization) of entities under common control and thus the current capital structure has been retroactively
presented in prior periods as if such structure existed at that time and in accordance with ASC 805-50-45-5, the entities under common
control are presented on a combined basis for all periods to which such entities were under common control. Since all of the subsidiaries
were under common control for the entirety of the years ended December 31, 2020, the results of these subsidiaries are included
in the financial statements for all periods.
After
the restructuring, Meihua holds
100
% ownership of Kang Fu and has
80,000,000
ordinary shares and
20,000,000
preferred shares authorized,
18,575,000
ordinary shares and
nil
preferred share issued and outstanding.
F-
10
The
discussion and presentation of financial statements herein assumes the completion of the restructuring, which is accounted for retroactively
as if it occurred on January 1, 2020, and the equity has been restated to reflect the change as well.
On
December 22, 2020, the Company issued a total of
1,425,000
ordinary shares to three BVI companies with total consideration of $
1,616,971
in a private offering. The consideration was received by Huada due to Meihua not having been incorporated at the time of payments received.
The timing of the payments received is listed below:
US$
December 2019
344,739
January 2020
359,885
April 2020
508,814
September 2020
403,533
Total
1,616,971
2. Summary of Significant Accounting Policies
Basis
of Presentation
The
consolidated financial statements include all accounts of Meihua and its subsidiaries (collectively, the "Company")
and have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP").
All inter-company transactions have been eliminated.
Use
of Estimates
The
preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions
that affect the amounts reported and disclosed in the consolidated financial statements and related notes.
The
most significant estimates and judgments include allowance for bad debts, the valuation of inventory, useful life of property, plant
and equipment and income taxes related to realization of deferred tax assets and uncertain tax position. Actual amounts could differ
from those estimates.
Non-controlling
interests
Non-controlling
interest represents the portion of the net assets of subsidiaries attributable to interests that are not owned or controlled by the Company.
The non-controlling interest is presented in the consolidated balance sheets, separately from equity attributable to the shareholders
of the Company. Non-controlling interest's operating results are presented on the face of the consolidated statements of income
and comprehensive income as an allocation of the total income for the year between non-controlling shareholders and the shareholders
of the Company. As of December 31, 2022, non-controlling interests represent one non-controlling shareholders' proportionate share
of equity interests in Hainan Guoxie.
Functional
Currency and Foreign Currency Translation
The
Company's reporting currency is the United States dollar ("US$"). The Company's operations are principally conducted
through the PRC subsidiaries where the local currency is the functional currency. Therefore, the functional currency of Kang Fu is the
Hong Kong dollar and the functional currency of Huada, Yada, Huadong and Guanghui is the Renminbi ("RMB").
Transactions
denominated in currencies other than the functional currencies are translated into the functional currency of the entity at the exchange
rates prevailing on the transaction dates. Monetary assets and liabilities denominated in currencies other than the applicable functional
currency are translated into the functional currency at the prevailing rates of exchange at the balance date. The resulting exchange
differences are reported in the consolidated statements of income and comprehensive income.
F-
11
The
assets and liabilities of the Company are translated at the exchange spot rate at the balance sheet date, stockholders' equity
is translated at the historical rates and the revenues and expenses are translated at the average exchange rates for the periods. The
resulting translation adjustments are reported under other comprehensive income in the consolidated statements of income and comprehensive
income in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC")
220,
Comprehensive Income
. The following are the exchange rates that were used in translating the Company's PRC subsidiaries'
financial statements into the consolidated financial statements:
For
    the Years Ended December 31
2022
2021
2020
Period
    Ended spot
US$
1
=RMB
6.8972
US$
1
=RMB
6.3726
US$
1
=RMB
6.5250
Period
    Average
US$
1
=RMB
6.7290
US$
1
=RMB
6.4508
US$
1
=RMB
6.9042
The
exchanges rates used for translation from Hong Kong dollar to US$ was 7.8000, a pegged rate determined by the linked exchange rate system
in Hong Kong. This pegged rate was used to translate Kang Fu's balance sheets, income statement items and cash flow items for both
the years ended December 31, 2022, 2021 and 2020.
Certain
Risks and Concentration
The
Company's financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily
of cash and receivables. As of December 31, 2022 and 2021 substantially all the Company's cash were held in major financial institutions
located in Hong Kong and the PRC, which management considers to be of high credit quality.
As
of December 31, 2022,
two
customers accounted for approximately
27.63
% and
10.97
% of the Company's total revenues. As of December
31, 2021,
two
customers accounted for approximately
21.91
% and
11.26
% of the Company's total revenues.
As
of December 31, 2022,
two
customers accounted for approximately
27.73
% and
13.14
% of the Company's accounts receivable. As of December
31, 2021,
three
customers accounted for approximately
25.88
%,
11.41
% and
10.25
%, respectively, of the Company's accounts receivable.
For
the years ended December 31, 2022, one supplier accounted for approximately
11.93
% of the Company's total purchases There were
no suppliers that individually represented greater than
10
% of the total purchase of the Group for the years ended December 31, 2021
and 2020.
F-
12
Fair
Value Measurement
Fair
value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to
be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact, and it considers
assumptions that market participants would use when pricing the asset or liability.
The
Company adopted the guidance of Accounting Standards Codification ("ASC") 820 for fair value measurements which clarifies
the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs
used in measuring fair value as follows:
Level 1:
Inputs
    are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.
Level 2:
Inputs
    are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets
    and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated
    by observable market data.
Level 3:
Inputs
    are unobservable inputs which 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.
The
Company's financial instruments include cash, accounts receivable, bank acceptance receivables, due from related parties, accounts
payable, other liabilities and accrued expenses and short-term bank borrowings. The carrying amounts approximate their fair values due
to their short maturities as of December 31, 2022 and 2021.
The
Company noted no transfers between levels during any of the periods presented. The Company did not have any instruments that were measured
at fair value on a recurring or non-recurring basis as of December 31, 2022 and 2021.
Cash
Cash
consists of petty cash on hand and cash held in banks, which are highly liquid and are unrestricted as to withdrawal or use.
Bank
Acceptance Receivable
s
Bank acceptance receivables are issued by bank under the request of
the Company's customers, to pay for the purchased goods. The Company can choose to hold acceptance notes until maturity and receive
the face value payment from the bank, or sell (exchange) the acceptance notes at a discount to another party willing to wait until maturity
to receive the bank's promised payment. The maturity date of the receivables is all within one year of the original issuance date
and carried at face value. The Company is not lending money, it just sells goods to the customers (customers can pay the purchased goods
by cash, accounts receivable or bank acceptance receivables). The receivables mature within one year, and are non-interest bearing. As
bank acceptance receivables are issued by the banks and payments are guaranteed. The Company has not discounted any bank acceptances and
there was no endorsed bank acceptances that are unmatured as of December 31, 2022. The Company collected approximately $
9.6
million as
of March 31, 2023.
F-
13
Accounts
Receivable and Allowance for Doubtful Accounts
Accounts
receivable represent trade receivables and are recognized initially at fair value and subsequently adjusted for any allowance for doubtful
accounts or impairment.
The
Company records impairment losses for accounts receivable based on assessments of the recoverability of the trade and other receivables
and individual account analysis, including the current creditworthiness and the past collection history of each debtor. Impairments arise
when there is objective evidence indicating that the balances may not be collectible. The identification of bad and doubtful debts, in
particular of a loss event, requires the use of judgment and estimates, which involve the estimates of specific losses on individual
exposures, as well as a provision on historical trends of collections. Based on management of customers' credit and ongoing relationship,
management makes conclusions whether any balances outstanding at the end of the period will be deemed non-collectible on an individual
basis and on aging analysis basis. The provision is recorded against accounts receivables balances, with a corresponding charge recorded
in the consolidated statements of operations and comprehensive income. Delinquent account balances are written-off against the allowance
for doubtful accounts after management has determined that the likelihood of collection is not probable.
The
Company historically has not had material bad debts in accounts receivable. There were no bad debt expenses related to accounts
receivable for the years ended December 31, 2022, 2021 and 2020 and there was no provision for doubtful accounts as of December 31,
2022 and 2021.
Inventories
Inventories
are valued using the lower of cost or net realizable value. Cost is principally determined using the weighted-average method. Manufactured
inventories included cost of materials, labor and overhead expenses. The Company records adjustments to inventory for excess quantities,
obsolescence, or impairment, when appropriate, to reflect inventory at net realizable value. These adjustments are based upon a combination
of factors including current sales volume, market conditions, lower of cost or market analysis and expected realizable value of the inventory.
There
were no write-downs recognized of inventories as of December 31, 2022 and 2021.
Prepayment
and other current assets
As
of December 31, 2022 and 2021, prepayment and other current assets were $
16,428,779
and $
1,394,539
.
Prepayment
and other assets primarily consist of deferred IPO costs, loans to third-parties, refundable tax credits and receivables, security deposits
made to customers, advances to employees and land use right receivable, which are presented net of allowance for doubtful accounts. These
balances are unsecured and are reviewed periodically to determine whether their carrying value has become impaired. The Company considers
the balances to be impaired if the utilization or refund of the balances becomes doubtful. The Company uses the aging method to estimate the
allowance for uncollectible balances. The allowance is also based on management's best estimate of specific losses on individual
exposures, as well as a provision on historical trends of collections and utilizations. Actual amounts received or utilized may differ
from management's estimate of credit worthiness and the economic environment. Delinquent account balances are written off against
allowance for doubtful accounts after management has determined that the likelihood of collection is not probable. The allowance for
doubtful accounts amounted to
nil
as of December 31, 2022 and 2021.
Deferred
IPO costs represent the incremental costs incurred for the Company's initial public offering ("IPO"). These costs has
been charged against the gross proceeds of the IPO in 2022 (see Note 14).  Deferred IPO costs primary include specific legal, audit
and professional consulting costs.  As of December 31, 2022 and 2021, the deferred IPO costs were $
nil
and $
1,277,152
, respectively.
F-
14
Property,
Plant and Equipment
Property,
plant and equipment items are recorded at their historic cost, less accumulated depreciation and impairment losses. The Company calculates
depreciation using the straight-line method, after consideration of the estimated residual values, over the following estimated useful
lives:
Category
Useful lives
Estimated residual value
Buildings
20
years
10
%
Machinery and Equipment
10
years
10
%
Motor vehicles
5
years
10
%
Electronic Equipment
5
years
10
%
Office Equipment
3
years
10
%
Inspection Equipment
5
years
10
%
Major
improvements are capitalized and expenditures for maintenance and repairs are expensed as incurred. Construction in progress represents
property, plant and equipment under construction or being installed. Costs include original cost, installation, construction and other
direct costs. Interest expenses directly related to construction in progress would be capitalized. Construction in progress is transferred
to the appropriate fixed asset account and depreciation commences when the asset has been substantially completed and placed in service.
Intangible
Assets
Intangible
assets are non-monetary assets without physical substance. These items are initially measured at cost and subsequently carried at cost
less any accumulated amortization and impairment losses. Intangible assets with finite useful lives are amortized on a straight-line
basis over their estimated useful lives. Amortization of finite-lived intangible assets is computed using the straight-line method over
the estimated useful lives, which is as follows:
Category
Useful lives
Land use rights
50
years
Patent
5
years
Trademark
10
years
Impairment
of Long-Lived Assets
The
Company accounts for impairment of long-lived assets in accordance with Accounting Standards Codification ("ASC") 360,
Property,
Plant and Equipment
. ("ASC 360"). Long-lived assets consist primarily of property, plant and equipment, and intangible
assets. In accordance with ASC 360, the Company evaluates the carrying value of long-lived assets when it determines a triggering event
has occurred, or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. When
indicators exist, recoverability of assets is measured by a comparison of the carrying value of the asset group to the estimated undiscounted
future net cash flows expected to be generated by the asset. Examples of such triggering events include a significant disposal of a portion
of such assets, and adverse change in the market involving the business employing the related assets. If such assets are determined not
to be recoverable, the Company performs an analysis of the fair value of the asset group and will recognize an impairment loss when the
fair value is less than the carrying amounts of such assets. The fair value, based on reasonable and supportable assumptions and projections,
require subjective judgments. Depending on the assumptions and estimates used, the appraised fair value projected in the evaluation of
long-lived assets can vary within a range of outcomes. The Company considers the likelihood of possible outcomes in determining the best
estimate for the fair value of the assets. The Company did not record any impairment charges for the years ended December 31, 2022, 2021 and
2020. There can be no assurance that future events will not have impact on company revenue or financial position which could result in
impairment in the future.
F-
15
Investment
In
accordance with Financial Accounting Standards Board ("FASB") ASC 321, "Investment-Equity Securities," the Company
accounts for non-marketable securities on a prospective basis. Equity investments that do not have readily determinable fair values and
do not qualify for the net asset value practical expedient are eligible for the measurement alternative.
On
March 3, 2011, Yada invested in Yangzhou Juyuan Guarantee Co., Ltd ("Juyuan") and obtained
12
% equity interest of Juyuan.
For the Company's passive and without significant influence or control equity investment in private company which do not have readily
determinable fair values, the Company has elected the measurement alternative defined as cost, less impairment, plus or minus adjustments
resulting from observable price changes in orderly transactions for the identical or a similar investment of the Company. The investment
is reviewed periodically to determine if its value has been impaired and adjustments are recorded as necessary in profit or loss for
the period.
Investments
in entities in which the Company can exercise significant influence but does not own a majority equity interest or control are accounted
for using the equity method of accounting in accordance with ASC 323, Investments-Equity Method and Joint Ventures ("ASC 323").
Under the equity method, the Company initially records its investment at cost and the difference between the cost of the equity investee
and the amount of the underlying equity in the net assets of the equity investee is accounted for as if the investee were a consolidated
subsidiary. The share of earnings or losses of the investee are recognized in the consolidated statements of comprehensive loss. Equity
method adjustments include the Company's proportionate share of investee income or loss, adjustments to recognize certain differences
between the Company's carrying value and its equity in net assets of the investee at the date of investment, impairments, and other
adjustments required by the equity method. The Company assesses its equity investment for other-than-temporary impairment by considering
factors as well as all relevant and available information including, but not limited to, current economic and market conditions, the
operating performance of the investees including current earnings trends, the general market conditions in the investee's industry
or geographic area, factors related to the investee's ability to remain in business, such as the investee's liquidity, debt
ratios, and cash burn rate and other company-specific information.
Investments
in equity securities without readily determinable fair values are measured at cost minus impairment adjusted by observable price changes
in orderly transactions for the identical or a similar investment of the same issuer. These investments are measured at fair value on
a nonrecurring basis when there are events or changes in circumstances that may have a significant adverse effect. An impairment loss
is recognized in the consolidated statements of comprehensive loss equal to the amount by which the carrying value exceeds the fair value
of the investment. Prior to the adoption of ASU 2016-01 on January 1, 2019, these investments were accounted for using the cost method
of accounting, measured at cost less other-than-temporary impairment.
On
December 1, 2022, Huadong invested RMB
40
million into Jiangsu Zhongxiangxin
International Science and Technology Innovation Park Co., Ltd. ("Zhongxiangxin"), and obtained
25
% ownership interest of
Zhongxiangxin. Zhongxiangxin manufactures and sells medical materials in the PRC. The Company accounted for the investments using equity
method, because the Company has significant influence but does not own a majority equity interest or otherwise control over the equity
investee. Under the equity method, the Company adjusts the carrying amount of the investment and recognizes investment income or loss
for its share of the earnings or loss of the investee after the date of investment. When the Company's share of losses in the equity
investee equals or exceeds its interest in the equity investee, the Company does not recognize further losses, unless the Company has
incurred obligations or made payments or guarantees on behalf of the equity investee. For the year ended December 31, 2022, the investment
gain from Zhongxiangxin was $
290
.
F-
16
The
Company continually reviews its investments in equity investees to determine whether a decline in fair value below the carrying value
is other-than-temporary. The primary factors the Company considers in its determination include the financial condition, operating performance
and the prospects of the equity investee; other company specific information such as recent financing rounds; the geographic region,
market and industry in which the equity investee operates; and the length of time that the fair value of the investment is below its
carrying value. If the decline in fair value is deemed to be other-than-temporary, the carrying value of the equity investee is written
down to fair value.
For
the years ended December 31, 2022, 2021 and 2020, no impairment indicators were identified and no loss related to revaluation of its
investment in the private company was recorded.
Value-added
Tax
Value-added
taxes ("VAT") collected from customers relating to product sales and remitted to governmental authorities are presented on
a net basis. VAT collected from customers is excluded from revenue which is recorded in VAT payable. The Company is subject to a VAT
rate of
13
%. The VAT payable
may be offset by VAT paid by the Company on raw materials and other materials included in the cost of producing or acquiring its finished
products.
Related
Parties
Parties
are considered to be related to the Company if the parties, directly or indirectly, through one or more intermediaries, control, are
controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management,
members of the immediate families of principal owners of the Company and its management and other parties with which the Company may
deal with if one party controls or can significantly influence the management or operating policies of the other to an extent that one
of the transacting parties might be prevented from fully pursuing its own separate interests. The Company discloses all significant related
party transactions.
Revenue
Recognition
Effective
January 1, 2018, the Company adopted ASC Topic 606 using the modified retrospective adoption method. Based on the requirements of ASC
Topic 606, revenue is recognized when control of the promised goods or services is transferred to the customers in an amount that reflects
the consideration the Company expects to be entitled to receive in exchange for those goods or services. The Company primarily sells
its products to hospitals and medical equipment companies. Revenue is recognized when the following 5-step revenue recognition criteria
are met:
1)
Identify
    the contract with a customer
2)
Identify
    the performance obligations in the contract
3)
Determine
    the transaction price
4)
Allocate
    the transaction price
5)
Recognize
    revenue when or as the entity satisfies a performance obligation
Revenue
from product sales is recognized at the point in time control of the products is transferred, generally upon customer receipt based upon
the standard contract terms. Shipping and handling activities are considered to be fulfillment activities rather than promised services
and are not, therefore, considered to be separate performance obligations. The Company's sales terms provide no right of return
outside of a standard quality policy and returns are generally not significant. Payment terms for product sales are generally set at
90
to
180
days after the consideration becomes due and payable.
F-
17
Revenue
Disaggregation
The
Company's disaggregated revenues are represented by two categories which are type of goods and type of customers.
Type
of Goods
For the year ended December 31,
2022
2021
2020
US$
US$
US$
Self-Manufactured Products
50,514,976
48,059,165
44,473,076
Resales of Sourced Disposable Medical Devices from Third Party Manufacturers
52,831,365
55,978,545
44,587,934
Total Revenue
103,346,341
104,037,710
89,061,010
Type
of Customers
For the year ended December 31,
2022
2021
2020
US$
US$
US$
Direct sales
9,465,644
9,499,748
9,430,082
Distributors
93,880,697
94,537,962
79,630,928
Total Revenue
103,346,341
104,037,710
89,061,010
Earnings
per Ordinary Share
Earnings
(loss) per ordinary share is calculated in accordance with ASC 260,
Earnings per Share
. Basic earnings (loss) per ordinary share
is computed by dividing the net income (loss) attributable to shareholders of the Company by the weighted average number of ordinary
shares outstanding during the year. Diluted earnings per ordinary share is computed in accordance with the treasury stock method and
based on the weighted average number of ordinary shares and dilutive ordinary share equivalents. Dilutive ordinary share equivalents
are excluded from the computation of diluted earnings per ordinary share if their effects would be anti-dilutive. There is no ordinary
share equivalent issued to date.
Comprehensive
Income (Loss)
ASC
220, Comprehensive Income ("ASC 220") establishes rules for reporting and display of comprehensive income and its components.
ASC 220 requires that unrealized gains and losses on the Company's foreign currency translation adjustments be included in comprehensive
income (loss).
Advertising
Costs
The
Company's advertising costs are expensed as incurred. Advertising expenses are included in selling expenses in the
accompanying consolidated statements of income and comprehensive income. Advertising expenses were $
95,432
, $
21,498
and $
53,770
for
the years ended December 31, 2022, 2021 and 2020, respectively.
Research
and Development Costs
Research
and development expenses are expensed as incurred. Research and development expenses were $
2,962,904
, $
2,725,014
and $
2,492,059
for the
years ended December 31, 2022, 2021 and 2020, respectively.
F-
18
Income
Tax
Current
income taxes are provided on the basis of net profit for financial reporting purposes, adjusted for income and expense items which are
not assessable or deductible for income tax purposes, in accordance with the regulations of the relevant tax jurisdictions.
Deferred
income taxes are recognized for temporary differences between the tax bases of assets and liabilities and their reported amounts in the
consolidated financial statements, net operating loss carry forwards and credits. 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 provided in accordance with the laws of the relevant taxing authorities. Deferred tax assets and liabilities
are measured using enacted rates expected to apply to taxable income in which temporary differences are expected to be reversed or settled.
The effect on deferred tax assets and liabilities of changes in tax rates is recognized in the statement of comprehensive income in the
period of the enactment of the change.
The
Company considers positive and negative evidence when determining whether a portion or all of its deferred tax assets will more likely
than not be realized. This assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses,
forecasts of future profitability, the duration of statutory carry-forward periods, its experience with tax attributes expiring unused,
and its tax planning strategies. The ultimate realization of deferred tax assets is dependent upon its ability to generate sufficient
future taxable income within the carry-forward periods provided for in the tax law and during the periods in which the temporary differences
become deductible. When assessing the realization of deferred tax assets, the Company has considered possible sources of taxable income
including (i) future reversals of existing taxable temporary differences, (ii) future taxable income exclusive of reversing
temporary differences and carryforwards, (iii) future taxable income arising from implementing tax planning strategies, and (iv) specific
known trend of profits expected to be reflected within the industry.
The
Company recognizes a tax benefit associated with an uncertain tax position when, in its judgment, it is more likely than not that the
position will be sustained upon examination by a taxing authority. For a tax position that meets the more-likely-than-not recognition
threshold, the Company initially and subsequently measures the tax benefit as the largest amount that the Company judges to have a greater
than
50
% likelihood of being realized upon ultimate settlement with a taxing authority. The Company's liability associated with
unrecognized tax benefits is adjusted periodically due to changing circumstances, such as the progress of tax audits, case law developments
and new or emerging legislation. Such adjustments are recognized entirely in the period in which they are identified. The Company's
effective tax rate includes the net impact of changes in the liability for unrecognized tax benefits and subsequent adjustments as considered
appropriate by management. The Company classifies interest and penalties recognized on the liability for unrecognized tax benefits as
income tax expense.
Segment
Reporting
FASB
280, "Segment Reporting," establishes standards for reporting information about operating segments on a basis consistent
with the Company's internal organizational structure as well as information of the Company's business segments, geographical
areas, segments and major customers. 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 chief
operating decision maker is the Company's president and Chief Executive Officer ("CEO"). Management, including the
chief operating decision maker, reviews operating results of different products at revenue level with no allocation of operating costs.
Consequently, based on management's assessment,
the Company has determined that it has only one operating segment
as defined by
FASB ASC 280.
F-
19
The
Company has disclosed the type of revenue by government category as follows.
December 31, 2022
December 31, 2021
December 31, 2020
US$
US$
US$
Category
Produced
Purchased
Total
Produced
Purchased
Total
Produced
Purchased
Total
Class I
7,463,707
8,572,512
16,036,219
6,151,443
7,331,962
13,483,405
5,181,532
6,155,223
11,336,755
Class II
37,229,199
36,177,490
73,406,689
36,788,116
41,313,745
78,101,861
35,863,806
33,573,351
69,437,157
Class III
1,189,906
1,863,990
3,053,896
1,094,957
2,291,899
3,386,856
758,525
2,355,768
3,114,293
Others
4,632,164
6,217,373
10,849,537
4,024,649
5,040,939
9,065,588
2,669,213
2,503,592
5,172,805
Total
50,514,976
52,831,365
103,346,341
48,059,165
55,978,545
104,037,710
44,473,076
44,587,934
89,061,010
Class
I, II, and III medical devices are defined by the National Medical Products Administration of China according to their risk levels under
the Regulation on the Supervision and Administration of Medical Devices (2021 Revision), Article 6 as follows:
●
"Class
I Medical Devices" means medical devices with low risks, whose safety and effectiveness can be ensured through routine administration.
●
"Class
II Medical Devices" means medical devices with moderate risks, which shall be strictly controlled and administered to ensure their
safety and effectiveness.
●
"Class
III Medical Devices" means medical devices with relatively high risks, which shall be strictly controlled and administered through
special measures to ensure their safety and effectiveness.
Furthermore,
the Company has disclosed revenue by major product type included in each government category.
December 31,
December 31,
December 31,
2022
2021
2020
Category
Products
US$
US$
US$
Class I
Eye drops bottle
2,583,231
2,398,222
2,466,978
Oral medicine bottle
3,965,345
3,263,135
2,200,569
Anal bag
837,328
739,376
554,859
Other Class I
8,650,315
7,082,672
6,114,349
Subtotal-Class I
16,036,219
13,483,405
11,336,755
Class II
Masks
410,163
600,534
9,632,150
Identification tape
12,262,269
15,049,686
11,617,668
Disposable medical brush
8,337,650
8,493,760
6,353,649
Gynecological inspection kits
7,571,089
8,752,617
4,924,689
Surgical kit
4,830,930
4,754,769
3,383,215
Medical brush
5,231,299
4,130,703
3,635,190
Medical kit
4,066,663
5,037,054
3,429,371
Other Class II
30,696,626
31,282,738
26,461,225
Subtotal-Class II
73,406,689
78,101,861
69,437,157
Class III
Electronic pump
142,828
246,819
292,211
Anesthesia puncture kit
539,615
430,288
438,047
Disposable infusion pump
280,081
278,734
335,632
Infusion pump
367,652
309,746
196,686
Electronic infusion pump
44,812
291,725
185,030
Laparoscopic trocar
139,284
219,901
134,585
Other Class III
1,539,624
1,609,643
1,532,102
Subtotal-Class III
3,053,896
3,386,856
3,114,293
Others
10,849,537
9,065,588
5,172,805
Total
103,346,341
104,037,710
89,061,010
For
the years ended December 31, 2022, 2021 and 2020, revenues and assets within PRC contributed over
99.5
% of the Company's total
revenues and assets.
F-
20
The
Outbreak of COVID-19
On
January 30, 2020, the World Health Organization declared the outbreak of the coronavirus disease (COVID-19) a "Public Health Emergency
of International Concern," and on March 11, 2020, the World Health Organization characterized the outbreak as a "pandemic."
COVID-19 has had a severe and negative impact on the Chinese and the global economy and such impact persists as of the date of this annual
report.
In
fiscal year 2020, COVID-19 had a significant impact on our business and results of operations as the sales volume of masks rose sharply
while the sales of products other than masks declined due to an overall decrease in market demand. In fiscal year 2021, with the stable
control of the domestic epidemic in China, the market of masks was no longer in urgent shortage compared to the same period in 2020,
and the production of epidemic prevention products resumed more normal production levels. In general, with the precise control of the
epidemic in China, our production and operations have recovered smoothly, and the demand for other products has increased gradually.
After the initial outbreak of COVID-19, from time to time, some instances of COVID-19 infections have emerged in various regions of China,
including the infections caused by the Omicron variants in 2022. For example, a wave of infections caused by the Omicron variants emerged
in Shanghai in 2022, and a series of restrictions and quarantines were implemented to contain the spread.
Many
of the restrictive measures previously adopted by the PRC governments at various levels to control the spread of the COVID-19 virus have
been revoked or replaced with more flexible measures since December 2022. While the revocation or replacement of the restrictive measures
to contain the COVID-19 pandemic could have a positive impact on our normal operations, the extent of the impact on the Company's
future financial results will be dependent on future developments such as the length and severity of the crisis, the potential resurgence
of the crisis, future government actions in response to the crisis and the overall impact of the COVID-19 pandemic on the global economy
and capital markets, among many other factors, all of which remain highly uncertain and unpredictable. Given this uncertainty, the Company
is currently unable to quantify the expected impact of the COVID-19 pandemic on its future operations, financial condition, liquidity
and results of operations if the current situation continues.
Recently
adopted Accounting Standards
Effective
January 1, 2020, the Company adopted ASU 2016-13, Financial Instruments – Credit Losses (Topic 326), Measurement of Credit
Losses on Financial Instruments. The new standard replaces the 'incurred loss methodology' credit impairment model with a
new forward-looking "methodology that reflects expected credit losses and requires consideration of a broader range of reasonable
and supportable information to inform credit loss estimates." In applying the new standard, the Company has adopted the loss rate
methodology to estimate historical losses on accounts receivables. The Company has adopted the aging methodology to estimate the credit
losses on accounts receivables. The historical data is adjusted to account for forecasted changes in the macroeconomic environment in
order to calculate the current expected credit loss. The Company's adoption of ASC 326 did not result in a material change in the
carrying values of the Company's financial assets on the transition date.
In
February 2016, FASB issued ASU No. 2016–02, Leases (Topic 842), ASC 842, and subsequently amended the guidance relating largely
to transition considerations under the standard in July 2018. The new guidance, which creates new accounting and reporting guidelines
for leasing arrangements, requires organizations that lease assets to recognize assets and liabilities on the balance sheet related to
the rights and obligations created by those leases, regardless of whether they are classified as finance or operating leases. Consistent
with current guidance, the recognition, measurement, and presentation of expenses and cash flows arising from a lease primarily will
depend on its classification as a finance or operating lease. The guidance also requires new disclosures to help financial statement
users better understand the amount, timing, and uncertainty of cash flows arising from leases. The new standard is effective for public
business entities for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period,
with early application permitted. In March 2019, the FASB issued ASU 2019-01, Leases (Topic 842) Codification Improvements,
which further clarifies the determination of fair value of the underlying asset by lessors that are not manufacturers or dealers and
modifies transition disclosure requirements for changes in accounting principles and other technical updates. The amendments in
ASU 2019-01 amend Topic 842 and the effective date of those amendments is for fiscal years beginning December 15, 2019, and interim periods
within those fiscal years for public business entities. For all other entities, ASC 842 is effective for annual periods beginning
after December 15, 2021. For the year ended December 31, 2022, the Company only had an operating lease of office space from January 1,
2022 to December 31, 2022, and the Company did not have any finance lease. The adoption of this guidance did not have a material impact
on the Company's consolidated financial statements.
In
December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes, which removes specific exceptions to the general
principles in Topic 740 and to simplifies accounting for income taxes. The guidance is effective for public business entities for fiscal
years beginning after December 15, 2020 and for interim periods within those fiscal years. For all other entities, the amendments are
effective for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022.
The adoption of this guidance did not have a material impact on the Company's consolidated financial statements.
F-
21
In
January 2020, the FASB issued ASU 2020-01, Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic
323), and Derivatives and Hedging (Topic 815): Clarifying the Interactions between Topic 321, Topic 323, and Topic 815, which clarifies
the interaction of the accounting for equity investments under Topic 321 and investments accounted for under the equity method of accounting
in Topic 323 and the accounting for certain forward contracts and purchased options accounted for under Topic 815. The guidance is effective
for public business entities for fiscal years beginning after December 15, 2021 and for interim periods within those fiscal years. The
adoption of this guidance did not have a material impact on the Company's consolidated financial statements.
Recently
Issued Accounting Standards
In
October 2021, the FASB issued ASU No. 2021-08, "'Business Combinations (Topic 805): Accounting for Contract Assets and Contract
Liabilities from Contracts with Customers" ("ASU 2021-08"). This ASU requires entities to apply Topic 606 to recognize
and measure contract assets and contract liabilities in a business combination. The amendments improve comparability after the business
combination by providing consistent recognition and measurement guidance for revenue contracts with customers acquired in a business
combination and revenue contracts with customers not acquired in a business combination. The amendments are effective for the Company
beginning after December 15, 2023, and are applied prospectively to business combinations that occur after the effective date. The Company
does not expect the adoption of ASU 2021-04 will have a material effect on the consolidated financial statements.
3.
Prepayments and other assets
Prepayments
and other current assets consist of the following:
December 31,
2022
December 31,
2021
US$
US$
Other
    receivable
239,148
117,389
Prepaid
    tax
250,410
-
Prepaid
    for land use right (1)
15,948,501
-
Prepaid
    for property (2)
12,323,842
-
Deferred
    IPO cost
-
1,277,150
Total
28,761,901
1,394,539
Less:
    non-current portion
12,333,122
-
Prepayments
    and other current assets
16,428,779
1,394,539
(1)
On October 22, 2018,
the Company signed a land use right agreement with the government of Touqiao Town, Yangzhou City and paid RMB 50 million ($7.25 million) and RMB 60 million ($8.70 million), respectively, in 2018 and 2019 according to the agreement.
As a result of COVID-19, the land use right had not been transferred to the Company as scheduled. Both parties agreed to cancel the transaction and the funds that were prepaid for land use right will be returned to the Company before December 31, 2023. The balance was reclassified from deposits to prepayments and other current assets. (see Note 8)
(2)
On
April 20, 2020, the Company signed a factory building purchase agreement with Jiangsu Qionghua Group Co., Ltd. and paid deposit of RMB
85
million ($
12.32
million). As a result of COVID-19, the factory building had not been completed as scheduled. Both parties agreed to
cancel the transaction and that the deposit for the building would be returned to the Company on or before December 31, 2025, with such
deposit accumulating interest at an annual interest rate of
3.5
%. The balance was reclassified from deposits to prepayments and other
current assets. (see Note 8)
F-
22
4.
Inventories
Inventories
consist of the following:
December 31,
2022
December 31,
2021
US$
US$
Raw
    material
177,474
305,408
Work-in-process
343,795
224,694
Finished
    goods
560,119
682,699
Low-value
    consumables
40,650
38,592
Total
1,122,038
1,251,393
For
the years ended December 31, 2022, 2021 and 2020, there were no writes-down of inventories.
5.
Property, Plant and Equipment
Property,
plant and equipment consisted of the following:
December 31,
2022
December 31,
2021
US$
US$
Buildings
7,343,492
9,552,700
Machinery
    and equipment
2,732,336
2,897,846
Motor
    vehicles
678,112
574,006
Electronic
    equipment
238,856
239,005
Office
    equipment
43,413
46,987
Inspection
    equipment
104,993
94,683
Construction
    in progress
1,394,146
657,880
Total
12,535,348
14,063,107
Less:
    accumulated depreciation
3,777,301
6,585,363
Property
    and equipment, net
8,758,047
7,477,744
Depreciation
expense was $
541,265
, $
595,522
and $
497,238
for the years ended December 31, 2022, 2021 and 2020, respectively.
As
of December 31, 2022 and 2021, the Company pledged buildings to secure bank borrowings to the Company as disclosed in Note 8.
F-
23
6.
Intangible Assets
Intangible
assets consisted of the following:
December 31,
2022
December 31,
2021
US$
US$
Land
    use rights
752,887
814,865
Patents
28,997
31,384
Software
9,424
10,201
Trademarks
121,789
131,814
Total
913,097
988,264
Less:
    accumulated amortization
415,497
426,263
Intangible
    assets, net
497,600
562,001
Amortization
expense was $
22,196
, $
26,951
and $
26,195
for the years ended December 31, 2022, 2021 and 2020, respectively.
The
following table sets forth the Company's amortization expenses for the twelve months ending December 31 of the following years:
2023
$
15,058
2024
15,058
2025
15,058
2026
15,058
2027
15,058
Thereafter
422,310
$
497,600
As
of December 31, 2022 and 2021, the Company pledged land use rights to secure bank borrowings to the Company as disclosed in Note 8.
7.
Investment
On
March 3, 2011, Yada invested RMB
6
million into Yangzhou Juyuan Guarantee Co., Ltd. ("Juyuan") and obtained
12
% equity interest
of Juyuan. Juyuan mainly provides financing guarantee services and relevant consulting services to customers. Juyuan has only one executive
director and one supervisor. Neither the executive director nor supervisor is related to Yada. Therefore, Yada has neither control nor
significant influence over Juyuan. For the Company's passive and without significant influence or control equity investment in
a private company which does not have readily determinable fair values, the Company has elected the measurement alternative defined as
cost, less impairment, plus or minus adjustments resulting from observable price changes in orderly transactions for the identical or
a similar investment of the same issuer.
On
December 1, 2022, Huadong invested RMB
40
million into Zhongxiangxin, and obtained
25
% ownership interest of Zhongxiangxin. Zhongxiangxin
manufactures and sells medical materials in the PRC. The Company accounted for the investments using the equity method, because the Company
has significant influence but does not own a majority equity interest or otherwise control over the equity investee. Under the equity
method, the Company adjusts the carrying amount of the investment and recognizes investment income or loss for its share of the earnings
or loss of the investee after the date of investment. When the Company's share of losses in the equity investee equals or exceeds
its interest in the equity investee, the Company does not recognize further losses, unless the Company has incurred obligations or made
payments or guarantees on behalf of the equity investee. For the year ended December 31, 2022, the investment gain from Zhongxiangxin
was $
290
.
For
the years ended December 31, 2022, 2021 and 2020, no impairment indicators were identified and no loss related to revaluation of its
investment in the private company was recorded.
F-
24
8.
Deposits
December 31,
2022
December 31,
2021
US$
US$
Deposits
    for land use right
-
17,261,400
Deposits
    for buildings
-
13,338,355
Total
-
30,599,755
On
October 22, 2018, the Company signed a land use right agreement with the government of Touqiao Town, Yangzhou City and paid RMB
50
million
($
7.85
million) and RMB
60
million ($
9.42
million), respectively, in 2018 and 2019 according to the agreement. This contract is terminated
and the payment is to be recovered. The balance was reclassified to prepayments and other current assets. (see Note 3)
On
April 20, 2020, the Company signed a factory building purchase agreement with Jiangsu Qionghua Group Co., Ltd. and paid deposit of RMB
85
million ($
13.34
million). This contract is terminated and the payment is to be recovered. The balance was reclassified to prepayments
and other noncurrent assets. (see Note 3)
During the IPO, the Company entered into a series of agreements with
Tai He International Group Limited ("Tai He"), a Hong Kong investment company. Pursuant to the agreements, Tai He agreed to
invest a minimum of $
35
million in the IPO subject to the Company making a $
7.0
million refundable deposit and advancing a $
3.0
million
service fee for investor relations and other services payable to Tai He. The Company paid approximately $
4.8
million to Tai He in 2022.
The Company's affiliates and individual shareholders paid the rest of the agreed amount. Later the Company learned that Tai He did
not invest in the IPO or provide any service to the Company. The Company is now proactively working to terminate the Tai He Agreements
and recover the amount paid to Tai He by the Company. Due to the uncertainty of collection, the Company has written off the approximately
$
4.8
million deposit and fully expensed the $
2.3
million service fee paid by the Company to Tai He in the year ended December 31, 2022.
9.
Bank Borrowings
Bank
borrowings are working capital loans from banks in China. Short-term bank borrowings as of December 31, 2022 consisted of the following:
Lender
Company
Rate
Issuance
    Date
Expiration
    Date
Amount-
RMB
Amount-
US$
Bank of Communications
Huadong
3.55
%
3/9/2022
1/19/2023
4,000,000
579,946
Agricultural
    Bank of China
Huadong
3.40
%
12/8/2022
12/7/2023
9,000,000
1,304,877
Jiangsu
    Yangzhou Rural Commercial Bank
Huadong
3.95
%
2/17/2022
3/2/2023
*
5,000,000
724,932
Bank of China
Huadong
3.55
%
3/9/2022
1/19/2023
*
5,000,000
724,932
Agricultural
    Bank of China
Yada
3.60
%
12/8/2022
12/6/2023
*
10,000,000
1,449,864
Industrial
    and Commercial Bank of China
Yada
3.70
%
2/18/2022
2/21/2023
*
9,000,000
1,304,877
Total
42,000,000
6,089,428
*
These loans were renewed upon maturity.
Short-term
bank borrowings as of December 31, 2021 consisted of the following:
Lender
Company
Rate
Issuance
    Date
Expiration
    Date
Amount-
RMB
Amount-
US$
Bank
    of Communications
Huadong
3.70
%
11/1/2021
10/19/2022
5,000,000
784,610
Agricultural
    Bank of China
Huadong
3.70
%
11/3/2021
11/3/2022
9,000,000
1,412,296
Jiangsu
    Yangzhou Rural Commercial Bank
Huadong
3.95
%
2/25/2021
2/17/2022
5,000,000
784,609
Bank of China
Huadong
3.80
%
3/3/2021
3/2/2022
5,000,000
784,609
Industrial
    and Commercial Bank of China
Yada
3.85
%
2/19/2021
2/18/2022
9,000,000
1,412,296
Total
33,000,000
5,178,420
Interest
expense was $
191,198
, $
180,744
and $
137,160
for the years ended December 31, 2022, 2021 and 2020, respectively.
The
Company's short-term bank borrowings are pledged by the Company's assets and guaranteed by the Company's major shareholders
Yongjun Liu, Yin Liu, Kai Liu and its subsidiary Yada.
F-
25
The
carrying values of the Company's pledged assets to secure short-term borrowings by the Company are as follows:
December 31,
2022
December 31,
2021
US$
US$
Buildings,
    net
2,777,379
2,499,131
Land
    use right, net
96,416
294,582
Total
2,873,795
2,793,713
10.
Long-term bank loan
Lender
Company
Rate
Issuance
Date
Expiration
    Date
Amount-
RMB
Amount-
US$
Bank
    of Communications
Huadong
3.50
%
11/3/2022
4/25/2024
5,000,000
724,932
Total
5,000,000
724,932
On
November 3, 2022, the Company signed a loan agreement with Bank of Communications to obtain a two-year loan of RMB
5
million ($
724,932
).
The loan bears a floating interest rate of a benchmark rate (
3.50
%). Huada mortgages the property and land for guaranteed repayment of
the loan. The principal shall be repaid on April 25, 2024.
Interest
expense was $
3,468
,
nil
and
nil
for the years ended December 31, 2022, 2021 and 2020, respectively.
11.
Taxes Payable
Taxes
payable consisted of the following:
December 31,
2022
December 31,
2021
US$
US$
VAT
    payable
380,926
488,443
Income
    tax payable
690,824
1,521,767
Other
    tax payable
59,526
72,042
Total
1,131,276
2,082,252
12.
Income Taxes
Cayman
Islands
Under
the current laws of the Cayman Islands, the Company is not subject to tax on income or capital gain. Additionally, upon payments of dividends
to the shareholders, no Cayman Islands withholding tax is imposed.
Hong
Kong
Under
the current Hong Kong Inland Revenue Ordinance, the Company's Hong Kong subsidiary, Kang Fu, is subject to
16.5
% income tax on
its taxable income generated from operations in Hong Kong. On December 29, 2017, Hong Kong government announced a two-tiered profit tax
rate regime. Under the two-tiered tax rate regime, the first HK$
2.0
million assessable profits will be subject to an
8.25
% lower tax
rate and the remaining taxable income will continue to be taxed at the existing
16.5
% tax rate. The two-tiered tax regime becomes effective
from the assessment year of 2018 and 2019, which is on or after April 1, 2018. The application of the two-tiered rates is restricted
to only one nominated enterprise among connected entities. Kang Fu is nominated by the Company as the entity to apply the two-tiered
rates among the group for the assessment years of 2022, 2021 and 2020.
F-
26
PRC
Provisions
for income tax are as follows:
December 31,
2022
December 31,
2021
December 31,
2020
US$
US$
US$
Provisions
    for current income tax
4,713,543
5,278,462
4,688,321
Provisions
    for deferred income tax
-
-
-
Total
4,713,543
5,278,462
4,688,321
The
following is a reconciliation of the Company's total income tax expense to the income before income taxes for the years ended December
31, 2022, 2021 and 2020, respectively:
2022
2021
2020
US$
US$
US$
Income
    before income tax provision
18,129,648
26,228,041
23,733,576
Tax
    at the PRC EIT tax rates
3,758,113
5,605,035
4,724,933
Other
37,169
(
13,086
)
(
28,392
)
Tax
    effect of non-deductible expenses
1,660,869
226,222
313,006
Tax
    effect of R&D expenses additional deduction*
(
742,608
)
(
539,709
)
(
321,226
)
Income
    tax expense
4,713,543
5,278,462
4,688,321
*
According to PRC tax regulations, an additional of
100
% of current year R&D expenses may be deducted from tax income.
F-
27
Under
the Enterprise Income Tax Law ("EIT Law"), Foreign Investment Enterprises ("FIEs") and domestic companies are
subject to Enterprise Income Tax ("EIT") at a uniform rate of
25
%.
Huadong
was entitled High and New Technology Enterprise ("HNTE") certificate and enjoyed preferential tax rate of
15
% for a three-year
validity period from November 30, 2016 and the HNTE certificate was renewed on November 22, 2019 with a three-year validity period. Thus,
Huadong is eligible for a
15
% preferential tax rate from January 1, 2016 to December 31, 2021.
The
EIT Law also provides that an enterprise established under the laws of a foreign country or region but whose "de facto management
body" is located in the PRC be treated as a resident enterprise for PRC tax purposes and consequently be subject to the PRC income
tax at the rate of
25
% for its global income. The Implementing Rules of the EIT Law define the location of the "de facto management
body" as "the place where the exercising, in substance, of the overall management and control of the production and business
operation, personnel, accounting, properties, etc., of a non-PRC company is located." Based on a review of surrounding facts and
circumstances, the Company does not believe that it is likely that its entities registered outside of the PRC should be considered as
resident enterprises for the PRC tax purposes.
The
EIT Law also imposes a withholding income tax on dividends distributed by a FIE to its immediate holding company outside of the PRC.
Kang Fu, which is the parent of Huada, Yada and Huadong, is therefore subject to a maximum withholding tax of
10
% on dividends distributed
by Huada, Yada and Huadong. In accordance with accounting guidance, all undistributed earnings are presumed to be transferred to the
parent company and are subject to the withholding taxes. The presumption may be overcome if the Company has sufficient evidence to demonstrate
that the undistributed dividends will be re-invested and the remittance of the dividends will be postponed indefinitely. As of December
31, 2022, the Company has determined that the undistributed earnings in Huada, Yada and Huadong will be re-invested into the subsidiary
for the expansion of the Company's business in mainland China and hence the remittance of the dividends will be postponed indefinitely.
Uncertain
tax positions
The
Company evaluates each uncertain tax position (including the potential application of interest and penalties) based on the technical
merits, and measure the unrecognized benefits associated with the tax positions. As of December 31, 2022, 2021 and 2020, the Company
did not have any significant unrecognized uncertain tax positions.
13.
Commitments and Contingencies
Operating
lease
The
Company has an operating lease to rent an office space in Shanghai. The lease term is
12
months, with the option to renew annually. Rent
expense was $
7,515
, $
7,839
and $
7,324
and is included in general and administrative expenses for the years ended December 31, 2022, 2021
and 2020, respectively. The Company has renewed the same operating lease with a term from January 1, 2023 to December 31, 2023, with
all other lease contents remaining the same.
Other
commitments
The
Company did not have other significant commitments, long-term obligations, or guarantees as of December 31, 2022, 2021 and 2020.
Contingencies
The
Company is subject to legal proceedings and regulatory actions in the ordinary course of business. The results of such proceedings cannot
be predicted with certainty, but the Company does not anticipate that the final outcome arising out of any such matter will have a material
adverse effect on our consolidated business, financial position, cash flows or results of operations taken as a whole.
On February 4, 2022, Macias Gini & O'Connell, LLP ("Plaintiff")
initiated a lawsuit in San Francisco Superior Court. Plaintiff, a certified public accounting firm based in the U.S., was hired by Kang
Fu International Medical Co, and subsequently by Meihua International Medical Technologies Co, Ltd. (collectively, "Meihua"),
to audit Meihua's consolidated financial statements for the 2018 and 2019 calendar years. Plaintiff seeks damages from Meihua for
its alleged failure to pay for services rendered in the amount of $
210,000
, plus interest and attorneys' fees. Although Meihua denies
plaintiff's allegations, on August 29, 2022, Meihua provided an initial settlement offer to Plaintiff. To date, Plaintiff has not
substantively responded. The Court has set and continued multiple case management conferences based on Plaintiff's requests for
continuances while the parties attempt to informally resolve the matter. No contingent liability has been recognized in relation to this
matter since the outcome of the litigation is highly uncertain.
F-
28
14.
Statutory Surplus Reserves and Restricted Net Assets
Pursuant
to laws applicable to entities incorporated in the PRC, the Company is required to make appropriations to certain reserve funds, comprising
the statutory surplus reserve and the discretionary surplus reserve, based on after-tax net income determined in accordance with generally
accepted accounting principles of the PRC ("PRC GAAP"). Appropriations to the statutory surplus reserve are required to be
at least
10
% of the after-tax net income determined in accordance with PRC GAAP until the reserve is equal to
50
% of the entity's
registered capital. Appropriations to the discretionary surplus reserve are made at the discretion of the Board of Directors. And as
of December 31, 2022 and 2021, the Company did not have a discretionary surplus reserve. As of December 31, 2022, all of the Company's
PRC subsidiaries reserves had reached
50
% of their registered capital threshold and, as a result, the Company stopped being required
to allocate after-tax profits to this reserve.
As
a result of these 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 and the statutory reserves of the Company's PRC subsidiaries. The aggregate
amounts of capital and statutory reserves restricted which represented the amount of net assets of the relevant subsidiaries in the Company
not available for distribution was $
15,665,860
and $
15,178,467
as of December 31, 2022 and 2021, respectively.
Under
PRC laws and regulations, statutory surplus reserves are restricted to set-off against losses, expansion of production and operation
and increasing registered capital of the respective company and are not distributable other than upon liquidation. The reserves are not
allowed to be transferred to the Company in terms of cash dividends, loans or advances, nor allowed for distribution except under liquidation.
15.
Related Party Transactions and Balances
Related
Parties:
Name
    of related parties
Relationship
    with the Company
Yangzhou Yada Powder Metallurgy Co., Ltd.
An entity controlled by Kai Liu, son of Yongjun Liu
Jiangsu Zhida Pharmaceutical Co., Ltd.
An entity controlled by Kai Liu, son of Yongjun Liu
Shanghai Xinya Pharmaceutical Hanjiang Co., Ltd.
An entity controlled by Kai Liu, son of Yongjun Liu
Yangzhou Meihua Import and Export Co., Ltd.
An entity controlled by Kai Liu, son of Yongjun Liu
Related
Party Sales
The
Company sells products to its related parties and the sales amount from related parties for 2022, 2021 and 2020 are as follows:
Sales:
For
    the Year Ended
December 31,
Name
    of related party
2022
2021
2020
Yangzhou Meihua Import and Export
    Co., Ltd.
$
18,780
$
51,750
$
71,885
Yangzhou Yada Powder Metallurgy Co., Ltd.
-
347,737
669,583
Shanghai Xinya Pharmaceutical Hanjiang Co.,
    Ltd.
10,416
176,414
67,101
Jiangsu Zhida Pharmaceutical
    Co., Ltd.
-
-
8,038
Total
$
29,196
$
575,901
$
816,607
F-
29
16.
Subsequent Events
The
Company has evaluated the impact of events that have occurred subsequent to December 31, 2022, through the date the consolidated financial
statements were available to be issued, and concluded that no subsequent events have occurred that would require recognition in the consolidated
financial statements or disclosure in the notes to the consolidated financial statements, except as follow:
Bank
borrowing
As
the date these consolidated financial statements were available to be issued, the Company has new bank borrowings in the amount of $
2,609,755
(RMB
18
million) with interest rates ranging from
3.45
-
3.95
% and has bank loan repayment of $
2,609,755
(RMB
18
million).
New
bank borrowing
Subsequent
new bank borrowings consisted of the following:
Lender
Company
Rate
Issuance
Date
Collateral/Security
Amount-RMB
Amount-USD
Jiangsu
    Yangzhou Rural Commercial Bank
Huadong
3.95
%
1/30/2023
Yada, Yongjun Liu
5,000,000
724,932
Industrial
    and Commercial Bank of China
Yada
3.45
%
2/17/2023
Properties of Yada
9,000,000
1,304,877
Bank
    of Communications
Huadong
3.50
%
1/19/2023
Yongjun Liu, Yin Liu, Yada
4,000,000
579,946
Total
18,000,000
2,609,755
Repayment
Subsequent
repayments on bank borrowings consisted of the following:
Lender
Company
Rate
Repayment
Date
Collateral/Security
Amount-RMB
Amount-USD
Jiangsu
    Yangzhou Rural Commercial Bank
Huadong
3.95
%
1/31/2023
Yada, Yongjun Liu
5,000,000
724,932
Bank
    of Communications
Huadong
3.55
%
1/13/2023
Yongjun Liu, Yin Liu, Yada
4,000,000
579,946
Industrial
    and Commercial Bank of China
Yada
3.70
%
2/16/2023
Properties of Yada
9,000,000
1,304,877
Total
18,000,000
2,609,755
F-30