Zhuoxun Hongtu Inc.

Location · Size · Expiration Date of Lease · Leased/Owned/ Granted · Function

Room 610, 6th Floor, Building 32, No. 1 Hangfeng Road, Fengtai District, Beijing, PRC · 105 square meters (approximately 1,130.21 square feet) · 2025.09.19 · Leased · Office

Room CPL1305, Zhengda International West Zone, Intersection of Kaiyuan Avenue and Jinchengzhai Street, Luolong District, Luoyang City, Henan Province, China · 117.7 square meters (approximately 1,266.91 square feet) · 2023.9.3-2024.9.3 · Granted · Office

• Our profitability will suffer if we are not able to maintain our resource utilization levels or continue to improve our productivity levels.
• Increases in wages for professionals in China could prevent us from sustaining our competitive advantage and could reduce our profit margins.
• We must continue to upgrade our technology infrastructure, or we will be unable to effectively meet demand for our services.
• Our data and web server systems may negatively interrupt in working or work improperly due to natural disasters, failure of third-party services and other unexpected problems.
• Our computer networks may be vulnerable to security risks that could disrupt our services and adversely affect our results of operations.
• We may lose users and lose revenues if our cyber security measures fail.
• Our future growth depends significantly on the strength of our brand and reputation. Any failure to maintain and enhance, or any damage to, our brand image or reputation could materially and adversely affect our business, results of operations, financial condition and prospects.
• We may not be able to prevent others from unauthorized use of our intellectual property, which could cause a loss of customers, reduce our revenues and harm our competitive position.
• We may face intellectual property infringement claims that could be time-consuming and costly to defend. If we fail to defend ourselves against such claims, we may lose significant intellectual property rights and may be unable to continue providing our existing services.
• Disruptions in telecommunications or significant failure in our IT systems could harm our service, which could result in a reduction of our revenue.
• We may need additional capital and any failure by us to raise additional capital on terms favorable to us, or at all, could limit our ability to grow our business and develop or enhance our service offerings to respond to market demand or competitive challenges.
• We may incur losses resulting from business interruptions resulting from occurrence of natural disasters, health epidemics and other outbreaks or events.
• Fluctuation in the value of the Renminbi and other currencies may have a material adverse effect on the value of your investment.
• Fluctuations in exchange rates could adversely affect our business and the value of our securities.
• We have identified material weaknesses in our internal control over financial reporting. If we fail to develop and maintain an effective system of internal control over financial reporting, we may be unable to accurately report our financial results or prevent fraud.
• If major mobile application distribution channels change their standard terms and conditions in a manner that is detrimental to us, or suspend or terminate their existing relationship with us, our business, financial condition and results of operations may be materially and adversely affected.
• The Internet is subject to many legal uncertainties and potential government regulations that may decrease demand for our services, increase our cost of doing business or otherwise have a material adverse effect on our financial results or prospects.
• Our future growth depends on the further acceptance of the Internet and particularly the mobile Internet as an effective platform for assessing educational services.
• The Chinese government exerts substantial influence over the manner in which we must conduct our business activities and may intervene or influence our operations at any time, which could result in a material change in our operations and the value of our Common Stock.
• RISKS RELATING TO OUR SECURITIES
• If we fail to maintain effective internal controls over financial reporting, the price of our Common Stock may be adversely affected.
• Because of our lack of operations and the nature of our business, our securities are considered highly speculative.
• We may, in the future, issue additional shares of Common Stock that would reduce investors’ percent of ownership and may dilute our share value.
• The Market for Penny Stock has suffered in recent years from patterns of fraud and abuse.
• Our Common Stock is subject to the “Penny Stock” Rules of the SEC, which makes transactions in our stock cumbersome and may reduce the value of an investment in our stock.
• Our Common Stock is not currently quoted in the OTC market. We are currently engaged in the process of preparing a Form 211 with market makers to regain compliance with Rule 15c2-11 of the Exchange Act of 1934 and to apply for resumption of the quotation of our Common Stock with the Financial Industry Regulatory Authority (FINRA) under FINRA Rule 6432. There is no guarantee that our Common Stock will resume quotation on the OTC Market.
• Because we do not intend to pay any dividends on our shares, investors seeking dividend income or liquidity should not purchase our shares.
• Because we can issue additional shares, purchasers of our shares may incur immediate dilution and may experience further dilution.
• Our Common Stock may experience extreme rises or declines in price, and you may not be able to sell your shares at or above the price paid.
• RISKS RELATING TO OUR CORPORATE STRUCTURE
• We rely on VIE Agreements with the VIE and the shareholders of the VIE to consolidate the financial results of the PRC operating entities. We do not have an equity ownership in, direct foreign investment in, or control of, through such ownership or investment, the VIE.
• Any failure by the VIE or its shareholders to perform their obligations under our VIE Agreements with them would have a material adverse effect on our results of operation.
• Our Common Stock may decline in value or become worthless if we are unable to assert our contractual rights over the assets of the PRC operating entities that conduct all or substantially all of our operations.
• The shareholders of the VIE may have actual or potential conflicts of interest with us, which may materially and adversely affect our business and financial condition.
• If the custodians or authorized users of our controlling non-tangible assets, including chops and seals of the VIE, fail to fulfill their responsibilities, or misappropriate or misuse these assets, our business and operations may be materially and adversely affected.
• VIE Agreements in relation to the VIE may be subject to scrutiny by the mainland China tax authorities and they may determine that we or the VIE owe additional taxes, which could negatively affect our financial condition and the value of your investment.
• If the VIE goes bankrupt or becomes subject to a dissolution or liquidation proceeding, its ability to operate its business might be materially and adversely hindered, which could materially and adversely affect our results of operations.
• RISKS RELATING TO DOING BUSINESS IN CHINA
• Uncertainties with respect to the PRC legal system could have a material adverse effect on us.
• Uncertainties in the interpretation and enforcement of Chinese laws and regulations could limit the legal protections available to us.
• China’s economic, political and social conditions, as well as changes in any government policies, laws and regulations may be quick with little advance notice and could have a material adverse effect on the PRC operating entities’ business and the value of our Common Stock.
• We may be subject to litigation and regulatory investigations and proceedings, and may not always be successful in defending ourselves against such claims or proceedings.
• Any failure to comply with relevant regulations relating to social insurance and housing provident fund may subject us to penalty and materially and adversely affect our business, financial condition and results of operations.
• Non-compliance with labor-related laws and regulations of the PRC may have an adverse impact on our financial condition and results of operation.
• Some of the lease agreements of our leased properties have not been registered with the relevant PRC government authorities as required by PRC law, which may expose us to potential fines.
• Our rights to use our leased properties could be challenged by property owners or other third parties, which may disrupt our operations and incur relocation costs.
• We may rely on dividends and other distributions on equity paid by the PRC operating entities to fund any cash and financing requirements we may have, and any limitation on the ability of the PRC operating entities to make payments to us could have a material and adverse effect on our ability to conduct our business.
• If the custodians or authorized users of our controlling non-tangible assets, including chops and seals, fail to fulfill their responsibilities, or misappropriate or misuse these assets, our business and operations could be materially and adversely affected.
• Fluctuation in the currency exchange rate of RMB may have a material adverse effect on our business, operations and financial position.
• Governmental control of currency conversion may limit our ability to utilize our revenues effectively and affect the value of your investment.
• There are significant uncertainties under the PRC Enterprise Income Tax Law relating to the withholding tax liabilities of the PRC operating entities, and dividends payable by the PRC operating entities to our offshore subsidiaries may not qualified to enjoy certain treaty benefits.
• The M&A Rules and certain other PRC regulations may make it more difficult for us to pursue growth through acquisitions.
• The approval of the China Securities Regulatory Commission, or CSRC, or other PRC regulatory agencies, may be required in connection with the share exchange transaction that occurred in July 2021 or the publicly listing of our securities on an overseas stock exchange or trading in the over-the-counter market under PRC law, and if required, we cannot assure you that we will be able to obtain such approval.
• PRC regulations relating to offshore investment activities by PRC residents may limit the PRC operating entities’ ability to change its registered capital or distribute profits to us or otherwise expose us or our PRC resident beneficial owners to liability and penalties under PRC laws.
• 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.
• Although the audit report included in this report was issued by U.S. auditors who are currently regularly 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 Common Stock may be delisted or prohibited from trading.
• PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay us to make loans or additional capital contributions to our PRC our PRC subsidiary, which could materially and adversely affect our liquidity and our ability to fund and expand our business.
• If we are classified as a PRC resident enterprise for PRC enterprise income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders.
• We face uncertainty with respect to indirect transfers of equity interests in PRC resident enterprises by their non-PRC holding companies.
• Regulation and censorship of information disseminated over the internet in China may adversely affect our business and reputation and subject us to liability for information displayed on our website.
• Epidemics, acts of war and other disasters may adversely affect our operations.