PART I [Key Information](index=6&type=section&id=Item%203.%20Key%20Information) This section outlines the company's VIE structure in China, detailing legal and operational risks, regulatory impacts, and selected financial data [Selected Condensed Consolidated Financial Schedule](index=10&type=section&id=Selected%20Condensed%20Consolidated%20Financial%20Schedule) Condensed consolidated financial data for the holding company, subsidiaries, WFOE, and VIE for FY2024 are presented Condensed Consolidated Financial Highlights for FY 2024 | Financial Metric | Holding Company | HK Subsidiaries | WFOE (PRC) | VIE (PRC) | Consolidated Total | | :--- | :--- | :--- | :--- | :--- | :--- | | **Total Assets** | $60,778,716 | $1,010,267 | $40,384,424 | $39,958,127 | $53,035,666 | | **Total Liabilities** | $10,869,404 | $2,202,299 | $1,570,397 | $2,125,559 | $3,126,354 | | **Total Shareholders' Equity** | $49,909,312 | $(1,192,032) | $38,814,027 | $37,832,568 | $49,909,312 | | **Operating Revenues** | $0 | $0 | $0 | $622,690 | $622,690 | | **Net (Loss) Income** | $(2,433,536) | $763,029 | $(610,708) | $(623,395) | $(2,433,536) | Condensed Consolidated Cash Flow for FY 2024 | Cash Flow Activity | Holding Company | HK Subsidiaries | WFOE (PRC) | VIE (PRC) | Consolidated Total | | :--- | :--- | :--- | :--- | :--- | :--- | | **Operating Activities** | $(1,761,029) | $(25,502) | $(3,451,046) | $1,231,202 | $(4,006,375) | | **Investing Activities** | $(5,756,000) | $0 | $3,294,358 | $(52,363) | $(11,556,351) | | **Financing Activities** | $6,998,517 | $0 | $0 | $0 | $6,998,517 | [Risk Factors](index=14&type=section&id=3.D.%20Risk%20Factors) Significant business, structural, and regulatory risks include VIE challenges, frozen bank accounts, and uncertain PRC laws - A major operational risk stems from the freezing of certain bank accounts of the VIE's subsidiaries by the Nan County Public Safety Bureau in China, materially impacting business operations, customer confidence, and financial results, with approximately **$17.3 million** in cash and short-term investments remaining frozen as of December 31, 2024[60](index=60&type=chunk)[64](index=64&type=chunk)[65](index=65&type=chunk) - The company's reliance on a VIE structure is a significant risk, as non-compliance with PRC foreign investment regulations could lead to severe penalties, including relinquishing interests in China operations and rendering securities worthless[53](index=53&type=chunk)[111](index=111&type=chunk)[126](index=126&type=chunk) - The rapidly changing and uncertain interpretation of Chinese laws, particularly regarding overseas listings (New Overseas Listing Rules), cybersecurity, and data transfers, poses a material risk to the company's ability to operate, raise capital, and remain listed on a U.S. exchange[26](index=26&type=chunk)[131](index=131&type=chunk)[132](index=132&type=chunk) - The company's ordinary shares may be thinly traded, leading to low liquidity and price volatility, and its status as a foreign private issuer offers potentially less protection to investors due to exemptions from certain SEC reporting and corporate governance requirements[208](index=208&type=chunk)[222](index=222&type=chunk)[224](index=224&type=chunk) - The company is a Cayman Islands holding company, not a Chinese operating company, conducting business in China through contractual arrangements with a Variable Interest Entity (VIE), a structure with unique risks not fully tested in Chinese courts[25](index=25&type=chunk) - Recent PRC regulations, including the New Overseas Listing Rules effective March 31, 2023, require filings with the CSRC for overseas offerings, which the company believes are subject to post-offering filing rather than prior approval[26](index=26&type=chunk)[132](index=132&type=chunk) - The company's auditor, Wei, Wei & Co., LLP, is a U.S.-based firm subject to PCAOB inspection, therefore the Holding Foreign Companies Accountable Act (HFCA Act) does not currently affect the company[28](index=28&type=chunk)[151](index=151&type=chunk) - As of the report date, no dividends or distributions have been made between the holding company, its subsidiaries, and the consolidated VIEs, or to investors, with the company intending to retain future earnings for business expansion[34](index=34&type=chunk)[35](index=35&type=chunk) [Information On The Company](index=50&type=section&id=Item%204.%20Information%20On%20The%20Company) This section details the company's history, e-commerce business model for collectibles, and its corporate structure, including the VIE arrangement [History and Development of the Company](index=50&type=section&id=A.%20History%20and%20Development%20of%20the%20Company) Key milestones include the 2020 IPO, a 2023 reverse stock split for Nasdaq compliance, and a 2024 private placement and subsidiary sale - The company completed its IPO on December 1, 2020, raising net proceeds of approximately **$17.3 million**[243](index=243&type=chunk) - In October 2023, the company executed a 1-for-5 reverse stock split (Share Consolidation) to regain compliance with Nasdaq's minimum bid price requirement[245](index=245&type=chunk) - On May 31, 2024, the company entered into a Securities Purchase Agreement for a private placement to sell **14,000,000** ordinary shares at **$0.50** per share, for aggregate proceeds of **$7.0 million**, along with warrants to purchase an additional **14,000,000** shares[246](index=246&type=chunk) - The company sold its subsidiary HKDAEx to an unrelated party for **$1** in December 2024, after HKDAEx ceased operations on June 30, 2024[240](index=240&type=chunk) [Business Overview](index=53&type=section&id=B.%20Business%20Overview) Operates an online e-commerce platform for collectibles, offering trading and support services in a competitive and complex regulatory environment - The company's primary business is facilitating the e-commerce trading of collectibles and artwork on its online platform, owned by its Hong Kong subsidiary[253](index=253&type=chunk) - Services provided to customers include account opening, investor education, real-time market information, customer support, and warehousing[256](index=256&type=chunk)[258](index=258&type=chunk) - The art e-commerce market is highly competitive, with over **10** active platforms operating in China as of December 31, 2024[296](index=296&type=chunk) - The company's operations are subject to extensive regulations in both the PRC and Hong Kong, including PRC rules on trading platforms (Decision No.38, Opinion No.37) and Hong Kong's Personal Data (Privacy) Ordinance (PDPO)[159](index=159&type=chunk)[363](index=363&type=chunk) [Organizational Structure](index=74&type=section&id=C.%20Organizational%20structure) The company uses a VIE structure, with its WFOE controlling the PRC VIE via contractual agreements to consolidate financial results - The company uses a VIE structure because it expects its PRC entity, Jiangsu Yanggu, may engage in business activities (like marketing surveys) that are on the PRC's 'Negative List' for foreign investment[380](index=380&type=chunk)[710](index=710&type=chunk) - The VIE agreements grant the WFOE the right to receive **100%** of the VIE's net income as service fees and obligate it to absorb **100%** of the VIE's losses[382](index=382&type=chunk)[711](index=711&type=chunk) - The VIE's shareholders have pledged all their equity to the WFOE and granted the WFOE an exclusive option to purchase their equity at the lowest price permitted by PRC law[383](index=383&type=chunk)[385](index=385&type=chunk)[713](index=713&type=chunk)[714](index=714&type=chunk) [Operating and Financial Review and Prospects](index=77&type=section&id=Item%205.%20Operating%20And%20Financial%20Review%20And%20Prospects) Fiscal year 2024 saw a **60.6% revenue decline** and a **$2.4 million net loss**, primarily due to an investigation and frozen accounts, though liquidity is supported by a **$7.0 million private placement** [Operating Results](index=77&type=section&id=A.%20Operating%20Results) Operating revenues declined **60.6%** to **$0.6 million** in 2024 due to an investigation and frozen accounts, but net loss narrowed to **$2.4 million** from reduced expenses - The investigation and charges against former major shareholders, along with the freezing of VIE subsidiary bank accounts, have materially and negatively impacted business operations and revenue[396](index=396&type=chunk)[400](index=400&type=chunk)[402](index=402&type=chunk) Key Operational Metrics (2022-2024) | Metric | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | **Active Traders** | ~19,000 | ~35,000 | ~142,000 | | **Number of Transactions** | ~7 million | ~19 million | ~96 million | | **Transaction Value** | ~$0.1 billion | ~$0.5 billion | ~$8.6 billion | Comparison of Operations for Years Ended Dec 31 | Metric | 2024 | 2023 | Change (%) | | :--- | :--- | :--- | :--- | | **Total Operating Revenues** | $622,690 | $1,580,058 | (60.6)% | | **Gross Profit** | $440,509 | $1,174,430 | (62.5)% | | **Operating Expenses** | $(3,637,707) | $(5,509,838) | (34.0)% | | **Net Loss** | $(2,433,536) | $(3,598,480) | (32.4)% | | **Basic & Diluted EPS** | $(0.18) | $(0.84) | (78.2)% | [Liquidity and Capital Resources](index=87&type=section&id=B.%20Liquidity%20and%20Capital%20Resources) The company held **$39.6 million** in cash and investments (including **$17.3 million** restricted) as of December 2024, with a **$7.0 million** private placement supporting liquidity despite negative operating cash flow - The company secured **$7.0 million** in a private placement on May 31, 2024, selling **14,000,000** ordinary shares at **$0.50** per share[453](index=453&type=chunk) Summary of Cash Flows (Years Ended Dec 31) | Cash Flow Activity | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | **Net Cash from Operating Activities** | $(4,006,375) | $3,624,590 | $(1,211,385) | | **Net Cash from Investing Activities** | $(11,556,351) | $(511,248) | $608,471 | | **Net Cash from Financing Activities** | $6,998,517 | $600,000 | $1,000,000 | - As of December 31, 2024, the company held approximately **$32.6 million** in cash and cash equivalents, though PRC regulations restrict the ability of PRC subsidiaries to transfer funds out of China[455](index=455&type=chunk)[456](index=456&type=chunk) [Directors, Senior Management and Employees](index=92&type=section&id=Item%206.%20Directors,%20Senior%20Management%20and%20Employees) This section details the company's 7-member board, executive compensation, equity plan, and a decrease in full-time employees to **33** in 2024 - The board of directors consists of **7** members, with Kit Ming (Michael) Lo serving as Chairman and Yi Shao as CEO[485](index=485&type=chunk) - For the fiscal year ended December 31, 2024, the company paid approximately **$194,744** in cash to its executive officers and **$127,097** to its non-executive directors[499](index=499&type=chunk) - The company has a 2021 Omnibus Equity Plan authorizing up to **800,000** shares, with **300,000** shares granted in February 2024 and an additional **500,000** shares granted to officers and employees in April 2025[508](index=508&type=chunk)[509](index=509&type=chunk) - The total number of full-time employees decreased from **52** as of December 31, 2023, to **33** as of December 31, 2024[529](index=529&type=chunk) [Major Shareholders and Related Party Transactions](index=101&type=section&id=Item%207.%20Major%20Shareholders%20and%20Related%20Party%20Transactions) This section outlines major shareholders and details related-party transactions, primarily with entities affiliated with Mr. Huajun Gao and Mr. Aimin Kong - The company's primary related party transactions involve its VIE arrangements and other operational agreements with entities controlled by or affiliated with shareholders Mr. Huajun Gao and Mr. Aimin Kong, such as Nanjing Culture and Kashi Jinwang[541](index=541&type=chunk)[545](index=545&type=chunk)[547](index=547&type=chunk) Related Party Transactions Summary (FY 2024 vs FY 2023) | Transaction Type | 2024 | 2023 | | :--- | :--- | :--- | | **Net Revenues - Related Parties** | $54,633 | $144,609 | | **Cost of Revenues - Related Party** | $21,075 | $64,051 | | **General & Admin Expenses - Related Parties** | $104,391 | $234,289 | [Financial Information](index=103&type=section&id=Item%208.%20Financial%20Information) The company's consolidated financial statements are included, with no material legal proceedings or plans for near-term dividend payments - The company is not currently involved in any material legal or administrative proceedings[551](index=551&type=chunk) - The company has no plan to declare or pay dividends in the near future and intends to retain earnings for business operations and expansion[552](index=552&type=chunk) [Additional Information](index=104&type=section&id=Item%2010.%20Additional%20Information) Details the company's Cayman Islands corporate governance, share capital, shareholder rights, and material tax consequences for investors across various jurisdictions - The company is a Cayman Islands exempted company, and its corporate affairs are governed by its memorandum and articles of association and the Companies Act of the Cayman Islands[562](index=562&type=chunk) - As of May 9, 2025, the authorized share capital is **$50,000** divided into **180,000,000** ordinary shares (**$0.00025** par value) and **100,000,000** preferred shares (**$0.00005** par value), with **20,733,927** ordinary shares outstanding and no preferred shares issued[563](index=563&type=chunk) - The company does not believe it was a Passive Foreign Investment Company (PFIC) for the taxable year ended December 31, 2024, but notes that PFIC status is a factual determination made annually and depends on the composition of its assets and income[229](index=229&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=114&type=section&id=Item%2011.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company faces liquidity, inflation, interest rate, and significant foreign currency risks, particularly due to RMB-denominated operations without hedging - The company's primary market risks are liquidity, inflation, interest rate, and foreign currency translation risk[635](index=635&type=chunk)[636](index=636&type=chunk)[637](index=637&type=chunk)[638](index=638&type=chunk) - Foreign currency risk is significant as operating transactions are mainly in RMB, which is not freely convertible, and the company does not currently use hedging instruments to manage this risk[638](index=638&type=chunk) PART II [Material Modifications to the Rights of Security Holders and Use of Proceeds](index=116&type=section&id=Item%2014.%20MATERIAL%20MODIFICATIONS%20TO%20THE%20RIGHTS%20OF%20SECURITY%20HOLDERS%20AND%20USE%20OF%20PROCEEDS) This section details the use of approximately **$4.4 million** from the **$17.3 million** IPO proceeds for IT upgrades, with no material change in intended use - The company's IPO in December 2020 raised net proceeds of approximately **$17.3 million**[645](index=645&type=chunk) - From the IPO date to December 31, 2024, approximately **$4.4 million** of the proceeds were used for upgrading IT infrastructure, software, and platform systems[646](index=646&type=chunk) [Controls and Procedures](index=116&type=section&id=Item%2015.%20CONTROLS%20AND%20PROCEDURES) Management concluded disclosure controls were ineffective as of December 31, 2024, due to a material weakness in accounting personnel expertise, with remediation plans underway - Management concluded that as of December 31, 2024, the company's disclosure controls and procedures and its internal control over financial reporting were not effective[647](index=647&type=chunk)[648](index=648&type=chunk) - A material weakness was identified related to the lack of in-house accounting personnel with appropriate knowledge of U.S. GAAP and SEC reporting requirements[651](index=651&type=chunk) - Remediation plans include using experienced external accountants, recruiting more qualified financial personnel, and implementing regular U.S. GAAP and SEC training[652](index=652&type=chunk) [Corporate Governance and Other Matters](index=118&type=section&id=Item%2016.%20Corporate%20Governance%20and%20Other%20Matters) This section covers corporate governance, including the audit committee financial expert, code of ethics, accountant fees, foreign private issuer status, and cybersecurity risk management - The board has determined that Mr. Nelson Wong is an audit committee financial expert[657](index=657&type=chunk) Principal Accountant Fees (Wei Wei & Co., LLP) | Fee Type | 2024 | 2023 | | :--- | :--- | :--- | | **Audit Fees** | $230,000 | $250,000 | | **Total Fees** | $230,000 | $250,000 | - As a foreign private issuer, the company follows its home country (Cayman Islands) practices in lieu of certain Nasdaq corporate governance rules, such as those related to shareholder approval for certain securities issuances[666](index=666&type=chunk) - The company has established a cybersecurity management policy and process, with oversight responsibility resting with the Board of Directors, and no material cybersecurity incidents have affected the company to date[670](index=670&type=chunk) PART III [Financial Statements](index=120&type=section&id=Item%2018.%20FINANCIAL%20STATEMENTS) This section presents the company's audited consolidated financial statements for 2022-2024, prepared under U.S. GAAP, with an unqualified auditor's opinion Consolidated Balance Sheet Highlights (As of Dec 31) | Metric | 2024 | 2023 | | :--- | :--- | :--- | | **Cash and cash equivalents** | $17,068,272 | $17,684,018 | | **Restricted cash and equivalents** | $6,475,274 | $14,740,676 | | **Total Assets** | $53,035,666 | $48,630,835 | | **Total Liabilities** | $3,126,354 | $3,081,186 | | **Total Shareholders' Equity** | $49,909,312 | $45,549,649 | Consolidated Statement of Operations Highlights (Years Ended Dec 31) | Metric | 2024 | 2023 | 2022 | | :--- | :--- | :--- | :--- | | **Total Operating Revenues** | $622,690 | $1,580,058 | $17,813,139 | | **Gross Profit** | $440,509 | $1,174,430 | $16,816,680 | | **(Loss) Income from Operations** | $(3,197,198) | $(4,335,408) | $2,589,351 | | **Net (Loss) Income** | $(2,433,536) | $(3,598,480) | $3,235,686 | - The notes to the financial statements detail the company's VIE structure, confirming that Jiangsu Yanggu and its subsidiaries are consolidated as VIEs because the WFOE has effective control and absorbs all risks and rewards[804](index=804&type=chunk) - A significant contingency relates to the frozen bank accounts of the VIE's subsidiaries, totaling approximately **$14.7 million** as of December 31, 2024, which had not been released as of the report date despite related charges against former shareholders being withdrawn in May 2025[874](index=874&type=chunk)[877](index=877&type=chunk)[879](index=879&type=chunk)

Core Viewpoint - Outcrop Silver & Gold Corporation has announced an increase in its public offering of units to raise up to $6,500,000 due to strong investor demand [1] Group 1: Offering Details - The offering price is set at $0.22 per unit, with each unit consisting of one common share and one-half of a common share purchase warrant [2] - Each warrant allows the holder to purchase one common share at an exercise price of $0.30 for a period of 24 months following the closing of the offering [2] - The company has granted the agent an over-allotment option to increase the offering size by up to approximately 15% of the total number of units issued [3] Group 2: Use of Proceeds - The net proceeds from the offering will be allocated for exploration and development of the Santa Ana Project, working capital, and general corporate purposes [4] Group 3: Closing and Regulatory Approvals - The closing of the offering is expected around March 26, 2025, subject to necessary regulatory approvals, including from the TSX Venture Exchange [5] Group 4: Company Overview - Outcrop Silver is focused on advancing its flagship Santa Ana high-grade silver project in Colombia, leveraging a seasoned team with extensive regional experience [8] - The company is committed to responsible mining practices and community engagement, aiming for sustainable development [9] - Outcrop Silver aims to transform the Santa Ana project into a significant silver producer, positively impacting the local economy [10]

Core Viewpoint - Outcrop Silver & Gold Corporation has announced a public offering of units to raise up to $5,000,000 at a price of $0.22 per unit, with participation from notable investor Eric Sprott [1][2]. Offering Details - The offering consists of units, each comprising one common share and one-half of a common share purchase warrant, with the warrant allowing the purchase of one common share at an exercise price of $0.30 for 24 months [2]. - The Agent has an option to increase the offering size by up to 15% to cover over-allotments and for market stabilization purposes [3]. - The net proceeds from the offering will be allocated for exploration and development of the Santa Ana Project, working capital, and general corporate purposes [4]. Timeline and Regulatory Approvals - The closing of the offering is expected around March 26, 2025, subject to necessary regulatory approvals, including from the TSX Venture Exchange [5]. - A prospectus supplement will be filed in connection with the offering, providing detailed information about the company and the offering [6]. Company Overview - Outcrop Silver is focused on advancing its flagship Santa Ana high-grade silver project in Colombia, with a commitment to responsible mining practices and community engagement [8][10]. - The company aims to transform the Santa Ana project into a significant silver producer, contributing positively to the local economy [10].

Financial Performance - Total revenues for the six months ended June 30, 2024, were approximately $0.4 million, a decrease of 45.7% from approximately $0.8 million for the same period in 2023 [2][11] - Gross profit decreased by 51.6% to approximately $0.3 million, with a gross margin of 65.8% compared to 76.0% in the prior year [2][27] - The company reported a loss from operations of approximately $2.1 million, contrasting with an income from operations of approximately $2.4 million for the same period in 2023 [2][15] - Net loss was approximately $1.9 million, a slight improvement from a net loss of approximately $2.1 million in the previous year [2][31] - Basic and diluted loss per share was $0.28, down from $0.50 in the same period last year, representing a 45.3% decrease [2][32] Revenue Breakdown - Listing service fees increased by approximately 86.9% to $101,934, driven by an increase in listing values from $2.4 million to $15.8 million [17][19] - Transaction fee revenue decreased by 55.0% to approximately $224,049, attributed to a drop in total transaction value from approximately $300 million to $86.8 million [21][22] - Marketing service fees fell by 61.1% to approximately $65,763 due to decreased demand for marketing services [24][25] - Other revenues decreased by 28.8% to approximately $55,511, primarily due to reduced consulting and training services [25] Operational Changes - The trading platform operated by HKDAEx merged with the main online platform for collectibles and artwork to enhance resource integration and customer service [3] - The trading platform of HKDAEx ceased operations as of June 30, 2024 [3] Investigation Impact - The investigation into Nanjing Jinwang has materially impacted business operations, causing difficulties for customers in withdrawing security deposits [9][11] - As of June 30, 2024, approximately $17.3 million in cash and short-term investments were frozen due to the investigation [8][12] - The company is actively communicating with authorities to unfreeze bank accounts and restore customer confidence [10][12] Liquidity and Capital Resources - As of June 30, 2024, the company had approximately $18.8 million in cash, with working capital of approximately $23.7 million, excluding frozen funds [12][14] - The company believes it has sufficient funds to meet working capital requirements and debt obligations over the next 12 months [14]

Core Insights - Outcrop Silver is advancing its Santa Ana silver project, recognized as one of the highest-grade primary silver projects globally, with 37 million high-grade silver equivalent ounces discovered [2] - The year 2024 is anticipated to be crucial for the company as new discoveries are being made, indicating significant growth potential [2] - Strong community collaboration has been instrumental in the project's progress, emphasizing the importance of local engagement in resource exploration [2] Company Focus - Outcrop Silver aims to maximize growth in the silver-rich region surrounding Santa Ana, working towards unlocking the project's full potential [2] - The company is committed to ongoing exploration efforts, which are expected to yield further discoveries and enhance the project's value [2]

PART I [Item 1. Identity of Directors, Senior Management and Advisers](index=6&type=section&id=Item%201.%20Identity%20of%20Directors%2C%20Senior%20Management%20and%20Advisers) This section is not applicable as per the report - The report states that this item is not applicable[14](index=14&type=chunk) [Item 2. Offer Statistics and Expected Timetable](index=6&type=section&id=Item%202.%20Offer%20Statistics%20and%20Expected%20Timetable) This section is not applicable as per the report - The report states that this item is not applicable[14](index=14&type=chunk) [Item 3. Key Information](index=6&type=section&id=Item%203.%20Key%20Information) This section details the company's Cayman Islands holding structure, which operates in China through a Variable Interest Entity (VIE), highlighting associated risks and presenting selected condensed consolidated financial data - The company is a Cayman Islands holding company, not a Chinese operating company, conducting business in China through contractual arrangements with a Variable Interest Entity (VIE), a structure carrying unique risks as Chinese authorities could disallow it, potentially rendering the company's securities worthless[14](index=14&type=chunk) - The company asserts that its VIE and subsidiaries in China have all required permissions (business licenses) and are not currently required to obtain approvals from the CSRC or CAC for their operations, but acknowledges significant uncertainty regarding future PRC regulations on overseas listings and data security[17](index=17&type=chunk) - As a holding company, cash flow from the PRC operating entities to the parent company is subject to PRC regulations, with dividends from the WFOE permissible only from accumulated after-tax profits and subject to a **10%** withholding tax (potentially reducible to **5%** under the Hong Kong-Mainland tax treaty), and as of the report date, no dividends or distributions have been made between the holding company, its subsidiaries, and the VIE[21](index=21&type=chunk)[22](index=22&type=chunk)[23](index=23&type=chunk) Selected Condensed Consolidated Balance Sheet as of December 31, 2023 (in USD) | Category | Amount (USD) | | :--- | :--- | | **Total Current Assets** | 37,893,285 | | **Total Assets** | **48,630,835** | | **Total Current Liabilities** | 3,081,186 | | **Total Liabilities** | **3,081,186** | | **Total Shareholders' Equity** | 45,549,649 | | **Total Liabilities and Shareholders' Equity** | **48,630,835** | Selected Condensed Consolidated Statement of Income for the Year Ended December 31, 2023 (in USD) | Category | Amount (USD) | | :--- | :--- | | **Operating Revenues** | 1,580,058 | | **Gross Profit** | 1,174,430 | | **Income (Loss) from Operations** | (4,335,408) | | **Net Income (Loss)** | **(3,598,480)** | [Risk Factors](index=18&type=section&id=3.D.%20Risk%20Factors) This subsection comprehensively outlines material business, corporate structure, China-specific, and share-related risks, including the impact of frozen bank accounts and regulatory uncertainties - **Business Risks:** - The freezing of bank accounts of Jiangsu Yanggu's subsidiaries by the Nan County Public Safety Bureau, due to an investigation into major shareholders, has materially and negatively impacted business operations and financial results[47](index=47&type=chunk)[60](index=60&type=chunk) - **Corporate Structure Risks:** - The company relies on contractual arrangements with its VIE, which may not be as effective as direct ownership - If the PRC government deems these arrangements non-compliant, the company could face severe penalties, including being forced to relinquish its interests in the VIE operations[48](index=48&type=chunk)[124](index=124&type=chunk)[129](index=129&type=chunk) - **China-Specific Risks:** - Uncertainties in the interpretation and enforcement of Chinese laws, including the New Overseas Listing Rules requiring CSRC filings, could negatively impact operations and the value of securities - The Holding Foreign Companies Accountable Act (HFCA Act) poses a delisting risk if the PCAOB is unable to inspect the company's auditor in the future, although the current auditor is US-based and inspectable[50](index=50&type=chunk)[152](index=152&type=chunk)[165](index=165&type=chunk) - **Share-Related Risks:** - The company's ordinary shares may be thinly traded, leading to liquidity issues for investors - As a foreign private issuer, the company is exempt from certain U.S. corporate governance and reporting requirements, offering less protection to shareholders - There is a risk of being classified as a Passive Foreign Investment Company (PFIC), which could have adverse U.S. federal income tax consequences for U.S. shareholders[54](index=54&type=chunk)[243](index=243&type=chunk)[260](index=260&type=chunk) [Item 4. Information On The Company](index=55&type=section&id=Item%204.%20Information%20On%20The%20Company) This section provides a detailed overview of Oriental Culture Holding LTD, covering its history, business as an online e-commerce provider for collectibles, its VIE-centric organizational structure, and property assets [History and Development of the Company](index=55&type=section&id=4.A.%20History%20and%20Development%20of%20the%20Company) Oriental Culture Holding LTD, incorporated in the Cayman Islands in 2018, launched operations in 2018, completed its IPO in 2020, and executed a reverse stock split in 2023 - The company is a holding company incorporated in the Cayman Islands in 2018, conducting operations through subsidiaries and a VIE structure[274](index=274&type=chunk)[275](index=275&type=chunk) - Completed its Initial Public Offering (IPO) in December 2020, raising net proceeds of approximately **$17.3 million**[281](index=281&type=chunk) - Executed a **1-for-5 reverse stock split** (Share Consolidation) in October 2023 to regain compliance with Nasdaq's minimum bid price rule[284](index=284&type=chunk) [Business Overview](index=57&type=section&id=4.B.%20Business%20Overview) The company operates online e-commerce platforms for collectibles, artwork, and commodities through its Hong Kong subsidiaries, providing comprehensive trading and support services - The company provides online e-commerce platforms for trading collectibles, artwork, and commodities, with operations primarily conducted through its Hong Kong subsidiaries, International Exchange and HKDAEx[286](index=286&type=chunk) - Services offered to customers include investor education, real-time market information, customer support, and warehousing services, delivered through proprietary software and a call center[288](index=288&type=chunk)[289](index=289&type=chunk) - The trading process involves Original Owners who list items, Offering Agents who assist with the listing, and Traders who buy and sell on the platform - The company has established detailed trading rules and a listing process[297](index=297&type=chunk)[298](index=298&type=chunk)[301](index=301&type=chunk) [Organizational Structure](index=78&type=section&id=4.C.%20Organizational%20structure) The company uses a Cayman Islands holding structure with BVI and Hong Kong subsidiaries, controlling its PRC operations through a Variable Interest Entity (VIE) via contractual agreements - The company utilizes a VIE structure for its PRC operations to comply with foreign investment restrictions - The WFOE, Nanjing Rongke, controls the VIE, Jiangsu Yanggu, through a series of contractual agreements[401](index=401&type=chunk)[403](index=403&type=chunk) - Key VIE agreements include a Technical Consultation and Service Agreement (entitling the WFOE to **100% of the VIE's net income**), an Equity Pledge Agreement, an Equity Option Agreement, and a Voting Rights Proxy Agreement, which collectively give the WFOE effective control[404](index=404&type=chunk)[405](index=405&type=chunk)[406](index=406&type=chunk) [Property, Plants and Equipment](index=80&type=section&id=4.D.%20Property%2C%20Plants%20and%20Equipment) The company's physical assets primarily consist of leased office spaces and a recently acquired office building in Nanjing, China, now serving as its main office - The company leases office space in Hong Kong and China for its operations[410](index=410&type=chunk) - In November 2021, VIE subsidiaries acquired an office building in Nanjing, China for approximately **$9.2 million**, which became the main China office in February 2024[410](index=410&type=chunk) [Item 5. Operating And Financial Review And Prospects](index=81&type=section&id=Item%205.%20Operating%20And%20Financial%20Review%20And%20Prospects) This section details the company's severe financial downturn in FY2023, with plummeting revenues and a net loss, attributed to an investigation into a related party and slow economic recovery [Operating Results](index=81&type=section&id=5.A.%20Operating%20Results) The company's FY2023 operating results show a severe decline in revenues and a swing to net loss, primarily due to an investigation into related parties and slow economic recovery Financial Performance Summary (FY2023 vs. FY2022) | Metric | FY 2023 (USD) | FY 2022 (USD) | Change (%) | | :--- | :--- | :--- | :--- | | Total Operating Revenues | 1,580,058 | 17,813,139 | (91.1)% | | Gross Profit | 1,174,430 | 16,816,680 | (93.0)% | | Income (Loss) from Operations | (4,335,408) | 2,589,351 | (267.4)% | | Net Income (Loss) | (3,598,480) | 3,235,686 | (211.2)% | | Basic & Diluted EPS | (0.84) | 0.77 | (210.6)% | Revenue Breakdown (FY2023 vs. FY2022) | Revenue Source | FY 2023 (USD) | FY 2022 (USD) | Change (%) | | :--- | :--- | :--- | :--- | | Listing services fees | 457,176 | 1,244,251 | (63.3)% | | Transaction fees | 806,794 | 13,643,958 | (94.1)% | | Marketing services fees | 166,444 | 2,749,224 | (93.9)% | | Other revenues | 149,644 | 175,706 | (14.8)% | | **Total** | **1,580,058** | **17,813,139** | **(91.1)%** | - The significant decrease in revenue and net income in 2023 was primarily due to the negative impact of an investigation into related parties and the slow recovery of the Chinese economy post-COVID-19[424](index=424&type=chunk) - Key operational metrics declined sharply in 2023: active traders fell by **75%** to **35,000**, total transactions dropped to **19 million** from **96 million**, and total transaction value decreased to **$0.5 billion** from **$8.6 billion** in 2022[427](index=427&type=chunk)[428](index=428&type=chunk)[429](index=429&type=chunk) [Liquidity and Capital Resources](index=91&type=section&id=5.B.%20Liquidity%20and%20Capital%20Resources) As of December 31, 2023, the company maintained solid liquidity with $37.4 million in cash and short-term investments, despite operational challenges, and believes current working capital is sufficient - As of December 31, 2023, the company had approximately **$37.4 million** in cash and short-term investments, including **$19.7 million** that is restricted - Working capital was approximately **$34.8 million**[480](index=480&type=chunk) Summary of Cash Flows (in USD) | Cash Flow Activity | FY 2023 | FY 2022 | | :--- | :--- | :--- | | **Operating Activities** | 3,624,590 | (1,211,385) | | **Investing Activities** | (511,248) | 608,471 | | **Financing Activities** | 600,000 | 1,000,000 | - The company's ability to pay dividends depends on distributions from its PRC subsidiary, which are subject to PRC regulations on profit distribution and foreign exchange controls[483](index=483&type=chunk) [Item 6. Directors, Senior Management and Employees](index=96&type=section&id=Item%206.%20Directors%2C%20Senior%20Management%20and%20Employees) This section introduces the company's leadership, compensation, equity plan, employee count, and major shareholders, noting the board's lack of gender diversity - The board is chaired by Mun Wah Wan, with Yi Shao as CEO and Xi Li as CFO - The board also includes three independent directors: Nelson Wong, Xiaobing Liu, and Jinren Chen[514](index=514&type=chunk)[517](index=517&type=chunk)[519](index=519&type=chunk) - In FY2023, aggregate cash compensation was approximately **$82,811** for executive officers and **$82,356** for non-executive directors[525](index=525&type=chunk) - The company adopted the 2021 Omnibus Equity Plan, authorizing up to **800,000 shares** - In February 2024, **300,000 shares** were granted to officers and employees, including **75,000** to the CEO, Yi Shao[532](index=532&type=chunk) - As of December 31, 2023, the company had **52 full-time employees**, with **49** based in Mainland China and **3** in Hong Kong[551](index=551&type=chunk)[552](index=552&type=chunk) - Major shareholders include Oriental Culture Investment Development LTD and Oriental Culture Investment Communication LTD, each beneficially owning a **10.7%** stake of the ordinary shares[560](index=560&type=chunk)[561](index=561&type=chunk)[562](index=562&type=chunk) [Item 7. Major Shareholders and Related Party Transactions](index=105&type=section&id=Item%207.%20Major%20Shareholders%20and%20Related%20Party%20Transactions) This section details the company's significant transactions with related parties, including technology service fees, storage fees, rental expenses, and administrative service fees - The company generated **$144,609** in technology service fee revenue from related parties in 2023[569](index=569&type=chunk)[570](index=570&type=chunk) - Cost of revenues included **$64,051** in storage fees paid to Zhongcang Warehouse Co., Ltd., an **18%** subsidiary of the VIE[569](index=569&type=chunk) - The company paid approximately **$147,000** in rent and **$87,000** in administrative service fees to entities controlled by major shareholders and the Chairman, respectively[574](index=574&type=chunk)[841](index=841&type=chunk) - As of year-end 2023, there was an outstanding receivable of **$346,114** from Nanjing Jinwang, a related party, for funds held in a trust account[575](index=575&type=chunk)[829](index=829&type=chunk) [Item 8. Financial Information](index=107&type=section&id=Item%208.%20Financial%20Information) This section confirms no material legal proceedings, no current dividend payments, and no significant financial changes since the annual statements - The company is not currently involved in any material legal or administrative proceedings[576](index=576&type=chunk) - The company has not paid dividends and has no plans to pay any in the near future, intending to retain earnings for business operations and expansion[577](index=577&type=chunk) [Item 9. The Offer and Listing](index=108&type=section&id=Item%209.%20The%20Offer%20and%20Listing) This section provides details about the company's ordinary shares, which have been traded on the NASDAQ Capital Market under 'OCG' since December 15, 2020 - The company's ordinary shares are listed on the NASDAQ Capital Market under the symbol **"OCG"**, with trading having commenced on **December 15, 2020**[580](index=580&type=chunk) [Item 10. Additional Information](index=108&type=section&id=Item%2010.%20Additional%20Information) This section provides supplementary corporate and legal information, including memorandum and articles of association, exchange controls, and detailed taxation summaries for shareholders - The company is a Cayman Islands exempted company, and its affairs are governed by its memorandum and articles of association and the Cayman Islands Companies Act[580](index=580&type=chunk) - Holders of ordinary shares are entitled to **one vote per share** - Dividends can be declared by the board out of profits or the share premium account, provided the company remains solvent[584](index=584&type=chunk)[585](index=585&type=chunk) - The PRC government imposes controls on the convertibility of RMB and the remittance of currency out of China, which may limit the ability to transfer funds from the PRC subsidiary[603](index=603&type=chunk) - The company discusses potential U.S. federal income tax consequences for U.S. Holders, including the risk of being classified as a Passive Foreign Investment Company (PFIC)[614](index=614&type=chunk)[621](index=621&type=chunk) [Item 11. Quantitative and Qualitative Disclosures About Market Risk](index=118&type=section&id=Item%2011.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section outlines the company's exposure to liquidity, inflation, interest rate, and foreign currency risks, primarily due to RMB-denominated operations - The company is exposed to liquidity risk, inflation risk, interest rate risk, and foreign currency translation risk due to its operations being denominated in RMB[637](index=637&type=chunk)[638](index=638&type=chunk)[640](index=640&type=chunk) [Item 12. Description of Securities Other Than Equity Securities](index=119&type=section&id=Item%2012.%20Description%20of%20Securities%20Other%20Than%20Equity%20Securities) This section is not applicable as per the report - The report states that this item is not applicable[641](index=641&type=chunk) PART II [Item 13. Defaults, Dividend Arrearages and Delinquencies](index=120&type=section&id=Item%2013.%20Defaults%2C%20Dividend%20Arrearages%20and%20Delinquencies) This section is not applicable as per the report - The report states that this item is not applicable[643](index=643&type=chunk) [Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds](index=120&type=section&id=Item%2014.%20Material%20Modifications%20to%20the%20Rights%20of%20Security%20Holders%20and%20Use%20of%20Proceeds) This section details the use of approximately $2.9 million from the company's $17.3 million December 2020 IPO proceeds for IT infrastructure and software upgrades - The company received net proceeds of approximately **$17.3 million** from its December 2020 IPO[643](index=643&type=chunk) - As of December 31, 2023, approximately **$2.9 million** of the IPO proceeds have been used for upgrading IT infrastructure and software[644](index=644&type=chunk) [Item 15. Controls and Procedures](index=120&type=section&id=Item%2015.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls were ineffective as of December 31, 2023, due to a material weakness in accounting personnel knowledge of U.S. GAAP and SEC reporting - Management concluded that as of December 31, 2023, the company's disclosure controls and procedures were **not effective**[645](index=645&type=chunk) - A material weakness was identified related to a lack of in-house accounting personnel with appropriate knowledge of U.S. GAAP and SEC reporting requirements[650](index=650&type=chunk) - Remediation plans include using external accountants, recruiting more qualified financial personnel, and implementing continuous training[651](index=651&type=chunk) [Item 16. Corporate Governance and Other Disclosures](index=122&type=section&id=Item%2016.%20Corporate%20Governance%20and%20Other%20Disclosures) This section covers governance topics including the audit committee financial expert, code of ethics, principal accountant fees, foreign private issuer exemptions, and cybersecurity risk management - The Board of Directors has designated independent director Mr. Nelson Wong as the audit committee financial expert[655](index=655&type=chunk) Principal Accountant Fees (Wei Wei & Co., LLP) | Fee Category | FY 2023 (USD) | FY 2022 (USD) | | :--- | :--- | :--- | | Audit fees | 250,000 | 184,000 | | All other fees | - | 60,000 | | **TOTAL** | **250,000** | **244,000** | - As a foreign private issuer, the company follows its home country (Cayman Islands) practices for certain corporate governance matters, exempting it from specific Nasdaq listing rules[663](index=663&type=chunk) - The company has established a cybersecurity risk management process overseen by the Board of Directors and managed by an internal IT manager - No material cybersecurity incidents have been reported[665](index=665&type=chunk) PART III [Item 17. Financial Statements](index=124&type=section&id=Item%2017.%20Financial%20Statements) The company has elected to provide financial statements pursuant to Item 18 - The company provides its financial statements under Item 18[667](index=667&type=chunk) [Item 18. Financial Statements](index=124&type=section&id=Item%2018.%20Financial%20Statements) This section contains the company's consolidated financial statements for FY2021-2023, audited by Wei, Wei & Co., LLP, detailing financial position, operations, cash flows, and significant accounting policies - The consolidated financial statements were audited by Wei, Wei & Co., LLP, which issued an unqualified opinion[679](index=679&type=chunk) - The notes to the financial statements detail the company's VIE structure, confirming that the WFOE is the primary beneficiary of Jiangsu Yanggu and its subsidiaries, leading to their consolidation[708](index=708&type=chunk) - Revenue is disaggregated into four main categories: listing service fees, transaction fees, marketing service fees, and other revenues - Transaction fees were the largest component in 2022 but saw a dramatic decline in 2023[756](index=756&type=chunk) - The company's PRC subsidiaries, Kashi Longrui and Kashi Dongfang, had a 5-year tax exemption that expired on **December 31, 2022**, which will impact future profitability[816](index=816&type=chunk) [Item 19. Exhibits](index=124&type=section&id=Item%2019.%20Exhibits) This section lists the exhibits filed as part of the annual report - Key exhibits filed with the report include the company's formation documents, VIE contractual agreements, and Sarbanes-Oxley certifications[669](index=669&type=chunk)

PART I [Item 3. Key Information](index=6&type=section&id=Item%203.%20Key%20Information) This section details the company's VIE-based holding structure in China, outlining associated legal and operational risks, including dividend restrictions and frozen bank accounts from a major shareholder investigation - The company operates in China through a Variable Interest Entity (VIE) structure, a contractual arrangement with unique legal uncertainties not definitively tested in Chinese courts[14](index=14&type=chunk) - The company is not currently required to obtain CSRC or CAC permissions for operations or foreign security issuance, but future offerings are subject to New Overseas Listing Rules filing requirements[17](index=17&type=chunk) - PRC regulations restrict dividend payments from the Chinese subsidiary (WFOE) to the holding company, requiring a 10% statutory reserve until 50% of registered capital is reached, with no dividends distributed to date[22](index=22&type=chunk)[23](index=23&type=chunk) [3.D. Risk Factors](index=13&type=section&id=3.D.%20Risk%20Factors) This section outlines material business, corporate structure, operational, and stock-related risks, notably the freezing of VIE subsidiary bank accounts, uncertainties in the VIE arrangement, regulatory changes, and potential NASDAQ delisting - The Nan County Public Safety Bureau froze bank accounts of VIE subsidiaries (Kashi Longrui, Kashi Dongfang, Nanjing Yanyu) due to an investigation into major shareholders, materially impacting business operations and financial results[38](index=38&type=chunk)[50](index=50&type=chunk)[51](index=51&type=chunk) Financial Impact of Frozen Bank Accounts (as of Dec 31, 2022) | Item | Amount (Approx. USD) | | :--- | :--- | | Cash and short-term investment in frozen accounts | $16.5 million | | Amount due from Nanjing Jinwang | $3.4 million | - The Holding Foreign Companies Accountable Act (HFCA Act) does not currently affect the company as its U.S.-headquartered auditor is subject to PCAOB inspection, though this status could change if PCAOB access is obstructed[15](index=15&type=chunk)[151](index=151&type=chunk) - Nasdaq notified the company on November 9, 2022, of non-compliance with the minimum bid price requirement of **$1.00 per share** for 30 consecutive trading days, posing a delisting risk[237](index=237&type=chunk) - Preferential tax treatment for Kashi Longrui and Kashi Dongfang expired in December 2022, subjecting them to the standard **25% PRC Enterprise Income Tax rate** and materially impacting future financial results[43](index=43&type=chunk)[213](index=213&type=chunk)[216](index=216&type=chunk) [Item 4. Information On The Company](index=50&type=section&id=Item%204.%20Information%20On%20The%20Company) This section details the company's history, business operations as an online e-commerce provider for collectibles and artwork, and its corporate structure, including regulatory environments in PRC and Hong Kong, and the VIE arrangement - The company operates as an online e-commerce service provider for collectibles, artwork, and commodities via its Hong Kong-based platforms, China International Assets and Equity of Artworks Exchange Limited and HKDAEx Limited[254](index=254&type=chunk)[265](index=265&type=chunk) - In March 2022, the VIE, Jiangsu Yanggu, invested **RMB 6 million (approx. $923,076)** for an **11.875% equity interest** in Beijing Jiu Yu Ling Jing Technology Co., Ltd. (JYLJ), a "Wine and Spirits" metaverse developer[263](index=263&type=chunk) - Chinese operations are conducted through a VIE structure, controlled by the WFOE (Nanjing Rongke) via key agreements including Technical Consultation and Service, Equity Pledge, Equity Option, and Voting Rights Proxy and Financial Supporting Agreements[377](index=377&type=chunk)[380](index=380&type=chunk) - The company acquired an office building of approximately **6,840 square meters** in Nanjing, China, in November 2021 for **RMB 60 million (approx. $9.2 million)**, intended as its main office space upon renovation completion[386](index=386&type=chunk) [Item 5. Operating And Financial Review And Prospects](index=74&type=section&id=Item%205.%20Operating%20And%20Financial%20Review%20And%20Prospects) This section provides management's discussion and analysis of financial performance, highlighting a significant decline in 2022 revenue and net income due to COVID-19 and frozen bank accounts, along with liquidity, cash flow, and critical accounting policies Key Operating Metrics (2020-2022) | Metric | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Active Traders | ~142,000 | ~159,000 | ~77,000 | | Number of Transactions | ~96 million | ~135 million | ~48 million | | Total Transaction Value | ~$8.6 billion | ~$15.6 billion | ~$4.6 billion | Consolidated Financial Performance (2021 vs. 2022) | Metric | FY 2022 (USD) | FY 2021 (USD) | Change (%) | | :--- | :--- | :--- | :--- | | Total Operating Revenues | $17.8M | $37.6M | (52.6)% | | Gross Profit | $16.8M | $35.2M | (52.2)% | | Income from Operations | $2.6M | $10.9M | (76.2)% | | Net Income | $3.2M | $11.4M | (71.7)% | | Basic and Diluted EPS | $0.15 | $0.56 | (72.6)% | - The significant **52.6% decrease in total operating revenues** in 2022 was primarily driven by a **$10.9 million (44.2%) drop** in transaction fee revenue and a **$5.7 million (82.0%) drop** in listing service fees, attributed to COVID-19 resurgence and frozen bank accounts[417](index=417&type=chunk)[420](index=420&type=chunk) - Net cash used in operating activities was approximately **$1.2 million** in 2022, a reversal from **$9.0 million** provided in 2021, primarily due to increased other receivables from related parties and advances to third parties[464](index=464&type=chunk)[465](index=465&type=chunk)[466](index=466&type=chunk) [Item 6. Directors, Senior Management And Employees](index=89&type=section&id=Item%206.%20Directors,%20Senior%20Management%20And%20Employees) This section details the company's leadership, board composition, and employee base, including executive and director compensation, committee structures, employee demographics, and a concentrated share ownership structure among principal shareholders Executive and Director Compensation (FY 2022) | Group | Aggregate Cash Compensation (USD) | | :--- | :--- | | Executive Officers | $82,727 | | Non-Executive Directors | $53,640 | - The company adopted the 2021 Omnibus Equity Plan, authorizing up to **4,000,000 ordinary shares** for issuance, with no awards granted as of the report date[512](index=512&type=chunk) Major Shareholder Ownership (as of April 26, 2023) | Shareholder | Beneficial Ownership (%) | | :--- | :--- | | HKFAEx Group Limited (controlled by Mun Wah Wan) | 6.6% | | Oriental Culture Investment Development LTD (Aimin Kong) | 11.5% | | Oriental Culture Investment Communication LTD (Huajun Gao) | 11.5% | | **Total for these three** | **29.6%** | - As of December 31, 2022, the company had **57 full-time employees**, with Technology and Research (**36.84%**) and General & HR and Administration (**33.33%**) being the largest functions[526](index=526&type=chunk)[527](index=527&type=chunk) [Item 7. Major Shareholders And Related Party Transactions](index=97&type=section&id=Item%207.%20Major%20Shareholders%20And%20Related%20Party%20Transactions) This section details the company's related party transactions, including receivables, payables, revenues, and expenses with entities connected to major shareholders and management for the year ended December 31, 2022 Related Party Transactions Summary (FY 2022) | Transaction Type | Amount (USD) | | :--- | :--- | | Net Revenues from Related Parties | $166,325 | | Cost of Revenues to Related Party | $304,400 | | Selling & Marketing Expenses to Related Party | $43,590 | | Office Rental Expense to Related Party | ~$151,000 | - Other receivables from related party Nanjing Jinwang amounted to approximately **$3.4 million** as of December 31, 2022, held in a trading platform trust account[664](index=664&type=chunk)[814](index=814&type=chunk) [Item 8. Financial Information](index=100&type=section&id=Item%208.%20Financial%20Information) This section confirms the inclusion of consolidated financial statements, notes no material legal proceedings, and states the company's policy of retaining earnings for business expansion without immediate dividend plans - The company has not declared or paid cash dividends and plans to retain earnings for business operations and expansion in the foreseeable future[554](index=554&type=chunk) [Item 9. The Offer And Listing](index=100&type=section&id=Item%209.%20The%20Offer%20And%20Listing) This section details the company's stock listing, with ordinary shares traded on the NASDAQ Capital Market under the ticker symbol "OCG" since December 15, 2020 - The company's ordinary shares are listed on the NASDAQ Capital Market under the symbol **"OCG"**[556](index=556&type=chunk)[557](index=557&type=chunk) [Item 10. Additional Information](index=100&type=section&id=Item%2010.%20Additional%20Information) This section provides supplementary corporate information, detailing the company's Cayman Islands corporate governance, exchange controls in various jurisdictions, and tax implications for the company and its shareholders, including U.S. PFIC rules - The company is a Cayman Islands exempted company, governed by its memorandum and articles of association and the Companies Act of the Cayman Islands[558](index=558&type=chunk) - The company does not believe it was a Passive Foreign Investment Company (PFIC) for the taxable year ended December 31, 2022, noting that PFIC status is an annual factual determination based on asset and income composition, including market capitalization[248](index=248&type=chunk) [Item 11. Quantitative And Qualitative Disclosures About Market Risk](index=112&type=section&id=Item%2011.%20Quantitative%20And%20Qualitative%20Disclosures%20About%20Market%20Risk) This section outlines the company's exposure to market risks, including liquidity, inflation, interest rate, and foreign currency risks, primarily due to RMB-denominated operations - The company is exposed to liquidity, inflation, interest rate, and foreign currency translation risks, primarily due to its RMB-denominated operations[618](index=618&type=chunk)[619](index=619&type=chunk)[621](index=621&type=chunk) PART II [Item 14. Material Modifications To The Rights Of Security Holders And Use Of Proceeds](index=114&type=section&id=Item%2014.%20Material%20Modifications%20To%20The%20Rights%20Of%20Security%20Holders%20And%20Use%20Of%20Proceeds) This section details the utilization of approximately **$17.3 million** net proceeds from the December 2020 IPO, with **$2.7 million** used for IT infrastructure upgrades as of December 31, 2022 IPO Proceeds and Utilization | Item | Amount (Approx. USD) | | :--- | :--- | | Net Proceeds from IPO | $17.3 million | | Proceeds Used (as of Dec 31, 2022) | $2.7 million | | Use of Deployed Proceeds | Upgrading IT infrastructure, software, and systems | [Item 15. Controls And Procedures](index=114&type=section&id=Item%2015.%20Controls%20And%20Procedures) This section presents management's assessment that disclosure controls and internal control over financial reporting were ineffective as of December 31, 2022, due to a material weakness in accounting personnel's U.S. GAAP and SEC reporting knowledge - Management concluded that the company's disclosure controls and procedures were not effective as of December 31, 2022[628](index=628&type=chunk) - A material weakness in internal control over financial reporting was identified due to insufficient in-house accounting personnel knowledge of U.S. GAAP and SEC reporting requirements[633](index=633&type=chunk) [Item 16. Corporate Governance and Other Information](index=116&type=section&id=Item%2016.%20Corporate%20Governance%20and%20Other%20Information) This section covers corporate governance, identifying Mr. Nelson Wong as the audit committee financial expert, detailing principal accountant fees, and explaining the company's adherence to Cayman Islands home country governance practices as a foreign private issuer - The board determined that Mr. Nelson Wong, an independent director, qualifies as an **"audit committee financial expert"**[637](index=637&type=chunk) Principal Accountant Fees (Wei Wei & Co., LLP) | Fee Category | 2022 (USD) | 2021 (USD) | | :--- | :--- | :--- | | Audit fees | $184,000 | $160,000 | | All other fees | $60,000 | - | | **TOTAL** | **$244,000** | **$160,000** | - As a foreign private issuer, the company follows Cayman Islands home country practices in lieu of certain NASDAQ corporate governance rules, including those for shareholder approval of security issuances and equity plans[644](index=644&type=chunk) PART III [Item 18. Financial Statements](index=118&type=section&id=Item%2018.%20Financial%20Statements) This section presents the company's complete consolidated financial statements for fiscal years 2020-2022, including the independent auditor's report, balance sheets, income statements, equity changes, cash flows, and detailed notes Consolidated Balance Sheet Highlights (as of Dec 31) | Metric | 2022 (USD) | 2021 (USD) | | :--- | :--- | :--- | | Total Assets | $53.39M | $50.84M | | Total Liabilities | $3.77M | $3.65M | | Total Shareholders' Equity | $49.62M | $47.19M | | Cash and Equivalents | $17.19M | $29.40M | | Restricted Cash | $11.80M | $0 | Consolidated Statement of Income Highlights (for year ended Dec 31) | Metric | 2022 (USD) | 2021 (USD) | 2020 (USD) | | :--- | :--- | :--- | :--- | | Total Operating Revenues | $17.81M | $37.60M | $17.44M | | Gross Profit | $16.82M | $35.17M | $14.80M | | Net Income | $3.24M | $11.44M | $2.05M | Consolidated Statement of Cash Flows Highlights (for year ended Dec 31) | Metric | 2022 (USD) | 2021 (USD) | 2020 (USD) | | :--- | :--- | :--- | :--- | | Net Cash from Operating Activities | ($1.21M) | $9.02M | $6.61M | | Net Cash from Investing Activities | $0.61M | ($2.81M) | ($11.77M) | | Net Cash from Financing Activities | $1.00M | $2.00M | $18.09M |

[Financial Highlights](index=1&type=section&id=Financial%20Highlights) Oriental Culture Holding LTD reported significant FY2021 financial growth, with revenues up 115.6% and net income surging 458.8% Fiscal Year 2021 vs 2020 Financial Performance | Metric | 2021 | 2020 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $37.6M | $17.4M | 115.6% | | Gross Profit | $35.2M | $14.8M | 137.7% | | Gross Margin | 93.5% | 84.8% | +8.7 p.p. | | Income from Operations | $10.9M | $1.7M | 561.3% | | Operating Profit Margin | 29.0% | 9.4% | +19.5 p.p. | | Net Income | $11.4M | $2.0M | 458.8% | | Earnings Per Share | $0.56 | $0.13 | 330.8% | [Management Commentary](index=1&type=section&id=Management%20Commentary) Management expressed satisfaction with record FY2021 results, highlighting market recovery and optimism for NFT and Metaverse growth - The Chairman, Mr. Lewis Wan, noted that 2021 was an extraordinary year with **record revenue and net income**, and expressed optimism about the company's development in NFT and Metaverse areas[3](index=3&type=chunk) - The CFO, Ms. Fiona Ni, attributed the strong performance to the market rebound in China and Hong Kong and highlighted a significant improvement in **gross margin**, which increased from approximately **85% in 2020 to 94% in 2021**[3](index=3&type=chunk) [About Oriental Culture Holding LTD](index=2&type=section&id=About%20Oriental%20Culture%20Holding%20LTD) Oriental Culture Holding LTD provides an online e-commerce platform for collectibles and artwork, expanding into NFTs and metaverse projects - The company provides an online e-commerce platform for collectors, artists, and dealers to trade collectibles and artwork[4](index=4&type=chunk) - The company is currently developing new business and services related to NFTs for cultural and artwork collections, as well as a metaverse project[4](index=4&type=chunk) [Safe Harbor Statement](index=2&type=section&id=Safe%20Harbor%20Statement) This press release contains forward-looking statements subject to risks and uncertainties, cautioning investors against undue reliance - The press release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995, which involve risks and uncertainties[5](index=5&type=chunk) - The Company undertakes no obligation to publicly revise forward-looking statements to reflect subsequent events or circumstances[5](index=5&type=chunk)

[Key Financial and Operational Highlights](index=1&type=section&id=Key%20Financial%20and%20Operational%20Highlights) Oriental Culture Holding LTD achieved revenue and gross profit growth in FY2020, despite a significant net income decline, driven by strong operational expansion in product listings and new accounts Fiscal Year 2020 vs 2019 Financial Highlights | ($ millions, except per share data) | 2020 | 2019 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $17.4 | $13.4 | 29.7% | | Gross profit | $14.8 | $12.1 | 22.1% | | Gross margin | 85.1% | 90.3% | -5.2 p.p. | | Income from operations | $1.65 | $8.98 | -81.7% | | Operating profit margin | 9.5% | 67.0% | -57.5 p.p. | | Net income | $2.0 | $9.1 | -77.5% | | Earnings per share | $0.13 | $0.64 | -79.6% | | Net book value per share | $2.15 | $0.92 | 133.7% | - As of December 31, 2020, the number of types of collectibles, artwork, and commodities listed on OCG's platforms reached **303**, a **163% increase** from the previous year[4](index=4&type=chunk) - Approximately **95,000 new accounts** were opened on the company's trading platforms in 2020, representing a **44% year-on-year growth** from about 66,000 new accounts in 2019[4](index=4&type=chunk) [Management Commentary](index=2&type=section&id=Management%20Commentary) Management anticipates capital inflow into real, liquid RMB-denominated assets on OCG's platforms due to economic recovery, with the CFO crediting H2 2020's positive performance to new listings and account growth - The Chairman believes that as money is used to stimulate economic growth, the scarcest assets will be **real, liquid assets**, especially those valued in RMB, which are traded on OCG's platforms[3](index=3&type=chunk) - Management is confident that the company's long-term performance will benefit from **capital inflow** and **growth in client numbers** as investor confidence in China's economy rises[3](index=3&type=chunk) - The CFO stated that the positive performance in the second half of 2020 was driven by sales from **collectibles and artwork listing services**, **marketing services**, and **transaction fees**, fueled by **new product listings** and **new accounts**[4](index=4&type=chunk) [Consolidated Financial Statements](index=4&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements for FY2020 detail the company's financial position, operational results, and cash flows, highlighting asset and equity growth from IPO, revenue growth offset by rising expenses, and significant cash movements [Consolidated Balance Sheets](index=4&type=section&id=CONSOLIDATED%20BALANCE%20SHEETS) As of December 31, 2020, total assets and shareholders' equity significantly increased to **$41.1 million** and **$33.6 million** respectively, primarily due to cash surge, a new deposit, and additional paid-in capital from the IPO Consolidated Balance Sheets (as of Dec 31) | (In USD) | 2020 | 2019 | | :--- | :--- | :--- | | **Total current assets** | **$39,027,941** | **$12,229,929** | | Cash and cash equivalents | $24,036,174 | $9,184,671 | | Deposit | $13,333,538 | - | | **Total assets** | **$41,108,765** | **$14,713,587** | | **Total current liabilities** | **$7,539,519** | **$1,614,315** | | Accounts payable | $4,831,394 | $333,505 | | **Total liabilities** | **$7,539,519** | **$1,614,315** | | **Total shareholders' equity** | **$33,569,246** | **$13,099,272** | | Additional paid-in capital | $18,884,992 | $1,608,045 | [Consolidated Statements of Income and Comprehensive Income](index=6&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20INCOME%20AND%20COMPREHENSIVE%20INCOME) In FY2020, total operating revenues grew to **$17.4 million**, but a **318.7% surge** in operating expenses led to an **81.7% decline** in income from operations to **$1.6 million**, resulting in net income of **$2.0 million** Consolidated Statements of Income (For the Years Ended Dec 31) | (In USD) | 2020 | 2019 | | :--- | :--- | :--- | | **Total operating revenues** | **$17,438,802** | **$13,449,435** | | **Gross profit** | **$14,796,639** | **$12,119,558** | | **Total operating expenses** | **($13,150,551)** | **($3,140,465)** | | Selling and marketing | ($6,004,883) | ($675,230) | | General and administrative | ($7,145,668) | ($2,465,235) | | **Income from operations** | **$1,646,088** | **$8,979,093** | | **Net income** | **$2,048,107** | **$9,087,872** | | **Earnings per share (Basic and diluted)** | **$0.13** | **$0.64** | [Consolidated Statements of Cash Flows](index=8&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) In 2020, net cash from operating activities was **$8.1 million**, while investing activities used **$11.8 million**, and financing activities provided **$18.0 million** from the IPO, resulting in an end-of-year cash balance of **$24.0 million** Consolidated Statements of Cash Flows (For the Years Ended Dec 31) | (In USD) | 2020 | 2019 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | **$8,101,587** | **$9,559,467** | | **Net cash (used in) investing activities** | **($11,769,294)** | **($1,438,760)** | | Deposit on real estate purchase | ($12,613,083) | - | | **Net cash provided by (used in) financing activities** | **$18,036,395** | **($853,579)** | | Proceeds from initial public offering, net | $18,090,668 | - | | **Increase in cash and cash equivalents** | **$14,851,503** | **$7,167,813** | | **Cash and cash equivalents, end of year** | **$24,036,174** | **$9,184,671** |