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** |