OTC: SEII

Listing Status

On November 26, 2018, we received a staff determination
notice from The Nasdaq Stock Market (“Nasdaq”) informing the Company that as a result of its failure to comply with Nasdaq’s
shareholder approval requirements set forth in Listing Rule 5635(c) (the “Rule”), the staff determined to deny the Company’s
request for continued listing based on a plan of compliance submitted on October 26, 2018. Our common stock was delisted from Nasdaq at
the open of trading on December 5, 2018. Our common stock is currently trading on the OTC Markets under the symbol “SEII.”

Our Corporate History and Background

We are a Nevada corporation. We were incorporated
in Delaware on June 24, 1987, under the name Malex, Inc. We changed our corporate name to China Wind Systems, Inc. on December 18, 2007.
On June 13, 2011, we changed our corporate name to Cleantech Solutions International, Inc. On August 7, 2012, we were converted into a
Nevada corporation. On January 8, 2018, we changed our name to Sharing Economy International Inc.

Beginning in the second quarter of 2017 and throughout
2018, we established new business divisions to focus on the development of sharing economy platforms and related rental businesses. We
believe a true peer-to-peer sharing economy based on rentals will take significant market share in both the business and consumer markets
over the next few years.

Sharing economy business models are hosted through
digital platforms that enable more precise, real-time measurement of spare capacity and have the ability to dynamically connect that capacity
with those who need it. These digital platforms handle transactions that offer access over ownership through renting, lending, subscribing,
reselling, swapping or donating. Consumers who use sharing economy business models are often more comfortable with transactions that involve
deeper social interactions than traditional methods of exchange.

While we are retaining our Sharing Economy business,
our primary business has changed, with the acquisition of the Peak Equity business.

1

Reverse Acquisition of Peak Equity

On December 27, 2019, Sharing Economy International
Inc. entered into a Share Exchange Agreement (the “Share Exchange Agreement”), by and among the Company, Peak Equity International
Limited, a British Virgin Islands corporation (“Peak Equity”), and all of the holders of ordinary shares of Peak Equity, which
consisted of three shareholders.

Under the terms and conditions of the Share Exchange
Agreement, the Company offered, sold and issued 7,200,000,000 shares of common stock in consideration for all the issued and
outstanding ordinary shares of Peak Equity. The effect of the issuance is that Peak Equity shareholders now hold approximately 99.7% of
the issued and outstanding shares of common stock of the Company.

Our Articles of Incorporation authorize us to
issue 200,000,000 of common stock. The Company is still obligated to issue an additional 7,018,360,787 shares of common stock to the Peak
Equity shareholders, and plans to amend its Articles of Incorporation, as amended, to increase its number of authorized shares of common
stock for such purpose. Assuming the issuance of such additional 7,018,360,787 shares of common stock to the Peak Equity shareholders,
the Peak Equity shareholders will hold approximately 99.7% of the issued and outstanding shares of common stock of the Company.

None of our officers or directors have resigned
in connection with the acquisition of the Peak Equity business.

As a result of the share exchange Peak Equity is now a wholly-owned
subsidiary of the Company.

The transactions consummated with Peak Equity
pursuant to the terms and conditions of the Share Exchange Agreement were treated as a reverse acquisition, with Peak Equity as the acquiror
and the Company as the acquired party. Unless the context suggests otherwise, when we refer in this Form 8-K to business and financial
information for periods prior to the consummation of the reverse acquisition, we are referring to the business and financial information
of Peak Equity.

On January 1, 2023, The Group disposed of its
interests in VUL group (excluding Vantage Ultimate Limited and Sharing Economy Investment Limited) as part of a broader legal and operational
reorganisation of its corporate structure. As a result of these transactions, the Group ceased to control these entities as of that date,
and they have been deconsolidated from the Group’s consolidated financial statements. The disposals formed part of a group restructuring
initiative designed to streamline the Group’s operations and optimise its portfolio of businesses.

Organization & Subsidiaries

The following table sets
forth our relationship our subsidiaries whose financial statements are consolidated.

Name
of Entity

Relationship
to Us

Nature
of Business

Sharing Economy International Inc.

N.A.

Holding company

Vantage Ultimate Limited (“Vantage”), a British Virgin Island (“BVI”) company

100% owned by us

Holding company

Sharing Economy Investment Limited (“Sharing Economy”), a BVI company

100% owned by Vantage

Holding company and provision of management services.

2

Our website is www.seii.com.
Information on our website or any other website does not constitute a part of this annual report.

We are not a Hong Kong operating company but a
Nevada holding company with operations conducted through our wholly owned subsidiaries based in Hong Kong and PRC. This structure presents
unique risks as our investors may never directly hold equity interests in our Hong Kong and PRC subsidiaries and will be dependent upon
contributions from our subsidiaries to finance our cash flow needs. Sharing Economy International Inc. and its Hong Kong and PRC subsidiaries
are not required to obtain permission from the Chinese authorities including the China Securities Regulatory Commission, or CSRC, or Cybersecurity
Administration Committee, or CAC, to operate or to issue securities to foreign investors. However, in light of the recent statements and
regulatory actions by the PRC government, such as those related to Hong Kong’s national security, the promulgation of regulations
prohibiting foreign ownership of Chinese companies operating in certain industries, which are constantly evolving, and anti-monopoly concerns,
we (the parent company and our subsidiaries) may be subject to the risks of uncertainty of any future actions of the PRC government in
this regard including the risk that we inadvertently conclude that such approvals are not required, that applicable laws, regulations
or interpretations change such that we are required to obtain approvals in the future, or that the PRC government could disallow our holding
company structure, which would likely result in a material change in our operations, including our ability to continue our existing holding
company structure, carry on our current business, accept foreign investments, and offer or continue to offer securities to our investors.
These adverse actions would likely cause the value of our common stock to significantly decline or become worthless. We may also be subject
to penalties and sanctions imposed by the PRC regulatory agencies, including the Chinese Securities Regulatory Commission, if we fail
to comply with such rules and regulations, which would likely adversely affect the ability of the Company’s securities to continue
to trade on the Over-the-Counter Bulletin Board, which would likely cause the value of our securities to significantly decline or become
worthless. For a detailed description of the risks facing the Company associated with our operations in Hong Kong, please refer to “Risk
Factors – Risk Relating to Doing Business in Hong Kong and PRC.”

Overview

Summary Financial Information

The tables and information below are derived from
our audited consolidated financial statements as of December 31, 2025 and 2024.

December 31,

2025
December 31,

2024

Financial Summary

Cash and Cash Equivalents
$263,147
$1,554

Total Assets
18,320,261
18,065,751

Total Liabilities
4,260,812
3,978,136

Total Stockholders’ Equity
$14,059,449
$14,087,615

Description of Business

We have developed and operated an online rental
classified platform named ECrent.com, which provides a marketplace for individuals and companies to view, list and search for rental products
and services.

Our mission is to become the largest, most extensive
sharing economy network, allowing individuals and companies to view, list and search for rental products and services on the platform,
creating the conditions for collaborative consumption. Collaborative consumption is the trigger for more sustainable business and consumer
practices that will protect the planet’s well-being as well as generate an entire class of new business opportunities based on the
sharing economy ecosystem.

Our model is designed to bring sustainability, entrepreneurship and
sharing together.

3

We operate an online platform, www.ecrent.com,
which connects owners (businesses and individuals) and consumers in a robust growing community. The platform consists of a set of web
portals and mobile applications which facilitate the online search for a wide and expanding range of rental products and services. The
ECrent platform is designed to enable members of the rapidly growing global community to seek and rent items everywhere worldwide. The
highly scalable ECrent platform is designed to consolidate all sharing and rental information (supply side) from all geographies into
one single source, across multiple categories, and then rebroadcast available rental supply to the demand side. The ECremt platform is
coded using advanced algorithms which leverage the central database to provide greater convenience to users through an intelligent matching
system. The intelligent matching system incorporates specific product and/or service criteria, product/service pairings, geography and
browsing behaviors. ECrent believes these features form the basis for a more comprehensive and extensive user experience than is otherwise
available from well-known, first generation, single purpose sharing economy businesses such as Uber and Airbnb.

After proof of concept by our ECrent Worldwide
in other markets, notably Asia and selected regions of Europe, we started operations in the United States in mid-spring 2016 after obtaining
a license to use our ECrent Worldwide’s software and trademark. Among the most significant findings, we learned that companies across
all segments covet highly targeted and active markets, which historically were believed to generate a greater rate of investment. We believe
the demand side is and will be dominated by environmentally and socially conscious users, which will be considered a targeted and active
market that will make the platform more attractive and valuable.

PwC’s accompanying survey showed that 44%
of U.S. adults are familiar with the sharing economy; 18% of U.S. adults say they have participated in the sharing economy as a consumer;
and 7% say they have participated as a provider. Based on the PwC research, the global sharing and rental market would generate a potential
revenue opportunity worth a total of $670 billion by 2025.

We believe ECrent is uniquely positioned to capitalize
on these trends, and the groundwork has laid in the course of the soft launch will help to achieve the goal to lead the sharing economy
development. While the traditional purchase-based consumer discretionary companies have mostly utilitarian relationships with their customers,
sharing economy participants are passionate about social responsibility, environmentalism and are committed to leading more sustainable
lives. This commitment, fortified by continued momentum, will allow us to build a more captive, engaged, true community of users.

The ECrent extensive and scalable platform is
engineered to serve the business-to-business, business-to-consumer, and consumer-to-consumer market segments. By covering across these
multiple segments positions ECrent for balanced growth regardless of macro-economic conditions as we will not rely on a single market.
We envision the strategy will also provide us with ample opportunity to further lead the market by regularly introducing new features,
functions, categories, and pricing.

We believe businesses will find the ECrent platform
highly appealing because it will allow them to monetize unused or little used assets as well as expand their business by opening up new
channels created by the sharing economy. In addition, we believe their affiliation with us will allow these companies to reinforce their
brand to consumers and investors. A study published by MIT Sloan Management Review and Boston Consulting Group in May 2016 (the “MIT
BCG Study”) found that 60% of investment firm board members are willing to divest from companies with poor sustainability performance
and 75% feel increased operational efficiency often accompanies sustainability progress. By contrast, this same study revealed that only
60% of the 3,000 executives and managers surveyed have a sustainability strategy in place, while only 25% can present a clear sustainability
business case. We believe the ECrent platform will be a highly cost effective vehicle for closing this significant gap between companies
and the markets they serve as well as their investors on the basis that our fully branded microsite will provide a cost-effective vehicle
for them to develop and implement improved sustainability performance to meet the needs of sustainability conscious investors, notably
building awareness and focus on tangible and measureable sustainability (business) outcomes.

4

The ECrent revenue model is to charge only the
supply side; demand side registrants are not subject to any fee in the present model. Businesses or individuals can either pay to post
a single item or service just as they would for a classified ad or they can post an unlimited number of items as well as brand themselves
through an online rental store (microsite) on the ECrent platform. Microsites represent a recurring revenue model, offering a value proposition
beyond renting items to other businesses or individuals. The MIT/BCG Study included steps business leaders could take to meet the needs
of sustainability-conscious investors, notably building greater awareness and focus on tangible and measurable sustainability (business)
outcomes. We believe the ECrent platform will be an ideal cost-effective vehicle for meeting these objectives.

The ECrent business is an emerging company in
an emerging field. Accordingly, the approach to the market seeks to exploit early market entry opportunities in the sharing economy with
a sense-and-respond strategy within our growing community. In the second fully operational phase we will employ both in-house sales professionals
and engage market channel partners to solicit business from supply side. We will also build a team of Community Relations specialists
who will cultivate tight relationships with users for by soliciting user feedback for ongoing improvements to the platform and expansion.
We believe aggressive marketing and strategic partnerships with various agencies, such as marketing firms and trade associations will
further propel our business once fully operational.

Revenue and User Model

ECrent revenue will be derived from online item
postings. We do not charge any fees based on transaction value nor do we plan to do so in the near future. Set forth below is the current
listing fee arrangements, which fees are to be paid prior to posting:

1.
A monthly fee of HK$50,000 for the advertisement posting (unlimited basis); and

2.
Online rental stores, or microsite for $2,500 per year.

The microsite is an enhanced online advertising
package that allows for unlimited number of postings for a defined period of time, and a personalized online web storefront, providing
customers with unique branding opportunities. We believe our microsites will represent a recurring revenue model as it will not be cost
effective for the users to terminate our services once they have expended efforts to design and promote their microsites and they have
received reoccurring traffic from their customers.

In addition, the company provides rental services
on some rare tools/items and venue locations in Hong Kong.

Intellectual Property

We develop and own all intellectual properties
and knowhow to develop and operate the whole ECrent.com platform, which is fully owned and controlled by the group.

Employees

As of December 31, 2025,
we had two employees and several consultants who are engaged with us either individually or as a business entity.

Properties

Our executive offices are located at No. 85 Castle
Peak Road, Castle Peak Bay, Tuen Mun, N.T., Hong Kong, China. Our telephone number is +852 3583-2186.

We do not own any real estate or other physical properties.

Government and Industry Regulations

Governing Regulations

Sharing Economy International Inc. is a Nevada
corporation with operating businesses located in Hong Kong. As such, the parent holding company, Sharing Economy International Inc. is
subject to the laws and regulations of the United States of America while our operating businesses are subject to the laws and regulations
of Hong Kong and PRC, as applicable, including labor, occupational safety and health, contracts, tort and intellectual property laws.
Furthermore, we need to comply with the rules and regulations of Hong Kong and PRC governing the data usage and regular terms of service
applicable to our potential customers or clients. As the information of our potential customers or clients are preserved in both Hong
Kong and PRC, we need to comply with the Hong Kong Personal Data (Privacy) Ordinance.

If PRC authorities reinterpret PRC laws to apply
to Hong Kong companies, we may become subject to the laws and regulations of China governing businesses in general, including labor, occupational
safety and health, contracts, tort and intellectual property. We may also become subject to foreign exchange regulations that might limit
our ability to convert foreign currency into Renminbi (“RMB”), acquire any other PRC companies, establish VIEs in the PRC,
or make dividend payments from any future WFOEs to us.

5

Environmental Regulations

Environmental commitments
from the global communities will continue to help the development of sharing economy businesses in the coming years.

Business Licenses

We believe our sharing
economy businesses are properly licensed with the appropriate government entities.

Employment Ordinance

Hong Kong

The Employment Ordinance is the main piece of
legislation governing conditions of employment in Hong Kong since 1968. It covers a comprehensive range of employment protection and benefits
for employees, including Wage Protection, Rest Days, Holidays with Pay, Paid Annual Leave, Sickness Allowance, Maternity Protection, Statutory
Paternity Leave, Severance Payment, Long Service Payment, Employment Protection, Termination of Employment Contract, Protection Against
Anti-Union Discrimination. In addition, every employer must take out employees’ compensation insurance to protect the claims made
by employees in respect of accidents occurred during the course of their employment.

An employer must also comply with all legal obligations
under the Mandatory Provident Fund Schemes Ordinance, (CAP485). These include enrolling all qualifying employees in MPF schemes and making
MPF contributions for them. Except for exempt persons, employer should enroll both full-time and part-time employees who are at least
18 but under 65 years of age in an MPF scheme within the first 60 days of employment. The 60-day employment rule does not apply to casual
employees in the construction and catering industries. Pursuant to the said Ordinance, we are required to make MPF contributions for our
Hong Kong employees once every contribution period (generally the wage period within 1 month). Employers and employees are each required
to make regular mandatory contributions of 5% of the employee’s relevant income to an MPF scheme, subject to the minimum and maximum
relevant income levels. For a monthly-paid employee, the minimum and maximum relevant income levels are HK$7,100 and HK$30,000 respectively.

China

Depending upon the political climate, we may also
become subject to the laws and regulations of China governing businesses in general, including labor, occupational safety and health,
contracts, tort and intellectual property. We may also become subject to foreign exchange regulations might limit our ability to convert
foreign currency into Renminbi, acquire PRC companies, or make dividend payments to SEII.

PRC Regulations on Tax

Enterprise Income Tax

The Enterprise Income Tax Law of the People’s
Republic of China (the “EIT Law”) was promulgated by the Standing Committee of the National People’s Congress on March 16,
2007 and became effective on January 1, 2008, and was later amended on February 24, 2017. The Implementation Rules of the
EIT Law (the “Implementation Rules”) were promulgated by the State Council on December 6, 2007 and became effective on
January 1, 2008. According to the EIT Law and the Implementation Rules, enterprises are divided into resident enterprises and non-resident
enterprises. Resident enterprises shall pay enterprise income tax on their incomes obtained in and outside the PRC at the rate of 25%.
Non-resident enterprises setting up institutions in the PRC shall pay enterprise income tax on the incomes obtained by such institutions
in and outside the PRC at the rate of 25%. Non-resident enterprises with no institutions in the PRC, and non-resident enterprises whose
incomes having no substantial connection with their institutions in the PRC, shall pay enterprise income tax on their incomes obtained
in the PRC at a reduced rate of 10%.

The Arrangement between the PRC and Hong Kong
Special Administrative Region for the Avoidance of Double Taxation the Prevention of Fiscal Evasion with respect to Taxes on Income (the
“Arrangement”) was promulgated by the State Administration of Taxation (“SAT”) on August 21, 2006 and came
into effect on December 8, 2006. According to the Arrangement, a company incorporated in Hong Kong will be subject to withholding
tax at the lower rate of 5% on dividends it receives from a company incorporated in the PRC if it holds a 25% interest or more in the
PRC company. The Notice on the Understanding and Identification of the Beneficial Owners in the Tax Treaty (the “Notice”)
was promulgated by SAT and became effective on October 27, 2009. According to the Notice, a beneficial ownership analysis will be
used based on a substance-over-form principle to determine whether or not to grant tax treaty benefits.

6

In April 2009, the Ministry of Finance, or
MOF, and SAT jointly issued the Notice on Issues Concerning Process of Enterprise Income Tax in Enterprise Restructuring Business, or
Circular 59. In December 2009, SAT issued the Notice on Strengthening Administration of Enterprise Income Tax for Share Transfers
by Non-PRC Resident Enterprises, or Circular 698. Both Circular 59 and Circular 698 became effective retroactively as of
January 2008. In February 2011, SAT issued the Notice on Several Issues Regarding the Income Tax of Non-PRC Resident Enterprises,
or SAT Circular 24, effective April 2011. By promulgating and implementing these circulars, the PRC tax authorities have enhanced
their scrutiny over the direct or indirect transfer of equity interests in a PRC resident enterprise by a non-resident enterprise.

Under Circular 698, where a non-resident enterprise
conducts an “indirect transfer” by transferring the equity interests of a PRC “resident enterprise” indirectly
by disposing of the equity interests of an overseas holding company, the non-resident enterprise, being the transferor, may be subject
to PRC enterprise income tax, if the indirect transfer is considered to be an abusive use of company structure without reasonable commercial
purposes. As a result, gains derived from such indirect transfer may be subject to PRC tax at a rate of up to 10%. Circular 698 also provides
that, where a non-PRC resident enterprise transfers its equity interests in a PRC resident enterprise to its related parties at a price
lower than the fair market value, the relevant tax authority has the power to make a reasonable adjustment to the taxable income of the
transaction.

In February 2015, the SAT issued Circular 7 to
replace the rules relating to indirect transfers in Circular 698. Circular 7 has introduced a new tax regime that is significantly different
from that under Circular 698. Circular 7 extends its tax jurisdiction to not only indirect transfers set forth under Circular 698 but
also transactions involving transfer of other taxable assets, through the offshore transfer of a foreign intermediate holding company.
In addition, Circular 7 provides clearer criteria than Circular 698 on how to assess reasonable commercial purposes and has introduced
safe harbors for internal group restructurings and the purchase and sale of equity through a public securities market. Circular 7 also
brings challenges to both the foreign transferor and transferee (or other person who is obligated to pay for the transfer) of the taxable
assets. Where a non-resident enterprise conducts an “indirect transfer” by transferring the taxable assets indirectly by disposing
of the equity interests of an overseas holding company, the non-resident enterprise being the transferor, or the transferee, or the PRC
entity which directly owned the taxable assets may report to the relevant tax authority such indirect transfer. Using a “substance
over form” principle, the PRC tax authority may disregard the existence of the overseas holding company if it lacks a reasonable
commercial purpose and was established for the purpose of reducing, avoiding or deferring PRC tax. As a result, gains derived from such
indirect transfer may be subject to PRC enterprise income tax, and the transferee or other person who is obligated to pay for the transfer
is obligated to withhold the applicable taxes, currently at a rate of 10% for the transfer of equity interests in a PRC resident enterprise.

On October 17, 2017, the SAT issued a Notice
Concerning Withholding Income Tax of Non-Resident Enterprise, or SAT Notice No. 37, which abolishes Circular 698 and certain
provisions of Circular 7. SAT Notice No. 37 reduces the burden of the withholding obligator, such as revocation of contract filing
requirements and tax liquidation procedures, strengthens the cooperation of tax authorities in different places, and clarifies the calculation
of tax payable and mechanism of foreign exchange.

Value-added Tax

Pursuant to the Provisional Regulations on Value-added
Tax of the PRC, or the VAT Regulations, which were promulgated by the State Council on December 13, 1993, took effect on January 1, 1994,
and were amended on November 10, 2008, February 6, 2016, and November 19, 2017, respectively, and the Rules for the Implementation of
the Provisional Regulations on Value-added Tax of the PRC, which were promulgated by the MOF on December 25, 1993, and were amended on
December 15, 2008, and October 28, 2011, respectively, entities and individuals that sell goods or labor services of processing, repair
or replacement, sell services, intangible assets, or immovables, or import goods within the territory of the People’s Republic of
China are taxpayers of value-added tax. The VAT rate is 17% for taxpayers selling goods, labor services, or tangible movable property
leasing services or importing goods, except otherwise specified; 11% for taxpayers selling services of transportation, postal, basic telecommunications,
construction and lease of immovable, selling immovable, transferring land use rights, selling and importing other specified goods including
fertilizers; 6% for taxpayers selling services or intangible assets.

According to the Notice on the Adjustment to the
Value-added Tax Rates issued by the SAT and the MOF on April 4, 2018, where taxpayers make VAT taxable sales or import goods, the applicable
tax rates shall be adjusted from 17% to 16% and from 11% to 10%, respectively. Subsequently, the Notice on Policies for Deepening Reform
of Value-added Tax was issued by the SAT, the MOF and the General Administration of Customs on March 30, 2019 and took effective on April
1, 2019, which further adjusted the applicable tax rate for taxpayers making VAT taxable sales or importing goods. The applicable tax
rates shall be adjusted from 16% to 13% and from 10% to 9%, respectively.

7

Dividend Withholding Tax

The Enterprise Income Tax Law provides that since
January 1, 2008, an income tax rate of 10% will normally be applicable to dividends declared to non-PRC resident investors that do
not have an establishment or place of business in the PRC, or that have such establishment or place of business but the relevant income
is not effectively connected with the establishment or place of business, to the extent such dividends are derived from sources within
the PRC.

PRC Laws and Regulations on Employment and
Social Welfare

Labor Law of the PRC

Pursuant to the Labor Law of the PRC, which was
promulgated by the Standing Committee of the NPC on July 5, 1994 with an effective date of January 1, 1995 and was last amended
on August 27, 2009 and the Labor Contract Law of the PRC, which was promulgated on June 29, 2007, became effective on January 1,
2008 and was last amended on December 28, 2012, with the amendments coming into effect on July 1, 2013, enterprises and institutions
shall ensure the safety and hygiene of a workplace, strictly comply with applicable rules and standards on workplace safety and hygiene
in China, and educate employees on such rules and standards. Furthermore, employers and employees shall enter into written employment
contracts to establish their employment relationships. Employers are required to inform their employees about their job responsibilities,
working conditions, occupational hazards, remuneration and other matters with which the employees may be concerned. Employers shall pay
remuneration to employees on time and in full accordance with the commitments set forth in their employment contracts and with the relevant
PRC laws and regulations. Our Hong Kong subsidiary currently does not comply with PRC laws and regulations, but complies with Hong Kong
laws and regulations.

Social Insurance and Housing Fund

Pursuant to the Social Insurance Law of the
PRC, which was promulgated by the Standing Committee of the NPC on October 28, 2010 and became effective on July 1, 2011, employers
in the PRC shall provide their employees with welfare schemes covering basic pension insurance, basic medical insurance, unemployment
insurance, maternity insurance, and occupational injury insurance. Our Hong Kong subsidiary has not deposited the social insurance fees
in full for all the employees in compliance with the relevant regulations. We may be ordered by the social security premium collection
agency to make or supplement contributions within a stipulated period, and shall be subject to a late payment fine computed from the due
date at the rate of 0.05% per day; where payment is not made within the stipulated period, the relevant administrative authorities shall
impose a fine ranging from one to three times the amount of the amount in arrears. Our Hong Kong subsidiary has not deposited the social
insurance fees as required by relevant regulations.

In accordance with the Regulations on Management
of Housing Provident Fund, which were promulgated by the State Council on April 3, 1999 and last amended on March 24, 2002,
employers must register at the designated administrative centers and open bank accounts for depositing employees’ housing funds.
Employers and employees are also required to pay and deposit housing funds, with an amount no less than 5% of the monthly average salary
of the employee in the preceding year in full and on time. Our subsidiaries have not registered at the designated administrative centers
nor opened bank accounts for depositing employees’ housing funds. They also have not deposited employees’ housing funds. Our
subsidiaries may be ordered by the housing provident fund management center to complete the registration formalities, open bank accounts,
make the payment and deposit within a prescribed time limit if they become subject to PRC laws. Failing to register or open bank accounts
at the expiration of the time limit could result in fines of not less than RMB10,000 nor more than RMB50,000. And an application may be
made to a people’s court for compulsory enforcement if payment and deposit has not been made after the expiration of the time limit.

PRC Regulations Relating to Foreign Exchange

General Administration of Foreign Exchange

The principal regulation governing foreign currency
exchange in the PRC is the Administrative Regulations of the PRC on Foreign Exchange (the “Foreign Exchange Regulations”),
which were promulgated on January 29, 1996, became effective on April 1, 1996 and were last amended on August 5, 2008.
Under these rules, Renminbi is generally freely convertible for payments of current account items, such as trade- and service-related
foreign exchange transactions and dividend payments, but not freely convertible for capital account items, such as capital transfer, direct
investment, investment in securities, derivative products or loans unless prior approval by competent authorities for the administration
of foreign exchange is obtained. Under the Foreign Exchange Regulations, foreign-invested enterprises in the PRC may purchase foreign
exchange without the approval of SAFE to pay dividends by providing certain evidentiary documents, including board resolutions, tax certificates,
or for trade- and services-related foreign exchange transactions, by providing commercial documents evidencing such transactions.

8

Circular No. 37 and Circular No. 13

Circular 37 was released by SAFE on July 4,
2014 and abolished Circular 75 which had been in effect since November 1, 2005. Pursuant to Circular 37, a PRC resident should apply
to SAFE for foreign exchange registration of overseas investments before it makes any capital contribution to a special purpose vehicle,
or SPV, using his or her legitimate domestic or offshore assets or interests. SPVs are offshore enterprises directly established or indirectly
controlled by domestic residents for the purpose of investment and financing by utilizing domestic or offshore assets or interests they
legally hold. Following any significant change in a registered offshore SPV, such as capital increase, reduction, equity transfer or swap,
consolidation or division involving domestic resident individuals, the domestic individuals shall amend the registration with SAFE. Where
an SPV intends to repatriate funds raised after completion of offshore financing to the PRC, it shall comply with relevant PRC regulations
on foreign investment and foreign debt management. A foreign-invested enterprise established through return investment shall complete
relevant foreign exchange registration formalities in accordance with the prevailing foreign exchange administration regulations on foreign
direct investment and truthfully disclose information on the actual controller of its shareholders.

If any shareholder who is a PRC resident (as determined
by the Circular No. 37) holds any interest in an offshore SPV and fails to fulfil the required foreign exchange registration with the
local SAFE branches, the PRC subsidiaries of that offshore SPV may be prohibited from distributing their profits and dividends to their
offshore parent company or from carrying out other subsequent cross-border foreign exchange activities. The offshore SPV may also be restricted
in its ability to contribute additional capital to its PRC subsidiaries. Where a domestic resident fails to complete relevant foreign
exchange registration as required, fails to truthfully disclose information on the actual controller of the enterprise involved in the
return investment or otherwise makes false statements, the foreign exchange control authority may order them to take remedial actions,
issue a warning, and impose a fine of less than RMB 300,000 on an institution or less than RMB 50,000 on an individual.

Circular 13 was issued by SAFE on February 13,
2015, and became effective on June 1, 2015. Pursuant to Circular 13, a domestic resident who makes a capital contribution to an SPV
using his or her legitimate domestic or offshore assets or interests is no longer required to apply to SAFE for foreign exchange registration
of his or her overseas investments. Instead, he or she shall register with a bank in the place where the assets or interests of the domestic
enterprise in which he or she has interests are located if the domestic resident individually seeks to make a capital contribution to
the SPV using his or her legitimate domestic assets or interests; or he or she shall register with a local bank at his or her permanent
residence if the domestic resident individually seeks to make a capital contribution to the SPV using his or her legitimate offshore assets
or interests.

We cannot assure that our PRC beneficial shareholders
have completed registrations in accordance with Circular 37.

Circular 19 and Circular 16

Circular 19 was promulgated by SAFE on March 30,
2015, and became effective on June 1, 2015. According to Circular 19, the foreign exchange capital in the capital account of foreign-invested
enterprises, meaning the monetary contribution confirmed by the foreign exchange authorities or the monetary contribution registered for
account entry through banks, shall be granted the benefits of Discretional Foreign Exchange Settlement (“Discretional Foreign Exchange
Settlement”). With Discretional Foreign Exchange Settlement, foreign capital in the capital account of a foreign-invested enterprise
for which the rights and interests of monetary contribution have been confirmed by the local foreign exchange bureau, or for which book-entry
registration of monetary contribution has been completed by the bank, can be settled at the bank based on the actual operational needs
of the foreign-invested enterprise. The allowed Discretional Foreign Exchange Settlement percentage of the foreign capital of a foreign-invested
enterprise has been temporarily set to be 100%. The Renminbi converted from the foreign capital will be kept in a designated account and
if a foreign-invested enterprise needs to make any further payment from such account, it will still need to provide supporting documents
and to complete the review process with its bank.

Furthermore, Circular 19 stipulates that foreign-invested
enterprises shall make bona fide use of their capital for their own needs within their business scopes. The capital of a foreign-invested
enterprise and the Renminbi it obtained from foreign exchange settlement shall not be used for the following purposes:

●
directly or indirectly used for expenses beyond its business scope or prohibited by relevant laws or regulations;

●
directly or indirectly used for investment in securities unless otherwise provided by relevant laws or regulations;

●
directly or indirectly used for entrusted loan in Renminbi (unless within its permitted scope of business), repayment of inter-company loans (including advances by a third party) or repayment of bank loans in Renminbi that have been sub-lent to a third party; or

●
directly or indirectly used for expenses related to the purchase of real estate that is not for self-use (except for foreign-invested real estate enterprises).

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Circular 16 was issued by SAFE on June 9,
2016. Pursuant to Circular 16, enterprises registered in the PRC may also convert their foreign debts from foreign currency to Renminbi
on a self-discretionary basis. Circular 16 provides an integrated standard for conversion of foreign exchange capital items (including
but not limited to foreign currency capital and foreign debts) on a self-discretionary basis applicable to all enterprises registered
in the PRC. Circular 16 reiterates the principle that an enterprise’s Renminbi capital converted from foreign currency-denominated
capital may not be directly or indirectly used for purposes beyond its business scope or purposes prohibited by PRC laws or regulations,
and such converted Renminbi capital shall not be provided as loans to non-affiliated entities.

Our PRC subsidiary’s distributions to their
offshore parents are required to comply with the requirements as described above.

PRC Share Option Rules

Under the Administration Measures on Individual
Foreign Exchange Control issued by the PBOC on December 25, 2006, all foreign exchange matters involved in employee share ownership plans
and share option plans in which PRC citizens participate require approval from SAFE or its authorized branch. Pursuant to SAFE Circular
37, PRC residents who participate in share incentive plans in overseas non-publicly-listed companies may submit applications to SAFE or
its local branches for the foreign exchange registration with respect to offshore special purpose companies. In addition, under the Notices
on Issues concerning the Foreign Exchange Administration for Domestic Individuals Participating in Share Incentive Plans of Overseas Publicly-Listed
Companies, or the Share Option Rules, issued by SAFE on February 15, 2012, PRC residents who are granted shares or share options by companies
listed on overseas stock exchanges under share incentive plans are required to (i) register with SAFE or its local branches, (ii) retain
a qualified PRC agent, which may be a PRC subsidiary of the overseas listed company or another qualified institution selected by the PRC
subsidiary, to conduct the SAFE registration and other procedures with respect to the share incentive plans on behalf of the participants,
and (iii) retain an overseas institution to handle matters in connection with their exercise of share options, purchase and sale of shares
or interests and funds transfers.

PRC Regulation of Dividend Distributions

The principal laws, rules and regulations governing
dividend distributions by foreign-invested enterprises in the PRC are the Company Law of the PRC, as amended, the Wholly Foreign-owned
Enterprise Law and its implementation regulations, the Chinese-foreign Cooperative Joint Venture Law and its implementation regulations,
and the Chinese-foreign Equity Joint Venture Law and its implementation regulations. Under these laws, rules and regulations, foreign-invested
enterprises may pay dividends only out of their accumulated profit, if any, as determined in accordance with PRC accounting standards
and regulations. Both PRC domestic companies and wholly-foreign owned PRC enterprises are required to set aside a general reserve of at
least 10% of their after-tax profit, until the cumulative amount of such reserve reaches 50% of their registered capital. A PRC company
is not permitted to distribute any profits until any losses from prior fiscal years have been offset. Profits retained from prior fiscal
years may be distributed together with distributable profits from the current fiscal year.

REPORTS TO SECURITY HOLDERS

Upon the effective date of this Registration Statement,
we will become subject to the informational requirements of the Securities Exchange Act of 1934, as amended, and accordingly, will file
current and periodic reports, proxy statements and other information with the Securities and Exchange Commission, or the Commission. Information
that the Company previously publicly disclosed was made through the OTC Disclosure and News Service and are available on the OTC Markets
Group’s website at www.otcmarkets.com. With respect to disclosures filed or furnished to the Commission, you may obtain copies of
our prior and future reports from the Commission’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549, or on the
SEC’s website, at www.sec.gov. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
We currently do not have an internet website, but will also make available free of charge electronic copies of our filings upon request.

NEAR-TERM REQUIREMENTS FOR ADDITIONAL CAPITAL

We believe that we will require approximately
$2 million over the next 18-24 months to implement our business plan. For the immediate future, we intend to finance our business expansion
efforts through loans from existing shareholders or financial institutions.

AVAILABLE INFORMATION

Access to all of our Securities and Exchange Commission
(“SEC”) filings, including our Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and
amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), is provided, free of charge, on our website (www.luduson.com) as soon as reasonably practicable after
such reports are electronically filed with, or furnished to, the SEC.

Empire Stock Transfer Inc. located at 1859 Whitney
Mesa Dr., Henderson, Nevada 89014, telephone number (702) 818-5898, serves as our stock transfer agent.

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