ITEM 1A
RISK FACTORS
Risks Related to Our Company
Since completing our business transformation in 2025 , our new business has generated revenue and achieved profitability, but still faces risks of sustained growth and market competition.
Prior to the cessation of our legacy business, our principal assets, product offerings and business primarily consisted of providing consumer networking and intelligent software services. After the closing of the transactions under the February 18, 2025 SPA, we transitioned to becoming a digital service provider, and our current business operations focus on integrating AI and data analytics into content creation and brand management. In 2025, we completed our strategic transformation from a legacy networking hardware business to a digital service provider. As of the end of 2025, we completely ceased our legacy operations, with our current business focused on three core areas: digital content services, software development services, and digital authentication services. In 2025, we successfully launched our new business, generating service fees of $6.2 million, and achieving profitability. However, our new business is still in the early stages of development and faces risks such as intensified market competition, rising customer acquisition costs, and accelerated technological iteration. There can be no assurance that we will be able to maintain our current growth rate and profitability or that our current business model will prove to be sustainable over the long term.
Our limited operating history in our new lines of business makes it difficult to evaluate our prospects and increases the risk of investment.
We have a limited operating history in our current digital services business. Although we generated revenue and achieved profitability in 2025, our historical results in our legacy business are not indicative of our future performance. Investors should consider our prospects in light of the risks and uncertainties frequently encountered by companies in new and rapidly evolving markets, including risks related to customer adoption, pricing models, technological change, and competitive dynamics. If our assumptions regarding market demand or our growth strategy prove incorrect, our business, financial condition and results of operations could be materially adversely affected.
We may fail to execute our business plan successfully .
Our stockholders may lose their investment if we fail to execute our business plan successfully. Our prospects must be considered in light of certain risks and uncertainties, including but not limited to, competition, changes in client preferences, cybersecurity risks, our ability to attract and retain qualified personnel, and general economic conditions. We cannot guarantee that we will be successful in executing our business plan. If we fail to execute our business plan successfully, our stockholders may lose their entire investment.
The Company may suffer from a lack of availability of additional funds.
We expect to have ongoing needs for working capital in order to fund operations and to continue to expand our operations. To that end, we may be required to raise additional funds through equity or debt financing. However, there can be no assurance that we will be successful in securing additional capital on favorable terms, if at all. If we are successful, whether the terms are favorable or unfavorable, there is a potential that we will fail to comply with the terms of such financing, which could result in severe liability for our Company. If we are unsuccessful, we may need to (a) initiate cost reductions; (b) forego business development opportunities; (c) seek extensions of time to fund liabilities; or (d) seek protection from creditors. In addition, any future sale of our equity securities would dilute our existing stockholders and could be at prices substantially below prices at which our shares currently trade. Our inability to raise capital could require us to significantly curtail or terminate our operations altogether. We may seek to increase our cash reserves through the sale of additional equity or debt securities. The sale of convertible debt securities or additional equity securities could result in additional and potentially substantial dilution to our stockholders. The incurrence of indebtedness would result in increased debt service obligations and could result in operating and financing covenants that would restrict our operations and liquidity. In addition, our ability to obtain additional capital on acceptable terms is subject to a variety of uncertainties.
In addition, if we are unable to generate adequate cash from operations, and if we are unable to find sources of funding, it may be necessary for us to sell all or a portion of our assets, enter into a business combination, or reduce or eliminate operations. These possibilities, to the extent available, may be on terms that result in significant dilution to our stockholders or that result in our stockholders losing all of their investment in us.
Our acquisition strategy creates risks for our business.
We expect that we will pursue acquisitions of other businesses, assets or technologies to grow our business. We may fail to identify attractive acquisition candidates or we may be unable to reach acceptable terms for future acquisitions. We might not be able to raise enough cash to compete for attractive acquisition targets. If we are unable to complete acquisitions in the future, our ability to grow our business will be impaired.
We may pay for acquisitions by issuing additional shares of our Common Stock, which would dilute our stockholders, or by issuing debt, which could include terms that restrict our ability to operate our business or pursue other opportunities and subject us to meaningful debt service obligations. We may also use significant amounts of cash to complete acquisitions. To the extent that we complete acquisitions in the future, we likely will incur future depreciation and amortization expenses associated with the acquired assets. We may also record significant amounts of intangible assets, including goodwill, which could become impaired in the future. Acquisitions involve numerous other risks, including:
difficulties integrating the operations, technologies, services and personnel of the acquired companies;
challenges maintaining our internal standards, controls, procedures and policies;
diversion of management’s attention from other business concerns;
over-valuation of acquired companies or assets;
litigation resulting from activities of the acquired company, including claims from terminated employees, customers, former stockholders and other third parties;
insufficient revenues to offset increased expenses associated with the acquisitions and unanticipated liabilities of the acquired companies;
insufficient indemnification or security from the selling parties for legal liabilities that we may assume in connection with our acquisitions;
entering markets in which we have no prior experience and may not succeed;
risks associated with foreign acquisitions, such as communication and integration problems resulting from geographic dispersion and language and cultural differences, compliance with foreign laws and regulations and general economic or political conditions in other countries or regions;
potential loss of key employees of the acquired companies; and
impairment of relationships with clients and employees of the acquired companies or our clients and employees as a result of the integration of acquired operations and new management personnel.
Our reliance on AI and data analytics exposes us to unique operational and ethical risks.
Our current business model focuses on integrating AI into content creation and brand management. AI technologies are complex and rapidly evolving. We may face risks related to biased algorithms, “hallucinations” in AI-generated content, or the inadvertent use of intellectual property in our training models. If our AI solutions produce inaccurate, offensive, or infringing content, our reputation could be severely damaged, and we could be subject to legal liability. Furthermore, as AI regulations emerge globally, we may incur significant costs to ensure compliance with new laws governing AI transparency and accountability.
Cybersecurity incidents or data breaches could disrupt our operations and harm our reputation.
Our business involves the collection, processing, storage, and transmission of proprietary and potentially sensitive data. We rely on internal systems and third-party service providers, including cloud-based infrastructure, to support our operations. Cybersecurity incidents, including hacking, phishing, ransomware attacks, or insider misconduct, could result in unauthorized access to, disclosure of, or loss of data. Any such incident could result in regulatory investigations, litigation, indemnity obligations, reputational damage, and significant remediation costs. In addition, increased regulatory scrutiny regarding data privacy and cybersecurity may result in additional compliance costs. A significant cybersecurity breach could materially adversely affect our business, financial condition, and results of operations.
We may be unable to scale our operations successfully.
Our growth strategy will place significant demands on our management and financial, administrative and other resources. Operating results will depend substantially on the ability of our officers and key employees to manage changing business conditions and to implement and improve our financial, administrative and other resources. If we are unable to respond to and manage changing business conditions, or the scale of our operations, then the quality of our services, our ability to retain key personnel, and our business could be harmed.
Our success depends on the continued efforts of our senior management and key technical personnel.
Our success depends on the continued service of our senior management, as well as the continued contributions of key technical personnel supporting our MCN operations, AI-driven content creation, and blockchain-based digital authentication. As we operate at the forefront of next-generation digital services, the demand for qualified professionals with specialized skills in these emerging fields is exceptionally high, and competition for such talent is intense. We invest significant resources in recruiting and training our employees, and the loss of one or more of our executive officers or key technical personnel could delay the development of new offerings, impair our ability to respond to technological advancements, and materially and adversely affect our business, financial condition, and results of operations.
We are subject to stringent and evolving laws and regulations regarding data privacy and cybersecurity.
As a digital service provider focusing on data analytics and digital authentication, we collect, process, and store significant amounts of sensitive data. We are subject to various federal, state, and international laws, such as the GDPR and CCPA, regarding data privacy. Any failure, or perceived failure, by us to comply with these laws, or any security breach resulting in the unauthorized release of data, could result in significant fines, litigation, and a loss of customer trust, which would materially and adversely affect our business.
We may suffer from a lack of liquidity.
By incurring indebtedness, we subject ourselves to increased debt service obligations which could result in operating and financing covenants that would restrict our operations and liquidity. This would impair our ability to hire the necessary senior and support personnel required for our business, as well as carry out our acquisition strategy and other business objectives.
The requirements of remaining a public company may strain our resources and distract our management, which could make it difficult to manage our business.
We are required to comply with various regulatory and reporting requirements, including those required by the SEC. Complying with these reporting and other regulatory requirements is time-consuming and expensive and could have a negative effect on our business, results of operations and financial condition.
We are required to comply with certain provisions of Section 404 of the Sarbanes-Oxley Act of 2002, as amended (the “ Sarbanes-Oxley Act ” ) and if we fail to continue to comply, our business could be harmed, and the price of our securities could decline.
Rules adopted by the SEC pursuant to Section 404 of the Sarbanes-Oxley Act require an annual assessment of internal control over financial reporting, and for certain issuers an attestation of this assessment by the issuer’s independent registered public accounting firm. The standards that must be met for management to assess the internal control over financial reporting as effective are evolving and complex, and require significant documentation, testing, and possible remediation to meet the detailed standards. We expect to incur significant expenses and to devote resources to compliance regarding Section 404 of the Sarbanes-Oxley Act on an ongoing basis. It is difficult for us to predict how long it will take or how costly it will be to complete the assessment of the effectiveness of our internal control over financial reporting for each year and to remediate any deficiencies in our internal control over financial reporting. As a result, we may not be able to complete the assessment and remediation process on a timely basis. We have identified a material weakness in our internal control over financial reporting, as described elsewhere in the Original Form 10-K. Although we are implementing a remediation plan, there can be no assurance that our remediation efforts will be successful. If we are unable to maintain effective internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports, which could materially adversely affect the market price of our Common Stock.
We have identified a material weakness in our internal control over financial reporting, which resulted in our disclosure controls and procedures being ineffective as of December 31, 2025. If we fail to fully remediate this material weakness, our financial reporting could be adversely affected and investor confidence could decline.
In the course of preparing our financial statements for the quarter ended June 30, 2025, management identified a material weakness in our internal control over financial reporting due to insufficient accounting staffing during the Company’s restructuring and new business launch. During the first half of 2025, we did not maintain a sufficient complement of personnel with an appropriate degree of knowledge and experience to fulfill internal control and financial reporting responsibilities. This resulted in reduced review capabilities and prior-period errors, which have since been corrected.
As a result of this material weakness, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of December 31, 2025. Although we have taken steps to remediate the material weakness, including hiring additional qualified accounting personnel with SEC expertise, enhancing review and approval procedures, providing additional training, and implementing ongoing monitoring processes, the material weakness will not be considered remediated until the enhanced controls operate for a sufficient period of time and management has concluded, through testing, that the controls are effective.
If our remediation efforts are not successful, or if additional material weaknesses are identified in the future, we may be unable to conclude that our internal control over financial reporting is effective. This could result in additional errors in our financial statements, future restatements, delays in required filings, regulatory scrutiny, loss of investor confidence, and a decline in the market price of our Common Stock.
Our disclosure controls and procedures were not effective as of December 31, 2025, and if we are unable to maintain effective disclosure controls and procedures in the future, investors may lose confidence in our reported financial information.
As disclosed in the Original Form 10-K, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of December 31, 2025 due to the material weakness in internal control over financial reporting described above. Although we are actively implementing remediation measures, there can be no assurance that these efforts will be successful or that additional deficiencies will not be identified.
Effective disclosure controls and procedures are necessary to ensure that information required to be disclosed in our SEC reports is recorded, processed, summarized, and reported within required time periods. Any failure to maintain effective disclosure controls could result in late filings, inaccurate reporting, regulatory action, or harm to our reputation, which could materially adversely affect our business and the market price of our Common Stock.
Changes in U.S. laws and regulations related to companies with connections to Hong Kong or the PRC could limit our ability to maintain our Nasdaq listing or access U.S. capital markets.
U.S. regulatory authorities, including the SEC and the Public Company Accounting Oversight Board (“PCAOB”), have adopted rules that increase disclosure requirements and regulatory scrutiny of U.S.-listed companies with operations or affiliations in Hong Kong or the PRC. Although we are currently compliant with applicable Nasdaq listing requirements and U.S. securities laws, future legislative or regulatory actions—such as expanded audit inspection requirements, data security reviews, or restrictions under the Holding Foreign Companies Accountable Act—could impose additional compliance burdens or create uncertainty regarding our continued eligibility to list our securities on a U.S. exchange.
If U.S. regulators are unable to inspect or investigate our auditors or operations to their satisfaction, or if future rules impose additional restrictions on companies with international ties, our Common Stock could be subject to trading prohibitions or delisting, which would materially and adversely affect investors.
Economic instability, inflation, global conflicts, or public health crises could adversely affect our business.
Global economic uncertainty, inflationary pressures, rising interest rates, armed conflicts, trade disputes, and public health emergencies could negatively impact customer spending, capital markets activity, and overall business confidence. These macroeconomic and geopolitical conditions may reduce demand for our services, increase our operating costs, disrupt supply chains or third-party service providers, and limit our access to financing. Any prolonged downturn in global or regional economic conditions could materially adversely affect our business, financial condition, and results of operations.
Our financial condition, results of operations and cash flow may be adversely affected by changing economic conditions, including interest rates and inflation, and other factors beyond our control.
In recent years, the global economic market has experienced cyclical or episodic downturns, and worldwide economic conditions remain uncertain and volatile, as a result of current geopolitical conditions including conflicts in the Middle East, the ongoing Russia-Ukraine War and geopolitical tensions between China and Taiwan, instability in the U.S. and global banking systems, a high inflation environment, the imposition of tariffs or other trade barriers and the risk of retaliatory actions or prolonged trade conflict, the downgrading of the U.S.’s credit rating and the possibility of an economic slowdown. A decline in economic conditions, such as a recession, an economic downturn, and/or inflationary conditions in our markets, can adversely and negatively impact our customers and potential customers in a manner that could adversely affect our financial condition, results of operations and cash flow.
Our operations could be adversely impacted by civil unrest, acts of war or terrorism, other criminal activities, infectious disease outbreaks or other unexpected events, including natural disasters, outside our control.
Our operations are always subject to adverse impacts resulting from civil unrest, acts of war, hostilities or acts of terrorism or other criminal activities. Such events may result in a temporary decline in the number of customers who seek our services or in our employees’ ability to perform their job duties. In addition, such events may temporarily interrupt our ability to provide our services. The occurrence of any such event and/or a disruption of our operations as a result may adversely affect our financial condition, results of operations and cash flow.
Risks Related to Doing Business in Hong Kong
Political risks associated with conducting business in Hong Kong and economic instability in Hong Kong may adversely impact our results of operations. Changes in the policies of the PRC government could have a significant impact on the business we conduct in Hong Kong and the profitability of that business.
Our revenue generating operational activities are primarily conducted in Hong Kong. Accordingly, political and economic conditions in Hong Kong and the surrounding region may directly affect our business. Hong Kong is a Special Administrative Region of the PRC, and the basic policies of the PRC regarding Hong Kong are reflected in the Basic Law — the constitutional document for Hong Kong — which provides Hong Kong with a high degree of autonomy and executive, legislative, and independent judicial powers, including that of final adjudication, under the principle of “one country, two systems.” However, there is no assurance that the economic, political, and legal environment in Hong Kong will not change in the future. Because all of our revenue generating operations are primarily based in Hong Kong, any change in such political arrangements may pose an immediate threat to the stability of Hong Kong’s economy, thereby directly and adversely affecting our results of operations and financial position.
Our revenue is susceptible to ongoing incidents or factors that affect the stability of social, economic, and political conditions in Hong Kong. Any severe adverse events may adversely affect the business operations of our Hong Kong operating subsidiary. Such adverse events may include changes in economic conditions and the regulatory environment, social and/or political conditions, civil disturbance or disobedience, and significant natural disasters. Given the relatively small geographic size of Hong Kong, any such incidents may have a widespread effect on the operations of our Hong Kong operating subsidiary, which could in turn materially and adversely affect our business, results of operations, and financial condition. Furthermore, legislative or administrative actions with respect to China-U.S. relations could cause investor uncertainty for affected issuers, including us, and the market price of our Common Stock could be adversely affected.
In addition, economic, political, and legal developments and social conditions in the PRC may significantly affect our business, financial condition, results of operations, and prospects. Policies of the PRC government can have significant effects on economic conditions in mainland China and Hong Kong. While we believe that the PRC will continue to strengthen its economic and trading relationships with foreign countries and that business development in the PRC will continue to follow market forces, we cannot assure you that this will be the case. Our business operations and prospects, financial condition, and results of operations may be adversely affected by changes in PRC government policy, including:
changes in laws, regulations, or their interpretation;
confiscatory taxation;
restrictions on currency conversion, imports, or sources of supply, or on our ability to continue as a for-profit enterprise;
expropriation or nationalization of private enterprises; and
the allocation of resources.
The enactment of the Law of the PRC on Safeguarding National Security in the Hong Kong Special Administrative Region (the “Hong Kong National Security Law”) could adversely impact our Hong Kong operating subsidiary.
On June 30, 2020, the Standing Committee of the PRC National People’s Congress passed the Hong Kong National Security Law. Hong Kong’s Chief Executive promulgated it locally on the same day. The Hong Kong National Security Law defines the duties and government bodies of Hong Kong for safeguarding national security and establishes four categories of offenses — secession, subversion, terrorist activities, and collusion with a foreign country or external elements to endanger national security — along with their corresponding penalties. On July 14, 2020, former U.S. President Donald Trump signed the Hong Kong Autonomy Act (the “HKAA”) into law, authorizing the U.S. administration to impose blocking sanctions against individuals and entities determined to have materially contributed to the erosion of Hong Kong’s autonomy. The HKAA further authorizes secondary sanctions, including blocking sanctions, against foreign financial institutions that knowingly conduct a significant transaction with foreign persons sanctioned under its authority. The imposition of sanctions may directly affect such foreign financial institutions, as well as any third parties or customers dealing with a targeted institution. It is difficult to predict the full impact of the Hong Kong National Security Law and the HKAA on Hong Kong and on companies located in Hong Kong. If our Hong Kong operating subsidiary is determined by competent authorities to be in violation of the Hong Kong National Security Law or the HKAA, our business operations, financial position, and results of operations could be materially and adversely affected.
The enactment of the Safeguarding National Security Ordinance in Hong Kong could further impact our Hong Kong operating subsidiary.
On March 23, 2024, the Legislative Council of Hong Kong passed the Safeguarding National Security Ordinance (the “Article 23 Ordinance”), which came into force on March 23, 2024. The Article 23 Ordinance was enacted pursuant to Article 23 of the Basic Law, which obligated Hong Kong to enact legislation on its own to prohibit acts of treason, secession, sedition, subversion, and theft of state secrets. The Article 23 Ordinance significantly expands the scope of national security-related offenses in Hong Kong beyond those established by the Hong Kong National Security Law of 2020. It creates a broad range of new offenses, including: (i) treason; (ii) insurrection; (iii) sabotage of public infrastructure; (iv) external interference in Hong Kong’s affairs; (v) theft, unlawful disclosure, or possession of state secrets; and (vi) espionage. The Article 23 Ordinance provides for substantial penalties, including imprisonment for up to life for certain offenses.
Certain provisions of the Article 23 Ordinance are drafted broadly and their scope of application in practice remains subject to uncertainty, as the courts of Hong Kong have not yet fully interpreted the new offenses. In particular, the provisions relating to “external interference” and “state secrets” may have broad application and could affect the manner in which our Hong Kong operating subsidiary engages with counterparties, regulators, or service providers outside of Hong Kong or mainland China.
Furthermore, the enactment of the Article 23 Ordinance has attracted international attention and concern, including from the governments of the United States, the United Kingdom, and the European Union. The international response to the Article 23 Ordinance could further affect the perception of Hong Kong as an international financial and business center and could contribute to additional U.S. or international regulatory actions targeting Hong Kong-based entities. If our Hong Kong operating subsidiary is determined to be in violation of the Article 23 Ordinance by competent authorities, or if future interpretations of the ordinance are applied broadly to our business activities, our business operations, financial position, and results of operations could be materially and adversely affected. We cannot predict with certainty how the Article 23 Ordinance will be interpreted and enforced over time, or whether its scope will be extended in ways that may affect our operations.
Our Hong Kong operating subsidiary may be subject to restrictions on paying dividends or making other payments to us, which may restrict our ability to satisfy liquidity requirements, conduct business operations, and pay dividends to holders of our Common Stock. Dividends payable to our foreign investors and gains realized on the sale of shares of our Common Stock by our foreign investors may become subject to PRC taxation.
FiEE, Inc. is a Delaware corporation with its operating subsidiary located in Hong Kong. However, most of our cash is maintained in U.S. dollars. We conduct no other business and, as a result, depend entirely upon our Hong Kong operating subsidiary’s earnings and cash flow. If we decide in the future to pay dividends, our ability, as a holding company, to pay dividends and meet other obligations depends upon the receipt of dividends or other payments from our Hong Kong operating subsidiary. There are currently no restrictions on the transfer of funds between FiEE, Inc. and our Hong Kong operating subsidiary, and no limitations on the ability of our Hong Kong operating subsidiary to issue dividends or other distributions to its overseas stockholders. However, we cannot assure you that PRC government oversight will not be extended to companies operating in Hong Kong, such as our Hong Kong operating subsidiary. There is a possibility that the PRC government could prevent our cash maintained in Hong Kong from leaving or restrict the deployment of such cash into our business or for the payment of dividends. Any such controls or restrictions may adversely affect our ability to finance our cash requirements, service debt, or make dividend or other distributions to our stockholders, and could result in a material adverse change to our business operations, prospects, financial condition, and results of operations, and could cause the value of our Common Stock to significantly decline or become worthless.
The market price of our securities could be adversely affected by heightened tensions between the United States and China.
U.S.-China relations have deteriorated significantly in recent years and continue to evolve rapidly, creating substantial uncertainty for companies with operations or connections to China and Hong Kong. Since 2020, the United States government has enacted a series of laws, executive orders, and regulations targeting Chinese entities and individuals. On June 30, 2020, the Standing Committee of the PRC National People’s Congress issued the Hong Kong National Security Law, and on March 23, 2024, Hong Kong enacted the Safeguarding National Security Ordinance (the “Article 23 Ordinance”). The enactment of each of these laws has been met with significant concern by the U.S. government and has resulted in additional U.S. regulatory action directed at Hong Kong.
On July 14, 2020, former U.S. President Donald Trump signed the Hong Kong Autonomy Act (the “HKAA”) into law, authorizing the U.S. administration to impose blocking sanctions against individuals and entities who are determined to have materially contributed to the erosion of Hong Kong’s autonomy. The HKAA further authorizes secondary sanctions, including the imposition of blocking sanctions, against foreign financial institutions that knowingly conduct a significant transaction with foreign persons sanctioned under this authority. The U.S. government has exercised its HKAA authority on multiple occasions, sanctioning individuals associated with the Hong Kong government and legislature.
Beyond Hong Kong-specific legislation, U.S.-China relations have been further strained by a broad range of additional developments, including: (i) the expansion of the U.S. Entity List under the Export Administration Regulations (the “EAR”) to include numerous Chinese companies and affiliates, restricting U.S. companies from exporting, re-exporting, or transferring certain items to listed entities; (ii) the enactment of the Uyghur Forced Labor Prevention Act; (iii) significant escalation of U.S. tariffs on Chinese imports, including tariff measures imposed or expanded in 2024 and 2025; (iv) U.S. restrictions on investment in certain Chinese technology sectors pursuant to executive orders issued under the International Emergency Economic Powers Act (“IEEPA”); and (v) ongoing Congressional and executive branch scrutiny of Chinese-linked entities operating in U.S. capital markets. The current U.S. administration has signaled a continued focus on restricting Chinese access to U.S. technology, capital markets, and financial infrastructure.
These measures have created increasing uncertainty for companies operating in or connected to Hong Kong and China, including issuers listed on U.S. stock exchanges. We cannot predict whether the U.S. government will take additional actions with respect to China or Hong Kong, or whether additional sanctions, export controls, tariff measures, or other restrictions will be imposed that directly or indirectly affect our Hong Kong operating subsidiary, our ability to access U.S. capital markets, or the trading price of our securities. Furthermore, legislative or administrative actions in respect of Sino-U.S. relations could cause investor uncertainty for affected issuers, including us, and the market price of our securities could be adversely affected.
Our business, financial condition, and results of operations, and/or the value of our Common Stock or our ability to offer or continue to offer securities to investors, may be materially and adversely affected to the extent the laws and regulations of mainland China become applicable to a company such as ours.
We currently have no subsidiaries or operations in mainland China. However, as we operate in Hong Kong, a Special Administrative Region of China, there is no guarantee that if certain existing or future laws of mainland China become applicable to a company such as ours, it will not have a material adverse impact on our business, financial condition, and results of operations and/or our ability to offer or continue to offer securities to investors, any of which may cause the value of such securities to significantly decline or become worthless.
Except for the Basic Law, national laws of the PRC do not apply in Hong Kong unless they are listed in Annex III of the Basic Law and applied locally by promulgation or local legislation. National laws that may be listed in Annex III are currently limited under the Basic Law to those falling within the scope of defense and foreign affairs, as well as other matters outside the limits of Hong Kong’s autonomy. National laws and regulations relating to data protection, cybersecurity, and anti-monopoly matters have not been listed in Annex III and do not apply directly to Hong Kong.
The laws and regulations of the PRC are evolving, and their enactment, interpretation, and implementation involve significant uncertainties. To the extent any mainland China laws and regulations become applicable to us, we may be subject to the risks and uncertainties associated with the PRC legal system, including with respect to the enforcement of laws and the possibility of changes in rules and regulations with little or no advance notice.
We may also become subject to the laws and regulations of mainland China to the extent we commence business and customer-facing operations in mainland China as a result of any future acquisition, expansion, or organic growth.
The HFCA Act and related regulations continue to evolve. Further implementation of, interpretation of, or amendments to the HFCA Act or related regulations, or a PCAOB determination of insufficient access to inspect our auditor, could pose regulatory risks to us and impose restrictions on our operations.
On December 18, 2020, the Holding Foreign Companies Accountable Act (the “HFCA Act”) was signed into law. The HFCA Act has since been subject to amendment by the U.S. Congress and to interpretations and rulemaking by the SEC. On June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act (the “AHFCAA”), which proposed to reduce the period of time for foreign companies to comply with PCAOB audit requirements from three to two consecutive years, thereby reducing the time before the securities of such foreign companies could be prohibited from trading or delisted.
Our auditor, UHY LLP, a U.S.-based independent registered public accounting firm that issues the audit report included elsewhere in the Original Form 10-K, is registered with the PCAOB and subject to regular PCAOB inspection to assess its compliance with applicable professional standards. Our auditor’s most recent PCAOB inspection was conducted in 2025. As of the date of this registration statement, our auditor is not among the firms listed on the PCAOB Determination List issued in December 2021.
On August 26, 2022, the PCAOB announced and executed a Statement of Protocol (the “Protocol”) with the CSRC and the Ministry of Finance of the People’s Republic of China (together, the “PRC Authorities”). The Protocol provides the PCAOB with: (1) sole discretion to select the firms, audit engagements, and potential violations it inspects and investigates, without involvement of Chinese authorities; (2) procedures for PCAOB inspectors and investigators to review complete audit work papers with all information included, and for the PCAOB to retain information as needed; and (3) direct access to interview and take testimony from all personnel associated with the audits it inspects or investigates.
On December 15, 2022, the PCAOB announced its determination in the 2022 HFCA Act Determination Report (the “2022 Report”) that it had secured complete access to inspect and investigate audit firms headquartered in mainland China and Hong Kong during 2022, and the PCAOB Board voted to vacate its prior determinations to the contrary. According to the 2022 Report, this determination was reached after the PCAOB had thoroughly tested compliance with every aspect of the Protocol necessary to establish complete access, including through on-site inspections and investigations conducted in a manner fully consistent with the PCAOB’s methodology and approach in the United States and globally. The PRC Authorities fully assisted and cooperated with the PCAOB in carrying out the inspections and investigations pursuant to the Protocol, and have agreed to continue assisting the PCAOB’s investigations and inspections in the future. The PCAOB may reassess its determinations and issue new determinations consistent with the HFCA Act at any time.
On December 29, 2022, the Consolidated Appropriations Act, 2023 was signed into law, which, among other things, amended the HFCA Act to reduce the number of consecutive years an issuer may be identified as a Commission-Identified Issuer before the SEC must impose an initial trading prohibition on the issuer’s securities from three years to two.
Further developments related to the HFCA Act could create additional uncertainties for our offering. We cannot assure you what further actions the SEC, the PCAOB, or the stock exchanges will take to address these issues, or what impact such actions will have on companies with significant operations in the PRC that have securities listed on a U.S. stock exchange. Furthermore, any additional actions, proceedings, or new rules resulting from efforts to increase U.S. regulatory access to audit information could create uncertainty for investors, adversely affect the market price of our Common Stock, and result in the delisting of our securities if we and our auditor are unable to meet PCAOB inspection requirements. Such a delisting would substantially impair your ability to sell or purchase our Common Stock and would have a negative impact on the price of our Common Stock.
Our Hong Kong operating subsidiary is subject to Hong Kong’s data privacy laws, and any failure to comply with applicable requirements could adversely affect our business.
Our Hong Kong operating subsidiary is subject to the Personal Data (Privacy) Ordinance (Cap. 590) (the “PDPO”), which is administered by the Office of the Privacy Commissioner for Personal Data (the “PCPD”). The PDPO regulates the collection, holding, processing, and use of personal data in Hong Kong through six Data Protection Principles governing data purpose limitation, data accuracy, data retention, data security, openness, and individual access rights. The PDPO was amended in 2021 to introduce criminal liability for doxxing-related offenses, providing the PCPD with investigation and enforcement powers in relation to doxxing conduct, including powers of arrest and search.
In addition to the PDPO, our Hong Kong operating subsidiary must navigate the evolving interplay between Hong Kong’s data privacy regime and the PRC’s data protection and cybersecurity framework, including the PRC Personal Information Protection Law (“PIPL”) and the Cybersecurity Law, to the extent any personal data processed by our subsidiary may be subject to those regimes. While national PRC data laws do not directly apply in Hong Kong pursuant to the Basic Law, the PRC government has indicated an intent to extend data governance oversight, and there is ongoing uncertainty as to the extent to which PRC data regulations may affect Hong Kong-based operators.
Any failure by our Hong Kong operating subsidiary to comply with the PDPO, including any data breach, unauthorized disclosure of personal data, or failure to comply with a data access or correction request, could expose us to regulatory investigation, enforcement action by the PCPD, civil liability, and reputational harm. We cannot assure you that our current data protection practices are or will remain fully compliant with all applicable requirements under the PDPO or any future amendments thereto.
It may be difficult for stockholders to enforce any judgment obtained in the United States against us, which may limit the remedies otherwise available to our stockholders.
As of December 31, 2025, our assets were held across multiple entities: approximately 36% in our U.S. parent company, approximately 41% in our Hong Kong subsidiary, and approximately 23% in our Japan subsidiary. Moreover, some of our current directors and executive officers are Chinese nationals or domiciled in mainland China. All or a substantial portion of their assets are located outside the United States. As a result, it may be difficult for our stockholders to effect service of process within the United States upon our subsidiaries or upon such individuals. In addition, there is uncertainty as to whether the courts of Hong Kong or mainland China would recognize or enforce judgments of U.S. courts obtained against us or our officers and/or directors predicated upon the civil liability provisions of the securities laws of the United States or any state thereof. It is also unclear whether extradition treaties currently in effect between the United States and the PRC would permit effective enforcement of criminal penalties under U.S. federal securities laws against us or our officers and directors.
In addition, the recognition and enforcement of foreign judgments are governed under the PRC Civil Procedures Law. PRC courts may recognize and enforce foreign judgments in accordance with the requirements of the PRC Civil Procedures Law, based either on treaties between China and the country where the judgment was rendered or on principles of reciprocity between jurisdictions. China does not have any treaties or other written arrangements with the United States providing for the reciprocal recognition and enforcement of foreign judgments. Furthermore, pursuant to the PRC Civil Procedures Law, PRC courts will not enforce a foreign judgment against us or our directors and officers if they determine that the judgment violates the basic principles of PRC law or national sovereignty, security, or public interest. As a result, it is uncertain whether and on what basis a PRC court would enforce a judgment rendered by a court in the United States.
Risks Related to Our Common Stock
We have previously failed to comply with Nasdaq’s continued listing requirements, and as a result, our C ommon S tock was suspended from trading on Nasdaq. Although we have resolved these issues and resumed trading, we may face delisting risks in the future, which has had and will continue to have a material effect on us and our stockholders.
We previously faced Nasdaq delisting risk but have resolved all deficiencies and resumed trading. From June 2024 to May 2025, we faced the risk of delisting from Nasdaq. In April 2025, we appointed independent directors and established board committees, resolving governance deficiencies. On May 29, 2025, the Panel determined that the Company is in compliance with listing rules, and our Common Stock resumed trading on Nasdaq on June 2, 2025, under the symbol “FIEE.” As of December 31, 2025, we have satisfied all applicable Nasdaq continued listing requirements.
However, a Nasdaq “Panel Monitor” has been implemented under Nasdaq Listing Rule 5815(d)(4)(A) for a period of one year from May 29, 2025, which will expire on May 29, 2026. During this period, if the Company becomes deficient with respect to any Nasdaq continued listing requirement, it will not have the opportunity to submit a compliance plan and may face delisting proceedings. There can be no assurance that we will be able to continuously satisfy all Nasdaq listing requirements in the future. If our Common Stock were to be delisted, the liquidity and market price of our securities could be materially adversely affected, and investors may find it more difficult to buy or sell our Common Stock.
A large portion of our C ommon S tock is controlled by a small number of stockholders .
A large portion of our Common Stock is held by a small number of stockholders, including shares held by Youxin Consulting Limited, a Hong Kong company wholly controlled by our Chief Executive Officer, Li Wai Chung, and shares held by our Chief Financial Officer, Cao Yu, Hu Bin, one of the three purchasers under the Purchase Agreement, and Elements Corporate Services Limited. As a result, these stockholders are able to influence the outcome of stockholder votes on various matters, including the election of directors and extraordinary corporate transactions including business combinations.
Furthermore, any additional equity financing or purchases of additional shares of our Common Stock from these stockholders may further reduce the public float and liquidity of our Common Stock which can in turn affect the market price of our Common Stock.
The interests of our large stockholders may differ from or conflict with the interests of our other stockholders. In addition, our large stockholders are not subject to any contractual restrictions on their ability to acquire additional shares of our Common Stock. This concentration of stock ownership may adversely affect the trading price for our Common Stock to the extent that investors perceive disadvantages in significant ownership of or control over the affairs of the Company.
The sale of the additional shares of C ommon S tock could cause dilution as well as the value of our C ommon S tock to decline.
The sale of a substantial number of shares of our Common Stock, or anticipation of such sales, could make it more difficult for us to sell equity or equity-related securities in the future at a time and at a price that we might otherwise wish. Further, if we do sell or issue more Common Stock, any investors’ investment in us will be diluted. Dilution is the difference between what you pay for your stock and the net tangible book value per share immediately after the additional shares are sold by us. If dilution occurs, any investment in our c Common Stock could seriously decline in value.
Our C ommon S tock price may decrease due to factors beyond our control.
The stock market from time to time has experienced extreme price and volume fluctuations, which have particularly affected the market prices for early-stage companies and which often have been unrelated to the operating performance of the companies. These broad market fluctuations may adversely affect the market price of our stock if a trading market for our stock ever develops. If our stockholders sell substantial amounts of their stock in the public market, the price of our stock could fall. These sales also might make it more difficult for us to sell equity, or equity-related securities, in the future at a price we deem appropriate.
The market price of our stock may also fluctuate significantly in response to, but not limited, to the following factors, most of which are beyond our control:
variations in our quarterly operating results,
changes in general economic conditions,
changes in market valuations of similar companies,
announcements by us or our competitors of significant acquisitions, strategic partnerships or joint ventures, or capital commitments; and
poor reviews from equity research analysts.
Any such fluctuations may adversely affect the market price or value of our Common Stock, regardless of our actual operating performance. As a result, stockholders may be unable to sell their shares, or may be forced to sell them at a loss.
Our C ommon S tock is subject to the application of the “ penny stock ” rules which could adversely affect the market price of our C ommon S tock and increase transaction costs to sell those shares.
The SEC has adopted Rule 3a51-1 which establishes the definition of a “penny stock,” for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, Rule 15g-9 requires:
that a broker or dealer approve a person’s account for transactions in penny stocks, and
the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.
In order to approve a person’s account for transactions in penny stocks, the broker or dealer must:
obtain financial information and investment experience objectives of the person, and
make a reasonable determination that the transactions in penny stocks are suitable for that person and that the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.
The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the SEC relating to the penny stock market, which, in highlight form:
sets forth the basis on which the broker or dealer made the suitability determination and
states that the broker or dealer received a signed, written agreement from the investor prior to the transaction.
Generally, brokers may be less willing to execute transactions in securities subject to the “penny stock” rules. This may make it more difficult for investors to dispose of our Common Stock and cause a decline in the market value of our stock.
The market price for our C ommon S tock is particularly volatile which could lead to wide fluctuations in our share price. You may be unable to sell your C ommon S tock at or above your purchase price, or at all, which may result in substantial losses to you.
The market for our Common Stock is characterized by significant price volatility when compared to seasoned issuers, and we expect that our share price will continue to be more volatile than that of a seasoned issuer for the indefinite future. As a consequence of this enhanced risk, more risk-averse investors may, under the fear of losing all or most of their investment in the event of negative news or lack of progress, be more inclined to sell their shares on the market more quickly and at greater discounts than would be the case with the stock of a seasoned issuer. Many of these factors are beyond our control and may decrease the market price of our Common Stock regardless of our operating performance. We cannot make any predictions or projections as to what the prevailing market price for our Common Stock will be at any time, or as to what effect the sale of shares or the availability of Common Stock for sale at any time will have on the prevailing market price.
Because we will likely issue additional shares of our C ommon S tock, investment in the C ompany could be subject to substantial dilution.
Investors’ interests in the Company will be diluted and investors may suffer dilution in their net book value per share when we issue additional shares. We are authorized to issue 60,000,000 shares of Common Stock. We anticipate that a substantial portion of our future funding, if any, will be in the form of equity financing from the sale of our Common Stock. If we sell or issue more Common Stock, any investors’ investment in the Company will be diluted. Dilution is the difference between what you pay for your stock and the net tangible book value per share immediately after the additional shares are sold by us. If dilution occurs, any investment in the Company’s Common Stock could seriously decline in value.
The Financial Industry Regulatory Authority (“ FINRA ”) sales practice requirements may also limit a stockholder’s ability to buy and sell our stock.
In addition to the “penny stock” rules described above, FINRA has adopted FINRA Rule 2111 that requires a broker-dealer to have reasonable grounds for believing that an investment is suitable for a customer before recommending the investment. Prior to recommending speculative low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low-priced securities will not be suitable for at least some customers. The FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our Common Stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares.
We do not intend to pay dividends for the foreseeable future.
We have never declared or paid any cash dividends on our stock and do not intend to pay any cash dividends in the foreseeable future. We anticipate that we will retain all of our future earnings for use in the development of our business and for general corporate purposes. Any determination to pay dividends in the future will be at the discretion of our Board.
If we are unable to comply with the financial reporting requirements mandated by the SEC’s regulations, investors may lose confidence in our financial reporting and the price of our C ommon S tock, if a market ever does develop for it, could decline.
If we fail to maintain effective internal controls over financial reporting, our ability to produce timely, accurate and reliable periodic financial statements could be impaired. If we do not maintain adequate internal control over financial reporting, investors could lose confidence in the accuracy of our periodic reports filed under the Exchange Act. Additionally, our ability to obtain additional financing could be impaired and a lack of investor confidence in the reliability and accuracy of our public reporting could cause our stock price to decline.
We are a “smaller reporting company” and the reduced reporting requirements applicable to smaller reporting companies may make our C ommon S tock less attractive to investors.
We are a smaller reporting company as defined in the Exchange Act. We may take advantage of certain of the scaled disclosures available to smaller reporting companies and will be able to take advantage of these scaled disclosures for so long as our voting and non-voting common stock held by non-affiliates is less than $250.0 million measured on the last business day of our second fiscal quarter, or our annual revenue is less than $100.0 million during the most recently completed fiscal year and our voting and non-voting common stock held by non-affiliates is less than $700.0 million measured on the last business day of our second fiscal quarter.
We cannot predict whether investors will find our Common Stock less attractive because we may rely on these exemptions. If some investors find our Common Stock less attractive as a result, there may be a less active trading market for our Common Stock and our stock price may be more volatile or decline.
Part III
Item 10
Directors, Executive Officers and Corporate Governance
The following table sets forth information regarding our executive officers and the members of our board of directors (the “Board”).
Name
Age
Position with the Company
Li Wai Chung
Chief Executive Officer and President
Cao Yu
Chief Financial Officer, Secretary, Treasurer and Director
Hongya Wen
Chairperson of the Board
Hu Bin
Director
David Natan
Director
Chan Oi Fat
Director
Directors are elected at each annual meeting of our stockholders and hold office until the next annual meeting of Company stockholders and thereafter until their successors are chosen and qualified.. Officers are appointed by the Board and serve at the discretion of the Board. Vacancies on the Board by reason of death, resignation, disqualification or other cause, including a vacancy resulting from enlargement of the Board, the election of a director to fill such vacancy shall be by vote of a majority of the directors then in office, whether or not constituting a quorum.
Biographical Information
Li Wai Chung , age 48, has served as our Chief Executive Officer since February 2025 and President since March 2025. He is currently a director of Shenzhen Youxin Consulting Management Co., Ltd, an independent non-executive director of Fulu Holdings Limited, a company listed on the Hong Kong Stock Exchange (stock code: 2101) and an independent non-executive director of Taizhou Water Group Co., Ltd, a company listed on the Hong Kong Stock Exchange (stock code: 1542). Mr. Li previously served as the executive director and Chief Financial Officer of Tyfon Culture Holdings Limited from June 2020 to November 2024. Prior to that, Mr. Li served as a partner of Shanghai Yongxuan Venture Capital Management Co., Ltd from October 2017 to October 2018. From August 2016 to September 2017, he served as the general manager of the investment department of Lens Technology Co. Ltd, a company listed on the Shenzhen Stock Exchange (stock code: 300433). He started his career at Deloitte China where he served as an audit manager from October 2000 to April 2006. Mr. Li received a bachelor’s degree of business administration in accounting and finance from the University of Hong Kong in November 2000 and a master’s degree of business administration from the University of Hong Kong in November 2013.
Cao Yu , age 35, has served as our Chief Financial Officer since February 2025 and Director since April 2025. She previously served as the treasury director of Taifeng Cultural Communication Co., Ltd where she oversaw its financial matters from November 2018 to November 2024. Prior to that, Ms. Cao served as a business manager of Yangfeng Art Exchange Co., Ltd from February 2016 to October 2018. From March 2011 to January 2016, she served as the treasury officer of financial department of Suzhou Industrial Park Xinfushida Plastic Profile Products Co., Ltd. Our Board has concluded that Ms. Cao is well-qualified to serve on our Board because of her many years of financial management experience and her extensive treasury and operational background.
Hongya Wen , age 49, has served as the Chairperson of the Board since January 2026. Most recently, Ms. Wen served as Deputy General Manager of Jiangsu Taifeng Cultural Communication Co., Ltd., an art brokerage and cultural services platform focused on the trading, exhibition, and promotion of artwork, from 2016 to November 2025, and previously served as its Sales Director from 2013 to 2016. Prior to joining Jiangsu Taifeng Cultural Communication Co., Ltd., Ms. Wen worked in the sales department of the Jiangsu Branch of China Life Insurance Company Limited. Our Board has concluded that Ms. Wen is well-qualified to serve as Chairperson of our Board because of her many years of executive leadership experience and her extensive sales and business development background.
Hu Bin , age 56, has served as our Director since April 2025. He currently serves as a director of DC International Service Trade GmbH since December 2024. Prior to that, Mr. Hu worked as a freelancer in the tourism industry from April 2001 to October 2024. From April 1994 to October 2000, he served as the general manager of Suzhou Wintime Advertising Co., Ltd. Before that, he served as the general manager of Suzhou Bauhaus Advertising Design Co., Ltd. from August 1992 to April 1994, where he was engaged in computer-aided design and 3D computer animation production. Mr. Hu began his career at Suzhou Advertising Company in October 1989, where he worked as a designer responsible for graphic design, platemaking, printing, and interior decoration. Mr. Hu graduated from Suzhou Academy of Arts in 1989. Our Board has concluded that Mr. Hu is well-qualified to serve on our Board because of his many years of leadership experience and his extensive background in design, business management, and international business development.
David Natan , age 73, has served as our Director at various times since November 2023. He currently serves as President and Chief Executive Officer of Natan & Associates, LLC, a consulting firm offering chief financial officer services to public and private companies in a variety of industries, since 2007. Mr. Natan previously served as a director of the Company from November 2023 to February 2025. He was re-appointed as a director on April 29, 2025. From February 2010 to May 2020, Mr. Natan served as Chief Executive Officer of Force Field Energy, Inc. (OTCMKTS: FNRG), a company focused on the solar industry and LED lighting products. From February 2002 to November 2007, Mr. Natan served as Executive Vice President of Reporting and Chief Financial Officer of Pharma Net Development Group, Inc., a drug development services company, and, from June 1995 to February 2002, as Chief Financial Officer and Vice President of Global Technovations, Inc., a manufacturer and marketer of oil analysis instruments and speakers and speaker components. Prior to that, Mr. Natan served in various roles of increasing responsibility with Deloitte & Touche LLP, a global consulting firm. Mr. Natan currently serves as a member of the Board of Directors and Chair of the Audit Committee of Sunshine Biopharma, Inc. (Nasdaq: SBFM), a pharmaceutical and nutritional supplement company, since February 2022. Previously, Mr. Natan has served as a director for the following public companies: Global Technovations, Forcefield Energy, Titan Pharmaceuticals (Nasdaq: TTNP), Vivakor Inc. (Nasdaq: VIVK), Net Brands Corp. (OTC: NBND), and OpGen Inc. (OTC: OPGN), and Cyclacel Pharmaceuticals (Nasdaq: CYCC). Mr. Natan holds a B.A. in Economics from Boston University. Our Board has concluded that Mr. Natan is well-qualified to serve on our Board because of his many years of executive leadership and financial management experience and his extensive background in public company governance, accounting, and corporate consulting across a broad range of industries.
Chan Oi Fat , age 47, has served as our Director since April 2025. He currently serves as Vice President – Finance of SML Holdings Limited since March 2018 and as Company Secretary of China Leon Inspection Holding Limited (HKEX: 1586) since February 2018 and of Raily Aesthetic Medicine International Holdings Limited (HKEX: 2135) since November 2020. He is an independent non-executive director of Huajin International Holdings Limited (HKEX: 2738) (since March 2025) and UBoT Holding Limited (HKEX GEM: 8529) (since May 2024) and previously served as an independent non-executive director of China Saftower International Holding Group Limited (HKEX GEM: 8623) from June 2020 to December 2023 and Shanghai Prime Machinery Company Limited (HKEX: 2345) from June 2014 to January 2021. Mr. Chan holds a B.B.A. (Hons) in Accountancy from the City University of Hong Kong (2000) and is a member of the Association of Chartered Certified Accountants (since 2003) and the Hong Kong Institute of Certified Public Accountants (since 2004). Our Board has concluded that Mr. Chan is well-qualified to serve on our Board because of his many years of financial and accounting expertise and his extensive background in public company governance across multiple international markets.
Involvement in Legal Proceedings
No director or associate of a director is involved in any material proceeding as a party adverse to the Company or with a material interest adverse to the Company.
Family Relationships
Our Chief Financial Officer, Secretary, Treasurer and director, Cao Yu, is the niece of our director, Hu Bin. There are no other family relationships between any of the Company’s executive officers and directors.
Delinquent Section 16(a) Reports
Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), requires our directors and officers, and persons who own more than ten percent of our Common Stock, to file with the SEC initial reports of ownership and reports of changes in ownership of our Common Stock. To our knowledge, based solely on a review of the copies of such reports furnished to us, during the fiscal year ended December 31, 2025, we believe that all filing requirements applicable to our officers, directors and greater than ten percent stockholders were complied with for the fiscal year ended December 31, 2025, except that David Lazar, our former director, Chief Executive Officer and Chief Financial Officer, was late in filing one required report on Form 4 with respect to three transactions, due to an administrative error, and Chan Oi Fat was late in filing one required report on Form 3.
Code of Business Conduct and Ethics
We have a code of business conduct and ethics that applies to all of our executive officers, directors and employees, including our principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions. The code of business conduct and ethics is available on our website at www.fiee.com/govern . We intend to make any legally required disclosures regarding amendments to, or waivers of, provisions of our code of business conduct and ethics on our website rather than by filing a Current Report on Form 8-K.
Committees of the Board
The Board has established three standing committees to assist it with its responsibilities. The composition and responsibilities of each committee are described below. The membership and responsibilities of each committee comply with the listing requirements of Nasdaq. Members serve on these committees until their resignation or until otherwise determined by the Board. In the future, the Board may establish other committees, as it deems appropriate, to assist it with its responsibilities.
Audit Committee
The purpose of the Audit Committee is set forth in the Audit Committee charter and is primarily to assist the Board in overseeing:
the selection, evaluation and oversight of our independent auditor;
the independent auditor’s qualifications, independence and performance;
the performance of our internal audit function and independent auditor;
the integrity and oversight of our financial statements, our financial reporting process and our systems of internal controls;
review and approval of any proposed related party transactions;
assessment and management of our exposure to risks;
our compliance with legal and regulatory requirements;
our compliance with our code of business conduct and ethics;
coordination with our Compensation Committee on the evaluation of our financial management personnel.
The Audit Committee currently consists of Hu Bin, David Natan and Chan Oi Fat, and the chairman of the Audit Committee is Mr. David Natan. The Board has affirmatively determined that each of these Audit Committee members meets the independence criteria applicable to directors serving on the Audit Committee under Nasdaq and SEC rules. The Board has also determined that each of these Audit Committee members meet the requirements for financial literacy under the applicable Nasdaq Listing Rules. In addition, David Natan qualifies as a financial expert, as defined in Item 407(d)(5)(ii) of Regulation S-K. The Board has adopted a written charter under which the Audit Committee operates. A copy of the charter, which satisfies the applicable standards of the SEC and Nasdaq, is available on our website at www.fiee.com/govern .
The Audit Committee held four meetings during the fiscal year ended December 31, 2025.
Nominating and Corporate Governance Committee
The purpose of the Nominating and Corporate Governance Committee is set forth in the Nominating and Corporate Governance Committee charter and is primarily to:
select and recommend to the Board nominees for election by the stockholders or appointment by the Board;
annually review with the Board the composition of the Board with regards to characteristics such as independence, knowledge, skills, experience and diversity of the Board members;
make recommendations on the frequency and structure of Board meetings and monitor the functioning of the committees of the Board;
advise the Board periodically with regard to significant developments in the law and practice of corporate governance as well as the Company’s compliance with applicable laws and regulations, and make recommendations to the Board on all matters of corporate governance and on any remedial action to be taken;
develop and recommend to the Board a set of corporate governance guidelines applicable to the Company; and
oversee the evaluation of the Board and management.
The Nominating and Corporate Governance Committee consists of Hu Bin, David Natan and Chan Oi Fat, and the chairman of the Nominating and Corporate Governance Committee is Chan Oi Fat. The Board has affirmatively determined that each of these Nominating and Corporate Governance Committee members meets the independence criteria applicable to directors serving on the Nominating and Corporate Governance Committee under Nasdaq and SEC rules. The Board has adopted a written charter under which the Nominating and Corporate Governance Committee operates. A copy of the charter, which satisfies the applicable standards of the SEC and Nasdaq, is available on our website at www.fiee.com/govern .
The Nominating and Corporate Governance Committee held one meeting during the fiscal year ended December 31, 2025.
Compensation Committee
The purpose of the Compensation Committee is set forth in the Compensation Committee charter and is primarily to:
establish, review and approve the overall executive compensation philosophy of the Company;
review the goals and objectives of the Company’s executive compensation plans, and amend, or recommend that the Board amend, these goals and objectives if the Compensation Committee deems it appropriate;
review the Company’s executive compensation plans in light of the Company’s goals and objectives with respect to such plans, and, if the Compensation Committee deems it appropriate, adopt, or recommend to the Board the adoption of, new, or the amendment of existing, executive compensation plans;
review and approve any severance or termination arrangements to be made with any executive officer of the Company;
review compensation arrangements for the Company’s employees to evaluate whether incentive and other forms of pay encourage unnecessary or excessive risk taking, and review and discuss, at least annually, the relationship between risk management policies and practices, corporate strategy and the Company’s compensation arrangements;
review at least annually the goals and objectives of the Company’s general compensation plans and other employee benefit plans, including incentive-compensation and equity-based plans, and amend, or recommend that the Board amend, these goals and objectives if the Compensation Committee deems it appropriate; and
review at least annually the Company’s general compensation plans and other employee benefit plans, including incentive-compensation and equity-based plans, in light of the goals and objectives of these plans, and recommend that the Board amend these plans if the Compensation Committee deems it appropriate.
The Compensation Committee consists of Hu Bin, David Natan and Chan Oi Fat, and the chairman of the Compensation Committee is Chan Oi Fat. The Board has affirmatively determined that each of these Compensation Committee members meets the independence criteria applicable to directors serving on the Compensation Committee under Nasdaq and SEC rules. The Board has adopted a written charter under which the Compensation Committee operates. A copy of the charter, which satisfies the applicable standards of the SEC and Nasdaq, is available on our website at www.fiee.com/govern .
The Compensation Committee held one meeting during the fiscal year ended December 31, 2025.
Board Leadership Structure
The Company’s governance framework provides the Board with the authority and flexibility necessary to select the appropriate leadership structure for the Board. In making determinations about the leadership structure, the Board considers many factors, including the specific needs of the business and what is in the best interests of the Company’s stockholders. Hongya Wen, an independent director, currently serves as the Chairperson of the Board. Li Wai Chung currently serves as our Chief Executive Officer. The Board has carefully considered its leadership structure and believes at this time that the Company and its stockholders are best served by having the offices of Chairperson of the Board and Chief Executive Officer held by different individuals based on our business and strategy. This structure allows our Chief Executive Officer to focus on the Company’s day-to-day operations and strategic vision, while allowing the Chairperson to lead the Board. The Board has not designated a lead independent director. The Board retains the authority to modify the foregoing leadership structure.
Board’s Role in Risk Oversight
The Board is ultimately responsible for risk management oversight. This oversight is primarily accomplished through the Board’s committees and management’s reporting processes, including receiving regular reports from members of management on areas of material risk to the Company, including operational, financial and strategic risks.
The Board’s standing committees support the Board by addressing various risks within their respective areas of responsibility. The Audit Committee assists the Board in discussing with management, internal auditors and the independent auditor of guidelines and policies governing the process by which senior management of the Company and the relevant departments of the Company, including the internal auditing department, assessing and managing the Company’s exposure to risk, as well as the Company’s major financial risk exposures and the steps management has taken to monitor and control such exposures. The Compensation Committee assesses risks arising from our compensation policies and practices. The Nominating and Corporate Governance Committee advises the Board periodically with regard to significant developments in the law and practice of corporate governance as well as the Company’s compliance with applicable laws and regulations, and make recommendations to the Board on all matters of corporate governance and on any remedial action to be taken. Each of the committees reports to the Board at regularly during which risks are discussed and assessed.
The Board believes that its current leadership structure supports the risk oversight function of the Board. Having the roles of Chief Executive Officer and Chairperson of the Board filled by separate individuals allows the Chief Executive Officer to lead management in its supervision of the Company’s day-to-day business operations, including the identification, assessment and mitigation of material risks, and allows the Chairperson of the Board to lead the Board in its oversight of the Company’s risk assessment and risk management activities.
Director Nomination Process
Our Nominating and Corporate Governance Committee is responsible for reviewing and making recommendations to our Board regarding nominations of director candidates. The Nominating and Corporate Governance Committee identifies new director candidates through a variety of sources. Our Nominating and Corporate Governance Committee will consider director candidates recommended by stockholders in the same manner it considers other candidates, but it has no obligation to recommend such candidates. A stockholder that wants to recommend a candidate for election to the Board should mail a recommendation to Flat A1, 29/F, Block A, TML Tower, 3 Hoi Shing Road, Tsuen Wan, Hong Kong. Such recommendation should describe the candidate’s qualifications and other relevant biographical information and provide confirmation of the candidate’s consent to serve as director.
The Nominating and Corporate Governance Committee works with the Board on an annual basis to determine the appropriate characteristics, skills and experience for the Board as a whole and its individual members. In evaluating the suitability of individual Board members, the Board and the Nominating and Corporate Governance Committee will take into account factors such as the individual’s general understanding of disciplines relevant to the success of a publicly traded company; understanding of FiEE’s business; education and professional background, including current employment and other board memberships; reputation for integrity; and any other factors they consider to be relevant. Additionally, in determining whether to recommend a director for re-election, the Nominating and Corporate Governance Committee also considers the director’s past attendance at meetings and participation in and contributions to the activities of the Board.
Our Nominating and Corporate Governance Committee recognizes the value of nominating individuals who will bring a variety of diverse opinions, perspectives, skills, experiences, backgrounds and orientations to the Board’s discussions and decision-making processes. The Board will endeavor to reflect the diversity of FiEE’s stockholders, employees, customers and the communities we serve. To that end, our Nominating and Corporate Governance Committee strives for diversity across a variety of categories, including experience, skills, accomplishments, personal qualities and other traits that it believes would contribute to our Board.
Insider Trading Policy
We have an insider trading policy that governs the purchase, sale and/or other dispositions of our securities by directors, officers, and employees, together with their immediate family members and other persons living in their households. We believe our insider trading policy is reasonably designed to promote compliance with insider trading laws, rules and regulations, and any applicable Nasdaq standards. In addition, it is the policy of the Company to comply with applicable U.S. securities laws, including laws, rules and regulations related to trading in our securities. A copy of our insider trading policy was filed as an exhibit to our Form 10-K for the year ended December 31, 2025.
