Agencia Comercial Spirits Ltd. Class A (AGCC) Risk Analysis

We are an exempted company incorporated under the laws of the Cayman Islands. Our corporate affairs are governed by our amended and restated memorandum and articles of association, the Companies Act (As Revised) of the Cayman Islands and the common law of the Cayman Islands. The rights of shareholders to take action against the directors, actions by minority shareholders and the fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from the common law of England, the decisions of whose courts are of persuasive authority, but are not binding, on a court in the Cayman Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under Cayman Islands law are not as clearly established as they would be under statutes or judicial precedent in some jurisdictions in the U.S. In particular, the Cayman Islands has a less developed body of securities laws than the U.S. Some U.S. states, such as Delaware, have more fully developed and judicially interpreted bodies of corporate law than the Cayman Islands. In addition, Cayman Islands companies may not have standing to initiate a shareholder derivative action in a federal court of the U.S. Shareholders of Cayman Islands exempted companies like us have no general rights under Cayman Islands law to inspect corporate records or to obtain copies of lists of shareholders of these companies. Our directors have discretion under our amended and restated memorandum and articles of association to determine whether or not, and under what conditions, our corporate records may be inspected by our shareholders, but we are otherwise not obliged to make them available to our shareholders. This may make it more difficult for you to obtain the information needed to establish any facts necessary for a shareholder motion or to solicit proxies from other shareholders in connection with a proxy contest. Certain corporate governance practices in the Cayman Islands, which is our home country, differ significantly from requirements for companies incorporated in other jurisdictions such as the U.S. Currently, we rely on home country practice with respect to certain corporate governance matters and as a result, our shareholders may be afforded less protection than they otherwise would under rules and regulations applicable to U.S. domestic issuers. As a result of all of the above, our public shareholders may have more difficulty in protecting their interests in the face of actions taken by management, members of the board of directors or our Controlling Shareholders than they would as public shareholders of a company incorporated in the U.S. For a discussion of significant differences between the provisions of the Companies Act (Revised) of the Cayman Islands and the laws applicable to companies incorporated in the U.S. and their shareholders, see "Share Capital - Our Memorandum and Articles."

We are a Cayman Islands exempted company and substantially all of our assets are located outside of the U.S. Substantially all of our current operations are conducted in Taiwan. In addition, some of our directors and officers are nationals and residents of countries and regions other than the U.S. Substantially all of the assets of these persons are located outside the U.S. As a result, it may be difficult or impossible for you to bring an action against us or against these individuals in the U.S. in the event that you believe that your rights have been infringed under the U.S. federal securities laws or otherwise. Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands, Hong Kong and Taiwan may render you unable to enforce a judgment against our assets or the assets of our directors and officers. For more information regarding the relevant laws of the Cayman Islands, Taiwan, and Hong Kong, see "Additional Information - Enforceability of Civil Liabilities".

Because we are a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the securities rules and regulations in the U.S. that are applicable to U.S. domestic issuers, including: - the rules under the Exchange Act requiring the filing of quarterly reports on Form 10-Q or current reports on Form 8-K with the SEC;- the sections of the Exchange Act regulating the solicitation of proxies, consents, or authorizations in respect of a security registered under the Exchange Act;- the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and - the selective disclosure rules by issuers of material nonpublic information under Regulation FD. We are required to file an annual report on Form 20-F within four months of the end of each fiscal year. In addition, we will furnish to the SEC on Form 6-K any material information that we make public in accordance with applicable law or stock exchange rules, including press releases relating to financial results and material events. However, the information we are required to file with or furnish to the SEC will be less extensive and less timely than that required to be filed with the SEC by U.S. domestic issuers. As a result, you may not be afforded the same protections or information that would be made available to you were you investing in a U.S. domestic issuer.

Our Controlling Shareholders, through Ping Shiang Business Ltd, continue to own more than a majority of the voting power of our outstanding Ordinary Shares. Under the Nasdaq listing rules, a company of which more than 50% of the voting power is held by an individual, group, or another company is a "controlled company" and is permitted to phase in its compliance with the independent committee requirements. As a "controlled company," we are permitted to elect not to comply with certain corporate governance requirements. Currently, we do not utilize the exemptions available for controlled companies but instead rely on the exemptions available for foreign private issuers to follow our home country governance practices. Although we do not currently rely on the "controlled company" exemptions under the Nasdaq listing rules even if we are deemed a "controlled company", we could elect to rely on these exemptions in the future. If we were to elect to rely on the "controlled company" exemptions, a majority of the members of our board of directors might not be independent directors and our nominating and corporate governance and compensation committees might not consist entirely of independent directors. Accordingly, if we rely on these exemptions during the period we remain a "controlled company" and during any transition period following a time when we are no longer a "controlled company", you may not have the same protections afforded to shareholders of companies that are subject to all of the corporate governance requirements of Nasdaq.

We have a dual-class voting structure consisting of Class A Ordinary Shares and Class B Ordinary Shares. Under this structure, holders of Class A Ordinary Shares are entitled to one (1) vote per share in respect of matters requiring the votes of shareholders, while holders of Class B Ordinary Shares are entitled to ten (10) votes per share. As of the date of this Annual Report, our Controlling Shareholders, through Ping Shiang Business Ltd beneficially own 14,500,000 Class A Ordinary Shares, approximately 63.63% of our outstanding Class A Ordinary Shares and 14,500,000 Class B Ordinary Shares, representing 95.06%%, of the aggregate total voting power of our total issued and outstanding share capital. The Controlling Shareholders have the ability to determine all matters requiring approval by shareholders. The interests of our Controlling Shareholders may not coincide with your interests, and they may make decisions with which you disagree, including decisions on important topics such as the composition of the board of directors, compensation, management succession, and our business and financial strategy. To the extent that the interests of our Controlling Shareholders differ from your interests, you may be disadvantaged by any action that they may seek to pursue. This concentrated control could also discourage others from pursuing any potential merger, takeover or other change of control transactions, which could have the effect of depriving the holders of our Class A Ordinary Shares of the opportunity to sell their shares at a premium over the prevailing market price.

Each Class B Ordinary Share has ten (10) votes per share, and our Class A Ordinary Shares have one (1) vote per share. As of the date of this Annual Report, our Controlling Shareholders, through Ping Shiang Business Ltd, beneficially own 14,500,000 Class A Ordinary Shares and 14,500,000 Class B Ordinary Shares, representing 95.06% of the aggregate total voting power of our total issued and outstanding share capital. Accordingly, the Controlling Shareholders control all matters submitted to our shareholders for approval. In addition, there is no restriction under our amended and restated memorandum and articles of association for potential future issuances of Class B Ordinary Shares. If such issuances occurred, the voting power of the holders of the Class A Ordinary Shares would be diluted. The Controlling Shareholders have the ability to determine all matters requiring approval by shareholders, which may limit or preclude your ability to influence corporate matters for the foreseeable future, including the election of directors, amendments of our organizational documents and any merger, consolidation, sale of all or substantially all of our assets or other major corporate transactions requiring shareholder approval. In addition, this concentrated control may prevent or discourage unsolicited acquisition proposals or offers for our capital stock that you may feel are in your best interest as one of our shareholders. As a result, such concentrated control may adversely affect the market price of our Class A Ordinary Shares.

We cannot predict whether our dual-class structure will result in a lower or more volatile market price of our Class A Ordinary Shares, adverse publicity or other adverse consequences. For example, certain index providers have announced and implemented restrictions on including companies with multiple-class share structures in certain of their indices. In July 2017, FTSE Russell announced that it would require new constituents of its indices to have greater than 5% of the company's voting rights in the hands of public stockholders, and S&P Dow Jones announced that that it would no longer admit companies with multiple-class share structures to certain of its indices, such as the S&P 500, S&P MidCap 400 and S&P SmallCap 600. Also in 2017, MSCI, a leading stock index provider, opened public consultations on its treatment of no-vote and multi-class structures and temporarily barred new multi-class listings from certain of its indices. However, in October 2018, MSCI announced its decision to include equity securities "with unequal voting structures" in its indices and to launch a new index that specifically includes voting rights in its eligibility criteria. Under these policies, the dual-class structure of our Ordinary Shares makes us ineligible for inclusion in certain indices and, as a result, mutual funds, exchange-traded funds and other investment vehicles that attempt to passively track those indices do not invest in our Class A Ordinary Shares. It is unclear what effect, if any, they will have on the valuations of publicly-traded companies excluded from such indices, but it is possible that they may adversely affect valuations, as compared to similar companies that are included. Due to the dual-class structure of our Ordinary Shares, we are excluded from certain indices and we cannot assure you that other stock indices will not take similar actions. Given the sustained flow of investment funds into passive strategies that seek to track certain indices, exclusion from certain stock indices precludes investment by many of these funds and could make our Class A Ordinary Shares less attractive to other investors. Any such exclusion from stock indices could result in a less active trading market for our Class A Ordinary Shares. Any actions or publications by shareholder advisory firms critical of our corporate governance practices or capital structure could also adversely affect the market price of our Class A Ordinary Shares.

Nasdaq listing rules require listed companies to have, among other things, a majority of its board members be independent. As a foreign private issuer, however, we are permitted to, and we may follow home country practice in lieu of certain Nasdaq requirements, or we may choose to comply with the above requirement within one year of listing. The corporate governance practice in our home country, the Cayman Islands, does not require a majority of our board to consist of independent directors. Thus, although a director must act in the best interests of our Company, it is possible that fewer board members will be exercising independent judgment and the level of board oversight on the management of our Company may decrease as a result. Additionally, Nasdaq listing rules mandate that U.S. domestic issuers establish a compensation committee, a nominating and corporate governance committee, and an audit committee, each composed solely of independent directors. As a foreign private issuer, we are not subject to these requirements. Nasdaq listing rules may also require shareholder approval for certain corporate matters, such as requiring that shareholders be given the opportunity to vote on all equity compensation plans and material revisions to those plans, as well as certain ordinary share issuances. Currently, we comply with the requirements of Nasdaq listing rules requiring that a majority of our board of directors consists of independent directors and have appointed a nominating and corporate governance committee. We may, however, consider following home country practice in lieu of the requirements under Nasdaq listing rules in the future with respect to certain corporate governance standards, which may afford less protection to investors.

We are an emerging growth company, as defined in the JOBS Act, and may remain an emerging growth company until the last day of the fiscal year following the fifth anniversary of the completion of our initial public offering. However, if certain events occur prior to the end of such five-year period, including if we become a "large accelerated filer," our annual gross revenues exceed US$1.235 billion or we issue more than US$1.0 billion of non-convertible debt in any three-year period, we will cease to be an emerging growth company prior to the end of such five-year period. For so long as we remain an emerging growth company, we are permitted and intend to rely on exemptions from certain disclosure requirements that are applicable to other public companies that are not emerging growth companies. In this annual report, we have taken advantage of reduced reporting burden. In particular, we have provided reduced financial disclosures and have not included all of the executive compensation related information that would be required if we were not an emerging growth company. We cannot predict whether investors will find our Class A Ordinary Shares less attractive if we rely on these exemptions. If some investors find our Class A Ordinary Shares less attractive as a result, there may be a less active trading market for our Class A Ordinary Shares and the trading price of our Class A Ordinary Shares may be reduced or more volatile. In addition, the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. This allows an emerging growth company to delay the adoption of these accounting standards until they would otherwise apply to private companies.

Nasdaq Listing Rule 5101 provides Nasdaq with broad discretionary authority over the initial and continued listing of securities in Nasdaq and Nasdaq may use such discretion to apply additional or more stringent criteria for the continued listing of particular securities, or suspend or delist particular securities based on any event, condition, or circumstance that exists or occurs that makes continued listing of the securities on Nasdaq inadvisable or unwarranted in the opinion of Nasdaq, even though the securities meet all enumerated criteria for continued listing on Nasdaq. In addition, Nasdaq has used its discretion to apply additional and more stringent criteria in the instances, including but not limited to: (i) where the company engaged an auditor that has not been subject to an inspection by the Public Company Accounting Oversight Board ("PCAOB"), an auditor that PCAOB cannot inspect, or an auditor that has not demonstrated sufficient resources, geographic reach, or experience to adequately perform the company's audit; (ii) where the company has a small public float, resulting in insiders holding a large portion of the company's listed securities; and (iii) where the company did not demonstrate sufficient nexus to the U.S. capital market, including having no U.S. shareholders, operations, or members of the board of directors or management. Because our public float is relatively small, and our insiders hold a large portion of the company's listed securities, Nasdaq may apply more stringent criteria for our continued listing. If we fail to maintain compliance with Nasdaq's continued listing requirements, our Class A Ordinary Shares could be delisted, which may have a material adverse effect on the liquidity and market price of our Class A Ordinary Shares.

Sales of substantial amounts of our Class A Ordinary Shares in the public market, or the perception that these sales could occur, could adversely affect the market price of our Class A Ordinary Shares and could materially impair our ability to raise capital through equity offerings in the future. As of the date of this annual report, we have 22,786,500 Class A Ordinary Shares outstanding. A significant portion of these shares are held by our directors, officers, and certain major shareholders. While these shares were previously subject to customary lock-up agreements in connection with our initial public offering, those restrictions have expired on April 21, 2026. As these lock-up restrictions expire, a substantial number of shares may become eligible for sale in the public market, subject to compliance with Rule 144 under the Securities Act and other applicable regulations. We cannot predict the effect, if any, that future market sales of securities held by significant shareholders or the availability of these securities for sale will have on the prevailing market price of our Class A Ordinary Shares. In addition, if we issue additional Class A Ordinary Shares in the future to raise capital or as stock-based compensation, our existing shareholders will experience further dilution. Any such issuances or the perception that such sales or issuances might occur, may adversely affect the price of our Class A Ordinary Shares and make it more difficult for us to sell equity or equity-related securities in the future at a time and price that we deem appropriate.

The trading market for our Class A Ordinary Shares will be influenced by research or reports that industry or securities analysts publish about our business. If one or more analysts who cover us downgrade our Class A Ordinary Shares, the market price for our Class A Ordinary Shares would likely decline. If one or more of these analysts cease to cover us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause the market price or trading volume for our Class A Ordinary Shares to decline.

The trading price of our Class A Ordinary Shares may be subject to wide fluctuations. Recently, there have been instances of extreme stock price run-ups followed by rapid price declines and strong stock price volatility among recently public companies, especially those with relatively smaller public floats. As a company with a relatively small public float and market capitalization, we may experience greater stock price volatility, extreme price run-ups, lower trading volume and less liquidity than large-capitalization companies. Such volatility, including any stock-run up, may be unrelated to our actual or expected operating performance, financial condition or prospects, making it difficult for prospective investors to assess the rapidly changing value of our Class A Ordinary Shares. Moreover, the trading price of our Class A Ordinary Shares may fluctuate due to broad market and industry factors, such as the performance and fluctuation of the market prices of other companies with business operations located mainly in Taiwan that are listed in the U.S. The trading performance of these Taiwanese companies may affect investor sentiment toward all companies from the region listed in the U.S., which may impact the trading performance of our Class A Ordinary Shares regardless of our actual operating performance. In addition to market and industry factors, the price and trading volume for our Class A Ordinary Shares may be highly volatile due to factors specific to our own operations, including: - variations in our income, earnings and cash flow;- announcements of new investments, acquisitions, strategic partnerships, or joint ventures;- changes in financial estimates by securities analysts;- detrimental adverse publicity about us, our services, or our industry;- additions or departures of key personnel;- the release of lock-up or other transfer restrictions on our outstanding equity securities or sales of additional equity securities; and - potential litigation or regulatory investigations. Any of these factors may result in large and sudden changes in the volume and price at which our Class A Ordinary Shares will trade. Furthermore, the stock market in general experiences price and volume fluctuations that are often unrelated or disproportionate to the operating performance of companies like us. These broad market and industry fluctuations may adversely affect the market price of our Class A Ordinary Shares. In addition, if the trading volume of our Class A Ordinary Shares is low, trading activity in relatively small quantities may easily influence the price of our Class A Ordinary Shares. This low volume of trades could also cause the price of our Class A Ordinary Shares to fluctuate greatly, with large percentage changes in price occurring in any trading day session. Holders of our Class A Ordinary Shares may also not be able to readily liquidate their investment or may be forced to sell at depressed prices due to low volume trading. If high spreads between the bid and asked prices of our Class A Ordinary Shares exist at the time of purchase, the stock would have to appreciate substantially on a relative percentage basis for an investor to recoup their investment. Broad market fluctuations and general economic and political conditions may also adversely affect the market price of our Class A Ordinary Shares. As a result of this volatility, investors may experience losses on their investment in our Class A Ordinary Shares. A decline in the market price of our Class A Ordinary Shares also could adversely affect our ability to issue additional Class A Ordinary Shares or other securities and our ability to obtain additional financing in the future. No assurance can be given that an active market in our Class A Ordinary Shares will be sustained. If an active market is not maintained, holders of our Class A Ordinary Shares may be unable to readily sell the shares they hold or may not be able to sell their shares at all. In the past, shareholders of public companies have often brought securities class action suits against those companies following periods of instability in the market price of their securities. If we were involved in a class action suit, it could divert a significant amount of our management's attention and other resources from our business and operations and require us to incur significant expenses to defend the suit, which could harm our results of operations. Any such class action suit, whether or not successful, could harm our reputation and restrict our ability to raise capital in the future. In addition, if a claim is successfully made against us, we may be required to pay significant damages, which could have a material adverse effect on our financial condition and results of operations.

In order to maintain the listing on Nasdaq, the Company is required to meet certain financial and share price criteria. The Company may be unable to meet these requirements in the future. If the Company's Class A Ordinary Shares are delisted from Nasdaq and the Company is unable to list its shares on another national securities exchange, such shares may be quoted on an over-the-counter market in the United States. If this occurs, the Company could face significant adverse consequences, including: - a limited availability of market quotations for our Class A Ordinary Shares;- reduced liquidity for our Class A Ordinary Shares;- a determination that our Class A Ordinary Shares are "penny stock", which will require brokers trading in our shares to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our Class A Ordinary Shares;- a limited amount of news and analyst coverage; and - a decreased ability to issue additional securities or obtain additional financing in the future. As of the date of this Annual Report, our Class A Ordinary Shares are listed on Nasdaq. Under U.S. federal law, this listing preempts state-level regulation of their sale. However, states retain the authority to investigate companies if there is suspicion of fraud. If fraud is found, states may regulate or bar the sale of shares. If we were no longer listed on Nasdaq, we would be subject to state regulations in each jurisdiction where we offer our shares.