Ridgetech (RDGT) Risk Analysis

In June 2023, Nasdaq notified the Company that it failed to maintain a minimum bid price of $1.00 per share for 30 consecutive trading days under Nasdaq Listing Rules 5550(a)(2) and 5810(c)(3)(A). After a 1-for-20 reverse stock split in March 2024, the Company regained compliance with the bid price rule. Effective July 22, 2026, Nasdaq implemented a new rule that significantly increases the risk of delisting for companies that fail to maintain the minimum Market Value of Listed Securities ("MVLS") requirement. Nasdaq listing rules require us to maintain an MVLS of at least $5,000,000. Under the new rule, if our MVLS remains below $5,000,000 for 30 consecutive business days, Nasdaq will issue a staff delisting determination and immediately suspend trading in our securities while commencing delisting proceedings. Unlike the bid price and certain other continued listing deficiencies, this MVLS requirement does not provide a compliance or cure period, and a request for review by a Nasdaq Listing Qualifications Hearings Panel does not automatically stay the trading suspension. Panel review is generally limited to instances of Nasdaq error or, in limited circumstances, an extension of no more than 180 days from the staff delisting determination. The MVLS of our ordinary shares is currently below $5,000,000. If our MVLS remains below $5,000,000 for 30 consecutive business days, we could face an immediate trading suspension and delisting, with little or no opportunity to regain compliance before our ordinary shares are removed from Nasdaq. We are considering conducting one or more offerings of our securities, including under our ATM Program, in an effort to increase our MVLS above the $5,000,000 threshold. However, there is no guarantee that any such offering will be completed on acceptable terms, or at all, or that any offering we do complete will result in our MVLS increasing sufficiently, or remaining above $5,000,000 for the required 30 consecutive business days, to avoid a staff delisting determination. We cannot provide assurance that we will remain compliant with the bid price rule, the MVLS requirement, or other continued listing standards in the future, including those relating to minimum stockholders' equity and market value of publicly held shares. If Nasdaq delists our ordinary shares from trading on its exchange due to noncompliance, we could face significant material adverse consequences including: - a limited availability of market quotations for our ordinary shares;         - a limited amount of news and analyst coverage for our company; and         - a decreased ability to issue additional securities or obtain additional financing in the future.

On January 31, 2025, we issued 14,834 ordinary shares to Mr. Lingtao Kong in exchange for all of his ownership interests in Ridgeline, which owns 100% of Allright. As a result, Mr. Kong became the beneficial owner of approximately 38% of our outstanding ordinary shares immediately following the closing of the Restructuring Transactions. He was also elected Chairman of our Board following the closing of the Restructuring Transactions. On July 16, 2026, following approval by the Audit Committee and the Board, we issued 100,000 Series A Preferred Shares to Mr. Kong. Each Series A Preferred Share is entitled to 100 votes per share and votes together with holders of our ordinary shares as a single class on all matters submitted to a vote of shareholders, unless otherwise required by applicable law or the Company's memorandum and articles of association. As a result, Mr. Kong currently controls approximately 73.5% of our total voting power. The Series A Preferred Shares are convertible into ordinary shares and are subject to transfer restrictions and certain automatic conversion provisions. Each Series A Preferred Share is convertible into one ordinary share at the holder's option and is also subject to automatic conversion upon the occurrence of certain events, including if Mr. Kong ceases to serve as an executive officer or director of the Company or upon the closing of a Board-approved change-of-control transaction. The Series A Preferred Shares are also subject to transfer restrictions and generally may not be transferred without the Board's prior written consent, subject to limited exceptions for certain tax or estate planning purposes. Mr. Kong's ownership of all of the outstanding Series A Preferred Shares, together with his leadership position, gives him significant influence over matters requiring shareholder approval, including director elections, amendments to governing documents, and major corporate transactions. His control could delay or prevent a change in control, potentially depriving shareholders of the opportunity to receive a premium for their shares and adversely affecting the market value and liquidity of our ordinary shares. His influence may also deter potential investors and raise actual or perceived conflicts of interest between his personal interests and those of other shareholders. Mr. Kong's significant influence could affect our corporate decision-making and his interests may not align with those of other shareholders.

Under the Nasdaq Listing Rules, a "controlled company" is a company of which more than 50% of the voting power is held by an individual, group, or another company. Following the issuance of 100,000 Series A Preferred Shares to Mr. Kong, our Chairman of Board, he holds more than 50% of the voting power of our outstanding ordinary shares and Series A Preferred Shares, voting together as a single class, and we therefore qualify as a controlled company and would be eligible to rely on exemptions from the requirements that our board of directors be composed of a majority of independent directors and that we have a compensation committee and a nominating and corporate governance committee composed entirely of independent directors. We do not currently intend to rely on the exemptions available to controlled companies, and rely instead on certain exemptions available to us as a foreign private issuer, as described under Item 16G. Corporate Governance below. If we elect to rely on some or all of these exemptions in the future, our board of directors and committees may not consist of a majority of independent directors, and you would not have the same protections afforded to shareholders of companies that are subject to all of the Nasdaq corporate governance requirements.

Although our securities has been listed on the Nasdaq Capital Market since April 22, 2010, the historical trading volume of our securities has generally been low. Limited trading volume will subject our ordinary shares to greater price volatility and may make it difficult for you to sell your shares at a price that is attractive to you.

The market price for our stock may be volatile and, when compared to seasoned issuers, subject to wide fluctuations in response to various factors, many of which are beyond our control, including the following: - actual or anticipated fluctuations in our quarterly operating results;         - changes in financial estimates by securities research analysts;- conditions in the pharmaceutical wholesale and online sales markets;         - changes in the economic performance or market valuations of other pharmaceutical wholesalers and online sales platforms;         - announcements by us or our competitors of new products, acquisitions, strategic partnerships, joint ventures or capital commitments;- addition or departure of key personnel;         - fluctuations of exchange rates between RMB and the U.S. dollar;         - intellectual property litigation; and         - general economic or political conditions in China. As an illustration of such volatility, the closing price of our ordinary shares during the fifty two (52) weeks preceding the date of this report ranged from a low of $1.14 to a high of $760.49. In addition, the securities market has from time to time experienced significant price and volume fluctuations that are not related to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of our stock. In the past, plaintiffs have often initiated securities class action litigation against a company following periods of volatility in the market price of its securities. We may, in the future, be the target of similar litigation. Securities litigation could result in substantial costs and liabilities and could divert management's attention and resources.