ITEM 1A. RISK FACTORS

An investment in our common stock involves a high degree of risk. If any of the following risks actually occurs, our business, financial condition or results of operations could suffer. You should read the section entitled “Special Note Regarding Forward-Looking Statements” above for a discussion of what types of statements are forward-looking statements, as well as the significance of such statements in the context of this Form 10-K.On July 1, 2024, the OTC Markets Group downgraded the Common Stock of the Company from OTCQB to Pink Sheets Limited Information due to the failure of the Company to file the Form 10-K by July 1, 2024. This downgrade will limit the ability of the holders of shares of Common Stock to trade their shares and, as such, reduce the liquidity of the investment. If the Company does not file the Form 10-K and the Quarterly Report on Form 10-Q for the fiscal quarter ended March 30, 2024, by July 16, 2024, the Company’s Common Stock will be further downgraded on the Pink Sheets and shares will no longer be traded on a non-solicited basis, which would further decrease the liquidity of the investment in the Common Stock. See “Pink Sheet Downgrade” below at page 22.

Risks Related to Our Financial Condition

There is substantial doubt about the Company’s ability to continue as a going concern. The report of Grassi & Co., our independent registered public accounting firm, with respect to our consolidated financial statements as of and for the year ended December 31, 2023 contains an explanatory paragraph as to our potential ability to continue as a going concern. As a result, this may adversely affect our ability to obtain new financing on reasonable terms or at all. Investors may be unwilling to invest in a company that will not have the funds necessary to continue to deploy its business strategies.

Failure to raise additional capital to fund future operations could harm our business and results of operations. As reflected on our audited consolidated financial statements as of and for the year ended December 31, 2023 contained herein, we have incurred net loss of $6,696,266, and have an accumulated deficit of $5,820,548. We will control our operating costs and require additional financing in order to maintain our corporate existence and to implement our business plans and strategy. If our own financial resources are insufficient to satisfy our capital requirements, we may seek to sell additional equity or debt securities or obtain credit facilities. The timing and amount of our capital requirements will depend on a number of factors, including our operational results, the need for other expenditures, and competitive pressures. If additional funds are raised through the issuance of equity or convertible debt securities, the percentage ownership of our then-existing stockholders will likely be reduced significantly. If we raise additional capital through the issuance of equity or convertible debt securities, the percentage ownership of our company held by existing shareholders will be reduced and those shareholders will probably experience significant dilution due to the “penny stock” status of the VEII Common Stock. We cannot make assurances that any financing will be available on terms favorable to us or at all. Current or past lenders may decline to provide new funding. If adequate funds are not available on acceptable terms, our ability to fund our business strategy, ongoing operations, take advantage of unanticipated opportunities, and in turn our business, financial condition and results of operations will be significantly and adversely affected.

Risks Related to Internal Controls

During the audit for the Form 10-K, management became aware of a material weakness in the design and effectiveness of Company’s internal controls, which, if not remediated, could affect the accuracy and timeliness of our financial reporting and result in misstatements in our financial statements.

During evaluation of our disclosure controls and procedures as of December 31, 2023, conducted as part of our annual audit and preparation of the Form 10-K’s annual financial statements, management concluded that Company’s disclosure controls and procedures were not effective. Management determined that as of December 31, 2023, Company had a material weakness that is described in Item 9A below at page 47.

This material weakness, which remained unremedied by the Company as of December 31, 2023, could result in a misstatement to the accounts and disclosures that would result in a material misstatement to our annual or interim consolidated financial statements that would not be prevented or detected. If we do not remediate the material weakness or if other material weaknesses are identified in the future, we may be unable to report the Company’s financial results accurately or to report them on a timely basis, which could result in the loss of investor confidence and have a material adverse effect on the stock price of the Common Stock as well as Company's ability to access capital and lending markets. Management is presently taking efforts to remediate this weakness.

The Company may be exposed to other potential risks relating to its internal controls over financial reporting and Company’s ability to have those controls attested to by Company’s independent auditors. As directed by Section 404 of the Sarbanes-Oxley Act of 2002, or SOX 404, the SEC adopted rules requiring public companies to include a report of management on the company's internal controls over financial reporting in their annual reports, including this Form 10-K. As directed by Section 404 of the Sarbanes-Oxley Act of 2002, or SOX 404, the SEC adopted rules requiring public companies to include a report of management on the company's internal controls over financial reporting in their annual reports, including Form 10-K. The Company can provide no assurance that it will comply with all of the requirements imposed thereby in the coming years. We can provide no assurance that we will comply with all of the requirements imposed thereby in the coming years. In the event that the Company ever identify significant deficiencies or material weaknesses in its internal controls that it cannot remediate in a timely manner, investors and others may lose confidence in the reliability of our financial statements.

Risks Related to Our Business

A substantial amount of our sales revenue is derived from sales to a limited number of customers, and our business will suffer if sales to these customers decline. We have derived a significant portion of our revenue from a limited number of customers. We have derived a significant portion of our revenue from a limited number of customers. For the year ended December 31, 2023 and 2022, our revenue was concentrated in our largest customer that accounted for approximately 16.3% and 22.3% of annual revenues respectively. For the year ended December 31, 2021, our revenue was concentrated in our largest customer that accounted for approximately 25.5% of annual revenues. As of December 31, 2023 and 2022, $195,276 or 10.3% and $46,788 or 4.1% of our accounts receivable, was due from our largest customer respectively. We do not have long term contractual arrangements or regular negotiation with most of these customers. The loss of one or more of these customers could damage our business, financial condition and results of operations. We are endeavoring but may not succeed expanding our customer base in order to reduce reliance on major customers. We do not conduct business in U.S.A. or European Union, which are major markets for IT Business. As a smaller IT Business, the loss of a single significant customer can have significant, adverse impact on our business and financial conditions, especially since we lack the resources to aggressively, effectively compete for new clients against larger competitors.

Impact of Coronavirus/COVID-19. As of the date of the filing of this Form 10-K, our operations are located primarily in Hong Kong with other operations in China and Philippines. Hong Kong has dropped most its COVID 19 restrictions as of April 1, 2023, including travel restrictions (excepting temperature checks at airports). Further, COVID 19 vaccination rates are above 90% of population for first and second stage vaccinations. The Company has not experienced any significant disruptions in business and business development operations for most of fiscal year 2023 and from January 2024 to the filing of this Form 10-K. That said, the ability of COVID 19 to rapidly develop new variants with differing vulnerability to existing vaccinations makes COVID 19 an ongoing risk to disrupt our business operations and business development efforts. Due to the unpredictability of COVID 19 mutations, it is uncertain what the full lasting and long-term impact of COVID-19 or variants on the future business of the Company and the impact on the demand for IT services in the Company’s key markets of Hong Kong, China and Philippines. As of the date of the filing of this Form 10-K, it is uncertain what the full short-term and long-term impact of COVID-19 on the future business of the Company and the impact on the demand for IT services in the Company’s key markets of Hong Kong, China and Philippines.

While we have not experienced any significant loss or shortage of personnel from COVID 19 pandemic as of the date of the filing of this Form 10-K, this pandemic, which may impact areas in waves and not in a single occurrence, or may mutate into a vaccine resistant strain that spreads rapidly, may cause a shortage of qualified personnel. Adequacy of qualified staffing is key to maintenance and growth of our IT Business and our IT Business is key to our financial condition and performance. While performing work by staffs in parts of the world outside of our key markets is a possible solution to any shortages of qualified staff in our key markets, we have not yet developed a contingency plan for remote personnel support of our IT Business or devoted resources to that endeavor. We have no significant experience in using personnel outside of our current market regions.

Our success depends on certain key personnel. We rely on highly skilled and qualified personnel, and if we are unable to continue to attract and retain such qualified personnel it will adversely affect our business. Our performance to date has been and will continue to be largely dependent on the talents, efforts and performance of our senior management and key technical personnel, who generally have, in our opinion, significant experience with our company and substantial relationships and reputations within the industry of our services. We do not currently have an employment agreement or non-competition agreement with our key executive personnel, or with most of our key technical and engineering personnel. We do not currently have an employment agreement with our key personnel, or with most of our key technical and engineering personnel. The loss of our executive officers or our other key personnel, particularly with little or no notice, could cause delays on business developments and projects and could have an adverse impact on our customers and industry relationships, our business, operating results or financial condition. While we may rely on independent contractors or consultants for technical needs, we may also experience an inability to hire such expertise in the future. The job market for experienced IT personnel is competitive in PRC and Hong Kong, our primary markets, as well as globally. We also lack the resources or funding to match more established competitors’ compensation packages for the kind of experienced executive personnel and key technical personnel that is critical to our company’s survival and success. We also lack the resources or funding to match more established competitors’ compensation packages for the kind of personnel that is critical to our company’s survival and success.

Our success depends to a significant extent on our ability to identify, attract, hire, train and retain qualified creative, technical and managerial personnel or to contract with such personnel as independent contractors. We expect competition for personnel with the specialized technical skills needed to create our products and provide our services will continue to intensify in our business because commerce’s reliance on technology increases in order to meet the competitive need for operational efficiencies and related automation and connectivity. We plan to hire individuals on a project-by-project basis, and individuals who work on one or more projects for us may not be available to work on future projects. If we have difficulty identifying, attracting, hiring, training and retaining such qualified personnel, or incur significant costs in order to do so, our business and financial results could be negatively impacted.

The Company has not developed a formal succession plan for key personnel and does not have key man life insurance. While VEII has adopted the Plan for incentive compensation, it has not issued any incentive compensation as of the date of the filing of this Form 10-K. The Company will evaluate issuance of incentive compensation in 2024.

Our successful pursuit of profitable business faces various risks and challenges, including:

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the success of our business will be primarily dependent on customer acceptance of our services and products, which is extremely difficult to predict in the highly competitive IT business industry, and our ability to obtain affordable, adequate funding to support efforts to promote our services and products and fund any expansion of business. As a microcap company with a lightly traded stock, we have to rely on private placements of stock or debt funding to acquire working capital for expansion of business. With the July 1, 2024, downgrade of our Common Stock to the Pink Sheet Limited Information tier, any equity placement funding will be difficult, if not unlikely, to achieve due decreased liquidity of the market for the Common Stock. While we have obtained credit lines in 2023, there is no assurance that these credit lines will adequately or timely fund any urgent need to develop and sustain new services or products, especially since they have been used to fund existing operations and business development efforts in our primary markets;

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achieving sustainable operating revenues in our core IT Business that is sufficient to support our business without equity or debt funding;

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the business can be capital-intensive in terms of labor costs and occasional need to purchase products or equipment for customer projects and our capacity to generate cash from our operations may be insufficient to meet our anticipated capital requirements, especially the capital needs of penetrating new markets and developing our services to meet customer demands;

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technological developments could render obsolete our technologies, services and products and undermine the competitiveness of our services and products in the industry and we may be unable to license or acquire the new technologies, services and products necessary to compete;

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the need to access expertise and technical resources in each market in which we may operate or seek to operate presents high capital costs that may be beyond our ability to fund – as such, we may be unable to bid for highly profitable, but high labor cost, projects or contract opportunities, which inability can limit our growth and profitability potential;

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we may be unable to compete for or afford key personnel in our industry that pays a premium for talent, especially since our common stock has a limited market price and limited liquidity;

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a shortage of qualified personnel could adversely impact our business operations and financial results since we use such personnel for customer work;

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technologies and customer tastes and demands can shift or change unexpectedly in the rapidly evolving IT industry and we may lack the wherewithal to respond to such changes; and

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any acquisitions we pursue in our industry and related industries could result in operating difficulties, dilution to our shareholders and other consequences harmful to our business. Integration of new acquisitions can undermine an acquiring company’s business strengths by diluting resources and manpower and imposing operational costs and resulting losses. We may lack sufficient internal controls and systems to properly handle the integration or management of new businesses or expanded operations.

As part of our growth strategy, and if we attain adequate funding as well as stability and profitability in our core business, we may selectively pursue strategic acquisitions in our industry and related industries. As of the date of the filing of this Form 10-K, additional funding that we have obtained has been applied to operational overhead and business development for existing operations. We have not attained sufficient funding to fund an acquisition or conduct extensive business development outside of our primary markets.

We may need additional and ongoing financing to fund our operations or to acquire or start new operations or business lines, which financing we may not be able to obtain on acceptable terms or at all, especially as a microcap, smaller company. Additional capital could be dilutive to our then current stockholders or result in increased interest expense and debt load in future periods. Additional capital raising efforts in future periods will be dilutive to our then current stockholders or result in increased interest expense and debt load in future periods. We have been able to obtain credit lines in July 2022 of $1 million, in January 2023 of $1.5 million and in December 2023 of $1 million for operating costs, including possible expansion of business operations. Nonetheless, we will need to raise additional and ongoing capital to fund our plans to invest in current business development, sustain current operations or and marketing initiatives and fund possible future acquisition. Due to the “penny stock” status of our Common Stock and lack of tangible assets required for traditional debt financing, we may be limited in our ability to obtain additional debt or obtain equity funding to meet operating costs or expansion of our operations in existing or new markets. Our future capital requirements depend on a number of factors, including our ability to manage any growth of our business and our ability to control our expenses while maximizing profits. Also, if we raise additional capital through debt funding, this will result in increased interest expense. Also, if we raise additional capital through the issuance of debt, this will result in increased interest expense. If we raise additional capital through the issuance of equity or convertible debt securities, the percentage ownership of our company held by existing public shareholders will be reduced and those shareholders will probably experience significant dilution due to the “penny stock” status of our Common Stock. If we raise additional capital through the issuance of equity or convertible debt securities, the percentage ownership of our company held by existing shareholders will be reduced and those shareholders will probably experience significant dilution due to the “penny stock” status of the VEII Common Stock.

New securities issued by us may contain certain rights, preferences or privileges that are senior to those of our Common Stock or other securities. Such seniority may adversely impact the rights and any possible financial return for our holders of the VEII Common Stock. We cannot assure investors that we will be able to raise the working capital as needed in the future on terms acceptable to us, if at all. We cannot assure investors that we will be able to raise the working capital as needed in the future on terms acceptable to us, if at all. If we do not raise capital as needed, we will be unable to implement our business development and business expansion strategy. If we do not raise capital as needed, we will be unable to operate our business or fully implement our business development and acquisition expansion strategy.

The July 1, 2024, downgrade of the Company’s Common Stock from OTCQB to Pink Sheets Limited Information will hinder any efforts to raise funding through sales of shares of Common Stock due to the decrease in liquidity of the public market for shares of Common Stock. The likelihood of the sale of securities convertible into shares of Common Stock would also be decreased by the downgrade of the shares of Common Stock.

We may not be able to adequately finance the significant costs associated with the development, licensing or purchase of new product lines and new services. While we have been able to secure a credit line for $1.5 million and $1 million for operating costs in January and December 2023 respectively, and a credit line for $1 million in July 2022, any technology business is subject to a demand to have the newest product and services to match changes in technology and customer purchasing habits. This technological cycle may require us from time to time to develop, license or purchase new products and develop or license new technologies to match changes in the technologies used by or preferred by our customers. This technological cycle will require us to develop, license or purchase new products and develop or license new services to match changes in the technologies used by or preferred by our customers. The cost of keeping pace on technologies, products and services that may be required by our customers may exceed our ability to fund from cash from operations and credit lines the development, purchase or licensing of those technologies, products and services. We do not possess the internal research and development capabilities and resources of many of our larger competitors. We do not possess the internal reserch and development capabilities and resources of many of our competitors, especially the larger ones.

We could be required to expend substantial funds for and commit significant resources to the following:

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training our personnel on new technologies, products and services;

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purchasing, licensing or developing new products for resell or new services;

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marketing and promotional costs for new products and services; and

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our future operating results may depend to a significant extent on our ability to continue to provide new and competitive products and services that compare favorably on the basis of cost and performance with the design and manufacturing capabilities of competitive third-party technologies. We may need to sufficiently increase our net sales to offset these increased costs, the failure of which would negatively affect our operating results. We will need to sufficiently increase our net sales to offset these increased costs, the failure of which would negatively affect our operating results.

A number of possible sources or causes may result in interruption or failure of our ability to timely provide our services and products, which could damage our reputation and have an adverse impact on our operating results. Our future success is significantly dependent on our ability to provide services and deliverables that consistently meet our customers’ needs. Our future success is significantly dependent on our ability to provide services and deliverables that consistently meet our customers’ needs. We may rely on contractors and their software applications, hardware and other information technology and communications systems for the development and provision of our services and deliverables to customers. This reliance on third parties may present problems in effectively performing services in a profitable or timely manner.

Our services, deliverables and products may be vulnerable to damage or interruption from earthquakes, hurricanes, terrorist attacks, floods, fires, power loss, telecommunications failures, cyber-attacks or computer viruses or other attempts to harm our systems, and similar events. Like all companies in the industry, we are also vulnerable to hackers and destructive computer programs. The expertise of hackers is constantly evolving and no system is absolutely secure from hackers or malicious software programs.

The long-term effects of climate change on the global and local economies and the IT industry and our IT Business in particular are unclear. Environmental regulations or changes in the supply, demand or available sources of energy or other resources may affect the availability or cost of goods and services, including natural resources, necessary to run our business. Climate changes may bring a decline in or disruptions in the economy of our markets or the world. Any decline in Hong Kong or PRC, or regional or global, economic conditions could lead to a decrease in customer discretionary spending, which in turn could adversely affect demand for our services. In addition, an increase in price levels generally, or in price levels in a particular sector such as the energy sector, could result in a shift in customers’ demand away from our services and products or make competitors’ services and products more attractive and more affordable. Such events could cause a decrease in the demand for our services and products, which would have an adverse effect on our profitability and operating results.

Political unrest in any of our markets could produce economic uncertainties that could adversely impact our future business and financial condition and performance.

Our markets are limited in number and we do not operate in some of the larger, lucrative IT Industry Markets. We are dependent on Hong Kong and, to a lesser extent, PRC for our customers and revenues. We lack extensive diversification into new geographical markets, which is a goal of our company, but we also believe there is sufficient business in Hong Kong and PRC to support our short-term business and financial goals and to support our foreseeable operating overhead. The acquisition of TapServices, Inc. is an effort to expand the reach of geographical markets beyond PRC and Hong Kong, but we remain committed to expanding our business in PRC and Hong Kong as our core geographical market. is an effort to expand the reach of geographical markets beyond PRC and Hong Kong SAR, but we remain committed to expanding our business in PRC and Hong Kong SAR as our core geographical market. TapServices, Inc. will need to be self-supporting in terms of revenues and meeting working capital needs in order to allow the other operating subsidiaries to dedicate funds to developing and supporting operations in the key China and Hong Kong markets.

Since we do not have revenue generating operations in North or South America, we do not anticipate any direct, immediate adverse consequences from any trade disputes between U.S. and China (other than any impact on China and Hong Kong economic conditions).

The Company is or could become subject to laws and regulations worldwide, changes to which could increase the Company’s costs and individually or in the aggregate adversely affect the Company’s business. Domestic and foreign laws and regulations could affect the Company’s activities including, but not limited to, in areas of privacy, labor, advertising, digital content, consumer protection, real estate, billing, e-commerce, promotions, quality of services, telecommunications, mobile communications and media, television, intellectual property ownership and infringement, tax, import and export requirements, anti-corruption, foreign exchange controls and cash repatriation restrictions, data privacy requirements, anti-competition, environmental, health and safety. Domestic and foreign laws and regulations could affect the Company’s activities including, but not limited to, in areas of privacy, labor, advertising, digital content, consumer protection, real estate, billing, e-commerce, promotions, quality of services, telecommunications, mobile communications and media, television, intellectual property ownership and infringement, tax, import and export requirements, anti-corruption, foreign exchange controls and cash repatriation restrictions, data privacy requirements, anti-competition, environmental, health and safety.

Operational and Legal Risks Associated with being a U.S. Public Company with Chinese-Based and Hong Kong-Based Operations

We operate primarily in Hong Kong and China and we are subject to significant political and economic uncertainties if Chinese government significantly alters the laws governing Hong Kong. We operate in Hong Kong and PRC. We operate in Hong Kong SAR and PRC. The control of the Communist Party over the government of PRC and Hong Kong injects potential risk exposure from sudden, unexpected changes in laws or regulations or trade regulations that could be adverse to the Company. The control of the Communist Party over the government of PRC and Hong Kong SAR injects potential risk exposure from sudden, unexpected changes in laws or regulations or trade regulations that could be adverse to the Company. Any changes in PRC laws and regulations, or their interpretation, or the imposition of new taxation, restrictions on currency conversion, imports and sources of supply, devaluations of currency or the nationalization or other expropriation of private enterprises could have a material adverse effect on our business, results of operations and financial condition. Any decrease in our revenues or an increase in operating costs (and corresponding reduction in our cash flows) would also adversely affect our ability to pay our indebtedness as it comes due.

The Chinese government may exercise significant oversight and discretion over the conduct of Company and Company’s operating subsidiaries in China as well as in Hong Kong (despite Hong Kong being a separate system from mainland China) and may intervene in or influence our operations and our status as a U.S. public holding company at any time. These Chinese governmental actions:

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could disallow our corporate structure as a U.S. public holding company in Hong Kong or our ownership of Chinese subsidiaries;

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could result in a material change in our operations, including, without limitation, reincorporation of companies, transfers of operations or assets to other jurisdictions, cessations of operations, bankruptcy, insolvency, liquidation, changes in business lines, efforts to list or continue to trade our securities on non-U.S. securities exchanges and quotation systems, and going private transactions – each of these transactions could adversely impact an investment in the Company;

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could hinder our ability to continue to offer securities to investors outside of China and Hong Kong or list our securities on any U.S. national securities exchange or OTCQB or Pink Sheets; and

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may cause the value of our securities to significantly decline or become illiquid investment or completely worthless.

Significant changes in PRC laws and regulations, or their interpretation, or the imposition of confiscatory taxation, restrictions on currency conversion, imports and sources of supply, devaluations of currency or the nationalization or other expropriation of private enterprises could have a material adverse effect on our business, results of operations and financial condition. Under its current leadership, the Chinese government has generally been pursuing economic reform policies that encourage private economic activity and greater economic decentralization. There is no assurance, however, that the Chinese government will continue to pursue these policies, or that it will not significantly alter these policies, from time to time without notice and in respect of Hong Kong SAR.

Chinese Government or Hong Kong Government may restrict our ability to transfer cash held in or from operations in China or Hong Kong. To the extent cash in the Company’s or its subsidiaries’ business is held in China or Hong Kong, or held by a Chinese or Hong Kong entity, those funds may not be available to fund operations of the Company or its subsidiaries or for other uses outside of China or Hong Kong due to interventions in or the imposition of restrictions and limitations on the ability of the Company or its subsidiaries by the Chinese government to transfer cash. There can be no assurance the Chinese government will not intervene in or impose restrictions on the ability of the Company or its subsidiaries to transfer cash outside of China or Hong Kong.

Investors may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing original actions in China or Hong Kong based upon U.S. laws, including the federal securities laws or other foreign laws, against us or our directors and executive officers who reside in China or Hong Kong. Most of our principal operating subsidiaries’ current operations and assets are located in Hong Kong or China. Moreover, six of our nine current directors and all of our executive officers are residents of Hong Kong. All or a substantial portion of the assets of these directors and executive officers are located outside the U.S. Our Chairman, Mr. Chan Heng Fai and Mr. Lim Sheng Hon Danny are residents of Singapore, and director Robert Trapp is a resident of the United States. Our senior officers, Mr. Tan Seng Wee, the Chief Executive Officer and a director, and Mr. Au Cheuk Lun, our Chief Financial Officer, as well as directors Tsang Po Wee, Lee Yuen Fong, Wong Shui Yeung, and Wong Tat Keung are all residents of Hong Kong.

As a result, it may not be possible to effect service of process within the U.S. or elsewhere outside of Hong Kong or China upon these directors and executive officers who reside in Hong Kong or may reside in or claim residence in China. In addition, uncertainty exists as to whether the courts of the Hong Kong or China would recognize or enforce judgments of U.S. courts obtained against us or such officers or directors predicated upon the civil liability provisions of the securities laws of the U.S. or any state thereof, or be competent to hear original actions brought in Hong Kong or China against us or those directors or executive officers predicated upon the securities laws of the U.S. or any state thereof. Under the Nationality Law of the People's Republic of China (“CNL”), which has been applied in the Hong Kong since 1 July 1997, and pursuant to Article 18 of and Annex III to the Basic Law, Hong Kong residents who are of Chinese descent and were born in the Chinese territories (including Hong Kong), or persons who satisfy the criteria laid down in the CNL as having Chinese nationality, are regarded as Chinese nationals by the Chinese government.

The legal and judicial systems in China are still rudimentary and evolving, and enforcement of existing laws is uncertain. As a result, it may be impossible to obtain swift and equitable enforcement of laws that do exist, or to obtain enforcement of the judgment of one court by a court of another jurisdiction. The Chinese legal system is based on the civil law regime, that is, it is based on written statutes. Unlike the U.S. legal system, a decision by one judge in China does not set a legal precedent that is required to be followed by Chinese judges in other cases. In addition, the interpretation of Chinese laws and Chinese court decisions may be varied to reflect domestic political changes or may be dictated or invalidated by the Chinese government.

While the Hong Kong court system is based on English common law system (like the United States court system) under the Basic Law, the “constitution” of Hong Kong written when United Kingdom handed control of Hong Kong to China in 1997, and has operated independently from Hong Kong government in the past, the independence of the Hong Kong judiciary has been undermined in the past three years by the Chinese government. Since the Chinese government has imposed national security laws of China in Hong Kong, the PRC National People’s Congress Standing Committee (“NPCSC”), which is a central authority of the Chinese government, has held that NPCSC decisions and directives are not reviewable by Hong Kong courts. The Court of Final Appeal, Hong Kong’s highest court, ruled in January 2021, that NPCSC decisions have the force of law in Hong Kong and are not subject to judicial review by Hong Kong courts. The former independence and integrity of the common law system of the Hong Kong courts have been compromised by Chinese government influence and direct intervention and investors face the same risks and challenges of obtaining service of process and pursuing and enforcing legal claims against our directors and senior officers who reside in China in the Chinese court system in obtaining service of process and pursuing and enforcing claims against our directors and senior officers who reside in Hong Kong in the Hong Kong court system.

The promulgation of new laws, changes to existing laws and the pre-emption of local regulations by national laws in China or Hong Kong may further and adversely affect investors seeking to enforce or assert claims against us or our management in Chinese or Hong Kong courts.

The Company and its operating subsidiaries have no assets or operations in United States. As a Nevada incorporated corporation, the Company has a registered agent office in the State of Nevada for service of process on the Company, but not for service of process on its officers and directors and not for service on its foreign subsidiaries and their officers and directors.

Risks Related to Our Common Stock

Pink Sheet Downgrade. On July 1, 2024, the Company’s Common Stock was downgraded by the OTC Markets Group from OTCQB to Pink Sheets Limited Information due to the Company’s failure to file the Form 10-K with the SEC by July 1, 2024. This downgrade further reduces the already limited liquidity of the shares of Common Stock and, combined with the low trading volume and low market price of the shares of Common Stock, greatly reduces the probability of raising working capital on affordable terms for necessary amounts through equity funding. Since the Company lacks hard assets suitable for asset-based lending, other than accounts receivable, the Company would experience difficulty in raising needed working capital from non-affiliated lenders. The Company may also be unable to obtain additional working capital from existing affiliated lenders who have had or have loans with the Company.

If the Company does not file the Form 10-K and the Quarterly Report on Form 10-Q for the fiscal quarter ending March 31, 2024, with the SEC by July 16, 2024, financial information qualifying the Company for a public market under SEC Rule 15c2-11 will expire and Company’s Common Stock will be downgraded to the Expert Market, effective July 17, 2024. The downgrade to Expert Market will end the ability of the public to directly trade the shares of Common Stock and limit access to quotes for those shares to broker-dealers and certain other sophisticated investors. This further downgrade would virtually eliminate the liquidity of the shares of Common Stock. The Company is endeavoring to timely file these reports, but the Company cannot make assurances that both reports will be filed by July 17, 2024.

If the Company fails to raise necessary working capital when needed and on affordable terms, then the Company may be unable to continue current operations, or may be required to reduce the extent of its operations and overhead, or both. Without additional, affordable working capital funding, the Company will not be able to expand its operations absent a significant increase in operating revenues and profit margins.

There currently is only a minimal liquid public market for our Common Stock. Failure to develop or maintain a liquid public trading market could negatively affect the value of our Common Stock and make it difficult or impossible for stockholders to sell their shares when desired or at desired prices.

Due to a lack of a significant public float, institutional investor support and primary market makers, VEII Common Stock is less liquid, receives little if no coverage by security analysts and news media, and generates lower prices than might otherwise be obtained if the Common Stock was listed on a national securities exchange or quoted on NASDAQ, had institutional investor support, active primary market makers and had analysts’ coverage. The penny stock status of the Company makes very difficult to attract institutional investor or market maker support, which in turn negatively impacts the liquidity and price of the Common Stock. The penny stock status of the Company makes very difficult to attract institutional investor or market maker support. The downgrade of the Common Stock to the Pink Sheets Limited Information as of July 1, 2024, has decreased the liquidity and increased the investment risk of the Common Stock. While the Company intends to re-qualify for quotation of its Common Stock on the OTCQB, it may be unable to do so. No assurances can be given of achieving quotation on the OTCQB for the Common Stock.

Some, but not all, of the factors which may delay or prevent the listing of our Common Stock on a more widely-traded and liquid market than the Pink Sheets Limited Information, or, if the Company can re-qualify for the OTCQB tier, the OTCQB include the following: our stockholders’ equity may be insufficient; the market value of our outstanding securities may be too low; our net income from operations may be too low; our Common Stock may not be sufficiently widely held; we may not be able to secure primary market makers for our Common Stock; and we may fail to meet the rules and requirements mandated by, any of the national securities exchanges to have our Common Stock listed or the standards of NASDAQ for quotation of the Common Stock. Our issued Common Stock is predominantly held by a relatively small number of shareholders. Our issued Common Stock is held by a relatively small number of shareholders. We would have to increase the public float considerably as part of any effort to enhance the liquidity of our Common Stock. The July 1, 2024 downgrade of the Common Stock to Pink Sheets Limited Information makes the qualification for quotation on the OTCQB the only available option for enhancing the liquidity of the public market for the shares of Common Stock and, even if quotation on the OTCQB is achieved, the liquidity of the shares of Common Stock on the OTCQB remain limited by the lack of institutional support for, lack of primary market makers for, absence of security firms coverage of and limited number of public shareholders for the shares of Common Stock. If the Company does not file the Form 10-K and its Quarterly Report on Form 10-Q for fiscal quarter ended March 31, 2024, by July 16, 2024, the OTC Markets Group will further downgrade the Common Stock to Pink Sheets Expert Market, which will end public investor direct trading of the shares of Common Stock and limit trading the share of Common Stock to broker-dealers and certain other sophisticated investor, and consequently, severely limit the liquidity of the shares of Common Stock.

The market price for our Common Stock can be volatile given our status as a relatively unknown company with a small and thinly traded public float, limited operating history of our current services and lack of sustained profits from fiscal year to fiscal year – all of those factors can foster fluctuations in our share price.

The market for our Common Stock can be characterized by significant price volatility when compared to seasoned issuers, and we expect that our share price will continue to be potentially more volatile than a seasoned issuer for the indefinite future. The volatility in our share price is attributable to a number of factors. First, as noted above, our Common Stock are sporadically and thinly traded. As a consequence of this lack of liquidity, the trading of relatively small quantities of shares by our shareholders may disproportionately influence the price of those shares in either direction. The price for our shares could, for example, decline precipitously in the event that a large number of shares of our Common Stock are sold on the market without commensurate demand, as compared to a seasoned issuer which could better absorb those sales without adverse impact on its share price. Secondly, we are a speculative or “risky” investment due to our limited operations and lack of sustained profits to date, and uncertainty of future market acceptance for our existing and potential products and services. As a consequence of this enhanced risk, more risk-adverse 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, including as to whether our common stock will sustain their current market prices, or as to what effect that the sale of shares or the availability of common stock for sale at any time will have on the prevailing market price.

The application of the “penny stock” rules could adversely affect the market price of our Common Stock and increase your transaction costs to sell those shares.

The SEC adopted Rule 3a51-1 (17 CFR §240.3a51-1) under the Exchange Act, 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 of Exchange Act requires:

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that a broker or dealer approve a person’s account for transactions in penny stocks, and

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the broker or dealer receives from the investor a written agreement to the transaction, setting forth the identity and

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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:

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obtain financial information and investment experience objectives of the person, and

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make a reasonable determination that the transactions in penny stocks are suitable for that person and 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:

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sets forth the basis on which the broker or dealer made the suitability determination, and

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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 common stock. Brokers may also have internal rules against trading, supporting as a market maker or otherwise handling or accepting for deposit any “penny stock” in general.

If the Company does not file the Form 10-K and Quarterly Report on Form 10-Q for fiscal quarter ended March 31, 2024, by July 16, 2024, then on July 17, 2024, the Company will no longer have the required financial information on file under Rule 15c-2-11, the Common Stock will be downgraded to Pink Sheets Expert Market and direct public access to trading those shares will end.

A limited number of our shareholders own a large percentage of our Common Stock, which will allow them to exercise significant influence over matters subject to shareholder approval.

Our executive officers, directors and their affiliated entities will beneficially own or control approximately 66.8% (See: Stock Ownership Table at page 55) of the outstanding shares of our Common Stock. Accordingly, these executive officers, directors and their affiliated entities, acting as a group, will have substantial influence over the outcome of corporate actions requiring shareholder approval, including the election of directors, any merger, consolidation or sale of all or substantially all of our assets, dissolution, or any other significant corporate transaction. These shareholders may also delay or prevent a change of control or otherwise discourage a potential acquirer from attempting to obtain control of us, even if such a change of control would benefit our other shareholders. This significant concentration of Common Stock ownership may adversely affect the trading price of our Common Stock due to investors’ perception that conflicts of interest may exist or arise.

Cybersecurity

We face an inherent business risk of exposure to product or service liability claims that could have a material adverse effect on our operating results. Because of the nature of our products and services, we face an inherent business risk of exposure to product or service-related liability claims arising from the claimed failure of our products or services, whether proprietary or licensed, to perform as intended and the resulting damages or harm to customer’s business, computers, network, e-pay or information systems, including cybersecurity breach claims and end user privacy claim liabilities. Because of the nature of our products and services, we face an inherent business risk of exposure to product or service related liability claims arising from the claimed failure of our products or services, whether proprietary or licensed, to perform as intended and the resulting damages or harm to customer’s business, computers, network, e-pay or information systems, including cybersecurity breach claims and end user privacy claim liabilities. We do not have insurance coverage for product and service liabilities, but we intend to obtain such insurance coverage upon receipt of sufficient funding or revenues from operations to afford such insurance coverage. The absence of product and service liability insurance could impose significant liabilities on our company and result in its failure.

Company’s Business is based on Services for Computer Systems and Networks, and related Systems management and Software Programming, and is inherently at risk of Cyberattacks. As a computer based business, the Company faces ongoing risks from cyberattacks – both to internal computer systems and networks and customer computer systems and networks using our services. The Company may be unable to anticipate all potential types of attacks or intrusions or to implement adequate security barriers or other preventative measures.

Network disruptions, security breaches and other significant failures of the Company’s computer systems and networks could (i) disrupt the proper functioning of our networks and systems and therefore our operations or those of certain of our customers; (ii) result in the unauthorized use of Company’s services or products without payment; (iii) result in the unauthorized access to, and destruction, loss, theft, misappropriation or release of proprietary, confidential, sensitive or otherwise valuable information of ours or our customers, including trade secrets, which others could use to compete against us or for disruptive, destructive or otherwise harmful purposes and outcomes; and (iv) require significant management attention or financial resources to remedy the damages that result or to change our systems and processes. We could be subject to claims for contract breach, damages, credits, fines, penalties, termination, or other remedies from our customers, and subject to additional scrutiny or litigation by regulators, as a result of network disruptions, security breaches and other significant failures of the above-described systems, any or all of which could result in a loss of business, damage to our reputation among our customers and the public generally and have a negative impact on our results of operations, financial condition, and cash flows.

The Company and one of its subsidiaries have been the subject of two (2) identified attempted cyberattacks involving domain name/email spoofing – where scammer pretended to be a professional advisor or one of our subsidiary companies – in 2024. We have researched these situations, taken remedial actions and do not believe any material impact has occurred and no Company or customer information has been compromised. We do not believe that the two known cyberattacks were “material” for reporting purposes on Current Report on Form 8-K. The two known cyberattacks in 2024 involved domain name/email spoofing where scammers posed as a professional provider of the Company or as one of the Company’s subsidiaries. As reported in this Form 10-K, the initial identified cyberattack resulted in the payment of $30,000 to a scammer bank account and the subsequent May 2014 cyberattack was identified and no financial harm or loss, or data breach, resulted. See Item 1C – Cybersecurity below at page 27.

Regulations

Inapplicability of the 2012 JOBS Act

We do not qualify as an “Emerging Growth Company” and do not qualify for any of the reduced or delayed disclosure options available to an Emerging Growth Company and as summarized below.

The JOBS Act provides scaled disclosure provisions for an eligible Emerging Growth Company, including, among other things: (a) permitting an Emerging Growth Company to include only two years of audited financial statements in a registration statement filed under the Securities Act for an initial public offering of common equity securities; (b) allowing an Emerging Growth Company to comply with the smaller reporting company version of Item 402 of Regulation S-K (Executive Compensation); and (c) removing the requirement that our independent registered public accounting firm attest to the effectiveness of Emerging Growth Company’s internal control over financial reporting in accordance with Section 404(b) of the Sarbanes-Oxley Act of 2002. The JOBS Act also exempts an Emerging Growth Company from the following additional compensation-related disclosure provisions that were imposed on U.S. public companies pursuant to the Dodd-Frank Act: the advisory “say-on-pay” vote on executive compensation required under Section 14A(a) of the Exchange Act; the Section 14A(b) requirements relating to shareholder advisory votes on golden parachute compensation; the Section 14(i) requirements for disclosure relating to the relationship between executive compensation and financial performance of the issuer; and the requirement of Dodd-Frank Act Section 953(b)(1), which will require disclosure as to the relationship between Chief Executive Officer and median employee pay. Under Section 102(b)(1) of the JOBS Act, "Emerging Growth Companies" can also delay adopting new or revised accounting standards until such time as those standards apply to private companies.

Climate change Disclosure Rules.

The Company did not experience any direct, material impact on business and financial condition in 2023 from pending or existing climate-change related legislation, regulations, and international accords in the U.S., the physical impacts of climate change, or perceived indirect material impact from business trends. On March 6, 2024, the Commission adopted final rules to require registrants to disclose certain climate-related information in registration statements and Form 10-K annual reports. The Company is uncertain as of the date of the filing of this Form 10-K on the impact of these new rules on the Company. On March 15, 2024, the U.S. Fifth Circuit Court of Appeals granted an administrative stay of the Commission’s new climate change disclosure rules.

ITEM 1B. UNRESOLVED STAFF COMMENTS.

None.

ITEM 1C. CYBER SECURITY

The Company manages cybersecurity and data protection through a continuously evolving framework. The framework is intended to allow us to identify, assess and mitigate the various risks we face, and assists us in establishing policies and safeguards, which are modified as new cybersecurity risks and incidents occur, to protect our systems and the information of those we serve. Our cybersecurity program is managed by our Chief Information Security Officer. The Audit Committee of the Board of Directors has oversight of our cybersecurity policy and is responsible for reviewing and assessing the Company’s cybersecurity risk management, procedures and resource commitment, including key risk areas and mitigation strategies. As part of this process, the Audit Committee receives regular updates from the Chief Information Security Officer on critical issues related to our information security risks, cybersecurity strategy, supplier risk and business continuity capabilities.

The Company’s framework includes an incident management and response program that monitors the Company’s information systems for vulnerabilities, threats and incidents; manages and takes action to contain incidents that occur; remediates vulnerabilities; and communicates the details of threats and incidents to management, including the Chief Information Security Officer, as deemed necessary or appropriate. Pursuant to the Company’s incident response plan, incidents are reported to the Audit Committee, appropriate government agencies and other authorities, as deemed necessary or appropriate, considering the actual or potential impact, significance and scope.

We work to require our third-party partners and contractors to handle data in accordance with our data privacy and information security requirements and applicable laws. We regularly engage with our suppliers, partners, contractors, service providers and internal development teams to identify and remediate vulnerabilities in a timely manner and monitor system upgrades to mitigate future risk, and ensure they employ appropriate and effective controls and continuity plans for their systems and operations.

To ensure that our program is designed and operating effectively, we perform regular vulnerability assessments and penetration tests to improve system security and address emerging security threats. We complete an enterprise information risk assessment as part of our overall enterprise information security risk management assessment, which is overseen by our Chief Information Security Officer. This risk assessment is a review of internal and external threats that evaluates changes to the information risk landscape to inform the program enhancements to be made in the future to rapidly respond and recover from potential attacks, including rebuild and recovery protocols for key systems. We evaluate our enterprise information security risk to ensure we address any unexpected or unforeseen changes in the risk environment or our systems and the resulting impacts are communicated to the Company’s overall enterprise risk management program. We believe our Chief Information Security Officer, who has over 20 years of experience managing information technology and cybersecurity matters, has the appropriate knowledge, experience and expertise to effectively manage our cybersecurity program.

The Board of Directors has oversight for the most significant risks facing us and for our processes to identify, prioritize, assess, manage, and mitigate those risks. The Audit Committee has been designated by our Board to oversee cybersecurity risks. The Audit Committee receives regular updates on cybersecurity and information technology matters and related risk exposures from our Chief Information Security Officer as well as other members of the senior leadership team. The Board also receives periodic updates from management and the Audit Committee on cybersecurity risks.

As of December 31, 2023, the Company had not identified any risks from cybersecurity threats that have materially affected or are reasonably likely to materially affect the Company, including our business strategy, results of operations or financial condition, but there can be no assurance that any such risk will not materially affect the Company in the future, especially in light of the continuing efforts of sophisticated hackers to develop new means, and more effective versions of existing means, accessing and fraudulently exploiting companies’ computer and network systems and communications systems. For further information about the cybersecurity risks we face, and potential impacts, see Part I, Item 1A, “Risk Factors.”

April 2024 Email Spoofing Incident. At 10:25 p.m., local Hong Kong SAR time, on April 9, 2024, the Company received information that indicated a possible email spoofing incident involving a wire transfer payment of accounting fees owed to the Company’s public auditor. By April 11, 2024, the Company verified that the Company had wired $30,825 as an intended payment of accounting fees owed to the public auditor to a third-party bank account on March 27, 2024, as a result of email spoofing presenting an invoice under the identity of the public auditor. An internal incident report was distributed by the Company’s Chief Information Security Officer about this email spoofing incident to Company’s senior officers, finance department personnel, Audit Committee and the Board. Based on conversations with Company’s bank and local law enforcement, the Company does not believe that recovery of the $30,825 payment is possible. As a result of an internal review of this email spoofing incident involving the senior officers of the Company, the Company’s Chief Information Security Officer and Company’s Audit Committee, the Company adopted the following actions as of April 12, 2024:

- Only verified email addresses allowed for incoming and outgoing emails by the Company email system;

- Briefing company personnel about the incident and cybersecurity safeguard measures adopted;

- Overall enterprise information security risk management assessment, overseen by our Chief Information Security Officer, to determine any additional safeguards, both technology based and internal processes, for email spoofing and related cybersecurity risks; and

- Established regular cybersecurity and information technology matters and related risk exposure reports and briefings of Audit Committee.

The Company does not believe the April 2024 email spoofing incident was “material” due to the limited amount of money involved and the corrective measures adopted to prevent future incidents of a similar nature.

The Company identified another email spoofing effort in May 2014 by a scammer pretending to be one of the Company’s subsidiaries and asking an existing customer for payment owed to the subsidiary to be sent to the scammer’s bank account. This effort was detected by the Company and the customer and no money was sent to the scammer’s bank account.

Company or its legal counsel filed reports of these incidents with appropriate regulatory and enforcement agencies in the appropriate jurisdictions.