Taoping Inc.

Company Overview

Business Model: Taoping Inc. is a provider of cloud-app technologies for Smart City IoT platforms, digital advertising delivery, and other internet-based information distribution systems in China. The company's Internet ecosystem facilitates branding, information dissemination, and resource exchange within the new media community. It offers a comprehensive portfolio of software and hardware with integrated solutions, including Information Technology infrastructure, Internet-enabled display technologies, and IoT platforms, serving customers in government, education, residential community management, media, transportation, and other private sectors. Revenue is generated from sales of hardware products, software products, system integration services, and related maintenance and support services, with an expectation of increasing recurring monthly revenues from cloud-based Software as a Service (SaaS) offerings.

Market Position: The company primarily operates in China's out-of-home advertising market, driven by urbanization and technological advancements such as the migration of display terminals from offline to online, the adoption of Quick Response (QR) codes, and the integration of Artificial Intelligence (AI). Taoping Inc. positions itself competitively by offering integrated ecosystem solutions that combine technology platforms, resource exchange, and big data services. Its proprietary Cloud-Application-Terminal (CAT) platform, coupled with a nationwide physical network of cloud-based display terminals, creates significant barriers to entry. The company also leverages the Taoping Alliance, a new media operating organization it founded, to enhance market expansion and industry reputation across China.

Recent Strategic Developments:

• 2024: Established Taoping Industrial (Yunnan) Co., Ltd. to explore smart agricultural related businesses in Yunnan Province. Unveiled an upgraded AI-powered smart terminal, integrating AI Generative Artificial Intelligence (AIGC) with its intelligent cloud platform technology. Signed a non-binding letter of intent to acquire 100% of Shenzhen Yunti Internet of Things Co., Ltd., aiming to expand its presence in the elevator equipment and service industry.
• 2023: Entered into long-term strategic cooperation agreements with Zhaoyuan City, Shandong Province, and Wuxuan County, Guangxi Province, to provide cloud-based intelligent product solutions (including IoT Smart Rest Station, autonomous street sweepers, smart large screen displays, and off-grid wastewater treatment solutions) and collaborate on environmental protection and urban/rural revitalization. Established Taoping EP Holdings (Shenzhen) Co., Ltd. (51% stake) to explore off-grid wastewater treatment. Acquired 80% equity of Fujian Taoping Investment Co., Ltd. (now 100% owned) to expand digital advertising and other businesses in Fujian Province. Established Taoping (Guangxi) EP Tech Co., Ltd. to expand wastewater treatment in Guangxi Province.
• Business Realignment: Ceased cryptocurrency mining operations by December 2022 and disposed of related subsidiaries (Taoping Digital Assets (Hong Kong) Limited, Taoping Digital Assets (Asia) Limited, Taoping Capital Limited) in 2023. Dissolved Zhenjiang Taoping IoT Tech. Co., Ltd. in June 2024 and Taoping Digital Tech. (Jiangsu) Co., Ltd. in January 2025 as part of business realignment.

Geographic Footprint: Taoping Inc. is a British Virgin Islands (BVI) holding company that conducts its operations primarily through its subsidiaries in mainland China and Hong Kong. Its key markets and operational regions are concentrated within the People’s Republic of China, including Shenzhen, Guangdong, Fujian, Guangxi, and Yunnan provinces.

Cross-Border Operations: Taoping Inc. controls its operating subsidiaries in China through Taoping Holdings Limited (BVI) and Taoping Group (China) Ltd. (Hong Kong). Funding from the BVI holding company to its Chinese subsidiaries is permitted through shareholder loans or capital contributions, subject to PRC government registration and filing requirements. PRC regulations restrict dividend payments from subsidiaries to accumulated profits, after mandatory allocations to statutory reserve funds. The company's operations are subject to the regulatory frameworks of the British Virgin Islands, Hong Kong, and the People’s Republic of China, including evolving laws on foreign investment, data security, and internet advertising. The functional currency of PRC subsidiaries is RMB, Hong Kong subsidiaries is HKD, and BVI/US entities is USD, exposing the company to foreign exchange risk.

Financial Performance

Revenue Analysis

Profitability Metrics:

• Gross Margin (2024): 21.2%
• Operating Margin (2024): -4.4%
• Net Margin (2024): -5.0%

Investment in Growth:

• R&D Expenditure (2024): $2.4 million (6.6% of revenue)
• Capital Expenditures (2024): $1.1 million
• Strategic Investments (2024): Cash paid for equity investments of $22,252.

Currency Impact Analysis:

• Substantially all consolidated revenues and costs and expenses are denominated in RMB. The company's reporting currency is the U.S. dollar, creating exposure to foreign exchange risk from fluctuations between the U.S. dollar and RMB.
• The company has not entered into any hedging transactions to reduce its exposure to foreign exchange risk.
• An average appreciation (depreciation) of the RMB against the U.S. dollar of 5% would increase (decrease) comprehensive income by $1.2 million based on 2024 figures.

Business Segment Analysis

Cloud-based Technology (CBT) Segment

Financial Performance:

• Revenue: $36.6 million (-4.8% YoY)
• Operating Income: $0.5 million
• Operating Margin: 1.4%
• Key Growth Drivers: Continued urbanization in China, increasing demand for out-of-home digital advertising, the ongoing shift from offline to online display terminals, the widespread adoption of QR codes for targeted advertising, and the strategic integration of AI technologies for enhanced advertising solutions. Recent strategic agreements with local governments for smart city solutions and environmental governance, alongside new initiatives in smart agriculture, are expected to drive future growth.

Product Portfolio:

• Cloud-based products, high-end data storage servers, and related services.
• Industry-specific integrated advertisement display terminal products.
• Digital advertising distribution technology platform, resource exchange and sharing, and big data analysis services.
• Proprietary Cloud-Application-Terminal (CAT) platform, encompassing cloud infrastructure, software applications, and high-definition digital display terminals (18.5 to 84 inches).
• "Taoping" online resource exchange platform (www.taoping.cn) and Taoping App for mobile ad distribution.
• Big data analysis services for advertising optimization.
• Industry-specific ecosystem solutions including New Media Elevator Management, New Media Transportation Management, and New Media Community Management.
• New AI-powered smart terminal integrating AIGC with intelligent cloud platform technology.
• Exploration of smart agricultural related businesses.

Market Dynamics:

• Operates in a highly competitive market characterized by rapid technological changes, evolving industry standards, and dynamic customer demands.
• Competes with numerous IT service companies and advertising agencies.
• Differentiates through integrated ecosystem solutions, high scalability, robust security measures, and a unique combination of digital network and physical assets.
• Benefits from market trends towards precision advertising and the increasing adoption of AI in advertising for programmatic buying and content generation.

Geographic Revenue Distribution:

• China: $36.6 million (100% of segment revenue)
• Growth Markets: Expanding presence in various cities and regions across mainland China through the Taoping Alliance and strategic local government partnerships.

Traditional Information Technology (TIT) Segment

Financial Performance:

• Revenue: $0.09 million (-60.4% YoY)
• Operating Loss: $(0.09) million
• Operating Margin: -100.0%
• Key Growth Drivers: This segment is being phased out as part of the company's business transformation, with declining revenue and continued operating losses.

Product Portfolio:

• Historically provided project-based technology products and system integration services.
• Solutions included Geographic Information Systems (GIS), Digital Public Security Technology (DPST), and Digital Hospital Information Systems (DHIS).
• Revenue was primarily from sales of hardware and system integration services.

Market Dynamics:

• Historically served public sector entities in China.
• The segment's decline is attributed to changes in government policies and regulations since 2012, leading to project postponements and uncollectible receivables.

Geographic Revenue Distribution:

• Primarily in mainland China.

International Operations & Geographic Analysis

Revenue by Geography:

International Business Structure:

• Subsidiaries:
  • Taoping Holdings Limited (BVI)
  • Taoping Group (China) Ltd. (Hong Kong)
  • Information Security Tech. (China) Co., Ltd. (Shenzhen, China)
  • TopCloud Software (China) Co., Ltd. (Shenzhen, China)
  • Information Security IoT Tech. Co., Ltd. (Shenzhen, China)
  • Biznest Internet Technology Co., Ltd. (Shenzhen, China)
  • iASPEC Bocom IoT Technology Co. Ltd. (Shenzhen, China)
  • Taoping New Media Co., Ltd. (Shenzhen, China)
  • Taoping EP Holdings (Shenzhen) Co., Ltd. (Shenzhen, China)
  • Fujian Taoping Investment Co., Ltd. (Fujian, China)
  • Taoping (Guangxi) EP Tech Co., Ltd. (Guangxi, China)
  • Taoping Industrial (Yunnan) Co., Ltd. (Yunnan, China)
• Joint Ventures: The company holds equity method investments in Qingdao Taoping IoT Co., Ltd. (47%), Yunnan Taoping IoT Co., Ltd. (40%), Jiangsu Taoping IoT Technology Co., Ltd. (25%), and Jiangsu Taoping New Media Co., Ltd (21%).

Cross-Border Trade:

• Transfer Pricing: The company is subject to PRC tax regulations on transfer pricing, which can introduce complexities and risks for inter-company transactions.

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: No share repurchases were disclosed.
• Dividend Payments: Taoping Inc. has not paid any cash dividends to date and does not anticipate paying any in the foreseeable future, intending to retain earnings for business development and expansion.
• Dividend Yield: Not applicable.
• Future Capital Return Commitments: No specific future capital return commitments were disclosed.

Balance Sheet Position:

• Cash and Equivalents (2024): $1.6 million
• Total Debt (2024): $7.9 million (Short-term bank loans: $2.1 million; Long-term bank loans: $5.8 million)
• Net Cash Position (2024): $(6.3) million (Net Debt)
• Debt Maturity Profile: Short-term and long-term bank loans mature on various dates from July 15, 2025, to October 31, 2027. Short-term loans may be extended for another year.

Cash Flow Generation:

• Operating Cash Flow (2024): $(2.4) million
• Free Cash Flow (2024): $(3.4) million
• Cash Conversion Metrics: The company experienced negative operating cash flow and free cash flow in 2024, indicating challenges in generating cash from core operations.

Currency Management:

• Cash holdings by major currencies: As of December 31, 2024, approximately $0.7 million was held outside the PRC (likely HKD/USD) and $0.9 million in the PRC (RMB).
• Hedging Strategies: The company has not entered into any hedging transactions to mitigate foreign exchange risk.

Operational Excellence

Production & Service Model: Taoping Inc.'s production model for its Cloud-based Technology (CBT) segment involves outsourcing hardware manufacturing (e.g., digital ads display terminals, high-end data storage servers) to Original Equipment Manufacturer (OEM) suppliers, while the company acts as the principal. Its service delivery model focuses on designing, developing, and providing software products, upgrades, and maintenance. The operational philosophy emphasizes automating interactive workflows for advertising agencies and customers, offering end-to-end digital advertising solutions, and leveraging its proprietary CAT platform for integrated technology solutions.

Global Supply Chain Architecture: Key Suppliers & Partners:

• OEM Partners: Responsible for hardware production and bear the costs of product warranty for digital displays and data servers.
• Technology Partners: Collaborates with vendors for specialized software development, such as the vehicular IOT smart advertising software.
• Taoping Alliance: A network of advertising agencies across China that enhances market reach and distribution.
• Strategic Cooperation Agreements: Partnerships with local governments in China for smart city, environmental governance, and smart agriculture projects.

Facility Network:

• Executive Offices: Located in Shenzhen, Guangdong, People’s Republic of China.
• Manufacturing: Hardware production is outsourced to OEM partners, with the company having closed its own manufacturing facilities in 2015.
• Research & Development: Internal R&D efforts are focused on software product development, including AI integration (Cloud Nest AI) and new applications for smart cities and smart agriculture.
• Distribution: Utilizes a cloud-based new media sharing platform and the Taoping Alliance national sales network for distribution.

Operational Metrics:

• Employees: As of December 31, 2024, the company had 33 full-time employees, a decrease from 56 in 2023 and 63 in 2022.
• Warranty: Offers a one-year or three-year warranty for TIT segment services and a one-year warranty for CBT digital displays and data servers, with OEM partners ultimately liable for hardware warranty costs.

Market Access & Customer Relationships

Go-to-Market Strategy: Distribution Channels:

• Direct Sales: Achieved through direct customer engagement, referrals, and leveraging strong brand recognition.
• Channel Partners: Engages in developing distributors and dealers to expand market reach.
• Digital Platforms: Operates Taoping Net (www.taoping.cn) as an online resource exchange platform for advertising and the Taoping App for mobile ad distribution and management.
• Marketing Campaigns: Participates in exhibitions, trade shows, seminars, and presents solutions to prospective customers.
• Strategic Alliances: The Taoping Alliance, a new media operating organization, is a key component of its market expansion strategy.

Customer Portfolio: Enterprise Customers:

• Tier 1 Clients (2024): Yayu Technology (Jiangsu) Co., Ltd. (7% of revenue), Guangzhou Qiaocheng Information Technology Co., Ltd. (5%), Guangxi Wancang Technology Group Co., Ltd. (4%), Shenzhen Chuangzhi Tiancheng Technology Co., Ltd. (4%), Shenzhen Beidian Zhengguang Technology Co., Ltd. (2%).
• Customer Concentration: The top five customers accounted for 22% of total revenues in 2024. No single customer accounted for greater than 10% of total revenues in 2024.
• Key Customer Types: Diverse customer base spanning new media, healthcare, education, residential community management, government, transportation, advertising agencies, auto dealerships, and educational institutes.

Regional Market Penetration:

• China: The primary market for all business operations, with a focus on expanding into new cities and business territories.
• Growth Markets: Actively pursuing emerging market opportunities, including smart charging piles and smart agriculture, by leveraging its national distribution network and local partnerships.

Competitive Intelligence

Global Market Structure & Dynamics

Industry Characteristics: The out-of-home digital advertising market in China is estimated to reach RMB 295 billion in 2023, with a 14% CAGR, driven by urbanization, economic growth, industry consolidation, and technological advancements. Key trends include the shift to networked display terminals, the adoption of QR codes for precision advertising, and the increasing integration of Artificial Intelligence (AI) for recommendations, programmatic advertising, and content generation. The IT services market is characterized by rapid technological change and evolving customer demands.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors:

• In Cloud-based Technology (New Media Industry): 56iq.com, Fujian Star-net Communication Co., Ltd, Shanghai View Show Technology Co., Ltd., and Maipu Communications Technology Co., Ltd.
• In Advertising Agencies (post-TNM acquisition): Focus Media, Air Media, and Vision China in certain geographic regions in China.

Regional Competitive Dynamics: Taoping Inc. differentiates itself through its integrated ecosystem solutions, high scalability, robust security, and the strategic combination of digital network capabilities with physical assets. The company actively expands its market presence across China by leveraging the Taoping Alliance and adapting to regional market variations.

Risk Assessment Framework

Strategic & Market Risks

Global Market Dynamics:

• Unfavorable Economic Conditions: Slowdowns in the global or Chinese economy, exacerbated by geopolitical tensions (e.g., Russia-Ukraine conflict, Hamas-Israel conflict, Red Sea attacks), and U.S.-China trade disputes (tariffs, trade war), could significantly reduce customer spending on advertising and IT, adversely impacting demand for the company's products and services.
• Technology Disruption: The rapid pace of technological change, frequent introduction of new applications, and evolving industry standards pose a risk of product obsolescence. Failure to continuously innovate and offer competitive new products and services could materially affect future operations.
• Customer Concentration: A significant portion of the company's revenues has historically been derived from a limited number of customers or related parties, with the top five customers accounting for 22% of total revenues in 2024. The loss of any major customer could materially and adversely affect revenues and shareholder value.

Operational & Execution Risks

Global Supply Chain Vulnerabilities:

• Supplier Dependency: Reliance on OEM partners for hardware production and warranty services introduces dependency risks.
• Regional Disruptions: Public health epidemics (e.g., COVID-19), political instability, economic downturns, or natural disasters in China could disrupt operations, supply chains, and customer demand.
• Trade Restrictions: Imposition of tariffs or other trade restrictions by the U.S. or China could increase costs, affect supplier relationships, and negatively impact the global economy, thereby harming the company's business.

Financial & Regulatory Risks

Currency & Financial Risks:

• Foreign Exchange: Substantial exposure to foreign exchange risk due to RMB-denominated revenues and costs, while reporting in USD. Limited availability and effectiveness of hedging transactions in China.
• Interest Rate Risk: While most debt is fixed-rate, a hypothetical 1.0% increase in annual interest rates could increase net loss before income taxes by approximately $79,000 (based on 2024 figures).
• Credit & Liquidity: Independent auditors have expressed substantial doubt about the company's ability to continue as a going concern, citing net losses, negative operating cash flows, competitive market conditions, and uncertainty regarding future financing. The ability to raise additional capital through equity or debt is critical for operations and growth.
• Debt Covenants: PRC subsidiaries' ability to distribute dividends is restricted by retained earnings, statutory reserve funds (10% of after-tax profit until 50% of registered capital), and potential debt covenants.
• Convertible Notes: Variable conversion prices in convertible notes could lead to substantial dilution for existing shareholders.

Regulatory & Compliance Risks:

• Multi-Jurisdictional Compliance (PRC): Operations in China are subject to a complex and evolving legal and regulatory framework, including the Company Law, Foreign Investment Law, data security laws, cybersecurity regulations, and advertising rules. Uncertainties in interpretation and enforcement could impact business viability and incur significant compliance costs.
• Overseas Listing Regulations (PRC): Recent CSRC Trial Measures and related guidelines for overseas securities offerings by PRC domestic companies may impose new filing requirements, potentially limiting the company's ability to offer securities or affecting their value.
• U.S. Regulatory Scrutiny: Subject to enhanced SEC disclosure requirements and the Holding Foreign Companies Accountable Act (HFCA Act), which mandates PCAOB inspection of auditors. Future inability of the PCAOB to inspect the company's auditor could lead to delisting from U.S. exchanges.
• Data Security & Privacy: Compliance with China's Data Security Law, Cybersecurity Review Measures, and Personal Information Protection Law may entail significant expenses and could materially affect business operations.
• Intellectual Property: Risks include inadequate protection of proprietary technology and potential claims of infringement by third parties, which could result in significant expenses or restrictions on business.
• Employee Benefit Plans: Failure to comply with PRC regulations regarding contributions to government-sponsored employee benefit plans could result in penalties.
• "Resident Enterprise" Classification: Potential classification as a "resident enterprise" by PRC tax authorities could lead to unfavorable tax consequences, including a 25% enterprise income tax on worldwide income and withholding taxes on dividends.
• Indirect Transfers of Equity Interests: Uncertainties surrounding PRC tax rules (Bulletin 37 and Bulletin 7) on indirect transfers of PRC assets could result in additional tax liabilities.
• Foreign Corrupt Practices Act (FCPA) & Chinese Anti-Corruption Laws: Exposure to liabilities for improper payments or offers, potentially leading to severe criminal or civil sanctions.

Geopolitical & External Risks

Country-Specific Risks:

• Political Risk (China): The PRC government's substantial influence over business activities means changes in legal, political, and economic policies could materially and adversely affect the company.
• Economic Risk (China): Economic slowdowns, U.S.-China trade tensions, and broader global economic conditions can impact operations and financial performance.
• Regulatory Changes (China): The evolving regulatory landscape, particularly in internet, data security, and foreign investment, could introduce new restrictions or increase compliance costs.

Innovation & Technology Leadership

Research & Development Focus: Taoping Inc. maintains a strong focus on research and development within its Cloud-based Technology (CBT) segment, continuously investing to enhance existing products and develop new software applications and services. A key strategic initiative is the development of Cloud Nest AI, a powerful generative AI system integrated across its cloud platform, aimed at accelerating growth through capabilities in content generation, human-computer interaction, visual perception, and cognitive decision-making, particularly in advertising media. The company is also exploring new business opportunities in smart agriculture.

Global R&D Network: While specific global R&D centers are not detailed, the company's R&D efforts are centralized around developing proprietary software products for the private sector, leveraging its extensive experience in large-scale IT projects. The innovation pipeline includes the new AI-powered smart terminal and smart city renewal solutions, such as IoT Smart Rest Stations, autonomous street sweepers, and off-grid wastewater treatment.

Intellectual Property Portfolio: The company safeguards its intellectual property through a combination of copyrights, trademarks, and trade secret laws. As of December 31, 2024, its wholly-owned subsidiaries hold 187 registered and copyrighted software products, 501 registered trademarks, and 30 patents. The company also owns key domain names (http://www.taop.com; http://www.taoping.cn; and http://www.pubds.com).

Technology Partnerships: Taoping Inc. engages in strategic alliances with local governments for the development and implementation of smart city, environmental, and smart agriculture solutions.

Leadership & Governance

Executive Leadership Team

International Management Structure: The company's management structure includes regional leadership within its Chinese subsidiaries, with overall oversight from the executive leadership team.

Board Composition: The Board of Directors consists of five directors: Jianghuai Lin, Zhiqiang Zhao, Ping Cai, Yong Jiang, and Remington C.H. Hu. The Audit, Compensation, and Governance and Nominating Committees are each composed entirely of independent directors (Ping Cai, Yong Jiang, and Remington C.H. Hu), meeting Nasdaq's independence criteria. Mr. Hu chairs the Audit Committee, Ms. Cai chairs the Compensation Committee, and Mr. Jiang chairs the Governance and Nominating Committee.

Regulatory Environment & Compliance

Multi-Jurisdictional Regulatory Framework: Primary Regulatory Environments:

• British Virgin Islands: As a BVI-incorporated holding company, Taoping Inc. is exempt from BVI income taxes for non-residents and material exchange controls.
• Hong Kong: Its Hong Kong subsidiaries are subject to a Hong Kong Profits Tax rate of 16.5%.
• People’s Republic of China: The company's primary operations are subject to a comprehensive and evolving PRC regulatory framework, including:
  • Company Law: Governs corporate entities, with recent amendments effective July 1, 2024, impacting capital contribution requirements.
  • Foreign Investment Law and Negative List (2024): Regulates foreign investment; the company believes its current PRC business is not on the Negative List.
  • Mobile Internet Applications Information Services (APP Provisions): Regulates mobile apps, requiring identity authentication, user information protection, and content examination.
  • Internet Information Security & Data Security Law: Imposes obligations on network operators to safeguard security, prevent data leakage, and comply with data classification and hierarchical protection systems.
  • Cybersecurity Review Measures & Personal Information Protection Law: Mandates cybersecurity reviews for activities affecting national security and sets comprehensive data privacy and protection requirements, including data localization for critical information infrastructure operators.
  • Administrative Measures for Internet Advertising: Strengthens oversight of internet advertising, requiring content review and prohibiting certain ad types.
  • Anti-Monopoly Law: Regulates concentrations of undertakings and monopolistic practices, including those involving variable interest entities (VIEs), though the company dissolved its VIE structure in 2021.
  • Labor Laws: Requires compliance with employment contracts, minimum wages, and limits on dispatched workers.
  • Employee Benefit Plans: Mandates participation in state pension, social insurance, and housing provident funds.
  • Foreign Currency Exchange: RMB is not freely convertible for capital account items, requiring SAFE approvals for cross-border capital transfers.
  • Overseas Investment by PRC Residents (SAFE Circular 37): Requires PRC residents to register offshore entities for overseas investment.
  • Stock Incentive Plans (SAFE Stock Incentive Plan Notice): Mandates foreign exchange registration for PRC residents participating in overseas stock incentive plans.
  • Enterprise Income Tax Law (EIT Law): Imposes a 25% EIT rate and a 10% withholding tax on dividends to non-resident enterprises, with potential for "resident enterprise" classification.
  • Value-Added Tax (VAT): Subject to various VAT rates depending on the nature of goods and services.

Cross-Border Compliance:

• Export Controls & Sanctions Compliance: The company faces general risks related to multi-jurisdictional export controls and sanctions compliance.
• Anti-Corruption: Subject to the U.S. Foreign Corrupt Practices Act (FCPA) and Chinese anti-corruption laws, with risks of liabilities for improper payments.

International Tax Strategy:

• Transfer Pricing: Subject to PRC transfer pricing regulations, which can impact inter-company transactions.
• Tax Treaties: May benefit from tax treaties (e.g., between China and Hong Kong) for preferential withholding tax rates on dividends.
• BEPS Compliance: Subject to global Base Erosion and Profit Shifting (BEPS) regulations.

Environmental & Social Impact

Global Sustainability Strategy: Taoping Inc. is engaged in sustainability initiatives through strategic collaborations with local governments in China. These partnerships focus on low-carbon environmental protection, urban renewal, rural ecological revitalization, and specific environmental governance projects such as wastewater, waste gas, and garbage treatment.

Regional Sustainability Initiatives:

• China: The company implements local environmental programs and ensures regulatory compliance as part of its smart city solutions, aiming to improve public services and environmental quality in urban and rural areas.

Social Impact by Region:

• Community Investment: Through its Smart City IoT platforms and solutions, the company contributes to local community development by enhancing public services and environmental protection.
• Labor Standards: The company adheres to PRC Labor Law and Labor Contract Law, providing employment contracts and participating in state-mandated social insurance and housing provident funds for its employees in China.

Currency Management & Financial Strategy

Multi-Currency Operations: Currency Exposure:

Hedging Strategies:

• Taoping Inc. has not entered into any hedging transactions to manage its exposure to foreign exchange risk, including transaction, translation, or economic hedging. This exposes the company to potential impacts from fluctuations in exchange rates, particularly between the RMB and the U.S. dollar.