MicroAlgo Navigates Delisting Risk, PRC Regulatory Hurdles

TL;DR

**MLGO is a high-risk bet on Chinese tech, with delisting fears and regulatory uncertainty overshadowing any potential growth.**

AI Summary

MicroAlgo Inc. (MLGO) operates as a holding company, conducting its business primarily through subsidiaries in the PRC, focusing on central processing algorithms. The company's Class A Ordinary shares are listed on Nasdaq, with 10,941,519 shares outstanding as of December 31, 2025, alongside 1,495,942 Class B Ordinary shares. A significant risk highlighted is the potential for delisting under the Holding Foreign Companies Accountable Act (HFCA Act) if the PCAOB is unable to inspect its auditor, Onestop Assurance PAC, for two consecutive years, despite Onestop not being on the PCAOB-Identified Firms list for the most recent period. The company also faces evolving PRC regulations, including the CSRC's Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies, which will require future filings for capital-raising activities. MicroAlgo's ability to pay dividends is contingent on distributions from its PRC subsidiaries, and funding to these subsidiaries is subject to PRC laws and SAFE registration requirements. The company has a limited operating history and faces challenges in a rapidly evolving market, including competition and the need to keep pace with technological developments.

Why It Matters

MicroAlgo's 20-F filing reveals critical regulatory and operational challenges that could significantly impact investors, employees, and its market position. The looming threat of delisting under the HFCA Act, despite its auditor being PCAOB-compliant for now, creates substantial uncertainty for shareholders and could erode investor confidence. Furthermore, the evolving and complex PRC regulatory environment, particularly regarding capital flows and future fundraising, could limit the company's growth and operational flexibility, potentially hindering its ability to compete effectively in China's central processing algorithms industry against domestic and international rivals. Employees and customers could face instability if these regulatory pressures constrain the company's long-term viability.

Risk Assessment

Risk Level: high — The risk level is high due to the explicit threat of delisting under the HFCA Act if the PCAOB cannot inspect its auditor for two consecutive years, as stated in 'Item 3. Key Information'. Additionally, the company operates in China, where it is subject to 'extensive and evolving legal system' and 'significant oversight and control over foreign investments' by the PRC government, creating substantial regulatory uncertainty for its operations and future capital-raising activities.

Analyst Insight

Investors should exercise extreme caution and consider the significant regulatory and delisting risks before investing in MLGO. Current shareholders should closely monitor PCAOB determinations and PRC regulatory updates, as these factors could materially impact the stock's trading status and value.

Key Numbers

• 10,941,519 — Class A Ordinary shares outstanding (As of December 31, 2025, indicating public float)
• 1,495,942 — Class B Ordinary shares outstanding (As of December 31, 2025, indicating control structure)
• 2 — Consecutive years (Threshold for delisting under HFCA Act if PCAOB inspection is prevented)
• 2022-12-12 — Closing date of Business Combination (When MicroAlgo Inc. name change and merger with VIYI occurred)
• 2025-12-31 — Fiscal year end (Period covered by the annual report)
• 2023-02-17 — CSRC Trial Measures release date (New PRC regulations affecting future overseas offerings)
• 2023-03-31 — CSRC Trial Measures effective date (Date new PRC regulations became active)
• 3 — Working days (Timeframe for filing follow-on offerings with CSRC under Trial Measures)

Key Players & Entities

• MicroAlgo Inc. (company) — Registrant and holding company
• Onestop Assurance PAC (company) — Independent registered public accounting firm
• PCAOB (regulator) — Public Company Accounting Oversight Board (United States)
• CSRC (regulator) — China Securities Regulatory Commission
• Nasdaq Stock Market LLC (regulator) — Exchange where Class A Ordinary shares are listed
• Min Shu (person) — Chief Executive Officer
• WiMi Hologram Cloud Inc. (company) — Majority Shareholder
• VIYI Algorithm Inc. (company) — Company acquired in business combination
• $0.0000001 (dollar_amount) — Par value of Class A and Class B Ordinary shares
• 7.0288 (dollar_amount) — RMB to USD exchange rate on December 31, 2025

FAQ

Risk Factors

• Rapidly Evolving Market [high — market]: MicroAlgo operates in a new and rapidly evolving market. Failure to keep pace with industry trends or technological developments, or to develop, acquire, market, and offer new products and services, could materially and adversely affect the company's business, results of operations, and financial condition.
• Limited Operating History and Growth Management [medium — operational]: The company has a limited operating history and may struggle to sustain rapid growth, effectively manage its expansion, or implement its business strategies. This could lead to adverse effects on its operations and financial performance.
• Delisting Risk under HFCA Act [high — regulatory]: MicroAlgo faces a significant risk of delisting from Nasdaq if the PCAOB is unable to inspect its auditor, Onestop Assurance PAC, for two consecutive years. This is a critical compliance hurdle for companies with PRC-based auditors.
• Evolving PRC Regulations [medium — regulatory]: New PRC regulations, such as the CSRC's Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies (effective March 31, 2023), require future filings for capital-raising activities. These evolving rules can impact future funding and listing compliance.
• Capital Requirements for R&D [medium — financial]: The company requires significant capital for research and development. Failure to obtain sufficient capital on favorable terms could materially affect its business, financial condition, and prospects.
• Intellectual Property Protection [medium — operational]: MicroAlgo's ability to protect its intellectual property rights is crucial for its competitive position. Risks include infringement of others' rights, loss of ability to use third-party IP, and potential source code copying.
• IT System Dependency [medium — operational]: The business is highly dependent on the proper functioning and improvement of its information technology systems. Service disruptions or failures to maintain these systems could harm operating results.
• Dividend Payment Contingency [low — financial]: The ability to pay dividends is contingent on distributions from PRC subsidiaries, which are subject to PRC laws and SAFE registration requirements, creating uncertainty for shareholder returns.

Industry Context

MicroAlgo operates in the nascent and rapidly evolving central processing algorithms market. This sector is characterized by intense competition, rapid technological advancements, and significant R&D investment requirements. Companies must constantly innovate to stay relevant and capture market share.

Regulatory Implications

The company faces dual regulatory pressures: U.S. delisting risks under the HFCA Act due to auditor inspection limitations and evolving PRC regulations (CSRC's Trial Measures) that govern overseas capital-raising activities and fund repatriation.

What Investors Should Do

1. Monitor PCAOB inspection status of Onestop Assurance PAC.
2. Track compliance with new CSRC Trial Measures.
3. Assess R&D pipeline and competitive positioning.
4. Evaluate management's ability to manage growth and integration.

Key Dates

• 2022-12-12: Closing date of Business Combination — Marks the effective date of the merger with VIYI and the company's name change to MicroAlgo Inc.
• 2023-02-17: Release date of CSRC Trial Measures — Introduction of new PRC regulations impacting overseas offerings by domestic companies.
• 2023-03-31: Effective date of CSRC Trial Measures — New PRC regulations governing overseas listings became active, requiring compliance for future capital-raising.
• 2025-12-31: Fiscal year end — The period covered by the 20-F annual report, providing financial and operational data.

Glossary

HFCA Act

Holding Foreign Companies Accountable Act, a U.S. law that can lead to the delisting of foreign companies from U.S. exchanges if their auditors cannot be inspected by the PCAOB for three consecutive years. (Directly impacts MicroAlgo's listing status on Nasdaq due to its PRC operations and auditor.)

PCAOB

Public Company Accounting Oversight Board, a U.S. non-profit corporation established by Congress to oversee the audits of public companies in order to protect the interests of investors. (Its inspection capabilities are central to the HFCA Act delisting risk for MicroAlgo.)

CSRC

China Securities Regulatory Commission, the primary regulator of the securities market in the People's Republic of China. (Its 'Trial Administrative Measures' impose new compliance requirements on PRC companies seeking overseas listings.)

SAFE

State Administration of Foreign Exchange, a Chinese government agency responsible for managing China's foreign exchange reserves and regulating cross-border capital flows. (Its registration requirements affect the ability of PRC subsidiaries to distribute funds to the parent company, impacting dividend payments.)

Class A Ordinary shares

A class of common stock, typically with one vote per share, that is publicly traded on an exchange. (Represents the publicly held shares of MicroAlgo on Nasdaq, with 10,941,519 outstanding as of December 31, 2025.)

Class B Ordinary shares

Another class of common stock, often with superior voting rights or held by founders/insiders. (Indicates a dual-class share structure, with 1,495,942 outstanding as of December 31, 2025, potentially affecting control.)

Year-Over-Year Comparison

This analysis is based on the 20-F filing for the fiscal year ending December 31, 2025. Specific comparative metrics to the prior year (2024) such as revenue growth, margin changes, and the emergence of new risks like the CSRC Trial Measures are not detailed within the provided text. However, the risk factors section highlights ongoing concerns regarding market evolution, R&D capital needs, and regulatory compliance, which are likely continuations or intensifications of previous challenges.

Key Financial Figures

• $0.0000001 — ch registered Class A Ordinary share, $0.0000001 par value MLGO The Nasdaq Stock Mar

Filing Documents

• microalgoinc_20f.htm (20-F) — 2255KB
• microalgoinc_ex1-2.htm (EX-1.2) — 18KB
• microalgoinc_ex4-2.htm (EX-4.2) — 69KB
• microalgoinc_ex8-1.htm (EX-8.1) — 9KB
• microalgoinc_ex11-2.htm (EX-11.2) — 23KB
• microalgoinc_ex12-1.htm (EX-12.1) — 8KB
• microalgoinc_ex12-2.htm (EX-12.2) — 11KB
• microalgoinc_ex13-1.htm (EX-13.1) — 6KB
• microalgoinc_ex13-2.htm (EX-13.2) — 6KB
• microalgoinc_ex15-1.htm (EX-15.1) — 3KB
• img_001.jpg (GRAPHIC) — 57KB
• img_002.jpg (GRAPHIC) — 103KB
• img_003.jpg (GRAPHIC) — 77KB
• ex1-2_001.jpg (GRAPHIC) — 4KB
• 0001829126-26-002991.txt ( ) — 9340KB
• mlgo-20251231.xsd (EX-101.SCH) — 69KB
• mlgo-20251231_cal.xml (EX-101.CAL) — 74KB
• mlgo-20251231_def.xml (EX-101.DEF) — 232KB
• mlgo-20251231_lab.xml (EX-101.LAB) — 379KB
• mlgo-20251231_pre.xml (EX-101.PRE) — 323KB
• microalgoinc_20f_htm.xml (XML) — 1338KB

FORWARD-LOOKING STATEMENTS

FORWARD-LOOKING STATEMENTS ii INTRODUCTORY NOTE iii PART I 1

IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS 1

OFFER STATISTICS AND EXPECTED TIMETABLE

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE 1

KEY INFORMATION

ITEM 3. KEY INFORMATION 1

INFORMATION ON THE COMPANY

ITEM 4. INFORMATION ON THE COMPANY 45

UNRESOLVED STAFF COMMENTS

ITEM 4A. UNRESOLVED STAFF COMMENTS 72

OPERATING AND FINANCIAL REVIEW AND PROSPECTS

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS 72

DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES 84

MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS 89

FINANCIAL INFORMATION

ITEM 8. FINANCIAL INFORMATION 90

THE OFFER AND LISTING

ITEM 9. THE OFFER AND LISTING 91

ADDITIONAL INFORMATION

ITEM 10. ADDITIONAL INFORMATION 91

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 101

DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES 102 PART II 103

DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES 103

MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS 103

CONTROLS AND PROCEDURES

ITEM 15. CONTROLS AND PROCEDURES 104

[Reserved]

ITEM 16. [Reserved] 106

AUDIT COMMITTEE FINANCIAL EXPERT

ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT 106

CODE OF ETHICS

ITEM 16B. CODE OF ETHICS 106

PRINCIPAL ACCOUNTANT FEES AND SERVICES

ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES 106

EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES 106

PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS 106

CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT

ITEM 16F. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT 106

CORPORATE GOVERNANCE

ITEM 16G. CORPORATE GOVERNANCE 107

MINE SAFETY DISCLOSURE

ITEM 16H. MINE SAFETY DISCLOSURE 107

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

ITEM 16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS 107

INSIDER TRADING POLICIES

ITEM 16J. INSIDER TRADING POLICIES 107

CYBERSECURITY

ITEM 16K. CYBERSECURITY 107 PART III 109

FINANCIAL STATEMENTS

ITEM 17. FINANCIAL STATEMENTS 109

FINANCIAL STATEMENTS

ITEM 18. FINANCIAL STATEMENTS 109

EXHIBITS

ITEM 19. EXHIBITS 110

SIGNATURES

SIGNATURES 111 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS F-1 i Table of Contents

FORWARD-LOOKING STATEMENTS

FORWARD-LOOKING STATEMENTS This annual report on Form 20-F contains forward-looking statements that involve risks and uncertainties. All statements other than statements of historical facts are forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements. You can identify these forward-looking statements by words or phrases such as "may," "will," "expect," "anticipate," "aim," "estimate," "intend," "plan," "believe," "likely to" or other similar expressions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategies and financial needs. These forward-looking statements include, but are not limited to, statements about: our growth strategies; our future business development, financial condition and results of operations; our ability to retain, grow and engage our user base and expand our product offering; expected changes in our revenues, content-related costs and operating margins; our ability to retain key personnel and attract new talent; competition landscape in China's central processing algorithms industry; general economic, political, demographic and business conditions in China and globally; and the regulatory environment in which we operate. We would like to caution you not to place undue reliance on these forward-looking statements and you should read these statements in conjunction with the risk factors disclosed in "Item 3. Key Information — 3.D. Risk Factors." Other sections of this annual report include additional factors which could adversely impact our business and financial performance. Moreover, we operate in an evolving environment. New risk factors and u

RISK FACTORS

RISK FACTORS Summary of Risk Factors Investment in our Class A Ordinary shares involves significant risks. Below is a summary of material risks we face, organized under relevant headings. These risks are discussed more fully in "Item 3. Key Information—D. Risk Factors." Risk Factors Relating to our Business and Industry We operate in a relatively new and rapidly evolving market. Our competitive position and results of operations could be harmed if we do not compete effectively. We have a limited operating history, and it may not be able to sustain rapid growth, effectively manage growth or implement business strategies. Recent acquisitions could prove difficult to integrate, disrupt the business, dilute shareholder value and strain the resources. Failure to maintain adequate financial, information technology and management processes and controls could result in material weaknesses which could lead to errors in our financial reporting, which could adversely affect our business. If we fail to keep up with industry trends or technological developments, or develop, acquire, market and offer new products and services, our business, results of operations and financial condition may be materially and adversely affected. Our results of operations could materially suffer in the event of insufficient pricing to enable us to meet profitability expectations. We make significant investments in research and development of new products and services that may not achieve expected returns. We require a significant amount of capital to fund our research and development investments. If we cannot obtain sufficient capital on favorable terms or at all, our business, financial condition and prospects may be materially and adversely affected. Our success depends on our ability to attract, hire, retain and motivate key management personnel and highly skilled employees. Our business depends substantially on the market recognition of our brand and negative media cov

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View this 20-F filing on SEC EDGAR