WF International Ltd.

-Regulations - Regulations Relating to HVAC Construction and Services for details. The engagement of subcontractors to address accident-related damage risks entails potential joint liability if the subcontractor is unable to cover compensation for claims, which could have adverse effects on our business, operations, and profitability. We engage in contracts with subcontractors to mitigate risks associated with accident-related claims. These contracts stipulate that subcontractors assume responsibility for any claims arising from accidents or damages that may occur during the installation process. The provisions outlining the subcontractors’ liability for construction accidents are enforceable for all parties involved in the contract. As advised by our PRC counsel, Yuan Tai Law Offices, according to the Regulations on Safety Production Management of Construction Projects, contracting and subcontracting parties bear joint liability for ensuring safety during project execution. Consequently, potential liability cannot be exempted through contractual agreements under the relevant statutes. In the event that an accident-related claim is filed against both the subcontractor and us, and if the subcontractor lacks sufficient financial resources to fulfill the awarded damages, or if we are unsuccessful in pursuing our claim against the subcontractors, we will be held accountable for such claims. This situation could have an adverse impact on our business, operational results, and overall profitability.