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Jiana Science & Technology Co., Ltd. – IPO: ‘F-1’ on 1/17/20

On:  Friday, 1/17/20, at 5:24pm ET   ·   Accession #:  1213900-20-1320   ·   File #:  333-235974

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  As Of               Filer                 Filing    For·On·As Docs:Size             Issuer                      Filing Agent

 1/17/20  Jiana Science & Tech Co., Ltd.    F-1                   26:7.6M                                   Edgar Agents LLC/FA

Document/Exhibit                   Description                      Pages   Size 

 1: F-1         Registration Statement by a Foreign Issuer          HTML   1.04M 
 2: EX-3.1      Original Memorandum and Articles of Association     HTML    143K 
                Date August 29, 2018                                             
 3: EX-3.2      Amended and Restated Memorandum and Articles of     HTML    141K 
                Association Dated January 10, 2020                               
 4: EX-10.1     Translation of Heyuan Lighthouse Basin (Shuntian)   HTML     34K 
                Pastoral Complex Exclusive Development Right                     
                Contract Dated February 9, 2018                                  
13: EX-10.10    Translation of Contractor Agreement Dated May 10,   HTML     88K 
                2018 Between Dongyuan Mingyuan Tianyuan Investment               
                Co., Ltd. and Nantong (Jiangsu) Third Construction               
                Coporation                                                       
14: EX-10.11    Translation of Employment Agreement Between Jiana   HTML     53K 
                Science and Technology Co., Ltd. and Fengzhen Zhu                
15: EX-10.12    Form of Director Offer Letter                       HTML     30K 
16: EX-10.13    Translation of Hakka Culture Center and Business    HTML     30K 
                Plaza Cooperation Agreement Dated August 18, 2017                
17: EX-10.14    Translation of Tianlun Mingyuan Pastoral Complex    HTML     34K 
                Investment and Development Agreement Dated October               
                12, 2017                                                         
18: EX-10.15    Translation of Construction Agreement Dated         HTML     59K 
                December 28, 2017                                                
19: EX-10.16    Translation of Investment and Development           HTML     37K 
                Agreement Dated April 20, 2018                                   
20: EX-10.17    Translation of Construction Agreement Dated April   HTML    189K 
                28, 2018                                                         
21: EX-10.18    Translation of Construction Project Strategic       HTML     24K 
                Cooperation Agreement Dated January 14, 2019                     
22: EX-10.19    Translation of Tianluncheng Project Engineering,    HTML     29K 
                Procurement and Construction ("Epc") Management                  
                Agreement Dated March 16, 2019                                   
 5: EX-10.2     Share Pledge Agreement Dated March 20, 2019 Among   HTML     88K 
                Jiana (Shenzhen) Development Technology Co., Ltd.,               
                Fengzhen Zhu, Qingchao Yao and Qian Zhou                         
23: EX-10.20    Translation of Investment Cooperation Agreement     HTML     27K 
                Dated March 10, 2019                                             
 6: EX-10.3     Exclusive Option Agreement Dated March 20, 2019     HTML     64K 
                Among Jiana (Shenzhen) Development Technology Co.,               
                Ltd., Fengzhen Zhu, Qingchao Yao and Qian Zhou                   
 7: EX-10.4     Exclusive Business Cooperation Agreement Dated      HTML     64K 
                March 20, 2019 Among Jiana (Shenzhen) Development                
                Technology Co., Ltd., Fengzhen Zhu, Qingchao Yao                 
                and Qian Zhou                                                    
 8: EX-10.5     Power of Attorney Given by Fengzhen Zhu, Qingchao   HTML     20K 
                Yao and Qian Zhou to Jiana (Shenzhen) Development                
                Technology Co., Ltd.                                             
 9: EX-10.6     Loan Agreement Between Jiana (Shenzhen)             HTML     74K 
                Development Technology Co., Ltd. and Fengzhen Zhu                
10: EX-10.7     Loan Agreement Between Jiana (Shenzhen)             HTML     76K 
                Development Technology Co., Ltd. and Qingchao Yao                
11: EX-10.8     Loan Agreement Between Jiana (Shenzhen)             HTML     83K 
                Development Technology Co., Ltd. and Qian Zhou                   
12: EX-10.9     Form of Spousal Consent                             HTML     17K 
24: EX-21.1     List of Subsidiaries                                HTML     20K 
25: EX-23.1     Consent of Rbsm LLP                                 HTML     11K 
26: EX-99.4     Opinion of Yingke Law Firm Regarding Certain Prc    HTML     33K 
                Legal Matters                                                    

As Filed with the Securities and Exchange Commission on January 17, 2020

Registration No. 333-      

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM F-1

REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933

JIANA SCIENCE AND TECHNOLOGY CO., LTD.

(Exact name of registrant as specified in its charter)

Not Applicable

(Translation of Registrant’s Name into English)

7CDE, A, Jinfeng Building,

Futian District, Shenzhen City,

Guangdong Province, PRC 518031

0755-83581568

(Address, including zip code, and telephone number,

including area code, of principal executive offices)

Cogency Global Inc.

10 E. 40th Street, 10th Floor

New York, NY 10016

(Name, address, including zip code, and telephone

number, including area code, of agent for service)

Copies to:

William S. Rosenstadt, Esq.

Mengyi “Jason” Ye, Esq.
Yarona L. Yieh, Esq.
Ortoli Rosenstadt LLP
366 Madison Avenue, 3^rd Floor
New York, NY 10022
+1-212-588-0022 — telephone

+1-212-826-9307 — facsimile

Approximate date of commencement of proposed sale to public: As soon as practicable after the effective date of this Registration Statement.

If any securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act, check the following box. ☒

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933.

Emerging growth company ☒

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

CALCULATION OF REGISTRATION FEE

The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. We will not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

[----] Ordinary Shares

JIANA SCIENCE AND TECHNOLOGY CO., LTD.

The prospectus relates to an offering of [●] ordinary shares with $0.0005 par value per share (the “Ordinary Shares”) of JIANA Science and Technology Co., Ltd., a Cayman Islands company. Prior to this offering, there has been no public market for our Ordinary Shares. We expect the initial public offering price will be between $[●] and $[●] per Ordinary Share. Each warrant will entitle the holder to purchase [●] Ordinary Shares at an exercise price of [●] ([●]%) of the price of the ordinary shares in this offering.

We intend to apply to list our Ordinary Shares on Nasdaq Capital Market under the symbol “[●]”. If the application is approved, trading of our Ordinary Share on the Nasdaq Capital Market is expected to begin within five days after the date of the closing of our offering pursuant to this prospectus. We cannot assure you that our application will be approved; if it is not approved, we will not complete this offering.

We are an “emerging growth company” under the federal securities laws and will be subject to reduced public company reporting requirements. Investing in our ordinary shares involves risks. See “Risk Factors” beginning on page 10.

We expect our total cash expenses for this offering to be approximately $[●], including cash expenses payable to the Underwriter for its reasonable out-of-pocket expenses, exclusive of the above commissions. The underwriters have agreed to purchase the ordinary shares from us on a firm commitment basis. The underwriters have an option exercisable within 45 days after the closing of the offering, to acquire up to an additional [●]% of the total number of securities to be offered by us in the offering, solely for the purpose of covering over-allotments. The offering will be coordinated with, and conditioned upon (i) completion of satisfactory due diligence by the Underwriters; (ii) an effective registration statement; and (iii) an underwriting agreement and any other ancillary documents completed by the forgoing or deemed necessary for the underwriters. One of the conditions to our obligation to sell any securities through the Underwriter is that, upon the closing of the offering, the Ordinary Shares would qualify for listing on the Nasdaq Capital Market.

This offering is being conducted on a firm commitment basis, [●], our underwriter, is obligated to take and pay for all of the shares if any such shares are taken. We have granted the underwriters an option for a period of 45 days after the closing of this offering to purchase up to [●]% of the total number of our Ordinary Shares to be offered by us pursuant to this offering (excluding Ordinary Shares subject to this option), solely for the purpose of covering over-allotments, at the initial public offering price less the underwriting discounts. If the underwriters exercise the option in full, the total underwriting discounts payable will be $[●] based on an assumed offering price of $[●] per Ordinary Share, and the total gross proceeds to us, before underwriting discounts and expenses, will be $[●]. If we complete this offering, net proceeds will be delivered to us on the applicable closing date.

If we complete this offering, net proceeds will be delivered to us on the closing date. We plan to use our proceeds in our subsidiaries in China, however, we will not be able to use such proceeds until we complete certain remittance procedures in China. If we complete this offering, then on the closing date, we will issue ordinary shares to investors in the offering on ordinary shares sold in this offering. One of the conditions to our obligation to sell any securities through the Underwriter is that, prior the closing of the offering, the Ordinary Shares would be conditionally approved for listing on the Nasdaq Capital Market.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

[Underwriter]

The date of this prospectus is ____________, 2020.

TABLE OF CONTENTS

You should rely only on the information contained in this prospectus or in any related free-writing prospectus. We have not authorized anyone to provide you with information different from that contained in this prospectus or in any related free-writing prospectus. We are offering to sell, and seeking offers to buy, the ordinary shares offered hereby, but only under circumstances and in jurisdictions where offers and sales are permitted and lawful to do so. The information contained in this prospectus is current only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of the ordinary shares.

Neither we nor any of the underwriters have taken any action that would permit a public offering of the ordinary shares outside the United States or permit the possession or distribution of this prospectus or any related free-writing prospectus outside the United States. Persons outside the United States who come into possession of this prospectus or any related free-writing prospectus must inform themselves about and observe any restrictions relating to the offering of the ordinary shares and the distribution of the prospectus outside the United States.

Until [●], 2020 (the 25^th day after the date of this prospectus), all dealers that buy, sell or trade ordinary shares, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the obligation of dealers to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

RISK FACTORS

An investment in our Ordinary Shares involves a high degree of risk. Before deciding whether to invest in our Ordinary Shares, you should consider carefully the risks described below, together with all of the other information set forth in this prospectus, including the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operation” and our consolidated financial statements and related notes. If any of these risks actually occurs, our business, financial condition, results of operations or cash flow could be materially and adversely affected, which could cause the trading price of our Ordinary Shares to decline, resulting in a loss of all or part of your investment. The risks described below and in the documents referenced above are not the only ones that we face. Additional risks not presently known to us or that we currently deem immaterial may also affect our business. You should only consider investing in our Ordinary Shares if you can bear the risk of loss of your entire investment.

Risks Related to Our Business

We may be subject to the general risks underlying the E-Commerce industry in PRC market.

The E-Commerce industry in the PRC market has been mature, and all E-Commerce platforms are constantly developing, upgrading, transforming and innovating. Particularly, we develop our business based on the innovative market of online real estate development, meaning that our business carries risks from both the E-Commerce industry and from the real estate industry. Therefore, we need to be cautious in selecting our business focus and expansion strategy, and we should be constantly aware of the innovation risk, technology risk and market risk in the industries. If we fail to make an accurate judgment of the current market, our performance can be severely impacted.

As a small real estate development platform, we are more sensitive to the market competition in the industry.

We are a small online real estate development platform and can be more sensitive to the changes of the industries in which we are operating. Although the Lighthouse Basin (Shuntian) Pastoral Complex project we are currently undertaking is equivalent to a comprehensive real estate project which includes operations ranging from branding and promotion to the online sale of the final product, it does not relieve us from the general competition in the real estate industry. For example, we are competing with our counterparts in the same industry with regard to customers, talent, and price, and our smaller size can place us at a disadvantage in diversifying our risks in the process.

We have a limited operating history which makes it difficult to evaluate our future prospects.

We made our transition to online real estate agency business in 2015. We have limited experience in most aspects of our business operation. In addition, we have limited experience in serving our current user and client base. As our business develops and as we respond to competition, we may continue to introduce new service offerings, make adjustments to our existing services, or make adjustments to our business operation in general. Any significant change to our business model that does not achieve expected results may have a material and adverse impact on our financial condition and results of operations. It is therefore difficult to effectively assess our future prospects.

The online real estate industry may not develop as expected. Prospective users and clients of our services may not be familiar with the development of online brokerage markets and may have difficulty distinguishing our services from those of our competitors. Convincing prospective users and clients of the value of using our services is critical to increasing the amount of transactions on our platform and to the success of our business.

You should consider our business and prospects in light of the risks and challenges we encounter or may encounter given the rapidly evolving market in which we operate and our limited operating history. These risks and challenges include our ability to, among other things:

If we are unable to compete successfully with our competitors, our financial condition and results of operations may be harmed.

We encounter intense competition in each of our business segments on a national, regional and local level. Competition in the industry is primarily based on quality of services, brand name recognition, geographic coverage, commission rates or service fees, and range of services. Compared to real estate development, providing real estate services does not require significant capital commitments. This low barrier to entry allows new competitors to enter our markets with relative ease. The new competitive landscape has placed additional demands on us to increase the amount of resources we provide to our customers and increase the quality of our services in order to retain our customers. New and existing competitors may offer competitive rates, greater convenience or superior services, which could attract customers away from us, resulting in lower revenues for our operations. Competition among real estate services companies may cause a decrease in commission rates or service fees we receive and higher costs to attract or retain talented employees.

Some of our competitors may have a broader national presence than us and may have a more established branding recognition than us in major markets, and also may have more financial or other resources than us. Others may have smaller aggregate businesses than us, but may be more established and have greater market presence and brand name recognition on a local or regional basis. We are also subject to competition from other large national and international firms such as World Union Real Estate Consultancy (China) Ltd., Jones Lang LaSalle, Centaline Group and SouFun Holdings Limited. These firms may have more financial or other resources than us. If we fail to compete effectively, our business operations and financial condition will suffer.

Our business is susceptible to fluctuations in the real estate market of China.

We conduct our real estate services business primarily in China. Our business depends substantially on the conditions of the PRC real estate market. Demand for private residential real estate in China has grown rapidly in the recent decade but such growth is often coupled with volatility in market conditions and fluctuation in real estate prices. Fluctuations of supply and demand in China’s real estate market are caused by economic, social, political and other factors. Over the years, governments at both national and local levels have announced and implemented various policies and measures aimed to regulate the real estate markets, in some cases to stimulate further development and more purchase of residential real estate units and in other cases to restrict these activities from growing too rapidly. These measures can affect real estate buyers’ eligibility to purchase additional units, their down payment requirements and financing, as well as availability of land to developers and their ability to obtain financing. These measures have affected and may continue to affect the conditions of the China’s real estate market and cause fluctuations in real estate pricing and transaction volume. See “—Risks Related to Our Business—Our business may be materially and adversely affected by government measures aimed at China’s real estate industry.” Furthermore, there may be situations in which China’s real estate industry is so active that real estate developers see a reduced need for marketing initiatives and reduce their spending on such initiatives, which could potentially adversely affect our result of operations. To the extent fluctuations in the real estate market adversely affect real estate transaction volumes or prices, our financial condition and results of operations may be materially and adversely affected.

Our business may be materially and adversely affected by government measures aimed at China’s real estate industry.

The real estate industry in China is subject to government regulations, including measures that are intended to control real estate prices. Since January 2011, PRC government agencies have issued a number of restrictive rules on the real estate market, which include:

In late February and March 2013, the PRC government issued the “New Five Policies” for administration of the housing market and detailed implementation rules, which revealed the PRC government’s strong determination to curb the increase of housing prices by requiring more stringent implementation of housing price control measures. For example, in cities where housing unit sales have already been subject to restrictions, if the local housing supply is not sufficient so that the housing prices are rising too fast, local governments are required to take more stringent measures to restrict housing units from being sold to those families who own one or more housing units. Following the request of the central government, Beijing, Shanghai and other major cities in China have announced detailed regulations for the New Five Policies in late March 2013, to further cool down local real estate markets.

Since 2016, the local governments of several cities in the PRC have implemented a series of measures designed to stabilize the growth of the property market on a more sustainable level. Such measures and policies by the government have caused a reduction in transactions in the real estate market. While these measures and policies remain in effect, they may continue to depress the real estate market, dissuade would-be purchasers from making purchases, reduce transaction volume, cause a decline in average selling prices, and prevent developers from raising the capital they need and increase developers’ costs to start new projects. However, the full effect and extent of these policies on the real estate industry and our business will depend in large part on the implementation and interpretation of the circulars by governmental agencies, local governments and banks involved in the real estate industry. The PRC government’s policies and regulatory measures on the PRC real estate sector could limit our access to required financing and other capital resources, adversely affect the property purchasers’ ability to obtain mortgage financing or significantly increase the cost of mortgage financing, reduce market demand for our services and our ability to successfully make sales and obtain relevant commissions, and increase our operating costs. We cannot be certain that the PRC government will not issue additional and more stringent regulations or measures or that agencies and banks will not adopt restrictive measures or practices in response to PRC governmental policies and regulations, which could substantially reduce pre-sales of our properties and cash flow from operations and substantially increase our financing needs, which would in turn materially and adversely affect our business, financial condition, results of operations and prospects.

A severe or prolonged downturn in the global or Chinese economy could materially and adversely affect our business and our financial condition.

The Chinese economy has slowed down since 2012 and such slowdown may continue. There is considerable uncertainty over the long-term effects of the expansionary monetary and fiscal policies adopted by the central banks and financial authorities of some of the world’s leading economies, including the United States and China. There have been concerns over unrest and terrorist threats in the Middle East, Europe and Africa, which have resulted in volatility in oil and other markets, and over the conflicts involving Ukraine and Syria. There have also been concerns on the relationship among China and other Asian countries, which may result in or intensify potential conflicts in relation to territorial disputes. Economic conditions in China are sensitive to global economic conditions, as well as changes in domestic economic and political policies and the expected or perceived overall economic growth rate in China. Any severe or prolonged slowdown in the global or Chinese economy may materially and adversely affect our business, results of operations and financial condition. In addition, continued turbulence in the international markets may adversely affect our ability to access capital markets to meet liquidity needs. 

Failure to maintain or enhance our brands or image could have a material and adverse effect on our business and results of operations.

We believe our brands are associated with a well-recognized, integrated real estate services company in the local markets that it operates, with consistent high-quality services among real estate developers and other real estate market players such as design institutes, transportation bureaus, and infrastructure bureaus in China. Our brands are integral to our sales and marketing efforts. Our continued success in maintaining and enhancing our brand and image depends to a large extent on our ability to satisfy customer needs by further developing and maintaining quality of services across our operations, as well as our ability to respond to competitive pressures. If we are unable to satisfy customer needs or if our public image or reputation were otherwise diminished, our business transactions with our customers may decline, which could in turn adversely affect our results of operations.

We may not be able to successfully execute our strategy of expanding into new geographical markets in China, which could have a material and adverse effect on our business and results of operations. 

Currently, we focus our operation in the southeastern part of China. However, as part of our businesses are carried on our online platform, we are implicated by the diversified needs of customers from different parts of China, and may be entering into other geographical markets within China. As China is a large and diverse market, consumer trends and demands may vary significantly by region and our experience in the markets in which we currently operate may not be applicable in other parts of China. As a result, we may not be able to leverage our experience to expand into other parts of China. When we enter new markets, we may face intense competition from companies with greater experience or an established presence in the targeted geographical areas or from other companies with similar expansion targets. In addition, our business model may not be successful in new and untested markets and markets with a different legal and business environment, such as Hong Kong and Macau. Therefore, we may not be able to grow our revenues in the new cities we enter into due to the substantial costs involved. Specifically, pursuant to PRC laws, while real estate service companies are not required to obtain local government approval prior to commencement of operations, they shall make record-filing with the real estate regulatory authorities at the county level or above within 30 days after effecting the SAIC registration, and local governments may impose local regulations with respect to operation eligibility and record-filing deadlines for primary real estate agency service providers to comply with. Typically, local governments impose eligibility standards such as registered capital, minimum number of qualified real estate brokers and/or sales associates, and/or minimum size of the operating premises. For local governments requesting service providers to make record filings, there may be a filing deadline imposed, and if service providers do not comply, it may result in fines, penalties and/or the suspension of operation.  If we are not able to meet the operation eligibility requirements, or are not able to, when applicable, timely file with relevant local real estate regulatory authorities in markets we desire to expand to, we may be unable to execute our strategy of expanding into desired new geographical markets in China, which could have a material and adverse effect on our business and results of operations. 

Our results of operations and cash flows may fluctuate due to seasonal variations in the real estate market and the non-recurring nature of our services provided to real estate developers. 

We generated a majority of our total revenues from services provided to real estate developers, and expect to continue to rely on real estate developers to generate a significant portion of our revenues for the foreseeable future. Revenues from our services to real estate developers typically are generated on a project-by-project basis. Each project may have several phases that in the aggregate, last for more than 5 years. Developers must first obtain sales permits and the timing of obtaining sales permits varies from project to project and is subject to uncertain and potentially lengthy delays as developers need to obtain a series of other permits and approvals related to the development before obtaining the sales permit. Additionally, whether future phases of a project will be constructed depend on a variety of factors such as the macroeconomic circumstances and the real estate market circumstances, as well as the sales performance of existing phases of a project. As such, there is no guarantee how much service revenues we may generate from each of our developer clients.

It is therefore difficult to predict the interval between the time we sign the agency agreements and the time we launch the sale for the projects. We recognize commission revenue from our primary real estate agency services upon achieving successful sale of an entire project or a phase of a project. Successful sale,” as defined in individual contracts with our developer clients, depends on, among other things, the delivery of the down payment and some purchasers may not deliver the down payments on time. Certain projects may take longer to complete the sales and thus making it difficult for us to forecast revenues and increases period-to-period fluctuations. For our independent training, we typically agree to fixed fee arrangement conditional upon the completion of a project, or a monthly consulting fee payment. For some of our consulting projects in relation to real estate design, sales and marketing strategy, land acquisition and property development, we may agree to a fixed fee arrangement conditional upon the delivery of a final product, such as providing a market study report or sales and marketing strategy report, or a monthly consulting fee payment. Because such consulting projects may take anywhere from a month to a year to perform, the timing of recognizing revenues from such projects may cause fluctuations in our quarterly revenues and even our annual revenues. Furthermore, difficulty in predicting when these projects will begin and how long it will take for us to complete them makes it difficult for us to forecast revenues.

In addition, we have in the past entered into, and expect to continue to enter into, contracts from time to time with developers requiring us to pay deposits, which has from time to time resulted in our operating with negative cash flows or, if we fail to recover such deposits, could have a material and adverse effect on our liquidity, financial condition and results of operations.

Our sales, revenues and operations will be affected if the prospective buyers are not able to secure mortgage financing on attractive terms, if at all.

A majority of the residential properties purchasers of the projects we serve rely on mortgages to fund their purchases. If the availability or attractiveness of mortgage financing is reduced or limited, many of our prospective buyers may not desire or be able to purchase our properties and, as a result, the sales progress of the property projects we serve will slow down and take longer to complete, and thus our business, liquidity and results of operations could be adversely affected. Among other factors, the availability and cost of mortgage financing may be affected by changes in PRC regulations or policies or changes in interest rates.

The circulars issued by the PRC State Council and related measures taken by local governments and banks have restricted and may continue to restrict the ability of purchasers to qualify for or obtain mortgage financing. Since January 26, 2011, for a household purchasing a second residential household property with mortgage financing, the down payment must be at least 60% of the purchase price and the interest rate for the mortgage on such property must be at least 1.1 times the benchmark interest rate. The notice of the General Office of the PRC State Council promulgated on February 26, 2013 authorized local counterparts of the PBOC to further increase down payment ratios and interest rates for loans to purchase second properties in accordance with the price control policies and targets of the corresponding local governments.

On September 29, 2014, the PBOC and the CBRC issued the Circular of PBOC and CBRC on Further Improving Financial Services for Housing, among other incentive policies, which specifies that the minimum down payment is 30% of the purchase price for purchasers of a first residential property for their households, and the minimum loan interest rate is 70% of the benchmark rate, to be decided by banking financial institutions in light of risk conditions. For purchasers of a second residential property for their households who have paid off the loan that financed their first house and reapply for a loan to finance an ordinary commodity house for the purpose of improving their living conditions, the loan policies for a first house will apply.

In light of the weakening in the property market in China, on March 30, 2015, the PBOC, the MOHURD and CBRC jointly issued the Circular on Issues concerning Individual Residential Mortgage Policies in an effort to stimulate the market. The circular reduces the minimum down payment ratios from 30% to 20% for first home buyers who use the housing provident fund for their purchase and from 60% to 40% for second home buyers with outstanding mortgages who apply for another mortgage. In addition, the circular provides that home buyers who use the housing provident fund for their home purchase are only required to pay a minimum down payment of 30% for their purchase of a second house if all loans are settled on their first home. Further, on August 27, 2015, the MOHURD, the Ministry of Finance of the PRC (the “MOF”) and the PBOC jointly issued the Circular on Adjusting the Minimum Down Payment for the Purchase of Houses by Individuals on the Housing Provident Fund Loans, which provides that home buyers who use the housing provident fund for their home purchase are only required to pay a minimum down payment of 20% for their purchase of a second house if all loans are settled on their first home.

On February 1, 2016, the PBOC and the CBRC jointly issued a notice which provides that in cities where restrictions on purchase of residential property are not being implemented, the minimum down payment ratio for a personal housing commercial loan obtained by a household for purchasing its first ordinary residential property is, in principle, 25% of the property price, which can be adjusted down by 5% by local authorities. For existing residential property household owners who have not fully repaid previous loans and are further obtaining personal housing commercial loans to purchase an additional ordinary residential property for the purpose of improving living conditions, the minimum down payment ratio must not be no less than 30% which is lower than the previous requirement of no less than 40%. 

Currently, our main business is in Guangdong Province, and we cannot predict how these policies will affect our performance, whether these policies will continue or what other action, if any, the banks in cities in which we operate may take.

In addition, from 2013, PRC banks have tightened the conditions on which mortgage loans are extended to home buyers by comparing the anticipated monthly repayment of the mortgage loan with the individual borrower’s monthly income and other measures. Therefore, mortgage loans for home buyers have been subject to longer processing periods or even denied by the banks. We monitor our homebuyers’ outstanding mortgage loans on an ongoing basis via our management reporting procedures and have taken the position that contracts with underlying mortgage loans with processing periods exceeding one year cannot be recognized as revenue under the percentage of completion method.

Our reliance on the Guangshen Expressway and Gangshen Expresswau may materially and adversely affect us.

We heavily rely on the Guangshen Expressway, which is the main traffic center connecting the Pearl River Delta Highway Network. There are only two expressways connected to our projects: Guangshen Expressway and Gangshen Expressway. Any traffic jam, delay or construction on these two expressways may affect the traffic of tourists to our project.

Our reliance on a concentrated number of suppliers and clients may materially and adversely affect us.

We heavily rely on the cooperation with local government in Dongyuan, Shuntian to be connect with more land owners and land resources. We are also in close collaboration with several local developers include Jiangsu Nantong Sanjian Group Municipal Compay, Zhuhai Zhonggang Road & Bridge Construction Co., Ltd., and Guangdong Guanyue Road Bridge Limited Company.

Details of customers accounting for 10% or more of total revenues are as follows:

Details of customers accounting for 10.0% or more of accounts receivable (“AR”) are as follows:

The Company performs ongoing credit evaluations of its customers and generally does not require collateral on accounts receivable.

The Company’s financial instruments that are potentially subject to significant concentration of credit risk consist primarily of cash and cash equivalents, accounts receivables and short-term investments. As of April 30, 2018 and 2019, all of the Company’s cash and cash equivalents and short-term investments were held at reputable financial institutions with high-credit ratings. In the event of bankruptcy of one of these financial institutions, the Company may not be able to claim its cash and demand deposits back in full. The Company continues to monitor the financial strength of the financial institutions. There has been no recent history of default in relation to these financial institutions. Accounts receivables, unsecured and denominated in RMB, derived from the Businesses, are exposed to credit risk. The risk is mitigated by credit evaluations the Company performs on the customers. There have been no material default of payments from the accounts receivable.

In the future, we cannot guarantee that we will be able to win bids for primary agent sales services with real estate developers of similar calibers who would provide us with similar revenues, or require our services at the same level, or they may experience financial or other difficulties that prevent them from making timely delivery of their properties under development. Should these real estate developers terminate or substantially reduce their agency services contract with us, and should we fail to find alternative real estate developers to provide us with revenue-generating business, or if any of them fail to make timely delivery of their properties under development, our financial condition and results of operations may be materially and adversely affected.

We may be subject to liabilities in connection with real estate agency activities.

As a real estate sales agent, we and our licensed employees are subject to statutory obligations not to sell properties that fail to meet the statutory sales conditions or provide false statements on the conditions of any property in any advertisement. We must present clients with relevant title certificates or sales permits of the properties and the related letter of authorization. Failure to fulfill these obligations could subject us or our employees to litigation from parties who purchased, sold or leased properties we brokered. We or our employees may become subject to claims by other participants in real estate transactions claiming that we or our employees did not fulfill our statutory obligations as brokers. Additionally, if we were to be found to have sold residential property that fail to meet the statutory sales conditions, we are subject to various fines, or if we were to be found to have provided false statements on the conditions of any property in any advertisement, we are subject to various fines in proportion to the advertisement income. See “Business—Regulations.”

If we fail to hire, train and retain qualified managerial and other employees, our business and results of operations could be materially and adversely affected.

We place substantial reliance on the real estate industry experience and knowledge of our senior management team as well as their relationships with other industry participants. The loss of the services of one or more members of our senior management team due to their departure, or otherwise, could hinder our ability to effectively manage our business and implement our growth strategies. Finding suitable replacements for our current senior management could be difficult, and competition for such personnel of similar experience is intense. If we fail to retain our senior management, our business and results of operations could be materially and adversely affected.

Our real estate service professionals interact with our customers on a daily basis. They are critical to maintaining the quality and consistency of our services and our brand and reputation. It is important for us to attract qualified managerial and other employees who have experience in real estate related services and are committed to our service approach. There may be a limited supply of qualified individuals in some of the cities in China where we have operations and other cities into which we intend to expand. We must hire and train qualified managerial and other employees on a timely basis to keep pace with our rapid growth while maintaining consistent quality of services across our operations in various geographic locations. We must also provide continuous training to our managerial and other employees so that they are equipped with up-to-date knowledge of various aspects of our operations and can meet our demand for high-quality services. If we fail to do so, the quality of our services may decrease in one or more of the markets where we operate, which in turn, may cause a negative perception of our brand and adversely affect our business.

Any failure to protect our trademarks and other intellectual property rights could have a negative impact on our business.

We believe our trademarks and other intellectual property rights are critical to our success. Any unauthorized use of our trademarks and other intellectual property rights could harm our competitive advantages and business. Historically, China has not protected intellectual property rights to the same extent as the United States or the Cayman Islands, and infringement of intellectual property rights continues to pose a serious risk of doing business in China. Monitoring and preventing unauthorized use is difficult. The measures we take to protect our intellectual property rights may not be adequate. Furthermore, the application of laws governing intellectual property rights in China and abroad is uncertain and evolving, and could involve substantial risks to us. If we are unable to adequately protect our brand, trademarks and other intellectual property rights, we may lose these rights and our business may suffer materially.

As internet domain name rights are not rigorously regulated or enforced in China, other companies have incorporated in their domain names elements similar in writing or pronunciation to the “fangrongwang” trademark or their Chinese equivalents. This may result in confusion between those companies and our company and may lead to the dilution of our brand value, which could adversely affect our business.

If we are unable to implement and maintain effective internal control over financial reporting in the future, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our ordinary shares may decline.

Prior to this offering, we were a private company with limited accounting personnel and other resources with which to address our internal controls and procedures. Our independent registered public accounting firm has not conducted an audit of our internal control over financial reporting. However, in preparing our consolidated financial statements as of and for the years ended April 30, 2017, 2018 and 2019, we identified material weaknesses in our internal control over financial reporting, as defined in the standards established by the Public Company Accounting Oversight Board of the United States, or PCAOB, and other control deficiencies. One material weakness identified relates to a lack of accounting personnel with appropriate knowledge of U.S. GAAP and SEC reporting and compliance requirements. As a result of lacking an effective accounting review process, material adjustments were made to the financial statements for the last three fiscal years in order to be in conformity with U.S. GAAP. We also identified a significant deficiency relating to insufficient written policies and procedures for accounting and financial reporting which led to inadequate financial statement closing process. Following the identification of the material weaknesses and control deficiencies, we have taken and plan to continue to take remedial measures. As part of our initial public offering process, we engaged financial consultants to advise on accounting and financial reporting processes in conformity with U.S. GAAP, and our management and accounting department have since had a substantially improved understanding of U.S. GAAP and financial reporting requirements. We also plan to hire officers and employees who have knowledge and experience in U.S. GAAP and financial reporting process. Additionally, we have had a recruitment plan in place and have been searching for candidates for qualified internal audit personnel with appropriate knowledge of U.S. GAAP. To remediate our material weaknesses, we expect to incur substantially more additional costs for addressing our material weaknesses and deficiencies. Our remedial measures include: (a) hiring qualified internal control personnel who will manage the implementation of internal control policies and procedures and improvement of the internal audit function; (b) developing and implementing written policies and procedures for accounting and financial reporting that meet the standards applied to public companies listed in the United States; and (c) conducting internal control training to management, key operations personnel and the accounting department, so that management and relevant personnel understand the requirements and elements of internal control over financial reporting mandated by the U.S. securities laws. However, the implementation of these measures may not fully address the material weaknesses in our internal control over financial reporting. Our failure to correct the material weaknesses or our failure to discover and address any other material weaknesses or control deficiencies could result in inaccuracies in our financial statements and could also impair our ability to comply with applicable financial reporting requirements and related regulatory filings on a timely basis. Moreover, ineffective internal control over financial reporting significantly hinders our ability to prevent fraud.

In addition, our independent registered public accounting firm will be required to attest to the effectiveness of our internal control over financial reporting beginning with our annual report on Form 20-F following the date on which we are no longer an “emerging growth company,” which may be up to five full years following the date of this offering. If we identify material weaknesses in our internal control over financial reporting, or if we are unable to comply with the requirements of Section 404 in a timely manner or assert that our internal control over financial reporting is effective, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting when required, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our Common Shares could be negatively affected, and we could become subject to investigations by the stock exchange on which our securities are listed, the Securities and Exchange Commission, or the SEC, or other regulatory authorities, which could require additional financial and management resources.

Our management team lacks experience in managing a U.S.-listed public company and complying with laws applicable to such company, the failure of which may adversely affect our business, financial conditions and results of operations.

Our current management team lacks experience in managing a company publicly traded in the U.S., interacting with public company investors and complying with the increasingly complex laws pertaining to U.S.-listed public companies. Prior to the completion of this offering, we mainly operate our businesses as a private company in the PRC. As a result of this offering, our company will become subject to significant regulatory oversight and reporting obligations under the U.S. federal securities laws and the scrutiny of securities analysts and investors, and our management currently has no experience in complying with such laws, regulations and obligations. Our management team may not successfully or efficiently manage our transition to becoming a U.S.-listed public company. These new obligations and constituents will require significant attention from our senior management and could divert their attention away from the day-to-day management of our business, which could adversely affect our business, financial conditions and results of operations.

We will incur increased costs as a result of being a public company.

Once we become a public company, we will incur significant legal, accounting and other expenses that we did not incur as a private company prior to our initial public offering. In addition, the Sarbanes-Oxley Act of 2002, as well as new rules subsequently implemented by the SEC and Nasdaq, have required changes in corporate governance practices of public companies. We expect these new rules and regulations to increase our legal, accounting and financial compliance costs and to make certain corporate activities more time-consuming and costly. In addition, we incur ongoing additional costs associated with our public company reporting requirements. We are currently evaluating and monitoring developments with respect to these new rules, and we cannot predict or estimate the amount of additional costs we may incur or the timing of such costs.

Increases in labor costs in the PRC may adversely affect our business and our profitability.

China’s economy has experienced increases in labor costs in recent years. China’s overall economy and the average wage in China are expected to continue to grow. The average wage level for our employees has also increased in recent years. We expect that our labor costs, including wages and employee benefits, will continue to increase. Unless we are able to pass on these increased labor costs to our customers by increasing prices for our products or services, our profitability and results of operations may be materially and adversely affected.

In addition, we have been subject to stricter regulatory requirements in terms of entering into labor contracts with our employees and paying various statutory employee benefits, including pensions, housing fund, medical insurance, work-related injury insurance, unemployment insurance and childbearing insurance to designated government agencies for the benefit of our employees. Pursuant to the PRC Labor Contract Law, or the Labor Contract Law, that became effective in January 2008 and its implementing rules that became effective in September 2008 and its amendments that became effective in July 2013, employers are subject to stricter requirements in terms of signing labor contracts, minimum wages, paying remuneration, determining the term of employees’ probation and unilaterally terminating labor contracts. In the event that we decide to terminate some of our employees or otherwise change our employment or labor practices, the Labor Contract Law and its implementation rules may limit our ability to effect those changes in a desirable or cost-effective manner, which could adversely affect our business and results of operations. Besides, pursuant to the Labor Contract Law and its amendments, dispatched employees are intended to be a supplementary form of employment and the fundamental form should be direct employment by enterprises and organizations that require employees. Further, it is expressly stated in the Interim Provisions on Labor Dispatch that became effective on March 1, 2014 that the number of seconded employees an employer uses may not exceed 10% of its total labor force and the employer has a two-year transition period to comply with such requirement. Our VIE and its consolidated subsidiaries and consolidated branch offices had used seconded employees for their principal business activities. The transition period ended on February 29, 2016, and those PRC subsidiaries have taken steps to decrease the number of seconded employees. If the relevant PRC subsidiaries are deemed to have violated the limitation on the use of seconded employees under the relevant labor laws and regulations, we may be subject to fines and incur other costs to make required changes to our current employment practices.

As the interpretation and implementation of labor-related laws and regulations are still evolving, we cannot assure you that our employment practice does not and will not violate labor-related laws and regulations in China, which may subject us to labor disputes or government investigations. If we are deemed to have violated relevant labor laws and regulations, we could be required to provide additional compensation to our employees and our business, financial condition and results of operations could be materially and adversely affected.

Unexpected network interruptions, security breaches or computer virus attacks and system failures could have a material adverse effect on our business, financial condition and results of operations.

Our internet-based business depends on the performance and reliability of the internet infrastructure. We cannot assure you that the internet infrastructure we depend on will remain sufficiently reliable for our needs. Any failure to maintain the performance, reliability, security or availability of our network infrastructure may cause significant damage to our ability to attract and retain users and clients. Major risks involving our network infrastructure include:

Any network interruption or inadequacy that causes interruptions in the availability of our online and mobile platforms or deterioration in the quality of access to our online and mobile platforms could reduce user and client satisfaction and result in a reduction in the activity level of our users and clients as well as the number of clients making trading transactions on our platform. Furthermore, increases in the volume of traffic on our online and mobile platforms could strain the capacity of our existing computer systems and bandwidth, which could lead to slower response times or system failures. The internet infrastructure we depend on may not support the demands associated with continued growth in internet usage. This could cause a disruption or suspension in our service delivery, which could hurt our brand and reputation. We may need to incur additional costs to upgrade our technology infrastructure and computer systems in order to accommodate increased demand if we anticipate that our systems cannot handle higher volumes of traffic and transaction in the future.

If we fail to protect the confidential information of our users and clients, whether due to cyber-attacks, computer viruses, physical or electronic break-ins or other reasons, we may be subject to liabilities imposed by relevant laws and regulations, and our reputation and business may be materially and adversely affected.

We collect, store and process certain personal and other sensitive data from our users and clients, which makes us a potentially vulnerable target to cyber-attacks, computer viruses, physical or electronic break-ins or similar disruptions. While we have taken steps to protect the confidential information that we have access to, our security measures could be breached. Because the techniques used to sabotage or obtain unauthorized access to systems change frequently and generally are not recognized until they are launched against a target, we may not be able to anticipate these techniques or implement adequate preventative measures. Any accidental or willful security breaches or other unauthorized access to our system could cause confidential user and client information to be stolen and used for criminal purposes. Security breaches or unauthorized access to confidential information could also expose us to liability related to the loss of the information, time-consuming and expensive litigation and negative publicity. We have not experienced any material cyber-security breaches or been subject to any material breaches of any of our cyber-security measures in the past. If security measures are breached because of third-party action, employee error, malfeasance or otherwise, or if design flaws in our technology infrastructure are exposed and exploited, our relationships with users and clients could be severely damaged, we could incur significant liability and our business and operations could be adversely affected.

We are subject to governmental regulation and other legal obligations related to the protection of personal data, privacy and information security in the regions where we do business, and there has been and may continue to be a significant increase in such laws that restrict or control the use of personal data. In China, the Cyber Security Law became effective in June 2017 and requires network operators to follow the principles of legitimacy in collecting and using personal information. In addition, the Personal Information Security Specification, or China Specification, came into force on May 1, 2018. Although the China Specification is not a mandatory regulation, it nonetheless has a key implementing role in relation to China’s Cyber Security Law in respect to protecting personal information in China. Furthermore, it is likely that the China Specification will be relied on by Chinese government agencies as a standard to determine whether businesses have abided by China’s data protection rules. Furthermore, under the China Specification, the data controller must provide the purpose of collecting and using subject personal information, as well as the business functions of such purpose, and the China Specification requires the data controller to distinguish its core function from additional functions to ensure the data controller will only collect personal information as needed.

There are uncertainties as to the interpretation and application of laws in one jurisdiction which may be interpreted and applied in a manner inconsistent to another jurisdiction and may conflict with our current policies and practices or require changes to the features of our system. We cannot assure that our existing user information protection system and technical measures will be considered sufficient under applicable laws and regulations. If we are unable to address any information protection concerns, any compromise of security that results unauthorized disclosure or transfer of personal data, or to comply with the then applicable laws and regulations, we may incur additional costs and liability and result in governmental enforcement actions, litigation, fines and penalties or adverse publicity and could cause our users and clients to lose trust in us, which could have a material adverse effect on our business, results of operations, financial condition and prospects. We may also be subject to new laws, regulations or standards or new interpretations of existing laws, regulations or standards, including those in the areas of data security and data privacy, which could require us to incur additional costs and restrict our business operations.

Because we are a Cayman Islands corporation and all of our business is conducted in the PRC, you may be unable to bring an action against us or our officers and directors or to enforce any judgment you may obtain.

We are incorporated in the Cayman Islands and conduct our operations primarily in China. Substantially all of our assets are located outside of the United States and the proceeds of this offering will primarily be held in banks outside of the United States. In addition, all of our directors and officers reside outside of the United States. As a result, it may be difficult or impossible for you to bring an action against us or against these individuals in the United States in the event that you believe we have violated your rights, either under United States federal or state securities laws or otherwise, or if you have a claim against us. Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands and of China may not permit you to enforce a judgment against our assets or the assets of our directors and officers. See “Enforceability of Civil Liabilities.”

Since our chief executive officer will own at least [●]% of our Ordinary Shares following the Offering, he will have the ability to elect directors and approve matters requiring shareholder approval by way of ordinary resolution or special resolution.

Our chief executive officer will own at least [●]% of our Ordinary Shares following the Offering. Such concentration of voting power could have the effect of delaying, deterring, or preventing a change of control or other business combination, which could, in turn, have an adverse effect on the market price of our Ordinary Shares or prevent our shareholders from realizing a premium over the then-prevailing market price for their Ordinary Shares.

The proposed tariffs by the U.S. government and the potential of a trade war between the U.S. and China, and on a larger scale, internationally, may dampen global growth. If the U.S. government, in the future, subjects the services that we provide to proposed tariffs, our business operations and revenues may be negatively impacted. 

The U.S. government has recently proposed, among other actions, imposing new or higher tariffs on specified products imported from China to penalize China for what it characterizes as unfair trade practices and China has responded by proposing new or higher tariffs on specified products imported from the United States. On April 3, 2018, the Office of the United States Trade Representative published a notice of determination and request for public comment under Section 301 under the Trade Act of 1974 (the “Notice”) concerning the proposed imposition of an additional 25% tariff on specified products from China, which products comprise approximately $50 billion in annual trade value for calendar year 2018. In response, China has proposed tariffs on a number of U.S. goods, on a much smaller scale, in the current time. Based on our analysis of the list of products set forth in the Notice, we expect that the proposed tariffs will not have a material direct impact on our business operations, as we are based in the PRC, and deliver services to customers exclusively located within the PRC market. However, the proposed tariffs may cause the depreciation of the RMB currency and a contraction of certain PRC industries that will likely be affected by the proposed tariffs. As such, there may be potential decrease in the spending powers of our target real estate property buyers and/or a negative impact on the operation of our developer clients, which in turn, may lead to a contraction of the PRC real estate market. As such, we may have access to fewer business opportunities and our operation may be negatively impacted. In addition, future actions or escalations by either the United States or China that affect trade relations may cause global economic turmoil and potentially have a negative impact on our business and we cannot provide any assurances as to whether such actions will occur or the form that they may take.

Our lack of effective internal controls over financial reporting may affect our ability to accurately report our financial results or prevent fraud which may affect the market for and price of our Ordinary Share. 

To implement Section 404 of the Sarbanes-Oxley Act of 2002, the SEC adopted rules requiring public companies to include a report of management on the company’s internal control over financial reporting. Prior to filing the registration statement of which this prospectus is a part, we were not subject to these rules. As a result, we do not have in place effective disclosure controls and procedures or internal controls over financial reporting. We are not subject to the requirement that we maintain internal controls and that management performs periodic evaluation of the effectiveness of the internal controls. Effective internal control over financial reporting is important to prevent fraud. As a result, our business, financial condition, results of operations and prospects, as well as the market for and trading price of our Ordinary Shares, may be materially and adversely affected if we do not have effective internal controls. We do not presently have the financial resources or personnel to develop or implement systems that would provide us with the necessary information on a timely basis so as to be able to implement financial controls. As a result, we may not discover any problems in a timely manner, and current and potential shareholders could lose confidence in our financial reporting, which would harm our business and the trading price of our Ordinary Shares. The absence of internal controls over financial reporting may inhibit investors from purchasing our Ordinary Shares and may make it more difficult for us to raise funds in a debt or equity financing. 

Because we are an “emerging growth company,” we may not be subject to requirements that other public companies are subject to, which could affect investor confidence in us and our Ordinary Shares.

We are an “emerging growth company,” as defined in the JOBS Act, and we intend to take advantage of certain exemptions from disclosure and other requirements applicable to other public companies that are not emerging growth companies including, most significantly, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act for so long as we are an emerging growth company. As a result, if we elect not to comply with such auditor attestation requirements, our investors may not have access to certain information they may deem important. See “Implications of Our Being an “Emerging Growth Company.”

Risks Related to Our Corporate Structure and Operation

If the PRC government deems that the contractual arrangements in relation to Shenzhen Jiana, our consolidated variable interest entity, do not comply with PRC regulatory restrictions on foreign investment in the relevant industries, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations.

Foreign ownership of internet-based businesses, such as distribution of online information, is subject to restrictions under current PRC laws and regulations. For example, foreign investors are not allowed to own more than 50% of the equity interests in a value-added telecommunication service provider (except e-commerce) and any such foreign investor must have experience in providing value-added telecommunications services overseas and maintain a good track record in accordance with the Guidance Catalog of Industries for Foreign Investment promulgated in 2007, as amended in 2011, 2015 and in 2017, respectively, and other applicable laws and regulations.

We are a Cayman Islands company and our PRC subsidiaries are considered foreign-invested enterprise. To comply with PRC laws and regulations, we conduct our operations in China through a series of contractual arrangements entered into between JIANA (Shenzhen) Development Co., Ltd. (“JIANA Development”) and Shenzhen Jiana Technology Co., Ltd. (“Shenzhen Jiana”). As a result of these contractual arrangements, we exercise control over Shenzhen Jiana and consolidate its operating results in our financial statements under U.S. GAAP. For a detailed description of these contractual arrangements, see “Corporate History and Structure.”

In the opinion of our PRC counsel, Yingke Law Firm, our current ownership structure, the ownership structure of Shenzhen Jiana Technology Co., Ltd., Heyuan Branch (“Heyuan Branch”), Dongyuan Mingyuan Tianyuan Investment Co., Ltd., (“Dongyuan Mingyuan”), Shenzhen Mingyuan Investment Holding, Ltd. (“Shenzhen Mingyuan”), our consolidated variable interest entity, the contractual arrangements between JIANA Development and Shenzhen Jiana are not in violation of existing PRC laws, rules and regulations; and these contractual arrangements are valid, binding and enforceable in accordance with their terms and applicable PRC laws and regulations currently in effect. However, our PRC counsel has also advised us that there are substantial uncertainties regarding the interpretation and application of current or future PRC laws and regulations, and there can be no assurance that the PRC government will ultimately take a view that is consistent with the opinion of our PRC counsel.

We rely on contractual arrangements with Shenzhen Jiana, our consolidated variable interest entity for a portion of our business operations, which may not be as effective as direct ownership in providing operational control.

The equity interests of Shenzhen Jiana, our consolidated variable interest entity, are held by our CEO Fengzhen Zhu, Qingchao Yao and Qian Zhou with each holding 84.27%, 5.63%, and 10% respectively. Fengzhen Zhu controls the decision making of Shenzhen Jiana and indirectly has a considerable influence over our company and our corporate matters. 

We have relied and expect to continue to rely on contractual arrangements with Shenzhen Jiana and its shareholders to operate our www.fangrong.com website and mobile application, which serve as an online portal for investment products, including the loans to be facilitated through our platform as well as other investment products offered by third parties. For a description of these contractual arrangements, see “Business — Corporate History and Structure.” These contractual arrangements may not be as effective as direct ownership in providing us with control over our consolidated variable interest entity. For example, Shenzhen Jiana and its shareholders could breach their contractual arrangements with us by, among other things, failing to conduct their operations, including maintaining our website and using the domain names and trademarks, in an acceptable manner or taking other actions that are detrimental to our interests.

If we had direct ownership of Shenzhen Jiana, we would be able to exercise our rights as a shareholder to effect changes in the board of directors of Shenzhen Jiana, which in turn could implement changes, subject to any applicable fiduciary obligations, at the management and operational level. However, under the current contractual arrangements, we rely on the performance by Shenzhen Jiana, and its shareholders of their obligations under the contracts. The shareholders of Shenzhen Jiana may not act in the best interests of our company or may not perform their obligations under these contracts. Such risks exist throughout the period in which we intend to operate our business through the contractual arrangements with Shenzhen Jiana. Although we have the right to replace any shareholder of Shenzhen Jiana under their respective contractual arrangements, if any shareholder of Shenzhen Jiana is uncooperative or any dispute relating to these contracts remains unresolved, we will have to enforce our rights under these contracts through the operations of PRC laws and arbitration, litigation and other legal proceedings and therefore, will be subject to uncertainties in the PRC legal system. See “— Any failure by Shenzhen Jiana, our consolidated variable interest entity, or its shareholders to perform their obligations under our contractual arrangements with them would have a material adverse effect on our business” below. Therefore, our contractual arrangements with Shenzhen Jiana, our consolidated variable interest entity, may not be as effective in ensuring our control over the relevant portion of our business operations as direct ownership would be.

Any failure by Shenzhen Jiana, our consolidated variable interest entity, or its shareholders to perform their obligations under our contractual arrangements with them would have a material adverse effect on our business.

If Shenzhen Jiana, our consolidated variable interest entity, or its shareholders fail to perform their respective obligations under the contractual arrangements, we may have to incur substantial costs and expend additional resources to enforce such arrangements. We may also have to rely on legal remedies under PRC laws, including seeking specific performance or injunctive relief, and claiming damages, which we cannot assure you will be effective under PRC laws. For example, if the shareholders of Shenzhen Jiana were to refuse to transfer their equity interest in Shenzhen Jiana to us or our designee if we exercise the purchase option pursuant to these contractual arrangements, or if they were otherwise to act in bad faith toward us, then we may have to take legal actions to compel them to perform their contractual obligations.

All the agreements under our contractual arrangements are governed by PRC laws and provide for the resolution of disputes through arbitration in China. Accordingly, these contracts would be interpreted in accordance with PRC laws and any disputes would be resolved in accordance with PRC legal procedures. The legal system in the PRC is not as developed as in some other jurisdictions, such as the United States. As a result, uncertainties in the PRC legal system could limit our ability to enforce these contractual arrangements. Meanwhile, there are very few precedents and little formal guidance as to how contractual arrangements in the context of a consolidated variable interest entity should be interpreted or enforced under PRC laws. There remain significant uncertainties regarding the ultimate outcome of such arbitration should legal action become necessary. In addition, under PRC laws, rulings by arbitrators are final and parties cannot appeal arbitration results in court unless such rulings are revoked or determined unenforceable by a competent court. If the losing parties fail to carry out the arbitration awards within a prescribed time limit, the prevailing parties may only enforce the arbitration awards in PRC courts through arbitration award recognition proceedings, which would require additional expenses and delay. In the event that we are unable to enforce these contractual arrangements, or if we suffer significant delay or other obstacles in the process of enforcing these contractual arrangements, we may not be able to exert effective control over our consolidated variable interest entity, and our ability to conduct our business may be negatively affected.

The shareholders of Shenzhen Jiana, our consolidated variable interest entity, may have potential conflicts of interest with us, which may materially and adversely affect our business and financial condition.

The equity interests of Shenzhen Jiana, our consolidated variable interest entity, are held by Fengzhen Zhu, our CEO, Qingchao Yao and Qian Zhou. Their interests in Shenzhen Jiana may differ from the interests of our company as a whole. These shareholders may breach, or cause Shenzhen Jiana to breach, the existing contractual arrangements we have with them and Shenzhen Jiana, which would have a material adverse effect on our ability to effectively control Shenzhen Jiana and receive economic benefits from it. For example, the shareholders may be able to cause our agreements with Shenzhen Jiana to be performed in a manner adverse to us by, among other things, failing to remit payments due under the contractual arrangements to us on a timely basis. We cannot assure you that when conflicts of interest arise, any or all of these shareholders will act in the best interests of our company or such conflicts will be resolved in our favor.

Currently, we do not have any arrangements to address potential conflicts of interest between these shareholders and our company, except that we could exercise our purchase option under the exclusive option agreement with these shareholders to request them to transfer all of their equity interests in Shenzhen Jiana to a PRC entity or individual designated by us, to the extent permitted by PRC laws. If we cannot resolve any conflict of interest or dispute between us and the shareholders of Shenzhen Jiana, we would have to rely on legal proceedings, which could result in the disruption of our business and could subject us to substantial uncertainty as to the outcome of any such legal proceedings.

Contractual arrangements in relation to Shenzhen Jiana, our consolidated variable interest entity, may be subject to scrutiny by the PRC tax authorities and they may determine that we or Shenzhen Jiana owe additional taxes, which could negatively affect our financial condition and the value of your investment.

Under applicable PRC laws and regulations, arrangements and transactions among related parties may be subject to audit or challenge by the PRC tax authorities within ten years after the taxable year when the transactions are conducted. The PRC Enterprise Income Tax Law requires every enterprise in China to submit its annual enterprise income tax return together with a report on transactions with its related parties to the relevant tax authorities. The tax authorities may impose reasonable adjustments on taxation if they have identified any related party transactions that are inconsistent with arm’s length principles.

We may lose the ability to use and benefit from assets held by Shenzhen Jiana, our consolidated variable interest entity, that are material to the operation of our business if the entity goes bankrupt or becomes subject to a dissolution or liquidation proceeding.

Shenzhen Jiana, our consolidated variable interest entity, holds certain assets that are material to the operation of our business. Under the contractual arrangements, our consolidated variable interest entity and its shareholders may not cause it to, in any manner, sell, transfer, mortgage or dispose of its assets or its legal or beneficial interests in the business without our prior consent. However, in the event Shenzhen Jiana’s shareholders breach these contractual arrangements and voluntarily liquidate Shenzhen Jiana, or Shenzhen Jiana declares bankruptcy and all or part of its assets become subject to liens or rights of third-party creditors, or are otherwise disposed of without our consent, we may be unable to continue some or all of our business activities, which could materially and adversely affect our business, financial condition and results of operations. If Shenzhen Jiana undergoes a voluntary or involuntary liquidation proceeding, independent third-party creditors may claim rights to some or all of these assets, thereby hindering our ability to operate our business, which could materially and adversely affect our business, financial condition and results of operations.

Risks Relating to Doing Business in the PRC

PRC regulations relating to investments in offshore companies by PRC residents may subject our PRC-resident beneficial owners or our PRC subsidiaries to liability or penalties, limit our ability to inject capital into our PRC subsidiaries or limit our PRC subsidiaries’ ability to increase their registered capital or distribute profits.

In July 2014, SAFE promulgated the Circular on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents’ Offshore Investment and Financing and Roundtrip Investment through Special Purpose Vehicles, or SAFE Circular 37, which replaces the previous SAFE Circular 75. SAFE Circular 37 requires PRC residents, including PRC individuals and PRC corporate entities, to register with SAFE or its local branches in connection with their direct or indirect offshore investment activities. SAFE Circular 37 is applicable to our shareholders who are PRC residents and may be applicable to any offshore acquisitions that we may make in the future.

Under SAFE Circular 37, PRC residents who make, or have prior to the implementation of SAFE Circular 37 made, direct or indirect investments in offshore special purpose vehicles, or SPVs, are required to register such investments with SAFE or its local branches. In addition, any PRC resident who is a direct or indirect shareholder of an SPV, is required to update its registration with the local branch of SAFE with respect to that SPV, to reflect any material change. Moreover, any subsidiary of such SPV in China is required to urge the PRC resident shareholders to update their registration with the local branch of SAFE to reflect any material change. If any PRC resident shareholder of such SPV fails to make the required registration or to update the registration, the subsidiary of such SPV in China may be prohibited from distributing its profits or the proceeds from any capital reduction, share transfer or liquidation to the SPV, and the SPV may also be prohibited from making additional capital contributions into its subsidiaries in China. In February, 2015, SAFE promulgated a Notice on Further Simplifying and Improving Foreign Exchange Administration Policy on Direct Investment, or SAFE Notice 13. Under SAFE Notice 13, applications for foreign exchange registration of inbound foreign direct investments and outbound direct investments, including those required under SAFE Circular 37, must be filed with qualified banks instead of SAFE. Qualified banks should examine the applications and accept registrations under the supervision of SAFE. We have used our best efforts to notify PRC residents or entities who directly or indirectly hold shares in our Cayman Islands holding company and who are known to us as being PRC residents to complete the foreign exchange registrations. However, we may not be informed of the identities of all the PRC residents or entities holding direct or indirect interest in our company, nor can we compel our beneficial owners to comply with SAFE registration requirements. We cannot assure you that all other shareholders or beneficial owners of ours who are PRC residents or entities have complied with, and will in the future make, obtain or update any applicable registrations or approvals required by, SAFE regulations. Failure by such shareholders or beneficial owners to comply with SAFE regulations, or failure by us to amend the foreign exchange registrations of our PRC subsidiaries, could subject us to fines or legal sanctions, restrict our overseas or cross-border investment activities, and limit our PRC subsidiaries’ ability to make distributions or pay dividends to us or affect our ownership structure, which could adversely affect our business and prospects.

Furthermore, as these foreign exchange and outbound investment related regulations are relatively new and their interpretation and implementation has been constantly evolving, it is unclear how these regulations, and any future regulation concerning offshore or cross-border investments and transactions, will be interpreted, amended and implemented by the relevant government authorities. For example, we may be subject to a more stringent review and approval process with respect to our foreign exchange activities, such as remittance of dividends and foreign-currency-denominated borrowings, which may adversely affect our financial condition and results of operations. We cannot assure you that we have complied or will be able to comply with all applicable foreign exchange and outbound investment related regulations. In addition, if we decide to acquire a PRC domestic company, we cannot assure you that we or the owners of such company, as the case may be, will be able to obtain the necessary approvals or complete the necessary filings and registrations required by the foreign exchange regulations. This may restrict our ability to implement our acquisition strategy and could adversely affect our business and prospects.

Changes in the policies of the PRC government could have a significant impact upon our ability to operate profitably in the PRC. 

We conduct all of our operations and all of our revenue is generated in the PRC. Accordingly, economic, political and legal developments in the PRC will significantly affect our business, financial condition, results of operations and prospects. Policies of the PRC government can have significant effects on economic conditions in the PRC and the ability of businesses to operate profitably. Our ability to operate profitably in the PRC may be adversely affected by changes in policies by the PRC government, including changes in laws, regulations or their interpretation, particularly those dealing with the Internet, including censorship and other restriction on material which can be transmitted over the Internet, security, intellectual property, money laundering, taxation and other laws that affect our ability to operate our website.

Because our business is dependent upon government policies that encourage a market-based economy, change in the political or economic climate in the PRC may impair our ability to operate profitably, if at all. 

Although the PRC government has been pursuing a number of economic reform policies for more than two decades, the PRC government continues to exercise significant control over economic growth in the PRC. Because of the nature of our business, we are dependent upon the PRC government pursuing policies that encourage private ownership of businesses. Restrictions on private ownership of businesses would affect the securities business in general and businesses using real estate service in particular. We cannot assure you that the PRC government will pursue policies favoring a market-oriented economy or that existing policies will not be significantly altered, especially in the event of a change in leadership, social or political disruption, or other circumstances affecting political, economic and social life in the PRC.

We must remit the offering proceeds to PRC before they may be used to benefit our business in the PRC, and this process may take a number of months.

The proceeds of this offering must be sent back to the PRC, and the process for sending such proceeds back to the PRC may take several months after the closing of this offering. We may be unable to use these proceeds to grow our business until we receive such proceeds in the PRC. In order to remit the offering proceeds to the PRC, we will take the following actions:

First, we will open a special foreign exchange account for capital account transactions. To open this account, we must submit to State Administration for Foreign Exchange (“SAFE”) certain application forms, identity documents, transaction documents, form of foreign exchange registration of overseas investments by domestic residents, and foreign exchange registration certificate of the invested company.

Second, we will remit the offering proceeds into this special foreign exchange account.

Third, we will apply for settlement of the foreign exchange. In order to do so, we must submit to SAFE certain application forms, identity documents, payment order to a designated person, and a tax certificate.

The timing of the process is difficult to estimate because the efficiencies of different SAFE branches can vary materially. Ordinarily, the process takes several months to complete but is required by law to be accomplished within 180 days of application. Until the abovementioned approvals, the proceeds of this offering will be maintained in an interest-bearing account maintained by us in the United States.

PRC laws and regulations governing our current business operations are sometimes vague and uncertain and any changes in such laws and regulations may impair our ability to operate profitably.

There are substantial uncertainties regarding the interpretation and application of PRC laws and regulations including, but not limited to, the laws and regulations governing our business and the enforcement and performance of our arrangements with customers in certain circumstances. The laws and regulations are sometimes vague and may be subject to future changes, and their official interpretation and enforcement may involve substantial uncertainty. The effectiveness and interpretation of newly enacted laws or regulations, including amendments to existing laws and regulations, may be delayed, and our business may be affected if we rely on laws and regulations which are subsequently adopted or interpreted in a manner different from our understanding of these laws and regulations. New laws and regulations that affect existing and proposed future businesses may also be applied retroactively. We cannot predict what effect the interpretation of existing or new PRC laws or regulations may have on our business.

Because our business is conducted in RMB and the price of our Ordinary Shares is quoted in United States dollars, changes in currency conversion rates may affect the value of your investments.

Our business is conducted in the PRC, our books and records are maintained in RMB, which is the currently of the PRC, and the financial statements that we file with the SEC and provide to our shareholders are presented in United States dollars. Changes in the exchange rate between the RMB and dollar affect the value of our assets and the results of our operations in United States dollars. The value of the RMB against the United States dollar and other currencies may fluctuate and is affected by, among other things, changes in the PRC’s political and economic conditions and perceived changes in the economy of the PRC and the United States. Any significant revaluation of the RMB may materially and adversely affect our cash flows, revenue and financial condition. Further, our Ordinary Shares offered by this prospectus are offered in United States dollars, we will need to convert the net proceeds we receive into RMB in order to use the funds for our business. Changes in the conversion rate between the United States dollar and the RMB will affect that amount of proceeds we will have available for our business. 

Under the PRC Enterprise Income Tax Law, or the EIT Law, we may be classified as a “resident enterprise” of China, which could result in unfavorable tax consequences to us and our non-PRC shareholders.

The EIT Law and its implementing rules provide that enterprises established outside of China whose “de facto management bodies” are located in China are considered “resident enterprises” under PRC tax laws. The implementing rules promulgated under the EIT Law define the term “de facto management bodies” as a management body which substantially manages, or has control over the business, personnel, finance and assets of an enterprise. In April 2009, the State Administration of Taxation, or SAT, issued a circular, known as Circular 82, which provides certain specific criteria for determining whether the “de facto management bodies” of a PRC-controlled enterprise that is incorporated offshore is located in China. However, there are no further detailed rules or precedents governing the procedures and specific criteria for determining “de facto management body.” Although our board of directors and management are located in the PRC, it is unclear if the PRC tax authorities will determine that we should be classified as a PRC “resident enterprise.”

If we are deemed as a PRC “resident enterprise,” we will be subject to PRC enterprise income tax on our worldwide income at a uniform tax rate of 25%, although dividends distributed to us from our existing PRC subsidiary and any other PRC subsidiaries which we may establish from time to time could be exempt from the PRC dividend withholding tax due to our PRC “resident recipient” status. This could have a material and adverse effect on our overall effective tax rate, our income tax expenses and our net income. Furthermore, dividends, if any, paid to our shareholders may be decreased as a result of the decrease in distributable profits. In addition, if we were considered a PRC “resident enterprise”, any dividends we pay to our non-PRC investors, and the gains realized from the transfer of our ordinary shares may be considered income derived from sources within the PRC and be subject to PRC tax, at a rate of 10% in the case of non-PRC enterprises or 20% in the case of non-PRC individuals (in each case, subject to the provisions of any applicable tax treaty). It is unclear whether holders of our Ordinary Shares would be able to claim the benefits of any tax treaties between their country of tax residence and the PRC in the event that we are treated as a PRC resident enterprise. This could have a material and adverse effect on the value of your investment in us and the price of our Ordinary Shares.

There are significant uncertainties under the EIT Law relating to the withholding tax liabilities of our PRC subsidiary, and dividends payable by our PRC subsidiary to our offshore subsidiaries may not qualify to enjoy certain treaty benefits.

Under the PRC EIT Law and its implementation rules, the profits of a foreign invested enterprise generated through operations, which are distributed to its immediate holding company outside the PRC, will be subject to a withholding tax rate of 10%. Pursuant to a special arrangement between Hong Kong and the PRC, such rate may be reduced to 5% if a Hong Kong resident enterprise owns more than 25% of the equity interest in the PRC company. Our PRC subsidiary is wholly-owned by our Hong Kong subsidiary. Moreover, under the Notice of the State Administration of Taxation on Issues regarding the Administration of the Dividend Provision in Tax Treaties promulgated on February 20, 2009, the tax payer needs to satisfy certain conditions to enjoy the benefits under a tax treaty. These beneficial owner of the relevant dividends, and (2) the corporate shareholder to receive dividends from the PRC subsidiary must have continuously met the direct ownership thresholds during the 12 consecutive months preceding the receipt of the dividends. Further, the State Administration of Taxation promulgated the Notice on How to Understand and Recognize the “Beneficial Owner” in Tax Treaties on October 27, 2009, which limits the “beneficial owner” to individuals, projects or other organizations normally engaged in substantive operations, and sets forth certain detailed factors in determining the “beneficial owner” status. In current practice, a Hong Kong enterprise must obtain a tax resident certificate from the relevant Hong Kong tax authority to apply for the 5% lower PRC withholding tax rate. As the Hong Kong tax authority will issue such a tax resident certificate on a case-by-case basis, we cannot assure you that we will be able to obtain the tax resident certificate from the relevant Hong Kong tax authority. As of the date of this prospectus, we have not commenced the application process for a Hong Kong tax resident certificate from the relevant Hong Kong tax authority, and there is no assurance that we will be granted such a Hong Kong tax resident certificate.

Even after we obtain the Hong Kong tax resident certificate, we are required by applicable tax laws and regulations to file required forms and materials with relevant PRC tax authorities to prove that we can enjoy 5% lower PRC withholding tax rate. We intend to obtain the required materials and file with the relevant tax authorities when it plans to declare and pay dividends, but there is no assurance that the PRC tax authorities will approve the 5% withholding tax rate.

If we become directly subject to the scrutiny, criticism and negative publicity involving U.S.-listed Chinese companies, we may have to expend significant resources to investigate and resolve the matter which could harm our business operations, stock price and reputation.

U.S. public companies that have substantially all of their operations in China have been the subject of intense scrutiny, criticism and negative publicity by investors, financial commentators and regulatory agencies, such as the SEC. Much of the scrutiny, criticism and negative publicity has centered on financial and accounting irregularities and mistakes, a lack of effective internal controls over financial accounting, inadequate corporate governance policies or a lack of adherence thereto and, in many cases, allegations of fraud. As a result of the scrutiny, criticism and negative publicity, the publicly traded stock of many U.S. listed Chinese companies sharply decreased in value and, in some cases, has become virtually worthless. Many of these companies are now subject to shareholder lawsuits and SEC enforcement actions and are conducting internal and external investigations into the allegations. It is not clear what effect this sector-wide scrutiny, criticism and negative publicity will have on us, our business and our stock price. If we become the subject of any unfavorable allegations, whether such allegations are proven to be true or untrue, we will have to expend significant resources to investigate such allegations and/or defend our company. This situation will be costly and time consuming and distract our management from developing our growth. If such allegations are not proven to be groundless, we and our business operations will be severely affected and you could sustain a significant decline in the value of our stock. 

The disclosures in our reports and other filings with the SEC and our other public pronouncements are not subject to the scrutiny of any regulatory bodies in the PRC.

We are regulated by the SEC and our reports and other filings with the SEC are subject to SEC review in accordance with the rules and regulations promulgated by the SEC under the Securities Act and the Exchange Act. Our SEC reports and other disclosure and public pronouncements are not subject to the review or scrutiny of any PRC regulatory authority. For example, the disclosure in our SEC reports and other filings are not subject to the review by China Securities Regulatory Commission, a PRC regulator that is responsible for oversight of the capital markets in China. Accordingly, you should review our SEC reports, filings and our other public pronouncements with the understanding that no local regulator has done any review of us, our SEC reports, other filings or any of our other public pronouncements.

Risks Relating to this Offering and the Trading Market 

There has been no public market for our Ordinary Shares prior to this offering, and you may not be able to resell our Ordinary Shares at or above the price you pay for them, or at all.

Prior to this offering, there has not been a public market for our Ordinary Shares. We plan to apply for the listing of our Ordinary Shares on the Nasdaq Capital Market. However, an active public market for our Ordinary Shares may not develop or be sustained after the offering, in which case the market price and liquidity of our Ordinary Shares will be materially and adversely affected. Our Ordinary Shares will not be listed on any exchange or quoted for trading on any over-the-counter system.

The initial public offering price for our Ordinary Shares may not be indicative of prices that will prevail in the trading market and such market prices may be volatile.

The initial public offering price for our Ordinary Shares will be determined by negotiations between us and the underwriter, and does not bear any relationship to our earnings, book value or any other indicia of value. We cannot assure you that the market price of our Ordinary Shares will not decline significantly below the initial public offering price. The financial markets in the United States and other countries have experienced significant price and volume fluctuations in the last few years. Volatility in the price of our Ordinary Shares may be caused by factors outside of our control and may be unrelated or disproportionate to changes in our results of operations.

You will experience immediate and substantial dilution in the net tangible book value of Ordinary Shares purchased.

The initial public offering price of our Ordinary Shares is substantially higher than the net tangible book value per share of our Ordinary Shares. Consequently, when you purchase our Ordinary Shares in the offering and upon completion of the offering, you will incur immediate dilution of US$[●] per share, based on an assumed initial public offering price of US$[●].   In addition, you may experience further dilution to the extent that additional ordinary shares are issued upon exercise of outstanding warrants or options we may grant from time to time.  

We do not intend to pay dividends for the foreseeable future.

We currently intend to retain any future earnings to finance the operation and expansion of our business, and we do not expect to declare or pay any dividends in the foreseeable future. As a result, you may only receive a return on your investment in our Ordinary Shares if the market price of our Ordinary Shares increases.

If securities or industry analysts do not publish research or reports about our business, or if they publish a negative report regarding our Ordinary Shares, the price of our Ordinary Shares and trading volume could decline.

The trading market for our Ordinary Shares may depend in part on the research and reports that industry or securities analysts publish about us or our business. We do not have any control over these analysts. If one or more of the analysts who cover us downgrade us, the price of our Ordinary Shares would likely decline. If one or more of these analysts cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause the price of our Ordinary Shares and the trading volume to decline.

The market price of our Ordinary Shares may be volatile or may decline regardless of our operating performance, and you may not be able to resell your shares at or above the initial public offering price.

The initial public offering price for our Ordinary Shares will be determined through negotiations between the underwriter and us and may vary from the market price of our Ordinary Shares following our initial public offering. If you purchase our Ordinary Shares in our initial public offering, you may not be able to resell those shares at or above the initial public offering price. We cannot assure you that the initial public offering price of our Ordinary Shares, or the market price following our initial public offering, will equal or exceed prices in privately negotiated transactions of our shares that have occurred from time to time prior to our initial public offering. The market price of our Ordinary Shares may fluctuate significantly in response to numerous factors, many of which are beyond our control, including:

In addition, the stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. Stock prices of many companies have fluctuated in a manner unrelated or disproportionate to the operating performance of those companies. In the past, stockholders have filed securities class action litigation following periods of market volatility. If we were to become involved in securities litigation, it could subject us to substantial costs, divert resources and the attention of management from our business, and adversely affect our business.

Our management has broad discretion to determine how to use the funds raised in the offering and may use them in ways that may not enhance our results of operations or the price of our Ordinary Shares.

We anticipate that we will use the net proceeds from this offering for working capital and other corporate purposes. Our management will have significant discretion as to the use of the net proceeds to us from this offering and could spend the proceeds in ways that do not improve our results of operations or enhance the market price of our Ordinary Shares.

We will incur increased costs as a result of being a public company, particularly after we cease to qualify as an “emerging growth company.”

Upon completion of this offering, we will become a public company and expect to incur significant legal, accounting and other expenses that we did not incur as a private company. The Sarbanes-Oxley Act of 2002, as well as rules subsequently implemented by the SEC and the Nasdaq Capital Market, impose various requirements on the corporate governance practices of public companies. As an “emerging growth company” pursuant to the JOBS Act, we may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. We expect these rules and regulations to increase our legal and financial compliance costs and to make some corporate activities more time-consuming and costly. After we are no longer an “emerging growth company,” we expect to incur significant additional expenses and devote substantial management effort toward ensuring compliance increased disclosure requirements. 

Our board of directors may decline to register transfers of ordinary shares in certain circumstances.

Except in connection with the settlement of trades or transactions entered into through the facilities of a stock exchange or automated quotation system on which our Ordinary Shares are listed or traded from time to time, our board of directors may, in its sole discretion, decline to register any transfer of any ordinary share which is not fully paid up or on which we have a lien. Our directors may also decline to register any transfer of any share unless (i) the instrument of transfer is lodged with us, accompanied by the certificate for the shares to which it relates and such other evidence as our board of directors may reasonably require to show the right of the transferor to make the transfer; (ii) the instrument of transfer is in respect of only one class of shares; (iii) the instrument of transfer is properly stamped, if required; (iv) in the case of a transfer to joint holders, the number of joint holders to whom the share is to be transferred does not exceed four; (v) the shares conceded are free of any lien in favor of us; or (vi) a fee of such maximum sum as Nasdaq Capital Market may determine to be payable, or such lesser sum as our board of directors may from time to time require, is paid to us in respect thereof.

If our directors refuse to register a transfer they shall, within one month after the date on which the instrument of transfer was lodged, send to each of the transferor and the transferee notice of such refusal. The registration of transfers may, on 14 days’ notice being given by advertisement in such one or more newspapers or by electronic means, be suspended and the register closed at such times and for such periods as our board of directors may from time to time determine, provided, however, that the registration of transfers shall not be suspended nor the register closed for more than 30 days in any year.

This, however, is unlikely to affect market transactions of the Ordinary Shares purchased by investors in the public offering. Once the Ordinary Shares have been listed, the legal title to such Ordinary Shares and the registration details of those Ordinary Shares in the Company’s register of members will remain with DTC/Cede & Co. All market transactions with respect to those Ordinary Shares will then be carried out without the need for any kind of registration by the directors, as the market transactions will all be conducted through the DTC systems.

The laws of the Cayman Islands may not provide our shareholders with benefits comparable to those provided to shareholders of corporations incorporated in the United States.

Our corporate affairs are governed by our amended and restated memorandum and articles of association, by the Companies Law (2018 Revision) of the Cayman Islands and by the common law of the Cayman Islands. The rights of shareholders to take action against our directors, actions by minority shareholders and the fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law in the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands and from English common law. Decisions of the Privy Council (which is the final Court of Appeal for British overseas territories such as the Cayman Islands) are binding on a court in the Cayman Islands. Decisions of the English courts, and particularly the Supreme Court and the Court of Appeal are generally of persuasive authority but are not binding in the courts of the Cayman Islands. Decisions of courts in other Commonwealth jurisdictions are similarly of persuasive but not binding authority. The rights of our shareholders and the fiduciary responsibilities of our directors under Cayman Islands law are not as clearly established as they would be under statutes or judicial precedents in the United States. In particular, the Cayman Islands has a less developed body of securities laws relative to the United States. Therefore, our public shareholders may have more difficulty protecting their interests in the face of actions by our management, directors or controlling shareholders than would shareholders of a corporation incorporated in a jurisdiction in the United States. 

You may be unable to present proposals before annual general meetings or extraordinary general meetings not called by shareholders.

 Cayman Islands law provides shareholders with only limited rights to requisition a general meeting, and does not provide shareholders with any right to put any proposal before a general meeting. However, these rights may be provided in a company’s amended and restated articles of association. Our amended and restated articles of association allow our shareholders holding shares representing in aggregate not less than 10% of our voting share capital in issue, to requisition a general meeting of our shareholders, in which case our directors are obliged to call such meeting. Advance notice of at least twenty-one clear days is required for the convening of our annual general shareholders’ meeting and at least fourteen clear days notice any other general meeting of our shareholders. A quorum required for a meeting of shareholders consists of at least one shareholder present or by proxy, representing not less than one-third in nominal value of the total issued voting shares in the Company.

Risks Related to Our Initial Public Offering and Ownership of Our Ordinary Shares

We will incur additional costs as a result of becoming a public company, which could negatively impact our net income and liquidity.

Upon completion of this offering, we will become a public company in the United States. As a public company, we will incur significant legal, accounting and other expenses that we did not incur as a private company. In addition, Sarbanes-Oxley and rules and regulations implemented by the SEC and the Nasdaq Capital Market require significantly heightened corporate governance practices for public companies. We expect that these rules and regulations will increase our legal, accounting and financial compliance costs and will make many corporate activities more time-consuming and costly.

We do not expect to incur materially greater costs as a result of becoming a public company than those incurred by similarly sized U.S. public companies. If we fail to comply with these rules and regulations, we could become the subject of a governmental enforcement action, investors may lose confidence in us and the market price of our Ordinary Shares could decline.

The obligation to disclose information publicly may put us at a disadvantage to competitors that are private companies.

Upon completion of this offering, we will be a publicly listed company in the United States. As a publicly listed company, we will be required to file periodic reports with the Securities and Exchange Commission upon the occurrence of matters that are material to our company and shareholders. In some cases, we will need to disclose material agreements or results of financial operations that we would not be required to disclose if we were a private company. Our competitors may have access to this information, which would otherwise be confidential. This may give them advantages in competing with our company. Similarly, as a U.S.-listed public company, we will be governed by U.S. laws that our competitors, which are mostly private Chinese companies, are not required to follow. To the extent compliance with U.S. laws increases our expenses or decreases our competitiveness against such companies, our public listing could affect our results of operations.

We are a “foreign private issuer” and our disclosure obligations differ from those of U.S. domestic reporting companies. As a result, we may not provide you the same information as U.S. domestic reporting companies or we may provide information at different times, which may make it more difficult for you to evaluate our performance and prospects.

We are a foreign private issuer and, as a result, we are not subject to the same requirements as U.S. domestic issuers. Under the Exchange Act, we will be subject to reporting obligations that, to some extent, are more lenient and less frequent than those of U.S. domestic reporting companies. For example, we will not be required to issue quarterly reports or proxy statements. We will not be required to disclose detailed individual executive compensation information. Furthermore, our directors and executive officers will not be required to report equity holdings under Section 16 of the Exchange Act and will not be subject to the insider short-swing profit disclosure and recovery regime.

As a foreign private issuer, we will also be exempt from the requirements of Regulation FD (Fair Disclosure) which, generally, are meant to ensure that select groups of investors are not privy to specific information about an issuer before other investors. However, we will still be subject to the anti-fraud and anti-manipulation rules of the SEC, such as Rule 10b-5 under the Exchange Act. Since many of the disclosure obligations imposed on us as a foreign private issuer differ from those imposed on U.S. domestic reporting companies, you should not expect to receive the same information about us and at the same time as the information provided by U.S. domestic reporting companies.

We are an “emerging growth company” and we cannot be certain if the reduced reporting requirements applicable to emerging growth companies will make our Ordinary Shares less attractive to investors.

We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act, or the JOBS Act. For as long as we continue to be an emerging growth company, we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We could be an emerging growth company for up to five years, although we could lose that status sooner if our revenues exceed $1 billion, if we issue more than $1 billion in non-convertible debt in a three-year period, or if the market value of our Ordinary Shares held by non-affiliates exceeds $700 million as of any October 31^st before that time, in which case we would no longer be an emerging growth company as of the following April 30^th. We cannot predict if investors will find our Ordinary Shares less attractive because we may rely on these exemptions. If some investors find our Ordinary Shares less attractive as a result, there may be a less active trading market for our Ordinary Shares and our stock price may be more volatile.  

Under 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. We have irrevocably elected not to avail our company of this exemption from new or revised accounting standards and, therefore, will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.

The requirements of being a public company may strain our resources and divert management’s attention.

As a public company, we will be subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Act, the listing requirements of the securities exchange on which we list, and other applicable securities rules and regulations. Despite recent reforms made possible by the JOBS Act, compliance with these rules and regulations will nonetheless increase our legal and financial compliance costs, make some activities more difficult, time-consuming or costly and increase demand on our systems and resources, particularly after we are no longer an “emerging growth company.” The Exchange Act requires, among other things, that we file annual, quarterly, and current reports with respect to our business and operating results.

As a result of disclosure of information in this prospectus and in filings required of a public company, our business and financial condition will become more visible, which we believe may result in threatened or actual litigation, including by competitors and other third parties. If such claims are successful, our business and operating results could be harmed, and even if the claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert the resources of our management and adversely affect our business, brand and reputation and results of operations.

We also expect that being a public company and these new rules and regulations will make it more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These factors could also make it more difficult for us to attract and retain qualified members of our board of directors, particularly to serve on our audit committee and compensation committee, and qualified executive officers.

The market price of our Ordinary Shares may be volatile or may decline regardless of our operating performance, and you may not be able to resell your shares at or above the initial public offering price.

The initial public offering price for our Ordinary Shares will be determined through negotiations between the Underwriter and us and may vary from the market price of our Ordinary Shares following our initial public offering. If you purchase our Ordinary Shares in our initial public offering, you may not be able to resell those shares at or above the initial public offering price. We cannot assure you that the initial public offering price of our Ordinary Shares, or the market price following our initial public offering, will equal or exceed prices in privately negotiated transactions of our shares that have occurred from time to time prior to our initial public offering. The market price of our Ordinary Shares may fluctuate significantly in response to numerous factors, many of which are beyond our control, including:

In addition, the stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. Stock prices of many companies have fluctuated in a manner unrelated or disproportionate to the operating performance of those companies. In the past, stockholders have filed securities class action litigation following periods of market volatility. If we were to become involved in securities litigation, it could subject us to substantial costs, divert resources and the attention of management from our business, and adversely affect our business.

We have broad discretion in the use of the net proceeds from our initial public offering and may not use them effectively.

To the extent (i) we raise more money than required for the purposes explained in the section titled “Use of Proceeds” or (ii) we determine that the proposed uses set forth in that section are no longer in the best interests of our Company, we cannot specify with any certainty the particular uses of such net proceeds that we will receive from our initial public offering. Our management will have broad discretion in the application of such net proceeds, including working capital, possible acquisitions, and other general corporate purposes, and we may spend or invest these proceeds in a way with which our stockholders disagree. The failure by our management to apply these funds effectively could harm our business and financial condition. Pending their use, we may invest the net proceeds from our initial public offering in a manner that does not produce income or that loses value.

We do not intend to pay dividends for the foreseeable future.

We currently intend to retain any future earnings to finance the operation and expansion of our business, and we do not expect to declare or pay any dividends in the foreseeable future. As a result, you may only receive a return on your investment in our Ordinary Shares if the market price of our Ordinary Shares increases.

There may not be an active, liquid trading market for our Ordinary Shares.

Prior to this offering, there has been no public market for our Ordinary Shares. An active trading market for our Ordinary Shares may not develop or be sustained following this offering. You may not be able to sell your shares at the market price, if at all, if trading in our shares is not active. The initial public offering price was determined by negotiations between us and the Underwriter based upon a number of factors. The initial public offering price may not be indicative of prices that will prevail in the trading market.

Shares eligible for future sale may adversely affect the market price of our Ordinary Shares, as the future sale of a substantial amount of outstanding Ordinary Shares in the public marketplace could reduce the price of our Ordinary Shares.

The market price of our shares could decline as a result of sales of substantial amounts of our shares in the public market, or the perception that these sales could occur. In addition, these factors could make it more difficult for us to raise funds through future offerings of our Ordinary Shares. [●] shares will be outstanding immediately after this offering. All of the shares sold in the offering will be freely transferable without restriction or further registration under the Securities Act. The remaining shares will be “restricted securities” as defined in Rule 144. These shares may be sold in the future without registration under the Securities Act to the extent permitted by Rule 144 or other exemptions under the Securities Act. See “Shares Eligible for Future Sale.”

You will experience immediate and substantial dilution.

The initial public offering price of our shares is substantially higher than the pro forma net tangible book value per share of our Ordinary Shares. Assuming the completion of the firm commitment offering, if you purchase shares in this offering, you will incur immediate dilution of approximately $[●] or approximately [●]% in the pro forma net tangible book value per share from the price per share that you pay for the shares. Assuming the completion of the maximum offering, if you purchase shares in this offering, you will incur immediate dilution of approximately $[●] or approximately [●]% in the pro forma net tangible book value per share from the price per share that you pay for the Ordinary Shares. Accordingly, if you purchase shares in this offering, you will incur immediate and substantial dilution of your investment. See “Dilution.”

Certain judgments obtained against us by our shareholders may not be enforceable.

We are an exempted company limited by shares incorporated under the laws of the Cayman Islands. We conduct substantially all of our operations in China and substantially all of our assets are located in China. In addition, a majority of our directors and executive officers reside within China, and most of the assets of these persons are located within China. As a result, it may be difficult or impossible for you to effect service of process within the United States upon us or these individuals, or to bring an action against us or against these individuals in the United States in the event that you believe your rights have been infringed under the U.S. federal securities laws or otherwise. Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands and of the PRC may render you unable to enforce a judgment against our assets or the assets of our directors and officers.

There is no statutory enforcement in the Cayman Islands of judgments obtained in the federal or state courts of the United States (and the Cayman Islands are not a party to any treaties for the reciprocal enforcement or recognition of such judgments), a judgment obtained in such jurisdiction will be recognized and enforced in the courts of the Cayman Islands at common law, without any re-examination of the merits of the underlying dispute, by an action commenced on the foreign judgment debt in the Grand Court of the Cayman Islands, provided such judgment (a) is given by a foreign court of competent jurisdiction, (b) imposes on the judgment debtor a liability to pay a liquidated sum for which the judgment has been given, (c) is final, (d) is not in respect of taxes, a fine or a penalty, and (e) was not obtained in a manner and is not of a kind the enforcement of which is contrary to natural justice or the public policy of the Cayman Islands. However, the Cayman Islands courts are unlikely to enforce a judgment obtained from the U.S. courts under civil liability provisions of the U.S. federal securities law if such judgment is determined by the courts of the Cayman Islands to give rise to obligations to make payments that are penal or punitive in nature. Because such a determination has not yet been made by a court of the Cayman Islands, it is uncertain whether such civil liability judgments from U.S. courts would be enforceable in the Cayman Islands.

The recognition and enforcement of foreign judgments are provided for under the PRC Civil Procedures Law. PRC courts may recognize and enforce foreign judgments in accordance with the requirements of the PRC Civil Procedures Law based either on treaties between China and the country where the judgment is made or on principles of reciprocity between jurisdictions. China does not have any treaties or other forms of reciprocity with the United States that provide for the reciprocal recognition and enforcement of foreign judgments. In addition, according to the PRC Civil Procedures Law, the PRC courts will not enforce a foreign judgment against us or our director and officers if they decide that the judgment violates the basic principles of PRC laws or national sovereignty, security or public interest. As a result, it is uncertain whether and on what basis a PRC court would enforce a judgment rendered by a court in the United States.

You may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because we are incorporated under Cayman Islands law.

We are an exempted company limited by shares incorporated under the laws of the Cayman Islands. Our corporate affairs are governed by our memorandum and articles of association, the Companies Law (2016 Revision) of the Cayman Islands and the common law of the Cayman Islands. The rights of shareholders to take action against the directors, actions by minority shareholders and the fiduciary duties of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from the common law of England, the decisions of whose courts are of persuasive authority, but are not binding, on a court in the Cayman Islands. The rights of our shareholders and the fiduciary duties of our directors under Cayman Islands law are not as clearly established as they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands has a less developed body of securities laws than the United States. Some U.S. states, such as Delaware, have more fully developed and judicially interpreted bodies of corporate law than the Cayman Islands. In addition, Cayman Islands companies may not have standing to initiate a shareholder derivative action in a federal court of the United States.

Shareholders of Cayman Islands exempted companies like us have no general rights under Cayman Islands law to inspect corporate records or to obtain copies of lists of shareholders of these companies. Our directors have discretion under our current memorandum and articles of association to determine whether or not, and under what conditions, our corporate records may be inspected by our shareholders, but are not obliged to make them available to our shareholders. This may make it more difficult for you to obtain the information needed to establish any facts necessary for a shareholder resolution or to solicit proxies from other shareholders in connection with a proxy contest.

As a result of all of the above, our public shareholders may have more difficulty in protecting their interests in the face of actions taken by management, members of the board of directors or controlling shareholders than they would as public shareholders of a company incorporated in the United States.

There can be no assurance that we will not be passive foreign investment company, or PFIC, for United States federal income tax purposes for any taxable year, which could subject United States investors in our Ordinary Shares to significant adverse United States income tax consequences.

We will be a “passive foreign investment company,” or “PFIC,” if, in any particular taxable year, either (a) 75% or more of our gross income for such year consists of certain types of “passive” income or (b) 50% or more of the average quarterly value of our assets (as determined on the basis of fair market value) during such year produce or are held for the production of passive income (the “asset test”). Although the law in this regard is unclear, we intend to treat Shenzhen Jiana as being owned by us for United States federal income tax purposes, not only because we exercise effective control over the operation of these entities but also because we are entitled to substantially all of their economic benefits, and, as a result, we consolidate their results of operations in our consolidated financial statements. Assuming that we are the owner of Shenzhen Jiana for United States federal income tax purposes, and based upon our income and assets, including goodwill, and the value of our ordinary shares, we do not believe that we were be a PFIC for the taxable year ended April 30, 2018 and do not anticipate becoming a PFIC in the foreseeable future.

While we do not expect to become a PFIC, because the value of our assets for purposes of the asset test may be determined by reference to the market price of our ordinary shares, fluctuations in the market price of our Ordinary Shares may cause us to become a PFIC for the current or subsequent taxable years. The determination of whether we will be or become a PFIC will also depend, in part, on the composition of our income and assets, which may be affected by how, and how quickly, we use our liquid assets and the cash raised in our initial public offering. If we determine not to deploy significant amounts of cash for active purposes or if it were determined that we do not own the stock of Shenzhen Jiana for United States federal income tax purposes, our risk of being a PFIC may substantially increase. Because there are uncertainties in the application of the relevant rules and PFIC status is a factual determination made annually after the close of each taxable year, there can be no assurance that we will not be a PFIC for the current taxable year or any future taxable year.

If we are a PFIC in any taxable year, a U.S. holder (as defined in “Material Tax Consequences Applicable to U.S. Holders of Our Ordinary Shares — United States Federal Income Tax Considerations”) may incur significantly increased United States income tax on gain recognized on the sale or other disposition of the Ordinary Shares and on the receipt of distributions on the Ordinary Shares to the extent such gain or distribution is treated as an “excess distribution” under the United States federal income tax rules and such holder may be subject to burdensome reporting requirements. Further, if we are a PFIC for any year during which a U.S. holder holds our ordinary shares, we generally will continue to be treated as a PFIC for all succeeding years during which such U.S. holder holds our ordinary shares. For more information see “Material Tax Consequences Applicable to U.S. Holders of Our Ordinary Shares — United States Federal Income Tax Considerations — Passive Foreign Investment Company Considerations.”

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements. All statements contained in this prospectus other than statements of historical fact, including statements regarding our future results of operations and financial position, our business strategy and plans, and our objectives for future operations, are forward-looking statements. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in the “Risk Factors” section. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the future events and trends discussed in this prospectus may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

You should not rely upon forward-looking statements as predictions of future events. The events and circumstances reflected in the forward-looking statements may not be achieved or occur. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. Except as required by applicable law, we undertake no duty to update any of these forward-looking statements after the date of this prospectus or to conform these statements to actual results or revised expectations.

USE OF PROCEEDS

After deducting the estimated placement discount and offering expenses payable by us, we expect to receive net proceeds of approximately $[●] from this firm commitment offering. The net proceeds from this offering must be remitted to China before we will be able to use the funds to grow our business. The procedure to remit funds may take several months after completion of this offering, and we will be unable to use the funds in China until remittance is completed. See “Risk Factors — We must remit the offering proceeds to PRC before they may be used to benefit our business in the PRC, and this process may take a number of months.”

We intend to use the net proceeds of this offering as follows after we complete the remittance process, and we have ordered the specific uses of proceeds in order of priority.

DIVIDEND POLICY

We have never declared or paid any cash dividends on our Ordinary Shares. We anticipate that we will retain any earnings to support operations and to finance the growth and development of our business. Therefore, we do not expect to pay cash dividends in the foreseeable future. Any future determination relating to our dividend policy will be made at the discretion of our Board of Directors and will depend on a number of factors, including future earnings, capital requirements, financial conditions and future prospects and other factors the Board of Directors may deem relevant.

Under section 37(3)(f) of the Companies Law of Cayman Islands law, we may only pay dividends (A) out of profits, (B) out of our share premium account, if we passes the solvency test, which requires us to be solvent and be able to pay our debts as they fall due in the ordinary course of business before and after the dividend payment), (C) out of the proceeds of a fresh issue of shares made for the purposes of the redemption or purchase, or (D) out of capital if (i) it is authorized by our articles of association and (ii) provided that we passed the solvency test.

If we determine to pay dividends on any of our Ordinary Shares in the future, as a holding company, we will be dependent on receipt of funds from our operating subsidiaries. Dividend distributions from our PRC subsidiaries to us are subject to PRC taxes, such as withholding tax. In addition, regulations in the PRC currently permit payment of dividends of a PRC company only out of accumulated distributable after-tax profits as determined in accordance with its articles of association and the accounting standards and regulations in China. See “Risk Factors — Risks Related to Doing Business in the People’s Republic of China — We rely on dividends and other distributions on equity paid by our PRC subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our PRC subsidiaries to make payments to us could have a material adverse effect on our ability to conduct our business.”

EXCHANGE RATE INFORMATION

Our financial information is presented in U.S. dollars. Our functional currency is Renminbi (“RMB”), the currency of the PRC. Transactions which are denominated in currencies other than RMB are translated into RMB at the exchange rate quoted by the People’s Bank of China at the dates of the transactions. Exchange gains and losses resulting from transactions denominated in a currency other than the RMB are included in statements of operations as foreign currency transaction gains or losses. Our financial statements have been translated into U.S. dollars in accordance with Accounting Standards Codification (“ASC”) Topic 830, “Foreign Currency Matters”. The financial information is first prepared in RMB and then is translated into U.S. dollars at period-end exchange rates as to assets and liabilities and average exchange rates as to revenue and expenses. Capital accounts are translated at their historical exchange rates when the capital transactions occurred. The effects of foreign currency translation adjustments are included as a component of accumulated other comprehensive income (loss) in shareholders’ equity. The relevant exchange rates are listed below:

The consolidated balance sheet balances, with the exception of equity at April 30, 2018 and 2019 were translated at RMB6.3393 and RMB6.7286 to $1.00, respectively. The equity accounts were stated at their historical rate. The average translation rates applied to consolidated statements of operation and comprehensive income and cash flows for the years ended April 30, 2017, 2018 and 2019 were RMB6.7611, RMB6.5821 and RMB 6.7411, respectively.

We make no representation that any RMB or U.S. dollar amounts could have been, or could be, converted into U.S. dollars or RMB, as the case may be, at any particular rate, or at all. The PRC government imposes control over its foreign currency reserves in part through direct regulation of the conversion of RMB into foreign exchange and through restrictions on foreign trade. We do not currently engage in currency hedging transactions.

CAPITALIZATION

The following table sets forth our capitalization as of April 30, 2019 on a pro forma as adjusted basis giving effect to the sale of the firm commitment offering at an assumed public offering price of $[●] per share and to reflect the application of the proceeds after deducting the estimated placement fees. You should read this table in conjunction with our financial statements and related notes appearing elsewhere in this prospectus and “Use of Proceeds” and “Description of Share Capital.”

[---] Ordinary Shares

U.S. Dollars

Each $1.00 increase (decrease) in the assumed initial public offering price of $[●] per ordinary share would increase (decrease) the pro forma as adjusted amount of total capitalization by $[●] million, assuming that the number of ordinary shares offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting underwriting discounts and commissions, non-accountable expense allowance and estimated offering expenses payable by us. An increase (decrease) of one million in the number of ordinary shares offered by us, as set forth on the cover page of this prospectus, would increase (decrease) the pro forma as adjusted amount of total capitalization by $[●] million, assuming no change in the assumed initial public offering price per ordinary share as set forth on the cover page of this prospectus.

DILUTION

If you invest in our Ordinary Shares, your interest will be diluted to the extent of the difference between the initial public offering price per Ordinary Share and the pro forma net tangible book value per Ordinary Share after the offering. Dilution results from the fact that the per Ordinary Share offering price is substantially in excess of the book value per Ordinary Share attributable to the existing shareholders for our presently outstanding Ordinary Shares. Our net tangible book value attributable to shareholders at April 30, 2019 was $[●] or approximately $[●] per Ordinary Share. Net tangible book value per Ordinary Share as of April 30, 2019 represents the amount of total assets less intangible assets and total liabilities, divided by the number of Ordinary Shares outstanding.

After giving effect to the sale of [●] Ordinary Shares in this offering at the assumed initial public offering price of $[●] per Ordinary Share and after deducting the underwriting discounts and estimated offering expenses payable by us, our pro forma as adjusted net tangible book value at April 30, 2019 would have been $[●], or $[●] per Ordinary Share. This represents an immediate increase in pro forma as adjusted net tangible book value of $[●] per Ordinary Share to existing investors and immediate dilution of $[●] per Ordinary Share to new investors. The following table illustrates this dilution to new investors purchasing Ordinary Shares in this offering:

The following table sets forth this per share dilution:

* Calculation based on the 10,224,949 shares of outstanding as of the date hereof and excluding the ordinary shares underlying the Underwriter’s warrants 

POST-OFFERING OWNERSHIP

The following chart illustrates our pro forma proportionate ownership, upon completion of the offering, by present shareholders and investors in this offering, compared to the relative amounts paid by each. The charts reflect payment by present shareholders as of the date the consideration was received and by investors in this offering at the offering price without deduction of commissions or expenses. The charts further assume no changes in net tangible book value other than those resulting from the offering.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with the section titled “Risk Factors”, “Prospectus Summary – Summary Financial Information”, our audited consolidated financial statements and the related notes included elsewhere in this prospectus. This discussion contains forward-looking statements that involve risks and uncertainties about our business and operations. Our actual results and the timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those we describe under “Risk Factors” and elsewhere in this prospectus. Our consolidated financial statements have been prepared in accordance with U.S. GAAP.

Overview

JIANA Science and Technology Co., Ltd. (the “Company”) was incorporated under the law of the Cayman Islands as the exempted limited liability company on August 29, 2018. The Company serves as a holding company and conducts its businesses primarily through its subsidiaries and consolidated variable interest entities (the “VIEs”). The Company, its subsidiaries and VIEs are collectively referred to as the “Group”. The Company is principally engaged in real estate agency, real estate project operation, consulting and technology development services (the “Businesses”) in the People’s Republic of China (the “PRC” or “China”).

Prior to the incorporation of the Company and the completion of the reorganization (“Reorganization”) as discussed below, the Businesses were mainly conducted by Shenzhen Jiana Technology Co., Ltd. (“Shenzhen Jiana”, the “VIE”) and its subsidiaries in the PRC.

In preparation of its initial public offering in the United States, the Company undertook a group reorganization pursuant to which the Businesses were transferred to the Company. The Reorganization involved the following:

(1) On August 29, 2018, the Company was incorporated in the Cayman Islands with 10,000,000 shares being allotted and issued to the initial subscribers, of which 8,427,100 shares were allocated and issued to Hongyuan Science and Technology Co., Ltd., a special purpose vehicle incorporated on August 13, 2018 and controlled by Ms. Fengzhen Zhu; 1,010,400 shares were allocated and issued to Yuanda International Commerce Co., Ltd., a special purpose vehicle incorporated on August 13, 2018 and controlled by Mr. Qian Zhou; and 562,500 shares were allocated and issued to Yuanzhong International Consulting, Ltd., a special purpose vehicle incorporated on August 15, 2018 and controlled by Mr. Qingchao Yao.

(2) On September 3, 2018, the Company incorporated JIANA International Consulting Co., Ltd. (“JIANA International”), a wholly owned subsidiary of the Company, in British Virgin Islands.

(3) On December 3, 2018, JIANA International entered into an equity purchase agreement with Hong Kong JIANA Investment Co., Ltd. (“Hong Kong JIANA”) pursuant to which JIANA International acquired 100% of equity interest in Hong Kong JIANA and Hong Kong JIANA became a wholly owned subsidiary of JIANA International.

(4) On March 18, 2019, the Company incorporated Jiana (Shenzhen) Development Co., Ltd. (“Jiana Development”), a wholly foreign-owned enterprise (“WFOE”) in the PRC, which is owned by Hong Kong JIANA.

(5) In March, 2019, Jiana Development entered into a series of contractual agreements with Shenzhen Jiana and its nominee shareholders. Such contractual arrangements primarily consist of Exclusive Business Cooperation Agreement, Power of Attorney, Share Pledge Agreement, Exclusive Option Agreement, Loan Agreements and Spousal Consent Letters, which enable the Company to (1) have power to direct the activities that most significantly affects the economic performance of the VIEs, and (2) receive the economic benefits of the VIEs that could be significant to the VIEs. Accordingly, the Company is considered the primary beneficiary of the VIEs and has consolidated the VIE’s financial results of operations, assets and liabilities in the Company’s consolidated financial statements.

To provide the Company effective control over and the ability to receive substantially all of the economic benefits of its VIE and the VIE’s subsidiaries, the Company, through Jiana Development, entered into the following contractual agreements with its VIE and the VIE’s nominee shareholders:

Exclusive Business Cooperation Agreement

Pursuant to the Exclusive Business Cooperation Agreement, the VIE appointed Jiana Development to be its exclusive service provider to provide complete technical support, business support and related consulting services during the term of the agreement, which included but not limited to technology consulting services, management software development, and computer hardware and software development and sales. In respect to the services provided by Jiana Development, the VIE agreed to pay service fees substantially equal to all of the net income of the VIE on a quarterly basis subject to certain adjustments depending on, among other things, the complexity, the difficulty, the required time and the commercial value of such services. Further, the VIE granted to Jiana Development an irrevocable and exclusive option to purchase, at Jiana Development’s sole discretion, any or all of the assets of the VIE, to the extent permitted under the PRC laws, at the lowest purchase price permitted by the PRC laws. The term of this agreement is ten years unless earlier terminated in accordance with the provisions of this agreement or relevant agreements separately executed between the parties.

Power of Attorney

Pursuant to the Power of Attorney, each nominee shareholder of Shenzhen Jiana irrevocably authorized the WFOE to exercise the rights related to their shareholdings, including but not limited to attending shareholders’ meetings and voting on their behalf on the sale or transfer or pledge or disposition of their equity interest in Shenzhen Jiana, and designating and appointing senior management members. The Power of Attorney will be continuously valid as long as the nominee shareholders remain the shareholders of Shenzhen Jiana.

Share Pledge Agreement

Pursuant to the Share Pledge Agreements, nominee shareholders of Shenzhen Jiana agreed to pledge all of their respective equity interests of Shenzhen Jiana to the WFOE to ensure that Shenzhen Jiana fully performs its obligations under the Exclusive Business Cooperation Agreement and pays the consulting and service fees thereunder to Jiana Development when the fees become due. The nominee shareholders and Shenzhen Jiana are in the process of registering the equity pledges with the relevant administration for industry and commerce in accordance with the PRC laws. After the completion of the equity pledge registrations, in the event of default on the Exclusive Business Cooperation Agreement, the WFOE has the right, but not the obligation, to dispose the pledged equity interests to compensate for any losses. The nominee shareholders also have undertaken, without the WFOE’s written consent, not to transfer the pledged equity interests or assign or delegate its right and obligations under the Share Pledge Agreement. The Equity Pledge Agreements will be continuously valid until all payments are due under the Business Cooperation Agreement. The WFOE has the right to collect any and all dividends declared or generated in connection with equity interest during the term of the Share Pledge Agreement.

Exclusive Option Agreement

Pursuant to the Exclusive Option Agreement, the nominee shareholders of Shanzhen Jiana irrevocably granted the WFOE an irrevocable and exclusive right to purchase, or designate one or more persons to purchase their equity interests in Shenzhen Jiana at any time in part or in whole at the WFOE’s sole discretion to the extent permitted by law. The aggregate purchase price of all the equity interest to be purchased by the WFOE shall be equal to the paid in capital by the nominee shareholders, adjusted pro rata for purchase of less than all of the equity interest, unless applicable PRC laws and regulations require an appraisal of the equity interest or stipulate other restrictions. The relevant parties shall execute all other necessary contracts, agreements or documents, obtain all necessary government licenses and permits and take all necessary actions to transfer valid ownership of the equity interest of Shenzhen Jiana to the WFOE. This agreement remains effective for a term of ten years and may be renewed at the WFOE’s option.

Loan Agreements

Pursuant to the Loan Agreements, the WFOE agreed to grant loans to each of the nominee shareholders of Shenzhen Jiana with the sole purpose of providing funds for the capital injection to Shenzhen Jiana. To secure such loans, the nominee shareholders should enter a Power of Attorney and an Exclusive Option Agreement. The WFOE has the right to acquire equity interests held by each nominee shareholder at any time. When the nominee shareholders transfer their equity interest to the WFOE or the WFOE’s designated person(s), in the event that the transfer price of such equity interest is equal to or lower than the principal of the loan, the loan shall be deemed an interest-free loan. In the event that the transfer price of such equity interest exceeds the principal of the loan, the excess over the principal shall be deemed the interest of the loan. The terms of the loans are ten years and can be extended upon mutual written consent of binding parties.

Spousal Consent Letters

The spouse of each nominee shareholder of Shenzhen Jiana unconditionally and irrevocably agreed to the execution of the Share Pledge Agreement, the Exclusive Option Agreement and the Power of Attorney and the disposal of the equity interest registered in the name of the respective nominee shareholder. In addition, the spouse of each nominee shareholder of Shenzhen Jiana agreed not to make any assertions in connection with the equity interests held by the respective nominee shareholder and the nominee shareholder can perform the contractual arrangements without the authorization or consent from the spouse.

Shenzhen Jiana has no equity interest in Shenzhen Mingyuan after it transferred all of its 60% equity interest in Shenzhen Mingyuan to a related party on February 24, 2019. On March 16, 2019, Heyuan Branch entered into an EPC management agreement, namely Tianluncheng Project EPC Management Agreement, with Shenzhen Mingyuan, whereby Heyuan Branch is responsible for the detailed design, overall management, sales of the project and the purchase of the remaining unsold inventories within the project. We have determined that the equity holders of Shenzhen Mingyuan are de facto agents and we are the primary beneficiary of Shenzhen Mingyuan as we have the power to direct the activities that most significantly impact its economic performance and the obligation to absorb losses or the right to receive its benefits that could potentially be significant to Shenzhen Mingyuan. We have consolidated Shenzhen Mingyuan in our consolidated financial statements for the periods presented.

On March 10, 2019, Shenzhen Jiana and Dongyuan Mingyuan entered into an investment cooperation agreement with Shenzhen Mingyuan. Pursuant to the investment cooperation agreement, the registered capital of Dongyuan Mingyuan increased from $2,976,102 (RMB20,000,000) to $8,184,280 (RMB55,000,000), of which $2,864,498 (RMB19,250,000), or 35%, was allotted to Shenzhen Jiana and $5,319,782 (RMB35,750,000), or 65%, was allotted to Shenzhen Mingyuan. Even though Shenzhen Jiana has less than 50% of voting right, we have determined that Shenzhen Mingyuan are de facto agents and we are the primary beneficiary of Dongyuan Mingyuan as we have the power to direct the activities that most significantly impact its economic performance and the obligation to absorb losses or the right to receive its benefits that could potentially be significant to Dongyuan Mingyuan. We have consolidated Dongyuan Mingyuan in our consolidated financial statements for the periods presented.

The ownership structure of principal subsidiaries, VIE and VIE’s subsidiaries for the periods presented and immediately after the Reorganization are set out as follows:

Immediately prior to the Reorganization, the Businesses have been conducted through Shenzhen Jiana Technology Co., Ltd. (“Shenzhen Jiana”) and its subsidiaries in the PRC. Pursuant to the Reorganization, the Businesses are transferred to and held by the Company. The Company and the newly incorporated entities have not been involved in any other businesses prior to the Reorganization and do not meet the definition of a business. The Reorganization is merely a reorganization of the Businesses with no change in management of such business. Accordingly, the Company resulting from the Reorganization is considered as a continuation of the Businesses conducted through the Company. Accordingly, the accompanying consolidated financial statements include the assets, liabilities, revenue, expenses and cash flows that are directly attributable to the Businesses before the completion of Reorganization. However, such presentation may not necessarily reflect the results of operations, financial position and cash flows if the Company had actually existed on a stand-alone basis during the years presented before the completion of Reorganization.

Initially established in 2008, we conducted business primarily in the information and technology industry and launched an online real estate information platform “China Real Estate Online” back in 2009. In the last three fiscal years, we generated our revenue mostly from four business lines: (1) Selling NetEase, Inc. (“NetEase”, one of the China’s largest mobile, desktop game and internet technology companies) digital prepaid cards which work as gift certificates that can be redeemed on NetEase for the purchase of games, software, hardware, and any other items that are provided on NetEase; (2) IT development services for other internet companies; (3) Real estate consulting services, for which we provided marketing strategies and planning advisory service for our customers; and (4) Real estate agency services. In August 2017, we entered in to a project cooperation agreement, namely Hakka Immigrant Culture Center and Business Plaza Cooperation Agreement, with the local government, whereby, we agreed to act as an agent to represent the local government, among other things, to sell lots of 80 Mu (approximately 53,360 square meters). In October 2017, we entered into an investment and development agreement with the local government to construct a complex, namely Tianlun Mingyuan Pastoral Complex. In February 2018, we further signed a contract for exclusive rights to develop and provide value-adding real estate service for the Heyuan Lighthouse Basin (Shuntian) Pastoral Complex (the “Lighthouse Project”), a large-scale suburban real estate development project located in Heyuan, Guangdong Province. Hakka Immigrant Culture Center and Business Plaza and Tianlun Mingyuan Pastoral Complex are part of the Heyuan Lighthouse Basin (Shuntian) Pastoral Complex. We anticipate that substantially all of our business going forward will revolve around the Lighthouse Project. We expect to cease our prepaid digital cards sales business and software development business in the near future and focus primarily on providing real estate related services.

General Factors Affecting Our Results of Operations

Our business and results of operations are affected by general factors affecting China’s online real estate industry, which include, among other things:

Results of Operations

The following table sets forth a summary of our consolidated results of operations for the periods presented, both in absolute amount and as a percentage of our revenues for the periods presented. This information should be read together with our audited consolidated financial statements and related notes included elsewhere in this prospectus. The results of operations in any period are not necessarily indicative of our future trends. 

Revenues

We generate revenue primarily from our five revenue streams by offering real estate agency services, consulting services, technology services, selling prepaid cards and real estate properties. The following table sets forth the components of our revenues by amounts and percentages of our total revenues for the periods presented:

Real estate agency services

We provide real estate marketing and sales agency services to real estate developers and the local government to sell commercial and residential properties.

We have determined that we are an agent in providing the real estate marketing and sales agency services to real estate developers as we are not primarily responsible for fulfilling the promise to provide a property and we do not have inventory risk before a property is transferred to a customer. We earn commission-based agency revenue based on the terms negotiated with our real estate developer clients. The commission rates vary project from project and are usually stated as a percentage of the selling price of a property or the excess of the selling price of a property over the fixed price agreed with the real estate developers. Revenue generated from real estate marketing and sales agency services to real estate developers is recognized on a net basis when a successful sale of the property has occurred and closed without further contingency. A successful sale is defined in each agency agreement and is usually achieved after (1) the property buyer has executed the purchase contract; and (2) the property buyer obtained a bank’s approval on the mortgage and made the required down payment if mortgage is applied, or made the one-off payment if mortgage is not applied.

We have determined that we are a principal in providing real estate agency services to local government as we have the discretion in establishing the price and have inventory risk before a property is transferred to a customer. Revenue generated from real estate marketing and sales agency services to local government is recognized on a gross basis when a successful sale of the property has occurred and closed without further contingency. A successful sale is achieved after (1) the property buyer has executed the purchase contract; and (2) the local government has confirmed the sale and the use right of the property has been transferred to a customer.

Technology services

We generate our technology services revenue primarily from customized software design and development service offered to the Company’s customers. We may from time to time engage third-party technology service providers to work with us on certain technology service projects.

Consulting services

We provide real estate brokers and developers a wide range of real estate consulting services, including market research, advertising plan, feasibility studies and project development. Our consulting services are tailored to meet the needs of real estate brokers and developers at various stages of the project development and sales process.

Product sales

We generate our product sales revenue primarily from selling prepaid digital game cards. We have contracted with a leading online gaming company in China. We purchase the prepaid digital game cards from this company and resell them to other distributors at a markup. We generally purchase the prepaid digital game cards on demand and do not hold inventories at the end of the periods presented. We also generate our product sales revenue from selling agricultural products grew in our farms within the Tianlun Mingyuan Pastoral Complex.

Cost of Revenues

The following table sets forth the components of our cost of revenues by amounts and percentages of our total revenues for the periods presented:

Cost of real estate agency services with inventory risk primarily consists of land use right acquisition fees, land improvement, surveying and mapping expenses, direct operational expenses and fixed profit sharing with the local government. Cost of technology services primarily consists of costs of contracted third-party technology service providers. Cost of prepaid cards primarily consist of costs of prepaid digital game cards purchased from the leading online gaming company in China and cost of agricultural products sales primarily consist the seeds, fertilizers, farming materials and labors to cultivate the agricultural products.

Operating Expenses

The following table sets forth the components of our operating expenses by amounts and percentages of our total revenues for the periods presented:

General and administrative expenses

Our general and administrative expenses consist primarily of professional service fees, rental expenses, payroll and benefit expenses relating to our management and administrative personnel.

Research and development expenses

Our Research and development expenses primarily consist of payroll and benefit expenses of our technical personnel who work on development of services, products and technology infrastructures as well as fees for research and development services provided by third parties. No research and development expenses were capitalized for the periods presented.

Selling and marketing expenses

Our selling and marketing expenses are expensed as incurred and primarily consist of commission paid to sales agents, advertising expenses, and related expenses for personnel engaged in marketing and business development activities.

Other Income

Investment income

Our investment income primarily consists of gains on available-for-sale investments in debt securities that are managed by the major financial institutions in China.

Interest income, net

Our interest income consists of interest income earned on our checking accounts in the major financial institutions in China and interest income earned on our loans to related parties. Our interest expenses are derived from the interest bearing bank borrowings from a bank.

Other income, net

Our other income primarily consists of government subsidies and debt forgiveness. Government subsidies represent amounts granted by local government authorities as a general incentive for us to promote development of the local technology industry. We record government subsidies in other income upon receipt and when there is no further performance obligation. Debt forgiveness is recognized as other income when creditors agree to give up their right to the debts.

Taxation

Cayman Islands

We were incorporated in the Cayman Islands as an exempted company with limited liability under the Cayman Companies Law and accordingly is not subject to income tax or capital gain tax. In addition, payments of dividends and capital in respect of our ordinary shares (and any consequential payments to the holders of our ordinary shares) will not be subject to taxation in the Cayman Islands and no withholding will be required on the payment of dividends or capital to any holder of our ordinary shares, nor will gains derived from the disposal of our ordinary shares be subject to Cayman Islands income or corporation tax. The Cayman Islands currently have no income, corporation or capital gains tax and no estate duty, inheritance tax or gift tax. 

British Virgin Islands

One of our subsidiaries is incorporated in the British Virgin Islands. Under the current law of the British Virgin Islands, we are not subject to income, corporation or capital gains tax in the British Virgin Islands. In addition, payment of dividends by the British Virgin Islands subsidiaries to their respective shareholders who are not resident in the British Virgin Islands, if any, is not subject to withholding tax in the British Virgin Islands.

Hong Kong

Our subsidiary in Hong Kong is subject to the uniform tax rate of 16.5%. Under Hong Kong tax law, our subsidiary in Hong Kong is exempted from income tax on their foreign-derived income and there is no withholding tax in Hong Kong on remittance of dividends.

China

Generally, our PRC subsidiaries, our consolidated affiliated entities and their subsidiaries are subject to enterprise income tax on their taxable income in China at a rate of 25%. The enterprise income tax is calculated based on the entity’s global income as determined under PRC tax laws and accounting standards. Shenzhen Jiana technology Co., ltd. (“Shenzhen Jiana”) obtained the status of High and New Technology Enterprises, or HNTE, on November 21, 2016 and therefore was eligible to enjoy a preferential enterprise income tax rate of 15% from November 21, 2016 to November 20, 2019. Shenzhen Jiana is currently in the process of renewing the certificate of HNTE, which will entitle Shenzhen Jiana to enjoy the preferential enterprise income tax rate for another three years. In addition, Shenzhen Jiana was also eligible to claim 150% of the qualified research and development expenses incurred as tax deductible expenses for the periods presented.

Under the EIT Law and its implementation rules, subject to any applicable tax treaty or similar arrangement between the PRC and the jurisdiction where the shareholders of our PRC subsidiaries reside that provides for a different income tax arrangement, PRC withholding tax at the rate of 10% is normally applicable to dividends from PRC sources payable to the shareholders that are non-PRC resident enterprises, which do not have an establishment or place of business in China, or which have such establishment or place of business if the relevant income is not effectively connected with the establishment or place of business. Under the PRC Individual Income Tax Law and its implementation rules, dividends from sources within China paid to foreign individual shareholders who are not PRC residents are generally subject to a PRC withholding tax at a rate of 20%, subject to any reduction or exemption set forth in applicable tax treaties and PRC laws. Although substantially all of our business operations are based in China, it is unclear whether dividends we pay with respect to our ordinary shares would be treated as income derived from sources within China and as a result be subject to PRC income tax if we were considered a PRC resident enterprise, as described below. See “Risk Factors—Risks Related to Doing Business in China—Under the EIT Law, we may be classified as a “resident enterprise” of China; such classification could result in unfavorable tax consequences to us and our non-PRC shareholders and materially and adversely affect our results of operations and financial condition.”

If JIANA Science and Technology Co., Ltd. or any of our subsidiaries outside of the PRC were deemed to be a “resident enterprise” under the EIT Law, it would be subject to enterprise income tax on its worldwide income at a rate of 25%. See “Risk Factors—Risks Related to Doing Business in China—Under the EIT Law, we may be classified as a “resident enterprise of China; such classification could result in unfavorable tax consequences to us and our non-PRC shareholders and materially and adversely affect our results of operations and financial condition.”

Comparison of Years Ended April 30, 2018 and 2019.

Revenues

Our revenues decreased by $4,554,616, or 56.3%, from $8,092,741 for the year ended April 30, 2018 to $3,538,125 for the year ended April 30, 2019.

Real estate agency revenue

Our real estate agency revenues increased by $1,383,046, or 87.7%, from $1,577,515 for the year ended April 30, 2018 to $2,960,561 for the year ended April 30, 2019. The increase was attributable to the increase in our revenue generated from our real estate agency services to the local government, offset by the decrease in our revenue generated from our real estate agency services to the real estate developers.

Our revenue generated from real estate agency services to local government increase by $1,506,613, or 134.8%, from $1,117,574 for the year ended April 30, 2018 to $2,624,187 for the year ended April 30, 2019. The increase was primarily attributable to the land use right sales of 5,454 square meters amounted to $2,056,362 within the Tianlun Mingyuan Pastoral Complex project, offset by the decrease of agency revenue of $549,749 generated from the land use right sales associated with the Hakka Culture Center and Business Plaza Cooperation Agreement with the local government.

Our revenue generated from real estate agency service to real estate developers decreased by $123,567, or 26.9%, from $459, 941 for the year ended April 30, 2018 to $336,374 for the year ended April 30, 2019. The decrease was primarily attributable to the shift of our resources to focus on the Lighthouse Project entered into in February 2018. 

Technology services

Our revenue generated from technology services decreased by $2,576,940, or 87.6%, from $2,940,802 for the year ended April 30, 2018 to $363,862 for the year ended April 30, 2019. The decrease was primarily attributable to the shift of our resources to focus on the Lighthouse Project entered into in February 2018.

Product sales 

Our revenue generated from product sales decreased by $3,360,722, or 94.0%, from $3,574,424 for the year ended April 30, 2018 to $213,702 for the year ended April 30, 2019. The decrease was primarily attributable to our determination to gradually cease the prepaid digital game cards business as a result of its low margin and our shift of our resources to focus on the Lighthouse Project entered into in February 2018.

Cost of Revenue

Our cost of revenues decreased by $5,620,604, or 86.1%, from $6,531,115 for the year ended April 30, 2018 to $910,511 for the year ended April 30, 2019. The decrease was primarily due to the decrease in cost of technology services and product costs, which were in line with our decrease in the respective revenues, offset by the increase of cost of real estate agency revenue generated from local government.

Operating Expenses

General and Administrative Expenses

Our general and administrative expenses increased by $103,480, or 25.2%, from $410,462 for the year ended April 30, 2018 to $513,942 for the year ended April 30, 2019, primarily attributable to the increase of (i) payroll expenses, office expenses and entertainment expenses totaling $162,987 as we started to prepare for the commencement of the Tianlun Mingyuan Pastoral Complex project; (2) professional service fees of $51,654 for the renewal of the High and New Technology Enterprises certificate and the reorganization of the Company for the initial public offering; partially offset by the decrease of rental expenses of $103,541 related to the two leased stores, which leases were assigned to the transferee along with the transfer of the assets and liabilities of these two leased stores in December 2017.

Research and development expenses

Our research and development expenses decreased by $39,787, or 16.7%, from $237,748 for the year ended April 30, 2018 to $197,961 for the year ended April 30, 2019, primarily attributable to our efforts to utilize our internal research and development personnel to conduct research and development activities rather than outsource to third parties.

Selling and Marketing Expenses

Our selling and marking expenses decreased by $20,433, or 33.3%, from $61,360 for the year ended April 30, 2018 to $40,927 for the year ended April 30, 2019, primarily attributable to a fully expensed advertising contract in February 2018. 

Other Income

Investment income

We did not have investment income for the year ended April 30, 2019 as compared to $3,566 for the year ended April 30, 2018 due to our redemption of all our short-term investments in May 2017.

Interest income, net

Our interest income, net decreased by $161, or 18.3%, from $882 for the year ended April 30, 2018 to $721 for the year ended April 30, 2019. We generated interest income of $2,080 from a related party loan, $234 from bank interest and incurred interest expense of $1,593 from the bank borrowings. The decrease of interest income was primarily attributable to the relatively lower daily cash balance on an average of our bank accounts for the year ended April 30, 2019.

Other income, net

Our other income, net decreased by $92,444, or 83.9%, from $110,215 for the year ended April 30, 2018 to $17,771 for the year ended April 30, 2019. The decrease was primarily attributable to (1) the decrease of other income of $66,780 recognized for the sale of two leased stores; (2) the decrease of other income of $22,383 recognized for government grant; and (3) the increase of other expense of $27,622 for the transfer of the capitalized costs in connection with the family farm project; partially offset by the increase of other income of $24,476 for debt forgiveness.

Income Tax Expense

We had income tax expense of $126,410 and $336,592 for the years ended April 30, 2018 and 2019, respectively, primarily resulting from the net profit position of certain operating entities in the PRC.

Net Income

As a result of the foregoing, we had net income of $840,309 and $1,556,684 for the years ended April 30, 2018 and 2019, respectively.

Comparison of Years Ended April 30, 2017 and 2018.

Revenues

Our revenues increased by $6,078,432, or 301.8%, from $2,014,309 for the year ended April 30, 2017 to $8,092,741 for the year ended April 30, 2018.

Real estate agency revenue

Our real estate agency revenues increased by $926,004, or 142.1%, from $651,511 for the year ended April 30, 2017 to $1,577,515 for the year ended April 30, 2018. The increase was attributable to the increase in our revenue generated from our real estate agency services to the local government, offset by the decrease in our revenue from our real estate agency services to the real estate developers.

Our revenue generated from real estate agency services to local government amounted to $1,117,574 for the year ended April 30, 2018 while it was nil for the year ended April 30, 2017. In August 2017, we entered in to a project cooperation agreement, namely Hakka Culture Center and Business Plaza Corporation Agreement, with the local government, whereby, we agreed to act as an agent to represent the local government, among other things, to sell lots of 80 Mu (approximately 53,360 square meters). For the year ended April 30, 2018, we had sold lots of 2,779 square meters to our customers.

Our revenue generated from real estate agency service to real estate developers decreased by $191,570, or 29.4%, from $651,511 for the year ended April 30, 2017 to $459,941 for the year ended April 30, 2018. The decrease was primarily attributable to the shift of our resources to focus on the Lighthouse Project entered into in February 2018.

Consulting services

Our revenue generated from marketing services amounted to $292,664 for the year ended April 30, 2017 and it was generated from only one marketing consulting service agreement entered into in February 2016 with a real estate broker. In April 2016, such marketing consulting service agreement was terminated and superseded by a real estate sales agency agreement whereby we started to earn commission-based agency revenue instead of consulting service revenue generated from the real estate broker under the new arrangement. We had not developed any new consulting service clients for the year ended April 30, 2018 as a result of the shift of our resources to focus on the Lighthouse Project entered into in February 2018.

Technology services

Our revenue generated from technology services increased by $2,068,805, or 237.2%, from $871,997 for the year ended April 30, 2017 to $2,940,802 for the year ended April 30, 2018. The increase was primarily attributable to our business strategy to shift from a marketing service company to a technology service company.

Product sales

Our revenue generated from product sales increased by $3,376,287, or 1,704.0%, from $198,137 for the year ended April 30, 2017 to $3,574,424 for the year ended April 30, 2018. The increase was primarily attributable to larger customer base of our prepaid digital game cards as a result of the growth of our business.

Cost of Revenue

Our cost of revenues increased by $5,625,920, or 621.5%, from $905,195 for the year ended April 30, 2017 to $6,531,115 for the year ended April 30, 2018. The increase was primarily due to the increase in cost of technology services and product costs, which were in line with our increase in the respective revenues.

Operating Expenses

General and Administrative Expenses

Our general and administrative expenses increased by $15,558, or 3.9%, from $394,904 for the year ended April 30, 2017 to $410,462 for the year ended April 30, 2018, primarily attributable to the increase of (i) rental expenses of $104,554, primarily resulting from the two leased stores, which leases were started in February and July 2017, respectively, and were reassigned to the transferee along with the transfer of the assets and liabilities of these two leased stores in December 2017, (ii) landscape maintenance services of $28,128, resulting from the landscape improvement to the newly incorporated branch, Shenzhen Jiana Technology Co., Ltd. Heyuan Branch, in November 2017, partially offset by the decrease of (i) payroll expenses of $77,444, resulting from the normal employee turnovers and transfer of certain administrative personnel to the research and development department, and (ii) consulting fees of $40,365, primarily due to accounting fees paid to financial consultants to prepare our financial statements during the year ended April 30, 2017.

Research and development expenses

Our research and development expenses increased by $102,418, or 76.7%, from $135,330 for the year ended April 30, 2017 to $237,748 for the year ended April 30, 2018, primarily attributable to the increase in payroll and benefit expenses of research and development personnel of $90,293 as a result of our business strategy to shift from a marketing service company to a technology service company.

Selling and Marketing Expenses

Our selling and marking expenses decreased by $64,249, or 51.1%, from $125,609 for the year ended April 30, 2017 to $61,360 for the year ended April 30, 2018, primarily attributable to the decrease of (i) advertising expenses of $25,382, resulting from a fully amortized advertising contract in May 2017, (ii) commission expense of $17,359, resulting from the decrease in successful sales on property sold on behalf of primary real estate developers, and (iii) website maintenance fees of $23,781.

Other income

Investment Income

Our investment income decreased by $1,541, or 30.2%, from $5,107 for the year ended April 30, 2017 to $3,566 for the year ended April 30, 2018. The decrease was a result of our redemption in May 2017 of short-term investments made during the year ended April 30, 2017.

Interest income, net

Our interest income, net decreased by $1,296, or 59.5%, from $2,178 for the year ended April 30, 2017 to $882 for the year ended April 30, 2018. The decrease was attributable to the relatively lower daily cash balance on average on our bank accounts for the year ended April 30, 2018.

Other income, net

Our other income, net primarily consisted of $66,780 recognized for the sale of two leases stores and $43,299 recognized for government grant.

Impairment of Investments in an Unconsolidated Investee

Our impairment of investments in an unconsolidated investee was $170,091 for the year ended April 30, 2017 while it was nil for the year ended April 30, 2018. On July 24, 2014, we entered into an equity transfer agreement to acquire 18.4% equity interest of Shenzhen Yulexuan Cultural Industries Guaranty, Ltd. (“Yulexuan”) from one of Yulexuan’s original shareholders for a total cash consideration of $181,617 (translated at the exchange rate on investment date). The investment is accounted for under the cost method. We reviewed our equity investment without readily determinable fair values for impairment on a quarterly basis and recorded an impairment loss of $170,091 (translated at the average exchange rate for the year ended April 30, 2017) for the entire equity investments in Yulexuan in December 2016 as the Company concluded that it was more likely than not the then carrying value of such equity investments were not recoverable.

Income Tax Expense

We had income tax expense of $59,849 and $126,410 for the years ended April 30, 2017 and 2018, respectively, primarily resulting from the net profit position of certain operating entities in the PRC.

Net Income

As a result of the foregoing, we had net income of $231,674 and $840,309 for the years ended April 30, 2017 and 2018, respectively.

Liquidity and Capital Resources

Cash flow and working capital

We had net income of $231,674, $840,309 and $1,556,684 for the years ended April 30, 2017, 2018 and 2019. We had net cash provided by operating activities of $751,306 for the year ended April 30, 2017, net cash used in operating activities of $634,501 and $18,068 for the years ended April 30, 2018 and 2019, respectively. We had working capital of $1,251,354, $2,057,395 and $2,916,132 for the years ended April 30, 2017, 2018 and 2019, respectively.

Prior to this offering, our principal sources of liquidity have been proceeds from historical equity financing activities as well as cash generated from our operating activities. As of April 30, 2018 and 2019, we had $357,995 and $52,290 in cash and cash equivalents. Our cash and cash equivalents primarily consist of cash on hand and deposits placed with financial institutions that can be withdrawn without restriction.

We believe that our current cash and cash equivalents, proceeds from additional equity and debt financing and our anticipated cash flows from operations will be sufficient to meet our anticipated working capital requirements and capital expenditures for the next 12 months. We may, however, need additional capital in the future to fund our continuing operations. The issuance and sale of additional equity would result in further dilution to our shareholders. The incurrence of indebtedness would result in increased fixed obligations and could result in operating covenants that would restrict our operations. We cannot assure you that financing will be available in amounts or on terms acceptable to us, if at all.

As of April 30, 2017, 2018 and 2019, 100.0% of our cash and cash equivalents were denominated in Renminbi. As of the same date, 100.0% of our cash and cash equivalents were held by our VIEs and their subsidiaries.

Although we consolidate the results of our VIEs and their subsidiaries, we only have access to the assets or earnings of our VIEs and their subsidiaries through our contractual arrangements with our VIEs and their shareholders. See “Corporate History and Structure.” For restrictions and limitations on liquidity and capital resources as a result of our corporate structure, see “Holding Company Structure.”

In utilizing the proceeds we expect to receive from this offering, we may make additional capital contributions to our PRC subsidiaries, establish new PRC subsidiaries and make capital contributions to these new PRC subsidiaries, make loans to our PRC subsidiaries, or acquire offshore entities with operations in China in offshore transactions. However, most of these uses are subject to PRC regulations. See “Risk Factors—Risks Related to Doing Business in China” and “Use of Proceeds.” PRC regulations relating to investments in offshore companies by PRC residents may subject our PRC-resident beneficial owners or our PRC subsidiaries to liability or penalties, limit our ability to inject capital into our PRC subsidiaries or limit our PRC subsidiaries’ ability to increase their registered capital or distribute profits.

A majority of our future revenues are likely to continue to be in the form of Renminbi. Under existing PRC foreign exchange regulations, Renminbi may be converted into foreign exchange for current account items, including profit distributions, interest payments and trade- and service-related foreign exchange transactions, without prior SAFE approval as long as certain routine procedural requirements are fulfilled. Therefore, our PRC subsidiaries are allowed to pay dividends in foreign currencies to us without prior SAFE approval by following certain routine procedural requirements. However, approval from or registration with competent government authorities is required where the Renminbi is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of loans denominated in foreign currencies. The PRC government may at its discretion restrict access to foreign currencies for current account transactions in the future.

The following table sets forth a summary of our cash flows for the periods presented:

Operating Activities

Net cash used in operating activities for the year ended April 30, 2019 was $18,068. This reflected the net income of $1,556,684, as adjusted for non-cash items of depreciation and amortization of $6,303. This amount was further primarily adjusted by change of working capital including: (1) an increase of accounts receivable of $1,522,183 as a result of land use right sales of 5,454 square meters within the Tianlun Mingyuan Pastoral Complex project during the fourth quarter of the year ended April 30, 2019, which was fully collected in October 2019; (2) an increase of prepayment of $176,695 primarily due to prepayment to construction companies for renovation of the Lighthouse Basin Pastoral Complex Reception Center and road construction within the Lighthouse Project; (3) an increase of construction projects of $723,687 primarily due to additional costs incurred associated with the construction of Hakka Culture Center and Business Plaza; (4) an increase of accounts payable of $576,188 primarily due to the unpaid land use right acquisition fees to the local government; (5) an increase of other payable and accrued expenses of $165,066 primarily due to the unpaid value added tax and subcharges resulting from the sales of land use right in the fourth quarter ended April 30,2019; (6) an increase of income tax payable of $336,592 due to the agency services to sell the land use right within the Tianlun Mingyuan Pastoral Complex project; and (7) an increase of advance from customers of $254,396 to purchase properties in the Hakka Culture Center and Business Plaza.

Net cash used in operating activities for the year ended April 30, 2018 was $634,501. This reflected the net income of $840,309, as adjusted for non-cash items primarily including (i) depreciation and amortization of $5,318, and (ii) gain on disposal of assets and liabilities of $66,780 related to two leased stores. This amount was further adjusted by change of working capital including: (1) an increase of accounts receivable of $375,699 as a result of the increase of revenue for the year ended April 30, 2018, (ii) an increase of other receivable of $352,463 primarily due to payments made on certain cooperative projects on behalf of the cooperative entities and loans to the Group’s customer and employee, which were interest free and payable on demand, (iii) an increase of payments of $155,232 primarily due to the advance payments to a design and construction company for construction project design, (iv) an increase of construction in progress of $489,073 primarily due to the fees incurred to survey, map and improve the lots which would be sold on behalf of the local government, (iv) a decrease of advances from customers of $159,938 due to the utilization of such advances for recognized revenues, (v) an increase of accounts payable of $126,787 primarily due to the proceeds from lots’ buyers which would be paid to the local government after deducting the commission-based agency revenue, and (vi) an increase of other payable and accrued expenses of $61,442, primarily due to the increase of other tax payable and accrued payroll expenses.

Net cash provided by operating activities for the year ended April 30, 2017 was $751,306. This reflected the net income of $231,674, as adjusted for non-cash items primarily including (i) depreciation and amortization of $6,517, and (ii) impairment of investments in an unconsolidated investee of $170,091. This amount was further adjusted by change of working capital including: (i) a decrease of accounts receivable of $168,430 as a result of increasing effort to collect the receivables, (ii) an increase of prepayments of $488,618, primarily due to the prepayment to a construction company for constructing a building for office and investment purpose, and (iii) an increase of advance from customers of $539,503, primarily due to the advances from customers to purchase the lots.

Investing Activities

Net cash used in investing activities was $87,216 for the year ended April 30, 2019. The net cash decrease was primarily attributable to the fees of $1,889,614 paid to the construction company to construct the Lighthouse Basin Pastoral Complex Reception Center and family farm project and to purchase of equipments, partially offset by the repayment of loans from third parties of $601,806, repayment of loans from related parties of $1,161,125 and proceeds of $215,098 from the sale of two leased stores in prior year. Non-cash investing activities consisted of costs incurred on account of $1,509,034 for the construction of Lighthouse Basin Pastoral Complex Reception Center and cost incurred on account of $585,716 for the construction of family farm project and proceeds receivable of $585,716 from transfer of the capitalized costs in connection with the family farm project.

Net cash used in investing activities was $179,159 for the year ended April 30, 2018. The net cash decrease was primarily attributable to loans to third parties of $301,603 and loans to related parties of $273,469, partially offset by the proceeds from sales of short-term investments of $459,348.

Net cash used in investing activities was $1,415,178 for the year ended April 30, 2017. The net cash decrease was primarily attributable to cash paid to purchase short-term investments of $1,626,594, cash paid for investment in an unconsolidated investee of $170,091, loans to related parties of $769,106, partially offset by proceed of sales of short-term investments of $1,188,347.

Financing Activities

Net cash used in financing activities was $179,179 for the year ended April 30, 2019. The net cash decreased was attributable to the repayment of loans to related parties of $331,615, payments of professional fees of $191,998 directly related to the initial public offering, partially offset by the proceeds from loans from related parties of $234,844 and proceeds from bank borrowings of $44,503. Non-cash investing activities consisted of issuance of 224,949 ordinary shares amounting to $1,635,371 for professional services in connection with the initial public offering.

Net cash provided by financing activities was $1,077,263 for the year ended April 30, 2018 and primarily consisted of deposits received from investors of $1,167,287 and proceeds of loans from related parties of $315,471, offset by payment for direct expenses relate to this offering of $49,530, and refund of deposits made to investors of $355,965.

We had not incurred any financing activities for the year ended April 30, 2017.

Capital Expenditures

We made capital expenditures of $37,374, $78,628 and $1,889,614 for the years ended April 30, 2017, 2018 and 2019, respectively. In these periods our capital expenditures were mainly used for the purchase of property and equipment and intangible assets. We will continue to make such capital expenditures to support the expected growth of our business.

Contractual Obligations and Commitments

The following table sets forth our contractual obligations as of April 30, 2019:

Our operating lease commitments relate to our leases of employee dormitories and offices pursuant to non-cancellable operating lease agreements. Our capital commitments are related to the expected costs for a construction project with a construction company.

On August 18, 2017, Shenzhen Jiana entered into a plaza project cooperation agreement, namely Hakka Culture Center and Business Plaza Cooperation Agreement, with the local government, under which Shenzhen Jiana agreed to, among other things, purchase land use right of 20 Mu (equivalent to 13,340 square meters) for a total purchase price of $29,965 (RMB200,000) to construct a hotel and pay a total price of $958,888 (RMB6,400,000) to the local government to purchase land use rights of 80 Mu (equivalent to 53,360 square meters). As of April 30, 2019 and the date of this prospectus, Shenzhen Jiana had purchased land use right of 62 Mu and paid $728,235 to the local government. The payments have been paid and the remaining committed purchased land use right will be paid by our own funds which consists of the Company’s registered capital of approximately $857,143 (RMB6,000,000) funded by the Company’s original shareholders and the cash generated from sales of the land use right.

On October 12, 2017, Shenzhen Jiana entered into an investment and development agreement with the local government to construct a complex, namely Tianlun Mingyuan Pastoral Complex. The total estimated costs to construct the complex amount to $294,897,130 (RMB1,925,000,000). The complex construction is divided into two phases. The first phase should be completed in three years after obtaining the approval to construction from the local government. As of April 30, 2019, capitalized fees of $297,307 were recorded in construction projects and accumulative capitalized fees of $232,481 were allocated to the sold properties and transferred to costs of revenue. The expected source of funds to start the Tianlun Mingyuan Pastoral Complex project is estimated to be $23,779,092 (RMB160,000,000), which expected to be funded from cash generating from sale of the Hakka Immigrant Cultural Plaza and Shopping Street  project and the Lighthouse Basin Pastoral Complex Reception Center  project as well as investments from potential investors. The remaining source of funds to complete the Tianlun Mingyuan Pastoral Complex project is expected to come from cash generating from sales of the project itself.

On December 28, 2017, Shenzhen Jiana entered into a construction agreement with a construction company, whereby Shenzhen Jiana agreed to pay the construction company an estimated total consideration of $10,701,400 (RMB70,000,000) to finish a construction project, namely Hakka Immigrant Cultural Plaza and Shopping Street. As of April 30, 2019, construction fees of $98,184 were capitalized and recorded in construction projects. Due to changes in land area and changes in the number of construction properties, the total construction cost is expected to be approximately $9,428,572 (RMB66,000,000). Currently, a portion of the project has been completed. The remaining construction cost and payment are due upon completion of the project. The Company plans to pay the construction service fees to the construction company with the revenue generating from sales of the properties within the Hakka Immigrant Cultural Plaza and Shopping Street project.

On April 20, 2018, Shenzhen Jiana entered into an investment and development agreement with the local government to construct an art town, namely Shuntian International Art Town. The total estimated costs to construct the art town amount to $628,519,643 (RMB3,953,200,000). As of April 30, 2019, the art town construction had not started and the total capital commitments were not reflected in the accompanying consolidated financial statements.

On April 28, 2018, Dongyuan Mingyuan entered into a construction agreement with a construction company to construct the pastoral scenery within the Lighthouse Project. The estimated cost of the construction work amounted to $1,577,461 (RMB10,000,000). On January 1, 2019, this agreement was terminated as the pastoral scenery under construction was transferred to the local farm owner along with the transfer of the capitalized costs in connection with the family farm project. Construction costs incurred through the date of the transfer amounted to $614,478 (RMB 4,134,578).

On May 10, 2018, Dongyuan Mingyuan entered into a construction agreement with a construction company, whereby Dongyuan Mingyuan agreed to pay the construction company an estimated total consideration of $4,704,554 (RMB30,000,000) to finish a construction project, namely Lighthouse Basin Pastoral Complex Reception Center. As of April 30, 2019, costs of construction of $2,133,684 were capitalized and recorded under construction in progress. Pursuant to the construction agreement, all construction fees are not due until the main frame of Lighthouse Basin Pastoral Complex Reception Center is completed. As of the date of this prospectus, the main frame of Lighthouse Basin Pastoral Complex Reception Center is not completed. The Company is intended to sell or lease the Lighthouse Basin Pastoral Complex Reception Center. The source of fund to pay the construction company is expected to come from revenue generating from sale or lease of the Lighthouse Basin Pastoral Complex Reception Center.

On January 14, 2019, Dongyuan Mingyuan entered into a construction project strategic cooperation agreement with a construction company to build a road within the Lighthouse Project. The total costs of construction is estimated to be $8,880,995 (RMB60,000,000), which will be paid by the local government. Any amount exceeding $8,880,995 will be paid by Dongyuan Mingyuan. As of April 30, 2019, Dongyuan Mingyuan made a prepayment of $445,858 to the construction company.

Other than as shown above, we did not have any significant capital and other commitments, long-term obligations or guarantees as of April 30, 2019.

Off-Balance Sheet Commitments and Arrangements

We have not entered into any off balance sheet financial guarantees or other off balance sheet commitments to guarantee the payment obligations of any third parties. We have not entered into any derivative contracts that are indexed to our shares and classified as shareholder’s equity or that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or product development services with us.

Internal Control Over Financial Reporting

Prior to this offering, we have been a private company with limited accounting personnel and other resources to address our internal controls over financial reporting as well as procedures. In connection with the audits of our consolidated financial statements as of and for the years ended April 30, 2017, 2018 and 2019 included in this prospectus, we and our independent registered public accounting firm identified a material weakness in our internal control over financial reporting, as defined in the standards established by the Public Company Accounting Oversight Board of the United States, and other control deficiencies. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our company’s annual or interim financial statements will not be prevented or detected on a timely basis.

The material weakness identified relates to a lack of accounting personnel with appropriate knowledge of U.S. GAAP and SEC reporting and compliance requirements. As a result of lacking effective accounting review process, material adjustments were made to the financial statements for the last three fiscal years in order to be in conformity with U.S. GAAP. We also identified a significant deficiency relating to insufficient written policies and procedures for accounting and financial reporting which led to inadequate financial statement closing process.

Following the identification of the material weaknesses and control deficiencies, we have taken and plan to continue to take remedial measures. As part of our initial public offering process, we engaged financial consultants to advise on accounting and financial reporting processes in conformity with U.S. GAAP, and our management and accounting department have since had a substantially improved understanding of U.S. GAAP and financial reporting requirements. We also plan to hire officers and employees who have knowledge and experience in U.S. GAAP and financial reporting process. Additionally, we have had a recruitment plan in place and have been searching for candidates for qualified internal audit personnel with appropriate knowledge of U.S. GAAP. To remediate our material weaknesses, we expect to incur substantially more additional costs for addressing our material weaknesses and deficiencies. Our remedial measures include: (a) hiring qualified internal control personnel who will manage the implementation of internal control policies and procedures and improvement of the internal audit function; (b) developing and implementing written policies and procedures for accounting and financial reporting that meet the standards applied to public companies listed in the United States; and (c) conducting internal control training to management, key operations personnel and the accounting department, so that management and relevant personnel understand the requirements and elements of internal control over financial reporting mandated by the U.S. securities laws. However, we cannot assure you that we will remediate our material weaknesses in a timely manner. See “Risk Factors—Risks Related to Our Business —If we are unable to implement and  maintain effective internal control over financial reporting in the future, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our ordinary shares may decline.”

As a company with less than US$1.07 billion in revenue for our last fiscal year, we qualify as an “emerging growth company” pursuant to the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002 in the assessment of the emerging growth company’s internal control over financial reporting. The JOBS Act also provides that an emerging growth company does not need to comply with any new or revised financial accounting standards until such date that a private company is otherwise required to comply with such new or revised accounting standards. Although we have adopted all the new accounting standards that have become effective so far, we may take advantage of the extended transition period for complying with new or revised accounting standards provided under the JOBS Act in the future.

Holding Company Structure

JIANA Science and Technology Co., Ltd. is a holding company with no material operations of its own. We conduct our operations primarily through our PRC subsidiaries, our consolidated variable interest entity and its subsidiaries (“VIEs”) in China. As a result, JIANA Science and Technology Co., Ltd.’s ability to pay dividends depends upon dividends paid by our PRC subsidiaries. If our existing PRC subsidiaries or any newly formed ones incur debt on their own behalf in the future, the instruments governing their debt may restrict their ability to pay dividends to us. In addition, our wholly foreign-owned subsidiaries in China are permitted to pay dividends to us only out of their retained earnings, if any, as determined in accordance with China accounting standards and regulations. Under PRC law, each of our subsidiaries and our consolidated affiliated entities in China is required to set aside at least 10% of its after-tax profits each year, if any, to fund certain statutory reserve funds until such reserve funds reach 50% of its registered capital. In addition, each of our wholly foreign-owned subsidiaries in China may allocate a portion of its after-tax profits based on China accounting standards to enterprise expansion funds and staff bonus and welfare funds at its discretion, and our consolidated affiliated entities may allocate a portion of their after-tax profits based on China accounting standards to a discretionary surplus fund at its discretion. The statutory reserve funds and the discretionary funds are not distributable as cash dividends. Remittance of dividends by a wholly foreign-owned company out of China is subject to examination by the banks designated by SAFE. We currently plan to reinvest all earnings from our wholly owned subsidiary in China to its business development and do not plan to request dividend distributions from such subsidiaries and VIEs.

Quantitative and Qualitative Disclosures about Market Risk

Concentrations Risk

Details of customers accounting for 10.0% or more of total revenues are as follows: