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Lemeng Holdings Ltd. – IPO: ‘F-1’ on 10/25/22

On:  Tuesday, 10/25/22, at 5:29pm ET   ·   Accession #:  1213900-22-66216   ·   File #:  333-268007

Previous ‘F-1’:  None   ·   Next:  ‘F-1/A’ on 12/7/22   ·   Latest:  ‘F-1/A’ on 11/2/23   ·   5 References:   By:  Lemeng Holdings Ltd. – Latest ‘F-1/A’ on 11/2/23 By:  Lemeng Holdings Ltd. – ‘F-1/A’ on 10/17/23 By:  Lemeng Holdings Ltd. – ‘F-1/A’ on 7/3/23 By:  Lemeng Holdings Ltd. – ‘F-1/A’ on 5/22/23 By:  Lemeng Holdings Ltd. – Next ‘F-1/A’ on 12/7/22 

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

10/25/22  Lemeng Holdings Ltd.              F-1                   24:5.4M                                   EdgarAgents LLC/FA

Document/Exhibit                   Description                      Pages   Size 

 1: F-1         Registration Statement by a Foreign Issuer          HTML   2.95M 
 2: EX-3.1      Memorandum and Articles of Association              HTML    524K 
 3: EX-5.1      Form of Opinion of Ogier Regarding the Validity of  HTML     43K 
                the Ordinary Shares Being Registered                             
 4: EX-8.2      Form of Opinion of Kaufman & Canoles, P.C.          HTML     15K 
                Regarding Certain U.S. Federal Income Tax Matters                
 5: EX-10.1     Employment Agreement With Baohua Feng               HTML     71K 
14: EX-10.10    Form of Advertisement Cooperation Agreement         HTML     49K 
 6: EX-10.2     Employment Agreement With Zongfang Bi               HTML     52K 
 7: EX-10.3     Exclusive Consulting and Service Agreement          HTML     55K 
 8: EX-10.4     Equity Pledge Agreement                             HTML     72K 
 9: EX-10.5     Exclusive Purchase Right Agreement                  HTML    130K 
10: EX-10.6     Proxy Agreement                                     HTML    100K 
11: EX-10.7     Spousal Consent Letter                              HTML     33K 
12: EX-10.8     English Translation of the Equity Transfer          HTML     35K 
                Agreement Between Beijing Lemenginteractive                      
                Technology Co., Ltd. and Nanjing Yingbao Network                 
                Technology Co., Ltd                                              
13: EX-10.9     Form of Mobile Advertisement Business Cooperation   HTML     62K 
                Agreement                                                        
15: EX-23.1     Consent of Friedman LLP                             HTML      9K 
16: EX-23.3     Consent of Jingtian&Gongcheng                       HTML     11K 
17: EX-23.4     Consent of Frost & Sullivan                         HTML     11K 
18: EX-23.5     Consent of Kaufman & Canoles, P.C                   HTML     15K 
24: EX-FILING FEES  Filing Fee Table                                HTML     20K 
19: EX-99.1     Opinion of Jingtian&Gongcheng, People's Republic    HTML     44K 
                of China Counselto the Registrant, Regarding                     
                Certain Prc Law Matters and the Validity of the                  
                Vie Agreements                                                   
20: EX-99.2     Consent of Lu Sun                                   HTML      9K 
21: EX-99.3     Consent of Zhuo Wang                                HTML      9K 
22: EX-99.4     Consent of Mikael Charette                          HTML      9K 
23: EX-99.5     Consent of Kang Zhao                                HTML      9K 

As filed on October 25, 2022 with the Securities and Exchange Commission

Registration No. 333-                      

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

FORM F-1
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933

LEMENG HOLDINGS LIMITED

樂盟控股有限公司

(Exact name of registrant as specified in its charter)

Not Applicable
(Translation of Registrant’s Name into English)

Copies to:

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. ☐

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 preliminary 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.

Class B Ordinary Shares 

Lemeng Holdings Limited

樂盟控股有限公司

This is an initial public offering of      Class B ordinary shares, US$0.001 par value per share (“Ordinary Shares”, “Class B Shares” or “Shares”), of Lemeng Holdings Limited 樂盟控股有限公司, a Cayman Islands exempted company (together with its subsidiaries, “Lemeng”, “we/us” or “our Company”). Our Shares have one (1) vote per share. We are not offering our Class A ordinary shares, US$0.001 par value per share (“Class A Shares”), which have twenty (20) votes per share, in this offering. Upon completion of this offering, we will be deemed to be a “controlled company” as defined by Nasdaq Rule 5615(c)(1); however, we do not intend to avail ourselves of the corporate governance exemptions afforded to controlled companies under the Nasdaq Marketplace Rules for at least one (1) year following completion of this offering. By virtue of his beneficial ownership of the Class A Shares, Baohua Feng will control Company actions requiring the approval of shareholders of ordinary shares, including the election of our Board of Directors, adoption of amendments to our memorandum and articles of association and the approval of merger, consolidation, sale of all or substantially all of our assets and other major corporate transactions, except to the extent such matters require approval by holders of our Class B Shares as a class.

Prior to this offering, there has been no public market for our Ordinary Shares. We expect the initial public offering price of our Ordinary Shares to be between $        and $        per share. We intend to apply to list our Ordinary Shares on the Nasdaq Capital Market under the symbol “LIAI”. We cannot assure you that our application will be approved; if it is not approved, we will not complete this offering.

We are a Cayman Islands holding company. We are not a Chinese operating company, and do not conduct business operations directly in People’s Republic of China (“PRC” or “China”). All operations in China are conducted through a variable interest entity (“VIE”), Beijing Lemeng Interactive Technology Co., Ltd. (“Lemeng BJ”), and its subsidiaries (collectively, “Lemeng Interactive”). This is an offering of the Shares of the Cayman Islands holding company, which does not conduct operations. You are not investing in Lemeng BJ or Lemeng Interactive, the PRC operating companies, and may never hold equity in the PRC entities. Neither we nor our subsidiaries own any equity in Lemeng BJ or Lemeng Interactive. Instead, we entered into certain contracts (the “VIE Agreements”) dated October 1, 2021, which are used to provide investors exposure to foreign investment in China-based companies where Chinese law prohibits or restricts direct foreign investment in the operating companies. These agreements with our wholly foreign owned entity, Zhejiang Leshen Technology Co., Ltd. (“Leshen” or “WFOE”) require us to consolidate the financial results of Lemeng Interactive for accounting purposes. The VIE structure provides contractual exposure to foreign investment in the VIE rather than replicating an investment and the main contribution of the VIE was to hold an ICP license as the PRC law limits direct foreign investment in internet-based businesses, such as provision of internet information services platform and other value-added telecommunication services.

These rights have not been tested in a court of law, and Chinese regulatory authorities could disallow this structure; any adverse action by such courts or regulatory authorities would likely result in a material change in our operations and/or a material change in the value of the securities we are registering for sale, including that such securities could significantly decline in value or become worthless. Because of our corporate structure, we are subject to unique risks to investors due to uncertainty of the interpretation and the application of PRC laws and regulations, including but not limited to limitation on foreign ownership of internet technology companies, and regulatory review of oversea listing of PRC companies through a special purpose vehicle, and the validity and enforcement of the VIE Agreements. We are also subject to the risks of uncertainty about any future actions of the PRC government in this regard. As a result of our indirect ownership in the WFOE and the VIE Agreements, we are regarded as the primary beneficiary of the VIEs under U.S. generally accepted accounting principles (“GAAP”) purposes. The VIE structure provides contractual exposure to foreign investment in the VIE rather than replicating an investment and the main contribution of the VIE was to hold an ICP license as the PRC law limits direct foreign investment in internet-based businesses, such as provision of internet information services platform and other value-added telecommunication services. We may also be subject to sanctions imposed by PRC regulatory agencies including Chinese Securities Regulatory Commission if we fail to comply with their rules and regulations. See “Risk Factors—Risks Relating to Our Contractual Arrangements and Our Corporate Structure (the ‘VIE structure’)” and “Risk Factors—Risks Related to Doing Business in China”.

Lemeng Interactive has maintained cash management policies which dictate the purpose, amount and procedure of cash transfers among Lemeng, the VIE and PRC and non-PRC subsidiaries. Cash transferred of less than RMB10.0 million (US$1.6 million) must be reported to and reviewed by Lemeng’s financial department and the PRC and non-PRC subsidiaries’ and the VIE’s chief executive officer and must be approved by the Chief Financial Officer and Chairman of Lemeng. Cash transfer in excess of RMB10.0 million (US$1.6 million) must be approved by board of directors of Lemeng. Our management monitors the cash position of each entity within our organization regularly and prepare budgets on a monthly basis to ensure each entity has the necessary funds to fulfill its obligation for the foreseeable future and to ensure adequate liquidity. In the event that there is a need for cash or a potential liquidity issue, it will be reported to our Chief Financial Officer and subject to approval by our Board of Directors, we will provide funding to the subsidiaries through loans or capital contributions. Other than Lemeng Interactive, neither we, as a Cayman Islands holding company, or its other subsidiaries has cash management policies dictating how funds are transfer, and each entity needs to comply with applicable law or regulations with respect to transfer of funds, dividends and distributions with other entities. We are permitted under applicable laws and regulations of the Cayman Islands to transfer cash to our subsidiary incorporated in the British Virgin Islands, Lemeng British Virgin Islands (“Lemeng BVI”), through loans or capital contributions without restriction on the amount of the funds; Lemeng BVI is permitted under the laws of the British Virgin Islands to provide funding to its subsidiary incorporated in Hong Kong, Lemeng HK (“Lemeng HK”) through loans or capital contributions without restrictions on the amount of the funds. As a holding company, we may rely on dividends and other distributions on equity paid by our subsidiary in Lemeng BVI, Lemeng HK, Leshen, our WFOE, and the consolidated VIEs in China, Lemeng BJ, for our cash and financing requirements. According to the Companies Ordinance of Hong Kong, a Hong Kong company may only make a distribution out of profits available for distribution. In order for us to pay dividends to our shareholders, we will rely on payments made from Lemeng BJ to WFOE, pursuant to VIE Agreements between them, and the distribution of such payments to Lemeng HK as dividends from WFOE. Certain payments from our Lemeng BJ to WFOE are subject to PRC taxes, including business taxes and Value-Added Tax (“VAT”). We intend to keep any future earnings to re-invest in and finance the expansion of our business, and will consider cash dividends based on our operations, availability of free convertible currencies, and dividends payment will be made at the discretion of our Board of Directors depending 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. As of the date of this prospectus, there have been no transfers, dividends or distributions made between the holding company, its subsidiaries and consolidated VIEs, or to investors. In the future, cash proceeds raised from overseas financing activities, including this offering, may be transferred by the holding company to WFOE or the consolidated VIE via capital contribution or shareholder loans, as the case may be. As discussed above, other than Lemeng Interactive, we do not maintain cash management policies and procedures as of the date of this prospectus. For more information, please see “Prospectus Summary — Transfers of Cash to and from Our Subsidiaries and VIE”, “Prospectus Summary — Dividend Policy” and “Prospectus Summary — Selected Condensed Consolidated Financial Data” beginning on page 19 of this prospectus and “Summary of Risk Factors — Restrictions of funding on dividend payments from Leshen and Lemeng Interactive under PRC laws” and “Risk Factors — Risks Related to Doing Business in China — We are a holding company, and we rely for funding on dividend payments from Leshen and Lemeng Interactive, which are subject to restrictions under PRC laws.” on page 47 of this prospectus and our consolidated financial statements starting on page F-1 of this prospectus for more information.

Pursuant to the exclusive consulting and service agreement between Leshen and Lemeng BJ dated October 1, 2021 (the “Exclusive Consulting and Service Agreement”), Leshen has the exclusive right to provide Lemeng BJ with comprehensive consulting services and other services. Without Leshen’s prior written consent, Lemeng BJ shall not directly or indirectly accept the same or any similar services provided by any third party and shall not establish similar cooperative relationships with any third party regarding the matters contemplated under the Exclusive Consulting and Service Agreement. Lemeng BJ shall pay Leshen a service fee equivalent to the remaining amount after Lemeng BJ’s profit before tax in the corresponding year deducts Lemeng BJ’s losses, if any, in the previous year, the necessary costs, expenses, taxes, and fees incurred in the corresponding year, and the withdraws of the statutory provident fund. To guarantee Lemeng BJ’s performance of its obligations thereunder, the shareholders of Lemeng BJ have pledged all of their equity interests in Lemeng BJ to Leshen pursuant to an equity interest pledge agreement effective on October 1, 2021. The Exclusive Consulting and Service Agreement will continue to be effective unless it is terminated by written notice of Leshen. In general, the People’s Bank of China and the State Administration of Foreign Exchange, or SAFE, implement capital control measures that severely restrict the flow of cash into and out of China. The PRC government may continue to strengthen its capital controls and Leshen’s and Lemeng BJ’s dividends and other distributions may be subject to tightened scrutiny in the future. To the extent cash is generated in our PRC subsidiaries, and may need to be used to fund operations outside of mainland China, such funds may not be available due to limitations placed by the PRC government. Furthermore, to the extent assets (other than cash) in our business are located in mainland China or held by a mainland China entity, the assets may not be available to fund operations or for other use outside of mainland China due to interventions in or the imposition of restrictions and limitations on the ability of us and our subsidiaries to transfer assets by the PRC government. If certain PRC laws and regulations, including existing laws and regulations and those enacted or promulgated in the future were to become applicable to our Hong Kong subsidiary in the future, and to the extent cash is generated in our Hong Kong subsidiary and to the extent assets (other than cash) in our business are located in Hong Kong or held by a Hong Kong entity and may need to be used to fund operations outside of Hong Kong, such funds or assets may not be available due to interventions in or the imposition of restrictions and limitations on the ability of us and our subsidiaries to transfer funds or assets by the PRC government. Furthermore, there can be no assurance that the PRC government will not intervene or impose restrictions on our ability to transfer or distribute cash, which could result in an inability or prohibition on making transfers or distributions to entities outside of mainland China and Hong Kong and adversely affect our business. Saved as the foregoing limitations imposed by the PRC government as described hereto, there are currently no limitations on our or our subsidiaries’ ability to transfer cash to investors. It may be impossible, therefore, for the Company (and, therefore, its shareholders) to realize any benefit from the operations of Lemeng BJ. See “Prospectus Summary — Transfers of Cash to and from Our Subsidiaries and VIE”, “Prospectus Summary — Dividend Policy” and “Prospectus Summary — Selected Condensed Consolidated Financial Data” beginning on page 19 and “Summary of Risk Factors — Restrictions of funding on dividend payments from Leshen and Lemeng Interactive under PRC laws” and “Risk Factors — Risks Related to Doing Business in China — We are a holding company, and we rely for funding on dividend payments from Leshen and Lemeng Interactive, which are subject to restrictions under PRC laws.” On page 47 and “Summary of Risk Factors – To the extent cash in the business is in PRC/Hong Kong or in PRC/Hong Kong entities, the funds may not be available to fund operations for other use outside of the PRC/Hong Kong” and “Risk Factors – Risks Related to Doing Business in China – To the extent cash in the business is in PRC/Hong Kong or in PRC/Hong Kong entities, the funds may not be available to fund operations for other use outside of the PRC/Hong Kong” on page 48 of this prospectus and the consolidated financial statements appearing beginning on page F-1.

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 certain risks. See “Risk Factors” beginning on page 24.

The Chinese government may intervene or influence the operation of Lemeng Interactive’s Hong Kong and PRC operating entities and exercise significant oversight and discretion over the conduct of their business and may intervene in or influence their operations at any time, or may exert more control over offerings conducted overseas and/or foreign investment in China-based issuers, which could result in a material change in operations and/or the value of our Class B Shares. Further, any actions by the Chinese government to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or be worthless.

Recently, the PRC government initiated a series of regulatory actions and statements to regulate business operations in China with little advance notice, including cracking down on illegal activities in the securities market, adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement. In addition, the PRC government announced that it would step up supervision of overseas listed PRC businesses. Under the new measures, the PRC government will enhance regulation of cross-border data flows and security, crack down on illegal activity in the securities market and punish fraudulent securities issuance, market manipulation and insider trading. The PRC government will also check sources of funding for securities investment and control leverage ratios. The PRC government has also opened a probe into several U.S.-listed technology companies focusing on anti-monopoly, financial technology regulation and more recently, with the passage of the PRC Data Security Law, how companies collect, store, process and transfer personal data, which could impact our ability to conduct our business, accept foreign investments, or list on a U.S. or other foreign exchange. On October 29, 2021, the Cyberspace Administration of China (“CAC”) published the Draft Outbound Data Transfer Security Assessment Measures (the “Draft Outbound Data Transfer Security Assessment Measures”). On July 7, 2022, the Outbound Data Transfer Security Assessment Measures (the “Outbound Data Transfer Security Assessment Measures”) formally promulgated, which became effective from September 1, 2022. The Outbound Data Transfer Security Assessment Measures stipulates the circumstances under which security assessment of outbound data transfers should be declared, including: (i) outbound transfer of important data, which means any data, the tampering, damage, leakage, or illegal acquisition or use of which, if it happens, may endanger national security, the operation of the economy, social stability, public health and security, by a data processor; (ii) outbound transfer of personal information by a critical information infrastructure operator or a personal information processor who has processed the personal information of more than 1,000,000 people; (iii) outbound transfer of personal information by a personal information processor who has made outbound transfers of the personal information of 100,000 people cumulatively or the sensitive personal information of 10,000 people cumulatively since 1 January of the previous year; or (iv) other circumstances where an application for the security assessment of an outbound data transfer is required as prescribed by the national cyberspace administration authority. On December 28, 2021, the Measures for Cybersecurity Review (2021 version) was promulgated and became effective on February 15, 2022, which iterates that any “online platform operators” controlling personal information of more than one million users which seeks to list in a foreign stock exchange should be subject to cybersecurity review. We are not in possession of personal information of over one million users and we do not expect to have personal information of more than one million users prior to this offering. In view of the above, our PRC legal counsel, Jingtian&Gongcheng, is of the view that we are not subject to the cybersecurity review for this offering under the Measures for Cybersecurity Review (2021 version). As of the date of this prospectus, we have not been involved in any investigations on cybersecurity review initiated by the CAC, and we have not received any warning, sanction or penalty in such respect. However, the Measures for Cybersecurity Review (2021 version) was recently adopted and, therefore, it is uncertain how it will be enacted, interpreted or implemented, and how it will affect us. Since these statements and regulatory actions are new, it is highly uncertain how soon legislative or administrative regulation making bodies will respond and what existing or new laws or regulations or detailed implementations and interpretations will be modified or promulgated, if any, and the potential impact such modified or new laws and regulations will have on our daily business operation, the ability to accept foreign investments and list on an U.S. exchange. As there remains significant uncertainty in the interpretation and enforcement of relevant PRC cybersecurity laws and regulations, we could be subject to cybersecurity review, and if so, there is no assurance that we would be able to pass such review in relation to this offering in a timely manner or at all. In addition, we could become subject to enhanced cybersecurity review or investigations launched by PRC regulators in the future. Any failure or delay in the completion of the cybersecurity review procedures or any other non-compliance with the related laws and regulations may result in fines or other penalties, including suspension of business, website closure, and revocation of prerequisite licenses, as well as reputational damage or legal proceedings or actions against us, which may have material adverse effect on our business, financial condition or results of operations. See “Risk Factors – Risks Related to Doing Business in China – The recent policy pronouncements by the PRC government regarding business activities of U.S.-listed PRC businesses may negatively impact Lemeng’s existing and future operations in Hong Kong.” on page 44.

The Anti-Monopoly Law of the People’s Republic of China, which took effect in 2008 and was amended on June 24, 2022, which amendment became effective August 1, 2022 (the “Anti-Monopoly Law”), established additional procedures and requirements that could make merger and acquisition activities by foreign investors more time-consuming and complex. Under the Anti-Monopoly Law, companies undertaking acquisitions relating to businesses in China must notify the State Council’s anti-monopoly law enforcement authority, in advance of any transaction where the parties’ revenue in the China market exceed certain thresholds and the buyer would obtain control of, or decisive influence over, the target. We also have not implemented monopolistic behaviors including monopoly agreements, abuse of a dominant position and concentration of undertakings that may have the effect to eliminate or restrict competition in the field of platform economy. However, since we anticipate that long term success in China’s market will require consolidation of the many small participants in that market, and our goal is to be one of the survivors of that consolidation, when it happens. Aggressive enforcement of new anti-monopoly regulations could interfere with the VIE’s ability to achieve that goal, which could impact our ability to conduct our business, accept foreign investments, or list on a U.S. or other foreign exchange. As of the date of this prospectus, we have not been involved in any investigations on anti-monopoly initiated by the related governmental regulatory authorities, and we have not received any inquiry, notice, warning, or sanction in such respect.

On December 24, 2021, the China Securities Regulatory Commission (the “CSRC”) issued the Administrative Provisions of the State Council Regarding the Overseas Issuance and Listing of Securities by Domestic Enterprises (Draft for Comments) (the “Draft Administrative Provisions”) and the Measures for the Overseas Issuance of Securities and Listing Record-Filings by Domestic Enterprises (Draft for Comments) (the “Draft Filing Measures,” collectively with the Draft Administrative Provisions, the “Overseas Issuance and Listing Regulations Drafts”), which are currently published for public comments only. According to the Overseas Issuance and Listing Regulations Drafts, among other things, after making initial applications with overseas stock markets for initial public offerings or listings, all domestic companies shall file with the CSRC within three working days. The required filing materials with the CSRC include (without limitation): (i) record-filing reports and related undertakings, (ii) compliance certificates, filing or approval documents from the primary regulators of applicants’ businesses (if applicable), (iii) security assessment opinions issued by related departments (if applicable), (iv) PRC legal opinions, and (v) prospectus. In addition, overseas offerings and listings may be prohibited for such domestic companies when any of the following applies: (i) if the intended securities offerings and listings are specifically prohibited by the laws, regulations or provisions of the PRC; (ii) if the intended securities offerings and listings may constitute a threat to, or endanger national security as reviewed and determined by competent authorities under the State Council in accordance with laws; (iii) if there are material ownership disputes over applicants’ equity interests, major assets, core technologies, or the others; (iv) if, in the past three years, applicants’ domestic enterprises, controlling shareholders or de facto controllers have committed corruption, bribery, embezzlement, misappropriation of property, or other criminal offenses disruptive to the order of the socialist market economy, or are currently under judicial investigation for suspicion of criminal offenses, or are under investigation for suspicion of major violations; (v) if, in the past three years, any directors, supervisors, or senior executives of applicants have been subject to administrative punishments for severe violations, or are currently under judicial investigation for suspicion of criminal offenses, or are under investigation for suspicion of major violations; and (vi) other circumstances as prescribed by the State Council. The Overseas Issuance and Listing Regulations Drafts further stipulate that a fine between RMB 1 million and RMB 10 million may be imposed if an applicant fails to fulfill the filing requirements with the CSRC or conducts an overseas offering or listing in violation of the Overseas Issuance and Listing Regulations Drafts, and in cases of severe violations, a parallel order to suspend relevant businesses or halt operations for rectification may be issued, and relevant business permits or operational licenses revoked. The Overseas Issuance and Listing Regulations Drafts, if enacted, may subject us to additional compliance requirements in the future, and though we believe that none of the situations that would clearly prohibit overseas offerings and listings applies to us, we cannot assure you that we will be able to receive clearance of such filing requirements in a timely manner, or at all. Furthermore, the Ministry of Commerce (“MOFCOM”) and the National Development and Reform Commission (“NDRC”) promulgated the Special Administrative Measures for Access of Foreign Investment (2021 Edition), or the Negative List (2021), stipulates that if a domestic enterprise engaged in business in the prohibited investment field issues shares abroad and is listed for trading, it shall be examined and approved by the relevant competent authorities of the state. According to a press release issued by the NDRC in relation to the Negative List (2021), the above provisions are only applicable to the direct overseas listing of domestic enterprises engaged in the prohibited investment field. Our PRC legal counsel is of the view that our listing on Nasdaq does not constitute a direct overseas listing of domestic enterprises mentioned in the above press release and therefore we are not subject to the examination and approval by the relevant competent authorities of the state in accordance with the Negative List (2021). As of the date of this prospectus, we also have not been involved in any investigations initiated by the above applicable governmental regulatory authorities, nor have we received any inquiry, notice, warning, or sanction. However, the above regulations and drafts for comments also indicate the intention of the Chinese government to increase its regulation of offshore investment in company’s utilizing the VIE structure to participate in the prohibited investment fields. If relevant governmental authority determines or new future rules provides that we are required to obtain the approval, we would have to apply for such approval. There is no assurance that we will be able to obtain such approval in time or at all. If we fail to obtain the approve as required or in a timely manner, the VIE structure may be deemed illegal and ordered to be cancelled by relevant government authorities, and other administrative measures or penalties may be imposed on us, which could materially and adversely affect our business, financial condition, results of operations and the value of our Class B Shares. Any failure of us to fully comply with new regulatory requirements may significantly limit or completely hinder our ability to offer or continue to offer our Class B Shares, cause significant disruption to our business operations, severely damage our reputation, materially and adversely affect our financial condition and results of operations and cause our Class B Shares to significantly decline in value or become worthless and impact our ability to accept foreign investments, or list on a U.S. or other foreign exchange. See “Risk Factors — Chinese government agencies may exert more oversight and control over offerings that are conducted overseas and foreign investment in China-based issuers, especially those in the technology field. Additional compliance procedures may be required in connection with this offering under PRC rules, regulations or policies.” See “Risk Factors — Our current corporate structure and business operations may be substantially affected by the newly enacted Foreign Investment Law.”

Our Class B Shares may be prohibited to trade on a national exchange or “over-the-counter” markets under the Holding Foreign Companies Accountable Act (the “HFCAA Act”) if the Public Company Accounting Oversight Board (“PCAOB”) is unable to inspect our auditors for three consecutive years beginning in 2021. Furthermore, on June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act (“AHFCAA”) and the U.S. House of Representatives introduced the AHFCAA on December 14, 2021 and referred to the House Committee on Financial Services. If signed into law, would amend the HFCAA Act and require the SEC to prohibit an issuer’s securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three consecutive years.

Pursuant to the HFCAA, the PCAOB issued a Determination Report on December 16, 2021 which found that the PCAOB is unable to inspect or investigate completely registered public accounting firms headquartered in: (1) mainland China of the PRC, and (2) Hong Kong. In addition, the PCAOB’s report identified the specific registered public accounting firms which are subject to these determinations.

The recent joint statement by the SEC and PCAOB, proposed rule changes submitted by Nasdaq, and the HFCAA all call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB.

On August 26, 2022, the PCAOB signed a Statement of Protocol with the CRSC and the Ministry of Finance of the PRC, which sets out specific arrangements on conducting inspections and investigations by both sides over relevant audit firms within the jurisdiction of both sides, including the audit firms based in mainland China and Hong Kong. This agreement marks an important step towards resolving the audit oversight issue that concern mutual interests, and sets forth arrangements for both sides to cooperate in conducting inspections and investigations of relevant audit firms, and specifies the purpose, scope and approach of cooperation, as well as the use of information and protection of specific types of data. These developments could add uncertainties to our offering.

Our auditor is currently subject to PCAOB inspections and the PCAOB is able to inspect our auditor. Our auditor, Friedman LLP, is headquartered in Manhattan, New York, and has been inspected by the PCAOB on a regular basis. Our auditor is not headquartered in mainland China or Hong Kong and was not identified in this report as a firm subject to the PCAOB’s determination. Notwithstanding the foregoing, in the future, if there is any regulatory change or step taken by PRC regulators that does not permit Friedman LLP to provide audit documentations located in China or Hong Kong to the PCAOB for inspection or investigation, or the PCAOB expands the scope of the Determination so that we are subject to the HFCAA Act, as the same may be amended, or if the agreement between the PCAOB and the CRSC on August 26, 2022 does not succeed, you may be deprived of the benefits of such inspection which could result in limitation or restriction to our access to the U.S. capital markets and trading of our securities, including trading on the national exchange and trading on “over-the-counter” markets, may be prohibited under the HFCAA Act. See “Risk Factors — The recent joint statement by the SEC and PCAOB, proposed rule changes submitted by Nasdaq, and the Holding Foreign Companies Accountable Act (“HFCAA”) all call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB. These developments could add uncertainties to our offering.” for more information.

This offering is being conducted on a firm commitment basis. The underwriter, The Benchmark Company, LLC 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 30 days after the closing of this offering to purchase up to 15% of the total number of our Ordinary Shares to be offered by us pursuant to this offering (excluding Shares subject to this option), solely for the purpose of covering overallotments, at the initial public offering price less the underwriting discount. If the underwriters exercise the option in full, the total underwriting discounts and commissions payable will be $   , and the total proceeds to us, before expenses, will be $  . If we complete this offering, net proceeds will be delivered to our company on the closing date. We will not be able to use such proceeds in China, however, until we complete certain remittance procedures in China. The underwriters expect to deliver our Shares to purchasers in the offering on or about   , 2022.

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.

Sole Book-Running Manager

THE BENCHMARK COMPANY

The date of this prospectus is                 , 2022. 

TABLE OF CONTENTS 

Neither we nor the underwriter has authorized anyone to provide any information or to make any representations other than those contained in this prospectus or in any free writing prospectuses we have prepared. We take no responsibility for and can provide no assurance as to the reliability of, any other information that others may give you. We are offering to sell, and seeking offers to buy, our Ordinary Shares only in jurisdictions where offers and sales are permitted.

The information in this preliminary prospectus is not complete and is subject to change. No person should rely on the information contained in this document for any purpose other than participating in our proposed initial public offering, and only the prospectus issued on       , 2022 is authorized by us to be used in connection with our proposed initial public offering. The preliminary prospectus will only be distributed by us and the underwriters named herein and no other person has been authorized by us to use this document to offer or sell any of our securities.

Until       , 2022 (25 days after the commencement of our initial public offering), all dealers that buy, sell, or trade our Ordinary Shares, whether or not participating in our initial public offering, may be required to deliver a prospectus. This delivery requirement is in addition to the obligation of dealers to deliver a prospectus when acting as underwriter and with respect to their unsold allotments or subscriptions. 

RISK FACTORS

Before you decide to purchase our Ordinary Shares, you should understand the high degree of risk involved. You should consider carefully the following risks and other information in this prospectus, including our consolidated financial statements and related notes. If any of the following risks actually occur, our business, financial condition and operating results could be adversely affected. As a result, the trading price of our Ordinary Shares could decline, perhaps significantly.

Risks Related to Our Business and Industry

Lemeng Interactive may be unable to innovate, adapt and respond timely and effectively to rapidly changing technologies and new market trends in mobile advertising industry.

The mobile advertising industry is a fast-growing and rapidly changing industry. Lemeng Interactive’s future success will depend on our ability to continuously innovate and develop to meet evolving marketing needs, and address technological advancements and new market trends in mobile advertising industry. We cannot ensure you that Lemeng Interactive will be able to timely identify and respond to new trends in the future. The introduction of new mobile advertising services is subject to risks and uncertainties. Unexpected technical, operational or other problems could delay or prevent the introduction of new mobile advertising services. Moreover, there can be no assurance that any of our new mobile advertising services will achieve widespread market acceptance. If Lemeng Interactive fails to keep pace with changing technologies and to introduce successful and well-accepted mobile advertising services for Lemeng Interactive’s existing customers and potential customers, or fail to improve and enhance the functionality and performance of our products and services, Lemeng Interactive could lose customers and its competitive position and ability to generate revenue and growth could be adversely affected.

Furthermore, the design of mobile devices and operating systems is controlled by third parties with which Lemeng Interactive does not have any formal relationship. These parties frequently introduce new devices, and from time to time they may introduce new operating systems or modify existing ones. Network carriers may also restrict our ability to access specific content on mobile devices. If Lemeng Interactive’s advertisements were unable to work on these devices or operating systems, either because of technological constraints or because a maker of these devices or developer of these operating systems wished to impair our ability to provide advertisements on them or Lemeng Interactive’s ability to fulfill advertising space, or inventory, from developers whose applications are distributed through their controlled channels, our ability to generate revenue could be significantly harmed. Any of these events could materially and adversely affect Lemeng Interactive’s business, results of operations and prospects.

Lemeng Interactive’s limited operating history makes it difficult to accurately forecast Lemeng Interactive’s future operating results and evaluate Lemeng Interactive’s business and prospects.

Lemeng BJ commenced operations in 2014 and has only a limited operating history. Although Lemeng Interactive experienced substantial revenue growth in its limited operating history, it may not be able to sustain this rate of growth or even maintain our current revenue levels. As a developing company in a rapidly evolving industry, our business prospects depend in large part on its ability to:

If Lemeng Interactive is unable to meet one or more of these objectives or otherwise adequately address the risks and difficulties that we face, our business may suffer, our revenue may decline and we may not be able to achieve further growth or long-term profitability.

If the mobile advertising industry, and in particular the interactive advertising industry, fails to continue to develop, Lemeng Interactive’s profitability and prospects may be materially and adversely affected.

Lemeng Interactive’s business and prospects depend on the continuing development of the mobile advertising industry, in particular, the interactive advertising industry, which may be affected by a number of factors, including:

Such factors may be beyond our control. There is no assurance that the mobile advertising industry, in particular, interactive advertising, will continue to develop. Lemeng Interactive’s business, financial conditions, results of operations and prospects will be materially and adversely affected if the mobile advertising industry fails to grow or grows more slowly than we expect.

We are dependent on Lemeng Interactive’s advertising platform to provide mobile advertising services.

We derive significant revenue from technology services through Lemeng Interactive’s advertising platform. As such, any significant interruptions to the advertising platform by hacking, cyberattack or due to telecommunication failures, power shortages, natural disasters or other events which may cause disruptions in Lemeng Interactive’s daily operations may reduce the attractiveness of its services, and result in a potential loss of Lemeng Interactive’s customers and their participation and consequently, its business and results of operations could be adversely affected. In addition, any measures to avoid information and technological system failures may not be effective or successful.

It is important that the advertising platform is compatible with a range of mobile technologies, systems and networks. In the event that it is difficult for advertisers and media channels to access and use Lemeng Interactive’s advertising platform on their devices, Lemeng Interactive may lose existing customers and media channels, which will in turn affect our business operation and prospects.

Lemeng Interactive’s failure to retain existing advertisers and media channels or attract new advertisers and media channels may negatively impact our revenue and business.

To sustain or increase Lemeng Interactive’s revenue, Lemeng Interactive needs to retain existing advertisers and media channels, deepen or expand its relationships with them as well as attract new advertisers and media channels. To retain and attract new advertisers, Lemeng Interactive needs to continue to provide targeted advertising that maximize advertisers’ return on their advertising budget. Lemeng Interactive typically does not have long-term agreements with advertisers and they may have business relationships with a number of advertising platforms at the mean time. If advertisers determine that their expenditures on the advertising platform do not generate sufficient returns, they may reduce their advertising budgets or terminate advertising arrangements with us.

To retain and attract new media channels, Lemeng Interactive needs to continue to improve the monetization efficiency of their advertisement inventory. Lemeng Interactive typically does not have long-term agreements with its media channels. If Lemeng Interactive’s media channels are no longer satisfied with the monetization efficiency of their advertisement inventory generated by using its advertising platform, they may reduce or discontinue our access to their advertising space.

In the event Lemeng Interactive loses advertisers or media channels, Lemeng Interactive cannot assure you that it will be able to replace them in a timely manner or at all. Lemeng Interactive may not be able to attract new advertisers or media channels. Lemeng Interactive’s failure to retain existing advertisers and media channels or attract new advertisers and media channels may materially and adversely affect our business, financial condition, results of operations and prospects.

Failure to maintain relationships with third-party advertising platforms may materially and adversely affect our business to provide advertising services.

Lemeng Interactive derives a significant portion of its advertising revenue from intermediary services. Lemeng Interactive typically does not have long-term agreements with such third-party advertising platforms. There is no assurance that Lemeng Interactive will be able to maintain its business relationship with them on mutually acceptable terms or at all. In addition, Lemeng Interactive’s cooperation with such third-party advertising platforms are not exclusive. If Lemeng Interactive fails to maintain its business relationship with them or to attract new third-party advertising platforms to work with Lemeng Interactive, Lemeng Interactive’s access to media channels may be limited, and our business, financial conditions, results of operations and prospects may be materially and adversely affected.

In addition, Lemeng Interactive’s business relationship with third-party advertising platforms does not provide Lemeng Interactive with control or oversight over their day-to-day business activities. If any of such third-party advertising platforms engages in activities that violates laws and regulations, Lemeng Interactive’s reputation could be harmed and its business and results of operations could be materially and adversely affected.

If Lemeng Interactive does not effectively manage its costs and expenses, Lemeng Interactive may not be able to sustain its profitability.

Lemeng Interactive relies on the supply of advertising spaces from media channels to deliver advertisements for advertisers. Lemeng Interactive’s traffic acquisition cost totaled approximately $22.8 million, and $22.4 million for the years ended December 31, 2021 and 2020, respectively, representing 31.8% and 41.4% of our cost of sales for the same periods. The increase in traffic acquisition cost may materially and adversely impact our profitability and our business, financial condition and results of operations.

In addition, Lemeng Interactive expended significant resources to grow its business in recent years on enhancing our technology capabilities and Lemeng Interactive expects that it will continue to expend significant resources to expand our business. Lemeng Interactive anticipates continued growth that could require substantial financial and other resources to, among other things:

Lemeng Interactive’s expenditures may not yield the anticipated returns or benefits to our business, and if it fails to effectively manage its costs, it may not be able to sustain profitability.

Lemeng Interactive may face government actions and civil claims in connection with false, fraudulent, misleading, or otherwise illegal content of advertisements for which we provide advertising services.

Under the Advertising Law of the People’s Republic of China (the “Advertising Law”), where an advertising operator provides advertising design, production or agency services with respect to an advertisement when it knows or should have known that the advertisement is false, fraudulent, misleading, or otherwise illegal, the competent PRC authority may confiscate the advertising operator’s advertising revenue from such services, impose penalties, order it to cease dissemination of such false, fraudulent, misleading or otherwise illegal advertisement or correct such advertisement, or suspend or revoke its business licenses under certain serious circumstances.

Under the Advertising Law, “advertising operators” include any natural person, legal person or other organization that provides advertising design, production, or agency services to advertisers for their advertising activities. As the advertising services involve provision of design services to advertisers and agency services, Lemeng Interactive is deemed as an “advertising operator” under the Advertising Law. In addition, for advertising content related to certain types of products and services, such as alcohol, cosmetics, pharmaceuticals, and medical procedures, Lemeng Interactive is expected to confirm that the advertisers have obtained requisite government approvals, including, among others, operating qualifications, proof of quality inspection for advertised products, government pre-approval of the content of the advertisements, and filings with the local authorities. Lemeng Interactive cannot ensure that each advertisement for which Lemeng Interactive places with its advertising platform or third-party advertising platform or media channels complies with all PRC laws and regulations relevant to advertising activities, that supporting documentation provided by Lemeng Interactive’s customers is authentic or complete or that it is able to identify and rectify all noncompliance in a timely manner. If Lemeng Interactive provides advertising design, production or agency services with respect to an advertisement when Lemeng Interactive knows or should have known that the advertisement is false, fraudulent, misleading, or otherwise illegal, the competent PRC authority may confiscate Lemeng Interactive’s advertising revenue from such services, impose penalties, order Lemeng Interactive to cease dissemination of such false, fraudulent, misleading or otherwise illegal advertisement or correct such advertisement, or suspend or revoke Lemeng Interactive’s business licenses under certain serious circumstances.

Moreover, civil claims may be filed against Lemeng Interactive or administrative penalties may be imposed on Lemeng Interactive for fraud, defamation, subversion, negligence, copyright or trademark infringement, or other violations due to the nature and content of the information for which we provide services. In the event Lemeng Interactive is subject to administrative penalties or civil claims in connection with false, fraudulent, misleading, or otherwise illegal advertising content for which we provide advertising services, our reputation, business, financial condition, results of operations and business prospectus may be materially and adversely affected.

If Lemeng Interactive is provided inaccurate or fraudulent data, Lemeng Interactive’s business, financial conditions, results of operations and reputation may be materially and adversely affected.

Lemeng Interactive conducts targeted advertising through its system. Therefore, Lemeng Interactive depends on the accuracy and genuineness of data provided by advertisers and media channels in assessing the behavior of visitors to its media channels and evaluating the performance of the advertisements it delivers. Lemeng Interactive’s data collection and analysis capabilities enable Lemeng Interactive to identify unusual traffic and send alerts to the operators of its advertising platform in real-time. However, there is no assurance that such mechanism will always be effective or adequate. If Lemeng Interactive is provided in accurate or fraudulent data, it may not be able to provide precise targeted advertising and its advertisers may refuse to pay Lemeng Interactive’s advertising fees due to the ineffectiveness of their advertising campaigns through Lemeng Interactive, which may result in disputes between Lemeng Interactive and its advertisers or media channels and materially and adversely affect our business, financial conditions, results of operations and reputation.

Lemeng Interactive faces intensive competition from well-established internet companies, advertising agents and traditional media.

The mobile advertising industry is a rapidly changing, highly competitive and fragmented industry with relatively low entry barriers. With the introduction of new technologies and the influx of new entrants, Lemeng Interactive expects competition to continue and intensify, which could harm our ability to increase revenue and attain or sustain profitability. We believe the principal competitive factors in this industry include:

In addition, mobile advertising platforms face competitive pressure from large and well-established internet companies, which have established stronger and broader presence across the online advertising industry and have significantly more financial, technical, marketing and other resources, more extensive customer base, and longer operating histories and greater brand recognition than we do. These companies have access to consumer information by virtue of their popular consumer-oriented websites and mobile apps, and have the technology designed for use in conjunction with the types of consumer information collected from their websites and mobile apps. These companies may also leverage their positions to make changes to their systems, platforms, exchanges, networks or other products or services that could be harmful to our business and results of operations. Mobile advertising platforms also face competition from advertising agents, who may have their own relationships with media channels and can directly connect advertisers with such sources. Furthermore, mobile advertising platforms continue to compete with traditional media including direct marketing, television, radio, cable and print advertising companies.

New technologies and methods of mobile advertising present an evolving competitive challenge, as market participants upgrade or expand their service offerings to capture more marketing spend from advertisers. In addition to existing competitors and their existing service offerings, Lemeng Interactive expects to face competition from new entrants to the mobile advertising industry and new service offerings from existing competitors. If existing or new companies develop, market or resell competitive high-value advertising solutions, acquire one of Lemeng Interactive’s competitors or strategic partners, form a strategic alliance or enter into exclusivity arrangement with one of Lemeng Interactive’s competitors or strategic partners, Lemeng Interactive’s ability to compete effectively could be significantly compromised and its business, results of operations and prospects could be materially and adversely affected.

If Lemeng Interactive’s algorithm for assessing and predicting potential target viewer are or become flawed or ineffective, or if Lemeng Interactive’s targeted advertising fails to improve the marketing results for its advertisers, its reputation and market share may be materially and adversely affected.

Lemeng Interactive’s ability to attract advertisers to, and build trust in, its advertising services depends significantly on its ability to effectively assess and predict viewer interest in relevant advertisements. Lemeng Interactive uses connection tools and algorithms to collect and analyze viewer data, forecast probability of viewers’ potential engagement with a given advertisement, create and tailor the advertisement based on parameters specified by its advertisers. Lemeng Interactive’s algorithm system takes into account multiple sources of data, including customers’ basic profile, viewers’ behavior data and transaction data.

The data Lemeng Interactive collects may not be relevant to all industries, and for certain industries, Lemeng Interactive may not have sufficient data to ensure that our algorithms system would work effectively. Further, Lemeng Interactive does not generally verify the data it gathers, which may be subject to fraud or are otherwise inaccurate. Even if such data are accurate, they may become irrelevant or outdated and as a result, may not reflect a viewer’s genuine interest or accurately predict his or her interaction with a given advertisement. For example, for viewers’ data collected through software development kits (“SDKs”), following the date Lemeng Interactive obtains the relevant data, a viewer’s interest and behavioral pattern may change or he or she may have already completed a transaction and is no longer interested in the marketing message.

In addition, Lemeng Interactive anticipates significant growth in the amount of data it processes as it continues to develop interactive advertising services to meet evolving and growing advertisers demands. As the amount of data and variables Lemeng Interactive processes increases, its algorithms system processes increasingly complex calculations and as a result, the likelihood of defect and errors increases. To the extent Lemeng Interactive’s proprietary algorithms system fail to accurately assess or predict a viewer’s interest in and interaction with relevant advertisement, or experience significant errors or defects, advertisers may not achieve their marketing goals in a cost-effective manner or at all, which could make Lemeng Interactive’s platform less attractive to them, result in damages to Lemeng Interactive’s reputation and a decline in our market share and adversely affect Lemeng Interactive’s business and results of operations.

Lemeng Interactive may experience systems disruptions, software defects, computer viruses and breakdowns, distributed denial of service attacks, or other hacking and phishing attacks on our systems. Any of these events could damage Lemeng Interactive’s market reputation and materially and adversely affect Lemeng Interactive’s business operation and results of operations.

Lemeng Interactive is dependent on the stable operation of its information technology systems including Lemeng Interactive’s advertising platform, telecommunication networks, computer systems, servers and other hardware. Lemeng Interactive’s business success relies on the uninterrupted and secured operation of Lemeng Interactive’s information technology systems and the safekeeping of confidential consumer information and historical online advertising records. Any system outage or data loss or other disruption owing to the events that may be beyond Lemeng Interactive’s control would cause damage to our reputation and expose Lemeng Interactive to liability to third parties.

Lemeng Interactive is susceptible to computer viruses, system breakdowns, power loss or telecommunications failure as a results of hardware deterioration. In addition, Lemeng Interactive’s infrastructure may be subject to distributed denial of service attacks, or other hacking and phishing attacks on Lemeng Interactive’s systems in the future and Lemeng Interactive cannot guarantee that any applicable recovery system, security protocol, network protection mechanisms or other defense procedures are or will be adequate to prevent such network or service interruptions, system failures or data losses. Lemeng Interactive’s infrastructure and systems may also be breached if any vulnerabilities therein are exploited by unauthorized third parties. If Lemeng Interactive fails to repair or maintain its information technology systems in a timely manner, our business may be temporarily disrupted, which could have a material and adverse impact on Lemeng Interactive’s business.

Lemeng Interactive’s efforts to expand the advertising services provided through Lemeng Interactive’s advertising platform may not succeed and may reduce our revenue growth rate, which may materially and adversely affect Lemeng Interactive’s business, financial condition and results of operations.

Lemeng Interactive derives significant revenue from providing technology services through its advertising platform, and we expect this will continue for the foreseeable future. Lemeng Interactive’s efforts to expand its advertising services provided through its advertising platform may not succeed and may reduce Lemeng Interactive’s revenue growth rate. Further, the introduction of significant technology changes and upgrades of Lemeng Interactive’s advertising platform may not be successful or result in significant revenue.

Additionally, if Lemeng Interactive is unable to develop enhancements to and new features for its existing or new solutions and services that keep pace with the changing technology, Lemeng Interactive’s business could be adversely affected. The success of enhancements, new features, solutions and services depends on several factors, including the timely completion, introduction and market acceptance of the feature. Failure in this regard may significantly impair Lemeng Interactive’s revenue growth as well as negatively impact Lemeng Interactive’s operating results if the additional costs are not offset by additional revenue.

If Lemeng Interactive is unable to protect its proprietary information or other intellectual property, Lemeng Interactive’s business could be adversely affected.

Lemeng Interactive relies on a combination of copyright, trademark and trade secret laws, and contractual restrictions, including through confidentiality, non-disclosure and assignment of copyright or invention assignment agreements with Lemeng Interactive’s key employees and third parties with whom Lemeng Interactive does business, to establish, maintain and protect Lemeng Interactive’s proprietary information and other intellectual property. Lemeng Interactive may not be able to efficiently detect and prevent all misappropriation, unauthorized use or reverse engineering its proprietary information and other intellectual property. For example, contractual restrictions may be breached, and Lemeng Interactive may not succeed in enforcing its rights or have adequate remedies for any breach of laws or contractual restrictions. In addition, Lemeng BJ may not be able to enter into agreements or arrangements with everyone who has access to Lemeng Interactive’s proprietary information or contributes to the development of Lemeng Interactive’s intellectual property. Moreover, Lemeng Interactive’s trade secrets may be disclosed to or otherwise become known or be independently developed by competitors, and in these situations Lemeng Interactive may have no or limited rights to stop others’ use of its information. Furthermore, to the extent that the employees or other third parties with whom Lemeng Interactive does business use intellectual property owned by others in their work for Lemeng Interactive, disputes may arise as to the rights to such intellectual property. If, for any of the above reasons, Lemeng Interactive’s intellectual property is disclosed or misappropriated, it would have an adverse effect on Lemeng Interactive’s business, financial condition and results of operations.

Lemeng Interactive may be subject to claims by third parties for intellectual property infringement.

Lemeng Interactive depends to a large extent on its ability to effectively develop and maintain intellectual property rights relating to its business. However, Lemeng Interactive cannot assure you that third parties will not put forward claims that its business infringes upon or otherwise violates patents, copyrights or other intellectual property rights which they hold, whether valid or otherwise. Lemeng Interactive may face allegations that Lemeng Interactive has infringed the trademarks, copyrights, patents and other intellectual property rights of third parties, including its competitors, or allegations that Lemeng Interactive is involved in unfair trade practices. Lemeng Interactive’s mobile advertising business may become involved in litigious proceedings relating to allegations of infringement of intellectual property rights, unfair competition, invasion of privacy, defamation and violations of rights of third parties. The validity, enforceability and scope of protection of intellectual property rights, particularly within China, are still evolving. As Lemeng Interactive faces increasing competition and as litigation becomes a more commonly pursued method for resolving commercial disputes in China, Lemeng Interactive faces a higher risk of being the subject of intellectual property infringement claims.

Defending against intellectual property claims is costly and can impose a significant burden on our management and resources. Further, there is no guarantee that Lemeng Interactive can obtain favorable final outcomes in all cases. Such intellectual property claims may harm its brand and reputation, even if they are vexatious or do not result in liability. Any resulting liability or expenses, or changes required to Lemeng Interactive’s products or services to reduce the risk of future liability, may have a material adverse effect on Lemeng Interactive’s business, results of operations and prospects.

If Lemeng Interactive fails to detect fraud or prevent its customers’ advertisements from appearing on undesirable mobile apps, our reputation will suffer, which would harm its brand and reputation and negatively impact our business, financial condition and results of operations.

Lemeng Interactive’s business depends on providing advertisers with a service that they trust, and Lemeng Interactive seeks to take reasonable measures to prevent advertisers’ advertisements from appearing on undesirable mobile apps or on certain mobile apps that they identify. Lemeng Interactive uses proprietary technology to detect click fraud. Lemeng Interactive also uses advertising filter to prevent its customers’ advertisements from appearing on undesirable mobile apps. Preventing and combating fraud requires constant monitoring, and Lemeng Interactive may not always be successful in its efforts to do so. Lemeng Interactive may serve advertising on inventory that is objectionable to its advertisers, and Lemeng Interactive may lose the trust of its advertisers, which would harm its brand and reputation and negatively impact our business, financial condition and results of operations.

Any negative publicity with respect to Lemeng Interactive, the mobile advertising industry in general or Lemeng Interactive’s partners may materially and adversely affect Lemeng Interactive’s reputation, business and results of operations.

Complaints, litigation, regulatory actions or other negative publicity that arise about the mobile advertising industry in general or Lemeng Interactive in particular, including on the quality, effectiveness and reliability of mobile advertising solutions, privacy and security practices, and marketing content, even if inaccurate, could adversely affect Lemeng Interactive’s reputation and customer confidence in, and the use of, its solutions. Harm to Lemeng Interactive’s reputation and customer confidence can also arise for many other reasons, including employee misconduct, misconduct of Lemeng Interactive’s data and media channels or other counterparties, failure by these persons or entities to meet minimum quality standards or otherwise fulfill their contractual obligations or to comply with applicable laws and regulations. Additionally, negative publicity with respect to Lemeng Interactive’s data, advertising platform or media channels could also affect our business and results of operation to the extent that our business rely on these partners.

Misconduct, errors and failure to function by Lemeng Interactive’s employees and the breach of data privacy regulation or leakage of consumer data could harm Lemeng Interactive’s business and reputation.

Lemeng Interactive is exposed to many types of operational risks, including the risk of misconduct and errors by its employees and the breach of data privacy regulation or leakage of consumer data. Lemeng Interactive’s business depends on its employees to process a large set of consumer data and business information relating to its customers. Lemeng Interactive could be materially adversely affected if such data or information was disclosed to unintended recipients or if Lemeng Interactive experiences an operational breakdown whether as a result of human error, a purposeful sabotage or a fraudulent manipulation of its operations or systems. Lemeng Interactive could also be materially adversely affected if its employees absconded with the consumer data or used its know-how to compete with Lemeng Interactive. Any of these occurrences could result in Lemeng Interactive’s diminished ability to operate its business, potential liability to its customers, inability to attract future customers, reputational damage, regulatory intervention and financial harm, which could negatively impact its business and results of operations.

Regulatory, legislative or self-regulatory developments for online businesses, including privacy and data protection regimes, are expansive, not clearly defined and rapidly evolving. These laws and regulations could create unexpected costs, subject Lemeng Interactive to enforcement actions for compliance failures, or restrict portions of its business or cause Lemeng Interactive to change its advertising platform or business model.

Governments across the world, including the PRC governments, have enacted or are considering enacting legislation relating to online businesses. There may be an increase in legislation and regulation related to online advertising, including mobile advertising business the collection and use of anonymous internet user data and unique device identifiers, such as IP address or mobile unique device identifiers, and other data protection and privacy regulation. These laws and regulations could adversely affect the demand for or effectiveness and value of Lemeng Interactive’s advertising services, force us to incur substantial costs or require Lemeng Interactive to change its business practices in a manner that could adversely affect its business and results of operations or compromise its ability to effectively pursue its growth strategies.

In recent years, the PRC government has enacted legislation relating to internet use to protect personal information from any unauthorized disclosure. For example, the PRC Cyber Security Law, promulgated by the Standing Committee of the National People’s Congress (“SCNPC”), stipulate that network operators shall publicize the rules of collection and use, clearly state the purpose, method and scope of information collection and use, and obtain the consent of the user. And without the consent of the user, network operators shall not provide personal information to others, except that the specific individual cannot be identified and cannot be recovered after processing.

In addition, SCNPC promulgated the Data Security Law of the People’s Republic of China (the “Data Security Law”) on June 10, 2021, which became effective on September 1, 2021. The Data Security Law imposes data security and privacy obligations on entities and individuals carrying out data processing activities, and introduces a data classification and hierarchical protection system. The classification of data is based on its importance in economic and social development, as well as the degree of harm expected to be caused to national security, public interests, or legitimate rights and interests of individuals or organizations if such data is tampered with, destroyed, leaked, or illegally acquired or used. The security assessment mechanism was also included in the Personal Information Protection Law (the “Personal Information Protection Law”), which was promulgated in August 2021 and became effective on November 1, 2021, for the Chinese government to supervise certain cross-border transfers of personal information.

The above laws and regulations are relatively new and subject to interpretation by the regulator. Although Lemeng Interactive only gains access to limited personal contact information that is necessary for, and relevant to, the services provided, Lemeng Interactive cannot assure you that whether the data Lemeng Interactive obtains and uses may include information that is deemed as “personal information” under the PRC Cyber Security Law and related data privacy and protection laws and regulations. Lemeng Interactive has placed great emphasis on protection of consumer’s data privacy and have established the information security management system adopted rigorous data security measures to prevent its data from unauthorized access or use or being retrieved to establish any connection with the device owners’ identities. Lemeng Interactive strives to comply with all applicable laws and regulations relating to privacy and data collection, processing, use, and disclosure. These laws and regulations are continually evolving, are not always clear, and are not always consistent across the jurisdictions in which Lemeng Interactive does business, and the measures Lemeng Interactive takes to comply with these laws, regulations and industry standards may not always be effective. In addition, there has been an increase in regulatory activities in connection with privacy and data protection in China, and the regulatory landscape is becoming more complex with increasingly strict requirements. Lemeng Interactive may be subject to litigation or enforcement action or reduced demand for the solutions or services if Lemeng Interactive, its suppliers or its clients fail to abide by applicable privacy laws or to provide adequate notice and/or obtain consent from end users. Any proceeding or perception of concerns relating to Lemeng Interactive’s collection, use, disclosure, and retention of data, including its security measures applicable to the data Lemeng Interactive collects, whether or not valid, could adversely affect its reputation, force it to spend significant amounts on defense of these proceedings, distract our management, increase our costs of doing business and inhibit the use of its advertising services, which could materially and adversely affect its business, results of operations and prospects.

Actual or alleged failure to comply with data privacy and protection laws and regulations could have a serious adverse effect on Lemeng Interactive’s reputation, and discourage current and potential consumers and users from using its services and adversely affect its business.

Lemeng Interactive’s business involves some anonymous personal contact information. Concerns about Lemeng Interactive’s practices with regard to the collection, use or disclosure of personal information or other privacy-related matters, even if unfounded, could damage Lemeng Interactive’s reputation and operations. While Lemeng Interactive adopted some measures to comply with the laws and regulations relating to the protection of personal information in China, Lemeng Interactive cannot guarantee the effectiveness of these measures. Any failure or perceived failure to comply with all applicable data privacy and protection laws and regulations, any failure or perceived failure of its employees to comply with its internal control measures, may result in negative publicity and legal proceedings or regulatory actions against it, and could damage its reputation, discourage current and potential agents, consumers and service providers from using the services and subject it to fines and damages, which could have a material adverse effect on its business and results of operations.

Lemeng Interactive’s business is sensitive to general economic conditions, and any severe or prolonged downturn in the global or PRC economy could materially and adversely affect its business and financial condition.

Economic conditions in China are sensitive to global economic conditions. Since Lemeng Interactive derives, and expects to continue to derive, all of its revenue from China, its business and prospects may be affected by economic conditions in China. Lemeng Interactive relies on the spending of advertisers and, as a result, users of Lemeng Interactive’s products, for its revenue, which may in turn depend on their level of disposable income, perceived future earnings and willingness to spend. Due to uncertain global economic conditions, particularly the current trade tension between the U.S. and China, its customers may reduce the amount they spend on mobile advertising. In addition, renewed financial turmoil affecting the financial markets, banking systems or currency exchange rates may significantly restrict our ability to obtain financing in the capital markets or from financial institutions on commercially reasonable terms, or at all, which could also materially and adversely affect its business, results of operations and prospects.

Lemeng Interactive’s insurance coverage may be inadequate to cover all significant risk exposures.

Lemeng Interactive maintains limited insurance policies covering certain potential liabilities. There can be no assurance that such coverage will be available or sufficient to cover all Lemeng Interactive’s risk exposures. If insurance coverage is unavailable or insufficient to cover any such exposures, Lemeng Interactive may incur substantial costs which, in turn, could materially and adversely affect its business, financial condition and results of operations.

Failure to obtain, renew, or retain licenses, permits or approvals or failure to comply with applicable laws and regulations may affect Lemeng Interactive’s ability to conduct our business.

The licensing requirements within the PRC mobile advertising and the value-added services industry are constantly evolving and Lemeng Interactive may be subject to more stringent regulatory requirements due to changes in the political or economic policies in China. The failure to obtain and/or maintain the licenses and permits required to conduct our business may subject Lemeng Interactive to various penalties, including confiscation of revenues, imposition of fines and/or restrictions on their business operations, or the discontinuation of their operations. Any such disruption in the business operations of Lemeng’s consolidated VIE could materially and adversely affect Lemeng’s business, financial condition and results of operations. See “Regulations” for more details. However, Lemeng Interactive cannot assure you that we will be able to successfully maintain these value-added telecommunication licenses or complete the updating and renewal of the filing records of its value-added telecommunication licenses with local counterparts of the Ministry of Industry and Information Technology, or the MIIT, on a timely basis. Failure to do so may materially and adversely affect our business, financial condition, results of operations and prospects.

Besides, as of the date of this prospectus, Lemeng’s WFOE, Leshen, is in process of obtaining the registration certificate of foreign exchange. Lemeng cannot assure you that Leshen will be able to successfully obtain the above certificate on a timely basis. Failure to do so may adversely affect Lemeng’s business, results of operations and prospects.

Failure to comply with regulations on the operation and management of telecommunications services could have an adverse effect on Lemeng Interactive’s reputation, and discourage current and potential partners from cooperating with Lemeng Interactive and adversely affect Lemeng Interactive’s business.

According to the Administrative Measures on Telecommunications Business Permits promulgated by the MIIT on July 3, 2017, telecommunications business operators shall report their business operation, service quality and other information to the license issuing authority in the first quarter of each year, and the telecommunication administration shall, according to the random inspection, daily supervision and punishment records, establish a list of bad telecommunication business operations (“Bad List”) and a list of dishonest telecommunication business operations (“Dishonest List”). If a telecommunications business operator fails to submit the annual report information within the time limit required by the administration, it shall be listed in the Bad List. If a telecommunications business operator included in the Bad List is again ordered by the telecommunications administration to suspend business for rectification or revoke its business license, or under other circumstances specified by the MIIT within three years, it shall be included in the Dishonest List. One of Lemeng BJ’s subsidiaries, Lemeng XJ failed to submit on time and has been included in the Bad List. Lemeng XJ has completed the supplementary submission and could be removed from the Bad List after being confirmed by the telecommunications administration. As of the date of this prospectus, Lemeng Interactive has not received any order or notice or penalty from the local authorities nor any claims or complaints from any other third parties. The record of being listed in the Bad List and any failure to comply with all applicable regulations on the operation and management of telecommunications services, may result in a bad social reputation and have a material adverse effect on our results of operations.

Failure to comply with regulations on online publishing services could have an adverse effect on Lemeng Interactive’s business operations and financial condition.

Some mobile games jointly operated by Yishen have been launched online without the approval of the competent authorities and do not obtain the International Standard Book Number (“ISBN”). According to Administrative Provisions on Online Publishing Services and relevant regulations, an entity providing online publishing services must, before launching its games online, file an application to the competent publication administrative departments of corresponding province, autonomous region or municipality directly under the Central Government, and upon examination and approval, the application will be submitted to the State Administration of Press, Publication, Radio, Film and Television for approval. If any entity arbitrarily launches online games without approval and does not obtain the ISBN, the entity shall be ordered to stop operating related online games and be subject to a fine that is five to ten times the illegal operating income if such operating income is more than RMB 10,000, or a fine less than RMB 50,000 if such operating income is less than RMB 10,000. If the competent authority orders Yishen to stop operating related mobile games, it could have an adverse effect on Lemeng Interactive’s business operations and financial condition.

Lemeng Interactive may be involved in legal and other proceedings arising out of its operations from time to time and may face significant liabilities as a result.

Lemeng Interactive may be involved in disputes arising from its operations. These disputes may lead to various legal or other proceedings and may result in substantial costs, damages to Lemeng Interactive’s brand and reputation and a diversion of resources and management’s attention. In addition, Lemeng Interactive may have disagreements with regulatory bodies in the course of its operations which may subject it to administrative proceedings and unfavorable decrees that result in pecuniary liabilities or otherwise disrupt the business operations. We cannot assure you that Lemeng Interactive will not be involved in any major disputes or legal or other proceedings in the future. Furthermore, Lemeng Interactive seeks to structure its business in a tax efficient manner. If any of Lemeng Interactive’s arrangements is successfully challenged by the relevant tax authorities, Lemeng Interactive may incur additional tax liabilities, which could adversely affect Lemeng Interactive’s financial condition or results of operations. In addition, from time to time, Lemeng Interactive’s directors and senior management may be parties to litigation or other legal proceedings. Even though Lemeng Interactive may not be directly involved in such proceedings, such proceedings may affect Lemeng Interactive’s reputation and, consequently, adversely impact Lemeng Interactive’s business.

The global coronavirus COVID-19 pandemic may materially and adversely affect Lemeng Interactive’s results of operations and financial condition.

On March 11, 2020, the World Health Organization declared the COVID-19 outbreak a global pandemic. Many businesses and social activities in China and other countries and regions were severely disrupted in 2020. This pandemic has also caused market panics, which materially and negatively affected the global financial markets, such as the plunge of global stocks on major stock exchanges in March 2020. Such disruption slowdown of the world’s economy in 2020 and beyond had, and may continue to have, a material adverse effect on its results of operations and financial condition. Some of the customers and vendors experienced significant business disruptions and suspension of operations due to quarantine measures to contain the spread of the pandemic, which increased the likelihood of default from the customers. As of the date of this prospectus, the COVID-19 pandemic is generally considered under control in China. In light of the current circumstances, based on available information, Lemeng Interactive estimates its financial results will not be adversely affected in fiscal year 2021. However, the extent to which the COVID-19 pandemic may impact Lemeng Interactive’s business, operations and financial results from this point forward will depend on numerous evolving factors that Lemeng Interactive cannot accurately predict at this time. Lemeng Interactive is closely monitoring the development of the COVID-19 pandemic and continuously evaluating any further potential impact on its business, results of operations and financial condition. If the outbreak persists or escalates, Lemeng Interactive may be subject to further negative impact on its business operations and financial condition.

Risks Relating to Our Contractual Arrangements and Our Corporate Structure (the “VIE structure”)

If the PRC government determines that the VIE Agreements do not comply with applicable regulations, or if these regulations or their interpretations change in the future, we could be subject to severe consequences, including the nullification of the VIE Agreements and the relinquishment of our interest in our Consolidated Affiliated Entities.

Current PRC laws and regulations impose certain restrictions or prohibitions on foreign ownership of companies that engage in value-added telecommunications services and other related businesses. Under the Special Administrative Measures for Access of Foreign Investment (2021 Edition) (“Negative List (2021)”), Lemeng Interactive’s mobile internet marketing services fall into the value-added telecommunications services which is considered restricted. To comply with PRC laws and regulations, we conduct its mobile internet marketing services in China through Lemeng BJ and its subsidiaries, based on the VIE structure and a series of VIE Agreements by and among WFOE, Lemeng BJ and the Registered Shareholders. As a result of these VIE Agreements, we consolidate or combine their results of operations into our financial statements. Lemeng BJ and its subsidiaries hold the licenses, approvals and key assets that are essential for the operations of Lemeng Interactive’s mobile internet marketing services.

However, there are substantial uncertainties regarding the interpretation and application of current or future PRC laws and regulations. The relevant PRC regulatory authorities have broad discretion in determining whether the VIE structure violates PRC laws and regulations. If we are found in violation of any PRC laws or regulations, or if the VIE structure is disallowed by the relevant governmental authorities, or if the VIE Agreements among WFOE, Lemeng BJ and the Registered Shareholders are determined as illegal or invalid by any PRC court, arbitral tribunal or regulatory authorities, the relevant governmental authorities would have broad discretion in dealing with such violation, including, without limitation:

Furthermore, any of the assets under the name of any record holder of equity interest in our Consolidated Affiliated Entities, including such equity interest, may be put under court custody in connection with litigation, arbitration or other judicial or dispute resolution proceedings against that record holder. We cannot be certain that the equity interest will be disposed of in accordance with the VIE Agreements. In addition, new PRC laws, rules and regulations may be introduced to impose additional requirements that may impose additional challenges to our corporate structure and VIE Agreements. The occurrence of any of these events or the imposition of any of these penalties may result in a material and adverse effect on our ability to conduct the business. In addition, if the imposition of any of these penalties causes us to lose the rights to direct the activities of our consolidated affiliated entity and its subsidiary or the right to receive their economic benefits, we would no longer be able to consolidate the Consolidated Affiliated Entities, which could effectively eliminate the assets, revenue and net income from our balance sheet and adversely affect our results of operations, which would most likely require us to cease conducting our business and would result in the delisting of our Ordinary Shares from Nasdaq Capital Market and a significant impairment in the market value of our Ordinary Shares.

The VIE Agreements may not be as effective in providing operational control as direct ownership and the Consolidated Affiliated Entities or the Registered Shareholders may fail to perform their obligations under the VIE Agreements.

We conduct mobile internet marketing services business in China through the Consolidated Affiliated Entities, based on a series of VIE Agreements by and among WFOE, Lemeng BJ and the Registered Shareholders. Lemeng Interactive’s revenue and cash flow from its mobile internet marketing services related businesses are attributed to the Consolidated Affiliated Entities. The VIE Agreements may not be as effective as direct ownership in providing us with control over the Consolidated Affiliated Entities. Direct ownership would allow us, for example, to directly or indirectly exercise our rights as a shareholder to effect changes in the boards of directors of the Consolidated Affiliated Entities, which, in turn, could affect changes, subject to any applicable fiduciary obligations at the management level. However, under the VIE Agreements, as a legal matter, if the Consolidated Affiliated Entities or the Registered Shareholders fail to perform their respective obligations under the VIE Agreements, we may have to incur substantial costs and expend significant resources to enforce those arrangements and resort to litigation or arbitration and rely on legal remedies under PRC laws. These remedies may include seeking specific performance or injunctive relief and claiming damages, any of which may not be effective. For example, if the Registered Shareholders were to refuse to transfer their equity interest in Lemeng BJ to Leshen or Leshen’s designee when Leshen exercises the call option pursuant to the VIE Agreements, or if they were otherwise to act in bad faith toward us, we might have to take legal action to compel them to perform their respective contractual obligations. In the event we are unable to enforce these VIE Agreements or we experience significant delays or other obstacles in the process of enforcing these VIE Agreements, we may not be able to exert effective control over our Consolidated Affiliated Entities and may lose control over the assets owned by the Consolidated Affiliated Entities. As a result, we may be unable to consolidate the Consolidated Affiliated Entities in our consolidated financial statements, which could materially and adversely affect our financial condition and results of operations.

The VIE Agreements may be subject to scrutiny by the PRC tax authorities and additional taxes may be imposed. A finding that we owe additional taxes could substantially reduce our consolidated net income and the value of your investment.

According to applicable PRC laws and regulations, arrangements and transactions among related parties may be subject to challenge by the PRC tax authorities, additional taxes and interest may be imposed. We would be subject to adverse tax consequences if the PRC tax authorities were to determine that transactions under the VIE Agreements between WFOE and Lemeng BJ were not conducted on an arm’s-length basis as the PRC tax authorities have the authority to make special tax adjustments on Lemeng BJ’s ’s tax position. Such adjustments may adversely affect us by increasing Lemeng BJ’s tax expenses without reducing the tax expenses of WFOE, subjecting Lemeng BJ to late payment fees and other penalties for under-payment of taxes. Our consolidated results of operations may be adversely affected if Lemeng BJ’s tax liabilities increase or if it is subject to late payment fees or other penalties.

The Registered Shareholders may potentially have a conflict of interest with us, and they may breach their contracts with us or cause such contracts to be amended in a manner contrary to our interests.

We conduct mobile internet marketing services business through the Consolidated Affiliated Entities. The Registered Shareholders may potentially have a conflict of interest with us, and they may breach their contracts with us if they believe it would further their own interest or if they otherwise act in bad faith. We cannot assure you that when conflicts of interest arise between us and Lemeng BJ, the shareholders will act completely in our interests or that the conflicts of interest will be resolved in our favor.

In addition, the Registered Shareholders may breach or cause Lemeng BJ to breach the VIE Agreements. Currently, we do not have any arrangements to address potential conflicts of interest between these shareholders and our company, except that we may invoke the right under the equity pledge agreements with the shareholders of Lemeng BJ to enforce the equity pledge in the case of the shareholders’ breach of the VIE Agreements. For individuals who are also our directors and officers, we rely on them to abide by the laws of the Cayman Islands, which provide that directors and officers owe a fiduciary duty to the company that requires them to act in good faith and in what they believe to be the best interests of the company and not to use their position for personal gains.

The Registered Shareholders may also be involved in personal disputes with third parties or other incidents that may have an adverse effect on their respective equity interests in Lemeng BJ and the validity or enforceability of the VIE Agreements with Lemeng BJ and the Registered Shareholders. For example, in the event that any individual shareholder of Lemeng BJ divorces his or her spouse, the spouse may claim that the equity interest of Lemeng BJ held by such shareholder is part of their community property and should be divided between such shareholder and his or her spouse. If such claim is supported by the court, the relevant equity interest may be obtained by the shareholder’s spouse or another third party who is not subject to obligations under the VIE Agreements, which could result in a requirement that we deconsolidate the financial results of Lemeng Interactive. Similarly, if any of the equity interests of Lemeng BJ is inherited by a third party with whom the current VIE Agreements are not binding, we could lose our ability to consolidate the financial results of Lemeng Interactive or to incur unpredictable costs to seek to maintain such consolidation, which could cause significant disruption to our business and operations and harm our financial condition and results of operations.

Although under the current VIE Agreements, (i) Lemeng BJ’s shareholders’ spouses have executed Spousal Consent Letters under which the spouses agree not to assert any rights over the equity interest in Lemeng BJ held by these shareholders, and (ii) it is expressly provided that Lemeng BJ and its shareholders shall not assign any of their respective rights or obligations to any third party without the prior written consent of our WFOE, we cannot assure you that these undertakings and arrangements will be complied with or effectively enforced. If Lemeng BJ or the Registered Shareholders breach their contracts with us or otherwise have disputes with us, we may have to initiate legal proceedings, which involve significant uncertainty. Such disputes and proceedings may significantly disrupt our business operations, adversely affect our ability to consolidate Lemeng Interactive’s financial results and otherwise result in negative publicity. There is also substantial uncertainty as to the outcome of any such legal proceedings.

We conduct our mobile internet marketing services in the PRC through the Consolidated Affiliated Entities by way of the VIE Agreements, but certain of the terms of the VIE Agreements may not be enforceable under PRC laws.

All the agreements which constitute the VIE Agreements are governed by PRC laws and provide for the resolution of disputes through arbitration in the PRC. Accordingly, these agreements would be interpreted in accordance with PRC laws and disputes would be resolved in accordance with PRC legal procedures. The legal environment in the PRC is not as developed as in other jurisdictions and uncertainties in the PRC legal system could limit our ability to enforce the VIE Agreements. Meanwhile, there are very few precedents and little formal guidance as to how VIE Agreements in the context of a consolidated affiliate entity should be interpreted or enforced under PRC laws. There remain significant uncertainties regarding the ultimate outcome of such arbitration if legal action becomes necessary. In addition, under PRC laws, rulings by arbitrators are final, parties cannot appeal the arbitration results in courts, and 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 the VIE Agreements, or if we suffer significant time delays or other obstacles in the process of enforcing them, it would be very difficult to exert effective control over the Consolidated Affiliated Entities, and our ability to conduct our business and our financial condition and results of operations may be materially and adversely affected.

If we exercise the option to acquire equity ownership of Lemeng BJ, the ownership transfer may subject us to certain limitations and substantial costs.

Pursuant to the Regulations for the Administration of Foreign-Invested Telecommunications Enterprises (the “FITE Regulations”) promulgated by the State Council, foreign investors are not allowed to hold more than 50% of the equity interests of any company providing value-added telecommunications services, including Internet Content Provider (“ICP”) services. In addition, foreign-invested telecommunication enterprises should meet the requirements as prescribed in the relevant regulations. If the PRC laws allow foreign investors to invest in value-added telecommunications enterprises in China, we cannot assure you that we could meet the requirements as prescribed and could pass the examination and approval of the competent telecommunications authorities.

Pursuant to the VIE Agreements, WFOE, or its designated person, has the exclusive right to purchase all or any part of the equity interests in Lemeng BJ from the Registered Shareholders at the lowest price allowed by the laws and regulations of the PRC at the time of exercise and the Registered Shareholders shall return all amount of purchase price they have received to WFOE. If such a transfer takes place, the competent tax authority may require WFOE to pay enterprise income tax for ownership transfer income with reference to the market value, in which case the amount of tax could be substantial.

Our current corporate structure and business operations may be substantially affected by the newly enacted Foreign Investment Law.

On March 15, 2019, the National People’s Congress (“NPC”) promulgated the PRC Foreign Investment Law, which took effect on January 1, 2020. Since it is relatively new, substantially uncertainties exist in relation to its interpretation and implementation. The PRC Foreign Investment Law does not explicitly classify whether consolidated affiliated entities based on contractual arrangements would be deemed as foreign invested enterprises if they are ultimately “controlled” by foreign investors. However, it has a catch-all provision under definition of “foreign investment” that includes investments made by foreign investors in China through other means as provided by laws, administrative regulations or other methods prescribed by the State Council. Therefore, it still leaves leeway for future laws, administrative regulations or provisions of the State Council to provide for contractual arrangements as a form of foreign investment, at which time it will be uncertain whether the contractual arrangements will be deemed to be in violation of the market access requirements for foreign investment in the PRC and if yes, how the VIE Agreements should be dealt with.

The PRC Foreign Investment Law grants national treatment to foreign-invested entities, except for those foreign-invested entities that operate in industries specified as either “restricted” or “prohibited” from foreign investment in the Negative List (2021). The PRC Foreign Investment Law provides that (i) foreign-invested entities operating in “restricted” industries are required to obtain market entry clearance and other approvals from relevant PRC government authorities; and (ii) foreign investors shall not invest in any industries that are “prohibited” under the Negative List (2021). If VIE Agreements with Lemeng BJ are deemed as foreign investment in the future, and any business of Lemeng BJ is “restricted” or “prohibited” from foreign investment under the Negative List (2021) effective at the time, we may be deemed to be in violation of the PRC Foreign Investment Law, the VIE Agreements with Lemeng BJ may be deemed as invalid and illegal, and we may be required to unwind such VIE Agreements and/or restructure our business operations, any of which may have a material adverse effect on our business operation.

The Negative List (2021) also stipulates that if a domestic enterprise engaged in business in the prohibited investment field issues shares abroad and is listed for trading, it shall be examined and approved by the relevant competent authorities of the state. According to a press release issued by the National Development and Reform Commission (“NDRC”) in relation to the Negative List (2021), the above provisions are only applicable to the direct overseas listing of domestic enterprises engaged in the prohibited investment field. However, if relevant governmental authority determines or new future rules provides that we are required to obtain the approval, we would have to apply for such approval. There is no assurance that we will be able to obtain such approval in time or at all. If we fail to obtain the approve as required or in a timely manner, the VIE structure may be deemed illegal and ordered to be cancelled by relevant government authorities, and other administrative measures or penalties may be imposed on us, which could materially and adversely affect our business, financial condition, results of operations and the value of our Ordinary Shares.

Furthermore, if future laws, administrative regulations or provisions mandate further actions to be taken by companies with respect to existing contractual arrangements, we may face substantial uncertainties as to whether we can complete such actions in a timely manner, or at all. Failure to take timely and appropriate measures to cope with any of these or similar regulatory compliance challenges could materially and adversely affect our current corporate structure, business operations and the value of our Ordinary Shares.

Risks Related to Doing Business in China

Chinese government agencies may exert more oversight and control over offerings that are conducted overseas and foreign investment in China-based issuers, especially those in the technology field. Additional compliance procedures may be required in connection with this offering under PRC rules, regulations or policies.

We are potentially subject to significant regulation by various agencies of the Chinese government. The WFOE and the VIE and its subsidiaries are required to have, and each has, a business license issued by the PRC State Administration for Market Regulation and its local counterparts. In addition, Lemeng Interactive has obtained ICP license for provision of internet value-added services. We cannot assure you that Lemeng Interactive can successfully update or renew the licenses required for its mobile internet marketing services in a timely manner or that such license is sufficient to conduct all of its present or future mobile internet marketing services.

The Regulations on Mergers and Acquisitions of Domestic Companies by Foreign Investors, or the M&A Rules, adopted by six PRC regulatory agencies in 2006 and amended in 2009, requires an overseas special purpose vehicle formed for listing purposes through acquisitions of PRC domestic companies and controlled by PRC companies or individuals to obtain the approval of the CSRC prior to the listing and trading of such special purpose vehicle’s securities on an overseas stock exchange. Substantial uncertainty remains regarding the scope and applicability of the M&A Rules to offshore special purpose vehicles. Although we believe that CSRC’s approval under the M&A Rules is not required for the listing and trading of our Class B Shares on Nasdaq in the context of this offering, we cannot assure you that relevant PRC governmental agencies, including the CSRC, would reach the same conclusion as we do.

On December 24, 2021, the CSRC released the Administrative Provisions of the State Council Regarding the Overseas Issuance and Listing of Securities by Domestic Enterprises (Draft for Comments) (the “Draft Administrative Provisions”) and the Measures for the Overseas Issuance of Securities and Listing Record-Filings by Domestic Enterprises (Draft for Comments) (the “Draft Filing Measures,” collectively with the Draft Administrative Provisions, the “Overseas Issuance and Listing Regulations Drafts”), both of which have a comment period that expired on January 23, 2022. The Overseas Issuance and Listing Regulations Drafts lay out the filing regulation arrangement for both direct and indirect overseas listing, and clarify the determination criteria for indirect overseas listing in overseas markets. Among other things, if a domestic enterprise intends to indirectly offer and list securities in an overseas market, the record-filing obligation is with a major operating entity incorporated in the PRC and such filing obligation shall be completed within three working days after the overseas listing application is submitted. The required filing materials for an initial public offering and listing shall include but not limited to: regulatory opinions, record-filing, approval and other documents issued by competent regulatory authorities of relevant industries (if applicable); and security assessment opinion issued by relevant regulatory authorities (if applicable).

The Overseas Issuance and Listing Regulations Drafts, if enacted, may subject us to additional compliance requirement in the future, and we cannot assure you that we will be able to get the clearance of filing procedures under the Overseas Issuance and Listing Regulations Drafts on a timely basis, or at all. Any failure of us to fully comply with new regulatory requirements may significantly limit or completely hinder our ability to offer or continue to offer our ordinary shares, cause significant disruption to our business operations, and severely damage our reputation, which would materially and adversely affect our financial condition and results of operations and cause our ordinary shares to significantly decline in value or become worthless. On December 27, 2020, the MOFCOM, and the NDRC promulgated the Special Administrative Measures for Access of Foreign Investment (2021 Edition), or the Negative List (2021). The Negative List (2021) stipulates that if a domestic enterprise engaged in business in the prohibited investment field issues shares abroad and is listed for trading, it shall be examined and approved by the relevant competent authorities of the state. According to a press release issued by the NDRC in relation to the Negative List (2021), the above provisions are only applicable to the direct overseas listing of domestic enterprises engaged in the prohibited investment field. However, if the CSRC or other regulatory agencies later promulgate new rules or explanations requiring that we should obtain such approvals for this offering and any follow-on offering, we may be unable to obtain such approvals which could significantly limit or completely hinder our ability to offer or continue to offer securities to our investors. The CSRC or other PRC regulatory agencies may also take actions requiring us, or making it advisable for us, to halt this offering before the settlement and delivery of the ordinary shares that we are offering. Consequently, if you engage in market trading or other activities in anticipation of and prior to the settlement and delivery of the ordinary shares we are offering, you would be doing so at the risk that the settlement and delivery may not occur. Any uncertainties or negative publicity regarding such approval requirements could have a material adverse effect on our ability to complete this offering or any follow-on offering of our securities or the market for and market price of our ordinary shares.

On October 29, 2021, the Cyberspace Administration of China (“CAC”) published the Draft Outbound Data Transfer Security Assessment Measures (the “Draft Outbound Data Transfer Security Assessment Measures”). On July 7, 2022, the Outbound Data Transfer Security Assessment Measures (the “Outbound Data Transfer Security Assessment Measures”) formally promulgated, which became effective from September 1, 2022. The Outbound Data Transfer Security Assessment Measures stipulates the circumstances under which security assessment of outbound data transfers should be declared, including: (i) outbound transfer of important data, which means any data, the tampering, damage, leakage, or illegal acquisition or use of which, if it happens, may endanger national security, the operation of the economy, social stability, public health and security, by a data processor; (ii) outbound transfer of personal information by a critical information infrastructure operator or a personal information processor who has processed the personal information of more than 1,000,000 people; (iii) outbound transfer of personal information by a personal information processor who has made outbound transfers of the personal information of 100,000 people cumulatively or the sensitive personal information of 10,000 people cumulatively since 1 January of the previous year; or (iv) other circumstances where an application for the security assessment of an outbound data transfer is required as prescribed by the national cyberspace administration authority. On November 14, 2021, the Cyberspace Administration of China published the Administrative Regulations on Internet Data Security (Draft for Comment), or the “Administrative Regulations Draft”, which reiterates that data handlers that process the personal information of more than one million users listing in a foreign country should apply for a cybersecurity review. On December 28, 2021, the Cybersecurity Review Measures (2021 version) was promulgated and became effective on February 15, 2022, which iterates that any “online platform operators” controlling personal information of more than one million users which seeks to list in a foreign stock exchange should be subject to cybersecurity review. The Cybersecurity Review Measures (2021 version), further elaborates the factors to be considered when assessing the national security risks of the relevant activities, including, among others, (i) the risk of core data, important data or a large amount of personal information being stolen, leaked, destroyed, and illegally used or exited the country; and (ii) the risk of critical information infrastructure, core data, important data or a large amount of personal information being affected, controlled, or maliciously used by foreign governments after listing abroad. Although Lemeng Interactive may be considered as an “online platform operator,” “data processor,” or “data handler” as mentioned in the relevant regulations, we do not believe we or Lemeng Interactive would constitute an “operator of critical information infrastructure” or our or Lemeng Interactive’s business and activities would affect or may affect national security, however, the Cybersecurity Review Measures (2021 version) was recently adopted, and the Administrative Regulations Draft are in the process of being formulated, we do not know what regulations will be adopted or how such regulations will affect us and our listing on Nasdaq. As there remains significant uncertainty in the interpretation and enforcement of relevant PRC cybersecurity laws and regulations, we could be subject to cybersecurity review, and if so, we may not be able to pass such review in relation to this offering. In addition, we could become subject to enhanced cybersecurity review or investigations launched by PRC regulators in the future. Any failure or delay in the completion of the cybersecurity review procedures or any other non-compliance with the related laws and regulations may result in fines or other penalties, including suspension of business, website closure, and revocation of prerequisite licenses, as well as reputational damage or legal proceedings or actions against us, which may have material adverse effect on our business, financial condition or results of operations. As of the date of this prospectus, we have not been involved in any investigations on cybersecurity review initiated by the CAC or related governmental regulatory authorities, and we have not received any inquiry, notice, warning, or sanction in such respect.

Our business is subject to various government regulations and regulatory interference. We may incur increased costs necessary to comply with existing and newly adopted laws and regulations or penalties for any failure to comply. Furthermore, given recent statements by the Chinese government indicating an intent to exert more oversight and control over offerings that are conducted overseas, although as of the date of this prospectus, we have not been involved in any investigations initiated by the applicable governmental regulatory authorities, nor have we received any inquiry, notice, warning, or sanction in such respect, it is uncertain whether or when we might be required to obtain permission from any related PRC government to list our shares on Nasdaq, and even if such permission is obtained, whether it will be later denied or rescinded, which could significantly limit or completely hinder our ability to offer or continue to offer our ordinary shares to investors and cause the value of our ordinary shares to significantly decline or be worthless. If the WFOE and the VIE and its subsidiaries (i) do not receive or maintain such permissions or approvals, should the approval be required in the future by the PRC government, (ii) inadvertently conclude that such permissions or approvals are not required, or (iii) applicable laws, regulations, or interpretations change and we are required to obtain such permissions or approvals in the future, our operations and financial conditions could be materially adversely affected, and our ability to offer securities to investors could be significantly limited or completely hindered and the securities currently being offered may substantially decline in value and be worthless.

If Lemeng Interactive fails to prevent security breaches, improper access to or disclosure of Lemeng Interactive’s data or user data, or other hacking and attacks, Lemeng Interactive may lose users, and its business, reputation, financial condition and results of operations may be materially and adversely affected.

Lemeng Interactive has employed significant resources to develop its security measures against breaches. Although Lemeng Interactive has not experienced any material disruptions, outages, cyberattacks, attempts to breach its systems, or other similar incidents and do not expect the occurrence of such incidents in the future, Lemeng Interactive’s cybersecurity measures may not detect, prevent or control all attempts to compromise its systems, including distributed denial-of-service attacks, viruses, malicious software, break-ins, phishing attacks, social engineering, security breaches or other attacks and similar disruptions that may jeopardize the security of information stored in and transmitted by its systems or that it otherwise maintains. Breaches of its cybersecurity measures could result in unauthorized access to its systems, misappropriation of information or data, deletion or modification of customer information, or a denial-of-service or other interruption to its business operations. As techniques used to obtain unauthorized access to or sabotage systems change frequently and may not be known until launched against Lemeng Interactive or its supporting service providers, Lemeng Interactive may be unable to anticipate, or implement adequate measures to protect against, these attacks.

Lemeng Interactive is likely in the future to be subject to these types of attacks. If Lemeng Interactive is unable to avert these attacks and security breaches, it could be subject to significant legal and financial liabilities, its reputation would be harmed and it could sustain substantial revenue loss from lost sales and customer dissatisfaction. Lemeng Interactive may not have the resources or technical sophistication to anticipate or prevent rapidly evolving types of cyber-attacks. Cyber-attacks may target Lemeng Interactive, its suppliers, customers or other participants, or the internet infrastructure on which it depends. Actual or anticipated attacks and risks may cause Lemeng Interactive to incur significantly higher costs, including costs to deploy additional personnel and network protection technologies, train employees, and engage third-party experts and consultants. As Lemeng Interactive does not carry cybersecurity insurance, it will not be able to mitigate such risks to any third party. Cybersecurity breaches would not only harm Lemeng Interactive’s reputation and business, but also could materially decrease its revenue and net income.

The VIE or the holding company may be subject to approval or other requirement from PRC authorities in connection with this offering, and, if required, we cannot assure you that we will be able to obtain such approval or satisfy such requirement. If we failed to obtain such approval or satisfy such requirement, we may not able to continue listing on U.S. exchange, continue to offer securities to investors, or materially affect the interest of the investors and the value of our Ordinary Shares may decrease or become worthless.

Our company, our subsidiaries, and the VIEs are currently not required to obtain permission or approval from the PRC authorities including CSRC or CAC for the VIE’s operation, nor have we, our subsidiaries, or VIE applied for or received any denial for the VIE’s operation. However, recently, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council jointly issued the “Opinions on Severely Cracking Down on Illegal Securities Activities According to Law,” or the Opinions, which was made available to the public on July 6, 2021. The Opinions emphasized the need to strengthen the administration over illegal securities activities, and the need to strengthen the supervision over overseas listings by Chinese companies. Effective measures, such as promoting the construction of relevant regulatory systems will be taken to deal with the risks and incidents of China-concept overseas listed companies, and cybersecurity and data privacy protection requirements and similar matters. The Opinions and any related implementing rules to be enacted may subject us to compliance requirement in the future. On December 24, 2021, the CSRC released the Overseas Issuance and Listing Regulations Drafts. The Overseas Issuance and Listing Regulations Drafts lay out the filing regulation arrangement for both direct and indirect overseas listing, and clarify the determination criteria for indirect overseas listing in overseas markets. Among other things, if a domestic enterprise intends to indirectly offer and list securities in an overseas market, the record-filing obligation is with a major operating entity incorporated in the PRC and such filing obligation shall be completed within three working days after the overseas listing application is submitted. It is uncertain when the final regulations will be issued and take effect, how they will be enacted, interpreted or implemented and whether it applies to listed companies. If we are required to make filing for the offering, we will need to comply with the aforesaid filing requirements. Moreover, we could be subject to the filing requirement for future share offering, major changes in our company and other scenario as required under the Overseas Issuance and Listing Regulations Drafts.

Given the current regulatory environment in the PRC, we are still subject to the uncertainty of interpretation and enforcement of the rules and regulations in the PRC, which can change quickly with little advance notice, and any future actions of the PRC authorities. It is uncertain when and whether we will be required to obtain permission from the PRC government to list on U.S. exchanges or enter into VIE agreements (including retroactively), and even if such permission is obtained, whether it will be denied or rescinded. As a result, our operations could be adversely affected, directly or indirectly, by existing or future laws and regulations relating to its business or industry.

Furthermore, there are substantial uncertainties regarding the interpretation and application of the laws and regulations governing our and Lemeng Interactive’s business, or the enforcement and performance of the VIE Agreements and the VIE structure. These laws and regulations may be subject to change, and their official interpretation and enforcement may involve substantial uncertainty. New laws and regulations that affect existing and proposed future businesses may also be applied retroactively. Due to the uncertainty and complexity of the regulatory environment, we cannot assure you that we and Lemeng Interactive would always be in full compliance with applicable laws and regulations, the violation of which may have adverse effect on our and on Lemeng Interactive’s business and reputation. If the PRC government determines that the VIE Agreements and the VIE structure do not comply with applicable laws, it could revoke Lemeng Interactive’s business and operating licenses, require Lemeng Interactive to discontinue or restrict the VIEs’ operations, restrict Lemeng Interactive’ right to collect revenues, require Lemeng Interactive to restructure the operations, impose additional conditions or requirements with which Lemeng Interactive may not be able to comply, impose restrictions on our business operations, or take other regulatory or enforcement actions against Lemeng Interactive that could be harmful to their business. Any of these or similar occurrences could significantly disrupt our or Lemeng Interactive’s business operations or restrict Lemeng Interactive from conducting a substantial portion of their business operations, which could materially and adversely affect Lemeng Interactive’s business, financial condition and results of operations. In addition, if the PRC government determines that the contractual arrangements constituting part of the VIE structure do not comply with PRC regulations, or if these regulations change or are interpreted differently in the future, the securities we are registering may decline in value or become worthless if the determinations, changes, or interpretations result in your inability to assert contractual control over the assets of Leshen or Lemeng Interactive, which conducts all or substantially all of our operations.

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. Lemeng cannot predict what effect the interpretation of existing or new PRC laws or regulations may have on our business.

The PRC legal system is a civil law system based on written statutes. Prior court decisions are encouraged to be used for reference but it remains unclear to what extent the prior court decisions may impact the current court ruling as the encouragement policy is new and there is limited judicial practice in this regard. Since a large number of laws and regulations are relatively new and the PRC legal system continues to rapidly evolve, the interpretations of many laws, regulations and rules are not always uniform and the enforcement of these laws, regulations and rules involves uncertainties.

In 1979, the PRC government began to promulgate a comprehensive system of laws and regulations governing economic matters in general. The overall effect of legislation over the past four decades has significantly enhanced the protections afforded to various forms of foreign investments in China. However, China has not developed a fully integrated legal system, and recently enacted laws and regulations may not sufficiently cover all aspects of economic activities in China. In particular, the interpretation and enforcement of these laws and regulations involve uncertainties. Since PRC administrative and court authorities have significant discretion in interpreting and implementing statutory provisions and contractual terms, it may be difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection we enjoy. These uncertainties may affect our judgment on the relevance of legal requirements and our ability to enforce our contractual rights or tort claims. In addition, the regulatory uncertainties may be exploited through unmerited or frivolous legal actions or threats in attempts to extract payments or benefits from us.

Furthermore, the PRC legal system is based in part on government policies and internal rules, some of which are not published on a timely basis or at all and may have retroactive effect. As a result, we may not be aware of our violation of any of these policies and rules until sometime after the violation. In addition, any administrative and court proceedings in China may be protracted, resulting in substantial costs and diversion of resources and management attention.

From time to time, we may have to resort to administrative and court proceedings to enforce our legal rights. However, since PRC administrative and court authorities have significant discretion in interpreting and implementing statutory and contractual terms, it may be more difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection we enjoy than in more developed legal systems. Furthermore, the PRC legal system is based in part on government policies and internal rules (some of which are not published in a timely manner or at all) that may have retroactive effect. As a result, we may not be aware of our violation of these policies and rules until sometime after the violation. Such uncertainties, including uncertainty over the scope and effect of its contractual, property (including intellectual property) and procedural rights, and any failure to respond to changes in the regulatory environment in China could materially and adversely affect our business and impede our ability to continue our operations.

We are also subject to the legal and operational risks associated with being based in and having substantially all operations in China. These risks may result in material changes in operations, or a complete hindrance of Lemeng’s ability to offer or continue to offer its securities to investors, and could cause the value of Lemeng’s securities to significantly decline or become worthless. Recently, the PRC government initiated a series of regulatory actions and statements to regulate business operations in China with little advance notice, including cracking down on illegal activities in the securities market, enhancing supervision over China-based companies listed overseas using variable interest entity structure, adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement. On July 6, 2021, the General Office of the Communist Party of China Central Committee and the General Office of the State Council jointly issued an announcement to crack down on illegal activities in the securities market and promote the high-quality development of the capital market, which, among other things, requires the relevant governmental authorities to strengthen cross-border oversight of law-enforcement and judicial cooperation, to enhance supervision over China-based companies listed overseas, and to establish and improve the system of extraterritorial application of the PRC securities laws. On December 28, 2021, Cybersecurity Review Measures (2021 version) was issued, which became effective on February 15, 2022. The Anti-Monopoly Law, which took effect in 2008 and was amended on June 24, 2022, which amendment became effective August 1, 2022 (the “Anti-Monopoly Law”), established additional procedures and requirements that could make merger and acquisition activities by foreign investors more time-consuming and complex. As of the date of this prospectus, the above regulations have not impacted our ability to conduct the business, accept foreign investments, or list on a U.S. or other foreign exchange; however, there are uncertainties in the interpretation and enforcement of these new laws and guidelines, which could materially and adversely impact our overall business and financial outlook.

The Chinese government exerts substantial influence over the manner in which we must conduct our business activities and may intervene or influence our operations at any time, which could result in a material change in our operations and the value of our Class B Shares.

The Chinese government has exercised and continues to exercise substantial control over virtually every sector of the Chinese economy through regulation and state ownership. Our ability to operate in China may be harmed by changes in its laws and regulations, including those relating to securities regulation, data protection, cybersecurity and mergers and acquisitions and other matters. The central or local governments of these jurisdictions may impose new, stricter regulations or interpretations of existing regulations that would require additional expenditures and efforts on our part to ensure our compliance with such regulations or interpretations.

Government actions in the future could significantly affect economic conditions in China or particular regions thereof and could require us to materially change our operating activities or divest ourselves of any interests we hold in Chinese assets. Our business may be subject to various government and regulatory interference in the provinces in which we operate. We may incur increased costs necessary to comply with existing and newly adopted laws and regulations or penalties for any failure to comply. Our operations could be adversely affected, directly or indirectly, by existing or future laws and regulations relating to our business or industry.

Given recent statements by the Chinese government indicating an intent to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers, any such action could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or become worthless.

The CSRC may exert more oversight and control over offerings that are conducted overseas and foreign investment in China-based issuers, especially those in the technology field. Additional compliance procedures may be required in connection with this offering. As a result, we face uncertainty about future actions by the PRC government that could significantly affect our ability to offer or continue to offer securities to investors and cause the value of our securities to significantly decline or be worthless.

On July 6, 2021, the General Office of the Communist Party of China Central Committee and the General Office of the State Council jointly issued a document to crack down on illegal activities in the securities market and promote the high-quality development of the capital market, which, among other things, requires the relevant governmental authorities to strengthen cross-border oversight of law-enforcement and judicial cooperation, to enhance supervision over China-based companies listed overseas, and to establish and improve the system of extraterritorial application of the PRC securities laws. Since this document is relatively new, uncertainties still exist in relation to how soon legislative or administrative regulation making bodies will respond and what existing or new laws or regulations or detailed implementations and interpretations will be modified or promulgated, if any, and the potential impact such modified or new laws and regulations will have on our Chinese operations.

Further, Chinese government continues to exert more oversight and control over Chinese technology firms. On July 2, 2021, Chinese cybersecurity regulator announced, that it had begun an investigation of Didi Global Inc. (NYSE: DIDI) and two days later ordered that the company’s application be removed from smartphone application stores. On July 5, 2021, the Chinese cybersecurity regulator launched the same investigation on two other Internet platforms, China’s Full Truck Alliance of Full Truck Alliance Co. Ltd. (NYSE: YMM) and BOSS Zhipin of Kanzhun Limited (Nasdaq: BZ). On July 24, 2021, the General Office of the Communist Party of China Central Committee and the General Office of the State Council jointly released the Guidelines for Further Easing the Burden of Excessive Homework and Off-campus Tutoring for Students at the Stage of Compulsory Education, pursuant to which foreign investment in such firms via mergers and acquisitions, franchise development, and variable interest entities are banned from this sector.

Therefore, China Securities Regulatory Commission and other Chinese government agencies may exert more oversight and control over offerings that are conducted overseas and foreign investment in China-based issuers, especially those in the technology filed. Additional compliance procedures may be required in connection with this offering and Lemeng Interactive’s business operations, and, if required, we cannot predict whether Lemeng Interactive will be able to obtain such approval. As a result, we face uncertainty about future actions by the PRC government that could significantly affect our ability to offer or continue to offer securities to investors and cause the value of our Ordinary Shares to significantly decline or be worthless.

We may be subject to PRC laws relating to the collection, use, sharing, retention, security, and transfer of confidential and private information, such as personal information and other data. These laws continue to develop, and the PRC government may adopt other rules and restrictions in the future. Non-compliance could result in penalties or other significant legal liabilities.

The Cybersecurity Law, which was adopted by the National People’s Congress on November 7, 2016 and came into force on June 1, 2017, and the Cybersecurity Review Measures (2020 Version), which were promulgated on April 13, 2020, provide that personal information and important data collected and generated by a critical information infrastructure operator in the course of its operations in China must be stored in China, and if a critical information infrastructure operator purchases internet products and services that affect or may affect national security, it should be subject to cybersecurity review by the CAC. In addition, a cybersecurity review is required where critical information infrastructure operators, or the “CIIOs,” purchase network-related products and services, which products and services affect or may affect national security. On December 28, 2021, the Cybersecurity Review Measures (2021 Version) was promulgated and became effective on February 15, 2022 and the Cybersecurity Review Measures (2020 Version) was repealed at the same time. The Cybersecurity Review Measures (2021 Version) iterates that the procurement of any network product or service by CIIOs or the conducting of data processing activities by online platform operators, that affects or may affect national security, shall be subject to a cybersecurity review and any online platform operators controlling personal information of more than 1 million users which seeks to list in a foreign stock exchange should also be subject to cybersecurity review.

On June 10, 2021, the Standing Committee of the National People’s Congress promulgated the Data Security Law which took effect on September 1, 2021. The Data Security Law requires that data shall not be collected by theft or other illegal means, and it also provides that a data classification and hierarchical protection system. The data classification and hierarchical protection system protects data according to its importance in economic and social development, and the damages it may cause to national security, public interests, or the legitimate rights and interests of individuals and organizations if the data is falsified, damaged, disclosed, illegally obtained or illegally used, which protection system is expected to be built by the state for data security in the near future. And on November 14, 2021, the CAC published the Administrative Regulations Draft. The Administrative Regulations Draft provide that data processing operators engaging in data processing activities that affect or may affect national security must be subject to the cybersecurity review. According to the Cybersecurity Review Measures (2021 Version) and the Administrative Regulations Draft, a cybersecurity review is conducted by the CAC, to assess potential national security risks that may be brought about by any procurement, data processing, or overseas listing. The state establishes a data classification protection system. According to the impact and importance of data on national security, public interests or the legitimate rights and interests of individuals and organizations, data are divided into general data, important data and core data, and different protection measures are taken for different levels of data. The state focuses on the protection of personal information and important data, and strictly protects core data. The Cybersecurity Review Measures (2021 Version) and the Administrative Regulations Draft further require that online platform operators and data processing operators that possess personal data of at least one (1) million users must apply for a cybersecurity review, if they plan to conduct listings in foreign countries.

While the Cybersecurity Review Measures (2021 Version) was recently adopted and the Administrative Regulations Draft has been released for public comment, and their implementation provisions and anticipated adoption or effective date remains substantially uncertain and may be subject to change. Due to the lack of further interpretations, the exact scope of what constitute a “CIIO,” “online platform operators,” “data processors,” or “data handlers” remains unclear. Further, the PRC government authorities may have wide discretion in the interpretation and enforcement of these laws. It also remains uncertain whether any future regulatory changes would impose additional restrictions on companies like Lemeng Interactive. We do not believe our or Lemeng Interactive’s business and activities would affect or may affect national security or we and Lemeng Interactive are among the “operators of critical information infrastructure” as mentioned above. However, as of the date of this prospectus, Lemeng Interactive has not received any notice from any authorities identifying it as a CIIO or an online platform operator or requiring it to undertake a cybersecurity review by the CAC. Further, Lemeng Interactive has not been subject to any penalties, fines, suspensions, investigations from any competent authorities for violation of the regulations or policies that have been issued by the CAC to date. As the interpretation or implementation of those rules and whether the PRC regulatory agencies, including the CAC, may adopt new laws, regulations, rules, or detailed implementation and interpretation related to the Cybersecurity Review Measures (2021 Version) and the Administrative Regulations Draft, there is no assurance that Lemeng Interactive would not be subject to the cybersecurity review or other governmental procedures under those rules. If any such new laws, regulations, rules, or implementation and interpretation come into effect, Lemeng Interactive expects to take all reasonable measures and actions to comply. We cannot assure you that Lemeng Interactive can fully or timely comply with such laws should they be deemed applicable to its operations. Lemeng Interactive may be required to suspend new user registration in China or experience other disruptions to its operations should it be required to have a cybersecurity review by the CAC. Any cybersecurity review could also result in negative publicity with respect to Lemeng Interactive and diversion of its managerial and financial resources. There is no certainty as to how such review or prescribed actions would impact its operations and it cannot guarantee that any clearance can be obtained or any actions that may be required for our listing on the Nasdaq Capital Market and the offering as well can be taken in a timely manner, or at all.