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Global Backbone Technology Ltd. – IPO: ‘F-1’ on 9/14/22

On:  Wednesday, 9/14/22, at 6:01am ET   ·   Accession #:  1829126-22-16848   ·   File #:  333-267406

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

 9/14/22  Global Backbone Technology Ltd.   F-1                   15:6.1M                                   Empire Filings/FA

Document/Exhibit                   Description                      Pages   Size 

 1: F-1         Registration Statement by a Foreign Issuer          HTML   2.05M 
 2: EX-1.1      Underwriting Agreement or Conflict Minerals Report  HTML    510K 
 3: EX-3.1      Articles of Incorporation/Organization or Bylaws    HTML     89K 
 4: EX-4.1      Instrument Defining the Rights of Security Holders  HTML      7K 
 5: EX-4.2      Instrument Defining the Rights of Security Holders  HTML    131K 
 6: EX-5.1      Opinion of Counsel re: Legality                     HTML     27K 
 7: EX-8.1      Opinion of Counsel re: Tax Matters                  HTML     36K 
 8: EX-10.2     Material Contract                                   HTML    183K 
 9: EX-14.1     Code of Ethics                                      HTML     46K 
10: EX-21.1     Subsidiaries List                                   HTML      7K 
11: EX-23.4     Consent of Expert or Counsel                        HTML      8K 
15: EX-FILING FEES  Exhibit 107                                     HTML     48K 
12: EX-99.1     Miscellaneous Exhibit                               HTML      8K 
13: EX-99.2     Miscellaneous Exhibit                               HTML      8K 
14: EX-99.3     Miscellaneous Exhibit                               HTML      8K 

As filed with the Securities and Exchange Commission on September 13, 2022

Registration No. 333-          

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM F-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

Global Backbone Technology, Ltd

(Exact name of Registrant as specified in its charter)

Not Applicable

(Translation of Registrant’s name into English)

Tel: +

(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

Cogency Global, Inc.

122 East 42nd st., 18th Floor
New York, NY 10168
Tel: +1-212-947-7200

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

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

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, 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, please 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, as amended, 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 may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted.

GLOBAL BACKBONE TECHNOLOGY, LTD

1,250,000 Ordinary Shares

This is the initial public offering of the ordinary shares of Global Backbone Technology, Ltd, a Cayman Islands exempted company. We are a holding company incorporated in the Cayman Islands with operations conducted by our subsidiaries based in Hong Kong and China. Unless the context otherwise indicates, all references to “we,” “us,” “our,” “Company,” “Registrant” or similar terms used in this prospectus refer to Global Backbone Technology, Ltd, a Cayman Islands exempted company, and its subsidiaries on a consolidated basis. All references to “Floade” or to “our Hong Kong subsidiary” are to our direct wholly-owned subsidiary, Floade Technology Company Limited, a Hong Kong corporation. All references to “Feizhiyue” or “our PRC subsidiary” are to Zhengzhou Feizhiyue Automobile Sales Co., Ltd, a PRC corporation and the wholly-owned subsidiary of Floade. It is currently estimated that the initial public offering price per ordinary share will be between US$4.00 and US$5.00. Currently, no public market exists for our ordinary shares. We intend to apply to list our ordinary shares to be listed on the Nasdaq Capital Market under the symbol “                 ”. There is no guarantee or assurance that our ordinary shares will be approved for listing on Nasdaq. If our shares are approved for listing on Nasdaq, we will register our ordinary shares under the Securities Exchange Act of 1934, as amended.

We are an “emerging growth company”, as that term is used in the Jumpstart Our Business Startups Act of 2012, and will be subject to reduced public company reporting requirements.

Investing in our ordinary shares is highly speculative and involves a significant degree of risk. See “Risk Factors” beginning on page 17 of this prospectus for a discussion of information that should be considered before making a decision to purchase our ordinary shares.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

We have granted the underwriters the right to purchase up to an additional 187,500 ordinary shares to cover over-allotments.

Investors in our ordinary shares are not purchasing equity securities of our subsidiary that has substantive business operations in China but instead are purchasing equity securities of a Cayman Islands holding company. We are a Cayman Islands holding company that conducts all of our operations and operates our business in China through our PRC subsidiary. Such structure involves unique risks to investors in our ordinary shares. Although we own and control our PRC operating subsidiary, investors in this offering may never hold equity interests directly in our operating entity.

We face various legal and operational risks and uncertainties related to being based in and having all of our operations in China. The PRC government has significant authority to exert influence on the ability of a China-based company, such as us, to conduct its business, accept foreign investments or list on an U.S. or other foreign exchanges. For example, we face risks associated with regulatory approvals of offshore offerings, anti-monopoly regulatory actions, and oversight on cybersecurity and data privacy. Such risks could result in a material change in our operations and/or the value of our ordinary shares or could significantly limit or completely hinder our ability to offer or continue to offer ordinary shares and/or other securities to investors and cause the value of such securities to significantly decline or be worthless. For a detailed description of risks related to doing business in China, see generally, “Risk Factors — Risks Related to Doing Business in China.”

The PRC government has significant oversight and discretion over the conduct of our business and may intervene with or influence our operations as the government deems appropriate to further regulatory, political and societal goals. The PRC government has recently published new policies that significantly affected certain industries such as the internet industry, and we cannot rule out the possibility that it will in the future release regulations or policies regarding our industry that could adversely affect our business, financial condition and results of operations. Furthermore, the PRC government has recently indicated an intent to exert more oversight and control over overseas securities offerings and other capital markets activities and foreign investment in China-based companies like us. Any such action, once taken by the PRC government, 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 in extreme cases, become worthless. Recently, the PRC government initiated a series of regulatory actions and made a number of public statements on the regulation of 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 a variable interest entity structure, adopting new measures to extend the scope of cybersecurity reviews, and expanding efforts in anti-monopoly enforcement. Specifically, the Measures for Cybersecurity Review (2021 version) was promulgated by the Cyberspace Administration of China, or the CAC on December 28, 2021, and became effective on February 15, 2022, which requires that any “online platform operators” controlling personal information of more than one million users which seeks to list in a foreign stock exchange should also be subject to cybersecurity review. We cannot assure you that we will not be deemed as an “online platform operator” as defined in the Measures for Cybersecurity Review, even though we do not operate an online platform that controls personal user information. We also do not believe that we are directly subject to these regulatory actions or statements, as we do not have a variable interest entity structure and our business does not involve the control or collection of user data, implicate cybersecurity, or involve any other type of restricted industry. Because these statements and regulatory actions are new, however, it is highly uncertain how soon legislative or administrative regulation making bodies in China will respond to them, or what existing or new laws or regulations or detailed implementation rules and interpretations will be modified or promulgated, if any, or the potential impact such modified or new laws and regulations will have on our daily business operations or our ability to accept foreign investments and continue to be listed on an U.S. exchange. In addition, Chinese regulatory authorities could change the rules and regulations regarding foreign ownership in the industry in which we operate, which 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. New regulations restricting or forbidding foreign ownership in our industry could cause the value of our securities to significantly decline or to become worthless. If the CAC or other regulatory agencies later promulgate new rules or explanations requiring that we obtain their 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 on a U.S. or any other foreign exchanges. The CAC 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. Please see: (i) “Risk Factor — If the Chinese government were to impose new requirements for approval from the PRC Authorities to issue our ordinary shares to foreign investors or list on a foreign exchange, 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 be worthless;” and (ii) “Risk Factor -- If the Chinese government chooses to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers, 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 be worthless.”

Pursuant to the Holding Foreign Companies Accountable Act (“HFCAA”), the Public Company Accounting Oversight Board (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 People’s Republic of China because of a position taken by one or more authorities in mainland China; and (2) Hong Kong, a Special Administrative Region and dependency of the PRC, because of a position taken by one or more authorities in Hong Kong. In addition, the PCAOB’s report identified the specific registered public accounting firms which are subject to these determinations. Our registered public accounting firm, Wei, Wei & Co., LLP, 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, if the PCAOB is not able to fully conduct inspections of our auditor’s work papers in China, 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 may be prohibited under the HFCAA. See Risk Factor –” Although the audit report included in this prospectus was issued by U.S. auditors who are currently inspected by the PCAOB, if it is later determined that the PCAOB is unable to inspect or investigate our auditor completely, investors would be deprived of the benefits of such inspection and our ordinary shares may be delisted or prohibited from trading.” Under the HFCAA, our securities may be prohibited from trading on the Nasdaq or other U.S. stock exchanges if our auditor is not inspected by the PCAOB for three consecutive years, and this ultimately could result in our Ordinary Shares being delisted. Furthermore, on June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act (“AHFCAA”), which, if enacted, would amend the HFCAA 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.

We do not have any specific cash management policies that dictate how funds are transferred between the Company, its subsidiaries, and investors. The structure of cash flows within our organization, and as summary of the applicable regulations, is as follows:

1. Our equity structure is a direct holding structure, that is, the overseas entity to be listed in the U.S., Global Backbone Technology, Ltd (“GBT Cayman”), directly controls our domestic operating entity Zhengzhou Feizhiyue Auto Sales Co., Ltd. (“Feizhiyue”) through the Hong Kong company, Floade Technology Company Limited (“Floade”). See “Corporate Information” for additional details.

2. Within our direct holding structure, the cross-border transfer of funds within our corporate group is legal and compliant with the laws and regulations of the PRC. After foreign investors’ funds enter GBT Cayman at the close of this offering, the funds can be directly transferred to Floade, and then transferred to our operating entity in the PRC.

If the Company intends to distribute dividends, the Company will transfer the dividends to Floade in accordance with the laws and regulations of the PRC, and then Floade will transfer the dividends to GBT Cayman, and the dividends will be distributed from GBT Cayman to all shareholders respectively in proportion to the shares they hold, regardless of whether the shareholders are U.S. investors or investors in other countries or regions.

3. Historically, GBT Cayman, has received equity financing from its shareholders to fund business operations of our PRC subsidiary. In 2020, we raised cash proceeds of $1,615,910 in a private offering to investors in China. These investors paid their subscription prices in RMB directly to our PRC subsidiary. (Please see, Consolidated Statements of Changes in Stockholders’ Equity at page F-4 – “Sale of common shares”; and Notes to Consolidated Financial Statements, Note 17, at page F-22 – “Receivable from subsidiaries.”) In the reporting periods presented in this Prospectus, no cash and other asset transfers have occurred among the Company and its subsidiaries; and no dividends or distributions of a subsidiary has been made to the Company. To date, no dividends or distributions have been made from GBT Cayman or its Hong Kong subsidiary, Floade, to investors. In addition, our PRC operating subsidiary, Feizhiyue, has not made any dividends or distributions to investors. For the foreseeable future, the Company intends to use the earnings for development of its business. As a result, we do not expect to pay any cash dividends.

4. Our PRC subsidiary’s ability to distribute dividends is based upon its distributable earnings. Current PRC regulations permit our PRC subsidiary to pay dividends to its shareholders only out of its accumulated profits, if any, determined in accordance with PRC accounting standards and regulations. In addition, our PRC subsidiary is required to set aside at least 10% of its after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of its registered capital. These reserves are not distributable as cash dividends. See “Regulations On Dividend Distribution” for more information.

The specific regulations regarding our ability to transfer funds among GBT Cayman and its subsidiaries, with which we must remain complaint include, SAFE Circulars 16, 19, 37, and 75, as well as the Company Law of the PRC. For further information on the applicable regulations on transfers of funds and dividends by and between our corporate entities and our shareholders, please see: “Prospectus Summary – Issues Related to Our Holding Company Structure;” “Risk Factor – Failure of beneficial owners of our shares who are PRC residents to comply with certain PRC foreign exchange regulations could restrict our ability to distribute profits, restrict our overseas and cross-border investment activities and subject us to liability under PRC law;” “Risk Factor – PRC regulations of loans and direct investment by offshore holding companies to PRC entities may delay or prevent us from using the proceeds of the offering to make loans or additional capital contributions to our PRC subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand our business;” ““Risk Factor -- Restrictions under PRC law on our PRC subsidiary’s ability to make dividends and other distributions could materially and adversely affect our ability to grow, make investments or complete acquisitions that could benefit our business, pay dividends to you, and otherwise fund and conduct our business;” “Regulation – Regulations on Foreign Currency Exchange;” “Regulation – Regulations on Dividend Distribution;” and “Regulation – Regulations on Offshore Financing.”

To address persistent capital outflows and the RMB’s depreciation against the U.S. dollar in the fourth quarter of 2016, the People’s Bank of China and the State Administration of Foreign Exchange, or SAFE, have implemented a series of capital control measures in the subsequent months, including stricter vetting procedures for China-based companies to remit foreign currency for overseas acquisitions, dividend payments and shareholder loan repayments. The PRC government may continue to strengthen its capital controls and our PRC subsidiaries’ dividends and other distributions may be subject to tightened scrutiny in the future. The PRC government also imposes controls on the conversion of RMB into foreign currencies and the remittance of currencies out of the PRC. Therefore, we may experience difficulties in completing the administrative procedures necessary to obtain and remit foreign currency for the payment of dividends from our profits, if any. Furthermore, if our subsidiary in the PRC incur debt on its own in the future, the instruments governing the debt may restrict its ability to pay dividends or make other payments. Finally, to the extent that our cash or/or other assets are held in our PRC subsidiary or our Hong Kong subsidiary, we face a risk that the PRC government may impose new restrictions or limitations on, or may directly intervene to prevent, the transfer of such funds or assets outside of the PRC or Hong Kong. In that event, our cash and assets, which are held primarily in our PRC operating subsidiary, may become unavailable to fund operations or for other uses outside of the PRC or Hong Kong. Please see “Risk Factor – Restrictions under PRC law on our PRC subsidiary’s ability to make dividends and other distributions could materially and adversely affect our ability to grow, make investments or complete acquisitions that could benefit our business, pay dividends to you, and otherwise fund and conduct our business.”

Neither the United States Securities and Exchange Commission nor any other regulatory body 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.

The underwriters expect to deliver the ordinary shares against payment in U.S. dollars in New York, New York on or about                   , 2022.

WestPark Capital, Inc.

The date of this prospectus is June __, 2022

TABLE OF CONTENTS

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

We have not taken any action to permit a public offering of the ordinary shares outside the United States or to permit the possession or distribution of this prospectus outside the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about and observe any restrictions relating to the offering of the ordinary shares and the distribution of the prospectus outside the United States.

RISK FACTORS

An investment in our ordinary shares involves significant risks. You should carefully consider all of the information in this prospectus, including the risks and uncertainties described below, before making an investment in our ordinary shares. Any of the following risks could have a material adverse effect on our business, financial condition and results of operations. In any such case, the market price of our ordinary shares could decline, and you may lose all or part of your investment.

Risks Relating to Business and Industry

Risks Related to Overall Business Operations

We are an emerging growth company with a limited operating history and limited sales to date.

We are subject to all of the risks inherent in the establishment of an emerging growth company, including the absence of an operating history, and the risk that we may be unable to successfully operate our business. There can be no assurance that we will be able to successfully operate our business, including without limitation our services, technologies and products.

Feizhiyue was incorporated in May 2016 and accordingly, has limited operating history upon which to base an evaluation of our business and prospects. You must consider the risks and difficulties we face as a small operating company with limited operating history. We generated approximately $3.3 million and $3.7 million in revenue for fiscal years 2021 and 2020, respectively.

Operating results for future periods are subject to numerous uncertainties and we cannot assure you that we will achieve or sustain profitability. Our prospects must be considered in light of the risks encountered by small operating companies with limited operating history, particularly companies in new and rapidly evolving markets. Operating results will depend upon many factors, including our success in attracting and retaining motivated and qualified personnel, our ability to establish short term credit lines or obtain financing from other sources, our ability to develop and market new products, control costs, and general economic conditions. Through our operating subsidiary Feizhiyue, we have engaged in limited operations to date, and although we believe that our plans to grow, expand and scale operations organically will be successful, there is no assurance that this will be the case. There can be no assurance that our sales projections and marketing plans will be achieved as anticipated and planned.

Feizhiyue’s business model is largely dependent on the continued success and viability of the ridesharing industry. The ride-hailing service market is still in a relatively early stage of growth with intense competition in metropolitan cities in China and if such market does not continue to grow, grow more slowly than we expect or fail to grow as large as we expect, our business, financial condition and results of operations could be adversely affected.

According to the Chinese Academy of Industry Economy Research Institute, the ride-hailing service market in China has grown rapidly since 2015. However, it is still relatively new, and it is uncertain to what extent market acceptance will continue to grow, if at all. Our success will depend to a substantial extent on the willingness of people to widely-adopt ride-hailing. If the public does not perceive ridesharing as beneficial, or chooses not to adopt it as a result of concerns regarding safety, affordability or for other reasons, whether as a result of incidents on the ride-hailing service platform or otherwise, then the ride-hailing service market may not further develop, or may develop more slowly than we expect or may not achieve the growth potential we expect, any of which could adversely affect our business, financial condition and results of operations.

Feizhiyue’s business operations have been and may continue to be materially and adversely affected by the coronavirus disease (COVID-19)

An outbreak of respiratory illness caused by COVID-19 emerged in Wuhan city, Hubei province, PRC, in late 2019 and has been expanding within the PRC and globally. The new strain of COVID-19 is considered to be highly contagious and poses a serious public health threat. On January 23, 2020, the PRC government announced the lockdown of Wuhan city in an attempt to quarantine the city. Since then, other measures including travel restrictions have been imposed in other major cities in the PRC and throughout the world in an effort to contain the COVID-19 outbreak. The World Health Organization (the “WHO”) is closely monitoring and evaluating the situation. On March 11, 2020, the WHO declared the outbreak of COVID-19 a pandemic, expanding its assessment of the threat beyond the global health emergency it had announced in January.

Any outbreak of such epidemic illness or other adverse public health developments in the PRC or elsewhere in the world may materially and adversely affect the global economy, our markets and our business. The COVID-19 pandemic created unique global and industry-wide challenges, including challenges to many aspects of our business. The COVID-19 pandemic has resulted in quarantines, travel restrictions, limitations on social or public gatherings, and the temporary closure of business venues and facilities across the world. In the first 6-9 months of 2020, the ride hailing industry in China was virtually shut down as a result of the PRC government’s response to the pandemic. This reduced the number of ride-hailing drivers which affected the number of vehicles leased by Feizhiyue and demand for its vehicle maintenance service offerings, as well as the ability of drivers who leased vehicles from it to make prompt periodic payments on their lease obligations. Feizhiyue also experienced a reduction in commission revenues. The decreased demand for ride- hailing services extended through the first quarter of 2021. In response to this situation, Feizhiyue forgave July 2020 lease payments from its customers of approximately $246,000. Many of the quarantine measures within China have since been relaxed. However, relaxation of restrictions on economic and social activities may also lead to new cases which may lead to re-imposed restrictions. Any future disruptions in our operations as a result of the pandemic would be expected to have a similar material adverse effect on our financial condition and results of operations. In 2022, the omicron variant of COVID-19 hit China again. The surge in positive cases has resulted in local authorities implementing numerous unprecedented measures such as regional quarantines, travel restrictions, routine tests, and temporary closure of stores and business facilities in China, including the city of Zhengzhou, where our headquarter is located. The reductions in travel and commercial activities have caused diminishing market demand on car-riding services and charging services, which may negatively impact our business and revenue. The degree to which the pandemic ultimately impacts our business and results of operations will depend on future developments beyond our control, including the severity of the pandemic, the extent of actions to contain or treat the virus, how quickly and to what extent normal economic and operating conditions can resume, and the severity and duration of the global economic downturn that results from the pandemic.

We cannot foresee whether COVID-19 will be effectively contained, nor can we predict the severity and duration of its impact. If COVID-19 is not effectively and timely controlled, our business operations and financial condition may be materially and adversely affected as a result of the slowdown in regional and national economic growth, weakened liquidity and financial condition of Feizhiyue’s customers or other factors that we cannot foresee. Any of these factors and other factors beyond our control could have an adverse effect on the overall business environment, cause uncertainties in the regions where Feizhiyue conducts business, cause its business to suffer in ways that we cannot predict and materially and adversely impact our business, financial condition and results of operations.

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

Any prolonged slowdown in the Chinese or global economy may have a negative impact on our business, results of operations and financial condition. There is uncertainty over the global economic conditions such as the trade war between the United States and China. There is uncertainty in financial markets over the decision by the United Kingdom to exit the European Union. There is considerable uncertainty over the long-term effects of the expansionary monetary and fiscal policies adopted by the central banks and financial authorities of some of the world’s leading economies, including the United States and China. There have also been concerns about the economic effect of the tensions in the relationship between China and surrounding Asian countries. Finally, the Company’s operating environment remains very challenging. Traditional retail sales of consumer goods in the PRC have been under tremendous pressure, showing a continuous slowdown. Coupled with the trade tensions between China and the United States, it is likely that the general consumer market in China will continue to face uncertainties and remain very competitive. Adverse economic conditions could also reduce the number of customers and interest in Feizhiyue’s products and services. Should any of these situations occur, our net revenues will decline, and our business and financial conditions will be negatively impacted. Additionally, continued turbulence in the international markets may adversely affect our ability to access the capital markets to meet liquidity needs.

The impact of economic conditions, including the resulting effect on discretionary consumer spending, may harm our business and operating results.

Our performance is subject to economic conditions and their impact on levels of discretionary consumer spending. Some of the factors that have an impact on discretionary consumer spending include general economic conditions, unemployment, consumer debt, reductions in net worth, residential real estate and mortgage markets, taxation, energy prices, interest rates, consumer confidence, and other macroeconomic factors. Consumer preferences tend to shift to lower-cost alternatives during recessionary periods and other periods in which disposable income is adversely affected. Alternatively, if economic conditions improve, it could lead to drivers obtaining additional or alternative opportunities for work, which could negatively impact the number of drivers utilizing Feizhiyue’s services.

Increases in labor costs in the PRC may adversely affect our business and results of operations.

The economy in China has experienced increases in inflation and labor costs in recent years. As a result, average wages in the PRC are expected to continue to increase. In addition, Feizhiyue is required by PRC laws and regulations to pay various statutory employee benefits, including pension, housing fund, medical insurance, work-related injury insurance, unemployment insurance and maternity insurance to designated government agencies for the benefit of our employees. The relevant government agencies may examine whether an employer has made adequate payments to the statutory employee benefits, and those employers who fail to make adequate payments may be subject to late payment fees, fines and/or other penalties. We expect that our labor costs, including wages and employee benefits, will continue to increase. Unless Feizhiyue is able to control its labor costs or pass on these increased labor costs to its customers by increasing the fees of its services, our financial condition and results of operations may be adversely affected. Although we expect that increased labor costs will pose a challenge in the future, there has been no recent significant recent change in our employees’ hourly rates.

Increases in fuel, vehicle, labor, energy, and other costs could adversely affect our operating results.

Factors such as inflation, increased fuel prices, and increased cost of vehicles purchased, rental, or maintenance costs may increase the costs incurred by drivers utilizing Feizhiyue’s services. In many cases, these increased costs may cause drivers to spend less time providing ridesharing services or to seek alternative sources of income. A decreased supply of drivers using Feizhiyue’s services could harm our business and operating results. The current annual inflation rate in China is about 2.1%, which is within the central bank’s target inflation range and significantly lower than inflation rates in United States and the rest of world. Accordingly, to date there has been no significant change in our employees’ hourly wages or in our vehicle maintenance costs (e.g. engine oil/filters/washer fluid/braking fluid). The drivers of our vehicles are responsible for fuel, car insurance, vehicle damage, repairs, and parts replacement. We have not yet seen a decrease in the supply of drivers as result of increases in the cost of these items. As of the date of this prospectus, inflation has very limited impact on the company’s business. Should significant inflationary pressures be felt in the future, however, our operations could be adversely affected.

If Feizhiyue’s efforts to attract prospective customers are not successful, or Feizhiyue fails to retain customers or continue attracting existing customers to its services, our growth prospects and revenue will be adversely affected.

Our ability to grow our business and generate revenue depends on retaining and expanding Feizhiyue’s total customer base. Feizhiyue’s number of customers may decline materially or fluctuate as a result of a number of factors, including dissatisfaction with the quality of services provided, quality of platform user support, negative publicity related to its brand, perceived political or geopolitical affiliations, or dissatisfaction with its service offerings in general.

Feizhiyue must convince prospective customers of the benefits of its service offerings and its existing users of the continuing value of our services. If Feizhiyue fails to keep pace with competing offerings or technological advancements to the ridesharing industry or fails to offer compelling service offerings and state-of-the-art delivery for its services to meet consumer demands, its ability to grow or sustain the reach of its service offerings, attract and retain customers may be adversely affected.

If Feizhiyue fails to promote and maintain its brand in an effective and cost-efficient manner, its business and results of operations may be harmed.

We believe that developing and maintaining awareness of Feizhiyue’s brand effectively is critical to attracting new and retaining existing customers. Successful promotion of its brands and its ability to attract customers depend largely on the effectiveness of its marketing efforts and the success of the channels Feizhiyue uses to promote its services. Feizhiyue’s efforts to build its brand have caused us to incur expenses, and it is likely that its future marketing efforts will require us to incur additional expenses. These efforts may not result in increased revenues in the immediate future or at all and, even if they do, any increases in revenues may not offset the expenses incurred. If Feizhiyue fails to successfully promote and maintain its brand while incurring substantial expenses, our results of operations and financial condition would be adversely affected, which may impair our ability to grow our business.

We may not be able to keep up with rapid technological changes.

The evolving nature of the ridesharing industry, transportation network companies, telecommunications, apps, and mobile based services, which are characterized by rapid technological change, changes in user and customer requirements and preferences, frequent new product and service introductions and the emergence of new industry standards and practices, could render our existing systems, apps and services obsolete. Our success will depend, in part, on Feizhiyue’s ability to develop, innovate, license or acquire leading technologies useful in its business, enhance its existing solutions, develop new solutions and technology that address the increasingly sophisticated and varied needs of its current and prospective users, and respond to technological advances and emerging industry and regulatory standards and practices in a cost-effective and timely manner. Future advances in technology may not be beneficial to, or compatible with, Feizhiyue’s business. Furthermore, Feizhiyue may not successfully use new technologies effectively or adapt its proprietary technology and app to user requirements or emerging industry standards on a timely basis. Feizhiyue’s ability to remain technologically competitive may require substantial expenditures and lead time. If Feizhiyue is unable to adapt in a timely manner to changing market conditions or user requirements, our business, financial condition and results of operations could be seriously harmed.

Feizhiyue depends on the continued growth and reliability of the internet, global positioning systems, ridesharing services and apps.

The recent growth in the use of apps and ridesharing services may cause periods of decreased performance for many ridesharing services, internet providers, apps and related service providers. If app and ridesharing usage continues to grow rapidly, the infrastructure these services are reliant upon (i.e. the internet, global positioning systems, and telecommunications networks and devices) may not be able to support these demands and therefore performance and reliability may decline. If outages or delays occur frequently or increase in frequency, the market for mobile apps, ridesharing services and related technologies could grow more slowly or decline, which may reduce the demand for Feizhiyue’s services.

Feizhiyue’s business is heavily reliant upon communications networks and centralized information technology systems and the concentration of our systems creates risks for us.

Feizhiyue relies heavily on communication networks and information technology systems to accept reservations, process rental and sales transactions, manage our pricing, manage its revenue earning vehicles, manage our financing arrangements, account for its activities and otherwise conduct its business. Feizhiyue’s reliance on these networks and systems exposes it to various risks that could cause a loss of reservations, interfere with its ability to manage its vehicles, slow rental and sales processes, adversely affect its ability to comply with its financing arrangements and otherwise materially adversely affect its ability to manage its business effectively. Feizhiyue’s major information technology systems, reservations and accounting functions are centralized in a few locations worldwide. Any disruption, termination or substandard provision of these services, whether as the result of localized conditions (such as a fire, explosion or hacking), failure of Feizhiyue’s systems to function as designed, or as the result of events or circumstances of broader geographic impact (such as an earthquake, storm, flood, epidemic, strike, act of war, civil unrest or terrorist act), could materially adversely affect Feizhiyue’s business by disrupting normal reservations, customer service, accounting and information technology functions or by eliminating access to financing arrangements. Any disruption or poor performance of Feizhiyue’s systems could lead to lower revenues, increased costs or other material adverse effects on our results of operations, financial condition, liquidity or cash flows.

Defects in Feizhiyue’s mobile applications may adversely affect its business.

Tools, code, subroutines and processes contained within Feizhiyue’s mobile applications may contain defects when updates and new versions are released. Feizhiyue’s introduction of a mobile application with defects or quality problems may result in adverse publicity, uncollectible or delayed accounts receivable, product redevelopment costs, loss of or delay in market acceptance of its services or claims by customers or others against it. Such problems or claims may have a material and adverse effect on our business, prospects, financial condition and results of operations.

Computer malware, viruses, hacking, phishing attacks and spamming could harm our business and results of operations.

Computer malware, viruses, physical or electronic break-ins and similar disruptions could lead to interruption and delays in Feizhiyue’s services and operations and loss, misuse or theft of data. Computer malware, viruses, computer hacking and phishing attacks against online networking platforms have become more prevalent and may occur on its systems in the future.

Any attempts by hackers to disrupt Feizhiyue’s website service or its internal systems, if successful, could harm its business, be expensive to remedy and damage its reputation or brand. Efforts to prevent hackers from entering its computer systems are expensive to implement and may limit the functionality of its services. Though it is difficult to determine what, if any, harm may directly result from any specific interruption or attack, any failure to maintain performance, reliability, security and availability of its products and services and technical infrastructure may harm its reputation, brand and its ability to attract customers. Any significant disruption to Feizhiyue’s website or internal computer systems could result in a loss of customers and could adversely affect our business and results of operations.

Feizhiyue has previously experienced, and may in the future experience, service disruptions, outages and other performance problems due to a variety of factors, including infrastructure changes, third-party service providers, human or software errors and capacity constraints. If Feizhiyue’s mobile application is unavailable when customers attempt to access it or it does not load as quickly as they expect, customers may seek other services.

Feizhiyue’s platform functions on software that is highly technical and complex and may now or in the future contain undetected errors, bugs, or vulnerabilities. Some errors in our software code may only be discovered after the code has been deployed. Any errors, bugs, or vulnerabilities discovered in its code after deployment, inability to identify the cause or causes of performance problems within an acceptable period of time or difficultly maintaining and improving the performance of its platform, particularly during peak usage times, could result in damage to Feizhiyue’s reputation or brand, loss of revenues, or liability for damages, any of which could adversely affect our business and financial results.

Feizhiyue expects to continue to make significant investments to maintain and improve the availability of its platform and to enable rapid releases of new features and products. To the extent that Feizhiyue does not effectively address capacity constraints, upgrade its systems as needed and continually develop its technology and network architecture to accommodate actual and anticipated changes in technology, our business and operating results may be harmed.

Feizhiyue depends upon intellectual property and proprietary rights that are vulnerable to unauthorized use.

Feizhiyue relies on a combination of copyright and trademark laws, trade secrets, software security measures, license agreements and nondisclosure agreements to protect our proprietary information. Our success will depend, in part, on Feizhiyue’s ability to operate without infringing the patent or other proprietary rights of others and its ability to preserve its trade secrets and other proprietary property, including its rights in any technology licenses upon which any of its products or services are based. Feizhiyue’s inability to preserve such rights properly or operate without infringing on others’ rights would have a material adverse effect on our business, results of operations and financial condition. Feizhiyue currently does not own any registered copyrights, patents or have any patent applications pending. It may be possible for unauthorized third parties to copy aspects of, or otherwise obtain and use, its proprietary information without authorization. In addition, there can be no assurance that any confidentiality agreements between Feizhiyue and its employees, or any license agreements with its customers, will provide meaningful protection for its proprietary information in the event of any unauthorized use or disclosure of such proprietary information.

We cannot assure you that third parties will not claim our current or future products or services infringe their intellectual property rights. Any such claims, with or without merit, could cause costly litigation that could consume significant management time. As the number of product and service offerings in the ridesharing industry increases and functionalities increasingly overlap, companies such as ours may become increasingly subject to infringement claims. Such claims also might require Feizhiyue to enter into royalty or license agreements. If required, Feizhiyue may not be able to obtain such royalty or license agreements or obtain them on terms acceptable to us.

Feizhiyue may experience significant fluctuations in its operating results. If Feizhiyue is unable to achieve or sustain profitability, our prospects would be adversely affected and investors may lose some or all of the value of their investment.

Our operating results may vary significantly and are not necessarily an indication of future performance. These fluctuations may be a result of a variety of factors, some of which are beyond our control. Our operating results may fluctuate as a result of factors including Feizhiyue’s ability to attract and retain new customers and users, increased competition in the markets in which Feizhiyue operates, its ability to expand its operations in new and existing markets, its ability to maintain an adequate growth rate and effectively manage that growth, its ability to keep pace with technological changes in the industries in which Feizhiyue operates, changes in governmental or other regulations affecting its business, harm to its brand or reputation, and other risks described elsewhere in this prospectus. As such, we may not accurately forecast our operating results. Feizhiyue bases its expense levels and investment plans on estimates. A significant portion of its expenses and investments are fixed, and Feizhiyue may not be able to adjust its spending quickly enough if its revenue is less than expected. If Feizhiyue is unable to achieve sustained profits, our prospects would be adversely affected and investors may lose some or all of the value of their investment.

Competition for employees is intense, and we may not be able to attract and retain qualified and skilled employees needed to support our business.

We believe our success depends on the efforts and talent of our employees, including risk management, driver and automobile management, post-financing management, financial and marketing personnel. Our future success depends on our continued ability to attract, develop, motivate and retain qualified and skilled employees. Competition for highly skilled technical, risk management and financial personnel is extremely intense. We may not be able to hire and retain these personnel at compensation levels consistent with our existing compensation and salary structure. Some of the companies with which we compete for experienced employees have greater resources than we have and may be able to offer more attractive terms of employment.

In addition, we invest significant time and expenses in training our employees, which increases their value to competitors who may seek to recruit them. If we fail to retain our employees, we could incur significant expenses in hiring and training their replacements, and the quality of our services and our ability to serve borrowers and investors could diminish, resulting in a material adverse effect to our business.

Our management team has limited public company experience.

Our management team has limited public company experience. We have never operated as a public company in the United States and several of our senior management positions are currently held by employees who have been with us for a short period of time. Our entire management team, as well as other Company personnel, will need to devote substantial time to compliance, and may not effectively or efficiently manage our transition into a public company. If we are unable to effectively comply with the regulations applicable to public companies or if we are unable to produce accurate and timely financial statements, which may result in material misstatements in our financial statements or possible restatement of financial results, our stock price may be materially adversely affected. Any such failures could also result in litigation or regulatory actions by the SEC or other regulatory authorities, loss of investor confidence, delisting of our securities, harm to our reputation and diversion of financial and management resources from the operation of our business, any of which could materially adversely affect our business, financial condition, results of operations and growth prospects. Additionally, the failure of a key employee to perform in his or her current position could result in our inability to continue to grow our business or to implement our business strategy.

The loss of the services of our key personnel could negatively affect our business, as could our inability to attract and retain qualified management, sales and technical personnel as and when needed.

The execution of our business strategy in the future depends largely on the continued efforts of our executive management. As we have a limited operating history, we are highly dependent upon these individuals’ knowledge, experience and reputation within the industry. These officers play an integral role in determining our strategic direction and for executing our growth strategy and are important to Feizhiyue’s brand, culture and the positive business reputation we enjoy with its customers and vendors. They manage our business operations, develop and execute our business strategies and manage the relationship with Feizhiyue’s key product suppliers and corporate customers. The loss of the services of any of these executives without qualified replacement could have a material adverse effect on our business and prospects, as we may not be able to find suitable individuals to replace them on a timely basis, if at all. In addition, any such departure could be viewed negatively by investors and analysts, which could cause the price of our shares to decline.

We may not be able to hire or retain additional management and other personnel and our recruiting and training costs may increase as a result of turnover, both of which may increase our costs and reduce our profits and may adversely impact our ability to implement our business strategy.

The success of our business depends upon our ability to attract and retain highly motivated, well-qualified management and other personnel. Our ability to execute our business strategy may suffer if:

Our results of operations may fluctuate significantly from fiscal period to fiscal period and may not fully reflect the underlying performance of our business.

Our results of operations, including the levels of our net revenues, expenses, net (loss)/income and other key metrics, may vary significantly in the future due to a variety of factors, some of which are outside of our control, and period-to-period comparisons of our operating results may not be meaningful. Accordingly, the results for any one fiscal period are not necessarily an indication of future performance. Fluctuations in fiscal period results may adversely affect the price of our shares. Factors that may cause fluctuations in our fiscal period financial results include:

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

As a public company, we will be required to maintain internal control over financial reporting and to report any material weaknesses in such internal control. In addition, in the future, we will be required to furnish a report by management on the effectiveness of our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act. We are in the process of designing, implementing, and testing our internal control over financial reporting required to comply with this obligation, which process is time consuming, costly, and complicated. In addition, our independent registered public accounting firm may be required to attest to the effectiveness of our internal control over financial reporting beginning with our annual report on Form 20-F following the date on which we are no longer an “emerging growth company,” which may be up to five full years following the date of this offering. If we identify material weaknesses in our internal control over financial reporting, if we are unable to comply with the requirements of Section 404 in a timely manner or assert that our internal control over financial reporting is not effective, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting when required, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our ordinary shares could be negatively affected, and we could become subject to investigations by the stock exchange on which our securities are listed, the Securities and Exchange Commission, or other regulatory authorities, which could require additional financial and management resources.

We may need additional capital, and financing may not be available on terms acceptable to us, or at all.

There is no guarantee that in the future we will generate enough working capital to support our business. Although we believe that our anticipated cash flows from operating activities, together with cash on hand and the proceeds of this offering, will be sufficient to meet our anticipated working capital requirements and capital expenditures in the ordinary course of business for the next twelve months, we cannot assure you this will be the case. We may need additional cash resources in the future if we experience changes in business conditions or other developments. We may also need additional cash resources in the future if we find and wish to pursue opportunities for investment, acquisition, capital expenditures or similar actions. If we determine that our cash requirements exceed the amount of cash and cash equivalents we have on hand at the time, we may seek to issue additional equity or debt securities or obtain credit facilities. The issuance and sale of additional equity would result in further dilution to our shareholders. The incurrence of indebtedness would result in increased fixed obligations and could result in operating covenants that would restrict our operations. We cannot assure you that financing will be available in amounts or on terms acceptable to us, if at all.

If we acquire any businesses in the future, they could prove difficult to integrate, disrupt our business, or have an adverse effect on our results of operations.

We intend to pursue growth primarily through internal growth, but from time to time we may consider opportunistic acquisitions which may be significant. Any future acquisition would involve numerous risks including, without limitation:

Risks Related to our Car Leasing and Vehicle Management Services Business

Feizhiyue’s relationships with third party ride-hailing providers is important to its ability to grow its business and our results of operations and financial condition.

Feizhiyue’s relationships with third party ride-hailing providers, is important to its business. Feizhiyue provides car-hailing consulting services through third party car-hailing operators’ ridesharing platforms including Didi Chuxing (“Didi”) for their car-hailing drivers. Feizhiyue’s current primary and largest such third party relationship is with Didi. Although Feizhiyue does not have a formal agreement with Didi, it does collaborate on an ongoing basis. If Feizhiyue’s collaboration with Didi were terminated, it would be required to contract with other third party ridesharing platforms through which to offer its car-hailing consulting services. If Feizhiyue is unable to enter into a similar arrangement with other ridesharing platforms, this may affect its ability to maintain some of its existing customers or attract additional new customers, which could adversely affect its business and operating results. For the fiscal year ended December 31, 2020, we generated $42,410 in service revenue through Didi. For the year ended December 31, 2021, we generated $4,338 in service revenue through Didi. At present, the market for ride sharing services in China includes such competitors as T3, Cao Cao, Shouqi and other platforms. Feizhiyue has the ability to cooperate with any ridesharing platform and is not constrained to Didi.

Four days after Didi’s initial public offering in the U.S. on June 30, 2021, China’s cybersecurity regulator told app stores to remove Didi, saying an investigation had uncovered problems with the way it collects and uses personal information. According to the announcement posted by the Cyberspace Administration of China (the “CAC”) on July 9, 2021, the CAC stated that it was confirmed that 25 apps operated by Didi in China, including the apps used by users and drivers, had the problem of collecting personal information in serious violation of relevant PRC laws and regulations. Pursuant to the PRC’s Cybersecurity Law, the CAC notified app stores to take down these apps and cease to provide viewing and downloading service in China, and required Didi to strictly comply with relevant laws and regulations, follow the relevant standards set by the PRC government authorities, and rectify the problem to ensure the security of users’ personal information. Once the “DiDi Chuxing” app is taken down from app stores in China, the app can no longer be downloaded in China, although existing users who had previously downloaded and installed the app on their phones prior to the takedown may continue using it. The move was the latest escalation in China’s effort to rein in powerful technology companies, including ridesharing companies, which has generated significant uncertainty about how freely they’ll be able to operate. With respect to Feizhiyue’s operations, it is not restricted in its ability to cooperate with other ridesharing platforms but there is no assurance that other such platforms will not become subject to the same regulatory restrictions imposed by the CAC on Didi. Limitations on Feizhiyue’s ability to utilize third party ridesharing platforms would adversely affect its ability to grow our vehicle service management revenue.

We have experienced significant vendor concentration in recent periods, and our revenue levels could be adversely affected if any significant vendor fails to deliver products to us at anticipated levels.

We are subject to vendor concentration risk as a result of Feizhiyue’s reliance on a relatively small number of vendors for a significant portion of its revenues. The relative magnitude and the mix of purchases from Feizhiyue’s largest vendors have varied significantly period to period. For the year ended December 31, 2020, one vendor accounted for 88% of its lease vehicle purchases. For the year ended December 31, 2021, four vendors accounted for 44%, 22%, 20%, and 14% of the Company’s total vehicle purchases. For the year ended December 31, 2020, one vendor accounted for 74% of Feizhiyue’s construction of charging stations. For the year ended December 31, 2021, two vendors accounted for 25%, and 70% for the Company’s construction of charging stations. No other vendors account for more than 10% of Feizhiyue’s total purchases for the years ended December 31, 2021 and 2020, respectively.

The loss of these vendors and inability to replace such vendors in a timely manner could have a material adverse effect on our business.

The uncertain supply of vehicles could create risks to Feizhiyue’s business.

If Feizhiyue is unable to purchase adequate supplies of competitively priced vehicles and the cost of the vehicles it purchases increases, our financial condition, results of operations, liquidity and cash flows may be materially adversely affected.

The price and other terms at which Feizhiyue can acquire vehicles vary based on market and other conditions. For example, certain vehicle manufacturers have in the past, and may in the future, utilize strategies to de- emphasize sales to the vehicle rental industry, which can negatively impact Feizhiyue’s ability to obtain vehicles on competitive terms and conditions. Consequently, there is no guarantee that Feizhiyue can purchase a sufficient number of vehicles at competitive prices and on competitive terms and conditions. If Feizhiyue is unable to obtain an adequate supply of vehicles, or if it obtains less favorable pricing and other terms when it acquires vehicles and is unable to pass on any increased costs to its customers, then our financial condition, results of operations, liquidity and cash flows may be materially adversely affected. In addition, a recent global shortage in the supply of semi-conductor chips and other key vehicle parts may also affect Feizhiyue’s ability to acquire new vehicles for its rental fleet and adversely affect its operations in several ways, including: 1) longer than normal wait times to take new vehicle deliveries, which will put a limits on its ability to increase our operating capacity; 2) a need to keep older models in its fleet longer than planned, thereby reducing its reducing our market competitiveness; and 3) due to limited supplies of necessary vehicle parts and accessories, Feizhiyue may face an increase in repair and maintenance costs and longer than normal repair times as the vehicles wait for necessary parts, thereby putting negative pressure on its ability to collect vehicle rents. Feizhiyue’s current fleet is comprised of popular car models which use generic and common parts. As a result, those parts have, to date, remained easy to find in the market and with no significant changes in prices. In addition, Feizhiyue usually uses basic model vehicles (as compared to models with advanced packages that required numerous microchips for new technology) for its fleet and the shortage on chip products has not yet had a material impact on it’s operation. In addition, there has not yet been any significant change in purchase prices of the type of new vehicles deployed by Feizhiyue. However, due to high demand and relatively low supply, Feizhiyue has recently had to wait longer than normal to take new vehicle deliveries (currently at least 2 months), which limits the speed of the company’s expansion and revenue growth.

Feizhiyue faces intense competition that may lead to downward pricing or an inability to increase prices.

The vehicle rental and used-vehicle sale industries are highly competitive. While price is not the only competitive factor, we believe price is one of the primary competitive factors in the vehicle rental market and that technology has enabled cost-conscious customers to more easily compare rates available from rental companies. In addition, Feizhiyue’s competitors may reduce prices in order to, among other things, attempt to gain a competitive advantage, capture market share, or to compensate for declines in rental activity. To the extent Feizhiyue does not match or remain within a reasonable competitive margin of its competitors’ pricing, our revenues and results of operations, financial condition, liquidity and cash flows could be materially adversely affected. If competitive pressures lead Feizhiyue to match any of its competitors’ downward pricing and it is not able to reduce its operating costs, then our margins, results of operations, financial condition, liquidity and cash flows could be materially adversely affected.

We face risks related to uninsured liabilities or future claims that exceed our insurance limits.

Feizhiyue’s businesses expose us to claims for personal injury, death and property damage resulting from the use of the vehicles rented by Feizhiyue, and for employment-related injury claims by its employees. Feizhiyue purchases insurance to cover it for these claims. We cannot assure you, however, that Feizhiyue will not be exposed to uninsured liability potentially resulting in multiple pay-outs or otherwise, liabilities in respect of existing or future claims exceeding the level of its insurance, availability of sufficient capital to pay any uninsured claims or the availability of insurance with unaffiliated carriers maintained on economically reasonable terms, if at all. While Feizhiyue has insurance for many of these risks, it retains risk relating to certain of these perils and certain perils are not covered by its insurance.

We are subject to a wide variety of regulatory burdens related to Feizhiyue’s operations.

We are subject to a wide variety of regulatory burdens related to Feizhiyue’s operations, and while management believes that the chosen operations and strategies are achievable in light of current economic and legal conditions, changes in the following regulatory areas may require management to make significant modifications to our stated strategies depending on future events. The regulations most directly pertinent to Feizhiyue’s business include:

The PRC subsidiary’s car leasing services are subject to certain PRC governmental regulations, including “Road Traffic Safety Law”, “Transportation Law”, “Regulations on ride-hailing services”, and “Zhengzhou City Regulations on ride-hailing services”, carried out by Transportation Department and Public Safety Department. These regulations may materially impact Feizhiyue’s business in the following ways:

The PRC subsidiary is responsible for ensuring the safety of operating vehicles and qualification of ride-hailing drivers. Ride-hailing service is a supplementary service to regular taxi services and has been widely adopted by consumers and Chinese regulators. Recently there was some reported misbehavior of ride-hailing drivers that raised safety concerns. We would experience significant loss if ride-hailing services were prohibited. In addition, the safety standard of ride-hailing vehicles is subject to change, in which case we might be required to make significant capital investments for upgrades and improvements in order to meet new standards, or to replace a portion of our entire fleet under the “Regulations on ride hailing services”. The Company might not have sufficient capital to do so. In addition, the eligibility and qualifications of car-hailing drivers under the “Regulations on ride hailing services” are also subject to change. If Feizhiyue’s ride-hailing drivers were disqualified to operate under new regulations, it would have difficulty on collecting lease payments, it might also experience early lease terminations, which would impact its revenue negatively. Moreover, the ride-hailing service is growing rapidly in China. If market supply reached a high point and the regulators were to cease issuing operating licenses to ride-hailing vehicles, Feizhiyue’s revenue growth would be impaired.

The PRC subsidiary’s charging station services are subject to certain PRC proposed guidelines. (No specific regulations have been written into law yet for this emerging technology). The guidelines include 1) “Guidelines for the Development of Electric Vehicle Charging Infrastructure (2015-2020)” proposed by National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Housing and Urban-Rural Development, the National Energy Administration, and the National Development and Reform Commission; 2) “Guideline on Supervision, Planning and Construction of Urban Parking Facilities” proposed by General Office of the Ministry of Housing and Urban-Rural Development. 3) “Guideline on Coordinating and Accelerating the Integration of Parking and Charging Infrastructure” proposed by The National Development and Reform Commission, the Ministry of Housing and Construction, the Ministry of Transport, and the National Energy Administration. 4) “Guidelines on Accelerating the Construction of Electric Vehicle Charging Infrastructure in Henan Province” proposed by Henan State Government. In general, EV infrastructure is highly promoted by Chinese authorities. If the market supply reaches to a high point and the regulators decided to slow down the infrastructure build, our revenue growth would be impaired.

Feizhiyue is also subject to certain environmental regulations. Pursuant to the Order on Ecosystem by The Ministry of Ecology and Environment, which was issued on July 28, 2017 and most recently amended on December 20, 2019, its gas fueled vehicles are required to pass an annual inspection and meet minimum emission standards, which is subject to change. Feizhiyue is subject to penalty if it fails to do so. Feizhiyue might be required to replace certain parts of its vehicles, or retire certain models of its fleet, in order to meet new emission standards and as a result, its operating cost would increase accordingly. In addition, the batteries installed in its electric vehicles have to be recycled and disposed of in compliance with regulations. Feizhiyue will be subject to penalty for any mishandling. If the environmental regulations were to change to impose a more stringent standard, Feizhiyue might incur additional recycling and compliance costs.

Please see the section on “Regulation” in this Prospectus for additional information.

PRC laws and regulations related to labor and employee benefits

Companies operating in China are required to comply with various laws and regulations related to labor and employment benefits. For example, companies are required to participate in various government- sponsored employee benefit plans, including certain social insurance, housing provident funds and other welfare-oriented payment obligations, and contribute to the plans in amounts equal to certain percentages of salaries, including bonuses and allowances, of employees up to a maximum amount specified by the local government from time to time at locations where our employees are based. The requirement of employee benefit plans has not been implemented consistently by the local governments in China given the different levels of economic development in different locations. Apart from that, if a company intends adopt flexible working hour arrangement and comprehensive working hour scheme, it shall fulfill the requirements in relevant regulations, and make filings with labor authorities, or the company will be subject to penalties and may be required to pay extra fees to its employees.

We cannot assure you that we have complied or will be able to comply with all labor-related law and regulations, including those relating to obligations to make social insurance payments, contribute to the housing provident funds, as well as make all filing for comprehensive working hour scheme. Besides, to efficiently administrate the contribution of employment benefit plans of Feizhiyue’s employees in some cities, we engage third-party agents to make the contribution for its employees. Feizhiyue’s failure to make contributions to various employee benefit plans and in complying with applicable PRC labor-related laws may subject it to fines, penalties, government investigations or labor disputes and it could be required to make up the contributions for these plans as well as to pay late fees and fines, which may adversely affect our financial condition and results of operations.

Environmental regulations. Feizhiyue is subject to a wide range of environmental laws and regulations, including those governing: discharges into the air and water; the operation and removal of storage tanks; and the use, storage and disposal of hazardous substances. In the normal course of Feizhiyue’s operations it uses, generates and disposes of materials covered by these laws and regulations. It will face potentially significant costs relating to claims, penalties and remediation efforts in the event of non-compliance with existing and future laws and regulations. Furthermore, if China adopts more stringent standards with respect to environmental protection or corporate social responsibilities, Feizhiyue may incur increased compliance costs or become subject to additional restrictions in its operations. Intellectual property rights and confidentiality protections in China may also not be as effective as in the United States or other countries. In addition, we cannot predict the effects of future developments in the PRC legal system on our business operations, including the promulgation of new laws, or changes to existing laws or the interpretation or enforcement thereof. These uncertainties could limit the legal protections available to us and our investors, including you. Moreover, any litigation in China may be protracted and result in substantial costs and diversion of our resources and management attention.

Feizhiyue relies on third-party insurance policies to insure auto-related risks. If insurance coverage is insufficient for the needs of its business or its insurance providers are unable to meet their obligations, we may not be able to mitigate the risks facing our business, which could adversely affect our business, financial condition and results of operations.

Feizhiyue procures third-party insurance policies which provide coverage for both owners and drivers on its platform. If the amount of one or more auto-related claims were to exceed its applicable aggregate coverage limits, it may bear the excess liability. Insurance providers have raised premiums and deductibles for many businesses and may do so in the future. As a result, its insurance and claims expense could increase. Our business, financial condition and results of operations could be adversely affected if (i) cost per claim, premiums or the number of claims significantly exceeds our historical experience and coverage limits, (ii) we experience a claim in excess of coverage limits, (iii) our insurance providers fail to pay insurance claims, or (iv) we experience a claim for which coverage is not provided.

The car leasing component of Feizhiyue’s business is cyclical, and a disruption in leasing activity could materially adversely affect our results of operations.

In the car leasing business, a decline in economic activity typically results in a decline in both business and leisure travel and, accordingly, a decline in the volume of car leasing transactions. In the case of a decline in car leasing activity, Feizhiyue may reduce leasing rates to meet competitive pressures, which could have a material adverse effect on its results of operations. A decline in economic activity also may have a material adverse effect on residual values realized on the disposition of its revenue earning cars.

Certain significant components of Feizhiyue’s expenses, including real estate taxes, rent, utilities, maintenance and other facility-related expenses, the costs of operating its information systems and minimum staffing costs, are fixed in the short-run. Cyclical changes in its revenues do not alter those fixed expenses, typically resulting in higher profitability in periods when its revenues are higher and lower profitability in periods when its revenues are lower.

Risks Related to our EV Charging Business

Revenue growth in our EV charging business depends on consumers’ willingness to adopt electric vehicles.

Growth in Feizhiyue’s electric vehicle (“EV”) charging business is highly dependent upon the adoption by consumers of EVs, and we are subject to a risk of any reduced demand for EVs. If the market for EVs does not gain broad market acceptance or develops more slowly than we expect, our business, prospects, financial condition and operating results will be harmed. The market for alternative fuel vehicles is relatively new, rapidly evolving, characterized by rapidly changing technologies, price competition, additional competitors, evolving government regulation and industry standards, frequent new vehicle announcements, long development cycles for EV original equipment manufacturers, and changing consumer demands and behaviors. Factors that may influence the purchase and use of alternative fuel vehicles, and specifically EVs, include:

The influence of any of the factors described above may negatively impact the widespread consumer adoption of EVs, which would materially adversely affect Feizhiyue’s EV charging business and our operating results, financial condition and prospects.

Feizhiyue is in an intensely competitive industry and there can be no assurance that it will be able to compete with its competitors who may have greater resources.

Feizhiyue faces strong competition from competitors in the EV charging services industry, including competitors who could duplicate its model. Many of these competitors may have substantially greater financial, marketing and development resources and other capabilities than Feizhiyue. In addition, there are very few barriers to entry into the market for its services. There can be no assurance, therefore, that any of its current and future competitors, many of whom may have far greater resources, will not independently develop services that are substantially equivalent or superior to its services. Therefore, an investment in our company is very risky and speculative due to the competitive environment in which we may operate.

Our competitors may be able to provide customers with different or greater capabilities or benefits than we can provide in areas such as technical qualifications, past contract performance, geographic presence and price. Furthermore, many of Feizhiyue’s competitors may be able to utilize substantially greater resources and economies of scale to develop competing products and technologies, divert sales away from it by winning broader contracts or hire away its employees by offering more lucrative compensation packages. In the event that the market for EV charging stations expands, we expect that competition will intensify as additional competitors enter the market and current competitors expand their product lines. In order to secure contracts successfully when competing with larger, well-financed companies, Feizhiyue may be forced to agree to contractual terms that provide for lower aggregate payments to it over the life of the contract, which could adversely affect its margins. Feizhiyue’s failure to compete effectively with respect to any of these or other factors could have a material adverse effect on our business, prospects, financial condition or operating results.

Risks Related to Doing Business in China

Changes in China’s economic, political or social conditions or government policies and the current tensions in international economic relations could have an adverse effect on our business and operations.

All of our assets and operations are located in China. Accordingly, our business, financial condition, results of operations and prospects may be influenced to a significant degree by political, economic and social conditions in China. The Chinese economy differs from the economies of most developed countries in many respects, including the level of government involvement, level of development, growth rate, control of foreign exchange, allocation of resources, evolving regulatory system and lack of sufficient transparency in the regulatory process.

While the Chinese economy has experienced significant growth over past decades, growth has been uneven, both geographically and among various sectors of the economy, and the rate of growth has been slowing since 2012. Any adverse changes in economic conditions in China, in the policies of the Chinese government or in the laws and regulations in China could have a material adverse effect on China’s overall economic growth. Such developments could adversely affect our business and operating results and adversely affect our competitive position. The Chinese government has implemented various measures to encourage economic growth and guide the allocation of resources. Some of these measures benefit the overall Chinese economy, but may also have a negative effect on us. For example, our financial condition and results of operations may be adversely affected by government control over capital investments or changes in tax regulations that are applicable to us.

Uncertainties with respect to the PRC legal system, including uncertainties regarding the enforcement of laws, and sudden or unexpected changes in laws and regulations in China could adversely affect us and limit the legal protections available to you and us.

Our operating subsidiary is incorporated under and governed by the laws of the PRC. The PRC legal system is based on written statutes. Prior court decisions may be cited for reference, but have limited precedential value. In 1979, the PRC government began to promulgate a comprehensive system of laws and regulations governing economic matters in general, such as foreign investment, corporate organization and governance, commerce, taxation and trade. As the significant part of our business is conducted in China, our operations are principally governed by PRC laws and regulations. However, since the PRC legal system continues to evolve rapidly, the interpretations of many laws, regulations and rules are not always uniform and enforcement of these laws, regulations and rules involves uncertainties, which may limit legal protections available to us. Uncertainties due to evolving laws and regulations could also impede the ability of a China- based company, such as our company, to obtain or maintain permits or licenses required to conduct business in China. In the absence of required permits or licenses, governmental authorities could impose material sanctions or penalties on us. In addition, some regulatory requirements issued by certain PRC government authorities may not be consistently applied by other PRC government authorities (including local government authorities), thus making strict compliance with all regulatory requirements impractical, or in some circumstances impossible. For example, we may have to resort to administrative and court proceedings to enforce the legal protection that we enjoy either by law or contract. However, since PRC administrative and court authorities have discretion in interpreting and implementing statutory and contractual terms, it may be more difficult to predict 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 on a timely basis or at all and 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 our contractual, property (including intellectual property) and procedural rights, could materially and adversely affect our business and impede our ability to continue our operations.

The PRC government has significant oversight and discretion over the conduct of our business and may intervene or influence our operations as the government deems appropriate to further regulatory, political and societal goals. The PRC government has recently published new policies that significantly affected certain industries such as the internet industry, and we cannot rule out the possibility that it will in the future release regulations or policies regarding our industry that could adversely affect our business, financial condition and results of operations. Furthermore, the PRC government has recently indicated an intent to exert more oversight and control over securities offerings and other capital markets activities that are conducted overseas and foreign investment in China-based companies like us. Any such intervention in or influence on our business operations or action to exert more oversight and control over securities offerings and other capital markets activities, once taken by the PRC government, could adversely affect our business, financial condition and results of operations and the value of our ordinary shares, or 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 in extreme cases, become worthless.

Because all of our operations are in China, our business is subject to the complex and rapidly evolving laws and regulations there. The Chinese government may exercise significant oversight and discretion over the conduct of our business and may intervene in or influence our operations at any time, which could result in a material change in our operations and/or the value of our ordinary shares.

The PRC government has significant oversight and discretion over the conduct of our business and may intervene with or influence our operations as the government deems appropriate to further regulatory, political and societal goals. The PRC government has recently published new policies that significantly affected certain industries such as the internet industry, and we cannot rule out the possibility that it will in the future release regulations or policies regarding our industry that could adversely affect our business, financial condition and results of operations. Furthermore, the PRC government has recently indicated an intent to exert more oversight and control over overseas securities offerings and other capital markets activities and foreign investment in China-based companies like us. Any such action, once taken by the PRC government, 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 in extreme cases, become worthless. As a business operating in China, we are subject to the laws and regulations of the PRC, which can be complex and evolve rapidly. The PRC government has the power to exercise significant oversight and discretion over the conduct of our business, and the regulations to which we are subject may change rapidly and with little notice to us or our shareholders. As a result, the application, interpretation, and enforcement of new and existing laws and regulations in the PRC are often uncertain. In addition, these laws and regulations may be interpreted and applied inconsistently by different agencies or authorities, and inconsistently with our current policies and practices. New laws, regulations, and other government directives in the PRC may also be costly to comply with, and such compliance or any associated inquiries or investigations or any other government actions may:

The promulgation of new laws or regulations, or the new interpretation of existing laws and regulations, in each case that restrict or otherwise unfavorably impact the ability or manner in which we conduct our business and could require us to change certain aspects of our business to ensure compliance, which could decrease demand for our products, reduce revenues, increase costs, require us to obtain more licenses, permits, approvals or certificates, or subject us to additional liabilities. To the extent any new or more stringent measures are required to be implemented, our business, financial condition and results of operations could be adversely affected as well as materially decrease the value of our ordinary shares.

We may be liable for improper collection, use or appropriation of personal information provided by our customers.

Our business operations through Feizhiyue include collecting and retaining internal and customer data, including personal information as our various information technology systems enter, process, summarize and report such data. We also maintain information about various aspects of Feizhiyue’s operations as well as regarding our employees. The integrity and protection of our customer, employee and company data is critical to our business. Our customers and employees expect that we will adequately protect their personal information. We are required by applicable laws to keep strictly confidential the personal information that we collect, and to take adequate security measures to safeguard such information.

The PRC Criminal Law, as amended by its Amendment 7 (effective on February 28, 2009) and Amendment 9 (effective on November 1, 2015), prohibits institutions, companies and their employees from selling or otherwise illegally disclosing a citizen’s personal information obtained during the course of performing duties or providing services or obtaining such information through theft or other illegal ways. On November 7, 2016, the Standing Committee of the PRC National People’s Congress issued the Cyber Security Law of the PRC, or Cyber Security Law, which became effective on June 1, 2017. Pursuant to the Cyber Security Law, network operators must not, without users’ consent, collect their personal information, and may only collect users’ personal information necessary to provide their services. Providers are also obliged to provide security maintenance for their products and services and shall comply with provisions regarding the protection of personal information as stipulated under the relevant laws and regulations. The Civil Code of the PRC (issued by the PRC National People’s Congress on May 28, 2020 and effective from January 1, 2021) provides main legal basis for privacy and personal information infringement claims under the Chinese civil laws. PRC regulators, including the Cyberspace Administration of China, MIIT, and the Ministry of Public Security have been increasingly focused on regulation in the areas of data security and data protection. The PRC regulatory requirements regarding cybersecurity are constantly evolving. For instance, various regulatory bodies in China, including the Cyberspace Administration of China, the Ministry of Public Security and the SAMR, have enforced data privacy and protection laws and regulations with varying and evolving standards and interpretations. In April 2020, the Chinese government promulgated Cybersecurity Review Measures, which came into effect on June 1, 2020. According to the Cybersecurity Review Measures, operators of critical information infrastructure must pass a cybersecurity review when purchasing network products and services which do or may affect national security. I On July 10, 2021, the CAC issued a revised draft of the Measures for Cybersecurity Review for public comments, which required that, among others, in addition to “operator of critical information infrastructure”, any “data processor” controlling personal information of no less than one million users which seeks to list in a foreign stock exchange should also be subject to cybersecurity review, and further elaborated the factors to be considered when assessing the national security risks of the relevant activities. Later 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 also be subject to cybersecurity review. Our business does not involve the collection of the personal information of over one million users, implicate cybersecurity, or involve any other type of restricted industry and we do not believe we are among the “operator of critical information infrastructure”, “data processor”, “online platform operators” or “data handler” as mentioned above. However, since the Measures for Cybersecurity Review (2021 version) was newly adopted and the Network Internet Data Protection Draft Regulations (draft for comments) is in the process of being formulated, it is unclear on how it will be interpreted, amended and implemented by the relevant PRC governmental authorities. Thus, we could not assure you that we will not be deemed as the “operator of critical information infrastructure”, “data processor”, “online platform operators” or “data handler” as mentioned above. As of the date of this prospectus, we and our PRC subsidiaries have not been involved in any investigations on cybersecurity review initiated by the CAC or related governmental regulatory authorities, and have not received any requirements to obtain permissions from any PRC authorities to issue our ordinary shares to foreign investors or were denied such permissions by any PRC authorities.

Very recently, certain internet platforms in China have been reportedly subject to heightened regulatory scrutiny in relation to cybersecurity matters. As of the date of this prospectus, we have not been informed by any PRC governmental authority of any requirement that we file for a cybersecurity review. However, if we are deemed to be a critical information infrastructure operator or a company that is engaged in data processing and holds personal information of more than one million users, we could be subject to PRC cybersecurity review. As there remains significant uncertainty in the interpretation and enforcement of relevant PRC cybersecurity laws and regulations, we cannot assure you that we would not be subject to such cybersecurity review requirement, and if so, that we would 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, removal of our app from the relevant app stores, 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.

On June 10, 2021, the Standing Committee of the National People’s Congress of China, or the SCNPC, promulgated the PRC Data Security Law, which took effect in September 2021. The PRC Data Security Law imposes data security and privacy obligations on entities and individuals carrying out data activities, and introduces a data classification and hierarchical protection system based on the importance of data in economic and social development, as well as the degree of harm it will cause to national security, public interests, or legitimate rights and interests of individuals or organizations when such data is tampered with, destroyed, leaked, or illegally acquired or used. The PRC Data Security Law also provides for a national security review procedure for data activities that may affect national security and imposes export restrictions on certain data and information. As uncertainties remain regarding the interpretation and implementation of these laws and regulations, we cannot assure you that we will comply with such regulations in all respects and we may be ordered to rectify or terminate any actions that are deemed illegal by regulatory authorities. We may also become subject to fines and/or other sanctions which may have material adverse effect on our business, operations and financial condition.

On August 20, 2021, the Standing Committee of the National People’s Congress of China promulgated the PRC Personal Information Protection Law, or the PIPL, which went into effect in November 2021. In addition to other rules and principles of personal information processing, the PIPL specifically provides rules for processing sensitive personal information. Sensitive personal information refers to personal information that, once leaked or illegally used, could easily lead to the infringement of human dignity or harm to the personal or property safety of an individual, including biometric recognition, religious belief, specific identity, medical and health, financial account, personal whereabouts and other information of an individual, as well as any personal information of a minor under the age of 14. Only where there is a specific purpose and sufficient necessity, and under circumstances where strict protection measures are taken, may personal information processors process sensitive personal information. A personal information processor shall inform the individual of the necessity of processing such sensitive personal information and the impact thereof on the individual’s rights and interests. We may collect sensitive personal information such as ID card photos and personal photos from our customers for purpose of verifying their personal identities when they carry out online check-in or make online reservation with our hotels. As uncertainties remain regarding the interpretation and implementation of the PIPL, we cannot assure you that we will comply with the PIPL in all respects and regulatory authorities may order us to rectify or terminate our current practice of collecting and processing sensitive personal information. We may also become subject to fines and/or other penalties which may have material adverse effect on our business, operations and financial condition.

While we take various measures to comply with all applicable data privacy and protection laws and regulations, there is no guarantee that our current security measures and those of our third-party service providers may always be adequate for the protection of our customer, employee or company data; and like all companies, we have experienced data incidents from time to time. Unauthorized access to our proprietary internal and customer data may be obtained through break-ins, sabotage, breach of our secure network by an unauthorized party, computer viruses, computer denial-of-service attacks, employee theft or misuse, breach of the security of the networks of our third-party service providers, or other misconduct. Because the techniques used by computer programmers who may attempt to penetrate and sabotage our proprietary internal and customer data change frequently and may not be recognized until launched against a target, we may be unable to anticipate these techniques. Unauthorized access to our proprietary internal and customer data may also be obtained through inadequate use of security controls. Any of such incidents may harm our reputation and adversely affect our business and results of operations. In addition, we may be subject to negative publicity about our security and privacy policies, systems, or measurements from time to time.

Any failure to prevent or mitigate security breaches, cyber-attacks or other unauthorized access to our systems or disclosure of our customers’ data, including their personal information, could result in loss or misuse of such data, interruptions to our service system, diminished customer experience, loss of customer confidence and trust, impairment of our technology infrastructure, and harm our reputation and business, resulting in significant legal and financial exposure and potential lawsuits.

If the Chinese government were to impose new requirements for approval from the PRC Authorities to issue our ordinary shares to foreign investors or list on a foreign exchange, 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 be worthless.

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.

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) and the Measures for the Overseas Issuance of Securities and Listing Record-Filings by Domestic Enterprises (Draft for Comments), which were published for public comments only with the comment period expired on January 23, 2022. The Draft Rules Regarding Overseas Listing lay out the filing regulation arrangement for both direct and indirect overseas listing, and clarify the determination criteria for indirect overseas listing in overseas market.

The Draft Rules Regarding Overseas Listing stipulate that the Chinese-based companies, or the issuer, shall fulfill the filing procedures within three working days after the issuer makes an application for initial public offering and listing in an overseas market. The required filing materials for an initial public offering and listing should include at least the following: record-filing report and related undertakings; 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); PRC legal opinion; and prospectus.

In addition, an overseas offering and listing is prohibited under any of the following circumstances: (1) if the intended securities offering and listing is specifically prohibited by national laws and regulations and relevant provisions; (2) if the intended securities offering and listing may constitute a threat to or endangers national security as reviewed and determined by competent authorities under the State Council in accordance with law; (3) if there are material ownership disputes over the equity, major assets, and core technology, etc. of the issuer; (4) if, in the past three years, the domestic enterprise or its controlling shareholders or actual 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; (5) if, in past three years, directors, supervisors, or senior executives 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; (6) other circumstances as prescribed by the State Council. The Administration Provisions defines the legal liabilities of breaches such as failure in fulfilling filing obligations or fraudulent filing conducts, imposing a fine between RMB 1 million and RMB 10 million, and in cases of severe violations, a parallel order to suspend relevant business or halt operation for rectification, revoke relevant business permits or operational license.

However, as of the date of this prospectus, the Draft Rules Regarding Overseas Listing have not yet gone into effect, it is still uncertain how PRC governmental authorities will regulate overseas listing in general and whether we are required to obtain any specific regulatory approvals or to fulfill any record-filing requirements. The Draft Rules Regarding Overseas Listing, 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 Draft Rules Regarding Overseas List on a timely basis, or at all. If we do not receive any required approvals or record-filing or if we incorrectly conclude that approvals or record-filing are not required or if the CSRC or other regulatory agencies promulgate new rules, explanations or interpretations requiring that we obtain their prior approvals or ex-post record-filing for this offering and any follow-on offering, we may be unable to obtain such approvals and record-filing which could significantly limit or completely hinder our ability to offer or continue to offer securities to our investors.

Furthermore, the PRC government authorities may strengthen oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers like us. Such actions taken by the PRC government authorities may intervene or influence our operations at any time, which are beyond our control. Therefore, any such action may adversely affect our operations and significantly limit or hinder our ability to offer or continue to offer securities and reduce the value of such securities.

As of the date of this prospectus, we and our PRC subsidiary have not been involved in any investigations on cybersecurity review initiated by the Cyber Administration of China or related governmental regulatory authorities, and have not received any requirements to obtain permissions from any PRC authorities to issue our Ordinary Shares to foreign investors or were denied such permissions by any PRC authorities. However, given the current PRC regulatory environment, it is uncertain when and whether we or our PRC subsidiaries, will be required to obtain permission from the PRC government to list on U.S. exchanges in the future, and even when such permission is obtained, whether it will be denied or rescinded.

We have been closely monitoring regulatory developments in China regarding any necessary approvals from the CSRC or other PRC governmental authorities required for overseas listings, including this offering. As of the date of this prospectus, except for the potential uncertainties disclosed above, we have not received any inquiry, notice, warning, sanctions or regulatory objection to this offering from the CSRC or other PRC governmental authorities. However, there remains significant uncertainty as to the enactment, interpretation and implementation of regulatory requirements related to overseas securities offerings and other capital markets activities. If it is determined in the future that the approval of the CSRC, the CAC or any other regulatory authority is required for this offering, the offering will be delayed until we have obtained the relevant approvals. There is also the possibility that we may not be able to obtain or maintain such approval or that we inadvertently concluded that such approval was not required. If the approval was required while we inadvertently concluded that such approval was not required or if applicable laws and regulations or the interpretation of such were modified to require us to obtain the CSRC approval in the future, we may face sanctions by the CSRC, the CAC or other PRC regulatory agencies. These regulatory agencies may impose fines and penalties on our operations in China, limit our ability to pay dividends outside of China, limit our operations in China, delay or restrict the repatriation of the proceeds from this offering into China or take other actions that could have a material adverse effect on our business, financial condition, results of operations and prospects, as well as the trading price of our securities. The CSRC, the CAC, or other PRC regulatory agencies also may take actions requiring us, or making it advisable for us, to halt this offering before settlement and delivery of our ordinary shares. Consequently, if you engage in market trading or other activities in anticipation of and prior to settlement and delivery, you do so at the risk that settlement and delivery may not occur. In addition, if the CSRC, the CAC or other regulatory PRC agencies later promulgate new rules requiring that we obtain their approvals for this offering, we may be unable to obtain a waiver of such approval requirements, if and when procedures are established to obtain such a waiver. Any uncertainties and/or negative publicity regarding such an approval requirement could have a material adverse effect on the trading price of our securities.

If the Chinese government chooses to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers, 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 be worthless.

Recent statements by the Chinese government have indicated an intent to exert more oversight and control over offerings that are conducted overseas and/or foreign investments in China based issuers. PRC has recently proposed new rules that would require companies collecting or holding large amounts of data to undergo a cybersecurity review prior to listing in foreign countries, a move that would significantly tighten oversight over China-based internet giants. On July 10, 2021, the CAC issued a revised draft of the Measures for Cybersecurity Review for public comments, which required that, among others, in addition to “operator of critical information infrastructure”, any “data processor” controlling personal information of no less than one million users which seeks to list in a foreign stock exchange should also be subject to cybersecurity review, and further elaborated the factors to be considered when assessing the national security risks of the relevant activities. Later 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 also be subject to cybersecurity review. On November 14, 2021, the CAC published the Network Internet Data Protection Draft Regulations (draft for comments), 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.

Our business does not involve the collection of the personal information of over one million users, implicate cybersecurity, or involve any other type of restricted industry and we do not believe we are among the “operator of critical information infrastructure”, “data processor”, “online platform operators” or “data handler” as mentioned above. However, since the Measures for Cybersecurity Review (2021 version) was newly adopted and the Network Internet Data Protection Draft Regulations (draft for comments) is in the process of being formulated, it is unclear on how it will be interpreted, amended and implemented by the relevant PRC governmental authorities. Thus, we could not assure you that we will not be deemed as the “operator of critical information infrastructure”, “data processor”, “online platform operators” or “data handler” as mentioned above. As of the date of this prospectus, we and our PRC subsidiaries have not been involved in any investigations on cybersecurity review initiated by the CAC or related governmental regulatory authorities, and have not received any requirements to obtain permissions from any PRC authorities to issue our ordinary shares to foreign investors or were denied such permissions by any PRC authorities. Uncertainties still exist due to the possibility that laws, regulations, or policies in the PRC could change rapidly in the future. Any future action by the PRC government expanding the categories of industries and companies whose foreign securities offerings are subject to review by the CRSC or the CAC could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and could cause the value of such securities to significantly decline or be worthless. In addition, Chinese regulatory authorities could change the rules and regulations regarding foreign ownership in the industry in which we operate, which 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. New regulations restricting or forbidding foreign ownership in our industry could cause the value of our securities to significantly decline or to become worthless.

Uncertainties exist with respect to the interpretation and implementation of the PRC Foreign Investment Law, which may impose new burdens on us.

The PRC Foreign Investment Law, or the FIL, was enacted by the National People’s Congress of the PRC on March 15, 2019 and became effective on January 1, 2020, replaced the trio of existing laws regulating foreign investment in China, namely, the Sino-foreign Equity Joint Venture Enterprise Law, the Sino- foreign Cooperative Joint Venture Enterprise Law and the Wholly Foreign-invested Enterprise Law, together with their implementation rules and ancillary regulations. This law has become the legal foundation for foreign investment in the PRC. The FIL embodies an expected PRC regulatory trend to rationalize its foreign investment regulatory regime in line with prevailing international practice and the legislative efforts to unify the corporate legal requirements for both foreign and domestic investments. However, uncertainties exist with respect to interpretation and implementation of the FIL, which may adversely impact our corporate governance practices and increase our compliance costs. For instance, we might be required by governmental interpretations or implementing rules of the FIL to adjust the corporate governance of our PRC subsidiary in a five-year transition period. In addition, the FIL imposes information reporting requirements on foreign investors or foreign invested enterprises. Failure to take timely and appropriate measures to cope with any of these or other regulatory compliance requirements under the FIL may lead to rectification obligations, penalties, or other regulatory sanctions on us.

Failure of beneficial owners of our shares who are PRC residents to comply with certain PRC foreign exchange regulations could restrict our ability to distribute profits, restrict our overseas and cross-border investment activities and subject us to liability under PRC law.

The State Administration of Foreign Exchange, or SAFE, has promulgated regulations, including the Notice on Relevant Issues Relating to Foreign Exchange Control on Domestic Residents’ Investment and Financing and Round-Trip Investment through Special Purpose Vehicles, or Circular 37, and its appendices. These regulations require PRC residents, including PRC institutions and individuals, to register with local branches of SAFE in connection with their direct establishment or indirect control of an offshore entity, for the purpose of overseas investment and financing, with such PRC residents’ legally owned assets or equity interests in domestic enterprises or offshore assets or interests, referred to in Circular 37 as a “special purpose vehicle”, or SPV. The term “control” under Circular 37 is broadly defined as the operation rights, beneficiary rights or decision-making rights acquired by the PRC residents in the offshore SPVs by such means as acquisition, trust, proxy, voting rights, repurchase, convertible bonds or other arrangements. Circular 37 further requires amendment to the registration in the event of any significant changes with respect to the SPV, such as increase or decrease of capital contributed by PRC individuals, share transfer or exchange, merger, division or other material event. In the event that a PRC shareholder holding interests in a SPV fails to fulfill the required SAFE registration, the PRC subsidiaries of that SPV may be prohibited from making profit distributions to the offshore parent and from carrying out subsequent cross-border foreign exchange activities, and the SPV may be restricted in its ability to contribute additional capital into its PRC subsidiaries. Further, failure to comply with the various SAFE registration requirements described above could result in liability under PRC law for foreign exchange evasion.

These regulations apply to our direct and indirect shareholders who are PRC residents and may apply to any offshore acquisitions or share transfers that we make in the future if our shares are issued to PRC residents. However, in practice, different local SAFE branches may have different views and procedures on the application and implementation of SAFE regulations, and there remains uncertainty with respect to its implementation. We cannot assure you that these direct or indirect shareholders of our company who are PRC residents will be able to successfully update the registration of their direct and indirect equity interest as required in the future. If they fail to update the registration, our PRC subsidiary could be subject to fines and legal penalties, and SAFE could restrict our cross-border investment activities and our foreign exchange activities.

On February 13, 2015, the SAFE promulgated a Notice on Further Simplifying and Improving Foreign Exchange Administration Policy on Direct Investment, or SAFE Notice 13, which became effective on June 1, 2015. Under SAFE Notice 13, applications for foreign exchange registration of inbound foreign direct investments and outbound overseas direct investments, including those required under Circular 37, will be filed with qualified banks instead of SAFE. The qualified banks will directly examine the applications and accept registrations under the supervision of SAFE.

Some of our shareholders that we are aware of are subject to SAFE regulations, and we expect all of these shareholders will have completed all necessary registrations with the local SAFE branch or qualified banks as required by Circular 37 immediately before completion of this offering. We cannot assure you, however, that all of these individuals may continue to make required filings or updates in a timely manner, or at all. We can provide no assurance that we are or will in the future continue to be informed of identities of all PRC residents holding direct or indirect interest in our company. Any failure or inability by such individuals to comply with SAFE regulations may subject us to fines or legal sanctions, such as restrictions on our cross-border investment activities or our PRC subsidiaries’ ability to distribute dividends to, or obtain foreign exchange denominated loans from, our company or prevent us from making distributions or paying dividends. As a result, our business operations and our ability to make distributions to you could be materially and adversely affected.

Furthermore, as these foreign exchange regulations are still relatively new and their interpretation and implementation have been constantly evolving, it is unclear how these regulations, and any future 43 Table of Contents regulation concerning offshore or cross-border transactions, will be interpreted, amended and implemented by the relevant government authorities. For example, we may be subject to a more stringent review and approval process with respect to our foreign exchange activities, such as remittance of dividends and foreign-currency-denominated borrowings, which may adversely affect our financial condition and results of operations. In addition, if we decide to acquire a PRC domestic company, we cannot assure you that we or the owners of such company, as the case may be, will be able to obtain the necessary approvals or complete the necessary filings and registrations required by the foreign exchange regulations. This may restrict our ability to implement our acquisition strategy and could adversely affect our business and prospects.

PRC regulations of loans and direct investment by offshore holding companies to PRC entities may delay or prevent us from using the proceeds of this offering to make loans or additional capital contributions to our PRC subsidiary, which could materially and adversely affect our liquidity and our ability to fund and expand our business.

We are an offshore holding company conducting our operations in China through our PRC subsidiary. We may make loans to our PRC subsidiary or we may make additional capital contributions to our subsidiary in China. Any loans by us to our subsidiary in China to finance their activities cannot exceed statutory limits and must be registered with the local counterpart of the PRC State Administration of Foreign Exchange, or SAFE. There is currently no limit on the amount of loans that we could make to our PRC subsidiary. We believe we will be able to loan our PRC subsidiary the entire amount of the net proceeds of this offering. In addition, a foreign invested enterprise shall use its capital pursuant to the principle of authenticity and self-use within its business scope. To date, we have not made any loans to our operating subsidiary in the PRC.

In March 2015, SAFE promulgated the Circular on Reforming the Administration Measures on Conversion of Foreign Exchange Registered Capital of Foreign-invested Enterprises, or SAFE Circular 19, which took effect and replaced certain previous SAFE regulations from June 1, 2015. On December 30,2019, the State Administration of Foreign Exchange promulgated the “notice concerning the abolishment and invalidation of the terms of five normative documents on foreign exchange control and seven normative documents on foreign exchange control. SAFE further promulgated the Circular of the SAFE on Reforming and Regulating Policies on the Control over Foreign Exchange Settlement of Capital Accounts, or SAFE Circular 16, which took effective on June 9, 2016 and, among other things, amended certain provisions of SAFE Circular 19. According to SAFE Circular 19 and SAFE Circular 16, the flow and use of Renminbi capital converted from foreign currency-denominated registered capital of a foreign-invested company is regulated such that Renminbi capital may not be used for business beyond its business scope, or to provide loans to persons other than affiliates, unless otherwise permitted under its business scope. SAFE Circular 19 and SAFE Circular 16 may limit our ability to transfer the net proceeds from this offering to our PRC subsidiary and convert the net proceeds into RMB.

In light of the various requirements imposed by PRC regulations on loans to and direct investment in PRC entities by offshore holding companies, we cannot assure you that we will be able to complete the necessary government registrations or obtain the necessary government approvals on a timely basis, if at all, with respect to future loans to our PRC subsidiary or future capital contributions by us to our subsidiary in China. As a result, uncertainties exist as to our ability to provide prompt financial support to our PRC subsidiary when needed. If we fail to complete such registrations or obtain such approvals, our ability to use the proceeds we expect to receive from this offering and to capitalize or otherwise fund our PRC operations may be negatively affected, which could materially and adversely affect our liquidity and our ability to fund and expand our business.

Restrictions under PRC law on our PRC subsidiary’s ability to make dividends and other distributions could materially and adversely affect our ability to grow, make investments or complete acquisitions that could benefit our business, pay dividends to you, and otherwise fund and conduct our business.

Substantially all of our revenues are earned by our PRC subsidiary. However, PRC regulations restrict the ability of our PRC subsidiary to make dividend and other payments to its offshore parent company. PRC legal restrictions permit payments of dividends by our PRC subsidiary only out of its accumulated after-tax profits, if any, determined in accordance with PRC accounting standards and regulations. Our PRC subsidiary is also required under PRC laws and regulations to allocate at least 10% of its annual after-tax profits determined in accordance with PRC GAAP to a statutory general reserve fund until the amounts in said fund reaches 50% of our PRC subsidiary’s registered capital. Allocations to these statutory reserve funds can only be used for specific purposes and are not transferable to us in the form of loans, advances or cash dividends. Any limitations on the ability of our PRC subsidiary to transfer funds to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends and otherwise fund and conduct our business. In addition, to the extent that our cash or/or other assets are held in our PRC subsidiary or our Hong Kong subsidiary, we face a risk that the PRC government may impose new restrictions or limitations on, or may directly intervene to prevent, the transfer of such funds or assets outside of the PRC or Hong Kong. In that event, our cash and assets, which are held primarily in our PRC operating subsidiary, may become unavailable to fund operations or for other uses outside of the PRC or Hong Kong.

Governmental control of currency conversion may limit our ability to utilize our cash balance effectively and affect the value of your investment.

The PRC government imposes controls on the convertibility of the Renminbi into foreign currencies and, in certain cases, the remittance of currency out of China. Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior approval of SAFE by complying with certain procedural requirements. Specifically, under the existing exchange restrictions, without prior approval of SAFE, cash generated from the operations of our PRC subsidiaries in China may be used to pay dividends to our Company. However, approval from or registration with appropriate government authorities is required where Renminbi is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of loans denominated in foreign currencies. As a result, we need to obtain SAFE approval to use cash generated from the operations of our PRC subsidiary to pay off its debt in a currency other than Renminbi owed to entities outside China, or to make other capital expenditure payments outside China in a currency other than Renminbi.

In light of the flood of capital outflows, the PRC government may from time to time impose more restrictive foreign exchange policies and increase scrutiny of major outbound capital movements. More restrictions and substantial vetting processes may be required by SAFE or other government authorities to regulate cross-border transactions falling under the capital account. The PRC government may at its discretion restrict access to foreign currencies for current account transactions in the future. If the foreign exchange control system prevents us from obtaining sufficient foreign currencies to satisfy our foreign currency demands, we may not be able to pay dividends in foreign currencies to our shareholders, including holders of our ordinary shares.

PRC laws and regulations have more complex procedures for some acquisitions of Chinese companies by foreign investors, which could make it more difficult for us to pursue growth through acquisitions in China.

PRC laws and regulations, such as the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the M&A Rules, Anti-Monopoly Law of the PRC and the Rules of the PRC Ministry of Commerce, or the MOFCOM, on Implementation of the Security Review System of Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the MOFCOM Security Review Rules, established additional procedures and requirements that are expected to make merger and acquisition activities in China by foreign investors more time-consuming and complex, including requirements in some instances that the MOFCOM be notified in advance of any change of control transaction in which a foreign investor takes control of a PRC domestic enterprise, or that the approval from the MOFCOM be obtained in circumstances where offshore companies established or controlled by PRC enterprises or residents acquire affiliated domestic companies. PRC laws and regulations also require certain merger and acquisition transactions to be subject to merger control review or security review.

According to these laws and regulations, a security review is required for mergers and acquisitions by foreign investors having “national defense and security” concerns, and for mergers and acquisitions by which foreign investors may acquire the “de facto control” of domestic enterprises that have “national security” concerns. In addition, when deciding whether a specific merger or acquisition of a domestic enterprise by foreign investors is subject to the security review, the MOFCOM will look into the substance and actual impact of the transaction. The MOFCOM Security Review Rules further prohibit foreign investors from bypassing the security review requirement by structuring transactions through proxies, trusts, indirect investments, leases, loans, control through contractual arrangements or offshore transactions.

We might grow our business in part by acquiring other companies operating in our industry. Complying with the requirements of the relevant regulations to complete such transactions could be time-consuming, and any required approval processes, including approval from the MOFCOM, may delay or inhibit our ability to complete such transactions, which could affect our ability to expand our business or maintain our market share.

Our business and our profitability may be negatively affected by the rising labor costs and potential obligations to make additional contributions of social insurance premium and housing funds.

In recent years, labor costs in China have continued to increase, driven by increased inflation, as well as enactment of new labor laws. As a result, we expect our labor costs, including wages and employee benefits, to continue to increase in the foreseeable future. Unless we are able to pass on these increased labor and benefit costs to our customers by increasing the prices of our products and services, our financial condition and results of operations may be adversely affected.

Pursuant to the laws and regulations applicable to China’s foreign investment enterprises, our subsidiaries that are foreign investment enterprises in the PRC have to make appropriation from their after- tax profit, as determined under PRC GAAP, to reserve funds including (i) general reserve fund, (ii) enterprise expansion fund and (iii) staff bonus and welfare fund. The appropriation to the general reserve fund must be at least 10% of the after-tax profits calculated in accordance with PRC GAAP. Appropriation is not required if the reserve fund has reached 50% of the registered capital of our subsidiaries. As of the date of this prospectus, our PRC subsidiary is still required to contribute to general reserve fund and these contributions are not expected to cease in the near term. Appropriation to the other two reserve funds is at our subsidiary’s discretion. Our PRC subsidiary did not make any contributions to the enterprise expansion fund or the staff and bonus welfare fund during each period presented. The restricted amounts of our PRC subsidiary totaled $177,005 and $146,984 as of December 31, 2021 and 2020, respectively. The relevant government agencies may examine whether an employer has made adequate payments of these requisite statutory employee benefits, and those employers who fail to make adequate payments may be subject to late payment fees, fines and/or other penalties. If the relevant PRC authorities determine that we shall make supplemental contributions, and that we are subject to fines and legal sanctions, our business, financial condition and results of operations may be adversely affected.

Under the PRC Enterprise Income Tax Law, we may be classified as a PRC resident enterprise, which could result in unfavorable tax consequences to us and our shareholders and have a material adverse effect on our results of operations and the value of your investment.

Under the PRC Enterprise Income Tax Law, as amended and effective in December 2018, an enterprise established outside China with “de facto management bodies” within China is considered a “resident enterprise” for PRC enterprise income tax purposes and is generally subject to a uniform 25% enterprise income tax rate on its worldwide income.

In 2009, the State Administration of Taxation, or the SAT, issued the Notice Regarding the Determination of PRC-Controlled Overseas Incorporated Enterprises as PRC Tax Resident Enterprise on the Basis of De Facto Management Bodies, or SAT Circular 82, which provides certain specific criteria for determining whether the “de facto management body” of a PRC-controlled enterprise that is incorporated offshore is located in China. Further to SAT Circular 82, the SAT issued the Administrative Measures for Enterprise Income Tax of PRC-Controlled Offshore Incorporated Resident Enterprises (Trial), or SAT Bulletin 45, effective 2011, to provide more guidance on the implementation of SAT Circular 82. SAT Bulletin 45 clarified certain issues in the areas of resident status determination, post-determination administration and competent tax authorities’ procedures.

According to SAT Circular 82, an offshore incorporated enterprise controlled by a PRC enterprise or a PRC enterprise group will be considered as a PRC tax resident enterprise by virtue of having its “de facto management body” in China and will be subject to PRC enterprise income tax on its worldwide income only if all of the following conditions are met: (a) the senior management and core management departments in charge of its daily operations function have their presence mainly in China; (b) its financial and human resources decisions are subject to determination or approval by persons or bodies in China; (c) its major assets, accounting books, company seals, and minutes and files of its board and shareholders’ meetings are located or kept in China; and (d) more than half of the enterprise’s directors or senior management with voting rights habitually reside in China. SAT Bulletin 45 specifies that when provided with a copy of a PRC tax resident determination certificate from a resident PRC controlled offshore incorporated enterprise, the payer should not withhold 10% income tax when paying the PRC-sourced dividends, interest and royalties to the PRC controlled offshore incorporated enterprise.

Although SAT Circular 82 and SAT Bulletin 45 only apply to offshore incorporated enterprises controlled by PRC enterprises or PRC enterprise groups and not those controlled by PRC individuals or foreigners, the determination criteria set forth therein may reflect the SAT’s general position on how the term “de facto management body” could be applied in determining the tax resident status of offshore enterprises, regardless of whether they are controlled by PRC enterprises, individuals or foreigners.

In addition, the SAT issued the Announcement of the State Administration of Taxation on Issues concerning the Determination of Resident Enterprises Based on the Standards of Actual Management Institutions in January 2014 to provide more guidance on the implementation of SAT Circular 82. This bulletin further provides that, among other things, an entity that is classified as a “resident enterprise” in accordance with the circular shall file the application for classifying its status of residential enterprise with the local tax authorities where its main domestic investors are registered. From the year in which the entity is determined to be a “resident enterprise,” any dividend, profit and other equity investment gain shall be taxed in accordance with the enterprise income tax law and its implementing rules.

If the PRC tax authorities determine that we or any of our non-PRC subsidiaries is a PRC resident enterprise for PRC enterprise income tax purposes, then we or any such non-PRC subsidiary could be subject to PRC tax at a rate of 25% on its world-wide income, which could materially affect our financial performance. In addition, we will also be subject to PRC enterprise income tax reporting obligations.

If the PRC tax authorities determine that our company is a PRC resident enterprise for PRC enterprise income tax purposes, gains realized on the sale or other disposition of ordinary shares may be subject to PRC tax, at a rate of 10% in the case of non-PRC enterprises or 20% in the case of non-PRC individuals (in each case, subject to the provisions of any applicable tax treaty), if such gains are deemed to be from PRC sources. Any such tax may reduce the returns on your investment in our shares.

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

Under the PRC Enterprise Income Tax Law and its implementation rules, the profits of a foreign- invested enterprise generated through operations, which are distributed to its immediate holding company outside China, will be subject to a withholding tax rate of 10%. Pursuant to a special arrangement between Hong Kong and China, such rate may be reduced to 5% if a Hong Kong resident enterprise owns more than 25% of the equity interest in the PRC company. Our current PRC subsidiary is wholly owned by our Hong Kong subsidiary, Floade Technology Company Limited. Accordingly, Floade Technology Company Limited. may qualify for a 5% tax rate in respect of distributions from its PRC subsidiary. Under the Notice of the State Administration of Taxation on Issues regarding the Administration of the Dividend Provision in Tax Treaties promulgated in 2009, the taxpayer needs to satisfy certain conditions to enjoy the benefits under a tax treaty. These conditions include: (i) the taxpayer must be the beneficial owner of the relevant dividends, and (ii) the corporate shareholder to receive dividends from the PRC subsidiary must have met the direct ownership thresholds during the 12 consecutive months preceding the receipt of the dividends. Further, the SAT promulgated the Notice on Issues concerning “Beneficial Owner” in Tax Treaties in 2018, which limits the “beneficial owner” to a person who has the right to own and dispose of the income and the rights or properties generated from the said income, and sets forth certain detailed factors in determining “beneficial owner” status, such as being normally engaged in substantive operations.

Entitlement to a lower tax rate on dividends according to tax treaties or arrangements between the PRC central government and governments of other countries or regions is subject to the Administrative Measures for Non-Resident Taxpayers to Enjoy Treatments under Tax Treaties promulgated in 2015, which provides that non-resident enterprises are not required to obtain pre-approval from the relevant tax authority in order to enjoy the reduced withholding tax. Instead, non-resident enterprises and their withholding agents may, by self-assessment and on confirmation that the prescribed criteria to enjoy the tax treaty benefits are met, directly apply the reduced withholding tax rate, and file necessary forms and supporting documents when performing tax filings, which will be subject to post-tax filing examinations by the relevant tax authorities. As a result, we cannot assure you that we will be entitled to any preferential withholding tax rate under tax treaties for dividends received from our PRC subsidiary.

We face uncertainty with respect to indirect transfer of equity interests in PRC resident enterprises by their non-PRC holding companies.

We face uncertainties regarding the reporting on and consequences of previous private equity financing transactions involving the transfer and exchange of shares in our company by non-resident investors.

In February 2015, the SAT issued the Bulletin on Issues of Enterprise Income Tax on Indirect Transfers of Assets by Non-PRC Resident Enterprises, or SAT Bulletin 7, as amended in 2017. Pursuant to this bulletin, an “indirect transfer” of assets, including equity interests in a PRC resident enterprise, by non-PRC resident enterprises may be re-characterized and treated as a direct transfer of PRC taxable assets, if such arrangement does not have a reasonable commercial purpose and was established for the purpose of avoiding payment of PRC enterprise income tax. As a result, gains derived from such indirect transfer may be subject to PRC enterprise income tax. According to SAT Bulletin 7, “PRC taxable assets” include assets attributed to an establishment in China, immovable properties located in China, and equity investments in PRC resident enterprises, in respect of which gains from their transfer by a direct holder, being a non-PRC resident enterprise, would be subject to PRC enterprise income taxes. When determining whether there is a “reasonable commercial purpose” of the transaction arrangement, features to be taken into consideration include: whether the main value of the equity interest of the relevant offshore enterprise derives from PRC taxable assets; whether the assets of the relevant offshore enterprise mainly consist of direct or indirect investment in China or if its income mainly derives from China; whether the offshore enterprise and its subsidiaries directly or indirectly holding PRC taxable assets have real commercial nature which is evidenced by their actual function and risk exposure; the duration of existence of the business model and organizational structure; the income tax payable abroad on the income from the indirect transfer of Chinese taxable assets; the replicability of the transaction by direct transfer of PRC taxable assets; and the tax situation of such indirect transfer and applicable tax treaties or similar arrangements. In respect of an indirect offshore transfer of assets of a PRC establishment, the resulting gain is to be included with the enterprise income tax filing of the PRC establishment or place of business being transferred, and would consequently be subject to PRC enterprise income tax at a rate of 25%. Where the underlying transfer relates to the immovable properties located in China or to equity investments in a PRC resident enterprise, which is not related to a PRC establishment or place of business of a non-resident enterprise, a PRC enterprise income tax of 10% would apply, subject to available preferential tax treatment under applicable tax treaties or similar arrangements, and the party who is obligated to make the transfer payments has the withholding obligation. Where the payer fails to withhold any or sufficient tax, the transferor is required to declare and pay such tax to the tax authority by itself within the statutory time limit. Late payment of applicable tax will subject the transferor to default interest. SAT Bulletin 7 does not apply to transactions of sale of shares by investors through a public stock exchange where such shares were acquired from a transaction through a public stock exchange.

There is uncertainty as to the application of SAT Bulletin 7. We face uncertainties as to the reporting and other implications of certain past and future transactions where PRC taxable assets are involved, such as offshore restructuring, sale of the shares in our offshore subsidiary or investments. Our Company may be subject to filing obligations or taxed if we are the transferor in such transactions, and may be subject to withholding obligations if our Company is the transferee in such transactions under SAT Bulletin 7. For transfer of shares in our Company by investors that are non-PRC resident enterprises, our PRC subsidiary may be requested to assist in the filing under SAT Bulletin 7. As a result, we may be required to expend valuable resources to comply with SAT Bulletin 7 or to request the relevant transferors from whom we purchase taxable assets to comply with these circulars, or to establish that our Company should not be taxed under these circulars, which may have a material adverse effect on our financial condition and results of operations.

Fluctuation in the value of Renminbi may have a material adverse effect on the value of your investment.

The value of the Renminbi against the U.S. dollar and other currencies is affected by changes in China’s political and economic conditions and China’s foreign exchange policies, among other things. In 2005, the PRC government changed its decades-old policy of pegging the value of the Renminbi to the U.S. dollar, and the Renminbi appreciated more than 20% against the U.S. dollar over the following three years. Between July 2008 and June 2010, this appreciation halted and the exchange rate between Renminbi and the U.S. dollar remained within a narrow band. Since June 2010, Renminbi has fluctuated against the U.S. dollar, at times significantly and unpredictably. With the development of the foreign exchange market and progress towards interest rate liberalization and Renminbi internationalization, the PRC government may in the future announce further changes to the exchange rate system and we cannot assure you that Renminbi will not appreciate or depreciate significantly in value against the U.S. dollar in the future. It is difficult to predict how market forces or PRC or U.S. government policy may impact the exchange rate between Renminbi and the U.S. dollar in the future.

Substantially all of our revenues and costs are denominated in Renminbi, and substantially all of our financial assets are also denominated in Renminbi. Any significant depreciation of Renminbi may materially adversely affect the value of and any dividends payable on our shares in U.S. dollars. To the extent that we need to convert U.S. dollars we receive from this offering into Renminbi for our operations, appreciation of Renminbi against U.S. dollar would have an adverse effect on the Renminbi amount we would receive from the conversion. Conversely, if we decide to convert our Renminbi into U.S. dollars for the purpose of paying dividends on our ordinary shares or for other business purposes, appreciation of the U.S. dollar against Renminbi would have an adverse effect on the U.S. dollar amount available to us.

We are not in compliance with the PRC’s regulations relating to offshore investment activities by PRC residents, and as a result, the PRC shareholders may be subject to severe penalties if we are not able to remediate the non-compliance.

In July 2014, SAFE promulgated the Circular on Issues Concerning Foreign Exchange Administration Over the Overseas Investment and Financing and Roundtrip Investment by Domestic Residents Via Special Purpose Vehicles, or Circular 37, which replaced Relevant Issues Concerning Foreign Exchange Control on Domestic Residents’ Corporate Financing and Roundtrip Investment through Offshore Special Purpose Vehicles, or Circular 75. Circular 37 requires PRC residents to register with local branches of SAFE in connection with their direct establishment or indirect control of an offshore entity, referred to in Circular 37 as a “special purpose vehicle” for the purpose of holding domestic or offshore assets or interests. Circular 37 further requires amendment to a PRC resident’s registration in the event of any significant changes with respect to the special purpose vehicle, such as an increase or decrease in the capital contributed by PRC individuals, share transfer or exchange, merger, division or other material event. Under these regulations, PRC residents’ failure to comply with specified registration procedures may result in restrictions being imposed on the foreign exchange activities of the relevant PRC entity, including the payment of dividends and other distributions to its offshore parent, as well as restrictions on capital inflows from the offshore entity to the PRC entity, including restrictions on its ability to contribute additional capital to its PRC subsidiaries. Further, failure to comply with the SAFE registration requirements could result in penalties under PRC law for evasion of foreign exchange regulations.

We have requested our shareholders who are Chinese residents to complete the initial foreign exchange registrations and make the necessary applications, filings, and amendments as required under Circular 37 and other related rules. However, we cannot provide any assurances that all of our shareholders who are Chinese residents will comply with our request to make or obtain any applicable registration. Any failure by any of our shareholders who is a PRC resident, or is controlled by a PRC resident, to comply with relevant requirements under these regulations could subject us to fines or sanctions imposed by the PRC government.

In the second quarter of 2020, our PRC subsidiary raised an aggregate of $1,649,730 from 3,530 individuals, nearly all of whom were PRC residents pursuant to a stock transfer agreement executed by each of them. The parties did not intend for the stock transfer agreement to constitute the sale of common stock — the stock transfer agreements were only intended as a simple agreement for future equity — the stock transfer agreements were to document future sales of stock in a parent company which would have legally acquired our PRC subsidiary, such parent company legally reorganized outside of the PRC, and if and only if such parent company was incorporated in either the BVI or Cayman Islands as the initial step towards a public offering of stock of such parent company in the United States. Subsequently, the parties acknowledged that it would have been more appropriate that stock transfer agreements were executed after the date the Company was properly reorganized outside of the PRC. As such, the parties signed rescissions of the stock transfer agreements and any and all monies advanced in connection therewith were returned to the aforementioned individuals. After the proper reorganization of the Company in the Cayman Islands, in lieu of such investment, all of such individuals were offered the opportunity to purchase shares in our parent company incorporated in the Cayman Islands. As a result, no shares of our PRC subsidiary are owned by any party other than our 100% owned Hong Kong subsidiary company. Although all monies initially raised by our PRC subsidiary were returned to all individuals, the raising of such monies was not in compliance with applicable securities laws in the PRC. While the Company believes that the issuance of shares in our Cayman Islands parent company is in accordance with the laws of the Cayman Islands, there is no assurance that we will not face scrutiny or regulatory action by the PRC government for the previous actions taken by our PRC subsidiary.

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

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

Although the audit report included in this prospectus was issued by U.S. auditors who are currently inspected by the PCAOB, if it is later determined that the PCAOB is unable to inspect or investigate our auditor completely, investors would be deprived of the benefits of such inspection and our ordinary shares may be delisted or prohibited from trading.

The audit report included in this prospectus was issued by Wei, Wei & Co., LLP, a U.S.-based accounting firm that is registered with the PCAOB and can be inspected by the PCAOB. We have no intention of dismissing Wei, Wei & Co., LLP in the future or of engaging any auditor not based in the U.S. and not subject to regular inspection by the PCAOB. As an auditor of companies that are registered with the SEC and publicly traded in the United States and a firm registered with the PCAOB, our auditor is required under the laws of the United States to undergo regular inspections by the PCAOB to assess its compliance with the laws of the United States and professional standards. If we were to engage a different auditor in the future, we would engage an auditor that is U.S.-based and subject to full PCAOB inspection with all materials related to the audit of our financial statements accessible to the PCAOB. There is no guarantee, however, that any future auditor engaged by the Company would remain subject to full PCAOB inspection during the entire term of our engagement. In such case, we will engage a new qualified and fully inspected auditor, which may result in us delaying or restating our financial statements.

The PCAOB is currently unable to conduct inspections in China without the approval of Chinese government authorities. If it is later determined that the PCAOB is unable to inspect or investigate our auditor completely, investors may be deprived of the benefits of such inspection. Any audit reports not issued by auditors that are completely inspected by the PCAOB, or a lack of PCAOB inspections of audit work undertaken in China that prevents the PCAOB from regularly evaluating our auditors’ audits and their quality control procedures, could result in a lack of assurance that our financial statements and disclosures are adequate and accurate.

As part of a continued regulatory focus in the United States on access to audit and other information currently protected by national law, in particular mainland China’s, in June 2019, a bipartisan group of lawmakers introduced bills in both houses of the U.S. Congress which, if passed, would require the SEC to maintain a list of issuers for which PCAOB is not able to inspect or investigate the audit work performed by a foreign public accounting firm completely. The proposed Ensuring Quality Information and Transparency for Abroad-Based Listings on our Exchanges (“EQUITABLE”) Act prescribes increased disclosure requirements for these issuers and, beginning in 2025, the delisting from U.S. national securities exchanges such as the Nasdaq of issuers included on the SEC’s list for three consecutive years. It is unclear if this proposed legislation will be enacted. Furthermore, there have been recent deliberations within the U.S. government regarding potentially limiting or restricting China-based companies from accessing U.S. capital markets. On May 20, 2020, the U.S. Senate passed the Holding Foreign Companies Accountable Act (the “HFCAA”), which includes requirements for the SEC to identify issuers whose audit work is performed by auditors that the PCAOB is unable to inspect or investigate completely because of a restriction imposed by a non-U.S. authority in the auditor’s local jurisdiction. The U.S. House of Representatives passed the HFCAA on December 2, 2020, and the HFCAA was signed into law on December 18, 2020. Additionally, in July 2020, the U.S. President’s Working Group on Financial Markets issued recommendations for actions that can be taken by the executive branch, the SEC, the PCAOB or other federal agencies and department with respect to Chinese companies listed on U.S. stock exchanges and their audit firms, in an effort to protect investors in the United States. In response, on November 23, 2020, the SEC issued guidance highlighting certain risks (and their implications to U.S. investors) associated with investments in China-based issuers and summarizing enhanced disclosures the SEC recommends China-based issuers make regarding such risks. On December 2, 2021, the SEC adopted final rules relating to the implementation of certain disclosure and documentation requirements of the HFCAA. We will be required to comply with these rules if the SEC identifies us as having a “non-inspection” year (as defined in the interim final rules) under a process to be subsequently established by the SEC. The SEC is assessing how to implement other requirements of the HFCAA, including the listing and trading prohibition requirements described above. Under the HFCAA, our securities may be prohibited from trading on the Nasdaq or other U.S. stock exchanges if our auditor is not inspected by the PCAOB for three consecutive years, and this ultimately could result in our ordinary shares being delisted. Furthermore, on June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act (“AHFCAA”), which, if enacted, would amend the HFCAA 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. On September 22, 2021, the PCAOB adopted a final rule implementing the HFCAA, which provides a framework for the PCAOB to use when determining, as contemplated under the HFCAA, whether the Board is unable to inspect or investigate completely registered public accounting firms located in a foreign jurisdiction because of a position taken by one or more authorities in that jurisdiction. On December 16, 2021, the PCAOB issued a Determination Report which found that the PCAOB is unable to inspect or investigate completely registered public accounting firms headquartered in: (1) mainland China of the People’s Republic of China, because of a position taken by one or more authorities in mainland China; and (2) Hong Kong, a Special Administrative Region and dependency of the PRC, because of a position taken by one or more authorities in Hong Kong.

Should the PCAOB be unable to fully conduct inspection of our auditor’s work papers in China, it will make it difficult to evaluate the effectiveness of our auditor’s audit procedures or quality control procedures. Investors may consequently lose confidence in our reported financial information and procedures or quality of the financial statements, which would adversely affect us and our securities.

Risks Related to Our Ordinary Shares and This Offering

There has been no prior public market for our ordinary shares and an active trading market may never develop or be sustained.

Prior to this offering, there has been no public market for our ordinary shares. An active trading market for our ordinary shares may never develop following completion of this offering or, if developed, may not be sustained. The lack of an active trading market may impair the value of your shares and your ability to sell your shares at the time you wish to sell them. An inactive trading market may also impair our ability to raise capital by selling our ordinary shares and enter into strategic partnerships or acquire other complementary products, technologies or businesses by using our ordinary shares as consideration. In addition, if we fail to satisfy exchange listing standards, we could be de-listed, which would have a negative effect on the price of our ordinary shares.

We expect that the price of our ordinary shares will fluctuate substantially and you may not be able to sell the shares you purchase in this offering at or above the offering price.

The initial public offering price for our ordinary shares sold in this offering is determined by negotiation between the representative of the underwriters and us. This price may not reflect the market price of our ordinary shares following this offering. In addition, the market price of our ordinary shares is likely to be highly volatile and may fluctuate substantially due to many factors, including:

In recent years, the stock markets generally have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies. Broad market and industry factors may significantly affect the market price of our ordinary shares, regardless of our actual operating performance. These fluctuations may be even more pronounced in the trading market for our ordinary shares shortly following this offering. If the market price of our ordinary shares after this offering never exceeds the initial public offering price, you may not realize any return on your investment in us and may lose some or all of your investment.

In addition, in the past, class action litigation has often been instituted against companies whose securities have experienced periods of volatility in market price. Securities litigation brought against us following volatility in our stock price, regardless of the merit or ultimate results of such litigation, could result in substantial costs, which would hurt our financial condition and operating results and divert management’s attention and resources from our business.

Our shares will initially trade under $5.00 per ordinary share and thus will be a penny stock. Trading in penny stocks has certain restrictions and these restrictions could negatively affect the price and liquidity of our ordinary shares.

Our stock is expected to trade below $5.00 per share upon listing. As a result, our stock would be known as a “penny stock”, which is subject to various regulations involving disclosures to be given to you prior to the purchase of any penny stock. The SEC has adopted regulations which generally define a “penny stock” to be any equity security that has a market price of less than $5.00 per share, subject to certain exceptions. Depending on market fluctuations, our ordinary shares could be considered to be a “penny stock”. A penny stock is subject to rules that impose additional sales practice requirements on broker/dealers who sell these securities to persons other than established Members and accredited investors. For transactions covered by these rules, the broker/dealer must make a special suitability determination for the purchase of these securities. In addition, a broker/dealer must receive the purchaser’s written consent to the transaction prior to the purchase and must also provide certain written disclosures to the purchaser. Consequently, the “penny stock” rules may restrict the ability of broker/dealers to sell our ordinary shares, and may negatively affect the ability of holders of our ordinary shares to resell them. These disclosures require you to acknowledge that you understand the risks associated with buying penny stocks and that you can absorb the loss of your entire investment. Penny stocks generally do not have a very high trading volume. Consequently, the price of the stock is often volatile and you may not be able to buy or sell the stock when you want to.

If you purchase our ordinary shares in this offering, you will incur immediate and substantial dilution in the book value of your shares.

Investors purchasing our ordinary shares in this offering will pay a price per share that substantially exceeds the pro forma as adjusted net tangible book value per share. As a result, investors purchasing ordinary shares in this offering will incur immediate dilution of $1.51 per share, representing the difference between our assumed initial public offering price of $4.00 per share and our pro forma as adjusted net tangible book value per share as of December 31, 2021. For more information on the dilution you may experience as a result of investing in this offering, see the section of this prospectus entitled “Dilution.”

A significant portion of our total outstanding shares are restricted from immediate resale but may be sold into the market in the near future. This could cause the market price of our ordinary shares to drop significantly, even if our business is doing well.

Sales of a substantial number of our ordinary shares in the public market could occur at any time. These sales, or the perception in the market that these sales may occur, could result in a decrease in the market price of our ordinary shares. Immediately after this offering, we will have outstanding 5,250,000 ordinary shares, based on the number of ordinary shares outstanding as of December 31, 2021, assuming no exercise of the underwriters’ over-allotment option. This includes the shares that we are selling in this offering, which may be resold in the public market immediately without restriction, unless purchased by our affiliates or existing stockholders. Of that amount,4,000,000 shares are currently restricted as a result of securities laws and/or lock-up agreements, but will be able to be sold after the closing of this offering, subject to securities laws and/or lock-up agreements. If held by one of our affiliates, the resale of those securities will be subject to volume limitations under Rule 144 of the Securities Act. See “Shares Eligible for Future Sale.”

We will have broad discretion in the use of proceeds of this offering designated for working capital and general corporate purposes.

We intend to use the net proceeds of this offering to expand our sales and marketing efforts and working capital. Within those categories, we have not determined the specific allocation of the net proceeds of this offering. Our management will have broad discretion over the use and investment of the net proceeds of this offering within those categories. Accordingly, investors in this offering have only limited information concerning management’s specific intentions and will need to rely upon the judgment of our management with respect to the use of proceeds.

We expect to incur significant additional costs as a result of being a public company, which may adversely affect our business, financial condition and results of operations.

Upon completion of this offering, we expect to incur costs associated with becoming a public company and corporate governance requirements that will become applicable to us as a public company, including rules and regulations of the SEC, the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. These rules and regulations are expected to significantly increase our accounting, legal and financial compliance costs and make some activities more time-consuming. We also expect these rules and regulations to make it more expensive for us to obtain and maintain directors’ and officers’ liability insurance. As a result, it may be more difficult for us to attract and retain qualified persons to serve on our board of directors or as executive officers. Accordingly, increases in costs incurred as a result of becoming a publicly traded company may adversely affect our business, financial condition and results of operations.

Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud.

Upon the closing of this offering, we will become subject to the periodic reporting requirements of the Exchange Act. We designed our disclosure controls and procedures to provide reasonable assurance that information we must disclose in reports we file or submit under the Exchange Act is accumulated and communicated to management, and recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. We believe that any disclosure controls and procedures, no matter how well-conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.

These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by an unauthorized override of the controls. Accordingly, because of the inherent limitations in our control system, misstatements due to error or fraud may occur and not be detected.

If we fail to implement and maintain an effective system of internal control, we may be unable to accurately report our operating results, meet our reporting obligations or prevent fraud.

Prior to this offering, we were a private company with limited accounting personnel and other resources with which to address our internal controls and procedures. Our management has not completed an assessment of the effectiveness of our internal control over financial reporting, and our independent registered public accounting firm has not conducted an audit of our internal control over financial reporting.

Upon completion of this offering, we will become a public company in the United States subject to the Sarbanes-Oxley Act of 2002. Section 404 of the Sarbanes-Oxley Act of 2002 will require that we include a report of management on our internal control over financial reporting in our annual report on Form 20-F beginning with our annual report for the fiscal year ending December 31, 2021. In addition, once we cease to be an “emerging growth company” as such term is defined under the JOBS Act, our independent registered public accounting firm may be required to attest to and report on the effectiveness of our internal control over financial reporting. Our management may conclude that our internal control over financial reporting is not effective. Moreover, even if our management concludes that our internal control over financial reporting is effective, our independent registered public accounting firm, after conducting its own independent testing, may issue a report that is qualified if it is not satisfied with our internal controls or the level at which our controls are documented, designed, operated or reviewed, or if it interprets the relevant requirements differently from us. In addition, after we become a public company, our reporting obligations may place a significant strain on our management, operational and financial resources and systems for the foreseeable future. We may be unable to timely complete our evaluation testing and any required remediation.

During the course of documenting and testing our internal control procedures, in order to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act of 2002, we may identify other weaknesses and deficiencies in our internal control over financial reporting. In addition, if we fail to maintain the adequacy of our internal control over financial reporting, as these standards are modified, supplemented or amended from time to time, we may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002. Generally, if we fail to achieve and maintain an effective internal control environment, we could suffer material misstatements in our financial statements and fail to meet our reporting obligations, which would likely cause investors to lose confidence in our reported financial information. This could in turn limit our access to capital markets, and harm our results of operations. Additionally, ineffective internal control over financial reporting could expose us to increased risk of fraud or misuse of corporate assets and subject us to potential delisting from the stock exchange on which we list, regulatory investigations and civil or criminal sanctions.

Securities analysts may not publish favorable research or reports about our business or may publish no information at all, which could cause our stock price or trading volume to decline.

If a trading market for our ordinary shares develops, the trading market will be influenced to some extent by the research and reports that industry or financial analysts publish about us and our business. We do not control these analysts. As a new public company, we may be slow to attract research coverage and the analysts who publish information about our ordinary shares will have had relatively little experience with us or our industry, which could affect their ability to accurately forecast our results and could make it more likely that we fail to meet their estimates. In the event we obtain securities or industry analyst coverage, if any of the analysts who cover us provide inaccurate or unfavorable research or issue an adverse opinion regarding our stock price, our stock price could decline. If one or more of these analysts cease coverage of us or fail to publish reports covering us regularly, we could lose visibility in the market, which in turn could cause our stock price or trading volume to decline and result in the loss of all or a part of your investment in us.

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

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

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

Certain corporate governance practices in the Cayman Islands, which is our home country, differ significantly from requirements for companies incorporated in other jurisdictions such as the United States. If we choose to follow home country practice, our shareholders may be afforded less protection than they otherwise would under rules and regulations applicable to U.S. domestic issuers.

In addition, we conduct substantially all of our business operations in China, and substantially all of our directors and senior management are based in China, which is an emerging market. The SEC, U.S. Department of Justice and other authorities often have substantial difficulties in bringing and enforcing actions against non-U.S. companies and non-U.S. persons, including company directors and officers, in certain emerging markets, including China. Additionally, our public shareholders may have limited rights and few practical remedies in emerging markets where we operate, as shareholder claims that are common in the United States, including class action securities law and fraud claims, generally are difficult to pursue as a matter of law or practicality in many emerging markets, including China. For example, in China, there are significant legal and other obstacles to obtaining information needed for shareholder investigations or litigation outside China or otherwise with respect to foreign entities. Although the local authorities in China may establish a regulatory cooperation mechanism with the securities regulatory authorities of another country or region to implement cross-border supervision and administration, the regulatory cooperation with the securities regulatory authorities in the Unities States has not been efficient in the absence of a mutual and practical cooperation mechanism. According to Article 177 of the PRC Securities Law which became effective in March 2020, no foreign securities regulator is allowed to directly conduct investigation or evidence collection activities within the territory of the PRC. Accordingly, without the consent of the competent PRC securities regulators and relevant authorities, no organization or individual may provide the documents and materials relating to securities business activities to foreign securities regulators.

As a result of all of the above, our public shareholders may have more difficulty in protecting their interests in the face of actions taken by management, members of the board of directors or controlling shareholders than they would as public shareholders of a company incorporated in the United States. For a discussion of significant differences between the provisions of the Companies Act and the laws applicable to companies incorporated in the United States and their shareholders, see “Description of Share Capital — Differences in Corporate Law.”

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

We are a Cayman Islands exempted company and all of our assets are located outside of the United States. All of our current operations are conducted in China. In addition, most of our current directors and officers are nationals and residents of countries other than the United States. All or a substantial portion of the assets of these persons are located outside the United States. As a result, it may be difficult or impossible for you to bring an action against us or against these individuals in the United States in the event that you believe that your rights have been infringed under the U.S. federal securities laws or otherwise. Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands and of China may render you unable to enforce a judgment against us, our assets, our directors and officers or their assets. For more information regarding the relevant laws of the Cayman Islands and China, see “Enforceability of Civil Liabilities.”

We are an emerging growth company within the meaning of the Securities Act and may take advantage of certain reduced reporting requirements.

We are an “emerging growth company,” as defined in the JOBS Act, and we may take advantage of certain exemptions from requirements applicable to other public companies that are not emerging growth companies including, most significantly, not being required to comply with the auditor attestation requirements of Section 404 for so long as we are an emerging growth company.

The JOBS Act also provides that an emerging growth company does not need to comply with any new or revised financial accounting standards until such date that a private company is otherwise required to comply with such new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the extended transition period, although we have early adopted certain new and revised accounting standards based on transition guidance permitted under such standards. As a result of this election, our future financial statements may not be comparable to other public companies that comply with the public company effective dates for these new or revised accounting standards.

We qualify as a foreign private issuer and, as a result, we will not be subject to U.S. proxy rules and will be subject to Exchange Act reporting obligations that permit less detailed and less frequent reporting than that of a U.S. domestic public company.

Upon the closing of this offering, we will report under the Exchange Act as a non-U.S. company with foreign private issuer status. Because we qualify as a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the Exchange Act that are applicable to U.S. domestic public companies, including (i) the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act; (ii) the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and (iii) the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q containing unaudited financial and other specified information, or current reports on Form 8-K upon the occurrence of specified significant events. In addition, our officers, directors and principal shareholders are exempt from the reporting and “short- swing” profit recovery provisions of Section 16 of the Exchange Act and the rules thereunder. Therefore, our shareholders may not know on a timely basis when our officers, directors and principal shareholders purchase or sell our ordinary shares. In addition, foreign private issuers are not required to file their annual report on Form 20-F until 120 days after the end of each fiscal year, while U.S. domestic issuers that are accelerated filers are required to file their annual report on Form 10-K within 75 days after the end of each fiscal year. Foreign private issuers also are exempt from Regulation Fair Disclosure, aimed at preventing issuers from making selective disclosures of material information. As a result of the above, you may not have the same protections afforded to shareholders of companies that are not foreign private issuers.

If we lose our status as a foreign private issuer, we would be required to comply with the Exchange Act reporting and other requirements applicable to U.S. domestic issuers, which are more detailed and extensive than the requirements for foreign private issuers. We may also be required to make changes in our corporate governance practices in accordance with various SEC rules. The regulatory and compliance costs to us under U.S. securities laws if we are required to comply with the reporting requirements applicable to a U.S. domestic issuer may be significantly higher than the cost we would incur as a foreign private issuer. As a result, we expect that a loss of foreign private issuer status would increase our legal and financial compliance costs and would make some activities highly time consuming and costly. We also expect that if we were required to comply with the rules and regulations applicable to U.S. domestic issuers, it would make it more difficult and expensive for us to obtain and maintain directors’ and officers’ liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These rules and regulations could also make it more difficult for us to attract and retain qualified members of our board of directors.

There can be no assurance that we will not be a passive foreign investment company, or PFIC, for U.S. federal income tax purposes for any taxable year, which could result in adverse U.S. federal income tax consequences to U.S. holders of our ordinary shares.

A non-U.S. corporation will be a PFIC for any taxable year if either (1) at least 75% of its gross income for such year consists of certain types of “passive” income; or (2) at least 50% of the value of its assets (based on an average of the quarterly values of the assets) during such year is attributable to assets that produce passive income or are held for the production of passive income, or the asset test. Based on our current and expected income and assets (taking into account the expected cash proceeds and our anticipated market capitalization following this offering), we do not presently expect to be a PFIC for the current taxable year or the foreseeable future. However, no assurance can be given in this regard because the determination of whether we are or will become a PFIC is a fact-intensive inquiry made on an annual basis that depends, in part, upon the composition of our income and assets. In addition, there can be no assurance that the Internal Revenue Service, or IRS, will agree with our conclusion or that the IRS would not successfully challenge our position. Fluctuations in the market price of our ordinary shares may cause us to become a PFIC for the current or subsequent taxable years because the value of our assets for the purpose of the asset test may be determined by reference to the market price of our ordinary shares. The composition of our income and assets may also be affected by how, and how quickly, we use our liquid assets and the cash raised in this offering. If we were to be or become a PFIC for any taxable year during which a U.S. Holder holds our ordinary shares, certain adverse U.S. federal income tax consequences could apply to such U.S. Holder. See “Taxation — Passive Foreign Investment Company Consequences.”

We may lose our foreign private issuer status in the future, which could result in significant additional costs and expenses.

As discussed above, we are a foreign private issuer, and therefore, we are not required to comply with all of the periodic disclosure and current reporting requirements of the Exchange Act. The determination of foreign private issuer status is made annually on the last business day of an issuer’s most recently completed second fiscal quarter. We would lose our foreign private issuer status if, for example, more than 50% of our ordinary shares are directly or indirectly held by residents of the United States and we fail to meet additional requirements necessary to maintain our foreign private issuer status. If we lose our foreign private issuer status on this date, we will be required to file with the SEC periodic reports and registration statements on U.S. domestic issuer forms, which are more detailed and extensive than the forms available to a foreign private issuer. We will also have to mandatorily comply with U.S. federal proxy requirements, and our officers, directors and principal shareholders will become subject to the short-swing profit disclosure and recovery provisions of Section 16 of the Exchange Act. As a U.S. listed public company that is not a foreign private issuer, we will incur significant additional legal, accounting and other expenses that we will not incur as a foreign private issuer, in order to maintain a listing on a U.S. securities exchange.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements that reflect our current expectations and views of future events. The forward looking statements are contained principally in the sections entitled “Prospectus Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business.” Known and unknown risks, uncertainties and other factors, including those listed under “Risk Factors,” may cause our actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements.

You can identify some of these forward-looking statements by words or phrases such as “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “is/are likely to,” “potential,” “continue” or other similar expressions. We have based these forward-looking statements largely on our current expectations and projections about future events that we believe may affect our financial condition, results of operations, business strategy and financial needs. These forward-looking statements include statements relating to:

These forward-looking statements involve various risks and uncertainties. Although we believe that our expectations expressed in these forward-looking statements are reasonable, our expectations may later be found to be incorrect. Our actual results could be materially different from our expectations. Important risks and factors that could cause our actual results to be materially different from our expectations are generally set forth in “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Business,” “Regulation” and other sections in this prospectus. You should thoroughly read this prospectus and the documents that we refer to with the understanding that our actual future results may be materially different from and worse than what we expect. We qualify all of our forward-looking statements by these cautionary statements.

This prospectus contains certain data and information that we obtained from private publications. Statistical data in these publications also include projections based on a number of assumptions. Our industry may not grow at the rate projected by market data, or at all. Failure of this market to grow at the projected rate may have a material and adverse effect on our business and the market price of our ordinary shares. In addition, the rapidly changing nature of our industry results in significant uncertainties for any projections or estimates relating to the growth prospects or future condition of our market. Furthermore, if any one or more of the assumptions underlying the market data are later found to be incorrect, actual results may differ from the projections based on these assumptions. You should not place undue reliance on these forward-looking statements.

The forward-looking statements made in this prospectus relate only to events or information as of the date on which the statements are made in this prospectus. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. You should read this prospectus and the documents that we refer to in this prospectus and have filed as exhibits to the registration statement, of which this prospectus is a part, completely and with the understanding that our actual future results may be materially different from what we expect.

USE OF PROCEEDS

We estimate that the net proceeds from the sale of 1,250,000 ordinary shares in this offering will be approximately $3,900,000, after deducting the underwriting discounts and commissions, non-accountable expense allowance and estimated offering expenses payable by us, based on the assumed initial public offering price of $4.00 per ordinary share. If the underwriters exercise their over-allotment option in full, we estimate that the net proceeds to us from this offering will be approximately $4,537,900, after deducting the underwriting discounts and commissions, non-accountable expense allowance and estimated offering expenses payable by us.

Each $1.00 increase (decrease) in the assumed initial public offering price of $4.00 per share would increase (decrease) the net proceeds to us from this offering by $1.1 million, assuming that the number of ordinary shares offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting the underwriting discounts and commissions, non-accountable expense allowance and estimated offering expenses payable by us. An increase (decrease) of 1.0 million in the number of ordinary shares we are offering would increase (decrease) the net proceeds to us from this offering by $3.5 million, assuming the assumed initial public offering price remains the same, and after deducting the underwriting discounts and commissions, non-accountable expense allowance and estimated offering expenses payable by us.

We intend to use the proceeds of this offering to expand our sales and marketing capabilities and for working capital and general corporate purposes. While our growth plans include potential acquisitions, we have no current plans to enter into an acquisition and do not currently intend to use any of the net proceeds of this offering to fund acquisitions. The estimated use of the net proceeds from this offering represents our intentions based upon our current plans and prevailing business conditions, which could change in the future as our plans and prevailing business conditions evolve.

Pending any use described above, we plan to invest the net proceeds in short-term, interest-bearing, debt instruments.

The net proceeds from this offering must be remitted to China before we will be able to use the funds to grow our business. The procedure to remit funds may take several months after completion of this offering, and we will be unable to use the offering proceeds in China until remittance is completed. See “Risk Factors” for further information.

DIVIDEND POLICY

Our board of directors has discretion on whether to declare and pay dividends, subject to certain restrictions under Cayman Islands law, namely that our Company may only pay dividends if our directors are satisfied on reasonable grounds that we are solvent immediately after the dividend payment in the sense that we will be able to pay our debts as they become due in the ordinary course of business, and the value of assets of our Company will exceed our total liabilities. Even if our board of directors decides to pay dividends, the form, frequency and amount will depend upon our future operations and earnings, capital requirements and surplus, general financial conditions, our ability to receive funds from our China operations, contractual restrictions and other factors that the board of directors may deem relevant.

We have never declared or paid dividends and do not have any plan to pay any cash dividends on our ordinary shares in the foreseeable future after this offering. We intend to retain most, if not all, of our available funds and any future earnings to operate and expand our business.

We are a holding company incorporated in the Cayman Islands. We may rely on dividends from our subsidiary in China for our cash requirements, including any payment of dividends to our shareholders. PRC regulations may restrict the ability of our PRC subsidiaries to pay dividends to us. See “Risk Factors — Risks Relating to Doing Business in China — Restrictions under PRC law on our PRC subsidiary’s ability to make dividends and other distributions could materially and adversely affect our ability to grow, make investments or complete acquisitions that could benefit our business, pay dividends to you, and otherwise fund and conduct our business”.

CAPITALIZATION

The following table sets forth our capitalization as of December 31, 2021 on:

You should read this information together with our audited consolidated financial statements appearing elsewhere in this prospectus and the information set forth under the sections titled “Selected Consolidated Financial Data,” “Exchange Rate Information,” “Use of Proceeds” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Each $1.00 increase (decrease) in the assumed initial public offering price of $4.00 per ordinary share would increase (decrease) the pro forma as adjusted amount of total capitalization by $1.1 million, assuming that the number of ordinary shares offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting underwriting discounts and commissions, non-accountable expense allowance and estimated offering expenses payable by us. An increase (decrease) of 1.0 million in the number of ordinary shares offered by us, as set forth on the cover page of this prospectus, would increase (decrease) the pro forma as adjusted amount of total capitalization by $3.5 million, assuming no change in the assumed initial public offering price per ordinary share as set forth on the cover page of this prospectus.

DILUTION

If you invest in our ordinary shares in this offering, your interest will be immediately diluted to the extent of the difference between the initial public offering price per ordinary share in this offering and the net tangible book value per ordinary share after this offering. Dilution results from the fact that the initial public offering price per ordinary share is substantially in excess of the net tangible book value per ordinary share. As of December 31, 2021, we had a historical net tangible book value of $9.5 million, or $2.38 per ordinary share. Our net tangible book value per share represents total tangible assets less total liabilities, all divided by the number of ordinary shares outstanding on December 31, 2021.

After giving effect to the sale of 1,250,000 ordinary shares in this offering at the assumed initial public offering price of $4.00 per ordinary share and after deducting the underwriting discounts and commissions, non-accountable expense allowance and estimated offering expenses payable by us, our pro forma as adjusted net tangible book value at December 31, 2021 would have been $13.1 million, or $2.49 per ordinary share. This represents an immediate increase in as adjusted net tangible book value of $0.11 per ordinary share to existing investors and immediate dilution of $1.51 per ordinary share to new investors. The following table illustrates this dilution to new investors purchasing ordinary shares in this offering:

Each $1.00 increase (decrease) in the assumed initial public offering price of $4.00 per ordinary share would increase (decrease) our pro forma as adjusted net tangible book value as of December 31, 2021 after this offering by approximately $0.21 per ordinary share, and would increase (decrease) dilution to new investors by $0.79 per ordinary share, assuming that the number of ordinary shares offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting the underwriting discounts and commissions, non-accountable expense allowance and estimated offering expenses payable by us. An increase (decrease) of 1.0 million ordinary shares in the number of ordinary shares we are offering would increase (decrease) our pro forma as adjusted net tangible book value as of December 31, 2021 after this offering by approximately $0.16 per ordinary share, and would increase (decrease) dilution to new investors by approximately $0.16 per ordinary share, assuming the assumed initial public offering price per ordinary share, as set forth on the cover page of this prospectus remains the same, and after deducting the estimate underwriting discounts and commissions, non-accountable expense allowance and estimated offering expenses payable by us. The pro forma as adjusted information is illustrative only, and we will adjust this information based on the actual initial public offering price and other terms of this offering determined at pricing.

If the underwriters exercise their over-allotment option in full, the pro forma as adjusted net tangible book value per ordinary share after the offering would be $2.52, the increase in net tangible book value per ordinary share to existing shareholders would be $0.14, and the immediate dilution in net tangible book value per ordinary share to new investors in this offering would be $1.48.

The table and discussion above are based on 4,000,000 ordinary shares outstanding as of December 31, 2021.

To the extent that we issue additional ordinary shares in the future, there will be further dilution to new investors participating in this offering.

The table below summarizes, as of December 31, 2021, after giving effect to the sale by us of shares of our ordinary shares in this offering, the number of ordinary shares, the total consideration, and the average price per share (i) paid to us by our existing shareholders, and (ii) to be paid by new investors participating in this offering at an assumed initial public offering price of $4.00 per share, before deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

EXCHANGE RATE INFORMATION

Solely for your convenience, this prospectus contains translations of certain US dollar amounts into Renminbi dollar amounts or vice versa at specified rates. You should not construe these translations as representations that the US dollar amounts could actually be converted into Renminbi dollar amounts or vice versa at the rates indicated or at all. For the purpose in this prospectus, unless it indicates otherwise, the translation of US dollar amounts into Renminbi dollar amounts have been made at the following exchange rates:

ENFORCEABILITY OF CIVIL LIABILITIES

We were incorporated in the Cayman Islands in order to enjoy the following benefits:

However, certain disadvantages accompany incorporation in the Cayman Islands. These disadvantages include, but are not limited to, the following:

Our constitutional documents do not contain provisions requiring that disputes, including those arising under the securities laws of the United States, between us, our officers, directors and shareholders, be arbitrated.

Substantially all of our current operations are conducted in the PRC, and substantially all of our assets are located in the PRC. Our current directors and officers are nationals and residents of the PRC and all of their assets are located outside the United States. As a result, it may be difficult for a shareholder to effect service of process within the United States upon these persons, or to bring an action against us or them in the United States, or to enforce against us or them judgments obtained in United States courts, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States.

Mourant Ozannes (Cayman) LLP, our counsel as to Cayman Islands law, have advised us that the courts of the Cayman Islands will not necessarily enter judgments in original actions brought in those courts predicated on U.S. federal or state securities laws. Additionally, there is no statutory enforcement in the Cayman Islands of judgments obtained in the United States, however, the courts of the Cayman Islands will in certain circumstances recognize such a foreign judgment and treat it as a cause of action in itself which may be sued upon as a debt at common law so that no retrial of the issues would be necessary provided that:

Henan Huarong, Law Firm, our counsel as to PRC law, have advised us that there is uncertainty as to whether the courts of China would:

Henan Huarong, Law Firm, have advised us that the recognition and enforcement of foreign judgments are provided for under the Chinese Civil Procedure Law. Chinese courts may recognize and enforce foreign judgments in accordance with the requirements of the Chinese Civil Procedure Law based either on treaties between China and the country where the judgment is made or on principles of reciprocity between jurisdictions. China does not have any treaties or other form of reciprocity with the Cayman Islands or the United States that provide for the reciprocal recognition and enforcement of foreign judgments. In addition, according to the PRC Civil Procedures Law, courts in the PRC will not enforce a foreign judgment against us or our directors and officers if they decide that the judgment violates the basic principles of PRC law or national sovereignty, security, or public interest. As a result, it is uncertain whether a Chinese court would enforce a judgment rendered by a court in either of the Cayman Islands or the United States. Under the PRC Civil Procedures Law, foreign shareholders may originate actions based on PRC law against a company in China for disputes if they can establish sufficient nexus to the PRC for a PRC court to have jurisdiction, and meet other procedural requirements, including, among others, the plaintiff must have a direct interest in the case, and there must be a concrete claim, a factual basis and a cause for the suit. It will be, however, difficult for U.S. shareholders to originate actions against us in the PRC in accordance with PRC laws because we are incorporated under the laws of the Cayman Islands and it will be difficult for U.S. shareholders, by virtue only of holding our ordinary shares, to establish a connection to the PRC for a PRC court to have jurisdiction as required under the PRC Civil Procedures Law.

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

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes that appear in this prospectus. In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this prospectus, particularly in “Risk Factors.” All amounts in included in the fiscal years ended December 31, 2021 and 2020 (“Annual Financial Statements”) are derived from our audited consolidated financial statements included elsewhere in this prospectus. These Annual Financial Statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles, or US GAAP.

Overview

We focus on improving the experience for car-hailing drivers and electric vehicle users by providing car-hailing vehicle management services and charging service stations. For the year ended December 31, 2021, revenues are primarily derived from (i) car leasing revenue from car-hailing drivers, which constituted 78.1% of revenues (ii) vehicle management service revenue from car-hailing drivers and service revenues from Didi, which constituted 4.0% of revenues, (iii) charging service revenue from electric car owners, which constituted 12.4% or revenues. (iv) sales of cars and accessories which constituted 5.4% of revenues. For the year ended December 31, 2020, revenues are primarily derived from (i) vehicle leasing which constituted 65.6% of revenues, (ii) vehicle management services provided to customers under leasing agreements which constituted 7.0% of revenues, (iii) charging services which constituted 5.5% or revenues, (iv) referrals of customers for car and car accessories purchases, repairs and maintenance services. which constituted 17.5% of revenues, and (v) miscellaneous sales of cars and car accessories which constituted 4.4% of revenues.

Vehicle rental and management service is currently our main operating line of business and primary revenue generating source. As of December 31, 2021, we managed a fleet of 489 vehicles under lease contract with vehicle rental periods generally ranging from one to three years. Under a full-service rental agreement, the Company provides and fully maintains the vehicle, which is generally configured to meet ridesharing requirements of Didi and those imposed by the Chinese government. The services provided under full-service rental and management agreements generally include preventive and regular maintenance, advanced diagnostics, emergency road service, fleet services, and safety programs. The majority of our vehicle lease agreements are set to expire by the end of 2022 and currently there are no lease revenues under contract for 2023 and beyond. Our vehicle leases are usually renewed shortly before expiration and historically our renewal rate is very high. We are confident in lease renewals in 2023. Moreover, current market conditions are in favour of our vehicle rental service as we see very high demand for lease vehicles and relatively short supplies.

We also provide comprehensive vehicle management services for car-hailing drivers such as driver training, 24-hour road rescue (including fuel delivery, electricity delivery, trailers) and other services, as well as consultation and analysis of traffic laws and operating policies for car-hailing drivers. We also assist in handling unexpected situations regarding driver qualification as well as traffic accidents during the operation process.

In cooperation with the local government and public resources, we initiated the construction of an electric vehicle charging station network in Henan province. As of December 31, 2021, we had constructed four distinct charging stations offering an aggregate of 175 chargers in Zhengzhou, the provincial capital of Henan.

Our charging services are offered to the general public and specifically to drivers on the Didi network. Our user base primarily consists of drivers of online car-hailing vehicles and taxis, as well as logistic and private vehicle owners. We earn service fees from providing the charging service.

In addition, we developed and launched an intelligent charging service platform which acts in concert with our charging station network. Users access our intelligent charging service platform through our official WeChat account, called “Xiaofei Charging.” Users can visit the “Xiaofei Charging” official account on We Chat, an interface to connect to our intelligent charging platform, to search available chargers and then go to the charging stations by using the map navigation function. In this prospectus, we refer to our intelligent charging service, as accessed through our official WeChat account, as our “platform,” our “application,” or our “mobile application.” The platform also supports users making charging appointment remotely, to avoid the situation that all chargers are being occupied when they arrive, and to pay charging fees in advance. We can also implement vehicle management, monitoring, charging sequence and vehicle coordination through the platform, which is useful in managing and enhancing the usage of each charging station.

General Factors Affecting Our Results of Operations

Our business and results of operations are affected by general factors affecting the PRC, which include, among other things:

Unfavorable changes in any of these general factors could materially and adversely affect our business and results of operations.

Specific Factors Affecting Our Results of Operations

Policy

The new energy industry is currently highly promoted by the Chinese government. For example, in July 2018, the Chinese government issued a notice to promote the use of new energy vehicles; by the end of 2020, municipalities directly under the central government, and other provincial key areas were required to replace all buses with new energy vehicles. In September 2015, the government issued guidelines to speed up the construction of electric vehicle charging stations. At present, the development of the charging infrastructure in Henan province is still in its infancy. According to the demand forecast of classified charging facilities, Henan province will need to build no less than 1,000 centralized charging stations and no less than 100,000 decentralized charging piles.

Ability to attract customers

Currently, our main source of income is the rental income from our leased vehicles. In order to increase the turnover of the operation cycle, we provide featured services such as “Private rescue”, “Xiaofei help” and “FeihuTeam”, which have a certain degree of ideological cohesion for drivers and are conducive to the sense of belonging. In efforts to improve charging margins and revenue, we have outsourced certain technical research and development activities and make appropriate adjustments in price between peak and off-peak periods to attract drivers. We also provide promotional gifts and improve the supporting facilities (for example: water heater, toilet, convenience stores, lounge) to improve the driver’s charging experience.

Relevant value-added services

We also offer related value-added services, including car accessories sales and installation, agent of vehicle insurance and vehicle maintenance, which are complementary to our basic businesses.

COVID-19 Pandemic

An outbreak of respiratory illness caused by COVID-19 emerged in Wuhan city, Hubei province, PRC, in late 2019 and has been expanding within the PRC and globally. The new strain of COVID-19 is considered to be highly contagious and poses a serious public health threat. On January 23, 2020, the PRC government announced the lockdown of Wuhan city in an attempt to quarantine the city. Since then, other measures including travel restrictions have been imposed in other major cities in the PRC and throughout the world in an effort to contain the COVID-19 outbreak. The World Health Organization (the “WHO”) is closely monitoring and evaluating the situation. On March 11, 2020, the WHO declared the outbreak of COVID-19 a pandemic, expanding its assessment of the threat beyond the global health emergency it had announced in January.

Any outbreak of such epidemic illness or other adverse public health developments in the PRC or elsewhere in the world may materially and adversely affect the global economy, our markets and our business. Any outbreak of such epidemic illness or other adverse public health developments in the PRC or elsewhere in the world may materially and adversely affect the global economy, our markets and our business.

The COVID-19 pandemic created unique global and industry-wide challenges, including challenges to many aspects of our business. The COVID-19 pandemic has resulted in quarantines, travel restrictions, limitations on social or public gatherings, and the temporary closure of business venues and facilities across the world. In the first 6-9 months of 2020, the ride hailing industry in China was virtually shut down as a result of the PRC government’s response to the pandemic. This reduced the number of ride-hailing drivers which affected the number of vehicles leased by us and demand for our vehicle maintenance service offerings, as well as the ability of drivers who leased vehicles from us to make prompt periodic payments on their lease obligations. We also experienced a reduction in commission revenues, the decreased demand for ride-hailing services extended through the first quarter of 2021. In response to this situation, we forgave July 2020 lease payments from our customers of approximately $246,000.

However, the omicron variant of COVID-19 hit China hard in 2022. The surge in positive cases has resulted in local authorities implementing numerous unprecedented measures such as regional quarantines, travel restrictions, routine tests, and temporary closure of stores and business facilities in China, including the city of Zhengzhou, where our headquarter is located. The reductions in travel and commercial activities have caused diminishing market demand on car-riding services and charging services, which may negatively impact our business and revenue. The degree to which the pandemic ultimately impacts our business and results of operations will depend on future developments beyond our control, including the severity of the pandemic, the extent of actions to contain or treat the virus, how quickly and to what extent normal economic and operating conditions can resume, and the severity and duration of the global economic downturn that results from the pandemic.

We cannot foresee whether the outbreak of COVID-19 will be effectively contained, nor can we predict the severity and duration of its impact. If the outbreak of COVID-19 is not effectively and timely controlled, our business operations and financial condition may be materially and adversely affected as a result of the slowdown in regional and national economic growth, weakened liquidity and financial condition of our customers or other factors that we cannot foresee. Any of these factors and other factors beyond our control could have an adverse effect on the overall business environment, cause uncertainties in the regions where we conduct business, cause our business to suffer in ways that we cannot predict and materially and adversely impact our business, financial condition and results of operations.

Emerging growth company

We are an “emerging growth company,” as defined in the JOBS Act, and we may take advantage of certain exemptions from requirements applicable to other public companies that are not emerging growth companies including, most significantly, not being required to comply with the auditor attestation requirements of Section 404 for so long as we are an emerging growth company. The JOBS Act provides that an emerging growth company does not need to comply with any new or revised financial accounting standards until such date that a private company is otherwise required to comply with such new or revised accounting standards. We have elected to take advantage of the extended transition period, although we have early adopted certain new and revised accounting standards based on transition guidance permitted under such standards. 

Years Ended December 31, 2021 and 2020

The following table summarizes the results of our operations for the years ended December 31, 2021 and 2020 and provides information regarding the dollar and percentage increase or (decrease) during such periods.

Revenues

Revenue decreased by $362,979, or 10%, to $3,306,279 for the year ended December 31, 2021 as compared to $3,669,258 for the year ended December 31, 2020. The decrease was primarily due to the decrease in commission revenue from the referring of customers for maintenance services to the auto shop and from referrals of GPS unit sales to a company owned by a current employee, which combined contributed $642,898 of commission revenue in 2020. The decrease in commissions from the referring of customers for maintenance services to the auto shop was mainly due to the flood disaster in Zhengzhou province which resulted in drivers using vehicles less and reduced maintenance needs. The decrease in commissions from referral of GPS unit sales was mainly due to limited new vehicle purchases for lease in 2021, which resulted in the decrease in the demand of GPS installations. The decrease in management fees revenue of $81,915 was mainly due to the forgiveness of two months management fees to some drivers to help relief the impact of the flood disaster. Service revenue decreased by $38,072, or 90%, to $4,338 for the year ended December 31, 2021 as compared to $42,410 for the year ended December 31, 2020, which was due to the termination of a data management platform contract with Didi in October 2020. The decrease was offset by the increase in vehicles leasing revenues of $174,419 and charging station revenues $207,443. The increased vehicle lease revenues was mainly attributable to the addition of 44 new lease agreements with car-hailing drivers that were entered into during 2020. The increased charging station revenues was mainly attributable to the cooperation with Evergrande, Kuaidian and New Telecom platforms in 2021, which can help to attract charging users through their app to the Company’s charging station.

Cost of revenues

Total cost of revenues increased by $464,026, or 20%, to $2,784,958 for the year ended December 31, 2021 as compared to $2,320,932 for the year ended December 31, 2020. This increase was primarily due to the cost of charging stations increased $258,412 in 2021 to $685,664 from $427,252 in 2020. The increased cost of the charging stations was mainly attributed to the increase of charging users, which resulted in increased electricity usage costs and a new charging station placed in service at the end of 2020, which resulted in increased depreciation expense and increased electricity fees. The vehicle depreciation increased by $94,611 which was due to the 45 additional vehicles purchased during 2020. Other cost of revenues primarily includes the salaries allocated to cost of sales which increased by $73,992 to $225,478 for the year ended December 31, 2021 as compared to $151,486 for the year ended December 31, 2020.

Selling, general and administrative expenses

For the year ended December 31, 2021, we incurred total selling, general and administrative expenses in the amount of $448,055, which was mainly comprised of compensation and related fringe benefits of $151,782, professional fees related to preparing for the offering of $193,373, rental related expenses of $21,204, business, travel and entertainment expenses of $14,539, and other expenses of $29,013.

For the year ended December 31, 2020, we incurred total selling, general and administrative expenses in the amount of $513,181, which was mainly comprised of compensation and related fringe benefits of $163,932, professional fees related to preparing for the offering of $185,179, rental related expenses of $19,872, business, travel and entertainment expenses of $42,826, write off of another receivable of $32,083 and other expenses of $69,289. Our selling, general and administrative expenses does not experience much fluctuation from 2020 to 2021.

Research and development

For the year ended December 31, 2021, we incurred total research and development in the amount of $39,316, which was mainly comprised of the allocated amortization of our mobile app charging platform.

Other income (expense), net

Cash received from government subsidies was approximately $117,000 for 2021 compared to $299,000 for 2020 as we applied for, and received government subsidies for our effort to promote new energy and economic growth.

Interest income increased by approximately $305,000, from approximately $26,000 in 2020 to approximately 331,000 in 2021, as we earned interest though lending out idle funds to two third parties.

Liquidity and Capital Resources

Our business requires substantial amounts of cash to cover operating expenses as well as to fund capital expenditures, working capital requirements, principal payments on our obligations, lease payments and tax payments when we generate taxable income. Recently, we have financed our capital requirements with advances from shareholders, cash flows from operating activities, and sale of ordinary shares.

We believe our current working capital, plus the proceeds from this offering, should be sufficient to support our operations for a period of one year from the date of this prospectus. However, we may need additional cash resources in the future if we experience changed business conditions or other developments and may also need additional cash resources in the future if we wish to pursue opportunities for investment, acquisition, strategic cooperation or other similar actions. If it is determined that the cash requirements exceed our amounts of cash on hand, we may seek to issue debt or equity securities or obtain a credit facility.

Our PRC subsidiary is permitted to pay dividends to us only out of their retained earnings, if any, as determined in accordance with the Accounting Standards for Business Enterprise as promulgated by the Ministry of Finance of the PRC, or the PRC GAAP. The retained earnings (deficit) for our PRC subsidiary as determined under the Accounting Standards for Business Enterprise was $805,262 ,and $535,073, as of December 31, 2021 and 2020, respectively. Pursuant to the laws and regulations applicable to China’s foreign investment enterprises, our subsidiaries that are foreign investment enterprises in the PRC have to make appropriation from their after-tax profit, as determined under PRC GAAP, to reserve funds including (i) general reserve fund, (ii) enterprise expansion fund and (iii) staff bonus and welfare fund. The appropriation to the general reserve fund must be at least 10% of the after-tax profits calculated in accordance with PRC GAAP. Appropriation is not required if the reserve fund has reached 50% of the registered capital of our subsidiary. As of the date of this prospectus, the PRC subsidiary is still required to contribute to the general reserve fund and these contributions are not expected to cease in the near term.

Appropriation to the other two reserve funds is at our subsidiary’s discretion. Our PRC subsidiary did not make any contributions to the enterprise expansion fund or the staff bonus welfare fund during each period presented. The restricted amounts of our PRC subsidiary totaled $177,005, and $146,984 as of December 31, 2021 and 2020, respectively.

The following summarizes the key components of our cash flows for the six months ended December 31, 2021 and 2020:

Operating Activities

Net cash provided by operating activities consists primarily of net income adjusted for non-cash items, including depreciation and amortization, deferred income taxes and loss on disposal of fixed assets. Net cash provided by operating activities was approximately $2.6 million for the year ended December 31, 2021, a decrease of $1.0 million, compared to $3.6 million for the year ended December 31, 2020. Decrease in net cash provided by operating activities was primarily attributable to the following factors:

- Net income after the non-cash items adjustment mentioned above decreased by $0.09 million

- Cash provided by accounts receivable decreased by $0.3 million when comparing to the year ended December 31, 2021, to the year ended December 31, 2020. During the year ended December 31, 2020, we collected deferred rent receivable for certain leases entered with rent abatement period, which we did not have for the year ended December 31, 2021.

- Changes in prepayments and advances decreased by $0.2 million when comparing to the changes for the year ended December 31, 2021, to the year ended December 31, 2020. During the year ended December 31, 2020, we realized more professional services which we prepaid in 2019.

- Changes in accrued interest receivable decreased by $0.2 million when comparing to the changes for the year ended December 31, 2021, to the year ended December 31, 2020. During the year ended December 31, 2021, we earned interest income through lending our idle funds to a third party in short term.

- Changes in deposit payable decreased by $0.1 million when comparing to the changes for the year ended December 31, 2021, to the year ended December 31, 2020. During the year ended December 31, 2021, we have limited new lease agreement entered with new drivers compared to 2020, which made our collection of deposit less than 2021

Investing Activities

Net cash used in investing activities was approximately $1.2 million for the year ended December 31, 2021, a net cash used decrease of $2.7 million, or 70%, compared to $3.9 million for the year ended December 31, 2020. The decrease was mainly due a net loan made to two third-party borrowers (after net the repayment) in 2021 amounted to 1.4 million compared to 3.5 million loan made to two third-party borrowers.

Financing Activities

Net cash (used in) provided by financing activities decreased by approximately $0.4 million, which was due to the repayment of the loan to stockholder of $0.1 million in 2021 compared to $0.06 million in 2020, loan proceeds and capital contribution from a stockholder amounted to $0.5 million in 2020 compared to nil in 2021, offset by the advance from related party of $0.2 million for operations in 2021, which we did not have in 2020.

Capital Expenditures

We had capital expenditures of $314,131 and $992,260 for the year ended December 31, 2021, and 2020, respectively. This decrease resulted from us having less lease vehicles purchases during the year ended December 31, 2021. We intend to fund our future capital expenditures with our existing cash balance, proceeds from this offering and other financing alternative. We will continue to make capital expenditures to support the growth of our business.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements including arrangements that would affect our liquidity, capital resources, market risk support and credit risk support or other benefits.

Critical Accounting Policies and Estimates

Our financial statements and accompanying notes have been prepared in accordance with U.S. GAAP. The preparation of these financial statements and accompanying notes requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis of making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We have identified certain accounting policies that are significant to the preparation of our financial statements. These accounting policies are important for an understanding of our financial condition and results of operation. Critical accounting policies are those that are most important to the portrayal of our financial conditions and results of operations and require management’s difficult, subjective, or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Certain accounting estimates are particularly sensitive because of their significance to financial statements and because of the possibility that future events affecting the estimate may differ significantly from management’s current judgments. While our significant accounting policies are more fully described in Note 2 to our consolidated financial statements included elsewhere in this registration statement, we believe the following critical accounting policies involve the most significant estimates and judgments used in the preparation of our financial statements.

Use of estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Significant accounting estimates reflected in our consolidated financial statements include the useful lives of property and equipment and our leased vehicles. Actual results could differ from those estimates.

Revenue recognition

Revenues are primarily derived from car leasing revenues from car-hailing drivers, commissions from a major online car-hailing company in China and car-hailing drivers, charging service revenues from electric car owners, sales of cars and car accessories, commissions on the referral of customers for car and car accessory purchases, repairs and maintenance services and management fees from car-hailing drivers. The Company adopted the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers (Topic 606),” including related amendments and implementation guidance within ASU 2015-14, ASU 2016-08, ASU 2016-10, ASU 2016-12 and ASU 2016-20 (collectively, including ASU 2014-09, “ASC 606”). ASC 606 supersedes the revenue recognition requirements in ASC 605 and requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This requires the Company to identify contractual performance obligations and determine whether revenue should be recognized at a point in time or over time, based on when control of services or products transfers to a customer.

The ASU requires the use of a new five-step model to recognize revenue from customer contracts. The five-step model requires that the Company (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligation.

Vehicle lease revenues

The Company entered into nil and 44 operating lease agreements with car-hailing drivers in 2021 and 2020, respectively. As of December 31, 2021 and 2020, there are 489 and 506 lease agreements in effect, respectively. The arrangements with the lessees have a fixed term of one to three years with monthly payments ranging from $468 to $680. At the end of the lease term, either the lease will be extended with the current driver, the vehicle will be leased to a new driver or returned to the Company. For the leasing agreements entered into before January 1, 2018, the Company provided these drivers with an abatement period ranging from six months to one year. Revenue from the leasing of the cars is recognized on a straight-line basis over the lease term. In response to the COVID-19 pandemic, the Company forgave one month lease payment in 2020 for all lessees and in response to the flood in Henan province, the Company forgave two month lease payments for certain lessees in 2021. The majority of our vehicle lease agreements are set to expire by the end of 2022 and currently there are no lease revenues under contract for 2023 and beyond. Our vehicle leases are usually renewed shortly before expiration and historically our renewal rate is very high. We are confident in lease renewals in 2023. Moreover, current market conditions are in favor of our vehicle rental service as we see very high demand for lease vehicles and relatively short supplies.

Service revenues

The Company provides business support, consultation, and training services to car-hailing drivers. The car hailing company will reward the Company based on the evaluation of the service quality on a monthly basis. These service revenues are recognized upon the completion of evaluation and confirmation from the car hailing company.

Charging station revenues

The completed charging stations as of December 31, 2021 in Zhengzhou City can service 175 vehicles simultaneously. Customers are offered the ability to refill their charging cards online in advance. Charging cards refilled in advance are recognized as deferred revenues. The charging revenue is recognized at a point in time as service sales when the drivers complete the charging services. 

Management fees

The car-hailing drivers who lease cars from the Company for the car-hailing services are required to sign lease agreements with the Company in order for them to be able to provide such services through the online platform. The Company provides the lessees’ with management services during the lease period. Management fees are charged at approximately $27 (RMB 180) each month and are paid by automobile lessees on a yearly or monthly basis during the lease period. Management fee revenue is recognized by the Company on the straight-line basis over the lease term.

Sales of vehicles and accessories

Sales primarily include automobiles and automobile integrated devices (“GPS”). Sales revenue is recognized when automobiles and GPS units are delivered to the customer. The Company does not provide the customers with the right of return.

Commissions

The Company earns commissions for referral of car-hailing drivers to 4S stores for automobile sales and repairs and maintenance. The Company also earns commissions for referrals of GPS unit sales to a company owned by a current employee (see Note 10 of our notes to the consolidated financial statements). The Company recognizes the revenue when the repair and maintenance services are provided, or the GPS unit sale is completed.

Fixed assets and lease vehicles

Fixed assets are recorded at cost, less accumulated depreciation. Cost includes the price paid to acquire the asset, and any expenditures that substantially increase the asset’s value or extends the useful life of an existing asset. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. Major repairs and betterments that significantly extend the original useful life or improve productivity are capitalized and depreciated over the periods benefited. Maintenance and repairs are generally expensed as incurred. The estimated useful lives for fixed asset categories are as follows:

Loans Receivable

Loans receivable consists of a loan to a former vendor and loans to third parties, which is carried at cost and includes unpaid principal and interest balances. The Company maintains an allowance for loan losses based on management’s estimate of credit losses inherent in the Company’s loans receivable. There was no allowance necessary as of December 31, 2021 and 2020. (See Note 11) 

Income taxes

We account for current income taxes in accordance with the laws of the relevant tax authorities. The charge for taxation is based on the results for the fiscal year as adjusted for items, which are non-assessable or disallowed. It is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred taxes are accounted for using the asset and liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the consolidated financial statements and the corresponding tax basis used in the computation of assessable tax profit. In principle, deferred tax liabilities are recognized for all taxable temporary differences. Deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which deductible temporary differences can be utilized. Deferred tax is calculated using tax rates that are expected to apply to the period when the asset is realized or the liability is settled. Deferred tax is charged or credited in the statement of operations, except when it is related to items credited or charged directly to equity, in which case the deferred tax is also dealt with in equity. Net deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. We present deferred tax assets and liabilities net as noncurrent in the balance sheet based on an analysis of each taxpaying component within a jurisdiction.

An uncertain tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded.

Recent Accounting Pronouncements

See Note 2 of our notes to the consolidated financial statements for a discussion of recently issued accounting standards.

Quantitative and Qualitative Disclosures about Market Risk and Credit Risk

Credit Risk

Credit risk is controlled by the application of credit approvals, limits and monitoring procedures. We manage credit risk through in-house research and analysis of the Chinese economy and the underlying obligors and transaction structures. We identify credit risk collectively based on industry, geography and customer type. In measuring the credit risk of our sales to our customers, we mainly reflect the “probability of default” by the customer on its contractual obligations and consider the current financial position of the customer and the current and likely future exposures to the customer.

Liquidity Risk

We are also exposed to liquidity risk which is the risk that we will be unable to provide sufficient capital resources and liquidity to meet our commitments and business needs. Liquidity risk is controlled by the application of financial position analysis and monitoring procedures. When necessary, we will turn to other financial institutions and related parties to obtain short-term funding to cover any liquidity shortage.

Foreign Exchange Risk

While our reporting currency is the U.S. dollar, almost all of our consolidated revenues and consolidated costs and expenses are denominated in RMB. Most of our assets are denominated in RMB. As a result, we are exposed to foreign exchange risk as our revenues and results of operations may be affected by fluctuations in the exchange rate between the U.S. dollar and RMB. If the RMB depreciates against the U.S. dollar, the value of our RMB revenues, earnings and assets as expressed in our U.S. dollar financial statements will decline. We have not entered into any hedging transactions in an effort to reduce our exposure to foreign exchange risk.

BUSINESS

Our current main operating line of business is vehicle rental and the providing of attendant vehicle maintenance services through our sole operating subsidiary, Feizhiyue. The customer primarily lease vehicles from Feizhiyue for use in on-line car hailing. As of December 31, 2021, Feizhiyue manages a fleet of 489 vehicles under lease contracts with vehicle rental periods generally ranging from one to three years. Feizhiyue’s comprehensive vehicle management services are provided under its standard lease agreements and focus on improving the commute experience for car-hailing drivers These services include preventive and regular maintenance, advanced diagnostics, emergency road service, fleet services, and safety programs.

Feizhiyue also provides comprehensive vehicle management services through third party car-hailing operators’ ridesharing platforms including Didi Chuxing (“Didi”) for their car-hailing drivers such as driver training, 24- hour road rescue (including fuel delivery, electricity delivery, trailers) and other services, as well as consultation and analysis of traffic laws and operating policies for car-hailing drivers. Feizhiyue also assists in handling unexpected situations regarding driver qualification as well as traffic accidents during the operation process.

In an effort to strategically expand its operations in line with the climate control objectives of the Chinese government, and in cooperation with local government and public resources, Feizhiyue initiated the construction of an electric vehicle charging station network in Henan province. As of December 31, 2021, Feizhiyue had constructed four distinct charging stations offering an aggregate of 175 chargers in Zhengzhou, the provincial capital of Henan. Its charging services are offered to the general public and currently specifically to drivers on the Didi network. Its user base primarily consists of drivers of online car-hailing vehicles and taxis, as well as logistic and private vehicle owners.

In addition, Feizhiyue developed and launched an intelligent charging service platform which acts in concert with our charging station network. Users access its intelligent charging service platform through our official WeChat account, called “Xiaofei Charging.” Users can visit the “Xiaofei Charging” official account on We Chat, an interface to connect to Feizhiyue’s intelligent charging platform, to search available chargers and then go to the charging stations by using the map navigation function. In this prospectus, we refer to our intelligent charging service, as accessed through our official WeChat account, as our “platform,” our “application,” or our “mobile application.” The platform also supports users making charging appointment remotely, to avoid the situation that all chargers are occupied when they arrive, and to pay charging fees in advance. Feizhiyue can also implement vehicle management, monitoring, charging sequence and vehicle coordination through the platform, which is useful in managing and enhancing the usage of each charging station.

For the year ended December 31, 2021, revenues were primarily derived from (i) vehicle leasing which constituted 78.1% of revenues, (ii) vehicle management services provided to customers under leasing agreements which constituted 4.0% of revenues, (iii) charging services which constituted 12.4% or revenues, and (iv) miscellaneous sales of cars and car accessories which constituted 5.4% of revenues. The majority of our vehicle lease agreements are set to expire by the end of 2022 and currently there are no lease revenue under contract for 2023 and beyond. Our vehicle leases are usually renewed shortly before expiration and historically our renewal rate is very high. We are confident in lease renewals in 2023. Moreover, current market conditions are in favour of our vehicle rental service as we see very high demand for lease vehicles and relatively short supplies.

Vehicle leasing and management services are a critical part of our business. However, we expect to expand our fleet at a moderate rate and emphasize on growing our charging service business in the future.

Auto Leasing

Vehicle rental and contract maintenance, provided through Feizhiyue, is our main operating line of business and primary revenue generating source.

We believe that customers rent Feizhiyue’s vehicles in order to reduce the complexity, cost and total capital associated with vehicle ownership. Feizhiyue leases vehicles to online car-hailing drivers under operating leases. It pre-orders a certain number of vehicles, then pays and picks up the vehicles after the confirmation of the drivers. The arrangements with the lessees have a fixed term of one to three years with monthly payments ranging from $468 to $680. Car leasing revenue is recognized on a straight-line basis over the lease term.

In line with our objectives to make our business in line with climate control objectives of the Chinese government, Feizhiyue continues to acquire more electric vehicles as part of its leasing fleet. As of December 31, 2021, and 2020, the Company had a total of 63 and 62 electric cars or, approximately 13% and 12% of its total fleet of 494 and 506 cars, respectively.

In addition, each lease requires a security deposit of $2,700 to $3,000 from the driver to cover unpaid traffic penalties and car damage. At the end of the lease term, either the lease will be extended with the current driver, the vehicle will be leased to a new driver or returned to Feizhiyue. Customer deposits payable was $1,415,160 and $1,424,081, as of December 31, 2021 and 2020, respectively.

Under Feizhiyue’s standard vehicle leasing agreement, customers are provided vehicle management services. These services include preventive and regular maintenance, advanced diagnostics, 24 hour road rescue service, including gas delivery, electricity delivery and trailer service, fleet services, and safety programs. Vehicle management services fees are charged at approximately $27 (RMB 180) each month; automobile lessees pay these fees on a yearly basis during the lease period in which case management fee revenue is recognized on a straight-line basis over the lease term.

Feizhiyue also provides comprehensive vehicle management services through third party car-hailing operators’ ridesharing platforms including Didi Chuxing (“Didi”) for their car-hailing drivers such as driver training, 24-hour road rescue (including fuel delivery, electricity delivery, trailers) and other services, as well as consultation and analysis of traffic laws and operating policies for car-hailing drivers. Feizhiyue also assists in handling unexpected situations regarding driver qualification as well as traffic accidents during the operation process. In these instances, its vehicle management services are provided through the third party car-hailing operator’s online platform. Under Feizhiyue’s arrangement with Didi, it is paid commission revenue by Didi set at a certain percentage of the total transaction volume that drivers which we offer vehicle management services operate on the Didi platform.

Feizhiyue launched “Xiaofei Bangmang” (Fei’s Help) designed to help the car-hailing drivers solve problems “in real time”. This program has served more than 3,000 drivers. Feizhiyue also has “Xiaofei Ketang” (Fei’s Classroom) to instruct the new drivers on the online car-hailing procedures, what to expect and how to handle common problems and challenges of order taking, driving, and after-service. Feizhiyue also provides consultation and analysis on traffic regulations and car- hailing operation policies, assists drivers on handling emergencies and traffic accidents during car-hailing service. To motivate and inspire drivers, Feizhiyue has a ranking program where each driver is assessed on the driver’s monthly transaction volume, and the driver’s good performance. The highest scoring drivers are announced and granted the title of “City Hero”. Feizhiyue also assists in handling unexpected situations regarding driver qualification as well as traffic accidents during the operation process. The car hailing company compensates us based on the evaluation of the service quality on a monthly basis. These service revenues are recognized upon the completion of the evaluation and confirmation from the car hailing company.

Auto Leasing/Vehicle Management Service Growth Strategy

Feizhiyue’s long-term strategy is focused on expanding and diversifying its revenues improving its operating effectiveness and enhancing the customer experience.

Expand and Diversify Revenues — Feizhiyue’s strategy to achieve ongoing growth is driven by initiatives that expand and diversify our revenues through customer- and market-focused initiatives. It is actively working to expand its auto leasing and vehicle management services business, and diversify its rental fleet with a broader mix of electric vehicles to increase in the range of customer options and markets it serves. Feizhiyue plans to expand its footprint in the PRC, with a focus on increasing the following: (i) the number of geographical markets served; (ii) the number of vehicles maintained and managed; and (iii) to continue to expand the scope of management services offered.

Improve Operating Effectiveness — Feizhiyue is focused on generating continuous improvement across its operations, with an emphasis on building a strong safety culture, a more robust auto leasing business and improving margins. Feizhiyue will continue to improve the effectiveness of its sales team with focused training, strong customer relationship management capabilities, and ongoing technology enhancements.

Enhance the Customer Experience — Feizhiyue seeks to differentiate its business by delivering a superior customer experience through the variety and quality of the vehicles and services it offers, the ease of doing business with it and the added value it offers through services, products and technologies. Its focus on offering quality leased vehicles tailored to meet the governmental requirements of the ridesharing industry is intended to meet the preferences of ridesharing drivers, including the expectations for reliable, safe, efficient and effective maintained vehicles.

EV Charging Operations

Feizhiyue is dedicated to slowing climate change by reducing greenhouse gas emissions caused by transportation. In 2018, it commenced its first installation of EV charging stations in China by the installation of four multi-port charging stations in Zhengzhou, the provincial capital of Henan. These installations assisted the city in the development of its EV infrastructure and supported its environmental goals. Feizhiyue’s charger model is YD-DC120KW-B. The supplier is Shenzhen Fu Dian Technology, Co., Ltd. The charger model follows the main standard of respective electric vehicle technical standard and electrical technical standard. The chargers have comprehensive safety measures, including functions on charger operation and malfunction monitoring, charging connection detection between the charger connector and vehicle, charger self-lock and temperature monitoring during the charging process, protections on electrical leakage, short circuit, overcurrent, overvoltage, over-temperature and an emergency stop button. Feizhiyue plans to deploy additional commercial chargers in and around Zhengzhou.

Feizhiyue’s charging stations have a regular user base — they are drivers of taxis, online car-hailing vehicles, logistic vehicle owners and a few private vehicle owners, which ensures the usage of the charging stations. Feizhiyue earns service fees from providing the charging service.

Based on comprehensive data of vehicles, users, chargers and geography, by applying big data and algorithm, navigation and location based technology, Feizhiyue developed and launched an intelligent charging service platform to act in concert with its charging station network. Its proprietary, cloud-based network allows it to share convenient and advantageous station management features and pertinent data with property partners and drivers through user interfaces. These features include real-time station status, payment processing, detailed charging session information, and monitoring and troubleshooting stations remotely, as well as standard and customized reporting capabilities on, among others, energy dispensed and gallons of fuel saved. Furthermore, we make appropriate adjustments in price between peak and off peak periods to attract the drivers.

There are a multitude of ways users can locate EV charging stations on Feizhiyue’s network. The users can visit our “Xiaofei Charging” official account on We chat, an interface to connect to Feizhiyue’s intelligent charging platform, which provides EV drivers with vital station information, including the ability to locate EV charging stations on its network, view real-time station status information, make charging appointments remotely, pay and initiate EV charging sessions, and manage their account (billing information, text messaging and email notifications). Users can also query the location and status of Feizhiyue’s charging stations in real time through third-party mobile applications including. Gaode Map, Baidu Map and Tencent Map.

Customers can refill their charging cards online in advance through the app. EV charging fees to EV drivers are based either on an hourly rate, a per kilowatt-hour (“kWh”) rate, or by session, and are calculated based on a variety of factors, including associated station costs and local electricity tariffs. Charging cards refilled in advance are recognized as deferred revenues. The charging revenue is recognized at a point in time as service sales when the drivers complete the charging service.

EV Charging Business Operational Strengths

Flexible Business Model. Feizhiyue is able to offer and bundle both access to its charging station network with services offered in its ride-hailing business. It can also implement vehicle management, monitoring, charging sequence and vehicle coordination through the intelligent charging platform, which is useful in managing and enhancing the usage of each charging stations. We believe this offers cross selling opportunities to meet the needs of EV drivers.

Ownership and Control of EV Charging Stations and Services. Feizhiyue owns its charging stations which allows it to control the settings and pricing for its EV charging services, service the equipment as necessary, and have greater brand management and price uniformity.

Experience with Products and Services of Other EV Charging Service Providers. Feizhiyue has experience owning and operating EV charging equipment provided by other EV charging service providers which has provided it with the working knowledge of the benefits and drawbacks of other equipment manufacturers and their applicable EV charging networks.

EV Charging Business Growth Strategy

Feizhiyue’s objective is to continue to be a leading provider of EV charging solutions by deploying larger-scale EV charging infrastructure. By doing so, Feizhiyue aims to enable the accelerated growth of EV adoption and the EV industry. Key elements of its strategy include:

Miscellaneous Revenues

Automobile Sales. During the year ended December 31, 2020, seven automobiles were sold to a company which is owned by one of Company’s current employees. Sales revenue is recognized when the automobiles are delivered to the customer. We do not provide the customers with the right of return.

Sale of Automobile Terminal Integrated Device-GPS. The automobile terminal integrated device is an electronic positioning device installed to monitor the vehicle information, location and driving route by regulatory authorities. It is required to install the automobile terminal integrated device on online car- hailing vehicles, to ensure the safety of drivers and passengers. In addition, it can help to monitor overloaded trucks and buses and other traffic rule violators. Feizhiyue sells the terminal device to online car-hailing vehicles, logistic companies and operating vehicle owners.

Branding and Marketing Strategy

Feizhiyue named its business services by using variants of “Feizhiyue” and the characteristics of the services provided. For example, we used “XiaoFei ChongDian” to designate our charging service, and “Fei Guanjia” and “XiaoFei Ketang” to designate our driver management services.

For Feizhiyue’s charging services, users can query the location and status of its charging stations in real time through third-party mobile applications including Gaode Map, Baidu Map and Tencent Map.

Feizhiyue also has its official account on We chat. By posting regular company news and industry policy updates, we believe this outreach enhances the social awareness and creditability of our company.

Management, Culture and Training

Our management team brings significant social, industry and government resources to the company. Our company chairman, Mr. Zhong has been the Executive Vice Chairman and Secretary for the Henan Online Car-hailing Work Committee and Deputy Secretary of Henan Province Road Transportation Association since January 2019. Moreover, Mr. Zhong has additionally held the position of vice president of Zhenzhou City Commerce and Industry Chamber since April 2010.

We are guided by a philosophy that recognizes customer service and the importance of delivering optimal performance, allowing us to identify and reward teams that meet our high performance standards. We seek to recruit, hire, train, retain and promote qualified, knowledgeable, and enthusiastic team members who share our passion. The employees we recruit have strong technical talents with solid theoretical knowledge and practical experience. Our team also consists of electricity and electronic industry experts who contribute to our charging operation strengths and online car-hailing vehicle management operations. In addition, we also have design, after-sales service and marketing personnel to handle user inquires and ensure service satisfaction.

We have specific training and certification requirements for all new team members. This process helps ensure that all team members educate our customers and execute our standards accurately and consistently. As team members progress to the assistant manager and manager levels, they undergo additional weeks of training in sales, operations, and management.

Our core values and distinctive corporate culture allow us to attract passionate and friendly employees who share the common vision. We have a strong focus on community engagement, and our culture reflects our belief in doing right by our customers and our communities. We provide our employees with extensive training, career development, individual enrichment, and empowerment, which we believe is a key contributor for our success.

Competition

The market for providing vehicles to online drivers is competitive. Many companies are larger and better- resourced than Feizhiyue is at present, and have superior market presence and reputation. However, we believe Feizhiyue enjoys a competitive advantage through its ability to directly lease cars to on-line ridesharing customers from its fleet. We also believe that Feizhiyue’s continuing focus on electric vehicles will further distinguish it from its competitors.

The major players in the charging operation market of China are “Te Lai Dian”, “Xing Xing Charging”, “Yi Gan Energy” and “State Gird Electric Vehicle Service”. We believe, Feizhiyue’s competitive advantage is that it is running both charging stations and online car-hailing management business. Feizhiyue has a large stable of users such as taxi drivers, online car-hailing drivers and logistics drivers which helps ensure the usage of its chargers.