F-1 1 ea0207408-01.htm REGISTRATION STATEMENT

As filed with the Securities and Exchange Commission on June 10, 2024

Registration No. 333-       

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

____________________

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

____________________

Harden Technologies Inc.
(Exact Name of Registrant as Specified in its Charter)

____________________

British Virgin Islands

 

3559

 

Not applicable

(State or Other Jurisdiction of
Incorporation or Organization)

 

(Primary Standard Industrial
Classification Code Number)

 

(I.R.S. Employer
Identification Number)

____________________

Building 8, No. 6 Jingye Road

Torch Development Zone

Zhongshan City

PR China 528400

+86-760-89935422

 

Vcorp Agent Services, Inc.

25 Robert Pitt Dr., Suite 204

Monsey, New York 10952

(888) 528-2677

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

 

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

____________________

Copies to:

Bradley A. Haneberg, Esq.
Haneberg Hurlbert PLC
1111 East Main Street
Suite 2010
Richmond, Virginia 23220

Telephone: 804-554-4941

 

Fang Liu, Esq.

VC Law LLP

1945 Old Gallows Road

Suite 260

Vienna, Virginia 22182

Telephone: (301) 760-7393

____________________

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

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, 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 term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

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 Securities and Exchange Commission, acting pursuant to such Section 8(a), may determine.

 

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The information in this 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 prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state or other jurisdiction where the offer or sale is not permitted.

PRELIMINARY PROSPECTUS

 

SUBJECT TO COMPLETION, DATED JUNE 10, 2024

1,250,000 Ordinary Shares

Harden Technologies Inc.

This is the initial public offering of Harden Technologies Inc. We expect the initial public offering price will be between $4.00 to $5.00 per ordinary share. No public market currently exists for our ordinary shares. We have applied for approval of the listing our ordinary shares on the Cboe BZX Exchange and have reserved the symbol “HAHA” for such listing for the ordinary shares we are offering. We believe that upon the completion of the offering contemplated by this prospectus, we will meet the standards for listing on the Cboe BZX Exchange. We cannot guarantee that we will be successful in listing our securities on the Cboe BZX Exchange; however, we will not complete this offering unless we are so listed.

We are an “emerging growth company,” as that term is used in the Jumpstart Our Business Startup Act of 2012 (the “Jobs Act”), and will be subject to reduced public company reporting requirements. See “Prospectus Summary — Implications of Being an Emerging Growth Company” and “Risk Factors — Risks Associated With Ownership of Our Ordinary Shares — We are an ‘emerging growth company,’ and we cannot be certain if choosing to elect the reduced reporting requirements applicable to emerging growth companies will make our ordinary shares less attractive to investors.”

Investing in our ordinary shares involves significant risks. See “Risk Factors” beginning on page 20 of this prospectus for a discussion of information that should be considered before making a decision to purchase our ordinary shares.

We are a holding company incorporated in the British Virgin Islands. As a holding company with no material operations of our own, we conduct a substantial majority of our operations through our subsidiaries in the People’s Republic of China (the “PRC”). The ordinary shares offered in this offering are shares of the British Virgin Islands holding company. Investors of our ordinary shares should be aware that they may never directly hold equity interests in our subsidiaries in the PRC.

As all our operations are conducted in China through our subsidiaries, 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. Such governmental actions:

        could result in a material change in our operations;

        could hinder our ability to continue to offer securities to investors; and

        may cause the value of our 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. Any future action by the Chinese government expanding the categories of industries and companies whose foreign securities offerings are subject to government review 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.

Recently, the PRC government initiated a series of regulatory actions and made several 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. We believe that we are not directly subject to these regulatory actions or statements, as we do not have a variable interest entity structure and our business belongs to the waste management and recycling equipment manufacturing industry in China, which does not involve the collection of user data, implicate cybersecurity, or involve any other type of restricted industry. Based on the advice of our PRC counsel, King & Wood Mallesons, and our understanding of currently applicable PRC laws and regulations, our registered

 

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public offering in the U.S. is not subject to the review or prior approval of the Cyberspace Administration of China (the “CAC”) or the China Securities Regulatory Commission (the “CSRC”). Uncertainties still exist, however, due to the possibility that laws, regulations, or policies in the PRC could change rapidly in the future. As these statements and regulatory actions are new, 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 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 list on an U.S. exchange. Any future action by the PRC government expanding the categories of industries and companies whose foreign securities offerings are subject to review by the CSRC 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.

On February 17, 2023, the CSRC issued the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies (the “Trial Administrative Measures”) and relevant supporting guidelines (collectively, the “New Administrative Rules Regarding Overseas Listings”), which came into effect since March 31, 2023, and the Circular on Arrangements for Record-filing Administration of Overseas Offering and Listing of Domestic Companies, pursuant to which, a PRC domestic company shall file with the CSRC within 3 working days after the relevant application with initial public offerings or listings in overseas markets is submitted overseas. If the indirect overseas securities offering and listing by a domestic company had been approved by the overseas regulator or stock exchange, such as the registration statement had been declared effective in the case of the U.S. market, prior to the effectuation of the Trial Administrative Measures, and the indirect overseas securities offering and listing will be completed before September 30, 2023 without the need to go through the regulatory procedure of the overseas regulator or stock exchange for offering and listing once again, then such company is not required to file with the CSRC in accordance with the Trial Administrative Measures immediately but shall be required to do so if it involves in re-financing and other filing matters in the future. While the PRC domestic companies that have submitted valid applications for overseas issuance and listing but have not been approved by overseas regulatory authorities or overseas stock exchanges before March 31, 2023 can reasonably arrange the timing of filing applications and should complete the filing before the overseas issuance and listing. We plan to file with the CSRC in accordance with the Trial Administrative Measures immediately. Further, under the New Administrative Rules Regarding Overseas Listings, if an issuer offers securities in the same overseas market where it has previously offered and listed securities subsequently, filings shall be made with the CSRC within 3 working days after the offering is completed. Upon the occurrence of any material event, such as change of control, investigations or sanctions imposed by overseas securities regulatory agencies or other relevant competent authorities, change of listing status or transfer of listing segment, or voluntary or mandatory delisting, after an issuer has offered and listed securities in an overseas market, the issuer shall submit a report thereof to CSRC within 3 working days after the occurrence and public disclosure of such event. Further, an overseas securities company that serves as a sponsor or lead underwriter for overseas securities offering and listing by the PRC domestic companies shall file with the CSRC within 10 working days after signing its first engagement agreement for such business, and submit to the CSRC, no later than January 31 each year, an annual report on its business activities in the previous year associated with overseas securities offering and listing by the PRC domestic companies. If an overseas securities company has entered into engagement agreements before the effectuation of the Trial Administrative Measures and is serving in practice as a sponsor or lead underwriter for overseas securities offering and listing by domestic companies, it shall file with the CSRC within 30 working days after the Trial Administrative Measures take effect. Since the New Administrative Rules Regarding Overseas Listings are newly promulgated, and the interpretation and implementation thereof involves uncertainties, we cannot assure that we will be able to complete the relevant filings in a timely manner or fulfil all the regulatory requirements thereunder.

As of the date of this prospectus, we are in the process of preparing a report and other required materials in connection with the CSRC filing, which will be submitted to the CSRC in due course. We expect to submit any additional materials as subsequently requested by and/or respond to questions from the CSRC on a timely basis as they occur, and expect to complete filing with the CSRC prior to our proposed initial public offering and listing on the Cboe BZX Exchange. However, if we do not comply with the filing procedures according to the Administration Measures or if our filing materials contain false records, misleading statements or material omissions, the CSRC may order rectify such non-compliance, issue a warning, and impose a fine of not less than RMB1 million and not more than RMB10 million.

On February 24, 2023, the CSRC promulgated the Provisions on Strengthening Confidentiality and Archives Administration of Overseas Securities Offering and Listing by Domestic Companies (the “Confidentiality and Archives Administration Provisions”), which also became effective on March 31, 2023. The Confidentiality and Archives Administration Provisions set out rules, requirements and procedures relating to provision of documents, materials and accounting archives for securities companies, securities service providers, overseas regulators and other entities and individuals in connection with overseas offering and listing, including without limitation to, domestic companies that carry out overseas offering and listing (either in direct or indirect means) and the securities

 

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companies and securities service providers (either incorporated domestically or overseas) that undertake relevant businesses shall not leak any state secret and working secret of government agencies, or harm national security and public interest, and a domestic company shall first obtain approval from competent authorities according to law, and file with the secrecy administrative department at the same level, if it plans to, either directly or through its overseas listed entity, publicly disclose or provide any documents and materials that contain state secrets or working secrets of government agencies. Working papers produced in the Chinese mainland by securities companies and securities service providers in the process of undertaking businesses related to overseas offering and listing by domestic companies shall be retained in the Chinese mainland. Where such documents need to be transferred or transmitted to outside the Chinese mainland, relevant approval procedures stipulated by regulations shall be followed. While we believe we do not involve leaking any state secret and working secret of government agencies, or harming national security and public interest in connection with provision of documents, materials and accounting archives, there is uncertainty how the new provisions will be interpreted and implemented in the future, and we may be required to perform additional procedures in connection with the provision of accounting archives.

Any failure of us to fully comply with these new regulatory requirements may significantly limit or completely hinder our ability to offer or continue to offer the ordinary shares, cause significant disruption to our business operations, severely damage our reputation, materially and adversely affect our financial condition and results of operations, and cause the ordinary shares to significantly decline in value or become worthless.

Our ordinary shares may be prohibited to trade on a national exchange or in the over-the-counter trading market in the United States under the Holding Foreign Companies Accountable Act (the “HFCA Act”) and the Accelerating Holding Foreign Companies Accountable Act (the “AHFCA Act”) if the Public Company Accounting Oversight Board (United States) (the “PCAOB”) determines that it cannot inspect or fully investigate our auditors for two consecutive years beginning in 2021. As a result, an exchange may determine to delist our securities. Additionally, our securities may be prohibited from trading if our auditor cannot be fully inspected as more stringent criteria have been imposed by the SEC and the PCAOB recently. On December 2, 2021, the SEC issued amendments to finalize rules implementing the submission and disclosure requirements in the HFCA Act, which became effective on January 10, 2022. The rules apply to registrants that the SEC identifies as having filed an annual report with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction and that the PCAOB is unable to inspect or investigate completely because of a position taken by an authority in foreign jurisdictions. For example, on December 16, 2021, the PCAOB issued a report on its determinations that it is unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered in the Chinese mainland and in Hong Kong, because of positions taken by PRC authorities in those jurisdictions. On December 15, 2022, however, the PCAOB vacated its previous 2021 determinations that the PCAOB was unable to inspect or investigate completely registered public accounting firms headquartered in the Chinese mainland and Hong Kong. As of the date of the prospectus, our auditor prior to November 24, 2022, Friedman LLP (“Friedman”), had been inspected by the PCAOB on a regular basis in the audit period, and our current auditor, Marcum Asia CPAs LLP (“Marcum Asia”), has been inspected by the PCAOB on a regular basis, both with the last inspection in 2020. Neither Friedman nor Marcum Asia is subject to the determinations announced by the PCAOB on December 16, 2021. As a result, we do not expect to be identified as a “Commission — Identified Issuer” under the HFCA as of the date of this prospectus. Friedman LLP was merged with Marcum LLP on September 1, 2022 and filed its application to withdraw the PCAOB registration on December 30, 2022. However, whether the PCAOB will continue to be able to satisfactorily conduct inspections of PCAOB-registered public accounting firms headquartered in the Chinese mainland and Hong Kong is subject to uncertainties and depends on a number of factors out of our and our auditor’s control. The PCAOB continues to demand complete access in the Chinese mainland and Hong Kong moving forward and is making plans to resume regular inspections in early 2023 and beyond, as well as to continue pursuing ongoing investigations and initiate new investigations as needed. While our auditor is based in the U.S. and is registered with PCAOB and subject to PCAOB inspection, in the event it is later determined that the PCAOB is unable to inspect or investigate completely our auditor because of a position taken by an authority in a foreign jurisdiction, then such inability could cause trading in our securities to be prohibited under the HFCA Act and the AHFCA Act, and ultimately result in a determination by a securities exchange to delist our securities. If trading in our ordinary shares is prohibited under the HFCA Act and the AHFCA Act in the future because the PCAOB determines that it cannot inspect or fully investigate our auditor at such future time, the Cboe BZX Exchange may determine to delist our ordinary shares, which may cause the value of our securities to decline or become worthless. See. “Risk Factors — Risks Associated With Ownership of Our Ordinary Shares — Our ordinary shares may be prohibited from being trading on and would require delisting from a national exchange under the HFCA Act and the AHFCA Act if the PCAOB is unable to inspect our auditors for two consecutive years beginning in 2021. The delisting of our ordinary shares, or the threat of their being delisted, may materially and adversely affect the value of your investment.”

 

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Cash dividends, if any, on our ordinary shares will be paid in U.S. dollars. As of the date of this prospectus, (1) no cash transfers nor transfers of other assets have occurred among the Company, and its subsidiaries, except that we transferred $12,990 from Harden International to WFOE as a working capital loan during the year ended December 31, 2021, (2) no dividends nor distributions have been made by a subsidiary, and (3) the Company has not paid any dividends nor made any distributions to U.S. investors. We intend to keep any future earnings to finance the expansion of our business, and we do not anticipate that any cash dividends will be paid in the foreseeable future, or any funds will be transferred from one entity to another. As such, we have not installed any cash management policies that dictate how funds are transferred among Harden, its subsidiaries, or investors. For further details, please refer to the consolidated financial statements included elsewhere in this registration statement of which this prospectus is a part. Under British Virgin Islands law, the directors of the Company may, by resolution of directors, authorize a dividend by the Company to the members at such time and of such an amount, as the directors think fit if they are satisfied, or reasonable grounds, that the company will, immediately after the payment of the dividend, satisfy the solvency test. A BVI company satisfies the solvency test if (a) the value of the company’s assets exceeds its liabilities, and (b) the company is able to pay its debts as they fall due.

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.

 

Per Share

 

Total Without
Over-Allotment
Option

 

Total With
Over-Allotment
Option

Initial public offering price(1)

 

$

4.50

 

$

5,625,000

 

$

6,468,750

Underwriting discounts and commissions(2)

 

$

0.2925

 

$

365,625

 

$

420,469

Proceeds to us, before expenses

 

$

4.2075

 

$

5,259,375

 

$

6,048,281

____________

(1)      Initial public offering price is assumed to be $4.50 per ordinary share, which is the midpoint of the range set forth on the cover page of this prospectus.

(2)      See “Underwriting” for more information regarding underwriting compensation. Excludes fees and expenses payable to our underwriters.

We expect our total cash expenses for this offering (including cash expenses payable to our underwriters for their out-of-pocket expenses) to be approximately $1,410,000, exclusive of the above discounts and commissions. In addition, we will pay additional items of value in connection with this offering that are viewed by the Financial Industry Regulatory Authority (“FINRA”) as underwriting compensation. These payments will further reduce proceeds available to us before expenses. See “Underwriting.”

This offering is being conducted on a firm commitment basis. The underwriters are obligated to take and pay for all of the ordinary shares, if any such shares are taken. We have granted the underwriters an option for a period of forty-five (45) days after the closing of this offering to purchase up to 15% of the total number of our ordinary shares to be offered by us pursuant to this offering (excluding shares subject to this option), solely for the purpose of covering over-allotments, at the initial public offering price less the underwriting discounts and commissions. If the underwriters exercise the option in full and originate all investors in the offering, the total underwriting discounts and commissions payable will be $420,469 based on an assumed initial public offering price of $4.50 per ordinary share (the midpoint of the price range set forth on the cover page of this prospectus), and the total gross proceeds to us, before underwriting discounts and commissions and expenses, will be $6,468,750. If we complete this offering, net proceeds will be delivered to us on the closing date. We will not be able to use such proceeds in China, however, until we complete capital contribution procedures which require prior approval from each of the respective local counterparts of China’s Ministry of Commerce, the State Administration for Market Regulation, and the State Administration of Foreign Exchange. See remittance procedures in the section titled “Use of Proceeds” beginning on page 51.

We have agreed to issue to the underwriter ordinary share purchase warrants, exercisable from the closing date of this offering for a period of three years after such date, to purchase ordinary shares equal to 5% of the total number of ordinary shares sold in this offering, exercisable at a per share price equal to 125% of the public offering price (the “Warrants”). The registration statement of which this prospectus is a part covers the ordinary shares issuable upon the exercise thereof.

The underwriters expect to deliver the ordinary shares to purchasers in this offering on or about  __________, 2024.

US Tiger Securities, Inc.

Prospectus dated         , 2024

 

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TABLE OF CONTENTS

 

Page

PROSPECTUS SUMMARY

 

1

RISK FACTORS

 

20

FORWARD-LOOKING STATEMENTS

 

50

USE OF PROCEEDS

 

51

DIVIDEND POLICY

 

52

EXCHANGE RATE INFORMATION

 

53

CAPITALIZATION

 

54

DILUTION

 

55

POST-OFFERING OWNERSHIP

 

56

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

 

57

CORPORATE HISTORY AND STRUCTURE

 

67

OUR BUSINESS

 

69

REGULATIONS

 

80

MANAGEMENT

 

93

RELATED PARTY TRANSACTIONS

 

102

PRINCIPAL SHAREHOLDERS

 

104

DESCRIPTION OF SHARES

 

106

SHARES ELIGIBLE FOR FUTURE SALE

 

115

TAX MATTERS APPLICABLE TO U.S. HOLDERS OF OUR ORDINARY SHARES

 

117

ENFORCEABILITY OF CIVIL LIABILITIES

 

124

UNDERWRITING

 

125

EXPENSES RELATED TO THIS OFFERING

 

129

LEGAL MATTERS

 

130

EXPERTS

 

130

INTERESTS OF NAMED EXPERTS AND COUNSEL

 

130

DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION

 

131

WHERE YOU CAN FIND MORE INFORMATION

 

131

INDEX TO FINANCIAL STATEMENTS

 

F-1

Through and including         , 2024 (25 days after the commencement of this offering), all dealers effecting transaction in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This delivery requirement is in addition to the obligation of dealers to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

You should rely only on the information contained in this prospectus and any free writing prospectus we may authorize to be delivered to you. We have not, and the underwriters have not, authorized anyone to provide you with information different from, or in addition to, that contained in this prospectus and any related free writing prospectus. We and the underwriters take no responsibility for, and can provide no assurances as to the reliability of, any information that others may give you. This prospectus is not an offer to sell, nor is it seeking an offer to buy, these securities in any jurisdiction where the offer or sale is not permitted. The information contained in this prospectus is only accurate as of the date of this prospectus, regardless of the time of delivery of this prospectus and any sale of our ordinary shares. Our business, financial condition, results of operations and prospects may have changed since that date.

For investors outside the United States: Neither we nor the underwriters have done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction, other than the United States, where action for that purpose is required. 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 this prospectus outside the United States.

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We are incorporated under the laws of the British Virgin Islands as a company limited by shares, and a majority of our outstanding securities are owned by non-U.S. residents. Under the rules of the U.S. Securities and Exchange Commission (the “SEC”) we currently qualify for treatment as a “foreign private issuer.” As a foreign private issuer, we will not be required to file periodic reports and financial statements with the SEC as frequently or as promptly as domestic registrants whose securities are registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

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PROSPECTUS SUMMARY

This summary highlights certain information contained elsewhere in this prospectus. You should read the entire prospectus carefully, including our consolidated financial statement and related notes, and especially the risks described under “Risk Factors” beginning on page 20 hereof. We note that our actual results and future events may differ significantly based upon a number of factors. The reader should not put undue reliance on the forward-looking statements in this document, which speak only as of the date on the cover of this prospectus.

Our Company

Harden is a waste management and recycling equipment manufacturer in China, specializing in the manufacture of customized industrial shredders and material sorting machines and production lines. We were founded on May 10, 2010 by our chairman of the board of directors, director and chief executive officer, Mr. Jiawen Miao. We are located in Zhongshan City in China’s Guangdong Province. We currently employ 219 people on a full time basis — 21 people in management positions; 33 in sales and marketing positions; 28 in research and development positions; 41 people in technical engineering positions; 26 in after-sale service positions and 70 in manufacturing and installation positions.

Industry and Market Background

According to Grand View Research, an international market research company, the global industrial recycling equipment market size is anticipated to reach $1.3 billion by 2027, expanding at a compound annual growth rate (“CAGR”) of 5.8%. The Asia Pacific region’s market is forecast to exceed $450 million by 2025, with China as a major revenue earner.

We expect growing awareness pertaining to the economic and environmental benefits of recycled processed materials to significantly impact our market. In addition, we expect growing concerns over the increasing carbon footprint along with rising government efforts in numerous countries in order to promote recycling of material to create significant opportunities for manufacturers. Industrial recycling equipment plays a significant role in this process. Scrap materials including discarded electrical and electronic goods, automobile parts, paper, and construction materials are collected from numerous sources for further processing. Industrial recycling equipment, including baler presses, granulators, shredders, and shears are then used to reduce the shape and size of the waste materials, which are further used for recycling.

Due to the increasing awareness towards the sustainable advantages and benefits of reusing and recycling waste materials, we believe the end-use utilization of recycled materials will further benefit the industry. We anticipate that recycled material such as steel, iron, plastic, rubber, and concrete in the industries including automotive, electrical and electronics, building and construction, and packaging will drive the market.

Our Products

We manufacture industrial shredders and waste sorting equipment for waste management and material recycling industries. We create equipment for customers according to their requirements depending upon applications and needs.

Samples of our industrial recycling equipment include the following:

Single Shaft Shredders — Single shaft shredders are often referred to as grinders and efficiently shred large quantities of materials unattended.

Dual Shaft Shredders — Dual shaft industrial shredders have opposite rotating rotors that pull the material between the two rotors. In a dual-shaft shredder, the cutters or knives cut the material when it passes over the cutter and the opposing counter-knife.

Quad Shaft Shredders — Quad shaft shredders can shred a wide-range of materials and produce a consistent small material. Quad shaft shredders are able to shred and recirculate material within the machine until it is reduced to the proper size to pass through a filtering screen.

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Primary Shredders — Primary shredders allow for the reduction of tough materials and are made with a hydraulic transmission. The shredders can be adjusted to different sizes to obtain the desired size of the shredded product.

Mobile Shredders — Mobile shredders are equipped with the same shredding units as stationary shredders. However, different mobile shredder models are built either on crawlers or a trailer, which makes them easy to move at a production site or transport between sites when needed.

Granulators — Granulators turn materials into flakes or granules, which can be sold as raw material for remanufacturing.

Disk Screens — Disk screens are used to separate waste according to piece size.

Air Separators — Air separators employ blowers and other mechanisms to separate lighter fractions of recyclable material.

Our Competitive Strengths

We believe the following competitive strengths differentiate us from our competitors and contribute to our ongoing success.

Focus on Technology and Research and Development.    We believe we employ a strong research and development team. We own 115 patents that we utilize in the production of our products, and we are committed to researching and developing new industrial recycling equipment, and an additional 54 patents that are pending approval.

Ability to Grow Our Brand Awareness.    We believe that the Harden brand is a well-known, respected global brand in our industry. Our brand name and image are integral to the growth of our business and to the implementation of our strategies for expanding our business.

Strong Cash Flow Management.    We believe that our cash flow management, driven by our low accounts receivable balance as compared to our competitors, allows us to compete effectively in a rapidly changing and increasingly complex Chinese market.

Effective Quality Control.    In every step, we have fully trained, experienced and skilled employees that are working in concert to ensure the quality of our industrial recycling equipment.

Experienced Management Team and Personnel with a Demonstrated Track Record.    Our management team, led by our chairman of the board, director and chief executive officer, Mr. Jiawen Miao, has extensive industry experience and a demonstrated track record of developing new products, adapting to changing market conditions, and managing manufacturing companies.

Pricing Strategy.    We strive to provide our customers with the best value proposition by offering our industrial recycling equipment at competitive prices on our platform.

Our Challenges and Risks

We recommend that you consider carefully the risks discussed below and under the heading “Risk Factors” beginning on page 20 of this prospectus before purchasing our ordinary shares. If any of these risks occur, our business, prospects, financial condition, liquidity, results of operations and ability to make distributions to our shareholders could be materially and adversely affected. In that case, the trading price of our ordinary shares could decline and you could lose some or all of your investment. These risks include, among others, the following:

        You may experience difficulties in effecting service of legal process, enforcing foreign judgments or brining actions in China against us or our management named in the prospectus based on foreign laws;

        We must remit the offering proceeds to China before they may be used to benefit our business in China, this process may take a number of months and we will be unable to use the proceeds to grow our business in the meantime.

        We face a wide range of competition that could affect our ability to operate profitably, and we believe that our European competitors are searching for opportunities to enter the China market;

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        If we become directly subject to the recent scrutiny, criticism and negative publicity involving U.S.-listed China-based companies, we may have to expend significant resources to investigate and resolve the matter which could harm our business operations, this offering and our reputation and could result in a loss of your investment in our shares, especially if such matter cannot be addressed and resolved favorably;

        Introduction of new laws and regulations or changes to existing laws and regulations by the Chinese government may occur quickly with little advance notice, and such new laws, regulations or changes thereto may adversely affect our business;

        Our ordinary shares may be prohibited from being traded on and would require delisting from a national exchange under the HFCA Act and the AHFCA Act if the PCAOB is unable to inspect our auditors for two consecutive years beginning in 2021. Our auditor is currently subject to PCAOB inspections, and the PCAOB is able to inspect our auditor;

        Additionally, our securities may be prohibited from trading if our auditor cannot be fully inspected as more stringent criteria have been imposed by the SEC and the PCAOB recently. On December 2, 2021, the SEC issued amendments to finalize rules implementing the submission and disclosure requirements in the HFCA Act, which became effective on January 10, 2022. The rules apply to registrants that the SEC identifies as having filed an annual report with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction and that the PCAOB is unable to inspect or investigate completely because of a position taken by an authority in foreign jurisdictions;

        Any decline in the availability or increase in the cost of raw materials, including steel and copper, could materially impact our earnings;

        We are an “emerging growth company,” and we cannot be certain if choosing to elect the reduced reporting requirements applicable to emerging growth companies will make our ordinary shares less attractive to investors; and

        The novel coronavirus could have a material adverse impact upon our business, results of operations, financial condition, cash flows or liquidity.

Our Strategies

Increase Our Revenue and Market Share by Expanding Our Business Network internationally.    In the short term, we intend to increase our revenue and market share by expanding our business network to other provinces in China. Over the long term, however, we believe that significant business opportunities exist outside of China — particularly in the United States and Europe.

Pursue Strategic Acquisitions.    We intend to continue to pursue expansion opportunities in existing and new markets, as well as in core and adjacent categories through strategic acquisitions.

Market Opportunity.    China’s 14th Five Year Plan (2021-2025) promotes the reduction on the reliance on foreign technology and dependence on imported resources, and to increase industrial modernization and technological innovation. We plan to capitalize on the opportunities presented by the 14th Five Year Plan by assisting in the recycling and reuse of materials along with lowering waste disposal fees of our existing and potential customers through the use of our shredder equipment.

Continue to Develop New Products.    We are committed to researching and developing new products according to market trends.

Target the Solid Waste Management and Recycling Industry Market.    The global waste management market is growing at a rapid rate in both developed and developing countries. According to Allied Market Research, a market research company based in the US, global waste management market is expected to grow from approximately $1.6 trillion in 2020 to approximately $2.5 trillion by 2030, growing at a CAGR of 3.4%. As a result of such growth, Allied Market Research also determined that the global waste management equipment market, in which we compete, will increase from $45.75 billion in 2019 to $55.63 billion by 2027, growing at a CAGR of 4.1%.

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Foreign Private Issuer Status

We are incorporated in the British Virgin Islands, and more than 50 percent of our outstanding voting securities are not directly or indirectly held by residents of the United States. Therefore, we are a “foreign private issuer” as defined in Rule 405 under the Securities Act and Rule 3b-4(c) under the Exchange Act. As a result, in accordance with the rules and regulations of the Cboe BZX Exchange, we may comply with home country governance requirements and certain exemptions thereunder rather than complying with the Cboe BZX Exchange corporate governance standards. We may choose to take advantage of the following exemptions afforded to foreign private issuers:

        Exemption from filing quarterly reports on Form 10-Q, from filing proxy solicitation materials on Schedule 14A or 14C in connection with annual or special meetings of shareholders, or from providing current reports on Form 8-K disclosing significant events within four (4) days of their occurrence, and from the disclosure requirements of Regulation FD.

        Exemption from Section 16 rules regarding sales of ordinary shares by insiders, which will provide less data in this regard than shareholders of U.S. companies that are subject to the Exchange Act.

        Exemption from the Cboe BZX Exchange rules applicable to domestic issuers requiring disclosure within four (4) business days of any determination to grant a waiver of the code of business conduct and ethics to directors and officers. Although we will require board approval of any such waiver, we may choose not to disclose the waiver in the manner set forth in the Cboe BZX Exchange rules, as permitted by the foreign private issuer exemption.

        Exemption from the requirement that our board of directors have a compensation committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities.

        Exemption from the requirements that director nominees are selected, or recommended for selection by our board of directors, either by (i) independent directors constituting a majority of our board of directors’ or independent directors in a vote in which only independent directors participate, or (ii) a committee comprised solely of independent directors, and that a formal written charter or board resolution, as applicable, addressing the nominations process is adopted.

Furthermore, Cboe BZX Exchange Rule 14.10(e) provides that a foreign private issuer may follow its home country practice in lieu of the requirements of Rule 14.10, the requirement to distribute annual and interim reports set forth in Rule 14.6(d), and the Direct Registration Program requirement set forth in Rules 14.3(b)(3) and 14.7; provided, however, that such a company shall: comply with the Notification of Material Noncompliance requirement (Rule 14.10(g)), the Voting Rights requirement (Rule 14.10(j)), have an audit committee that satisfies Rule 14.10(c)(3)(C), and ensure that such audit committee’s members meet the independence requirement in Rule 14.10(c)(2). If we rely on our home country corporate governance practices in lieu of certain of the rules of the Cboe BZX Exchange, our shareholders may not have the same protections afforded to shareholders of companies that are subject to all of the corporate governance requirements of the Cboe BZX Exchange. If we choose to do so, we may utilize these exemptions for as long as we continue to qualify as a foreign private issuer.

Although we are permitted to follow certain corporate governance rules that conform to British Virgin Island requirements in lieu of many of the Cboe BZX Exchange corporate governance rules, we intend to comply with the Cboe BZX Exchange corporate governance rules applicable to foreign private issuers, including the requirement to hold annual meetings of shareholders.

Corporate Information

Our principal executive office is located at Xingda Street, Torch Development Zone, Zhongshan City, Guangdong Province, 528400, PR China. Our telephone number is +86-760-89935422. Our registered office in the British Virgin Islands is located at the office of Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, British Virgin Islands, VG 1110.

Our agent for service of process in the United States is Vcorp Agent Services, Inc. 25 Robert Pitt Dr., Suite 204, Monsey, New York 10952. Our websites are located at www.industrial-shredder.info and www.siruide.com. Information contained on, or that can be accessed through, our website is not a part of, and shall not be incorporated by reference into, this prospectus.

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Corporate Structure

Harden Technologies Inc (“Harden”) — We formed Harden Technologies Inc., our British Virgin Islands holding company, on April 8, 2021.

Harden International Limited (“Harden International”) — We formed Harden International, our wholly-owned Hong Kong subsidiary, on April 20, 2021. Harden International serves as a holding company for WOFE.

Harwell Technologies Ltd. (“WFOE”) — We formed WFOE, our principal operating company in China and wholly-owned subsidiary of Harden International, on May 13, 2021. WFOE serves as a holding company for Harden Machinery.

Harden Machinery Ltd. (“Harden Machinery”) — We formed Harden Machinery, our former operating company in China and wholly-owned subsidiary of WFOE on May 10, 2010. Its business scope includes the design and manufacture of customized industrial recycling equipment.

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Dr. Shredder Technologies Ltd. (“Dr. Shredder”) — Dr. Shredder is a company incorporated on September 29, 2017 in China and is a 55% owned subsidiary of Harden Machinery. The remaining 45% of Dr. Shredder is owned by three former employees of Harden. Dr. Shredder is engaged in the manufacture and sale of small and medium-sized industrial shredders and data destruction shredders.

As used herein the term “China Operating Companies” shall refer to WFOE, Harden Machinery and Dr. Shredder.

Implications of Being an Emerging Growth Company

As a company with less than US$1.235 billion in revenue during our last fiscal year, we qualify as an “emerging growth company” as defined in the Jobs Act, and we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies,” including but not limited to, being permitted to present only two years of audited financial statements and only two years of related Management’s Discussion and Analysis of Financial Condition and Results of Operations in our filings with the SEC, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. We have not decided whether to take advantage of any or all of these exemptions. If we do take advantage of any of these exemptions, we do not know if some investors will find our ordinary shares less attractive as a result. The result may be a less active trading market for our ordinary shares and the price of our ordinary shares may be more volatile.

In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the “Securities Act”), for complying with 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. However, we are choosing to “opt out” of such extended transition period, and as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.

We will remain an “emerging growth company” until the earliest of (i) the last day of the first fiscal year in which our annual gross revenues exceed US$1.235 billion, (ii) the last day of our fiscal year following the fifth anniversary of the completion of this offering; (iii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our ordinary shares that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (iv) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period.

Implications of the HFCA Act

Our ordinary shares may be prohibited to trade on a national exchange or in the over-the-counter trading market in the United States under the HFCA Act and the AHFCA Act if the PCAOB determines that it cannot inspect or fully investigate our auditors for two consecutive years beginning in 2021. As a result, an exchange may determine to delist our securities. Additionally, our securities may be prohibited from trading if our auditor cannot be fully inspected as more stringent criteria have been imposed by the SEC and the PCAOB recently. On December 2, 2021, the SEC issued amendments to finalize rules implementing the submission and disclosure requirements in the HFCA Act, which became effective on January 10, 2022. The rules apply to registrants that the SEC identifies as having filed an annual report with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction and that the PCAOB is unable to inspect or investigate completely because of a position taken by an authority in foreign jurisdictions. For example, on December 16, 2021, the PCAOB issued a report on its determinations that it is unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered in the Chinese mainland and in Hong Kong, because of positions taken by PRC authorities in those jurisdictions. On December 15, 2022, the PCAOB vacated its previous 2021 determinations that the PCAOB was unable to inspect or investigate completely registered public accounting firms headquartered in the Chinese mainland and Hong Kong. Our auditor prior to November 24, 2022, Friedman, had been inspected by the PCAOB on a regular basis in the audit period with last inspection in 2020, and our current auditor, Marcum Asia, has been

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inspected by the PCAOB on a regular basis, with the last inspection in 2020. Neither Friedman nor Marcum Asia is subject to the determinations announced by the PCAOB on December 16, 2021. As a result, we do not expect to be identified as a “Commission — Identified Issuer” under the HFCA as of the date of this prospectus. However, whether the PCAOB will continue to be able to satisfactorily conduct inspections of PCAOB-registered public accounting firms headquartered in the Chinese mainland and Hong Kong is subject to uncertainties and depends on a number of factors out of our and our auditor’s control. The PCAOB continues to demand complete access in the Chinese mainland and Hong Kong moving forward and is making plans to resume regular inspections in early 2023 and beyond, as well as to continue pursuing ongoing investigations and initiate new investigations as needed. While our auditor is based in the U.S. and is registered with PCAOB and subject to PCAOB inspection, in the event it is later determined that the PCAOB is unable to inspect or investigate completely our auditor because of a position taken by an authority in a foreign jurisdiction, then such inability could cause trading in our securities to be prohibited under the HFCA Act and the AHFCA Act, and ultimately result in a determination by a securities exchange to delist our securities. If trading in our ordinary shares is prohibited under the HFCA Act and the AHFCA Act in the future because the PCAOB determines that it cannot inspect or fully investigate our auditor at such future time, the Cboe BZX Exchange may determine to delist our ordinary shares, which may cause the value of our securities to decline or become worthless. See “Risk Factors — Risks Associated With Ownership of Our Ordinary Shares — Our ordinary shares may be prohibited from being traded on and would require delisting from a national exchange under the HFCA Act and the AHFCA Act if the PCAOB is unable to inspect our auditors for two consecutive years beginning in 2021. The delisting of our ordinary shares, or the threat of their being delisted, may materially and adversely affect the value of your investment.”

Implications of Chinese Regulations

As of the date of this prospectus, each of the China Operating Companies has received all requisite permissions and approvals from Chinese authorities to conduct and operate our business as currently conducted under relevant PRC laws and regulations, and none of the China Operating Companies has been denied by relevant Chinese authorities due to its business qualifications. The following table provides details on the licenses and permissions held by the China Operating Companies.

Company

 

License/Permission

 

Issuing Authority

 

Validity/Expiration

Harwell Technologies, Inc.

 

Business License

 

Zhongshan Market Supervision Administration

 

Unlimited

Harden Machinery Ltd.

 

Business License

 

Zhongshan Market Supervision Administration

 

Unlimited

Dr. Shredder Technologies Ltd.

 

Business License

 

Zhongshan Market Supervision Administration

 

Unlimited

Harden Machinery Ltd.

 

Safety Production Permit

 

Guangdong Provincial Department of Housing and Urban-rural Development

 

January 20, 2025

Harden Machinery Ltd.

 

Third-grade Professional Contracting Qualification for Environmental Protection Projects

 

Zhongshan Housing and Urban-rural Development Bureau

 

June 30, 2026

Harden Machinery Ltd.

 

High-tech Enterprise Certificate

 

Science & Technology Department of Guangdong Province

Guangdong Provincial Finance Department

Guangdong Provincial Tax Service, State Taxation Administration

 

December 20, 2024

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Neither we nor our subsidiaries are currently required to obtain permissions or approvals from Chinese authorities, including the CSRC, the CAC, or any other Chinese authorities to list on a foreign stock exchange or issue securities to foreign investors. However, we are required to file with the CSRC for the Company’s IPO in accordance with the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies and relevant supporting guidelines. See “Regulations — New M&A Regulations and Overseas Listings”. As of the date of this prospectus, we have not received any inquiry, notice, warning, sanctions or regulatory objection to this offering from the CSRC, CAC or any other Chinese authorities.

However, if our subsidiaries or the holding company were required to obtain permissions or approvals in the future and were denied permission from Chinese authorities to list on U.S. exchanges, we will not be able to continue listing on U.S. exchange, which would materially affect the interest of the investors. It is uncertain when and whether the Company will be required to obtain permissions or approvals from Chinese authorities to list on a foreign stock exchange 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, CAC or other Chinese authorities. However, there remains significant uncertainty as to the enactment, interpretation and implementation of regulatory requirements related to overseas securities offerings and other capital market activities.

Although the Company is currently not required to obtain permission from any of Chinese authorities and has not received any denial to list on the U.S. exchange, our operations and financial conditions could be adversely affected, and our ability to offer securities to investors could be significantly limited, directly or indirectly, by existing or future laws and regulations relating to its business or industry; if we inadvertently conclude that such permissions or approvals are not required when they are, or applicable laws, regulations, or interpretations change and we are required to obtain permissions or approvals in the future.

The New “M&A Rule”

On August 8, 2006, six Chinese regulatory agencies, including the Ministry of Commerce of the PRC (“MOFCOM”), jointly issued the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors (the “New M&A Rule”), which became effective on September 8, 2006, and was amended on June 22, 2009. The New M&A Rule contains provisions that require that an offshore special purpose vehicle (“SPV”) formed for the purpose of seeking a public listing on an overseas stock exchange through acquisitions of PRC domestic companies and controlled directly or indirectly by Chinese companies or individuals to obtain the approval of the CSRC prior to the listing and trading of such SPV’s securities on an overseas stock exchange. On September 21, 2006, the CSRC published procedures specifying documents and materials required to be submitted to it by an SPV seeking CSRC approval of overseas listings.

However, the application of the New M&A Rule remains unclear with no consensus currently existing among leading Chinese law firms regarding the scope and applicability of the CSRC approval requirement. Our Chinese counsel, King & Wood Mallesons, has given us the following advice, based on their understanding of current Chinese laws and regulations:

        WFOE was established by means of direct investment and not through a merger or requisition of the equity or assets of a “PRC domestic company” as defined under the New M&A Rule, and at the time of our equity interest acquisition, Harden was a foreign-invested enterprise rather than a “PRC domestic company” before it was acquired by WFOE; and

        In spite of the lack of clarity on this issue, the CSRC currently has not issued any definitive rule or interpretation regarding whether offerings like the one contemplated by this prospectus are subject to the New M&A Rule.

The CSRC has not issued any such definitive rule or interpretation, and we have not chosen to voluntarily request approval under the New M&A Rule. If the CSRC requires that we obtain its approval prior to the completion of this offering, the offering will be delayed until we obtain CSRC approval, which may take several months. There is also the possibility that we may not be able to obtain such approval. If prior CSRC approval was required, we may face regulatory actions or other sanctions from the CSRC or other Chinese regulatory authorities. These authorities may impose fines and penalties upon our operations in China, limit our operating privileges in China, delay or restrict the repatriation of the proceeds from this offering into China, or take other actions that could have a material

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adverse effect upon our business, financial condition, results of operations, reputation and prospects, as well as the trading price of our ordinary shares. The CSRC or other Chinese regulatory agencies may also take actions requiring us, or making it advisable for us, to terminate this offering prior to closing.

The Opinions on Strictly Cracking Down Illegal Securities Activities in Accordance with the Law

On July 6, 2021, The General Office of the Central Committee of the Communist Party of China and the General Office of the State Council jointly issued Opinions on Strictly Cracking Down Illegal Securities Activities in Accordance with the Law (“Opinions”) which require (i) speeding up the revision of the provisions on strengthening the confidentiality and archives management relating to overseas issuance and listing of securities and (ii) improving the laws and regulations relating to data security, cross-border data flow, and management of confidential information. As of the date of this prospectus, no official guidance or related implementation rules have been issued. As of the date of this prospectus, it remains unclear as to how the Opinions will be interpreted, amended and implemented by the relevant Chinese authorities.

The Measures for Cybersecurity Review

On December 28, 2021, the CAC, the National Development and Reform Commission (“NDRC”), and several other administrations jointly issued the revised Measures for Cybersecurity Review, or the Revised Review Measures. According to the Revised Review Measures, if an “online platform operator” that is in possession of personal data of more than one million users intends to list in a foreign country, it must apply for a cybersecurity review. Given the recency of the issuance of the Revised Review Measures, there is a general lack of guidance and substantial uncertainties exist with respect to their interpretation and implementation.

Our business belongs to the waste management and recycling equipment manufacturing industry in China, which does not involve the collection of user data, implicate cybersecurity, or involve any other type of restricted industry. Based on the advice of our PRC counsel, King & Wood Mallesons, and our understanding of currently applicable PRC laws and regulations, our registered public offering in the U.S. is not subject to the review or prior approval of the CAC. Uncertainties still exist, however, due to the possibility that laws, regulations, or policies in the PRC could change rapidly in the future. As these statements and regulatory actions are new, 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 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 list on an U.S. exchange. Any future action by the PRC government expanding the categories of industries and companies whose foreign securities offerings are subject to review by 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.

The New Administrative Rules Regarding Overseas Listings

On February 17, 2023, the CSRC issued the New Administrative Rules Regarding Overseas Listings, which came into effect since March 31, 2023, and the Circular on Arrangements for Record-filing Administration of Overseas Offering and Listing of Domestic Companies, pursuant to which, a PRC domestic company shall file with the CSRC within 3 working days after the relevant application with initial public offerings or listings in overseas markets is submitted overseas. If the indirect overseas securities offering and listing by a domestic company had been approved by the overseas regulator or stock exchange, such as the registration statement had been declared effective in the case of the U.S. market, prior to the effectuation of the Trial Administrative Measures, and the indirect overseas securities offering and listing will be completed before September 30, 2023 without the need to go through the regulatory procedure of the overseas regulator or stock exchange for offering and listing once again, then such company is not required to file with the CSRC in accordance with the Trial Administrative Measures immediately but shall be required to do so if it involves in re-financing and other filing matters in the future. While the PRC domestic companies that have submitted valid applications for overseas issuance and listing but have not been approved by overseas regulatory authorities or overseas stock exchanges before March 31, 2023 can reasonably arrange the timing of filing applications and should complete the filing before the overseas issuance and listing. We plan to file with the CSRC in accordance with the Trial Administrative Measures immediately. Further, under the New Administrative Rules Regarding Overseas Listings, if an issuer offers securities in the same overseas market where it has previously offered and listed securities subsequently, filings shall be made with the CSRC within 3 working days after the offering is completed. Upon the occurrence of any material event, such as change of

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control, investigations or sanctions imposed by overseas securities regulatory agencies or other relevant competent authorities, change of listing status or transfer of listing segment, or voluntary or mandatory delisting, after an issuer has offered and listed securities in an overseas market, the issuer shall submit a report thereof to CSRC within 3 working days after the occurrence and public disclosure of such event. Further, an overseas securities company that serves as a sponsor or lead underwriter for overseas securities offering and listing by the PRC domestic companies shall file with the CSRC within 10 working days after signing its first engagement agreement for such business, and submit to the CSRC, no later than January 31 each year, an annual report on its business activities in the previous year associated with overseas securities offering and listing by the PRC domestic companies. If an overseas securities company has entered into engagement agreements before the effectuation of the Trial Administrative Measures and is serving in practice as a sponsor or lead underwriter for overseas securities offering and listing by domestic companies, it shall file with the CSRC within 30 working days after the Trial Administrative Measures take effect. Since the New Administrative Rules Regarding Overseas Listings are newly promulgated, and the interpretation and implementation thereof involves uncertainties, we cannot assure that we will be able to complete the relevant filings in a timely manner or fulfil all the regulatory requirements thereunder.

On February 24, 2023, the CSRC promulgated the Confidentiality and Archives Administration Provisions, which also became effective on March 31, 2023. The Confidentiality and Archives Administration Provisions set out rules, requirements and procedures relating to provision of documents, materials and accounting archives for securities companies, securities service providers, overseas regulators and other entities and individuals in connection with overseas offering and listing, including without limitation to, domestic companies that carry out overseas offering and listing (either in direct or indirect means) and the securities companies and securities service providers (either incorporated domestically or overseas) that undertake relevant businesses shall not leak any state secret and working secret of government agencies, or harm national security and public interest, and a domestic company shall first obtain approval from competent authorities according to law, and file with the secrecy administrative department at the same level, if it plans to, either directly or through its overseas listed entity, publicly disclose or provide any documents and materials that contain state secrets or working secrets of government agencies. Working papers produced in the Chinese mainland by securities companies and securities service providers in the process of undertaking businesses related to overseas offering and listing by domestic companies shall be retained in the Chinese mainland. Where such documents need to be transferred or transmitted to outside the Chinese mainland, relevant approval procedures stipulated by regulations shall be followed. While we believe we do not involve leaking any state secret and working secret of government agencies, or harming national security and public interest in connection with provision of documents, materials and accounting archives, there is uncertainty how the new provisions will be interpreted and implemented in the future, and we may be required to perform additional procedures in connection with the provision of accounting archives.

Any failure of us to fully comply with these new regulatory requirements may significantly limit or completely hinder our ability to offer or continue to offer the ordinary shares, cause significant disruption to our business operations, severely damage our reputation, materially and adversely affect our financial condition and results of operations, and cause the ordinary shares to significantly decline in value or become worthless.

For more detailed information, see “Risk Factors — Risks Related to Doing Business in China — 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” and “Risk Factors — Risks Related to Doing Business in China — We are subject to a variety of laws and other obligations regarding privacy, data security, cybersecurity, and data protection, and any failure to comply with applicable laws and obligations could have a material and adverse effect on our business, financial condition and results of operations.”

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The Offering(1)

Ordinary shares offered by us:

 

1,250,000 ordinary shares

Ordinary shares outstanding immediately prior to this offering:

 


10,000,000 ordinary shares

Ordinary shares outstanding immediately after this offering:

 


11,250,000 ordinary shares

Offering price per ordinary share:

 

We estimate the initial public offering price per share to be in the range of $4.00 to $5.00 per ordinary share

Transfer Agent:

 

Vstock Transfer, LLC

Use of proceeds:

 

We expect to receive gross proceeds of $5,625,000 in the offering, assuming an initial public offering price of $4.50 per ordinary share, the midpoint of the estimated price range set forth on the cover page of this prospectus. In addition, we expect to receive net proceeds of approximately $4.7 million in this offering, assuming an initial public offering price of $4.50 per share, the midpoint of the estimated price range set forth on the cover page of this prospectus, and after deducting the estimated underwriting discounts and commissions and offering expenses payable by us. The net proceeds from this offering must be remitted to China before we will be able to use the funds to grow our business.

   

We intend to use the net proceeds of this offering as follows after we complete the remittance process:

   

   approximately $2.6 million for the development of a new manufacturing facility;

   approximately $1.1 million for research and development related to design of mobile shredding and mobile screening machines, waste robotic sorting technologies and pilot recycling plant development;

   and any remaining balance for additional working capital.

   

For more information on the use of proceeds, see “Use of Proceeds” on page 51.

Risk factors:

 

Investing in our ordinary shares involves a high degree of risk. Below is a summary of material factors that make an investment in our ordinary shares speculative or risky. Importantly, this summary does not address all the risks that we face. Please refer to the information contained in and incorporated by reference under the heading “Risk Factors” on page 20 of this prospectus.

   

Risks Relating to Our Business

   The impact of a novel strain of coronavirus (“COVID-19”) has significantly impacted China and the rest of the world. We are currently unable to predict the full effect of COVID-19 upon our business and operations.

____________

(1)      Unless otherwise indicated, all information contained in this prospectus assumes no exercise of the underwriter’s over-allotment option and is based upon 10,000,000 ordinary shares outstanding immediately prior to the closing of this transaction and/or 11,250,000 ordinary shares outstanding as of the closing of this offering.

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   To the extent the Chinese economy slows, our business may be materially and negatively impacted.

   We may not be able to maintain effective business relationships with our suppliers and customers with whom we have an interdependent relationship.

   Wage increases in China may prevent us from maintaining competitive advantages and could reduce our profit margins.

   Our senior executives have not managed a publicly traded company in the past, and they have no prior experience with legal compliance issues related to U.S. or British Virgin Islands law.

   We may require additional financing in the future, and there can be no guarantee that such financing will be available when needed.

   We may not be able to attract and retain qualified and skilled employees.

   Our bank accounts in China are not insured or protected against loss.

   

Risks Relating to Our Corporate Structure

   Our subsidiaries are subject to restrictions on paying dividends or making other payments to us, which may have a material adverse effect on our ability to conduct our business. See “Risk Factors — We will likely not pay dividends in the foreseeable future” and “Dividend Policy.”

   

Risks Relating to Doing Business in China

   There are uncertainties in the interpretation and enforcement of PRC laws and regulations that could limit the legal protection available to you and us.

   You may experience difficulties in effecting service of legal process, enforcing foreign judgments, or bringing actions in China against us or our management named in the prospectus based on foreign laws. It may also be difficult for you or overseas regulators to conduct investigations or collect evidence within China.

   Changes in China’s economic, political, or social conditions or government policies could have a material adverse effect on our business and operations.

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   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. See “Risk Factors — Risks Related to Doing Business in China — Because all 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.”

   

   Under Chinese law, the proceeds of this offering must be sent back to China, and the process for sending such proceeds back to China may take several months after the closing of this offering. In order to remit the offering proceeds to China, we must:

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

   remit the offering proceeds into this special foreign exchange account; and

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

See “Risk Factors — Risks Related to Doing Business in China — Governmental control of currency conversion may affect the value of our shareholders’ investment in our company.”

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   The Chinese government may intervene or influence our operations at any time or may exert more control over offerings conducted overseas and foreign investment in China based issuers, which could result in a material change in our operations and/or the value of our ordinary shares. Additionally, the governmental and regulatory interference 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. See “Risk Factors — Risks Related to Doing Business in China — 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.”

   

Chinese law relating to listing on foreign stock exchanges or issuing securities to foreign investors is rapidly evolving and can change rapidly. Although the Company is currently not required to obtain permission from any of Chinese authorities and has not received any denial to list on the U.S. exchange, our operations and financial conditions could be adversely affected, and our ability to offer securities to investors could be significantly limited, directly or indirectly, by existing or future laws and regulations relating to its business or industry; if we inadvertently conclude that such permissions or approvals are not required when they are, or applicable laws, regulations, or interpretations change and we are required to obtain permissions or approvals in the future. See “Risk Factors — Risks Related to Doing Business in China — 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” and “Risk Factors — Risks Related to Doing Business in China — We are subject to a variety of laws and other obligations regarding privacy, data security, cybersecurity, and data protection, and any failure to comply with applicable laws and obligations could have a material and adverse effect on our business, financial condition and results of operations.”

   We may become subject to a variety of laws and regulations in the PRC regarding privacy, data security, cybersecurity, and data protection. We may be liable for improper use or appropriation of personal information provided by our customers. See “Risk Factors — Risks Related to Doing Business in China — 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.”

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Risks Relating to this Offering

   The trading price of our ordinary shares may be volatile, and you may incur losses.

   You may experience immediate and substantial dilution in the net tangible book value of ordinary shares purchased.

   We have not previously paid any cash dividends, and we do not anticipate paying any dividends on our ordinary shares in the foreseeable future. See “Risk Factors — Risks Relating to Our Corporate Structure — We will likely not pay dividends in the foreseeable future.”

Over-Allotment Option

 

We have granted to the underwriter an option, exercisable within 45 days from the closing of this offering, to purchase up to an additional 15% of the total number of the ordinary shares offered by us at the initial public offering price, less underwriting discounts.

Underwriter’s Warrants

 

We have granted US Tiger Securities, Inc. the Warrants, exercisable from the closing date of this offering for a period of three years after such date, to purchase ordinary shares equal to 5% of the total number of ordinary shares sold in this offering, exercisable at a per share price equal to 125% of the public offering price.

Lock-up:

 

All of our directors, officers and certain shareholders (defined as owners of 5% or more of our ordinary shares) have agreed with the underwriters, subject to certain exceptions, not to sell, transfer or dispose of, directly or indirectly, any of our ordinary shares or securities convertible into or exercisable or exchangeable for our ordinary shares for a period of six (6) months after the date of this prospectus. See “Shares Eligible for Future Sale” and “Underwriting” for more information.

Proposed Cboe BZX Exchange symbol:

 

We have applied to have our ordinary shares listed on Cboe BZX Exchange under the symbol “HAHA”.

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Prospectus Conventions

Except where the context otherwise requires, “we”, “us”, “Company”, “our” and “Harden” collectively refer to:

        Harden, our British Virgin Islands holding company;

        Harden International, our wholly-owned Hong Kong subsidiary;

        WFOE, a company incorporated in China and a wholly-owned subsidiary of Harden International;

        Harden Machinery, a company incorporated in China and a wholly-owned subsidiary of WFOE; and

        Dr. Shredder, a company incorporated in China and is a 55% owned subsidiary of Harden Machinery.

As used in this prospectus, the “PRC” or “China” refers to the People’s Republic of China, including Hong Kong, Macau and Taiwan; however, such jurisdictions are not included in the definition of the “PRC” and “China” when we make reference to the specific laws, regulations or policies that have been adopted by the PRC, or when the context otherwise requires.

Unless otherwise indicated, all share amounts and per share amounts in this prospectus have been presented on a pro-forma basis to reflect a recapitalization of the authorized and outstanding shares of the Company effected upon June 3, 2021. As a result of the recapitalization, the shares of the Company increased from 10,000,000 ordinary shares, par value $0.001 per share, to 100,000,000 ordinary shares, par value $0.001 per share.

As used herein the term “Chinese Operating Companies” shall include WFOE, Harden Machinery and Dr. Shredder.

This prospectus contains translations of certain RMB amounts into U.S. dollar amounts at a specified rate solely for the convenience of the reader. Unless otherwise noted, all translations made in this prospectus are based on a rate of RMB 7.0999 to $1.00, which was the exchange rate on December 31, 2023. Unless otherwise stated, we have translated balance sheet amounts, with the exception of equity, at December 31, 2023 at RMB 7.0999 to $1.00 as compared to RMB 6.8972 to $1.00 at December 31, 2022. We have stated equity accounts at their historical rates. The average translation rates applied to income statement accounts for the years ended December 31, 2023 and 2022 were RMB 7.0809 and RMB 6.7290 respectively. We make no representation that the RMB or U.S. dollar amounts referred to in this prospectus could have been or could be converted into U.S. dollars or RMB, as the case may be, at any particular rate or at all. On May 10, 2024, the Federal Reserve exchange rate was RMB 7.2260 to $1.00. See “Risk Factors — Risks Related to Doing Business in China — Fluctuation of the Renminbi could materially affect our financial condition and results of operations” for discussions of the effects of fluctuating exchange rates on the value of our capital shares. Any discrepancies in any table between the amounts identified as total amounts and the sum of the amounts listed therein are due to rounding.

For the sake of clarity, this prospectus follows the English naming convention of first name followed by last name, regardless of whether an individual’s name is Chinese or English. For example, the name of our chairman of the board, director and chief executive officer will be presented as “Jiawen Miao,” even though, in Chinese, his name would be presented as “Miao Jiawen.”

Cash Flows through Our Organization

As a holding company, we may rely upon dividends paid to us by our subsidiaries in the PRC to pay dividends and to finance any debt we may incur. As of the date of this report, none of our subsidiaries have issued any dividends or distributions to us and we have not made any dividends or distributions to our shareholders as of the date of this report. Our subsidiaries in the PRC generate and retain cash generated from operating activities and re-invest it in our business.

Under BVI law, we may pay a dividend on our shares out of either profit, provided that in no circumstances may a dividend be paid if this would result in us being unable to pay our debts due in the ordinary course of business. If we determine to pay dividends, as a holding company, we will be dependent on receipt of funds from our subsidiaries in PRC.

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Current PRC regulations permit our subsidiary in the Chinese mainland to pay dividends to the Company only out of its accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. Therefore, under our current corporate structure, we rely on dividend payments or other distributions from our subsidiaries to fund any cash and financing requirements we may have, including the funds necessary to pay dividends and other cash distributions to our shareholders or to service any debt we may incur. If our subsidiary incurs debt on its own behalf in the future, the instruments governing such debt may restrict its ability to pay dividends to us. In addition, our subsidiaries are permitted to pay dividends to us only out of their accumulated profits, if any, as determined in accordance with PRC accounting standards and regulations. Under PRC laws and regulations, each of our Chinese subsidiaries are required to set aside a portion of their net income each year to fund a statutory surplus reserve until such reserve reaches 50% of its registered capital. This reserve is not distributable as dividends. As a result, our PRC subsidiaries are restricted in their ability to transfer a portion of its net assets to us in the form of dividends, loans or advances.

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 subsidiaries in the PRC incur debt on their own in the future, the instruments governing the debt may restrict their ability to pay dividends or make other payments. If we are unable to receive funds from our subsidiaries, we may be unable to pay cash dividends on our ordinary shares.

Cash dividends, if any, on our ordinary shares will be paid in U.S. dollars. If we are considered a PRC tax resident enterprise for tax purposes, any dividends we pay to our overseas shareholders may be regarded as China-sourced income and as a result may be subject to PRC withholding tax at a rate of up to 10%. A 10% PRC withholding tax is applicable to dividends payable to investors that are non-resident enterprises. Any gain realized on the transfer of ordinary shares by such investors is also subject to PRC tax at a current rate of 10% which in the case of dividends will be withheld at source if such gain is regarded as income derived from sources within the PRC.

Pursuant to the Arrangement between the Chinese mainland and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and Tax Evasion on Income, or the Double Tax Avoidance Arrangement, the 10% withholding tax rate may be lowered to 5% if a Hong Kong resident enterprise owns no less than 25% of a PRC project. However, the 5% withholding tax rate does not automatically apply and certain requirements must be satisfied, including without limitation that (a) the Hong Kong project must be the beneficial owner of the relevant dividends; and (b) the Hong Kong project must directly hold no less than 25% share ownership in the PRC project during the 12 consecutive months preceding its receipt of the dividends. In current practice, a Hong Kong entity must obtain a tax resident certificate from the Hong Kong tax authority to apply for the 5% lower PRC withholding tax rate. As the Hong Kong tax authority will issue such a tax resident certificate on a case-by-case basis, we cannot assure you that we will be able to obtain the tax resident certificate from the relevant Hong Kong tax authority and enjoy the preferential withholding tax rate of 5% under the Double Taxation Arrangement with respect to dividends to be paid by our PRC subsidiary to its immediate holding company. As of the date of this report, we have not applied for the tax resident certificate from the relevant Hong Kong tax authority. Our subsidiaries in Hongkong intends to apply for the tax resident certificate when our subsidiaries in the Chinese mainland plans to declare and pay dividends to their immediate holding companies in Hong Kong.

As an offshore holding company, we will be permitted under PRC laws and regulations to provide funding from the proceeds of our offshore fund-raising activities to our subsidiaries in China only through loans or capital contributions, subject to the satisfaction of the applicable government registration and approval requirements. Before providing loans to our PRC subsidiaries, we will be required to make filings about details of the loans with the State Administration of Foreign Exchange of the PRC (the “SAFE”) in accordance with relevant PRC laws and regulations. Our PRC subsidiaries that receive the loans are only allowed to use the loans for the purposes set forth in these laws and regulations. Under regulations of the SAFE, Renminbi is not convertible into foreign currencies for capital account items, such as loans, repatriation of investments and investments outside of China, unless the prior approval of the SAFE is obtained and prior registration with the SAFE is made.

Under PRC law, we may provide funding to our PRC subsidiaries only through capital contributions or loans, and prior to the dismantling of our PRC consolidated affiliated entities only through loans to our former consolidated affiliated entities, subject to satisfaction of applicable government registration and approval requirements.

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We have not declared or paid any cash dividends, nor do we have any present plan to pay any cash dividends on our ordinary shares in the foreseeable future. We currently intend to retain most, if not all, of our available funds and any future earnings to operate and expand our business.

Also, as of the date of this report, we do not anticipate any difficulties on our ability to transfer cash between subsidiaries. We have not installed any cash management policies that dictate the amount of such funds and how such funds are transferred.

Summary Consolidated Financial Information

In the table below, we provide you with historical selected financial data for the years ended December 31, 2023 and 2022, which have been derived from our consolidated financial statements for the years. Historical results are not necessarily indicative of the results that may be expected for any future period. When you read this historical selected financial data, it is important that you read it along with the historical financial statements and related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this prospectus.

Condensed Consolidating Schedule — Statement of Operations

 

For the Year Ended December 31, 2023

   

Harden

 

Harden International

 

Subsidiaries

 

Eliminations

 

Consolidated Total

Revenues

 

 

 

 

21,141,677

 

 

 

 

21,141,677

 

Cost

 

 

 

 

14,827,833

 

 

 

 

14,827,833

 

Gross profit

 

 

 

 

6,313,844

 

 

 

 

6,313,844

 

Loss from operations

 

 

 

 

(348,669

)

 

 

 

(348,669

)

Income (loss) for equity method investment

 

610,318

 

(29

)

 

 

 

(610,289

)

 

 

Net income (loss)

 

609,850

 

(29

)

 

605,201

 

 

(610,289

)

 

604,733

 

 

For the Year Ended December 31, 2022

   

Harden

 

Harden International

 

Subsidiaries

 

Eliminations

 

Consolidated Total

Revenues

 

$

 

$

 

 

$

30,616,040

 

$

 

 

$

30,616,040

Cost

 

$

 

$

 

 

$

21,839,009

 

$

 

 

$

21,839,009

Gross profit

 

$

 

$

 

 

$

8,777,031

 

$

 

 

$

8,777,031

Income from operations

 

$

 

$

 

 

$

504,290

 

$

 

 

$

504,290

Income (loss) for equity method investment

 

$

1,029,870

 

$

(16

)

 

$

 

$

(1,029,855

)

 

$

Net income (loss)

 

$

1,029,490

 

$

(16

)

 

$

990,795

 

$

(1,029,855

)

 

$

990,415

Condensed Consolidating Schedule — Balance Sheet

 

As of December 31, 2023

   

Harden

 

Harden International

 

Subsidiaries

 

Eliminations

 

Consolidated Total

Cash and restricted cash

 

194

 

 

 

4,449,915

 

 

 

4,450,109

Total current assets

 

38,890

 

 

 

23,982,276

 

(232,283

)

 

23,788,883

Investments in subsidiaries

 

10,633,542

 

12,990

 

 

 

(10,646,532

)

 

Total non-current assets

 

10,633,542

 

12,990

 

 

2,571,057

 

(10,401,259

)

 

2,816,330

Total assets

 

10,672,432

 

12,990

 

 

26,553,333

 

(10,633,542

)

 

26,605,213

Total liabilities

 

67,780

 

13,044

 

 

15,991,826

 

17

 

 

16,072,667

Total equity (deficit)

 

10,604,652

 

(54

)

 

10,561,507

 

(10,633,559

)

 

10,532,546

Total liabilities and equity

 

10,672,432

 

12,990

 

 

26,553,333

 

(10,633,542

)

 

26,605,213

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As of December 31, 2022

   

Harden

 

Harden International

 

Subsidiaries

 

Eliminations

 

Consolidated Total

Cash and restricted cash

 

$

514

 

$

 

 

$

2,293,049

 

$

 

 

$

2,293,563

Total current assets

 

$

23,358

 

$

 

 

$

21,030,110

 

$

475,108

 

 

$

21,528,576

Investments in subsidiaries

 

$

10,324,386

 

$

12,990

 

 

$

 

$

(10,337,376

)

 

$

Total non-current assets

 

$

10,324,386

 

$

12,990

 

 

$

3,435,184

 

$

(10,799,495

)

 

$

2,973,065

Total assets

 

$

10,347,744

 

$

12,990

 

 

$

24,465,294

 

$

(10,324,387

)

 

$

24,501,641

Total liabilities

 

$

51,780

 

$

13,016

 

 

$

14,209,869

 

$

14

 

 

$

14,274,679

Total equity (deficit)

 

$

10,295,964

 

$

(26

)

 

$

10,255,425

 

$

(10,324,401

)

 

$

10,226,962

Total liabilities and equity

 

$

10,347,744

 

$

12,990

 

 

$

24,465,294

 

$

(10,324,387

)

 

$

24,501,641

Condensed Consolidating Schedule — Statement of Cash Flows

 

For the Year Ended December 31, 2023

   

Harden

 

Harden International

 

Subsidiaries

 

Eliminations

 

Consolidated Total

Net cash provided by (used in) operating activities

 

(16,320

)

 

29

 

1,007,923

 

 

 

991,632

 

Net cash provided by investing activities

 

 

 

 

1,837,729

 

 

 

1,837,729

 

Net cash provided by (used in) financing activities

 

16,000

 

 

 

(396,612

)

 

 

(380,612

)

Inter-company cash transfers:

   

 

       

 

       

 

None

 

 

 

 

 

 

 

 

 

For the Year Ended December 31, 2022

   

Harden

 

Harden International

 

Subsidiaries

 

Eliminations

 

Consolidated Total

Net cash used in operating activities

 

$

(23,225

)

 

$

 

$

(48,580

)

 

$

 

$

(71,805

)

Net cash used in investing activities

 

$

 

 

$

 

$

(2,460,182

)

 

$

 

$

(2,460,182

)

Net cash provided by financing activities

 

$

23,016

 

 

$

 

$

1,885,751

 

 

$

 

$

1,908,767

 

Inter-company cash transfers:

 

 

 

 

 

 

   

 

 

 

 

 

   

 

 

 

None

 

$

 

 

$

 

$

 

 

$

 

$

 

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RISK FACTORS

Investment in our securities involves a high degree of risk. You should carefully consider the risks described below together with all of the other information included in this prospectus before making an investment decision. The risks and uncertainties described below represent our known material risks to our business. If any of the following risks actually occurs, our business, financial condition or results of operations could suffer. In that case, you may lose all or part of your investment. You should not invest in this offering unless you can afford to lose your entire investment.

Risks Related to Our Business

The novel coronavirus could have a material adverse impact upon our business, results of operations, financial condition, cash flows or liquidity.

In the last few years, the outbreak of a novel strain of coronavirus (“COVID-19”) has spread rapidly throughout the world. COVID-19 and has resulted in quarantines, travel restrictions, and the temporary closure of stores and facilities throughout China and the rest of the world. In March 2020, the World Health Organization declared COVID-19 a pandemic. Government efforts to contain the spread of the coronavirus and responses by businesses and individuals to reduce the risk of exposure to infection have caused significant disruptions to the global economy and normal business operations across a growing list of countries and business sectors. These efforts are likely to adversely affect business confidence and consumer sentiment, and have been, and may continue to be, accompanied by significant volatility in financial and commodity markets. The spread of the coronavirus and various variants also may have broader macro-economic implications, including reduced levels of economic growth and possibly a global recession, the effects of which could be felt well beyond the time the spread of infection is contained.

In terms of the impact on us and the industrial recycling machinery, parts and equipment industry in China, after the COVID-19 outbreak began in China in December 2019, many Chinese cities and villages were locked down to control the spread of the disease. Our facilities as well as those of our suppliers were closed down for a few months in early 2020. On December 7, 2022, China announced 10 new rules that constitute a relaxation of almost all of its stringent COVID-19 pandemic control measures. Shortly after their announcement, additional mobility restrictions issued by local governments were also scrapped. On May 5, 2023, the World Health Organization declared that COVID-19 is now an established and ongoing health issue which no longer constitutes a public health emergency of international concern. However, the extent of the impact of COVID-19 on our company’s future financial results will be dependent on future developments such as the length and severity of COVID-19, the potential resurgence of COVID-19, future government actions in response to the COVID-19 and the overall impact of COVID-19 on the global economy and capital markets, among many other factors, all of which remain highly uncertain and unpredictable. Given this uncertainty, we are currently unable to quantify the expected impact of COVID-19 on its future operations, financial condition, liquidity and results of operations.

We currently are unable to predict the full effect of COVID-19 and responses thereto on our business and operations, and on our results of operations, financial condition, cash flow and liquidity, as these depend on rapidly evolving developments, which are highly uncertain and will be a function of factors beyond our control, such as:

        damage to a recovery of the industrial recycling market and other markets in China;

        implementation of effective measures to prevent and contain further outbreaks;

        development and distribution of effective medical solutions, including COVID-19 vaccines;

        timing and scope of governmental restrictions on mobility and other activities;

        financial and other market reactions to the foregoing; and

        reactions and responses of the populace both in affected regions and regions yet to be affected.

While we expect we will suffer adverse effects, the more severe the outbreak and the longer it lasts, the more likely it is that the impact upon our financial condition and results of operations will be materially adverse.

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Our revenue and net income may be materially and adversely affected by any economic slowdown in China.

In recent years, the PRC government has implemented several measures to control the rate of economic growth, including raising interest rates and adjusting deposit reserve ratios for commercial banks as well as by implementing other measures designed to tighten credit and liquidity. These measures have contributed to a slowdown of the PRC economy. According to the National Bureau of Statistics of China, China’s GDP growth rate was 8.1 percent growth year-on-year over 2000. Any continuing or worsening slowdown could significantly reduce domestic commerce in China. An economic downturn, whether actual or perceived, a further decrease in economic growth rates or an otherwise uncertain economic outlook in China could have a material adverse effect on our business, financial condition and results of operations.

Our business is dependent on third-party suppliers and changes or difficulties in our relationships with our suppliers may harm our business and financial results.

We are dependent on our suppliers for material necessary to manufacture our products. For the years ended December 31, 2023 and 2022, no supplier accounted for more than 10% of the Company’s total purchases. As of December 31, 2023, one supplier accounted for approximately 12% of the Company’s total accounts payable. As of December 31, 2022, no supplier accounted for more than 10% of the Company’s total accounts payable.

Our suppliers may fail to meet timelines or contractual obligations or provide us with sufficient products, which may adversely affect our business. Certain of our contracts with key suppliers, can be terminated by the supplier upon giving notice within a certain period and restrict us from using other suppliers. Failure to appropriately structure or adequately manage our agreements with third parties may adversely affect our supply of products. We are also subject to credit risk with respect to our third-party suppliers. The insolvency of any such suppliers could result in increased charges or the termination of the service contracts. We may not be able to replace a supplier within a reasonable period of time, on as favorable terms or without disruption to our operations. Any adverse changes to our relationships with third-party suppliers could have a material adverse effect on our image, brand and reputation, as well as on our business, financial condition and results of operations.

In addition, to the extent that our creditworthiness is impaired, or general economic conditions decline, certain of our key suppliers may demand onerous payment terms that could materially adversely affect our working capital position, or such suppliers may refuse to continue to supply to us.

Our business is dependent on certain major customers and changes or difficulties in our relationships with our major customers may harm our business and financial results.

From time to time, we may conduct business with customers that may account for a significant amount of business. For the year ended December 31, 2023, a customer accounted for approximately 13% of the Company’s total revenues. For the year ended December 31, 2022, no customer accounted for more than 10% of the Company’s total revenues. As of December 31, 2023, no customer accounted for more than 10% of the Company’s accounts receivable. As of December 31, 2022, one customer accounted for approximately 12% of the Company’s accounts receivable. The loss of any significant customer may materially affect our business and financial condition.

The success of our business is dependent upon the acquisition of new customers.

We depend significantly on our reputation for high-quality products and services, best-in-class engineering, and exceptional customer service to attract new customers and grow our business. For fiscal 2023, revenue from our new customers accounted for approximately 78% of our total revenue. If we fail to continue to deliver our products and services within the planned timelines, if our products and services do not perform as anticipated or if we cancel projects, potential customers may opt to purchase the products and services offered by our competitors. Our failure to effectively market to new customers could materially and adversely affect our business, financial condition and results of operations.

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Geopolitical risks and political uncertainty may adversely impact economic conditions, increase market volatility, cause operational disruption to us and impact our strategic plans, which could have adverse effects on our business and its profitability.

We are exposed to geopolitical risks and political uncertainty in the markets in which we operate. Geopolitical risks and political uncertainty may adversely impact our operations. Increased geopolitical tensions may increase cross-border cyber activity and therefore increase cyber security risks. Geopolitical tensions may also lead to civil unrest and/or acts of civil disobedience. Such events could impact operational resilience by disrupting our systems, operations, new business sales and renewals, distribution channels and services to customers, which may result decreased profitability, financial loss, adverse customer impacts and reputational damage. Additionally, the degree and nature of regulatory changes and our competitive position in some markets may be impacted, for example, through measures favoring local enterprises, such as changes to the maximum level of non-domestic ownership by foreign companies.

The current tensions in international economic relations may negatively affect the demand for our services, and our results of operations and financial condition may be materially and adversely affected.

Recently there have been heightened tensions in international economic relations, such as the one between the United States and China. The U.S. government has imposed, and has continued to propose to impose additional, new, or higher tariffs on certain products imported from China to penalize China for what it characterizes as unfair trade practices. China has responded by imposing, and proposing to impose additional, new, or higher tariffs on certain products imported from the United States. Amid these tensions, the U.S. government has imposed and may impose additional measures on entities in China, including sanctions. Escalations of the tensions that affect trade relations may lead to slower growth in the global economy in general, which in turn could negatively affect our clients’ businesses and materially reduce demand for our products and services, thus potentially negatively affect our business, financial condition, and results of operations.

Any decline in the availability or increase in the cost of raw materials, including steel and copper, could materially impact our earnings.

Our products and project installation operations depend heavily on the ready availability of various raw materials, including steel and copper. The availability of raw materials may decline, and their prices may fluctuate. If our suppliers are unable or unwilling to provide us with raw materials on terms favorable to us, we may be unable to produce certain products. The inability to produce certain products or installation projects for customers could result in a decrease in profit and damage to our reputation. In the event our raw material costs increase, we may not be able to pass these higher costs on to our customers in full or at all, and this may materially impact our business and financial condition.

We may be subject to intellectual property infringement claims, which may be expensive to defend and may disrupt our business.

We cannot be certain that our operations or any aspects of our business do not or will not infringe upon or otherwise violate intellectual property rights held by third parties. We have not, but may in the future become, subject to legal proceedings and claims relating to the intellectual property rights of others. There could also be existing intellectual property of which we are not aware that our products may inadvertently infringe. We cannot assure you that holders of intellectual property purportedly relating to some aspect of our technology, products or business, if any such holders exist, would not seek to enforce such intellectual property rights against us in China or any other jurisdiction. If we are found to have violated the intellectual property rights of others, we may be subject to liability for our infringement activities or may be prohibited from using such intellectual property, and we may incur licensing fees or be forced to develop alternatives of our own. In addition, we may incur significant expenses, and may be forced to divert management’s time and other resources from our business and operations to defend against any such infringement claims, regardless of their merit. Successful infringement or licensing claims made against us may result in significant monetary liabilities and may materially disrupt our business and operations by restricting or prohibiting our use of the intellectual property in question, and our business, financial position and results of operations could be materially and adversely impacted.

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Damage claims against our products could reduce our sales and revenues.

If any of our products are found to cause injury or damage, we could suffer financial damages. We have not had significant claims for damages or losses from our products to date. We do not carry product liability insurance. Any claims for damages related to the products we sell could damage our reputation and reduce our revenues.

We do not have business insurance coverage. Any future business liability, disruption or litigation we experience might divert management focus from our business and could significantly impact our financial results.

Availability of business insurance products and coverage in China is limited, and most such products are expensive in relation to the coverage offered. We have determined that the risks of disruption, cost of such insurance and the difficulties associated with acquiring such insurances on commercially reasonable terms make it impractical for us to maintain such insurance. As a result, we do not have any business liability, disruption or litigation insurance coverage for our operations in China. Accordingly, a business disruption, litigation or natural disaster may result in substantial costs and divert management’s attention from our business, which would have an adverse effect on our results of operations and financial condition.

If we fail to adopt new technologies to evolving customer needs or emerging industry standards, our business may be materially and adversely affected.

To remain competitive, we must continue to stay abreast of the constantly evolving industry trends, market conditions or customer preferences and to enhance and improve our technologies accordingly. Our success, in part, will depend on our ability to identify, develop, acquire or license leading technologies useful in our business. There can be no assurance that we will be able to use new technologies effectively or adapt to meet customer requirements. If we are unable to adapt in a cost-effective and timely manner in response to changing market conditions or customer preferences, whether for technical, legal, financial or other reasons, our business may be materially and adversely impacted.

Wage increases in China may prevent us from sustaining our competitive advantage and could reduce our profit margins.

Pursuant to the PRC Labor Contract Law that became effective in January 2008 and its amendments that became effective in July 2013 and its implementing rules that became effective in September 2008, employers are subject to stricter requirements in terms of signing labor contracts, minimum wages, paying remuneration, determining the term of employees’ probation, and unilaterally terminating labor contracts. In the event that we decide to terminate some of our employees or otherwise change our employment or labor practices, the Labor Contract Law and its implementation rules may limit our ability to effect those changes in a desirable or cost-effective manner, which could adversely affect our business and results of operations. As the interpretation and implementation of these new laws and regulations are still evolving, our employment practice may not at all times be deemed in compliance with the new laws and regulations. If we are subject to penalties or incur significant liabilities in connection with labor disputes or investigation, our business and profitability may be adversely affected.

We cannot assure you that our growth strategy will be successful, which may result in a negative impact on our growth, financial condition, results of operations and cash flow.

We intend to grow, in part, by expanding into new markets. However, many obstacles to this expansion exist, including increased competition from similar businesses, unexpected costs and costs associated with marketing efforts. As such, we cannot assure you that we will be able to successfully overcome these potential challenges and establish our business in additional markets. Our inability to implement this growth strategy successfully may have a negative impact on our growth, future financial condition, and results of operations or cash flows.

If we experience a significant disruption in, or a breach in security of, our information technology systems or if we fail to implement, manage or integrate new systems, software and technologies successfully, it could harm our business.

Our information technology (“IT”) systems are an integral part of our business. We depend on our IT systems to process transactions, manage logistics, keep financial records, prepare our financial reporting and operate other critical functions. Security breaches, cyber-attacks or other serious disruptions of our IT systems can create

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systemic disruptions, shutdowns or unauthorized disclosure of confidential information. If we are unable to prevent or adequately respond to such breaches, attacks or other disruptions, our operations could be adversely affected or we may suffer financial or reputational damage. In addition, our ability to effectively implement our business plan in a rapidly evolving market requires effective planning, reporting and analytical processes and systems. We are improving and expect that we will need to continue to improve and further integrate our IT systems, reporting systems and operating procedures on an ongoing basis. If we fail to do so effectively, it could adversely affect our ability to achieve our objectives.

We depend on our key personnel, and our business and growth prospects may be severely disrupted if we lose their services.

Our future success depends heavily upon the continued service of our key executives. If any of our key executives became unable or unwilling to continue in his/her present position, or if he/she joined a competitor or formed a competing company in violation of his/her employment agreement, we may not be able to replace him/her easily, our business may be significantly disrupted and our financial condition and results of operations may be materially adversely affected.

We do not maintain key person life insurance on any of our senior management or key personnel. The loss of any one of them would have a material adverse effect on our business and operations. Competition for senior management and our other key personnel is intense and the pool of suitable candidates is limited. We may be unable to locate a suitable replacement for any senior management or key personnel that we lose. In addition, if any member of our senior management or key personnel joins a competitor or forms a competing company, they may compete with us for customers, business partners and other key professionals and staff members of our company. Although each of key executives has signed a confidentiality and non-competition agreement in connection with his or her employment with us, we cannot assure that we will be able to successfully enforce these provisions in the event of a dispute between us and any member of our senior management or key personnel.

In addition, we compete for qualified personnel with other industry competitors, and we face competition in attracting skilled personnel and retaining the members of our senior management team. These personnel possess technical and business capabilities, including expertise relevant to the waste management and recycling equipment manufacturing industry, which are difficult to replace. There is intense competition for experienced senior management with technical and industry expertise in the waste management and recycling equipment manufacturing industry, and we may not be able to retain our key personnel. Intense competition for these personnel could cause our compensation costs to increase, which could have a material adverse effect on our results of operations. Our future success and ability to grow our business will depend in part on the continued service of these individuals and our ability to identify, hire and retain additional qualified personnel. If we are unable to attract and retain qualified employees, we may be unable to meet our business and financial goals.

We may be exposed to liabilities under the Foreign Corrupt Practices Act and Chinese anti-bribery law.

We are subject to the U.S. Foreign Corrupt Practices Act (“FCPA”) and other laws that prohibit improper payments or offers of payments to foreign governments and their officials and political parties by U.S. persons and issuers as defined by the statute for the purpose of obtaining or retaining business. We are also subject to the Anti-Unfair Competition Law of the PRC and the relevant anti-bribery provisions in the Criminal Law of the PRC, or together, the “PRC Anti-Bribery Laws.” The current PRC Anti-Bribery Laws prohibit the payment of bribes to government officials, private companies or individuals in a commercial transaction or their agents. We have operations, agreements with third parties, and make sales in China, which may experience corruption. Our activities in China create the risk of unauthorized payments or offers of payments by one of the employees, consultants or distributors clients of our company, because these parties are not always subject to our control. We are in process of implementing an anticorruption program, which prohibits the offering or giving of anything of value to foreign officials, directly or indirectly, for the purpose of obtaining or retaining business. The anticorruption program also requires that clauses mandating compliance with our policy be included in all contracts with foreign sales agents, sales consultants and distributors and that they certify their compliance with our policy annually. It further requires all hospitality involving promotion of sales to foreign governments and government-owned or controlled entities to be in accordance with specified guidelines. In the meantime, we believe to date we have complied in all material respects with the provisions of the FCPA and the PRC Anti-Bribery Laws.

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However, our existing safeguards and any future improvements may prove to be less than effective, and the employees, consultants or distributors of our Company may engage in conduct for which we might be held responsible. Violations of the FCPA or PRC Anti-Bribery Laws may result in severe criminal or administrative sanctions, and we may be subject to other liabilities, which could negatively affect our business, operating results and financial condition. In addition, the government may seek to hold our Company liable for successor liability FCPA violations committed by companies in which we invest or that we acquire.

Our senior management lacks experience in managing a public company and complying with laws applicable to operating as a U.S. public company domiciled in the British Virgin Islands and failure to comply with such laws could have a material adverse effect on our business.

None of our company’s senior management has experience managing a public company or managing a British Virgin Islands company. In addition, our senior management currently does not have significant experience in complying with laws, regulations and obligations relating to managing a public company or complying with British Virgin Islands law. The senior management is only experienced in operating business in compliance with Chinese laws. We are now required to file annual and current reports in compliance with U.S. securities and other laws. These obligations can be burdensome and complicated, and failure to comply with such obligations could have a material adverse effect on us. In addition, we expect that the process of learning about such new obligations as a public company in the United States will require our senior management to devote time and resources to such efforts that might otherwise be spent on the operation of our business.

We may require financing in the future, and our operations could be curtailed if we are unable to obtain required financing when needed.

We may need to obtain debt or equity financing to fund future capital expenditures. Additional equity financing may result in dilution to the holders of our outstanding shares of capital stock. Debt financing may impose affirmative and negative covenants that restrict our freedom to operate our business, including covenants that:

        limit our ability to pay dividends or require us to seek consent for the payment of dividends;

        increase our vulnerability to general adverse economic and industry conditions;

        require us to dedicate a portion of our cash flow from operations to payments on our debt, thereby reducing the availability of our cash flow to fund capital expenditures, working capital and other general corporate purposes; and

        limit our flexibility in planning for, or reacting to, changes in our business and our industry.

We cannot ensure that we will be able to raise funds or obtain additional financing on terms that are acceptable to us, or any financing at all, and the failure to obtain sufficient financing could adversely affect our business operations.

Potential disruptions in the capital and credit markets may adversely affect our business, including the availability and cost of short-term funds for liquidity requirements, which could adversely affect our results of operations, cash flows and financial condition.

Potential changes in the global economy may affect the availability of business and consumer credit. We may need to rely on the credit markets, particularly for short-term borrowings from banks in China, as well as the capital markets, to meet our financial commitments and short-term liquidity needs if internal funds from our operations are not available to be allocated to such purposes. Disruptions in the credit and capital markets could adversely affect our ability to draw on such short-term bank facilities. Our access to funds under such credit facilities is dependent on the ability of the banks that are parties to those facilities to meet their funding commitments, which may be dependent on governmental economic policies in China. Those banks may not be able to meet their funding commitments to us if they experience shortages of capital and liquidity or if they experience excessive volumes of borrowing requests from us and other borrowers within a short period of time.

Long-term disruptions in the credit and capital markets could result from uncertainty, changing or increased regulations, reduced alternatives or failures of financial institutions could adversely affect our access to the liquidity needed for our business. Any disruption could require us to take measures to conserve cash until the markets

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stabilize or until alternative credit arrangements or other funding for our business needs can be arranged. Such measures may include deferring capital expenditures, and reducing or eliminating discretionary uses of cash. These events would adversely impact our results of operations, cash flows and financial position.

Our bank accounts in China are not insured or protected against loss.

Our operating subsidiaries maintain cash accounts with various banks located in China. Such cash accounts are not insured or otherwise protected. While we have not experienced any losses for uninsured bank deposits and do not believe that we are exposed to significant risks on cash held in bank accounts, should any bank holding such cash deposits become insolvent, or if our operating subsidiaries are otherwise unable to withdraw funds, those entities would lose the cash on deposit with that particular bank.

If we fail to implement and maintain an effective system of internal controls or fail to remediate the material weaknesses in our internal control over financial reporting that have been identified, we may fail to meet our reporting obligations or be unable to accurately report our results of operations or prevent fraud, and investor confidence and the market price of our ordinary shares may be materially and adversely affected.

Until recently, we have been a private company with limited accounting personnel and other resources with which to address our internal control over financial reporting. Our independent registered public accounting firm has not conducted an audit of our internal control over financial reporting. However, in preparing our audited consolidated financial statements for the years ended December 31, 2023 and 2022, we have identified two material weaknesses in our internal control over financial reporting, as defined in the standards established by the PCAOB. A “material weakness” is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.

The material weaknesses identified included that (1) we did not have sufficient full-time personnel with appropriate levels of accounting knowledge and experience to monitor the daily recording of transactions, address complex U.S. GAAP accounting issues and to prepare and review financial statements and related disclosures under U.S. GAAP; and (2) we lack a functional internal audit department or personnel that monitors the consistency of the preventive internal control procedures, and we lack adequate internal audit policies and procedures to ensure that these policies and procedures have been carried out as planned.

Following the identification of the material weaknesses and control deficiencies, we have taken and planned to continue to take remedial measures including (i) hiring more qualified accounting personnel with relevant U.S. GAAP and SEC reporting experience and qualifications to strengthen the financial reporting function and to set up a financial and system control framework; (ii) implementing regular and continuous U.S. GAAP accounting and financial reporting training programs for our accounting and financial reporting personnel; (iii) establish internal audit function by engaging an external consulting firm to assist us with assessment of Sarbanes-Oxley Act compliance requirements and improvement of overall internal control; and (iv) strengthening corporate governance. However, the implementation of these measures may not fully address the material weaknesses in our internal control over financial reporting.

We are subject to the Sarbanes-Oxley Act. Section 404 of the Sarbanes-Oxley Act 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 in our second annual report on Form 20-F after becoming a public company. In addition, once we cease to be an “emerging growth company,” as such term is defined in the JOBS Act, our independent registered public accounting firm may attest to and report on the effectiveness of our internal control over financial reporting if the Sarbanes-Oxley Act 404(b) requirement is met. An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002 in the assessment of the emerging growth company’s internal control over financial reporting.

We will incur increased costs as a result of being a public company. As a new public company, we expect to incur significant legal, accounting and other expenses that we did not incur as a private company. The Sarbanes-Oxley Act, as well as rules subsequently implemented by the SEC and the Cboe BZX Exchange, impose various requirements on the corporate governance practices of public companies. As a company with less than US$1.235 billion in net revenues for our last fiscal year, we qualify as an “emerging growth company” pursuant

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to the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act in the assessment of the emerging growth company’s internal control over financial reporting.

We expect these rules and regulations to increase our legal and financial compliance costs and to make some corporate activities more time-consuming and costly. We expect to incur significant expenses and devote substantial management effort toward ensuring compliance with the requirements of Section 404 of the Sarbanes-Oxley Act and the other rules and regulations of the SEC. In addition, we will incur additional costs associated with our public company reporting requirements. It may also be more difficult for us to find qualified persons to serve on our board of directors or as executive officers. We are currently evaluating and monitoring developments with respect to these rules and regulations, and we cannot predict or estimate with any degree of certainty the amount of additional costs we may incur or the timing of such costs.

Risks Relating to Our Corporate Structure

We will likely not pay dividends in the foreseeable future.

We have not previously paid any cash dividends, and we do not anticipate paying any dividends on our ordinary shares in the foreseeable future. Dividend policy is subject to the discretion of our board of directors and will depend on, among other things, our earnings, financial condition, capital requirements and other factors. If we determine to pay dividends on any of our ordinary shares in the future, we will be dependent, in large part, on receipt of funds from our operating subsidiaries for our cash needs, including the funds necessary to pay dividends and other cash distributions, if any, to our shareholders, to service any debt we may incur and to pay our operating expenses. The payment of dividends by entities organized in China is subject to limitations as described herein. Under British Virgin Islands law, the directors of the company may, by resolution of directors, authorize a dividend by the company to the members at such time and of such an amount, as the directors think fit if they are satisfied, or reasonable grounds, that the company will, immediately after the payment of the dividend, satisfy the solvency test. A BVI company satisfies the solvency test if (a) the value of the company’s assets exceeds its liabilities, and (b) the company is able to pay its debts as they fall due.

If we determine to pay dividends on any of our ordinary shares in the future, as a holding company, we will be dependent on receipt of funds from our operating subsidiaries.

Pursuant to the Chinese enterprise income tax law, dividends payable by a foreign investment entity to its foreign investors are subject to a withholding tax of 10%. Similarly, dividends payable by a foreign investment entity to its Hong Kong investor who owns at least 25% of the equity of the foreign investment entity is subject to a withholding tax of 5%.

The payment of dividends by entities organized in China is subject to limitations, procedures and formalities. Regulations in China currently permit payment of dividends only out of accumulated profits as determined in accordance with accounting standards and regulations in China. Our operating subsidiaries are also required to set aside at least 10% of their after-tax profit based on the Company Law of the PRC and the Chinese accounting standards year to their compulsory reserves fund until the accumulative amount of such reserves reaches 50% of their registered capital.

The transfer to this reserve must be made before distribution of any dividend to shareholders. The surplus reserve fund is non-distributable other than during liquidation and can be used to fund previous years’ losses, if any, and may be utilized for business expansion or converted into registered capital, provided that the remaining reserve balance after such issue is not less than 25% of the registered capital. As of December 31, 2023 and 2022, the accumulated appropriations to statutory reserves amounted to $1,360,464 and $1,360,464, respectively.

Because we do not anticipate paying any cash dividends on our capital stock in the foreseeable future, capital appreciation, if any, will be your sole source of gain.

We have never declared or paid cash dividends. To support the financial needs of our business, we may retain all of our future earnings, if any. As a result, capital appreciation, if any, of our ordinary shares will be your sole source of gain for the foreseeable future.

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Our business may be materially and adversely affected if any of our operating subsidiaries declare bankruptcy or become subject to a dissolution or liquidation proceeding.

The Enterprise Bankruptcy Law of the PRC provides that an enterprise may be liquidated if the enterprise fails to settle its debts as and when they fall due and if the enterprise’s assets are, or are demonstrably, insufficient to clear such debts. Our operating subsidiaries hold certain assets that are important to our business operations. If any of our operating subsidiaries undergoes a voluntary or involuntary liquidation proceeding, unrelated third-party creditors may claim rights to some or all of these assets, thereby hindering our ability to operate our business, which could materially and adversely affect our business, financial condition and results of operations.

Risks Related to Doing Business in China

Because all 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.

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:

        delay or impede our development;

        result in negative publicity or increase our operating costs;

        require significant management time and attention; and

        subject us to remedies, administrative penalties and even criminal liabilities that may harm our business, including fines assessed for our current or historical operations, or demands or orders that we modify or even cease our business practices.

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 way 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, potentially rendering it worthless.

If the Chinese government chooses to exert more oversight and control over 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 foreign investments in China-based issuers. The 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. The Measures for Cybersecurity Review (2021 version) was promulgated on December 28, 2021 and became effective on February 15, 2022. These measures specify that any “online platform operators” controlling the personal information of more than one million users which seek to list on a foreign stock exchange are subject to prior cybersecurity review.

Our business belongs to the waste management and recycling equipment manufacturing industry in China, which does not involve the collection of user data, implicate cybersecurity, or involve any other type of restricted industry. Uncertainties still exist, however, due to the possibility that laws, regulations, or policies in the PRC

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could change rapidly in the future. As these statements and regulatory actions are new, 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 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 list on an U.S. exchange. Any future action by the PRC government expanding the categories of industries and companies whose foreign securities transactions are subject to review by 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.

If we become directly subject to the recent scrutiny, criticism and negative publicity involving U.S.-listed China-based companies, we may have to expend significant resources to investigate and resolve the matter which could harm our business operations and our reputation, especially if such matter cannot be addressed and resolved favorably.

In recent years, 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 around financial and accounting irregularities, a lack of effective internal controls over financial accounting, inadequate corporate governance policies or a lack of adherence thereto and, in some 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 has 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 type of scrutiny, criticism and negative publicity might have on our company or our business. 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 may be a significant distraction to our management. If such allegations are not proven to be groundless, our company and business operations could be severely hampered and our shares could be rendered worthless.

Fluctuations in exchange rates could adversely affect our business and the value of our securities.

Changes in the value of the RMB against the U.S. dollar are affected by, among other things, changes in China’s political and economic conditions. Any significant revaluation of the RMB may have a material adverse effect on our revenues and financial condition, and the value of, and any dividends payable on our shares in U.S. dollar terms. For example, to the extent that we need to convert U.S. dollars into RMB for our operations, appreciation of the RMB against the U.S. dollar would have an adverse effect on RMB amount we would receive from the conversion. Conversely, if we decide to convert our RMB 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 the RMB would have a negative effect on the U.S. dollar amount available to us. In addition, fluctuations of the RMB against other currencies may increase or decrease the cost of imports and exports, and thus affect the price-competitiveness of our products against products of foreign manufacturers or products relying on foreign inputs.

Since July 2005, the RMB is no longer pegged to the U.S. dollar. Although the People’s Bank of China regularly intervenes in the foreign exchange market to prevent significant short-term fluctuations in the exchange rate, the RMB may appreciate or depreciate significantly in value against the U.S. dollar in the medium to long term. Moreover, it is possible that in the future Chinese authorities may lift restrictions on fluctuations in the RMB exchange rate and lessen intervention in the foreign exchange market.

We reflect the impact of currency translation adjustments in our financial statements under the heading “Foreign currency translation adjustment.” For the years ended December 31, 2023 and 2022, we had an adjustment of $(299,149) and $(787,376), respectively, for foreign currency translation adjustments. Very limited hedging transactions are available in China to reduce our exposure to exchange rate fluctuations. To date, we have not entered into any hedging transactions. While we may enter into hedging transactions in the future, the availability and effectiveness of these transactions may be limited, and we may not be able to successfully hedge our exposure at all. In addition, our foreign currency exchange losses may be magnified by China exchange control regulations that restrict our ability to convert RMB into foreign currencies.

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Under the Enterprise Income Tax Law, we may be classified as a “Resident Enterprise” of China. Such classification will likely result in unfavorable tax consequences to us and our non-PRC shareholders.

Under the Enterprise Income Tax Law of the PRC (the “EIT Law”) and the Regulation on the Implementation of Enterprise Income Tax Law of China (the “EIT Rules”), both of which became effective on January 1, 2008, and the former of which was last amended on December 29, 2018, and the latter of which was amended on April 23, 2019, an enterprise established outside of China with “de facto management bodies” within China is considered a “resident enterprise” and will be subject to the enterprise income tax on its global income at the rate of 25%. The EIT Rules define de facto management as “substantial and overall management and control over the production and operations, personnel, accounting, and properties” of the enterprise. According to these regulations, a resident enterprise would have to pay a withholding tax at a rate of 10% when paying dividends to its non-PRC shareholders.

On April 22, 2009, the State Administration of Taxation of China issued Circular 82 further interpreting the application of the EIT Law and its implementation to offshore entities controlled by a Chinese enterprise or group. Pursuant to Circular 82, an enterprise incorporated in an offshore jurisdiction and controlled by a Chinese enterprise or group will be classified as a “non-domestically incorporated resident enterprise” if (i) its senior management in charge of daily operations reside or perform their duties mainly in China; (ii) its financial or personnel decisions are made or approved by bodies or persons in China; (iii) its substantial assets and properties, accounting books, corporate stamps, board and stockholder minutes are kept in China; and (iv) at least half of its directors with voting rights or senior management are often resident in China.

We do not believe that we meet the conditions outlined in the preceding paragraph since our company does not have a PRC enterprise or enterprise group as its primary controlling shareholder. Further, our company is a holding company incorporated outside China and its key assets are its ownership interests in its subsidiaries, and its records (including the resolutions of its board of directors and the resolutions of its shareholders) are maintained outside China. However, as the tax residency status of an enterprise is subject to determination by the PRC tax authorities and uncertainties remain with respect to the interpretation of the term “de facto management body,” there can be no assurance that the PRC government will ultimately take a view that is consistent with our position. We will continue to monitor our tax status.

If the PRC tax authorities determine that we are a “resident enterprise” for PRC enterprise income tax purposes, we may be subject to the enterprise income tax at a rate of 25% on our worldwide taxable income as well as PRC enterprise income tax reporting obligations. In addition, we may be required to withhold a 10% withholding tax from dividends we pay to our shareholders that are non-resident enterprises. In addition, non-resident enterprise shareholders may be subject to PRC tax on gains realized on the sale or other disposition of our shares, if such income is treated as sourced from within the PRC. Furthermore, if we are deemed a PRC resident enterprise, dividends payable to our non-PRC individual shareholders and any gain realized on the transfer of our shares by such shareholders may be subject to PRC tax at a rate of 10% in the case of non-PRC enterprises or a rate of 20% in the case of non-PRC individuals unless a reduced rate is available under an applicable tax treaty. It is unclear whether non-PRC shareholders of our company would be able to claim the benefits of any tax treaties between their country of tax residence and the PRC in the event that we are treated as a PRC resident enterprise. Any such tax may reduce the returns on your investment in our shares.

You may experience difficulties in effecting service of legal process, enforcing foreign judgments or brining actions in China against us or our management based on foreign laws.

We are a company incorporated under the laws of the British Virgin Islands, we conduct substantially all of our operations in China, and substantially all of our assets are located in China. As a result, it may be difficult to effect service of process upon us or those persons in China. In addition, China does not have treaties providing for the reciprocal recognition and enforcement of judgements of courts with the British Virgin Islands and many other countries and regions. Therefore, recognition and enforcement in China of judgments of a court in any of these non-PRC jurisdictions in relation to any matter not subject to a binding arbitration provision may be difficult or impossible.

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We must remit the offering proceeds to China before they may be used to benefit our business in China, this process may take a number of months and we will be unable to use the proceeds to grow our business in the meantime.

Under Chinese law, the proceeds of this offering must be sent back to China, and the process for sending such proceeds back to China may take several months after the closing of this offering. In order to remit the offering proceeds to China, we will take the following actions:

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

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

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

The timing of the process is difficult to estimate because the efficiencies of different SAFE branches can vary materially. Ordinarily, the process takes several months to complete. We may be unable to use these proceeds to grow our business until we receive such proceeds in China.

Fluctuation of the RMB may indirectly affect our financial condition by affecting the volume of cross-border money flow.

Although we use the United States dollar for financial reporting purposes, all of the transactions effected by our operating subsidiaries are denominated in China’s currency, the RMB. The value of the RMB fluctuates and is subject to changes in China’s political and economic conditions. We do not currently engage in hedging activities to protect against foreign currency risks. Even if we choose to engage in such hedging activities, we may not be able to do so effectively. Future movements in the exchange rate of the RMB could adversely affect our financial condition as we may suffer financial losses when transferring money raised outside of China into the country or paying vendors for services performed outside of China.

If any dividend is declared in the future and paid in a foreign currency, you may be taxed on a larger amount in U.S. dollars than the U.S. dollar amount that you will actually ultimately receive.

In the event we pay dividends in the future, shareholders will be taxed on the U.S. dollar value of their dividends, if any, at the time they receive them, even if they actually receive a smaller amount of U.S. dollars when the payment is in fact converted into U.S. dollars. Specifically, if a dividend is declared and paid in a foreign currency, the amount of the dividend distribution that shareholders must include in their income as a U.S. holder will be the U.S. dollar value of the payments made in the foreign currency, determined at the spot rate of the foreign currency to the U.S. dollar on the date the dividend distribution is includible in your income, regardless of whether the payment is in fact converted into U.S. dollars. Thus, if the value of the foreign currency decreases before shareholders actually convert the currency into U.S. dollars, they may be taxed on a larger amount in U.S. dollars than the U.S. dollar amount that they will actually ultimately receive.

Introduction of new laws and regulations or changes to existing laws and regulations by the Chinese government may occur quickly with little advance notice, and such new laws, regulations or changes thereto may adversely affect our business.

The Chinese legal system is a codified legal system made up of written laws, regulations, circulars, administrative directives and internal guidelines. Unlike common law jurisdictions such as the U.S., decided cases (which may be taken as precedent) do not form part of the legal structure of China and thus have no binding effect. Furthermore, in line with its transformation from a centrally planned economy to a more market-oriented economy, the Chinese government is still in the process of developing a comprehensive set of laws and regulations. As the legal system in China is still evolving, laws and regulations or their interpretation may be subject to further and rapid changes. Such uncertainty and prospective changes to the Chinese legal system could adversely affect our results of operations and financial condition.

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We may be subject to foreign exchange controls in China, which could limit our use of our funds, which could have a material adverse effect on our business.

We are subject to Chinese rules and regulations on currency conversion. In China, SAFE regulates the conversion of the RMB into foreign currencies. Currently, a foreign invested enterprise (“FIE”) is required to apply to banks for foreign exchange registration under domestic and overseas direct investment. WFOE is a FIE, with such registration. WFOE is allowed to open foreign currency accounts including the “current account” and the “capital account”. Currently, conversion within the scope of the “current account” and general “capital account” can be effected without requiring the approval of SAFE. However, conversion of currency in some restricted “capital account” (e.g. for capital items such as direct investments, loans and securities), unless expressly exempted by laws and regulations, still requires the approval of SAFE.

In particular, if WFOE borrows foreign currency through loans from our company or other foreign lenders, these loans must be registered with SAFE. If WFOE is financed by means of additional capital contributions, certain Chinese government authorities’ registration and/or approvals or their local counterparts are required. These restrictions could limit our use of our funds, which could have an adverse effect on our business.

Governmental control of currency conversion may affect the value of our shareholders’ investment in our company.

The Chinese government imposes controls on the convertibility of the Renminbi into foreign currencies and, in certain cases, the remittance of currency out of China, which may take as long as six months in the ordinary course. We receive the majority of our revenues in Renminbi. Under our current corporate structure, our income is derived from payments from WFOE. Shortages in the availability of foreign currency may restrict the ability of our company to remit sufficient foreign currency to pay dividends or other payments to us, or otherwise satisfy our foreign currency denominated obligations. Under existing Chinese foreign exchange regulations, payments of current account items, including profit distributions, interest payments and expenditures from trade-related transactions, can be made in foreign currencies without prior approval from SAFE by complying with certain procedural requirements. However, approval from 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 bank loans denominated in foreign currencies. The Chinese government may also at its discretion restrict access in the future to foreign currencies for current account transactions. If the foreign exchange control system prevents us from obtaining sufficient foreign currency to satisfy our currency demands, we may not be able to pay dividends in foreign currencies to our shareholders.

Failure to comply with PRC laws and regulations related to labor and employee benefits may subject us to penalties or additional cost.

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. Our failure to make contributions to various employee benefit plans and in complying with applicable PRC labor-related laws may subject us to fines, penalties, government investigations or labor disputes and we 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.

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Labor laws in China may adversely affect our results of operations.

In June 2007, the National People’s Congress of the PRC enacted the Labor Contract Law, which became effective on January 1, 2008 and was amended on December 28, 2012. To clarify certain details in connection with the implementation of the Labor Contract Law, the China State Council promulgated the Implementing Rules for the Labor Contract Law on September 18, 2008, which came into effect immediately. These labor laws impose significant liabilities on employers and affects the cost of an employer’s decision to reduce its workforce. The labor laws formalized workers’ rights concerning overtime hours, pensions, layoffs, employment contracts and the role of trade unions. Among other things, these labor laws provide for specific standards and procedures for the termination of an employment contract. In addition, the laws require the payment of a statutory severance pay upon the termination of an employment contract in most cases, including the case of the expiration of a fixed-term employment contract. The labor laws also mandate that employers provide social welfare packages to all employees, increasing our labor costs. In addition, in July 2018, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council jointly issued the Reform Plan of the Taxation and Collection Systems of National Taxes and Local Taxes, which states that, effective from January 1, 2019, basic pension insurance premiums, basic medical insurance premiums, unemployment insurance premiums, injury insurance premiums and maternity insurance premiums shall be levied by the tax authorities. Under the new system, the social insurance premiums collection is likely to be stringently administrated and enforced. All of our employees working for us exclusively within China are covered by these labor laws, and in the event we decide to significantly change or decrease our workforce, these labor laws could adversely affect our ability to enact such changes in a manner that is most advantageous to our business or in a timely and cost-effective manner, thus materially and adversely affecting our financial condition and results of operations.

Chinese regulations relating to the establishment of offshore special purpose companies by Chinese residents may subject our Chinese resident shareholders to personal liability and limit our ability to inject capital into our Chinese subsidiaries, limit our subsidiaries’ ability to increase its registered capital, distribute profits to us, or otherwise adversely affect us.

On July 4, 2014, China’s SAFE issued the Circular of the State Administration of Foreign Exchange on Issues concerning Foreign Exchange Administration over the Overseas Investment and Financing and Round-trip Investment by Domestic Residents via Special Purpose Vehicles, or Circular 37, which became effective as of July 4, 2014. On February 13, 2015, SAFE issued the Circular of the State Administration of Foreign Exchange on Further Simplifying and Improving the Direct Investment Foreign Exchange Administration Policies, or Circular 13. According to Circular 37 and Circular 13, prior foreign exchange registration with the local SAFE branch or a qualified bank is required for Chinese residents to contribute domestic assets or interests to offshore companies, known as SPVs. Moreover, Circular 37 applies retroactively. As a result, Chinese residents who have contributed domestic assets or interests to a SPV, but failed to complete foreign exchange registration of overseas investments as required before July 4, 2014 shall send a letter to SAFE and its branches for explanation. SAFE and its branches shall, under the principle of legality and legitimacy, conduct supplementary registration, and impose administrative punishment on those in violation of the administrative provisions on the foreign exchange pursuant to the law.

We have requested our shareholders who are Chinese residents to make the necessary applications, filings and amendments as required under Circular 37, Circular 13 and other related rules. As of the date of this prospectus, all of our beneficial owners who are PRC individuals have completed their initial registration in accordance with Circular 37 and Circular 13. We attempt to comply, and attempt to ensure that our shareholders who are subject to these rules comply, with the relevant requirements. 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 registrations or comply with other requirements required by Circular 37, Circular 13 or other related rules. The failure or inability of our Chinese resident shareholders to make any required registrations or comply with other requirements or making misrepresentation on or failure to disclose controllers of the foreign-invested enterprise may subject such shareholders who are PRC residents and our PRC subsidiaries to fines and legal sanctions and may also limit our ability to contribute additional capital into or provide loans to WFOE, limiting WFOE’s ability to pay dividends or otherwise distributing profits to us.

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Failure to comply with the Individual Foreign Exchange Rules relating to the overseas direct investment or the engagement in the issuance or trading of securities overseas by our Chinese resident stockholders may subject such stockholders to fines or other liabilities.

Other than Circular 37, our ability to conduct foreign exchange activities in China may be subject to the interpretation and enforcement of the Implementation Rules of the Administrative Measures for Individual Foreign Exchange promulgated by SAFE on January 5, 2007 (as amended and supplemented, the “Individual Foreign Exchange Rules”) and the Foreign Exchange Administration Regulations of the PRC, which was promulgated by the State Council on January 29, 1996, became effective on April 1, 1996 and last amended on August 1, 2008 (which became effective on August 5, 2008). Under the Individual Foreign Exchange Rules and the Foreign Exchange Administration Regulations, any Chinese individual seeking to make a direct investment overseas or engage in the issuance or trading of negotiable securities or derivatives overseas must make the appropriate registrations in accordance with SAFE provisions. Chinese individuals who fail to make such registrations may be subject to warnings, fines or other liabilities.

We may not be fully informed of the identities of all our beneficial owners who are Chinese residents. For example, because the investment in or trading of our shares will happen in an overseas public or secondary market where shares are often held with brokers in brokerage accounts, it is unlikely that we will know the identity of all of our beneficial owners who are Chinese residents. Furthermore, we have no control over any of our future beneficial owners and we cannot assure you that such Chinese residents will be able to complete the necessary approval and registration procedures required by the Individual Foreign Exchange Rules.

It is uncertain how the Individual Foreign Exchange Rules will be interpreted or enforced and whether such interpretation or enforcement will affect our ability to conduct foreign exchange transactions. Because of this uncertainty, we cannot be sure whether the failure by any of our Chinese resident stockholders to make the required registration will subject our subsidiaries to fines or legal sanctions on their operations, restriction on remittance of dividends or other punitive actions that would have a material adverse effect on our business, results of operations and financial condition.

We are subject to a variety of laws and other obligations regarding privacy, data security, cybersecurity and data protection, and any failure to comply with applicable laws and obligations could have a material and adverse effect on our business, financial condition and results of operations.

We are subject to PRC laws relating to privacy, data security, cybersecurity, and data protection. In particular, there are numerous laws and regulations regarding privacy and the collection, use, sharing, retention, security, and transfer of confidential and private information, such as personal information and other data. These laws apply not only to third-party transactions, but also to transfers of information between us and our PRC subsidiaries, and among us, and other parties with which we have commercial relations. These laws continue to develop, and the PRC government may adopt other rules and restrictions in the future. Non-compliance could result in penalties or other significant legal liabilities.

The 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. The Civil Code of the PRC issued by the NPC 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.

On November 7, 2016, the Standing Committee of the National People’s Congress of the PRC (“SCPNC”) issued the Cyber Security Law of the PRC (the “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 Cyber Security Law is the first PRC law that systematically lays out the regulatory requirements on cybersecurity and data protection, subjecting many previously under-regulated or unregulated activities in cyberspace to government scrutiny.

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In April 2020, the CAC and certain other PRC regulatory authorities 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.

The PRC Data Security Law, which was promulgated by the SCPNC on June 10, 2021 and took effect on September 1, 2021, requires data collection to be conducted in a legitimate and proper manner, and stipulates that, for the purpose of data protection, data processing activities must be conducted based on data classification and hierarchical protection system for data security. As the Data Security Law was recently promulgated, we may be required to make further adjustments to our business practices to comply with this law. If our data processing activities were found to be not in compliance with this law, we could be ordered to make corrections, and under certain serious circumstances, such as severe data divulgence, we could be subject to penalties, including the revocation of our business licenses or other permits.

Furthermore, the Opinions on Strictly Cracking Down Illegal Securities Activities in Accordance with the Law issued on July 6, 2021 require (i) speeding up the revision of the provisions on strengthening the confidentiality and archives management relating to overseas issuance and listing of securities and (ii) improving the laws and regulations relating to data security, cross-border data flow, and management of confidential information.

On July 10, 2021, the Cyberspace Administration of China issued a revised draft of the Measures for Cybersecurity Review for public comments (“Draft Measures”), which required that, in addition to “operator of critical information infrastructure”, any “data processor” carrying out data processing activities that affect or may affect national security 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, including, among others, (i) the risk of core data, important data or a large amount of personal information being stolen, leaked, destroyed, and illegally used or exited the country; and (ii) the risk of critical information infrastructure, core data, important data or a large amount of personal information being affected, controlled, or maliciously used by foreign governments after listing abroad. The Cyberspace Administration of China has said that under the proposed rules companies holding data on more than 1,000,000 users must now apply for cybersecurity approval when seeking listings in other nations because of the risk that such data and personal information could be “affected, controlled, and maliciously exploited by foreign governments,” The cybersecurity review will also investigate the potential national security risks from overseas IPOs.

On August 20, 2021, the SCNPC promulgated the Personal Information Protection Law of the PRC, (the “Personal Information Protection Law”), which took effect in November 2021. As the first systematic and comprehensive law specifically for the protection of personal information in the PRC, the Personal Information Protection Law provides, among others, that (i) an individual’s consent shall be obtained to use sensitive personal information, such as biometric characteristics and individual location tracking, (ii) personal information operators using sensitive personal information shall notify individuals of the necessity of such use and impact on the individual’s rights, and (iii) where personal information operators reject an individual’s request to exercise his or her rights, the individual may file a lawsuit with the court.

On December 28, 2021, the CAC, the National Development and Reform Commission (“NDRC”), and several other administrations jointly issued the revised Measures for Cybersecurity Review, (the “Revised Review Measures”). According to the Revised Review Measures, if an “online platform operator” that is in possession of personal data of more than one million users intends to list in a foreign country, it must apply for a cybersecurity review. Given the recency of the issuance of the Revised Review Measures, there is a general lack of guidance and uncertainties exist with respect to their interpretation and implementation.

Furthermore, the CAC released the draft of the Regulations on Network Data Security Management in November 2021 for public consultation, which among other things, stipulates that a data processor listed overseas must conduct an annual data security review by itself or by engaging a data security service provider and submit the annual data security review report for a given year to the municipal cybersecurity department before January 31 of the following year.

On July 7, 2022, the CAC promulgated the Measures for the Security Assessment of Outbound Data Transfers (the “Measures”), which became effective from September 1, 2022. The Measures shall apply to the security assessment of the provision of important data and personal information collected and generated by data processors

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in the course of their operations within the territory of the PRC by such data processors to overseas recipients. The Measures stipulate the circumstances under which security assessment of outbound data transfers should be declared, including: (i) outbound transfer of important data by a data processor; (ii) outbound transfer of personal information by a critical information infrastructure operator or a personal information processor who has processed the personal information of more than one million people; (iii) outbound transfer of personal information by a personal information processor who has made outbound transfers of the personal information of one million people cumulatively or the sensitive personal information of 10,000 people cumulatively since January 1 of the previous year; or (iv) other circumstances where an application for the security assessment of an outbound data transfer is required as prescribed by the national cyberspace administration authority. Based on the relevant regulations relating to outbound data transfer in the Cyber Security Law, the Data Security Law, and the Personal Information Protection Law, the Measures provide the scope, conditions and procedures of security assessment of outbound data transfer and thereby provide specific guidelines for security assessment of outbound data transfers.

As there remain uncertainties regarding the further interpretation and implementation of those laws and regulations, we cannot assure you that we will be compliant such new regulations in all respects, and we may be ordered to rectify and terminate any actions that are deemed illegal by the regulatory authorities and become subject to fines and other sanctions. As a result, we may be required to suspend our relevant businesses or face other penalties, which may materially and adversely affect our business, financial condition, and results of operations.

Changes in China’s political and economic policies could harm our business.

Substantially all of our business operations are conducted in China. Accordingly, our results of operations, financial condition and prospects are subject to economic, political and legal developments in China. China’s economy differs from the economies of most developed countries in many respects, including with respect to the amount of government involvement, level of development, growth rate, control of foreign exchange and allocation of resources.

The Chinese economy has historically been a planned economy subject to governmental plans and quotas and has been transitioning to a more market-oriented economy. Although we believe that the economic reform and the macroeconomic measures adopted by the Chinese government have had a positive effect on the economic development China, we cannot predict the future direction of these economic reforms or the effects these measures may have on our business, financial position or results of operations. In addition, the Chinese economy differs from the economies of most countries belonging to the Organization for Economic Cooperation and Development (“OECD”). These differences include, without limitation:

        economic structure;

        level of government involvement in the economy;

        level of development;

        level of capital reinvestment;

        control of foreign exchange;

        methods of allocating resources; and

        balance of payments position.

As a result of these differences, our business may not develop in the same way or at the same rate as might be expected if the Chinese economy were similar to those of the OECD member countries.

Since 1978, the Chinese government has promulgated many new laws and regulations covering general economic matters. Even where adequate law exists in China, enforcement of existing laws or contracts based on existing law may be uncertain, and it may be difficult to obtain swift enforcement or to obtain enforcement of a judgment by a court of another jurisdiction. In addition, interpretation of statutes and regulations may be subject to government policies reflecting domestic political changes. Our activities in China will also be subject to administration review and approval by various national and local agencies of the Chinese government. Because of the changes occurring in China’s legal and regulatory structure, we may not be able to secure the requisite

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governmental approval for our activities. Although we have obtained all required governmental approvals to operate our business as currently conducted, to the extent we are unable to obtain or maintain required governmental approvals, the Chinese government may, in its sole discretion, prohibit us from conducting our business.

Changes in international trade policies, trade disputes, barriers to trade, or the emergence of a trade war may dampen growth in China and may have a material adverse effect on our business.

Political events, international trade disputes, and other business interruptions could harm or disrupt international commerce and the global economy, and could have a material adverse effect on us and our customers, service providers, and other partners. International trade disputes could result in tariffs and other protectionist measures which may materially and adversely affect our business. Tariffs could increase the cost of the goods and products which could affect customers’ spending levels. In addition, political uncertainty surrounding international trade disputes and the potential of the escalation to trade war and global recession could have a negative effect on customer confidence, which could materially and adversely affect our business. We may have also access to fewer business opportunities, and our operations may be negatively impacted as a result. In addition, the current and future actions or escalations by either the United States or China that affect trade relations may cause global economic turmoil and potentially have a negative impact on our markets, our business, or our results of operations, and we cannot provide any assurances as to whether such actions will occur or the form that they may take.

Because our operations are located in China, information about our operations is not readily available from independent third-party sources.

Because our operations are based in China, our shareholders may have greater difficulty in obtaining information about them on a timely basis than would shareholders of a U.S.-based company. Our operations will continue to be conducted in China and shareholders may have difficulty in obtaining information from sources other than the companies themselves. Information available from newspapers, trade journals, or local, regional or national regulatory agencies such as issuance of construction permits and contract awards for development projects will not be readily available to shareholders and, where available, will likely be available only in Chinese. Shareholders will be dependent upon management for reports of their progress, development, activities and expenditure of proceeds.

We may be involved from time to time in legal proceedings and commercial or contractual disputes, which could have a material adverse effect on our business, results of operations and financial condition.

From time to time, we may be involved in legal proceedings and commercial disputes. Such proceedings or disputes are typically claims that arise in the ordinary course of business, including, without limitation, commercial or contractual disputes, and other disputes with customers and suppliers, intellectual property matters, environmental issues, tax matters and employment matters. There can be no assurance that such proceedings and claims, should they arise, will not have a material adverse effect on our business, results of operations and financial condition.

Risks Associated Ownership of Our Ordinary shares

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

We are an “emerging growth company,” as defined in the JOBS Act. For as long as we continue to be an emerging growth company, we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We could be an emerging growth company for up to five years, although we could lose that status sooner if our revenues exceed US$1.235 billion, if we issue more than $1 billion in non-convertible debt in a three-year period, or if the market value of our ordinary shares held by non-affiliates exceeds $700 million as of any June 30 before that time, in which case we would no longer be an emerging growth company as of the following December 31. We cannot predict if investors will find our ordinary shares less attractive because we may rely on these exemptions. If some investors find our ordinary shares less attractive as a result, there may be a less active trading market for our ordinary shares and our stock price may be more volatile.

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Under the JOBS Act, emerging growth companies can also delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have irrevocably elected not to avail our Company of this exemption from new or revised accounting standards and, therefore, will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.

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, beginning with our annual report on Form 20-F filed with the SEC on May 15, 2024, we are 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. In addition, our independent registered public accounting firm will be required to attest to the effectiveness of our internal control over financial reporting beginning with our annual report on Form 20-F following the date on which we are no longer an “emerging growth company,” which may be up to five full years. 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 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 SEC, or other regulatory authorities, which could require additional financial and management resources.

There may not be an active, liquid trading market for our ordinary shares.

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

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

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

        actual or anticipated fluctuations in our quarterly operating results;

        the financial projections we may provide to the public, any changes in these projections or our failure to meet these projections;

        actions of securities analysts who initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow our Company, or our failure to meet these estimates or the expectations of investors;

        announcements by us or our competitors of significant products or features, technical innovations, acquisitions, strategic partnerships, joint ventures, or capital commitments;

        price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole;

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        lawsuits threatened or filed against us; and

        other events or factors, including those resulting from war or incidents of terrorism, or responses to these events.

In addition, the securities markets have from time to time experienced price and volume fluctuations that are not related to the operating performance of particular companies. As a result, to the extent shareholders sell our shares in a negative market fluctuation, they may not receive a price per share that is based solely upon our business performance. We cannot guarantee that shareholders will not lose some or all of their investment in our ordinary shares.

If a limited number of participants in this offering purchase a significant percentage of the offering, the effective public float may be smaller than anticipated and the price of our ordinary shares may be volatile which could subject us to securities litigation and make it more difficult for you to sell your shares.

As a company conducting a relatively small public offering, we are subject to the risk that a small number of investors will purchase a high percentage of the offering. While the underwriters are required to sell shares in this offering to at least 300 round lot shareholders (a round lot shareholder is a shareholder who purchases at least 100 shares) in order to ensure that we meet the Cboe BZX Exchange initial listing standards, we have not otherwise imposed any obligations on the underwriters as to the maximum number of shares they may place with individual investors. If, in the course of marketing the offering, the underwriters were to determine that demand for our shares was concentrated in a limited number of investors and such investors determined to hold their shares after the offering rather than trade them in the market, other shareholders could find the trading and price of our shares affected (positively or negatively) by the limited availability of our shares. If this were to happen, investors could find our shares to be more volatile than they might otherwise anticipate. Companies that experience such volatility in their stock price may be more likely to be the subject of securities litigation. In addition, if a large portion of our public float were to be held by a few investors, smaller investors may find it more difficult to sell their shares.

Certain recent initial public offerings of companies with public floats comparable to our anticipated public float have experienced extreme volatility that was seemingly unrelated to the underlying performance of the respective company. We may experience similar volatility, which may make it difficult for prospective investors to assess the value of our ordinary shares.

Our ordinary shares may be subject to extreme volatility that is seemingly unrelated to the underlying performance of our business. Recently, companies with comparable public floats and initial public offering sizes have experienced instances of extreme stock price run-ups followed by rapid price declines, and such stock price volatility was seemingly unrelated to the respective company’s underlying performance. Although the specific cause of such volatility is unclear, our anticipated public float may amplify the impact the actions taken by a few shareholders have on the price of our ordinary shares, which may cause our share price to deviate, potentially significantly, from a price that better reflects the underlying performance of our business. Should our ordinary shares experience run-ups and declines that are seemingly unrelated to our actual or expected operating performance and financial condition or prospects, prospective investors may have difficulty assessing the rapidly changing value of our ordinary shares. In addition, investors in our ordinary shares may experience losses, which may be material, if the price of our ordinary shares declines after this offering or if such investors purchase shares of our ordinary shares prior to any price decline.

If we are unable to comply with certain conditions, our ordinary shares may not trade on the Cboe BZX Market.

We have applied to list our ordinary shares on the Cboe BZX Exchange, which provides that we pay the balance of our entry fee and show that we satisfy applicable initial listing requirements. If we are unable to meet these conditions our shares may not trade on the Cboe BZX Exchange. In addition, we have relied on an exemption to the blue sky registration requirements afforded to “covered securities”. Securities listed on the Cboe BZX Exchange are “covered securities.” If we were unable to meet applicable conditions for listing, then we would be unable to rely on the covered securities exemption to blue sky registration requirements and we would need to register the offering in each state in which we planned to sell shares. Consequently, we will not complete this offering until we have met the required listing conditions.

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If we are listed the Cboe BZX Exchange and our financial condition deteriorates, we may not meet continued listing standards on the Cboe BZX Exchange.

The Cboe BZX Exchange also requires companies to fulfill specific requirements in order for their shares to continue to be listed. In order to qualify for continued listing on the Cboe BZX Exchange, we must meet the following criteria:

        Our shareholders’ equity must be at least $2,500,000; or the market value of our listed securities must be at least $35,000,000; or our net income from continuing operations in our last fiscal year (or two of the last three fiscal years) must have been at least $500,000;

        The market value of our publicly held shares must be at least $1,000,000;

        The minimum bid price for our shares must be at least $1.00 per share;

        We must have at least 300 shareholders;

        We must have at least 500,000 publicly held shares; and

        We must have at least 2 market makers.

If our shares are listed on the Cboe BZX Exchange but are delisted from the Cboe BZX Exchange at some later date, our shareholders could find it difficult to sell our shares. In addition, if our ordinary shares are delisted from the Cboe BZX Exchange at some later date, we may apply to have our ordinary shares quoted on the Bulletin Board or in the “pink sheets” maintained by the National Quotation Bureau, Inc. The Bulletin Board and the “pink sheets” are generally considered to be less efficient markets than the Cboe BZX Exchange. In addition, if our ordinary shares are not so listed or are delisted at some later date, our ordinary shares may be subject to the “penny stock” regulations. These rules impose additional sales practice requirements on broker-dealers that sell low-priced securities to persons other than established customers and institutional accredited investors and require the delivery of a disclosure schedule explaining the nature and risks of the penny stock market. As a result, the ability or willingness of broker-dealers to sell or make a market in our ordinary shares might decline. If our ordinary shares are not so listed or are delisted from the Cboe BZX Exchange at some later date or become subject to the penny stock regulations, it is likely that the price of our shares would decline and that our shareholders would find it difficult to sell their shares.

We may become a passive foreign investment company, which could result in adverse U.S. tax consequences to U.S. investors.