Table of Contents

As filed with the U.S. Securities and Exchange Commission on June 30, 2025.

Registration No. 333-[·]

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

___________________________

FORM F-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

___________________________

Zerolimit Technology Holding Co. Ltd.

(Exact name of Registrant as specified in its charter)

___________________________

Not Applicable

(Translation of Registrant’s name into English)

20F, Haowei Technology Building No. 8

Keji South Road, High-tech Industrial Park South District, Nanshan District

Shenzhen 518051, People’s Republic of China

Telephone: 86-0755-8653-8929

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

___________________________

c/o Cogency Global Inc.

122 East 42nd Street, 18th Floor

New York, NY 10168

Telephone: (800) 221-0102

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

___________________________

Copies to:

___________________________

Approximate date of commencement of proposed sale to the public:

As soon as practicable after the effective date of this registration statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. o

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 þ

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

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

___________________________

† 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.

SUBJECT TO COMPLETION

PRELIMINARY PROSPECTUS DATED [·], 2025

Zerolimit Technology Holding Co. Ltd.

Up to 2,000,000 Ordinary Shares

This is an initial public offering of 2,000,000 ordinary shares, par value US $0.0001 per share (each, an “Ordinary Share,” and, collectively, the “Ordinary Shares”) of Zerolimit Technology Holding Co. Ltd., a Cayman Islands exempted company with limited liability.

Prior to this offering, there has been no public market for our Ordinary Shares. We anticipate the initial offering price per Ordinary Share will be $4 per Ordinary Share. The offering is being made on a “firm commitment” basis by Prime Number Capital LLC, the underwriter (the “Underwriter”). See “Underwriting.” We plan to list our Ordinary Shares on the Nasdaq Capital Market (“Nasdaq”) under the symbol “ZDAN.” We cannot guarantee that we will be successful in listing our Ordinary Shares on Nasdaq. This offering is conditioned upon the successful listing of our Ordinary Shares on Nasdaq. If Nasdaq does not approve our listing application, this initial public offering will be terminated.

Throughout this prospectus, unless the context indicates otherwise, the terms “Zerolimit Cayman,” “we,” “our,” and “our Company,” only refers to Zerolimit Technology Holding Co. Ltd., the Cayman Islands holding company; the term “HK Zerolimit”, refers to Zerolimit Technology Holding Co. Limited, a limited liability company incorporated in Hong Kong, which is 100% owned by our Company; the term “WFOE” refers to Zerolimit Holdings (Shenzhen) Co., Ltd, a limited liability company organized under the laws of the People’s Republic of China (the “PRC”), which is 100% owned by HK Zerolimit, and the term “Zhenglian Shenzhen” or “the VIE” refers to Zhenglian Technology (Shenzhen) Co., Ltd., a limited liability company organized under the laws of the PRC, which is 100% owned by the VIE shareholders. For details on Zerolimit Cayman's corporate structure, see “Corporate History and Structure.”

Our Company is not a Chinese operating company, but rather a Cayman Islands holding company with no material operations of its own. Our Company conducts its operations through its subsidiaries through a series of contractual arrangements with the VIE incorporated in the PRC. Our corporate structure involves unique risks to investors as they are purchasing equity securities in a Cayman Islands holding company, and not equity securities of the VIE based in China. However, due to our indirect relationship with the VIE through the VIE Agreements, we are regarded as the primary beneficiary of the VIE for accounting purposes under the United States generally accepted accounting principles (“U.S. GAAP”). Our PRC counsel has advised us that as of the date of this prospectus, there are substantial uncertainties regarding the interpretation and application of the current and future PRC Laws, rules and regulations related to VIE Agreements. See sections entitled “Corporate Structure and History” and “The VIE Agreements” for additional information related to our VIE structure and related matters.

The VIE Agreements have not been tested in a court of law in China as of the date of this prospectus. Such risks exist throughout the period in which we intend to operate certain portions of our business through contractual arrangements with the VIE in accordance with the VIE Agreements. The VIE Agreements may not be as effective in providing operational control. For example, the VIE and the VIE Shareholders could breach their contractual arrangements with us by, among other things, failing to conduct the VIE’s operations in an acceptable manner or taking other actions that are detrimental to our interests. If we had direct ownership of the VIE, we would be able to exercise our rights as a shareholder to effect changes in the board of directors of the VIE, which in turn could implement changes, subject to any applicable fiduciary obligations, at the management and operational level. However, under the current contractual arrangements, we rely on the VIE and the VIE Shareholders to perform their obligations under such contractual arrangements so that we can exercise operational control for accounting purposes. The VIE Shareholders may not act in the best interests of our Company or may not perform their obligations under these contracts. We are also subject to the risk that the PRC government could disallow the VIE structure, which would likely result in a material change in our operations and, as a result, the value of our Ordinary Shares may depreciate significantly or become worthless.

Investing in our Ordinary Shares involves a high degree of risk, including the risk of losing your entire investment. See “Risk Factors” beginning on page 23 to read about factors you should consider before buying our Ordinary Shares.

Pursuant to the Holding Foreign Companies Accountable Act (the “HFCAA”), which was enacted on December 18, 2020 and amended by the Consolidated Appropriations Act, 2023 enacted on December 29, 2022, if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspection by the PCAOB for two consecutive years, the SEC shall prohibit our shares from being traded on any U.S. stock exchange. The Consolidated Appropriations Act, 2023 reduced the number of consecutive non-inspection years required for triggering the prohibitions under the HFCAA from three years to two years. On December 16, 2021, the PCAOB issued its report notifying the SEC of its determination that it was unable to inspect or investigate completely registered public accounting firms headquartered in mainland China or Hong Kong. On December 15, 2022, the PCAOB issued a report that vacated its December 16, 2021 determination and removed mainland China and Hong Kong from the list of jurisdictions where it is unable to inspect or investigate completely registered public accounting firms. Our auditor, TPS Thayer, LLC (“TPS”), is an independent registered public accounting firm headquartered in Sugar Land, Texas, and has been inspected by the PCAOB on a regular basis, with the last inspection in September of 2022. Each year, the PCAOB will determine whether it can inspect and investigate completely audit firms in mainland China and Hong Kong, among other jurisdictions. If the PCAOB determines in the future that it no longer has full access to inspect and investigate completely accounting firms in mainland China and Hong Kong and we use an accounting firm headquartered in one of these jurisdictions to issue an audit report on our financial statements filed with the SEC, we would be identified as a “Commission-Identified Issuer” following the filing of the annual report on Form 20-F for the relevant fiscal year. There can be no assurance that we would not be identified as a “Commission-Identified Issuer” for any future fiscal year, and if we were so identified for two consecutive years, we would become subject to the prohibition on trading under the HFCAA. The delisting of our securities, or the threat of being delisted, may materially and adversely affect the value of your investment. These risks could result in a material adverse change in our operations and the value of our securities, which may significantly limit or completely hinder our ability to offer or continue to offer securities to investors, or cause the value of such securities to significantly decline or become worthless. For more details, see “Risk Factors – Risks Related to Doing Business in the PRC– If it is later determined that the PCAOB is unable to inspect and investigate completely our auditor, our securities will be prohibited from trading in the United States under the Holding Foreign Companies Accountable Act (the HFCAA). The delisting of and prohibition from trading our securities, or the threat of their being delisted and prohibited from trading, may cause the value of our securities to significantly decline or become worthless.”

We are an “emerging growth company” and a “foreign private issuer” as defined under U.S. federal securities laws and are eligible for reduced public company reporting requirements. See “Prospectus Summary — Implications of Being an Emerging Growth Company and a Foreign Private Issuer” and “Risk Factors.”

We face various legal and operational risks and uncertainties related to our subsidiaries and VIE’s operations in China. Our subsidiaries and the VIE have substantial business operation located in China and are subject to evolving PRC laws and regulations. Our subsidiaries and the VIE expect to be subject to the approval, filing or other requirements of the China Securities Regulatory Commission, or the CSRC, or other PRC governmental authorities in connection with this offering under current PRC laws, regulations and rules. We may also be subject to cybersecurity review by the Cyberspace Administration of China. Because these statements and regulatory actions are new and subject to change, it is uncertain as to how quickly the legislative or administrative regulation making bodies in China will respond to companies, or what existing or new laws or regulations will be amended or promulgated, if any, or the potential impact such amended or new legislation will have on our business operations or our ability to list on a U.S. stock exchange. Although PRC regulations only apply directly to our subsidiaries and the VIE, we are nevertheless indirectly impacted as a result, and therefore disclose these PRC regulations as affecting us.

We are not a Chinese operating company, but rather a Cayman Islands holding company with operations conducted by subsidiaries and through contractual arrangements with a variable interest entity (VIE) based in China. This structure involves unique risks to investors. The VIE structure is used to provide investors with exposure to foreign investment in China-based companies where Chinese law prohibits direct foreign investment in the operating companies. Investors may never hold equity interests in the Chinese operating company. Chinese regulatory authorities could disallow this structure, which would likely result in a material change in our operations and/or pose a material change in the value of the securities we are seeking to registering for sale in this offering. The value of our securities could significantly decline or become worthless.

We currently have not maintained any cash management policies that dictate the purpose, amount and procedure of fund transfers among our Cayman Islands holding company, our subsidiaries, the VIE, and investors. Rather the funds can be transferred in accordance with the applicable laws and regulations. See “Prospectus Summary – Cash Transfers and Dividend Distribution.” See also the consolidated financial statements of Zerolimit Technology Holding Co. Ltd. and Subsidiaries attached to this prospectus. We may require additional capital resources in the future and we may seek to issue additional equity or debt securities or obtain new or expanded credit facilities, which could subject us to operating and financing covenants, including requirements to maintain a certain amount of cash reserves. See “Risk Factors – Risks Related to Doing Business in the PRC – Governmental control of currency conversion may limit our ability to utilize our revenues, transfer or distribute cash to and from our subsidiaries and to and from WFOE and the VIE effectively and affect the value your investment.”

In the last several years, the Securities and Exchange Commission has issued guidance regarding the obligations of companies based in, or with a majority of their operations in, the PRC. Recently, in the context of rules applicable under the HFCAA, we may additional compliance and disclosure requirements. We are not owned or controlled by any foreign government entities; nor are any of our shares held or controlled by any such entities. Our governing and organizational documents, such as an articles of incorporation or the equivalent, do not contain any charters or mandates on behalf of the Chinese Communist Party. We have disclosed throughout this prospectus material risks related to the role of the government of the PRC in the operations of PRC-based companies and operations, including disclosures about any material impacts that intervention or control by the PRC could have with respect to our operations, our business or the value of our securities. To the extent relevant or applicable to us, we have disclosed throughout this prospectus the material impacts of PRC statutes. We do not believe the Uyghur Forced Labor Prevention Act (“UFLPA”), which among other things prohibits the import of goods from the Xinjiang Uyghur Autonomous Region of the PRC, applies to our business or operations. Thus, we do not expect the UFLPA to materially impacts our business or operations. We have also set forth in the prospectus any material compliance risks and material supply chain disruptions that we may face as a result of our connection to the PRC. See “Risk Factors” for more information.

Additionally, upon the completion of this offering, we will be a “controlled company” as defined under corporate governance rules of Nasdaq, because Guangqing Hu, the Chairman of our board of directors (“Board of Directors”) and Chief Technology Officer, is currently the beneficial owner (as that term is defined under Rule 13d-3 promulgated pursuant to the Exchange Act) of 73.01% of our outstanding Ordinary Shares, which is directly held by Zerolimit Digital Technology Limited, a British Virgin Islands exempted company with limited liability, whereby Guangqing Hu is the holder of 100% of the ordinary shares of Zerolimit Digital Technology Limited. See “Principal Shareholders.” Our controlling shareholder will have substantial control over corporate matters after this offering. For so long as we remain a controlled company under Nasdaq’s corporate governance standards, we are eligible to utilize certain exemptions from the corporate governance requirements of Nasdaq. For more information, see “Risk Factors — Risks Related to this Offering and the Ordinary Shares — We will be a “controlled company” within the meaning of the Nasdaq listing rules, and as such may follow certain exemptions from certain corporate governance requirements that could adversely affect our public shareholders.”

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

We have granted the Underwriter an option for a period of [45] days after the closing of this offering to purchase up to fifteen percent (15%) of the total number of Ordinary Shares to be offered by us pursuant to this offering (excluding Ordinary Shares subject to this option), solely for the purpose of covering over-allotments, if any, at the public offering price less the underwriting discounts. If the Underwriter exercises the option in full, the total underwriting discounts payable will be $[·], based on an assumed public offering price of $4 per Ordinary Share, which is the midpoint of the estimated initial public offering price range set forth on the cover page of this prospectus, and the total gross proceeds to us, before underwriting discounts and expenses, will be $[·].

The Underwriter expects to deliver the Ordinary Shares against payment in U.S. dollars to purchasers on or about [·], 2025.

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

Prospectus dated [·], 2025

TABLE OF CONTENTS

ABOUT THIS PROSPECTUS

Except where the context otherwise requires or where otherwise indicated, the terms “we,” “us,” “Company,” “our” or “Zerolimit Cayman” refer to Zerolimit Technology Holding Co. Ltd. and where appropriate its consolidated subsidiaries. We conduct substantially all of our operations through Zhenglian Shenzhen, the VIE, in PRC.

You should rely only on the information contained in this prospectus or in any free writing prospectus that we authorize to be delivered to you. Neither we nor the Underwriter has authorized anyone to provide you with additional or different information. If anyone provides you with additional, different or inconsistent information, you should not rely on it. This prospectus is an offer to sell only the Ordinary Shares offered hereby, and only under circumstances and in jurisdictions where it is lawful to do so. We are not making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted or where the person making the offer or sale is not qualified to do so or to any person to whom it is not permitted to make such offer or sale. For the avoidance of doubt, no offer or invitation to subscribe for Ordinary Shares is made to the public in the Cayman Islands. The information contained in this prospectus is current only as of the date on the front cover of the prospectus. Our business, financial condition, results of operations, and prospects may have changed since that date.

References to “RMB” are to Renminbi, the legal currency of PRC. References to “$,” “U.S. dollars” and “USD” are to United States dollars, the legal currency of the United States. Our business is conducted by the VIE in PRC using RMB. Our consolidated financial statements are presented in U.S. dollars. In this prospectus, we refer to assets, obligations, commitments, and liabilities in our consolidated financial statements in U.S. dollars. These dollar references are based on the exchange rate of RMB to U.S. dollars, determined as of a specific date or for a specific period. Changes in the exchange rate will affect the amount of our obligations and the value of our assets in terms of U.S. dollars which may result in an increase or decrease in the amount of our obligations (expressed in dollars) and the value of our assets, including accounts receivable (expressed in dollars). Unless otherwise noted, all conversions from RMB to U.S. dollars are based on the exchange rate set forth in the H.10 statistical release of the Board of Governors of the Federal Reserve System dated September 30, 2024 and 2023, which was RMB7.0176 to US$1.00 and RMB7.2960 to US$1.00, respectively. We make no representation that any RMB or U.S. dollar amounts could have been, or could be, converted into U.S. dollars or RMB, as the case may be, at any particular rate or at all. Certain amounts shown in this prospectus or derived from the U.S. GAAP financial statements have been rounded or truncated as deemed appropriate by the management of Zerolimit Cayman. Accordingly, numerical figures shown as totals in some tables may not be an arithmetic aggregation of the figures that precede them.

Neither we nor the Underwriter has taken any action to permit a public offering of the Ordinary Shares outside the United States or to permit the possession or distribution of this prospectus or any filed free-writing prospectus outside the United States. Persons outside the United States who come into possession of this prospectus or any filed free writing prospectus must inform themselves about, and observe any restrictions relating to, the offering of the Ordinary Shares and the distribution of this prospectus or any filed free-writing prospectus outside the United States.

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by, and should be read in conjunction with, the more detailed information and financial statements appearing elsewhere in this prospectus. In addition to this summary, we urge you to read the entire prospectus carefully, especially the risks of investing in the Ordinary Shares discussed under “Risk Factors” before deciding whether to invest in the Ordinary Shares. Unless the context otherwise requires, references to “we,” “us,” “our,” or the “Company” in this section are to the business and operations of Zerolimit Cayman, its consolidated subsidiaries and the consolidated VIE. See “Corporate History and Structure — The VIE Agreements” for a summary of the contractual arrangements and “Risk Factors — Risks Related to Our Corporate Structure” for certain risks related to the contractual arrangements.

Our Mission

Driving continuous advancement in internet technology through our subsidiaries and the VIE incorporated in China.

Overview

We are a Cayman company with operations conducted through our subsidiaries and the VIE incorporated in China. Our subsidiaries and the VIE are dedicated to providing a comprehensive solution for global users in the transition to the new generation of the internet. Our subsidiaries and the VIE’s distributed network infrastructure software products enable users to efficiently set up distributed networks or migrate existing centralized applications to distributed networks.

As the internet continues to develop, we believe certain problems with the traditional and current networks (which can informally be referred to as Web 2.0) will become more and more pronounced. Among them are: (1) security concerns; (2) centralization concerns, for example, certain companies have full control over personal data stored on their centralized servers; and (3) resource limitation concerns, for example, as virtual or augmented reality and AI become more ubiquitous, the processing power, bandwidth, and storage resources required for such data increases, and consequently, there is an increase in the demand for processing power, bandwidth, and storage resources for the data associated with these technologies.

Therefore, companies and individuals find the need to upgrade to more advanced equipment to meet the continually increasing demands for resources. We believe that distributed networks can address the limitations of traditional networks. Leveraging secure and decentralized distributed technologies, with relatively modest infrastructure investment, companies or individuals can obtain sufficient processing power, bandwidth, and storage resources at a comparatively lower cost. This allows them to meet the growing demands of the next generation internet.

The VIE’s network infrastructure software products can build a unique proprietary distributed network that can be easily deployed across a multitude of devices, from servers to personal computers, tablets, and mobile phones (meeting the minimum hardware requirements). These devices can simultaneously serve as nodes on the distributed network. Deployment is typically achieved by simply running a software installation package on hardware that meets the specified configuration. Security is ensured through innovative authentication methods, utilizing public and private key pairs, along with other relevant security measures.

In order to propel the development of distributed networks and encourage more developers or network platform operators to engage in the utilization of decentralized applications, we not only offer efficient network infrastructure tools but also provides complementary software development kits for decentralized applications. The development tools facilitate the entire process of decentralized application development, including coding, debugging, testing, and deployment, within an integrated environment.

Our goal is to become a leading provider of distributed network solutions. We hope to continue to increase our investment in the research and development of distributed networks and to continuously educate and spread awareness of the solutions we can provide to the issues encountered by both traditional and current networks. Additionally, we will enhance the commercial value delivered to our end-users through the dealer channel network of our subsidiaries and the VIE. We believe that by leveraging the proprietary technology, research and development capabilities of the VIE and our subsidiaries, and accumulating valuable expertise through investments in relevant technological research, we can maintain a competitive advantage in the industry.

We aim to stay up-to-date on technical innovations by maintaining a large talent pool and will continue to invest in research and development to upgrade the software solutions of our subsidiaries and the VIE. In 2022, the VIE and our subsidiaries obtained the national high-tech enterprise certification in PRC. As of September 30, 2024, the VIE’s research and development team consisted of 23 researchers, programmers, and engineers, accounting for approximately 55% of the total number of employees.

The VIE has historically derived its revenue mainly from software product sales through distributors and related post-contract services. As of September 30, 2024 and 2023, we had 35 and 28 distributors in China, respectively.   We consider these distributors to be our customers. Through this distribution network channel penetration, sales have extended to cover 9 provinces and 11 municipalities in China as of September 30, 2024.

We capitalized $0.012 million and $0.59 million of research and development expenditure for the fiscal years ended September 30, 2024 and 2023, respectively. We also incurred research and development expenses of $0.048 million and $0.124 million for the fiscal years ended September 30, 2024 and 2023, respectively. Our allocation of resources towards innovation has fostered our growth, as a combined company including the VIE and our subsidiaries. For the fiscal year ended September 30, 2024 and 2023, total revenue reached approximately $5.91 million and $5.68 million, respectively, and net income was approximately $2.71 million and $2.52 million, respectively.

Our Technology Advantages

We place significant emphasis on the innovation and research and development of the underlying infrastructure of the next generation of the internet. Through continuous investment, we have achieved outstanding results, including obtaining the national high-tech enterprise certification, jointly issued by the Shenzhen Science and Technology Innovation Committee, Shenzhen Finance Bureau, and the Shenzhen Tax Service of State Taxation Administration, and the specialized and sophisticated small and medium sized enterprise (“SME”) recognition, issued by Shenzhen Small and Medium-sized Enterprises Service Bureau, and securing 2 registered trademarks, 38 registered computer software copyrights, 11 registered patents and 1 license in China as of September 30, 2024.

Based on our software component tools, the distributed network we construct can achieve functionalities such as distributed storage, peer-to-peer transmission, consensus mechanisms, and cryptographic algorithms. The independently developed Zerolimit Virtual Routing Protocol (‘ZVR Protocol’) enables distributed networking from a small-scale to an extremely large-scale node count, facilitating rapid node allocation and resource location in distributed computing and storage. By incorporating digital signature algorithms resistant to quantum computing attacks, our distributed network achieves scalability, reliability, efficiency and security:

Scalability: The distributed network can accommodate more users and data by increasing the number of nodes. This means that as demand grows, more nodes can be added to expand the network's capacity and processing power. This ability for horizontal scalability ensures that the network can handle high traffic, adapt to a growing user base, while maintaining stability and performance.

Reliability: The distributed network can improve reliability by distributing data and tasks across multiple nodes. Even if one node fails or becomes unavailable, other nodes can continue to operate, ensuring uninterrupted service. This backup mechanism reduces the risk of a single point of failure and provides a relatively reliable network service.

Efficiency: In the distributed network, the processing of data transitions from centralized to distributed, with multiple nodes across the network handling the storage and computational requirements of a single node. All nodes can both generate and process data simultaneously. Data generation and processing occur concurrently, and this concurrency scales with the number of nodes. As the number of nodes increases, and the network expands, the overall processing capacity of the entire network continually strengthens.

Security: Our patented technologies provide assurance that data managed by the distributed network is secure and tamper-proof. Using a large integer hash and an improved one-time signature scheme of multiple trapdoor permutations with permanent and dynamic private keys that are secure against key leaks, the innovative digital signature algorithm is designed to withstand attacks from quantum computers. Each piece of data is sliced into multiple parts and distributed for storage across various nodes, and it can be encrypted to allow access only with authorization. Due to the redundant backup nature of nodes, the abnormality or attack on some nodes will not impact the system's operation, provided the system has a sufficient amount of nodes.

Our Products

Our primary products encompass Cloud Data Base Station Node Software and other software products and complementary solutions designed for constructing distributed networks. We believe that with our products, end-users from diverse industries can efficiently establish the distributed networks they require and develop the decentralized applications they need based on these distributed networks.

We offer four different software products and related complementary solutions to assist end-users in the commercial deployment of distributed networks during the fiscal years ended September 30, 2024 and 2023:

1. Cloud Data Base Station Node Software

Cloud Data Base Station Node Software is a basic component tool for building distributed application networks. It is a software package that effectively allows devices to become nodes on the distributed network. It is considered as a prime building block that can be used in multiple programs to perform a specific task or function and can also be integrated with other software products we have developed or will develop. Each cloud data station node is equivalent to an underlying server that provides general-purpose storage and computing capabilities, enabling users to engage in the development of related distributed networks.

During the fiscal years ended September 30, 2024 and 2023, we derived approximately 89.90% and 86.30% of our revenue from this product, respectively.

2. Smart Metaverse Box

Smart Metaverse Box went on sale in April 2023. It is an embedded integrated hardware and software device designed for ordinary household users, serving as a distributed lightweight node within the home. As a crucial node in the distributed application network, it contributes computing power, storage, and bandwidth to the entire distributed network.

During the fiscal year ended September 30, 2024 and 2023, we derived approximately 0.60% and 2.52% of our revenue from this product, respectively.

3. Decentralization Application Software

Several Decentralization Application Software tools were developed based on our Company’s independent networking software and development software tools. After the customer purchases the right to use the tools, they can be deployed on to the customer's distributed network to meet the various needs of end users. Decentralization Application Software includes distributed domain name software, distributed cloud disk software, Huashengren (e-commerce) software, and Rushu Jiazhen (digital collection) software.

During the fiscal year ended September 30, 2024 and 2023, we derived approximately 7.40% and 11.18% of our revenue from this product line, respectively.

4. Enterprise Data Base Station Node Software and Hardware

Enterprise Data Base Station Node Software and Hardware is a device capable of running multiple nodes and designed for enterprise users, combining the functionality of server. It is a critical facility for distributing and miniaturizing traditional large data centers, as it can be flexibly deployed in general office environments without requiring significant upfront infrastructure investment. It serves as the initial networking tool for carrying local distributed digital applications.

During the fiscal years ended September 30, 2024 and 2023, we derived approximately 2.10% and nil of the revenue from this product, respectively.

The following tables set forth our revenue breakdown by type of products for the related periods indicated:

Our Business Model

We currently generate our revenue primarily from software sales and related post-contract services, along with a portion from sales of complementary embedded hardware-software integrated products.

As of the date of this prospectus, we rely completely on our distribution network to promote and sell, and its distribution footprint is concentrated only in China. We sold 100% of our software products through distributors during fiscal years 2024 and 2023.

Distributors and End-Users

Our distributors refer to those individuals or entities who purchase our products at the specified price stipulated in their purchase agreements with us and distribute the products in the designated region where they are located or through their offline and online channels to resell the products to end-users.

While we do not possess all of the details regarding the end-users or the particular projects utilizing our software products, we generally categorize our end-users as individuals or enterprises who seek access to the distributed network and leverage our software products to create the decentralized applications for their specific needs.

Adopting a distribution model is advantageous for rapidly reaching end-users through the sales network of distributors, creating sales scale, and concurrently establishing firewall between the Company and end-user data through the distributor channel.

We typically enter into purchase agreements with our distributors, which specify the cooperation scope, payment terms, rights and obligations of both parties, restrictive covenants, delivery terms, refunds or replacements, breach and termination, and dispute resolutions. The distributors make payment to us in accordance with the agreed-upon terms and then leverage their sales networks to sell our software products to end-users. After the payment has been received from the distributors, our software products are delivered in accordance with the contractual obligations in the purchase agreements to the distributors through an activation code. The distributors subsequently deliver the software products to end-users by sharing this activation code. We do not deliver software products directly to any end-user.

Our distributors are considered our customers. As of September 30, 2024, we had 35 distributors in China. These distributors cover 9 provinces and 11 municipalities in China, including Guangdong, Chongqing, Zhejiang, Hainan, Hubei, Liaoning, Shandong, Sichuan, and Hebei.

Our distributors normally do not disclose to us the detailed information of the end-users or any specific project the software products are being used in. Additionally, we work together with distributors to provide after-sales support and maintenance services.

Customer Relationships

The top 3 customers for the fiscal year ended September 30, 2024 are the following: (1) Guangdong Lightning Cat New Energy Technology Co., Ltd (“Guangdong Lightning”), (2) Chongqing Shenghong Technology Co., Ltd (“Chongqing Shenghong”), and (3) Shenzhen Huawang Supply Chain Co., Ltd (“Shenzhen Huawang”), accounting for 11%, 11% and 10% of the total revenue for the fiscal year, respectively. Among these customers, none of them are related parties of our Company, its subsidiaries or the VIE.

Guangdong Lightning, Chongqing Shenghong and Shenzhen Huawang are distributors which have signed master sales agreements with the VIE, the form of which will be filed as Exhibit 10.1 to this registration statement. Important terms of the agreements are as follows:

1. Upon receipt of the software payment into the designated account of the VIE (“Party B”), Party B shall be responsible for configuring the software and delivering the software activation code along with the installation manual to the distributor (“Party A”). Party A shall confirm the successful activation of the software and then issue an acceptance confirmation.

2. The software license provided is a permanent license, allowing Party A to operate the software at any time and place, within an independent third-party environment, following delivery.

3. Party B is committed to providing one year of after-sales service, which includes technical support, maintenance, and automatic background updates.

4. For after-sales services exceeding one year, the service fees shall be separately negotiated and agreed upon by both Party A and Party B based on necessity.

The top 3 customers for the fiscal year ended September 30, 2023 are the following: (1) Liaoning Pulian Suyuan Health Technology Information Consulting Co., Ltd. (“Liaoning Pulian”), (2) Shenzhen Jisu Distributed Network Technology Co., Ltd. (“Shenzhen Jisu”), and (3) Zerolimit Digital Technology Co., Ltd. (“Zerolimit Digital”), accounting for 22%, 15% and 10% of the total revenue for the fiscal year, respectively. Of these customers, only Zerolimit Digital is a related party of the Company, its subsidiaries and the VIE.

Liaoning Pulian and Shenzhen Jisu are distributors which have signed master sales contracts with the VIE. Important terms of the agreements are as follows:

1. Upon receipt of the software payment into the designated account of the VIE (“Party A”), Party A shall be responsible for configuring the software and delivering the software activation code along with the installation manual to the distributor (“Party B”). Party B shall confirm the successful activation of the software and then issue an acceptance confirmation.

2. The software license provided is a permanent license, allowing Party B to operate the software at any time and place, within an independent third-party environment, following delivery.

3. Party A is committed to providing one year of after-sales service, which includes technical support, maintenance, and automatic background updates

4. For after-sales services exceeding one year, the service fees shall be separately negotiated and agreed upon by both Party A and Party B based on necessity.

This product guarantee constitutes Party A's commitment to Party B. During its agency period, Party B shall assume the product guarantee obligations towards the end-users, which are transferred to Party B concurrently with the delivery of Party A's products.

Zerolimit Digital is the VIE’s domestic parent company which has signed software authorization agreements for the use of four software products developed by the VIE. Please refer to the discussion starting on page 136 for “Material Transactions with Related Parties” for more details.

Suppliers

When developing software component tools, we require support for the development and testing networks for distributed development. This involves the procurement of hardware devices and the purchase of data center services for online operations. Additionally, for the nodes we develop (such as the Smart Metaverse Box), we rely on hardware suppliers for components like mainboards, storage devices, computing equipment, and software components.

As of September 30, 2024 and 2023, we had 1 and 14 suppliers in China, respectively, and we have maintained good relationships and contact with most of these suppliers to ensure adequate and timely supply of its software products. We typically purchase these devices and services on a purchase-order basis.

For the fiscal year ended September 30, 2024, the VIE’s sole supplier was China Mobile Jilin Co., Ltd. Tonghua Branch, which was providing us the data center services for online operations, including cabinet service of RMB5,000 per month per cabinet and IDC network service of RMB5,400 per month per Gbps.

Software Support and Maintenance

We work with our distributors to offer software support and maintenance services.

Currently, we do not have any customer service representatives to provide support directly to end-users. Instead, we rely on our network of distributors’ customer service representatives to carry out the after-sales service, which typically starts with the end-users submitting their issues to the distributors’ customer service representatives. Once distributors collect the issues, they forward them to us for review and processing. We handle the issues and provide online technical support or necessary software upgrades. The revenue from software support and maintenance is immaterial.

Corporate Development

We commenced our commercial operations in 2017 in China. In the early stages of our establishment, we focused on building the overall technological framework to expedite the development process of the distributed network. From 2018 to 2019, we made breakthroughs in the technological framework, including the development of mobile deployment, peer-to-peer networking, and distributed storage. We also launched successive versions of our distributed network infrastructure software, including a demo version, internal test version, and public test version. In September 2021, we officially launched the Cloud Base Station Node Software, which marked a milestone in our business operations. Since 2021, we have begun generating revenue from software products developed based on distributed networks. In 2022, we obtained the national high-tech enterprise certification in China. In April 2023, we achieved the recognition as a specialized and sophisticated SME.

We are constantly investing in research and development to improve the existing software products and create new ones. We maintain a talent pool and will continue to invest to enhance our technology. As of September 30, 2024 and 2023, our research and development team consisted of 23 and 31 researchers, programmers, and engineers, accounting for approximately 55% and 57% of the total number of employees, respectively.

Competitive Strengths

We believe that we possess the following strengths, which give us a competitive advantage in our industry:

Our founder, Chief Technology Officer and Chairman of our Board of Directors, Mr. Guangqing Hu, has been developing our proprietary technology to address the need for secure, decentralized, distributed networks since 2017 and has taken steps to safeguard such technology. Since inception, our research and development team has continued to innovate its proprietary technology to be competitive in the industry.

As of the date of this prospectus, we have 2 registered trademarks, 38 registered computer software copyrights, 11 registered patents and 1 license in China.

Our research and development team consisted of 23 and 31 talented researchers, programmers, and engineers, representing approximately 55% and 57% of its total workforce as of September 30, 2024 and 2023, respectively. Our team of experts includes individuals with a range of backgrounds and expertise.

We have some inertia and goodwill generated by virtue of our having been in and being known in the industry and a technological leader pertaining to decentralized network technologies. For example, we have been asked to speak at various seminars and have been asked to provide our expertise in a variety of contexts which has increased our recognition over the years in the industry. This provides us with a competitive advantage over other newer entrants or other competitors that are perhaps not as established or known in the industry. In addition, we believe that, over time, our proprietary technology will perpetuate our growth within the industry as we continue to rapidly develop products tailored to user needs.

We have established good relationships with its distributors through various means, such as understanding their needs to improve products, establishing effective communication channels, providing training and support, adjusting marketing strategies in a timely manner, and signing strategic agreements. We also maintain long-term and positive cooperation with our suppliers through means such as making timely payments and signing strategic agreements. We have fostered good relationships with various levels of government through measures which include developing technology in line with policy advocacy, actively applying for corporate qualifications and research projects, proactively engaging in discussions for government-enterprise cooperation, and conducting legal and compliant tax operations.

Vision & Strategy

Our goal is to improve the world by resolving the issues it faces by limitations and flaws existing with networks (including the internet) as we know them today. We will continue to innovate and propagate our solutions to retain our competitive advantages in the provision of secure, decentralized, distributed network solutions. We will also continue to educate and spread awareness of the solutions we can provide to the issues facing traditional and current networks. We will continue to support our users and maintain our relationships with our distributors, and form new relationships with suppliers, distributors, customers, governments, and others in the industry. We intend to execute the following strategies to achieve this goal.

As we grow our industry and service area expertise, we intend to leverage the knowledge accumulated in our work to more effectively address business-specific needs. In addition, we plan to continue investing in research and development.

We are constantly innovating and learning of new ways to improve our products and develop new solutions to address issues users face.

We intend to expand our distribution network to penetrate new geographic markets and gain market share in existing markets.

We believe our success greatly depends on our ability to attract, incentivize, and retain talented professionals. With a view toward improving our competitive advantage in the market, we plan to implement a series of initiatives to attract additional and retain mid- to high-level personnel, including formulating a market-oriented employee compensation structure and implementing a standardized multilevel performance review mechanism.

Recent PRC Regulatory Developments

On February 17, 2023, with the approval of the State Council, the CSRC released the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies (the “Trial Measures”) and five supporting guidelines, which came into effect on March 31, 2023. According to the Trial Measures, among other requirements, (1) domestic companies that seek to offer or list securities overseas, both directly and indirectly, should fulfill the filing procedures with the CSRC; if a domestic company fails to complete the filing procedures, such domestic company may be subject to administrative penalties; (2) where a domestic company seeks to indirectly offer and list securities in an overseas market, the issuer shall designate a major domestic operating entity responsible for all filing procedures with the CSRC, and such filings shall be submitted to the CSRC within three business days after the submission of the overseas offering and listing application. On the same day, the CSRC also held a press conference for the release of the Trial Measures and issued the Notice on Administration for the Filing of Overseas Offering and Listing by Domestic Companies, which clarifies that (1) on or prior to the effective date of the Trial Measures, domestic companies that have already submitted valid applications for overseas offering and listing but have not obtained approval from overseas regulatory authorities or stock exchanges may reasonably arrange the timing for submitting their filing applications with the CSRC, and must complete the filing before the completion of their overseas offering and listing; (2) a six-month transition period will be granted to domestic companies which, prior to the effective date of the Trial Measures, have already obtained the approval from overseas regulatory authorities or stock exchanges, but have not completed the indirect overseas listing; if domestic companies fail to complete the overseas listing within such six-month transition period, they shall file with the CSRC according to the requirements; and (3) the CSRC will solicit opinions from relevant regulatory authorities and complete the filing of the overseas listing of companies with contractual arrangements which duly meet the compliance requirements, and support the development and growth of these companies. Base on the foregoing, we are required to complete necessary filing procedures with the CSRC pursuant to the Trial Measures.

Furthermore, PRC counsel has advised that on February 24, 2023, the CSRC revised the Provisions on Strengthening the Management of Confidentiality and Archives Related to the Overseas Issuance of Securities and Overseas Listing by Domestic Companies which were issued in 2009. The revised Archives Rules came into effect on March 31, 2023 together with the Trial Measures. As is consistent with the Trial Measures, the revised Archives Rules will expand their application to cover indirect overseas offering and listing, by stipulating that a domestic company which plans to publicly disclose or provide to relevant individuals or entities, including securities companies, securities service providers and overseas regulators, any documents and materials containing state secrets or working secrets of government agencies, shall first obtain approval from competent authorities according to law, and file with the secrecy administrative department at the same level.

In addition, on December 28, 2021, the Cyberspace Administration of China published the Measures for Cybersecurity Review, or Cybersecurity Review Measures, which took effect on February 15, 2022, replacing the old Measures for Cybersecurity Review which took effect on 1 June 2020. According to the Cybersecurity Review Measures, there are three scenarios that require cybersecurity review : (1) where a critical information infrastructure operator purchases network products and services that may impact or potentially impact national security; (2) where a network platform operator conducts data processing activities that may affect or potentially affect national security; and (3) where a network platform operator, which holds personal information of over one million users, seeks to list abroad.

Given the aforementioned, as well as the fact that (i) we are not in possession of more than one million users’ personal information, and (ii)we are not a network platform operator that conducts data processing activities, we do not fall under the second and third scenarios described above. Regarding the first scenario, according to the Regulation on the Protection of Critical Information Infrastructure Security, which became effective on September 1, 2021, 'critical information infrastructure' refers to crucial networks, systems, and other facilities in vital industries and sectors such as public communication and information services, energy, transportation, water conservancy, finance, public services, e-government, defense technology industry, etc., where any disruption, loss of function, or data leak could severely endanger national security, national economic lifelines, or public interests. According to the Cybersecurity Review Measures, 'network products and services' mainly include core network equipment, key communication products, high-performance computers and servers, large-capacity storage devices, major databases and application software, cybersecurity equipment, cloud computing services, and other products and services that have a significant impact on the security of critical information infrastructure, cybersecurity, and data security. We do not believe we are among the 'operator of critical information infrastructure', but in practice, the applicability of existing cybersecurity review regulations is broad, and without explicit determination by relevant authorities, it is typically challenging for a company such as ours to accurately self-assess whether it needs to undergo a cybersecurity review. As of the date of this prospectus, neither we nor any of our PRC subsidiaries has been required by any PRC governmental authority to apply for cybersecurity review, nor have we or any of our PRC subsidiaries received any inquiry, notice, warning, sanction in such respect or been denied permission from any PRC regulatory authority to list on U.S. exchanges.

As advised by our PRC counsel, (1) PRC governmental authorities have significant discretion in interpreting and implementing statutory provisions. If our or VIE’s business is identified by the PRC government authorities as falling under the category of "critical information infrastructure operators purchasing network products and services that may impact or potentially impact national security", then we need to comply with the obligations regarding cybersecurity review. In that case, any failure or delay in the completion of the cybersecurity review procedures or any other non-compliance with applicable laws and regulations may result in fines, suspension of business or other penalties, as well as reputational damage or legal proceedings or actions against us, which may have a material adverse effect on our business, financial condition or results of operations; (2) we are subject to the Trial Measures for filing procedures with the CSRC; and (3) since these statements and regulatory actions by the PRC government are newly published and there exists uncertainty with respect to their requirements and implementation, it is uncertain what the potential impact such modified or new laws and regulations will have on our or the VIE’s daily business operation, the ability to accept foreign investments and listing on U.S. stock exchanges. As of the date of this prospectus, we have prepared the filing application materials required by the Trial Measures, however, we cannot assure you that we will be able to complete such filings with the CSRC pursuant to the Trial Measures in a timely manner or even at all. Any failure by us to comply with such filing requirements under the Trial Measures may result in an order to rectify, warnings and fines against us and could materially hinder our ability to offer or continue to offer our securities.

The Standing Committee of the National People’s Congress (the “SCNPC”) or other PRC regulatory authorities may in the future promulgate laws, regulations or implementing rules that require our Company, or the VIE to obtain regulatory approval from Chinese authorities before listing in the U.S.  Although as of the date of this prospectus, the Company and the VIE have not been involved in any investigations on cybersecurity review initiated by any PRC regulatory authority, nor has any of them received any inquiry, notice or sanction in such respect, it is uncertain whether or when we might be required to obtain permission from any PRC governmental authority to list our shares overseas, and even if such permission is obtained, whether it will be later denied or rescinded, which could significantly limit or completely hinder our ability to offer or continue to offer our Ordinary Shares to investors and could cause the value of our Ordinary Shares to significantly decline or be worthless. See “Risk Factors — Risks Related to Our Corporate Structure.”

Corporate Structure and History

We are a holding company incorporated in the Cayman Islands and not a Chinese operating company. As a holding company with no material operations of our own, the majority of our operations are conducted through the VIE in China pursuant to the VIE Agreements (described in more detail below). For a description of the VIE Agreements, see “Corporate History and Structure — VIE Agreements.” See also “Risk Factors – Risks Related to Our Corporate Structure.”

Our holding company Zerolimit Technology Holding Co. Ltd, or Zerolimit Cayman, was incorporated under the laws of the Cayman Islands on February 2, 2023 to facilitate off-shore financing activities, and our daily operations are conducted primarily through the VIE in China. On August 28,2017, Zhenglian Technology (Shenzhen) Co., Ltd., or Zhenglian Shenzhen, the VIE, was incorporated pursuant to PRC laws. Zerolimit Technology Holding Co., Limited, or HK Zerolimit, our wholly-owned Hong Kong subsidiary, was established on March 13, 2023. Finally, on May 22, 2023, Zerolimit Holdings (Shenzhen) Co., Ltd was incorporated pursuant to PRC laws as a wholly foreign-owned enterprise, WFOE, and a wholly owned subsidiary of HK Zerolimit. The VIE Agreements by and between WFOE, the VIE and the VIE Shareholders are described in more detail below.

The shareholders of Zerolimit Technology Holding Co. Ltd. are as follows:

Beneficial owners of the above are as follows: (a) represents 36,505,000 ordinary shares held by Zerolimit Digital Technology Limited, a British Virgin Islands limited company, which is 100% owned by Guangqing Hu, the Company’s Chief Technology Officer and Chairman of the Board of Directors, as of the date of this prospectus; Guangqing Hu beneficially owns 100% of these shares on behalf of Zerolimit Digital Technology Limited; (b) represents 5,500,000 ordinary shares held by Zerolimit Excellence Limited, a British Virgin Islands limited company, which is 100% owned by Kai Hu, our former director and the nephew of the Chief Technology Officer, Guangqing Hu, and the Company’s former director and an employee of the VIE, as of the date of this prospectus; Kai Hu beneficially owns 100% of these shares on behalf of Zerolimit Excellence Limited; (c) represents 5,500,000 ordinary shares held by Zerolimit Power Limited, a British Virgin Islands limited company, which is 100% owned by Jian Gang, the Company’s former director, as of the date of this prospectus; Jian Gang beneficially owns 100% of these shares on behalf of Zerolimit Power Limited; and (d) represents 2,495,000 ordinary shares held by Zerolimit Virtue Limited, a British Virgin Islands limited company, which is 100% owned by Baifen Le, our former director and the wife of the Chief Technology Officer, Guangqing Hu, and the Company’s former director and an employee of the VIE, as of the date of this prospectus; Baifen Le, beneficially owns 100% of these shares on behalf of Zerolimit Virtue Limited.

The VIE equity interest holders include ZeroLimit Digital Technology Co., Ltd, Kai Hu, Jian Gang and Baifen Le, which hold 73%, 11%, 11% and 5% of the equity interests in the VIE, respectively; ZeroLimit Digital Technology Co., Ltd equity interest holders include Guangqing Hu and Zerolimit Origin Technology (Shenzhen) Co., Ltd, which hold 10% and 90% of the equity interests in ZeroLimit Digital Technology Co., Ltd, respectively; Zerolimit Origin Technology (Shenzhen) Co., Ltd equity interest holders include Guangqing Hu and Kai Hu, who hold 90% and 10% of the equity interests in the Zerolimit Origin Technology (Shenzhen) Co., Ltd, respectively.

Our Ordinary Shares in this offering are shares of our offshore holding company in the Cayman Islands instead of shares of the VIE.

The following diagram illustrates our corporate structure, including our subsidiary and the VIE, as of the date of this prospectus. For more detail on our corporate history, please refer to “Corporate History and Structure.”

Notes: All percentages reflect the equity interests.

The VIE commenced its business in China in 2017. In the early stages of our establishment, we focused on building the overall technological framework to expedite the development process of the distributed network. From 2018 to 2019, we made breakthroughs in the technological framework, including the development of mobile deployment, peer-to-peer networking, and distributed storage. We also launched successive versions of our distributed network configuration tool software, including a demo version, internal test version, and public test version. In September 2021, we officially launched the Cloud Base Station Node Software, which marked a milestone in our business operations. Since 2021, we have begun generating revenue from software products developed based on distributed networks. In 2022, we obtained the national high-tech enterprise certification in China. In April 2023, we achieved the recognition as a specialized and sophisticated SME.

The VIE Agreements

We are a holding company incorporated in the Cayman Islands and not a Chinese operating company. As a holding company with no material operations of our own, the majority of our operations are conducted through the VIE in China pursuant to the VIE Agreements. The VIE Agreements were entered into by and among WFOE, the VIE, and the VIE’s Shareholders and include the Powers of Attorney, an Equity Interest Pledge Agreement, an Exclusive Consulting and Services Agreement, an Exclusive Option Agreement, and Spousal Consent Letters. Due to PRC legal restrictions on foreign ownership in certain internet-related businesses we may explore and operate in the future. We control and receive the economic benefits of the VIE’s business operations through the VIE Agreements, and we consolidate the VIE for accounting purposes only because we met the conditions under U.S. GAAP to consolidate the VIE. Pursuant to the VIE Agreements, the VIE shall pay service fees in an amount equivalent to all of its net income to WFOE, while WFOE has the power to direct the activities of the VIE that can significantly impact the VIE’s economic performance, has the obligation to absorb the expected losses of the VIE, and has the right to receive substantially all of the economic benefits of the VIE. Such contractual arrangements are designed so that the operations of the VIE are solely for the benefit of WFOE and ultimately, the Company. As such, under the U.S. GAAP, the Company is deemed to have a controlling financial interest in, and be the primary beneficiary of, the VIE for accounting purposes and must consolidate the VIE. We are also subject to the risk that the PRC government could disallow the VIE structure, which would likely result in a material change in our operations and, as a result, the value of our Ordinary Shares may depreciate significantly or become worthless. For a description of our corporate structure and VIE contractual arrangements, see “Corporate History and Structure.” See also “Risk Factors – Risks Related to Our Corporate Structure.”

In the opinion of Global Law Office, our PRC legal counsel, the VIE Agreements are not in violation of any prohibitive provisions of the current applicable PRC Laws, however, the relevant PRC regulatory authorities have broad discretion in determining whether the VIE structure violates PRC laws. Accordingly, the PRC regulatory authorities may take a view that is contrary to, or otherwise different from, the above opinion of our PRC legal counsel. We are also subject to the risks of uncertainty about any future actions of the PRC government in this regard that could disallow the VIE structure, which would likely result in a material change in our operations and a complete hindrance of our ability to offer or continue to offer our securities to investors and the value of our Ordinary Shares may depreciate significantly or become worthless. See “Risk Factors — Risks Related to Our Corporate Structure — We rely on contractual arrangements with the VIE and the VIE Shareholders for a large portion of our business operations. And “Risk Factors —  Risks Related to Our Corporate Structure — If the PRC government determines that the contractual arrangements constituting part of the VIE structure do not comply with PRC regulations, or if these regulations change or are interpreted differently in the future, we may be unable to assert our contractual rights over the assets of the VIE and its subsidiary, and our Ordinary Shares may decline in value or become worthless.”

Summary of Risk Factors

We face various legal and operation risks and uncertainties as we have substantial operations in China. The PRC government has significant authority to exert influence on the ability of a China-based company, like the VIE, to conduct its business, accept foreign investments or list on U.S. stock exchanges. For example, we face risks associated with regulatory approvals of offshore offerings, anti-monopoly regulatory actions, cybersecurity and data privacy, as well as issues that can arise if the PCAOB is unable to perform an inspection on our registered public accounting firm. Any such action, once taken by the PRC government, could cause the value of our securities to significantly decline or in extreme circumstances, become worthless. The operational risks associated with being based in and having operations in China also apply to operations in Hong Kong. With respect to the legal risks associated with being based in and having operations in China, the laws, regulations and discretion of the governmental authorities in China discussed in this prospectus are expected to apply to entities and businesses in mainland China, rather than to entities or businesses in Hong Kong which operate under a different set of laws from those of mainland China.

Investing in the Ordinary Shares involves significant risks. You should carefully consider all of the information set forth in this prospectus before making an investment in the Ordinary Shares. Below please find a summary of risks and uncertainties we face, organized under relevant headings. These risks are discussed more fully in the section titled “Risk Factors.”

Risks Related to Our Corporate Structure

Risks Related to Our Business

Risks Related to Doing Business in the PRC

Risks Related to this Offering and the Ordinary Shares

In addition, we face risks and uncertainties related to our corporate structure, including risks associated with our contractual relationship with the VIE, which is based on contractual arrangements rather than equity ownership.

We also face other challenges, risks and uncertainties that may materially adversely affect our business, financial condition, results of operations and prospects. You should consider the risks discussed in “Risk Factors” and elsewhere in this prospectus before investing in our Ordinary Shares.

As a “controlled company” under Nasdaq rules, our controlling shareholder will have substantial control over corporate matters after this offering.

Transfer of Cash or Assets

As of the date of this prospectus, no cash transfer or transfer of other assets have occurred between our Company, our subsidiaries, and the VIE. As of the date of this prospectus, none of our subsidiaries or the VIE have distributed any dividends or made any other distributions to our Company. As of the date of this prospectus, neither we nor any of our subsidiaries have ever paid dividends or made distributions to U.S. investors. We intend to retain most, if not all, of our available funds and any future earnings after this offering to the development and growth of our business. We do not expect to pay dividends in the foreseeable future after this offering. In the future, cash proceeds raised from overseas financing activities, including this offering, may be transferred by us to WFOE via capital contribution or shareholder loans, as the case may be.

While we have no current intention of paying dividends, should we decide in the future to do so, as a holding company, our ability to pay dividends and meet other obligations depend upon the receipt of dividends or other payments from our operating subsidiaries or the VIE. In addition, our operating subsidiaries and the VIE, from time to time, may be subject to restrictions on their ability to make distributions to us, including as a result of restrictive covenants in loan agreements, restrictions on the conversion of local currency into U.S. dollars or other hard currency and other regulatory restrictions as discussed below. If future dividends are paid in RMB, fluctuations in the exchange rate for the conversion of RMB into U.S. dollars may reduce the amount received by U.S. stockholders upon conversion of the dividend payment into U.S. dollars.

Chinese regulations currently permit the payment of dividends only out of accumulated profits as determined in accordance with Chinese accounting standards and regulations. Our subsidiaries and VIE in China are also required to set aside a portion of their after tax profits according to Chinese accounting standards and regulations to fund certain reserve funds. Currently, our subsidiaries and VIE in China are the only sources of revenues or investment holdings for the payment of dividends. If they do not accumulate sufficient profits under Chinese accounting standards and regulations to first fund certain reserve funds as required by Chinese accounting standards, we will be unable to pay any dividends.

Under Cayman Islands law, a Cayman Islands company may pay a dividend on its shares out of either profit or share premium amount, provided that in no circumstances may a dividend be paid if this would result in the company being unable to pay its debts due in the ordinary course of business. If we determine to pay dividends on any of our Ordinary Shares in the future, as a holding company, we will rely on dividends and other distributions on equity from the VIE to WFOE in accordance with the VIE agreements for cash requirements, including the funds necessary to pay dividends and other cash contributions to our shareholders.

According to the Foreign Investment Law of the PRC and its implementing rules, which jointly established the legal framework for the administration of foreign-invested companies, a foreign investor may, in accordance with other applicable laws, freely transfer into or out of China its contributions, profits, capital earnings, income from asset disposal, intellectual property rights, royalties acquired, compensation or indemnity legally obtained, and income from liquidation, made or derived within the territory of China in RMB or any foreign currency, and any entity or individual shall not illegally restrict such transfer in terms of the currency, amount and frequency. According to the Company Law of the PRC and other Chinese laws and regulations, WFOE may pay dividends only out of its respective accumulated profits as determined in accordance with Chinese accounting standards and regulations. In addition, WFOE is required to set aside at least 10% of its accumulated after-tax profits, if any, each year to fund a certain statutory reserve fund, until the aggregate amount of such fund reaches 50% of its registered capital. Where the statutory reserve fund is insufficient to cover any loss WFOE incurred in the previous financial year, its current financial year’s accumulated after-tax profits shall first be used to cover the loss before any statutory reserve fund is drawn therefrom. Such statutory reserve funds and the accumulated after-tax profits that are used for covering the loss cannot be distributed to us as dividends. At its discretion, WFOE may allocate a portion of its after-tax profits based on Chinese accounting standards to a discretionary reserve fund. Any limitation on the ability of WFOE to distribute dividends or other payments to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our businesses, pay dividends or otherwise fund and conduct our business.

Renminbi is not freely convertible into other currencies. As result, any restriction on currency exchange may limit the ability of WFOE to use its potential future renminbi revenues to pay dividends to us. The Chinese government imposes controls on the convertibility of renminbi into foreign currencies and, in certain cases, the remittance of currency out of China. Shortages in availability of foreign currency may then restrict the ability of WFOE to remit sufficient foreign currency to our offshore entities for our offshore entities to pay dividends or make other payments or otherwise to satisfy our foreign-currency-denominated obligations. The renminbi is currently convertible under the “current account,” which includes dividends and trade and service-related foreign exchange transactions, but not under the “capital account,” which includes foreign direct investment and foreign currency debt, including loans we may secure for our onshore subsidiary. Currently, WFOE may purchase foreign currency for settlement of “current account transactions,”, without the approval of the State Administration of Foreign Exchange of China (“SAFE”) by complying with certain procedural requirements. However, the relevant Chinese governmental authorities may limit or eliminate our ability to purchase foreign currencies in the future for current account transactions. The Chinese government may continue to strengthen its capital controls, and additional restrictions and substantial vetting processes may be instituted by SAFE for cross-border transactions falling under both the current account and the capital account. Any existing and future restrictions on currency exchange may limit our ability to utilize revenues generated in renminbi to fund our business activities outside of China or pay dividends in foreign currencies to holders of our securities. Foreign exchange transactions under the capital account remain subject to limitations and require approvals from, or registration with, SAFE and other relevant Chinese governmental authorities. This could affect our ability to obtain foreign currency through debt or equity financing for our subsidiaries. See “Risk Factors — Risks Related to Doing Business in the PRC — We may rely on dividends and other distributions on equity paid by WFOE to fund any cash and financing requirements we may have, and any limitation on the ability of WFOE to make payments to us and any tax we are required to pay could have a material adverse effect on our ability to conduct our business.” For a detailed discussion of the Chinese legal restrictions on the payment of dividends and our ability to transfer cash within our organization. In addition, 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 10.0%.

In order for us to pay dividends to our shareholders, we will rely on payments made from the VIE to WFOE in accordance with the VIE Agreements, and the distribution of payments from WFOE to HK Zerolimit, and finally to the Company as dividends. Certain payments from the VIE to WFOE are subject to PRC taxes, including VAT.

Pursuant to the Arrangement between Mainland China 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 mainland China 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 mainland China project during the 12 consecutive months preceding its receipt of the dividends. In current practice, a Hong Kong project 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 WFOE to HK Zerolimit. As of the date of this prospectus, we have not applied for the tax resident certificate from the relevant Hong Kong tax authority. HK Zerolimit intends to apply for the tax resident certificate when WFOE plans to declare and pay dividends to HK Zerolimit. See “Risk Factors — Risks Related to Doing Business in the PRC — We may rely on dividends and other distributions on equity paid by WFOE to fund any cash and financing requirements we may have, and any limitation on the ability of WFOE to make payments to us and any tax we are required to pay could have a material adverse effect on our ability to conduct our business.”

Further Description Cash Transfers

The Company’s management team monitors the cash position of each entity within its organization on a regular basis and also prepares budgets on a monthly basis to ensure that each entity has the necessary funds to fulfill its obligation for the foreseeable future and to ensure adequate liquidity. As a holding company, the Company may also rely on dividends and other distributions on equity paid by its subsidiary in Hong Kong, Zerolimit HK, and the consolidated VIE in China, Zhenglian Shenzhen, for its cash and financing requirements.

Current PRC regulations permit the Company’s indirect PRC subsidiaries to pay dividends to the Company only out of their accumulated profits, if any, as determined in accordance with Chinese accounting standards and regulations. In addition, each of the Company’s subsidiaries in China is required to set aside at least 10% of their respective after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of its registered capital. Although the statutory reserves can be used, among other ways, to increase the registered capital and eliminate future losses in excess of retained earnings of the respective companies, the reserve funds are not distributable as cash dividends except in the event of liquidation.

The PRC government also imposes controls on the conversion of RMB into foreign currencies and the remittance of currencies out of the PRC. Therefore, the Company may experience difficulties in completing the administrative procedures necessary to obtain and remit foreign currency for the payment of dividends from profits, if any. Furthermore, if the Company’s subsidiaries in the PRC incur debt on their own accord in the future, the instruments governing the debt may restrict the Company’s ability to pay dividends or to make other payments. If the Company or its subsidiaries are unable to receive all of the revenues from their operations through the current VIE Agreements, the Company may be unable to pay dividends on the Ordinary Shares.

In order for the Company to pay dividends to its shareholders, the Company will rely on payments made from Zhenglian Shenzhen to WFOE, pursuant to VIE Agreements between them, and the distribution of such payments to Zerolimit HK as dividends from WFOE. Dividends from WFOE to its foreign non-resident enterprise are subject to a 10% withholding tax, unless the foreign enterprise investor’s jurisdiction of incorporation has a tax treaty with China that provides for a reduced rate of withholding tax.

The Company intends to keep any future earnings to re-invest in and finance the expansion of its business. Thus, the Company does not currently anticipate that any cash dividends will be paid or any assets will be transferred in the foreseeable future. As of the date of the prospectus, there has been no distribution of dividends or assets among the holding company, the subsidiary or the consolidated VIE.

In the future, cash proceeds raised from overseas financing activities, including this instant public offering, may be transferred by the Company to the consolidated VIE via capital contribution or shareholder loans, as the case may be. Other than the above, the Company did not adopt or maintain any cash management policies and procedures as of the date of the prospectus.

Implications of Being an Emerging Growth Company and a Foreign Private Issuer

As a company with less than US$1.235 billion in revenues during our last fiscal year, we qualify as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, as amended, or the JOBS Act. As long as we remain an emerging growth company, we may rely on exemptions from some of the reporting requirements applicable to public companies that are not emerging growth companies. In particular, as an emerging growth company, we:

We intend to take advantage of all of these reduced reporting requirements and exemptions, including the longer phase-in periods for the adoption of new or revised financial accounting standards under §107 of the JOBS Act. Our election to use the phase-in periods may make it difficult to compare our financial statements to those of non-emerging growth companies and other emerging growth companies that have opted out of the phase-in periods under §107 of the JOBS Act.

We will remain an emerging growth company until the earliest of (a) the last day of the fiscal year during which we have total annual gross revenues of at least US$1.235 billion; (b) the last day of our fiscal year following the fifth anniversary of the completion of this offering; (c) the date on which we have, during the preceding three-year period, issued more than US$1.0 billion in non-convertible debt; or (d) the date on which we are deemed to be a “large accelerated filer” under the Securities Exchange Act of 1934, as amended, or the Exchange Act, which would occur if the market value of our Ordinary Shares that are held by non-affiliates exceeds US$700 million as of the last business day of our most recently completed second fiscal quarter. Once we cease to be an emerging growth company, we will not be entitled to the exemptions provided in the JOBS Act discussed above.

We are also considered a “foreign private issuer.” Even after we no longer qualify as an emerging growth company, as long as we qualify as a foreign private issuer under the Exchange Act, we will be exempt from certain provisions of the Exchange Act that are applicable to U.S. domestic public companies, including:

We may take advantage of these exemptions until such time as we are no longer a foreign private issuer. We would cease to be a foreign private issuer at such time as more than 50% of our outstanding voting securities are held by U.S. residents and any of the following three circumstances applies: (i) the majority of our executive officers or directors are U.S. citizens or residents; (ii) more than 50% of our assets are located in the United States; or (iii) our business is administered principally in the United States.

Both foreign private issuers and emerging growth companies are also exempt from certain more stringent executive compensation disclosure rules. Thus, even if we no longer qualify as an emerging growth company, but remain a foreign private issuer, we will continue to be exempt from the more stringent compensation disclosures required of companies that are neither an emerging growth company nor a foreign private issuer. As a result, we do not know if some investors will find our shares less attractive, which may result in a less active trading market for our shares or more volatility in the price of our shares. 

Corporate Information

The VIE’s principal executive offices are located at 20F, Haowei Technology Building, No.8 Keji South Road, High-tech Industrial Park South District, Nanshan District, Shenzhen, China. Our telephone number at this address is +86-0755-8653-8929. Our registered office in the Cayman Islands is situated at the office of Ogier Global (Cayman) Limited, 89 Nexus Way, Camana Bay, Grand Cayman, KY1-9009, Cayman Islands.

Investors should submit any inquiries to the address and telephone number of our principal executive offices. Our corporate website is currently under construction and will be located at https://www.zerolimit.group/. The information contained on our website is not a part of this prospectus. Our agent for service of process in the United States is Prudentia Law Corporation.

Conventions that Apply to this Prospectus

Unless otherwise indicated or the context requires otherwise, references in this prospectus to:

Unless the context indicates otherwise, all information in this prospectus assumes no exercise by the Underwriter of its over-allotment option.

THE OFFERING

The following assumes that the Underwriter will not exercise their option to purchase additional Ordinary Shares in the offering, unless otherwise indicated.

RISK FACTORS

Investing in our Ordinary Shares involves a high degree of risk. You should carefully consider the risks and uncertainties described below, together with all of the other information contained in this prospectus, before deciding to invest in our Ordinary Shares. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties that we are unaware of or that we deem immaterial may also become important factors that adversely affect our business. If any of the following risks occur, our business, operating results, financial condition and future prospects could be materially and adversely affected. In that event the market price of our Ordinary Shares could decline, and you could lose part or all of your investment.

Risks Related to Our Corporate Structure

We do not hold direct equity interest in the VIE. We control and receive the economic benefits of the business operations of the VIE through the VIE Agreements among WFOE, the VIE and the VIE Shareholders. We have evaluated the guidance of FASB ASC 810 and determined that WFOE is the primary beneficiary of the VIE, for accounting purposes, based upon such contractual arrangements. Our Company has indirect beneficial ownership in 100% of the equity in WFOE. Accordingly, we consolidate the financial results of the VIE into our consolidated financial statements under U.S. GAAP. See “Corporate History and Structure – VIE Agreements” for further details. In the opinion of Global Law Office, our PRC legal counsel, The VIE Agreements are not in violation of any prohibitive provisions of the current applicable PRC Laws, however, the relevant PRC regulatory authorities have broad discretion in determining whether the VIE structure violates PRC laws and regulations, therefore there are substantial uncertainties regarding the interpretation and application of the current and future PRC Laws, rules and regulations related to the validity and enforcement of VIE Agreements.

We rely on contractual arrangements by and between WFOE, the VIE and the VIE Shareholders for our business operations.

We are a Cayman Islands exempted company and our China subsidiary, WFOE, is a foreign-invested enterprise. We have relied, and expect to continue relying, on contractual arrangements by and between WFOE, the VIE and the VIE Shareholders to operate our business in China. We conduct our operations in the PRC through the VIE pursuant to the VIE Agreements. The VIE Agreements are designed so that the operations of the VIE are solely for the benefit of WFOE and, ultimately, the Company. As such, under U.S. GAAP, our Company is deemed to have a controlling financial interest in, and be the primary beneficiary of, the VIE for accounting purposes only and is required to consolidate the financial results of the VIE in our consolidated financial statements. For a description of the VIE Agreements, see “Corporate History and Structure — VIE Agreements.” The revenues contributed by the VIE constituted all of our net revenues for the fiscal years ended September 30, 2024 and 2023.

If the VIE or the VIE Shareholders fail to perform their respective obligations under the contractual arrangements, we may have to incur substantial costs and expend additional resources to enforce such arrangements. For example, if the VIE Shareholders refuse to transfer their equity interest in the VIE to us or our designee if we exercise the purchase option pursuant to the VIE Agreements, or if they otherwise act in bad faith toward us, then we may have to take legal actions to compel them to perform their contractual obligations. In addition, if any third parties claim any interest in such shareholders’ equity interests in the VIE, our ability to exercise shareholders’ rights or foreclose the share pledge according to the contractual arrangements may be impaired. If these events or other disputes between the VIE Shareholders and third parties were to impair our contractual relationship with the VIE, our ability to consolidate the financial results of the VIE for accounting purposes would be affected, which would in turn result in a material adverse effect on our business, operations and financial condition.

All of the VIE Agreements are governed by and interpreted in accordance with PRC law, and disputes arising from the VIE Agreements between us and the VIE will be resolved through arbitration in China. These disputes do not include claims arising under United States federal securities law and thus the arbitration provisions do not prevent our shareholders from pursuing claims under United States federal securities law. The relevant PRC regulatory authorities have broad discretion in determining whether the VIE structure violates PRC laws and regulations, therefore there are substantial uncertainties regarding the interpretation and application of the current and future PRC Laws, rules and regulations related to the validity and enforcement of VIE Agreements. As a result, uncertainties in the legal system could limit our ability to enforce the VIE Agreements. There remain significant uncertainties regarding the ultimate outcome of such arbitration should legal action become necessary. In addition, under PRC law, as long as the award does not violate the Arbitration Law, the award is final, which means parties cannot appeal the arbitration results in courts, and if the losing parties fail to carry out the arbitration awards within a prescribed time limit, the prevailing parties may only enforce the arbitration awards in PRC courts through arbitration award enforcement proceedings, which would require additional expenses and delay. In the event we are unable to enforce the VIE Agreements, or if we suffer significant delays or other obstacles in the process of enforcing the VIE Agreements, our ability to conduct business may be negatively affected.

Numerous uncertainties exist regarding the status of the rights of the Cayman Islands holding companies, including with respect to our Company’s contractual arrangements with the VIE, its founders and owners, and accordingly, we face significant challenges in enforcing these contractual agreements due to legal uncertainties and jurisdictional limits.

We have been advised by our Cayman Islands legal counsel, Ogier, that there is uncertainty as to whether the courts of the Cayman Islands would (i) recognize or enforce against us judgments of courts of the United States based on certain civil liability provisions of U.S. securities laws; and (ii) entertain original actions brought in each respective jurisdiction against us or our directors or officers predicated upon the securities laws of the United States or any state in the United States.

Contractual agreements and arranges with the VIE, its founders and owners, also represented an untested area of law within the Cayman Islands. As such, we are unaware as to the ability to enforce such contract matters in applicable courts and jurisdictions. Thus, we face many challenges in enforcing our arrangements, due to the vast uncertainties and potential jurisdictional limitations.

There is also no statutory enforcement in the Cayman Islands of judgments obtained in the United States, although the courts of the Cayman Islands will in certain circumstances recognize and enforce a foreign judgment, without any re-examination or re-litigation of matters adjudicated upon, provided such judgment meets certain requirements. See “Enforceability of Civil Liabilities” later in this prospectus for additional information.

If the PRC government determines that the contractual arrangements constituting part of the VIE structure do not comply with PRC regulations, or if these regulations change or are interpreted differently in the future, we may be unable to assert our contractual rights over the assets of the VIE, and our Ordinary Shares may decline in value or become worthless.

According to our PRC counsel, the VIE Agreements are not in violation of any prohibitive provisions of the current applicable PRC Laws, however, the relevant PRC regulatory authorities have broad discretion in determining whether the VIE structure violates PRC laws. Accordingly, the PRC regulatory authorities may take a view that is contrary to, or otherwise different from, the above opinion of our PRC legal counsel.

If our corporate structure and contractual arrangements are deemed by the relevant regulators that have competent authority, to be illegal, either in whole or in part, we may lose the consolidated VIE, which conducts our business operations, holds significant intellectual property assets and accounts for all of our revenues to date, and have to modify such structure to comply with regulatory requirements. However, there can be no assurance that we can achieve this without material disruption to our business. Further, if our corporate structure and contractual arrangements are found to be in violation of any existing or future PRC laws or regulations, the relevant regulatory authorities would have broad discretion in dealing with such violations, including:

Furthermore, new PRC laws, rules and regulations may be introduced to impose additional requirements that may be applicable to our corporate structure and contractual arrangements. The occurrence of any of these events could materially and adversely affect our business, financial condition and results of operations and the market price of our Ordinary Shares. In addition, if the imposition of any of these penalties or a requirement to restructure our corporate structure causes us to lose the rights to direct the activities of the VIE or our right to receive their economic benefits for accounting purposes, we would no longer be able to consolidate the financial results of the VIE into our consolidated financial statements for accounting purposes, which may cause the value of our securities to significantly decline or even become worthless.

The VIE Shareholders may have actual or potential conflicts of interest with us, which may materially and adversely affect our business and financial condition.

Pursuant to the VIE Agreements, the VIE shall pay service fees in an amount equivalent to all of its net income to WFOE, and WFOE has the power to direct the activities of the VIE, which can significantly impact the VIE’s economic performance, and WFOE has the right to receive substantially all of the economic benefits of the VIE. Such contractual arrangements are designed so that the operations of the VIE are solely for the benefit of WFOE and, ultimately, our Company. As such, under U.S. GAAP, our Company is deemed to have a controlling financial interest in, and be the primary beneficiary of, the VIE for accounting purposes and is required to consolidate the VIE. We refer to the VIE Shareholders as its nominee shareholders because, although they remain the holders of equity interests on record in the VIE, pursuant to the terms of the Powers of Attorney, each such VIE Shareholder has irrevocably authorized our Company to exercise his, her or its rights as a shareholder of the VIE. As of the date of this prospectus, we are not aware of any conflicts between the VIE Shareholders and us. However, the VIE Shareholders may have actual or potential conflicts of interest with us in the future. These VIE Shareholders may refuse to sign or breach, or cause the VIE to breach, or refuse to renew, the existing contractual arrangements we have with them and the VIE, which would have a material and adverse effect on our ability to receive economic benefits from it for accounting purposes. For example, these VIE Shareholders may be able to cause our agreements with the VIE to be performed in a manner adverse to us by, among other things, failing to remit payments due under the contractual arrangements to us on a timely basis. We cannot assure you that when conflicts of interest arise any or all of these VIE Shareholders will act in the best interests of our Company or such conflicts will be resolved in our favor. Currently, we do not have any arrangements to address potential conflicts of interest between these VIE Shareholders and our Company. If we cannot resolve any conflict of interest or dispute between us and these VIE Shareholders, we would have to rely on legal proceedings, which could result in disruption to our business and subject us to substantial uncertainty as to the outcome of any such legal proceedings.

We may lose the ability to use and enjoy assets held by the VIE that are material to the operation of our business if the entity goes bankrupt or becomes subject to a dissolution or liquidation proceeding.

If the VIE goes bankrupt and all or part of its assets become subject to liens or rights of third-party creditors, we may be unable to continue our business activities, which could materially and adversely affect our business, financial condition and results of operations. Under the contractual arrangements, the VIE may not, in any manner, sell, transfer, mortgage or dispose of its assets or legal or beneficial interests in the business without our prior consent. If the VIE undergoes a voluntary or involuntary liquidation proceeding, any independent third-party creditors may claim rights to some or all of these assets, thereby hindering our ability to operate our business, which could materially and adversely affect our business, financial condition and results of operations.

Contractual arrangements in relation to the VIE may be subject to scrutiny by the PRC tax authorities and they may determine that WFOE or the VIE owe additional taxes, which could negatively affect our financial condition and the value of your investment.

Under the applicable PRC laws and regulations, arrangements and transactions among related parties may be subject to audit or challenge by the PRC tax authorities. We could face material and adverse tax consequences if the PRC tax authorities determine that the VIE contractual arrangements were not entered into on an arm’s-length basis in such a way as to result in an impermissible reduction in taxes under applicable PRC laws, rules and regulations, and adjust the income of the VIE in the form of a transfer pricing adjustment. A transfer pricing adjustment could, among other things, result in a reduction of expense deductions recorded by the VIE for PRC tax purposes, which could in turn increase their tax liabilities without reducing WFOE’s tax expenses for accounting purposes. In addition, the PRC tax authorities may impose late payment fees and other penalties on the VIE for the adjusted but unpaid taxes according to the applicable regulations. Our financial position could be materially and adversely affected if the tax liabilities of the VIE increase or if it is required to pay late payment fees and other penalties. 

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

We are a Cayman Islands exempted company and the majority of our assets are located in the PRC and held by the VIE. All of our current operations are conducted in the PRC. In addition, all of our current officers and directors are nationals and residents of China and all of them are currently located in China, with the exception of one nominee independent director who resides in the United States and will be appointed upon effectiveness of the registration statement. The majority of the assets of these persons are located in China. The recognition and enforcement of foreign judgments are provided for under the PRC Civil Procedures Law. PRC courts may recognize and enforce foreign judgments in accordance with the requirements of the PRC Civil Procedures Law based either on treaties between China and the country where the judgment is made or on principles of reciprocity between jurisdictions. China does not have any treaties or other forms of written arrangement with the United States that provide for the reciprocal recognition and enforcement of foreign judgments. In addition, according to the PRC Civil Procedures Law, the PRC courts will not enforce a foreign judgment against us or our directors and officers if they decide that the judgment violates the basic principles of PRC laws or national sovereignty, security, or public interest. As a result, it is uncertain whether and on what basis a PRC court would enforce a judgment rendered by a court in the United States. As a result, it may be difficult or impossible for you to bring an action against us or against these individuals in the United States in the event that you believe that your rights have been infringed under the U.S. federal securities laws or otherwise. Since our officers and directors reside in China, it may make it difficult to enforce any judgments obtained from foreign courts against such persons. Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands and of the PRC may render you unable to seek recognition and/or enforce a judgment against our assets or the assets of our directors and officers. For more information regarding the relevant laws of the Cayman Islands and the PRC, see “Enforceability of Civil Liabilities.”

PRC regulatory authorities may in the future promulgate laws, regulations or implementing rules that require us, our subsidiaries, or the VIE to obtain regulatory approval from PRC authorities before or after listing in the U.S.

We are subject to certain legal and operational risks associated with being based in China. PRC laws and regulations governing our current business operations may change in substance and may also change in interpretation and may be subject to various interpretations, and as a result these risks may result in material changes in the operations of the VIE, significant depreciation of the value of our Ordinary Shares, or a complete hindrance of our ability to offer or continue to offer our securities to investors. The PRC government adopted a series of regulatory actions and issued statements to regulate business operations in China.

On August 8, 2006, six governmental agencies, namely, the Ministry of Commerce, the State Assets Supervision and Administration Commission, the State Administration for Taxation, the State Administration for Industry and Commerce, the CSRC and the SAFE, jointly adopted the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the M&A Rules, which became effective on September 8, 2006 and were amended on June 22, 2009. The M&A Rules require that among other things, that the Ministry of Commerce, or MOFCOM, be notified in advance of any change of control transaction in which a foreign investor acquires control of a PRC domestic enterprise and involves the following circumstances: (i) any important industry is concerned; (ii) such transaction involves factors that impact or may impact national economic security; or (iii) such transaction will lead to a change of control of a domestic enterprise which holds a famous trademark or PRC time-honored brand. The M&A Rules also requires offshore special purpose vehicles that are controlled by PRC companies or individuals and that have been formed for overseas listing purposes through acquisitions of PRC domestic interest held by such PRC companies or individuals, to obtain the approval of CSRC prior to publicly listing their securities on an overseas stock exchange.

Under the current PRC laws and regulations, we do not expect that this offering will trigger MOFCOM pre-notification under the above-mentioned circumstances. However, the application of the M&A Rules remains unclear. If CSRC approval is required, it is uncertain whether it would be possible for us to obtain the approval, and any failure to obtain or delay in obtaining CSRC approval for this offering would subject us to sanctions imposed by the CSRC and other PRC regulatory agencies. According to our PRC counsel, Global Law Office, based on their understanding of the current PRC laws, rules and regulations that the CSRC’s approval under the M&A Rules may not be required for our proposed initial public offering and proposed listing on Nasdaq, given that: (i) the CSRC currently has not issued any definitive rule or interpretation concerning whether offerings like ours in this prospectus are subject to this regulation, and (ii) we did not establish our China subsidiary through merger with or acquisition of PRC domestic companies as defined in the M&A Rules.

However, our PRC counsel has further advised us that there remains some uncertainty as to how the M&A Rules will be interpreted or implemented in the context of an overseas offering and its opinions summarized above are subject to any new laws, rules and regulations or detailed implementations and interpretations in any form relating to the M&A Rules. We cannot assure you that relevant PRC government agencies, including the CSRC, would reach the same conclusion that we do.

In addition, with respect to foreign investments that affect or may affect the national security, a security review shall be carried out in accordance with the Measures for the Security Review of Foreign Investments promulgated by the NDRC on December 19, 2020, and implemented as of January 18, 2021. According to the Measures, an office of the working mechanism for the security review of foreign investments, or working mechanism office shall be established to undertake the routine work of the security review of foreign investments. In addition, foreign investment in military industry and related fields of national defense and security, or foreign investment in areas around military facilities and military industry facilities, may lead to foreign investment in obtaining actual control of enterprises in several important fields, such as important agricultural products, important energy and resources, major equipment manufacturing, important Infrastructure, important transportation services, important cultural products and services, important information technology and Internet products and services, important financial services and key technology fields. Foreign investors or domestic parties involved in the aforesaid foreign investment shall voluntarily report to the working mechanism office before implementing the investment, and shall not implement the investment until the working mechanism office decides whether a safety review is necessary. Violators of the provisions may be ordered to make declaration within a specified time limit, dispose equities or assets and take other necessary measures to restore the equities or assets to the status before the implementation of the investment and eliminate impact on national security.

On February 17, 2023, the CSRC released the Trial Measures and five supporting guidelines, which came into effect on March 31, 2023 and subjects us to additional compliance requirement in the future. See “Risk Factors — The Most Material Risks Related to Our Corporate Structure — The Opinions recently issued by the General Office of the Central Committee of the Chinese Communist Party, the General Office of the State Council and the New Overseas Listing Rules promulgated by the CSRC may subject us to additional compliance requirements in the future.”

Furthermore, our Company, the VIE, and our investors may face uncertainty about future actions by the government of China that could significantly affect the VIE’s financial performance and operations, including the enforceability of the contractual arrangements constituting the VIE Agreements. We cannot assure you that the PRC government will not initiate governmental actions against us or scrutinize us, which could substantially affect our operation and the value of our Ordinary Shares may depreciate as a result.  As of the date of this prospectus, neither our Company nor the VIE has received nor was denied permission from Chinese authorities to list on U.S. stock exchanges under the PRC laws and regulations currently in effect. However, there is no guarantee that our Company or the VIE will receive, or not be denied, permission from Chinese authorities to list on U.S. stock exchanges in the future. China’s economic, political and social conditions, as well as interventions and influences of any government policies, laws and regulations are uncertain and could have a material adverse effect on our business.

The Opinions recently issued by the General Office of the Central Committee of the Chinese Communist Party, the General Office of the State Council and the New Overseas Listing Rules promulgated by the CSRC may subject us to additional compliance requirements in the future.

On February 17, 2023, with the approval of the State Council, the CSRC released the Trial Measures and five supporting guidelines, which came into effect on March 31, 2023. According to the Trial Measures, (1) domestic companies that seek to offer or list securities overseas, both directly and indirectly, should fulfill the filing procedures and report relevant information to the CSRC; if a domestic company fails to complete the filing procedures or conceals any material fact or falsifies any major content in its filing documents, such domestic company may be subject to administrative penalties, such as an order to rectify, warnings, fines, and its controlling shareholders, actual controllers, the person directly in charge and other directly liable persons may also be subject to administrative penalties, such as warnings and fines; (2) if the issuer meets both of the following conditions, the overseas offering and listing shall be determined as an indirect overseas offering and listing by a domestic company: (i) any of the total assets, net assets, revenues or profits of the domestic operating entities of the issuer in the most recent accounting year accounts for more than 50% of the corresponding figure in the issuer’s audited consolidated financial statements for the same period; (ii) its major operational activities are carried out in China or its main places of business are located in China, or the senior managers in charge of operation and management of the issuer are mostly Chinese citizens or are domiciled in China; and (3) where a domestic company seeks to indirectly offer and list securities in an overseas market, the issuer shall designate a major domestic operating entity responsible for all filing procedures with the CSRC, and where an issuer makes an application for an initial public offering in an overseas market, the issuer shall submit filings with the CSRC within three business days after such application is submitted. On the same day, the CSRC also held a press conference for the release of the Trial Measures and issued the Notice on Administration for the Filing of Overseas Offering and Listing by Domestic Companies, which, among others, clarifies that (1) on or prior to the effective date of the Trial Measures, domestic companies that have already submitted valid applications for overseas offering and listing but have not obtained approval from overseas regulatory authorities or stock exchanges may reasonably arrange the timing for submitting their filing applications with the CSRC, and must complete the filing before the completion of their overseas offering and listing; (2) a six-month transition period will be granted to domestic companies which, prior to the effective date of the Trial Measures, have already obtained the approval from overseas regulatory authorities or stock exchanges, but have not completed the indirect overseas listing; if domestic companies fail to complete the overseas listing within such six-month transition period, they shall file with the CSRC according to the requirements; and (3) the CSRC will solicit opinions from relevant regulatory authorities and complete the filing of the overseas listing of companies with contractual arrangements which duly meet the compliance requirements, and support the development and growth of these companies. Based on the foregoing, we are required to complete necessary filing procedures with the CSRC pursuant to the Trial Measures.

On February 24, 2023, the CSRC revised the Archives Rules issued in 2009. The revised Archives Rules came into effect on March 31, 2023. In the overseas listing activities of domestic companies, domestic companies, as well as securities companies and securities service institutions providing relevant securities services thereof, should establish a sound system of confidentiality and archival work, shall not disclose state secrets, or harm the state and public interests. Where a domestic company provides or publicly discloses to the relevant securities companies, securities service institutions, overseas regulatory authorities and other entities and individuals, or provides or publicly discloses through its overseas listing entity, any document or material involving any state secret or any work secret of any governmental agency, it shall report to the competent authority for approval in accordance with the law, and submit to the secrecy administration department for filing. Securities companies and securities service organizations shall comply with the confidentiality and archive management requirements, and keep the documents and materials properly. Securities companies and securities service institutions that provide domestic enterprises with relevant securities services for overseas issuance and listing of securities shall keep the working papers they compile (such as the records of working plan and procedure, evidence and supporting materials related to the services which are obtained and prepared by the aforementioned service providers) within the territory of the PRC. If such working papers need to be taken abroad, approval shall be obtained in accordance with relevant provisions.

As of the date of this prospectus, we have prepared the filling application materials required by the Trial Measures. However, we cannot assure you that we will be able to get the clearance of filing procedures under the Trial Measures on a timely basis, or at all. Any failure by us to fully comply with new regulatory requirements, including but limited to the failure to complete the filing procedures with the CSRC if required, may significantly limit or completely hinder our ability to offer or continue to offer our Ordinary Shares, cause significant disruption to our business operations, and severely damage our reputation, which would materially and adversely affect our financial condition and results of operations and cause our Ordinary Shares to significantly decline in value or become worthless.

We may also be subject to cybersecurity review by the Cyberspace Administration of China.

On December 28, 2021, the Cyberspace Administration of China published the Measures for Cybersecurity Review, or Cybersecurity Review Measures, which took effect on 15 February 2022, replacing the old Measures for Cybersecurity Review which took effect on 1 June 2020. According to the Cybersecurity Review Measures, there are three scenarios that require cybersecurity review : (1) where a critical information infrastructure operator purchases network products and services that may impact or potentially impact national security; (2) where a network platform operator conducts data processing activities that may affect or potentially affect national security; and (3) where a network platform operator, which holds personal information of over one million users, seeks to list abroad.

Given the aforementioned, as well as the fact that (i) we are not in possession of more than one million users’ personal information, and (ii)we are not a network platform operator that conducts data processing activities, we do not fall under the second and third scenarios described above. Regarding the first scenario, according to the Regulation on the Protection of Critical Information Infrastructure Security, which became effective on September 1, 2021, 'critical information infrastructure' refers to crucial networks, systems, and other facilities in vital industries and sectors such as public communication and information services, energy, transportation, water conservancy, finance, public services, e-government, defense technology industry, etc., where any disruption, loss of function, or data leak could severely endanger national security, national economic lifelines, or public interests. According to the Cybersecurity Review Measures, 'network products and services' mainly include core network equipment, key communication products, high-performance computers and servers, large-capacity storage devices, major databases and application software, cybersecurity equipment, cloud computing services, and other products and services that have a significant impact on the security of critical information infrastructure, cybersecurity, and data security. We do not believe we are among the 'operator of critical information infrastructure', but in practice, the applicability of existing cybersecurity review regulations is broad, and without explicit determination by relevant authorities, it is typically challenging for a company such as ours to accurately self-assess whether it needs to undergo a cybersecurity review. As of the date of this prospectus, neither we nor any of our PRC subsidiaries has been required by any PRC governmental authority to apply for cybersecurity review, nor have we or any of our PRC subsidiaries received any inquiry, notice, warning, sanction in such respect or been denied permission from any PRC regulatory authority to list on U.S. exchanges.

As advised by our PRC counsel, PRC governmental authorities have significant discretion in interpreting and implementing statutory provisions. If our or VIE’s business is identified by the PRC government authorities as falling under the category of “critical information infrastructure” operators purchasing network products and services that may impact or potentially impact national security, then we need to comply with the obligations regarding cybersecurity review. In that case, any failure or delay in the completion of the cybersecurity review procedures or any other non-compliance with applicable laws and regulations may result in fines, suspension of business or other penalties, as well as reputational damage or legal proceedings or actions against us, which may have a material adverse effect on our business, financial condition or results of operations.

Government control of currency conversion and transfers of funds may limit our ability to utilize revenues, remit dividends, make distributions or otherwise transfer cash among our subsidiaries and the VIE effectively, which may affect the value of your investment.

Government control of currency conversion and transfers of funds may limit our ability to utilize revenues, remit dividends, make distributions or otherwise transfer cash among our subsidiaries and the VIE effectively, which may affect the value of your investment.

The PRC government imposes controls on the convertibility of the Renminbi into foreign currencies and the remittance of currency out of mainland China. Under our current corporate structure, our Cayman Islands holding company may rely on dividend payments from our subsidiaries to fund any cash and financing requirements we may have. The ability of our subsidiaries to remit dividends to us may be restricted by the laws and regulations imposed by the PRC.

The majority of our and the VIE’s income is received in Renminbi and our inability to obtain foreign currency or remit currency out of mainland China may restrict our ability to pay dividends or other payments, or otherwise satisfy our foreign currency denominated obligations, if any. Under existing PRC 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 the State Administration of Foreign Exchange as long as certain procedural requirements are met. Approval from appropriate government authorities is required if Renminbi is converted into foreign currency and remitted out of the PRC to pay capital expenses such as the repayment of loans denominated in foreign currencies. The PRC government may, at its discretion, impose restrictions on access to foreign currencies for current account transactions and if this occurs in the future, we may not be able to pay dividends in foreign currencies to our shareholders. See “Risk Factors — Risks Related to Doing Business in the PRC — Governmental control of currency conversion may limit our ability to utilize our revenues effectively and affect the value of your investment.”

As of the date of this prospectus, there are no restrictions or limitations imposed by the Hong Kong government nor under laws in Hong Kong on the transfer of capital within, into, and out of Hong Kong (including funds from Hong Kong to mainland China), except for the transfer of funds involving money laundering, terrorist financing or criminal activities. However, there is no guarantee that the Hong Kong government will not promulgate new laws or regulations that may impose such restrictions in the future. Pursuant to the Basic Law, the PRC laws and regulations shall not be applied in Hong Kong except for those listed in Annex III of the Basic Law (which is confined to laws relating to national defense, foreign affairs, and other matters that are not within the scope of autonomy of Hong Kong). While the National People’s Congress of the PRC has the power to amend the Basic Law, the Basic Law also expressly provides that no amendment to the Basic Law shall contravene the established basic policies of the PRC regarding Hong Kong. As a result, national laws of the PRC not listed in Annex III of the Basic Law do not apply to our Hong Kong subsidiary. However, there is no assurance that our Hong Kong subsidiary will not become subject to PRC laws or regulations as a result of any significant change in the current political arrangements between mainland China and Hong Kong or any other unforeseeable reasons, in which event our Hong Kong subsidiary could be subject to similar government controls on the convertibility of foreign currency and the remittance of currency out of Hong Kong as described above.

As a result of the above, to the extent cash in the business is in mainland China or Hong Kong or business may be conducted by a mainland China or Hong Kong entity, such funds or assets may not be available to fund operations or for other use outside of mainland China or Hong Kong, as applicable, due to interventions in or the imposition of restrictions and limitations on the ability of us, our subsidiaries, or the VIE by the competent government to the transfer of cash. 

Risks Related to Our Business

The VIE’s operating history may not be indicative of its future growth or financial results and the VIE may not be able to sustain its historical growth rates, which may adversely affect the market price of our Ordinary Shares.

The VIE’s operating history may not be indicative of its future growth or financial results. There is no assurance that the VIE will be able to grow its revenues in future periods. The VIE’s growth rates may decline for any number of possible reasons, and some of them are beyond its control, including decreasing demand for its software and hardware solutions, increasing competition, declining growth of the decentralized distributed technology industry in general, emergence of alternative business models, or changes in government policies or general economic conditions. The VIE expects that its distributors will continue to expand their sales networks to increase its users and provide service and convenience to them. However, the execution of the VIE’s expansion plan is subject to uncertainty and the VIE may not grow at the rate management of the VIE expects for the reasons stated above. If the VIE’s growth rates decline, investors’ perceptions of our business and prospects may be adversely affected and the market price of our Ordinary Shares could decline accordingly.

The VIE depends on its proprietary technology, and our future results may be impacted if the VIE cannot maintain technological superiority in its industry.

The VIE’s success in the past has largely been attributable to its sophisticated proprietary technology. The VIE has benefited from the fact that the type of proprietary technology employed by the VIE has not been widely available to its competitors. This is largely because Mr. Guangqing Hu, our founder, Chairman of our Board of Directors and CTO has been developing the distributed network configuration tool software since 2017 using the VIE’s proprietary technology and has taken steps to safeguard such technology. If technology equivalent to the proprietary technology the VIE employs becomes more widely available to its current or future competitors for any reason, including, but not limited to, loss of intellectual property protection, challenges to our intellectual property rights, unenforceability of such rights, or even industry innovation or industry divergence from our technological philosophy and roadmap, our operating results may be adversely affected.

Additionally, to keep pace with changing technologies and client demands, the VIE must correctly interpret and address market trends and enhance the features and functionality of its technology in response to these trends, which management expects will lead to significant research and development costs. The VIE may be unable to accurately determine the needs of clients, developers and end-users or the trends in the decentralized distributed technology industry or to design and implement the appropriate features and functionality of the VIE’s technology in a timely and cost-effective manner, which could result in decreased demand for the VIE’s network, products, and service offerings and a corresponding decrease in our revenue. Also, any adoption or development of similar or more advanced technologies by the VIE’s competitors may require that the VIE devotes substantial resources to the development of more advanced technology to remain competitive. The markets in which the VIE competes are characterized by rapidly changing technology, evolving industry standards, practices and techniques. Also, the VIE may not be able to keep up with these rapid changes in the future, develop new technology, realize a return on its research and development expenditures or remain competitive in the future.

In addition, although the VIE’s network is decentralized and less susceptible to the following as a result of its decentralized nature, the VIE must still protect its systems against physical damage from fire, earthquakes, power loss, telecommunications failures, computer viruses, hacker attacks, physical break-ins and similar events. Any software or hardware damage or failure that causes interruption or an increase in response time of the VIE’s proprietary technology could reduce client satisfaction and decrease usage of the VIE’s products and network. This would also likely result in reputational damage to the VIE and consequently negatively affect its future performance.

The further development and acceptance of decentralized distributed technologies, which are part of a new and rapidly changing industry, are subject to a variety of factors that are difficult to evaluate. The slowing or stopping of the development or acceptance of decentralized distributed technologies would have a material adverse effect on our business.

The growth of the distributed technology industry in general, as well as the network on which our technologies rely, is subject to a high degree of uncertainty. The factors affecting the further development of the distributed technology industry and networks, include, without limitation:

The distributed technology industry has been characterized by rapid changes and innovations. Although it has experienced significant growth in recent years, the slowing or stopping of the development, general acceptance and adoption and usage of decentralized networks, along with the innovation or obsolescence of related technologies may materially adversely affect our business plans, financial results and prospects.

Changing technologies, even those not directly pertaining to our industry, can have a material adverse effect on our business.

Changes in other technologies and related industries could have a material adverse effect: (i) changes in hardware technology and performance networks and (ii) changes in software technology and other related industries and technologies which affect us.

The performance improvement of hardware technology and hardware products that may occur in the future could have an adverse effect on our ability to adapt to industry-leading standards. In addition, the anticipated upgrading of network performance (such as, for example, 5G/6G technology) in the future, would be conducive to the improvement of the comprehensive performance of distributed networks and the development of the industry. To the extent that these and other technological changes and performance improvements occur in the industry, we would be required to adapt and maintain a competitive position within the sector and marketplace. There is no guarantee that our products and offerings would remain viable due to these and other technology changes and network performance standards.

Potential risks in our business arise mainly from whether the software technology that we use in our operations becomes outdated. Our software technology needs to be continuously upgraded and iterated to adapt to the changes of software industry. Technology in the software sector is characterized by constant ongoing changes, and our ability to innovate and adapt are critical to our success. There is no assurance that our products and offerings can be maintained at the advanced level of progress which may occur in the software industry. If we are unable to adapt and innovate to keep up with technology changes in the software sector, our business plan, financial performance and overall success could suffer a significant and material adverse effect.

The VIE depends on its largest 5 distributors, the loss of any of which could cause a significant decline in our consolidated revenues.

Management of the VIE considers distributors to be its customers since the VIE sells its software and hardware solutions to its distributors not to end-users directly. The VIE enters into distributor agreements. The VIE does not have agreements with end-users. We generally categorize our end-users as individuals or enterprises who seek access to the distributed network and leverage our software products to create the decentralized applications for their specific needs. The VIE’s distributors market to government organizations, businesses and individuals interested in utilizing decentralized distributed networks and either utilizing existing applications, having applications developed for them or creating their own applications. As part of the e-learning platform, which runs its own network, the Company is in ongoing discussions with various organizations. As of September 30, 2024, the VIE had 35 distributors in China. The VIE had 5 significant customers which accounted for greater around 50% of their total revenue for the fiscal year ended September 30, 2024 . For the fiscal year ended September 30, 2024, the VIE’s top 5 customers accounted for 12%, 11%, 11%, 8%, 7%, respectively, of revenues for such period. For the fiscal year ended September 30, 2023, the VIE’s top 5 customers accounted for 22%, 15%, 10%, 7%, 6%, respectively, of revenues for such period.

Although the VIE does enter into distributor agreements with each customer describing the terms and conditions concerning the software, delivery of the software and payment, the consequences of breach of this agreement are only the termination of their distributor agreement. The VIE relies upon short-form order sheets to memorialize purchase agreements when distributors make their orders on an as-needed basis. The distributors can reduce the quantities of products from the VIE, or cease purchasing products from the VIE. Such reductions or terminations could have a material adverse impact on the VIE’s revenues, profits and financial condition. The loss of any of the VIE’s major customers, or a significant reduction in sales to any such customers, would adversely affect its profitability, which would cause a significant decline in our consolidated revenues.

We expect that the VIE will continue to depend on a relatively small number of distributors for a significant portion of its net revenue. The distributors constitute customers of the VIE. The VIE’s ability to maintain close and satisfactory relationships with its distributors is important to the ongoing success and profitability of its business. The VIE’s ability to attract potential distributors is also critical to the success of its business. If any of the VIE’s significant distributors reduce, delay or cancel orders for any reason, or the financial condition of any of the VIE’s key distributors deteriorates, the VIE’s business could be seriously harmed. Similarly, a failure to manufacture sufficient quantities of products to meet the demands of these distributors may cause the VIE to lose distributors, which may affect adversely the profitability of the VIE’s business as a result which would cause a significant decline in our consolidated revenues. Furthermore, if the VIE experiences difficulties in the collection of their accounts receivables from their major distributors, our results of operation may be materially and adversely affected.

The top 3 customers for the fiscal year ended September 30, 2024 are the following (1) Guangdong Lightning Cat New Energy Technology Co., Ltd (“Guangdong Lightning”), (2) Chongqing Shenghong Technology Co., Ltd (“Chongqing Shenghong”), and (3) Shenzhen Huawang Supply Chain Co., Ltd (“Shenzhen Huawang”), accounting for 11%, 11% and 10% of the total revenue for the fiscal year, respectively. Among these customers, none of them are related parties of our Company, its subsidiaries or the VIE.

Guangdong Lightning, Chongqing Shenghong and Shenzhen Huawang are distributors which have signed master sales contracts  with the VIE. Important terms of the agreements are as follows:

1. Upon receipt of the software payment into the designated account of the VIE (“Party B”), Party A shall be responsible for configuring the software and delivering the software activation code along with the installation manual to the distributor (“Party A”). Party A shall confirm the successful activation of the software and then issue an acceptance confirmation.

2. The software license provided is a permanent license, allowing Party A to operate the software at any time and place, within an independent third-party environment, following delivery.

3. Party B is committed to providing one year of after-sales service, which includes technical support, maintenance, and automatic background updates.

4. For after-sales services exceeding one year, the service fees shall be separately negotiated and agreed upon by both Party A and Party B based on necessity.

The top 3 customers for the fiscal year ended September 30, 2023 are the following: (1) Liaoning Pulian Suyuan Health Technology Information Consulting Co., Ltd. (“Liaoning Pulian”), (2) Shenzhen Jisu Distributed Network Technology Co., Ltd. (“Shenzhen Jisu”), and (3) Zerolimit Digital Technology Co., Ltd. (“Zerolimit Digital”), accounting for 22%, 15% and 10% of the total revenue for the fiscal year, respectively. Of these customers, only Zerolimit Digital is a related party of the Company, its subsidiaries and the VIE.

Liaoning Pulian and Shenzhen Jisu are distributors which have signed master sales contracts with the VIE. Important terms of the agreements are as follows:

1. Upon receipt of the software payment into the designated account of Party A, Party A shall be responsible for configuring the software and delivering the software activation code along with the installation manual to Party B. Party B shall confirm the successful activation of the software and then issue an acceptance confirmation.

2. The software license provided is a permanent license, allowing Party B to operate the software at any time and place, within an independent third-party environment, following delivery.

3. Party A is committed to providing one year of after-sales service, which includes technical support, maintenance, and automatic background updates

4. For after-sales services exceeding one year, the service fees shall be separately negotiated and agreed upon by both Party A and Party B based on necessity.

This product guarantee constitutes Party A's commitment to Party B. During its agency period, Party B shall assume the product guarantee obligations towards the end-users, which are transferred to Party B concurrently with the delivery of Party A's products.

Zerolimit Digital is the VIE’s domestic parent company which has signed software authorization agreements for the use of four software products developed by the VIE. Please refer to the discussion starting on page 140 for “Material Transactions with Related Parties” for more details.

We are subject to concentration risks of suppliers and customers.

As of September 30, 2024 and 2023, there were three and three customers from whom revenues individually represent greater than 10% of our total revenues, respectively. The total sales to these customers accounted for approximately 34% and 47% of our total revenues, respectively, for the same periods. As of September 30, 2024 and 2023, there were one and zero suppliers from whom purchases individually represent greater than 10% of our total purchases, respectively. The total purchase from these suppliers accounted for approximately 100% and 0% of our total purchase, respectively, for the same periods. Considering such concentration, the loss of these customers and suppliers could have a material adverse effect on our business.

Although the VIE enters into distributor agreements with its customers, and thereby the parties agree to a specific quantity of products and services, the consequences of breach of any such agreement is only the termination of the applicable distributor agreement. If customers reduce the quantities of products and services or cease purchasing products and services from the VIE, such reductions or terminations would cause a significant decline in our consolidated revenues.

The distributor agreement with each customer describes the terms and conditions concerning the software, delivery of the software and payment. The VIE relies upon short-form order sheets to memorialize agreements with its customers for the purchase of products and services, pursuant to which customers make their orders on an as-needed basis. The customers can reduce the quantities of products from the VIE, or cease purchasing products from the VIE. Such reductions or terminations could have a material adverse impact on the VIE’s revenues, profits and financial condition. The loss of any of the VIE’s major customers, or a significant reduction in sales to any such customers, would adversely affect the VIE’s profitability and also cause a significant decline in our consolidated revenues.

The success of a network created using our proprietary technology depends on maintaining a minimum user base, which translates to a minimum number of nodes; for instance, if the number of users and nodes decreases below 160, application failures on the distributed network are more likely, however the minimum number of nodes to run a network with only one application is three nodes.

There are a number of factors that could negatively impact user retention and growth, including, among other things:

The success of a network created using our proprietary technology depends on maintaining a minimum user base, which translates to a minimum number of nodes. If the number of nodes on a network running one application decreases below three, application failure on the network is more likely. If the number of nodes on the distributed network decreases below 160, To ensure that users continue to run decentralized applications on network created using the VIE’s proprietary technology, the VIE must make sure its software packages can create and update nodes so that they continue operating within the network, or it could have a material adverse effect on our business, results of operations or financial condition.

The distributed network may face scalability challenges as it expands to a greater number of users.

Although the VIE has considered scalability issues for its distributed network and generally the network is scalable and actually increases in efficacy with an increased number of users, if the VIE has missed or failed to consider certain consequences that may arise as a result of scaling or usage by an increasing number of users, such failure could lead to a failure in the distributed network or a reduction in the efficacy thereof and could cause substantial reputational harm to the VIE and could damage relationships with existing users, reduced demand for the VIE’s products and services, and consequently adversely affect the market price of our Ordinary Shares.

Issues with the VIE’s programming code and damage to nodes could hurt users’ ability to effectively establish and maintain networks resulting in an inability to provide applications on such networks, which could damage the VIE’s reputation and harm our results of operations.

The ability to establish and maintain networks, as well as the applications that run on such networks depends on the VIE’s programming code. In addition, although the benefit of a decentralized network is that redundancies and distribution of information is achieved over numerous devices (nodes), if there is damage to enough of the nodes on a network, e.g. through wars, nuclear holocaust, or other globally destructive catastrophes, widespread targeted node attacks at numerous locations throughout the globe, floods, fires, power loss, telecommunications failures or hackers, this could result in network interruptions and consequently interruptions to applications on the network. Issues with the VIE’s programming code and damage to enough nodes on a network could damage our brand and have a material adverse effect on our business, results of operations or financial condition.

If the VIE continues to sell hardware products, a significant interruption in the VIE’s suppliers could potentially disrupt the VIE’s operations.

The VIE has limited control over the operations of their third-party suppliers. Any significant interruption in such suppliers’ operations may have an adverse impact on the VIE operations. We generally rely on our suppliers for hardware equipment, motherboards, storage devices, computing devices, and software component materials and other related products to operate our software products. For example, significant interruptions in the operations of the suppliers’ manufacturing facilities could cause delay or failure of shipment of such hardware equipment, services, devices, or software component materials to the VIE, which in turn, may cause delay or failure to manufacture and ship ordered products to customers, resulting in damage to the VIE’s customer relationships. If the VIE is unable to adequately address the impact of the interruptions of operations of their third-party suppliers, the VIE’s business operations and financial results may be materially and adversely affected.

Although the VIE believes that it could establish alternate sources from other suppliers, there can be no assurance that such replacement suppliers will provide the hardware equipment, services, devices, or software component materials that are needed by the VIE in the quantities requested, at the quality required, or at the prices that the VIE is willing to pay. Any shortage in such hardware equipment, services, devices, or software component materials, deficiency in quality or any increase in prices could adversely affect the VIE’s reputation, financial conditions and results of operations.

The VIE does not have long-term contracts with its hardware product suppliers and the suppliers can reduce order quantities or terminate their sales to the VIE.

The VIE does not have long term contracts with its suppliers. If the VIE’s supply of certain services is disrupted or delayed, there can be no assurance that additional supplies or services can serve as adequate replacements or that supplies will be available on terms that are favorable to the VIE, if at all. Moreover, even if the VIE can identify adequate replacements on substantially similar terms, its business could be adversely affected until those efforts were completed. Any disruption or delay in the supply of the VIE’s hardware components could limit the ability of the VIE to fulfill orders or service or replace products, or cause other constraints on the VIE’s operations that could damage its customer relationships.

If the VIE is unable to build and maintain a sufficient sales and distribution network to meet increasing demand of its products, the VIE’s ability to execute on its business plan as outlined in this prospectus will be impaired.

The VIE’s distributors refer to those individuals or entities who purchase our products and distribute them in the region designated in our purchase agreements with them or through offline and online channels to resell our products to end users. As of September 30, 2024, we had 35 distributors in China. These intermediaries cover 9 provinces and 11 municipalities in China, including Guangdong, Chongqing, Zhejiang, Hainan, Hubei, Liaoning, Shandong, Sichuan, and Hebei.

Although the VIE’s current sales and distribution channels are sufficient to satisfy the current business needs, it might become insufficient to meet demand if the VIE continues to grow its business. If the VIE’s planned efforts to expand its direct sales force and distribution channels are not effective, its ability to execute on its business plan and to realize continued growth will be impaired.

The VIE may face competition from, and the VIE may be unable to compete successfully against, new entrants and established companies with greater resources.

The VIE’s industry is competitive and rapidly evolving and includes many companies both domestically and internationally. The VIE faces increasing competitive pressures to grow its business in order to maintain its competitive position, and the VIE may encounter competition from, and lose customers to, other companies with design, technological and manufacturing capabilities similar to them. In addition to the risk posed by the quantitative effect of the entry of new competitors, some of the VIE’s potential competitors may also have greater name recognition, greater operating revenues, larger customer bases, longer customer relationships, and greater financial, technical, personnel and marketing resources than the VIE. If the VIE is unsuccessful in competing with its competitors for its existing and prospective customers’ business, the VIE’s financial condition and results of operation may be adversely affected.

Increased competition may further reduce the VIE’s market share and profitability and require the VIE to increase its sales and marketing efforts and capital commitment in the future, which could negatively affect the VIE’s results of operations. Although the VIE is continuously growing its customer base, there is no assurance that the VIE will be able to continue to do so in the future against current or future competitors, and such competitive pressures may have a material adverse effect on the VIE’s business, financial condition, and results of operations.

The continuing development of VIE’s products depends upon its strong working relationships with its distributors.

The research, development, marketing, and sales of the VIE’s products and the development of new and improved products and services and future products and services depend upon the VIE’s working relationships with its distributors. See “Research and Development.” The VIE relies on its distributors to provide them with feedback from the end-users, which can then be used to continue development of the VIE’s software products and hardware.

Distributors assist the VIE in marketing and sales, as well as collecting customers’ feedback and advice related to the VIE products. If the VIE cannot maintain strong working relationships with its distributors and continue to receive their advice and input, the development, improvement and marketing of the VIE’s products could suffer, which could have a material adverse effect on our business, financial condition and results of operations.

Technological changes may adversely affect the sales of the VIE’s products and may cause its products to become obsolete.

The distributed technology market is characterized by extensive research and development and rapid technological changes. Technological progress or new developments in the distributed technology industry or technological changes in other industries could adversely affect the demand and consequently sales of the VIE’s products and services. For example, new hardware innovations could render our software applications which make certain assumptions based on current hardware standards inoperable or handicapped and could require significant development on our part to adapt to such changes in technology and new industry developments. The VIE’s products and services could also be rendered obsolete due to future innovations by its competitors, all of which would have a material adverse effect on the VIE’s business, financial condition, and results of operations.

Consolidation in the decentralized distributed technology industry could have an adverse effect on the VIE’s revenues and results of operations.

Distributed technology companies may consolidate to create new companies with greater market power. If companies in the decentralized distributed technology industry consolidates, competition to provide goods and services to industry participants will become more intense. These industry participants may use their market power to negotiate price concessions or reductions for their products making them more desirable than the VIE’s products. If the VIE reduces its prices because of consolidation in the decentralized distributed technology industry, the VIE’s revenues would decrease accordingly, which could have a material adverse effect on the VIE’s business, financial condition, and results of operations.

The VIE may fail to effectively develop and commercialize new products, which would materially and adversely affect their business, financial condition, and results of operations.

The distributed technology industry is developing rapidly and related technology trends are constantly evolving. This results in frequent introduction of new products, short product life cycles and significant price competition. Consequently, the VIE’s future success depends on its ability to anticipate technology development trends and identify, develop, and commercialize in a timely and cost-effective manner new and advanced products that their customers demand. Whether the VIE is successful in developing and commercializing new products is determined by their ability, among other things, to:

We cannot assure you that the VIE can effectively develop and commercialize new products. In the event the VIE fails to develop and commercialize new products, it would materially and adversely affect the VIE’s business, financial condition, and results of operations.

If the VIE fails to develop other products, the VIE may be unable to grow its business.

As a significant part of the VIE’s growth strategy, they intend to develop and commercialize additional hardware and software products through their research and development program or by acquiring additional technologies and patents from third parties. The success of this strategy depends largely upon the VIE’s ability to develop new technologies or identify, select and acquire the technologies and patents on terms that are acceptable to them.

Any patents and technologies the VIE identifies or acquires will require additional development efforts prior to bringing products to market, including approval or clearance by the applicable regulatory authorities. All products are prone to the risks of failure inherent in product development, including the possibility that the hardware or software will not be shown to be sufficiently safe and effective for approval or clearance by regulatory authorities. In addition, we cannot assure you that any such hardware or software products that are approved or cleared will be successfully implemented to operate effectively within distributed network, or will be widely accepted in the marketplace.

If the VIE is unable to develop suitable new products through internal research programs or by obtaining intellectual property or technologies from third parties, it could have a material adverse effect on the VIE’s business, financial condition, and results of operations.

If the VIE is not able to implement its strategies to achieve its business objectives, the VIE’s business operations and financial performance will be adversely affected.

The VIE’s business plan and growth strategies are based on currently prevailing circumstances and the assumption that certain circumstances will or will not occur. However, there are uncertainties involved in various stages of development, and there is no assurance that the VIE will be successful in implementing its strategies or that its strategies, even if implemented, will lead to the successful achievement of their objectives. If the VIE is not able to successfully implement its strategies, the VIE’s business operations and financial performance will be adversely affected.

The VIE’s future success depends on the continuing efforts of its senior management team and other key personnel, and the business may be harmed if the VIE were to lose their services.

The VIE’s future success depends heavily upon the continuing services of the members of its senior management team and other key personnel, in particular, Mr. Guangqing Hu, our chairman of the Board of Directors, or “Chairman,” and CTO. In addition, because of the importance of research and development to the VIE’s business, the VIE’s team of engineers plays a key role in the VIE’s operations. If one or more of the VIE’s senior executives or other key personnel, including key engineers, are unable or unwilling to continue in their present positions, the VIE may not be able to replace them easily or at all, and the VIE’s business may be disrupted and financial condition and results of operations may be materially and adversely affected. Competition for senior management and key personnel is intense, the pool of qualified candidates is very limited, and the VIE may not be able to retain the services of their senior executives or key personnel, or attract and retain high-quality senior executives or key personnel in the future. As is customary in the PRC, the VIE does not have insurance coverage for the loss of its senior management team or other key personnel.

In addition, if any member of the VIE’s senior management team or any of its other key personnel joins a competitor or forms a competing company, the VIE may lose clients, important relationships, sensitive trade information, and key professionals and staff members.

If the VIE fails to adopt new technologies to evolving distributor needs or emerging industry standards, the VIE’s business may be materially and adversely affected.

To remain competitive, the VIE must continue to stay abreast of the constantly evolving industry trends and must enhance and improve its technology accordingly. The VIE must identify and adopt new technologies to meet customer needs, and must also identify and adopt technologies that meet evolving industry standards and trends. Such adoption may be accomplished through in-house research and development or acquisition of the technologies. There can be no assurance that the VIE will be able to identify, develop or acquire such technologies or even utilize such technologies effectively. If the VIE is unable to adapt to customer demands and evolving industry standards and trends in a cost-effective and timely manner, whether for technical, legal, financial or other reasons, its business may be materially and adversely affected.

Changes to the VIE’s payment terms with both distributors and suppliers may materially adversely affect our operating cash flows.

The VIE may experience significant pressure from its suppliers to reduce the number of days of their accounts payable or change the way they pay. At the same time, the VIE may experience pressure from its distributors to extend the number of days before paying their accounts receivable. As the company's business expands and distributors’ needs become increasingly diverse, in order to enhance market competitiveness and strengthen long-term strategic partnerships with clients, we have appropriately relaxed our payment collection policies for distributors with good credit standing. We now offer distributors a credit term of approximately 30 days. Agreements with distributors include terms for acceptable methods of payment, the dates payments are due, and other payment terms. Additionally, we have strengthened comprehensive monitoring and control over accounts receivable throughout the entire process, from pre-sale to in-process and post-sale stages, while maintaining close communication with distributors. This helps to ensure the smooth and timely receipt of payments. Any failure to manage the VIE’s accounts payable and accounts receivable may have a material adverse effect on our business, financial condition and results of operations.

Economic recessions could have a significant, adverse impact on our business.

The VIE’s revenues are generated from sales of products and services in China and the VIE anticipates that revenues from such sales will continue to constitute its sole source of revenues in the near future. The VIE’s sales and earnings can also be affected by changes in the general economy of China.

The distributed technology industry historically has experienced cyclical fluctuations in financial results due to economic recession, downturns in business cycles of customers, interest rate fluctuations, and other economic factors beyond the VIE’s control. Deterioration in the economic environment subjects the VIE’s business to various risks, which may have a material and adverse impact on the VIE’s operating results and cause the VIE to not reach their long-term growth goals. A downturn in the economy could affect the discretionary spending power of customers and, in turn, depress the number of orders for the VIE’s products, which would have a material adverse effect on our business, financial condition and results of operations.  

Any disruption of the operation of the VIE could materially and adversely affect the VIE’s business and results of operations.

Currently, the VIE’s software products are primarily produced at its office located in Shenzhen, China. Natural disasters or other unanticipated catastrophic events, including storms, fires, explosions, earthquakes, terrorist attacks and wars, as well as changes in governmental planning for the land where the VIE’s office are located could significantly impair the VIE’s ability to manufacture software products and operate its business. Catastrophic events could also destroy inventories of hardware. The occurrence of any catastrophic event could result in the temporary or long-term closure of the facility and may severely disrupt the VIE’s business operations.

In addition, VIE’s office and their suppliers’ factories are subject to environmental inspections and regulations. As of the date of this prospectus, we cannot assure you that all the factories and offices are in strict compliance with such environmental inspections and regulations based on our knowledge. If such facilities fail to rectify and pass the environmental inspections or comply with relevant environmental requirements relating to production activities in a timely manner, they may be subject to fines, rectification, suspension and closure, which may materially and adversely affect the production at the VIE’s office and in turn may impact its business. In the event of any changes in the PRC laws and/or regulations and/or government policies on environmental protection and more stringent requirements are imposed on the VIE’s and its suppliers, the VIE may have to incur extra costs and expenses to comply with such requirements and the VIE’s business and results of operations may be adversely affected.

Furthermore, the VIE’s facilities are located on leased properties. Though such leases are renewable upon expiration, the VIE’s ability to renew existing leases upon their expiration is crucial to the VIE’s production activities, operations and profitability. If the VIE is unable to negotiate for a renewal of the relevant leases, the VIE may be forced to relocate its production bases and it may be difficult and costly to replace or relocate the facilities and equipment on a timely basis. If the VIE fails to address the risks mentioned above, its production will be materially and adversely affected.

If the VIE or its suppliers experience any unanticipated disruptions, the VIE’s production will be severely disrupted, which may in turn materially and adversely affect the VIE’s business, financial condition and results of operations.

The VIE may be exposed to intellectual property infringement and other claims by third parties which, if successful, could disrupt the VIE’s business and have a material adverse effect on our financial condition and results of operations.

The VIE’s success depends, in large part, on its ability to use and develop its technology and know-how without infringing third-party intellectual property rights. As intellectual property litigation becomes more common in PRC, the VIE faces a higher risk of being the subject of claims for intellectual property infringement, invalidity or indemnification relating to other parties’ proprietary rights. The VIE’s current or potential competitors, many of which have substantial resources and have made substantial investments in competing technologies, may have or may obtain patents that will prevent, limit or interfere with the VIE’s ability to make, use or sell its products in China. The validity and scope of claims relating to internet ecosystem technology patents involve complex scientific, legal and factual questions and analysis and, as a result, may be highly uncertain. In addition, the defense of intellectual property suits, including patent infringement suits, and related legal and administrative proceedings can be both costly and time consuming and may significantly divert the efforts and resources of the VIE’s technical and management personnel. Furthermore, an adverse determination in any such litigation or proceedings to which the VIE may become parties could cause them to:

each of which could effectively prevent the VIE from pursuing some or all of its business and result in its distributors or potential distributors deferring or limiting their purchase or use of the VIE’s products, which could have a material adverse effect on our financial condition and results of operations. 

In addition, the VIE currently holds two patents which were acquired through assignment from the transferor, Xin Jianfang. However, the transfer agreements for these aforementioned two patents have been lost, we cannot assure that such transfers are valid or will be considered legally binding, and may exposed to litigation risk. However, for us, these two patents are not our core patents.

The VIE may not be able to prevent others from unauthorized use of its intellectual property, which could harm its business and competitive position.

The VIE relies on a combination of trademark, fair trade practice, patent, copyright and trade secret protection laws in China, as well as confidentiality procedures and contractual provisions, to protect its intellectual property rights. The VIE intends to enter into confidentiality agreements with their employees that include terms identifying all employee-developed intellectually property as service inventions belonging to the VIE. In addition, the VIE strives to remain current in its annual patent fee payments. The VIE regards its trademarks, patents, know-how, proprietary technologies, and similar intellectual property as critical to its success. The VIE may become an attractive target to intellectual property attacks in the future with the increasing recognition of its brand. Any of the VIE’s intellectual property rights could be challenged, invalidated, circumvented or misappropriated, or such intellectual property may not be sufficient to provide the VIE with competitive advantages. In addition, there can be no assurance that (i) all of the VIE’s intellectual property rights will be adequately protected, or (ii) the VIE’s intellectual property rights will not be challenged by third parties or found by a judicial authority to be invalid or unenforceable. Intellectual property protection may not be sufficient in China. Confidentiality agreements may be breached by counterparties, and there may not be adequate remedies available to the VIE for any such breach. Accordingly, the VIE may not be able to effectively protect its intellectual property rights or to enforce its contractual rights in China. In addition, policing any unauthorized use of the VIE’s intellectual property is difficult, time-consuming and costly and the steps the VIE has taken may be inadequate to prevent the misappropriation of its intellectual property.

In the event that the VIE resorts to litigation to enforce its intellectual property rights, such litigation could result in substantial costs and a diversion of their managerial and financial resources. We can provide no assurance that the VIE will prevail in such litigation. In addition, the VIE’s trade secrets may be leaked or otherwise become available to, or be independently discovered by, its competitors. Any failure in protecting or enforcing the VIE’s intellectual property rights could have a material adverse effect on our business, financial condition and results of operations.

Changes in U.S. and international trade policies, particularly with regard to China, may adversely impact the VIE’s business and operating results.

The U.S. government has recently made statements and taken certain actions that may lead to potential changes to U.S. and international trade policies, including recently imposed tariffs affecting certain products manufactured in China. It is unknown whether and to what extent new tariffs (or other new laws or regulations) will be adopted, or the effect that any such actions would have on the VIE or its industry and customers. If the VIE plans to sell its products internationally in the future, any unfavorable government policies on international trade, such as capital controls or tariffs, may affect the demand for the VIE’s products, impact the competitive position of the VIE’s products or prevent the VIE from being able to sell products in certain countries. If any new tariffs, legislation and/or regulations are implemented, or if existing trade agreements are renegotiated or, in particular, if the U.S. government takes retaliatory trade actions due to the recent U.S.-China trade tension, such changes could have an adverse effect on the VIE’s business, financial condition, and results of operations.

The VIE has no business liability or disruption insurance, which could expose the VIE to significant costs and business disruption.

The insurance industry in China is still at an early stage of development, and insurance companies in China currently offer limited business-related insurance products. The VIE does not have any business liability or disruption insurance to cover its operations. The VIE has determined that the costs of insuring for these risks and the difficulties associated with acquiring such insurance on commercially reasonable terms make it impractical for the VIE to have such insurance. Any uninsured risks may result in substantial costs and the diversion of resources, which could adversely affect the VIE’s results of operations and financial condition.

If we do not obtain substantial additional financing, including the financing sought in this offering, the VIE’s ability to execute its business plan as outlined in this prospectus will be impaired.

The VIE’s plans for business expansion and development are dependent upon its raising significant additional capital, including the capital sought in this offering. The VIE’s plans call for significant new investments in research and development, marketing, expanded production capacity, and working capital for materials and other items. Management estimates that our capital needs for expanding our research and development department and management department, including but not limited to, hiring high-end internet ecosystem talents and management personnel with international and professional backgrounds, will be approximately USD$[·] million. Although the Company expects the proceeds of this offering and net earnings to substantially fund the VIE’s planned growth and development, management will be required to properly and carefully administer and allocate these funds. Should the VIE’s capital needs be higher than estimated, or should additional capital be required after the close of this offering, we will be required to seek additional investments, loans or debt financing to fully pursue our business plans. Such additional investment may not be available to us in sufficient amounts or on terms which are favorable or acceptable. Should we be unable to meet the VIE’s full capital needs, its ability to fully implement its business plan will be impaired.

Pandemics and epidemics, natural disasters, terrorist activities, political unrest, and other outbreaks could disrupt the VIE’s delivery and operations, which could materially and adversely affect the VIE’s business, financial condition, and results of operations.

Global pandemics, epidemics in China or elsewhere in the world, or fear of the spread of contagious diseases, such as Ebola virus disease (EVD), coronavirus disease 2019 (COVID-19), Middle East respiratory syndrome (MERS), severe acute respiratory syndrome (SARS), H1N1 flu, H7N9 flu, and avian flu, as well as hurricanes, earthquakes, tsunamis, or other natural disasters could disrupt the VIE’s business operations, reduce or restrict the VIE’s supply of products, incur significant costs to protect its employees and facilities, or result in regional or global economic distress, which may materially and adversely affect the VIE’s business, financial condition, and results of operations. Actual or threatened war, terrorist activities, political unrest, civil strife, and other geopolitical uncertainty could have a similar adverse effect on the VIE’s business, financial condition, and results of operations. Any one or more of these events may impede the VIE’s production and delivery efforts and adversely affect its sales results, whether short-term or for a prolonged period of time, which could materially and adversely affect the VIE’s business, financial condition, and results of operations. 

Since late December 2019, the outbreak of a novel strain of coronavirus, later named COVID-19 has spread globally. On January 30, 2020, the International Health Regulations Emergency Committee of the World Health Organization declared the outbreak a “Public Health Emergency of International Concern (PHEIC),” and later on March 11, 2020, a global “pandemic.” The COVID-19 pandemic has led governments across the globe to impose a series of measures intended to contain its spread, including border closures, travel bans, quarantine measures, social distancing, and restrictions on business operations and large gatherings. From 2020 to the middle of 2022, COVID-19 vaccination programs have been greatly promoted around the globe, however several types of COVID-19 variants have emerged in different parts of the world and caused temporary lockdowns. Restrictions had been re-imposed from time to time in certain cities to combat sporadic outbreaks of COVID-19 in the PRC from early 2020 through December 2022. For example, in early 2022, the Omicron variant of COVID-19 was identified in China, especially in Shenzhen and Shanghai city, Jilin Province and Beijing, where strict lockdowns were imposed. In addition, in the second half of 2022, some cities, including Guangzhou, Shenzhen and Beijing, remained under lockdown for discrete periods of time due to measures to contain the spread of Omicron and the zero-COVID measures taken by the local governments.

Due to the rapidly expanding nature of COVID-19 pandemic and the zero-COVID measures taken by the local governments from early 2020 through December 2022, and because substantially all of the VIE’s business operations and workforce are concentrated in the PRC, we believe that COVID-19 pandemic has impacted, and will likely continue to impact, the VIE’s business, results of operations, and financial condition. The potential further impact on the results of operations will also depend on future developments and information that may emerge regarding the duration and severity of COVID-19 and the actions taken by governmental authorities and other entities to contain COVID-19 or to mitigate its impacts, almost all of which are beyond our control.

The impacts of COVID-19 on the VIE’s business, financial condition, and results of operations as of the date of this prospectus include, but are not limited to, the following:

The extent to which the COVID-19 pandemic impacts the VIE’s business in the future will depend on future developments and further government actions. Any future impact on the results of operations of the VIE will depend on, to a large extent, future developments and new information that may emerge regarding the duration and severity of the COVID-19 pandemic and the actions taken by government authorities and other entities to contain the spread or treat its impact, almost all of which are beyond our and the VIE’s control. Given the general slowdown in economic conditions globally and volatility in the capital markets, we cannot assure you that we will be able to maintain the growth rate we have experienced or projected. We will continue to closely monitor the situation throughout 2023 and beyond.

The VIE is also vulnerable to natural disasters and other calamities. The VIE cannot assure you that it is adequately protected from the effects of fire, floods, typhoons, earthquakes, power loss, telecommunications failures, break-ins, war, riots, terrorist attacks, or similar events. Any of the foregoing events may give rise to interruptions, damage to the VIE property, delays in production, breakdowns, system failures, technology platform failures, or internet failures, which could cause the loss or corruption of data or malfunctions of the VIE’s manufacturing facilities, as well as adversely affect its business, financial condition, and results of operations.

The VIE’s success depends on its technology research and development talents (“R&D Talents”), and the VIE cannot assure their retention.

The VIE’s success partly depends upon the retention of its R&D Talents. The VIE has a R&D Talents team comprised of 23 employees as of September 30, 2024. There can be no assurance that the existing R&D Talents will be adequate or qualified to carry out the VIE’s strategies, or that the VIE will be able to hire or retain new R&D Talents to carry out its strategies. The loss of one or more of the R&D Talents, or the failure to attract and retain additional R&D Talents, could have a material adverse effect on our business, financial condition and results of operations.

In addition, if the VIE fails to establish a competitive incentive mechanism in terms of career prospects, salary, benefits and working environment, they may face the risk of instability in the R&D Talents team, which could adversely affect their long-term development. 

If the VIE is not able to maintain and enhance its brands and increase market awareness of the VIE, or effectively develop and expand its marketing and sales capabilities, then the VIE’s ability to attract new customers may be harmed and our business, results of operations and financial condition may be adversely affected.

We believe that maintaining and enhancing the “Zerolimit”, “Zhenglian” and “ZDAN” brand identities (the “Brands”) and increasing market awareness of the aforementioned brands and the market awareness of the VIE and its capabilities, is critical to achieving widespread acceptance of its products and solutions. It is important also for the VIE to strengthen its relationships with its existing distributors and customers and to motivate its distributors and attract new customers. The successful promotion of the Brands will depend largely on the VIE’s continued marketing efforts, the VIE’s ability to continue to offer high quality products and services, the VIE’s ability to maintain relationships with suppliers, distributors, and customers, and the VIE’s ability to be thought leaders in the distributed technology market and the VIE’s ability to successfully differentiate its products and services from those of its competitors. The VIE’s brand promotion and thought leadership activities may not be successful or yield increased revenues. In addition, “independent” industry analysts often provide reviews of our products and competing products and services, which may significantly influence the perception of the VIE’s products in the marketplace. If these reviews are negative or not as strong as reviews of our competitors’ products and services, then the VIE’s brand may be harmed.

Any malicious or inadvertent negative allegations made by the media or other parties about the foregoing or other aspects of our Company, including but not limited to our shareholders, management, business, compliance with law, financial condition or prospects, whether with merit or not, could severely hurt our reputation and harm our business and results of operations.

The VIE may receive complaints from its distributors on its products, pricing and customer support. If the VIE does not handle customer complaints effectively, the VIE’s brand and reputation may suffer, its distributors may lose confidence in the VIE and they may reduce or cease their use of the VIE’s products. In addition, the VIE’s customers may post and discuss on social media about the VIE’s products, solutions and relevant services, including the VIE’s products and platform. The VIE success depends, in part, on its ability to generate positive customer feedback and minimize negative feedback on social media channels where existing and potential customers seek and share information. If actions the VIE takes or changes the VIE makes to the VIE’s products, solutions or platform upset these customers, their online commentary could negatively affect the VIE’s brand and reputation. Complaints or negative publicity about the VIE, its products, solutions or platform could materially and adversely impact the VIE’s ability to attract and retain customers, the VIE’s business, results of operations and financial condition.

As the VIE also provides services to customers in different industries, negative publicity about such counterparties, including any failure by them to adequately protect customer information, to comply with applicable laws and regulations or to otherwise meet required quality and service standards could harm the VIE’s reputation.

The promotion of the Brands also requires the VIE to make substantial expenditures, and we anticipate that these expenditures will increase as the VIE’s market becomes more competitive and as we expand into new markets. To the extent that these activities increase revenues, the increased revenues still may not be enough to offset the increased expenses we incur. If the VIE does not successfully maintain and enhance its brand, then the VIE’s business may not grow, we may see the VIE’s pricing power reduced relative to competitors and the VIE may lose customers, all of which would adversely affect our business, results of operations and financial condition.

The VIE’s ability to maintain customer satisfaction depends in part on the consistency and quality of the VIE’s customer support services through the product cycle. Failure to maintain continuous and high-quality customer support could have an adverse effect on our business, results of operation, and financial condition.

We believe that customer satisfaction is key to our business. In order to deliver high-level customer satisfaction, the VIE must successfully assist its distributors in deploying and continuing to use the VIE’s products and solutions, resolving performance issues, and responding to performance and reliability problems that may arise from time to time. Because the VIE’s platform and products are designed to be highly configurable and to rapidly implement customers’ reconfigurations, customer errors in configuring the VIE’s platform and products can result in significant disruption to its distributors.

There can be no assurance that the VIE will be able to hire sufficient personnel as and when needed, particularly if the VIE’s sales exceeds its internal forecasts. To the extent that the VIE is unsuccessful in hiring, training, and retaining adequate support resources, the VIE’s ability to provide high-quality and timely support to its distributors will be negatively impacted, and the VIE’s customers’ satisfaction with the VIE’s network could be adversely affected. Any failure to maintain high-quality customer support, or a market perception that the VIE does not maintain high-quality customer support, could adversely affect our reputation, business, results of operations, and financial condition, particularly with respect to our large enterprise customers.

Defects or errors in the VIE’s products or solutions could diminish demand for the VIE’s products or solutions, harm the VIE’s business and results of operations and subject the VIE to liability.

The VIE’s customers use its products for important aspects of its businesses, and any errors, defects or disruptions to the VIE’s products and any other performance problems with the VIE’s products could damage the VIE’s customers’ businesses and, in turn, hurt the VIE’s brand and reputation. The VIE provides regular updates to its products, which have in the past contained, and may in the future contain, undetected errors, failures, vulnerabilities and bugs when first introduced or released. Real or perceived errors, failures or bugs in our products could result in negative publicity, loss of or delay in market acceptance of the VIE’s platform, loss of competitive position, lower customer retention or claims by customers for losses sustained by them. In such an event, the VIE may be required, or may choose, for customer relations or other reasons, to expend additional resources in order to help correct the problem. In addition, the VIE may not carry insurance to compensate the VIE for any losses that may result from claims arising from defects or disruptions in products. As a result, the VIE’s reputation and brand could be harmed, and our business, results of operations and financial condition may be adversely affected.

In addition, our solutions and products must sometimes interoperate with our customers’ existing framework and infrastructure. These complex internal systems are developed, delivered, and maintained by the customer and a myriad of vendors and service providers. As a result, the components of the VIE’s customers’ infrastructure have different specifications, rapidly evolve, utilize multiple protocol standards, include multiple versions and generations of products, and may be highly customized. The VIE must be able to interoperate and provide products to customers with highly complex and customized internal frameworks, which requires careful planning and execution between the VIE’s customers, its customer support teams and, in some cases, its channel partners. Further, when new or updated elements of the VIE customers’ infrastructure or new industry standards or protocols are introduced, the VIE may have to update or enhance its technologies and infrastructure to allow the VIE to continue to provide products to customers. The VIE’s competitors or other vendors may refuse to work with the VIE to allow their products to interoperate with the VIE’s platform and products, which could make it difficult for the VIE’s platform and products to function properly in customer internal networks and infrastructures that include these third-party products.

The VIE may not deliver or maintain interoperability quickly or cost-effectively, or at all. These efforts require capital investment and engineering resources. If the VIE fails to maintain compatibility of its solutions, platform and products with its distributors’ internal networks and infrastructures, the VIE’s customers may not be able to fully utilize the VIE’s solutions, platform and products, and the VIE may, among other consequences, lose or fail to increase its market share and experience reduced demand for its products, which would materially harm our business, results of operations, and financial condition.

If the VIE fails to prevent security breaches, improper access to or disclosure of data on the network, or other hacking and attacks, we may lose users, and our business, reputation, financial condition and results of operations may be materially and adversely affected.

The VIE’s business and technology involve decentralized and distributed storage, which end users may use for the transmission of potentially sensitive or confidential data.

The VIE has privacy and data security policies in place that are designed to prevent security breaches and the VIE has employed significant resources to develop its security measures against breaches. However, as newer technologies evolve, and the portfolio of the service providers with which the VIE shares confidential information with grows, the VIE could be exposed to increased risk of breaches in security and other illegal or fraudulent acts, including cyberattacks. The evolving nature of such threats, in light of new and sophisticated methods used by criminals and cyberterrorists, including computer viruses, malware, phishing, misrepresentation, social engineering and forgery, is making it increasingly challenging to anticipate and adequately mitigate these risks.

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

The VIE’s failure to comply with data protection laws and regulations could lead to government enforcement actions and significant penalties against the VIE, and adversely impact its operating results.

Regulatory authorities in China have implemented and are considering a number of legislative and regulatory proposals concerning data protection. For example, the Cyber Security Law of the People’s Republic of China (the “Cyber Security Law”), which became effective in June 2017, created China’s first national-level data protection regime for “network operators,” which may include all organizations in China that provide services over the internet or other information network.

Under the Cyber Security Law, the transmission of certain personal information and important data outside of China is only permitted upon the completion of a security assessment conducted by or as determined by the Chinese government. Certain draft regulations, including the Measures for Security Assessment for Cross-border Transfer of Personal Information and Important Data, published in 2017, and the Measures for Security Assessment for Cross-border Transfer of Personal Information, published in 2019, have been proposed by the Chinese government that specify the procedures and stipulate more detailed compliance requirements relating to such assessment, and in certain circumstances, government approval, prior to the transmission of such information and data outside of China. In addition to the foregoing draft regulations relating to security assessment, the Cyberspace Administration of China issued and implemented the Measures for Security Assessment of Cross-border Transfer of Data effective on September 1, 2022, which provides the conditions, application procedures and required materials for security assessment through the local provincial cyberspace administration before the transmission of personal information and important data outside of China.

On December 8, 2022, the Ministry of Industry and Information Technology of China promulgated the Administrative Measures for Data Security in the Field of Industry and Information Technology (for Trial Implementation) effective from January 1, 2023, which regulate the data processing activities in the field of industry and information technology conducted within the territory of the PRC. Under the foregoing measures, “data in the field of industry and information technology” includes industrial data, telecommunications data and radio data; among others, “industrial data” means data produced and collected in the course of research and development, design, production and manufacturing, business management, operating maintenance, and platform operation in various sectors and fields of industry. A data processor in the field of industry and information technology in the PRC shall submit its catalogue of important data and core data to the local industrial regulatory department for recordation. For transmission of such important data and core outside of China, a security assessment of cross-border data transfer shall be conducted in accordance with the applicable laws and regulations.

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

We expect that these data protection and transfer laws and regulations will receive greater attention and focus from regulators going forward, and the VIE will face uncertainty as to whether the VIE’s efforts to comply with evolving obligations under data protection, privacy and security laws in China and the United States will be sufficient.

Any failure or perceived failure by the VIE to comply with applicable laws and regulations could result in reputational damage or proceedings or actions against the VIE by governmental entities, individuals or others. These proceedings or actions could subject the VIE to significant civil or criminal penalties and negative publicity, result in the delayed or halted transfer or confiscation of certain personal information, result in the suspension of ongoing trials or ban on initiation of new trials, require the VIE to change its business practices, increase its costs and materially harm our business, prospects, financial condition and results of operations. In addition, our current and future relationships with customers, suppliers and other third parties could be negatively affected by any proceedings or actions against the VIE or current or future data protection obligations imposed on them under applicable law, including Cyber Security Law. In addition, a data breach affecting personal information, or a failure to comply with applicable requirements could result in significant management resources, legal and financial exposure and reputational damage that could potentially have a material adverse effect on the VIE’s business and results of operations.

Furthermore, on February 24, 2023, the CSRC revised the Provisions on Strengthening the Management of Confidentiality and Archives Related to the Overseas Issuance of Securities and Overseas Listing by Domestic Companies which were issued in 2009. The revised Archives Rules came into effect on March 31, 2023 together with the Trial Measures. As is consistent with the Trial Measures, the revised Archives Rules will expand their application to cover indirect overseas offering and listing, by stipulating that a domestic company which plans to publicly disclose or provide to relevant individuals or entities, including securities companies, securities service providers and overseas regulators, any documents and materials containing state secrets or working secrets of government agencies, shall first obtain approval from competent authorities according to law, and file with the secrecy administrative department at the same level.

Changes in laws and regulations related to the internet or changes in the internet infrastructure itself may diminish demand for the VIE’s products and solutions, and could adversely affect our business, results of operations and financial condition.

The future success of the VIE’s business depends upon the need for decentralized distributed network technologies. Chinese or foreign government bodies or agencies have in the past adopted, and may in the future adopt, laws or regulations affecting the use of the internet or other networks, particularly decentralized distributed networks as a commercial medium. Changes in these laws or regulations could require the VIE to modify its products and platform in order to comply with these changes. In addition, government agencies or private organizations have imposed and may impose additional taxes, fees or other charges for accessing the internet or commerce conducted via the internet or other networks. These laws or charges could limit the growth of internet-related commerce or communications as well as decentralized distributed networks generally, or result in reductions in the demand for internet-based products and services or other network-based products such as the VIE products. In addition, the use of the internet or other networks as a business tool could be adversely affected due to delays in the development or adoption of new standards and protocols to handle increased demands of internet or other network activity, security, reliability, cost, ease-of-use, accessibility and quality of service. The performance of the internet or other networks and their acceptance as business tools has been adversely affected by “viruses,” “worms,” and similar malicious programs. If the use of the internet or other networks is reduced as a result of these or other issues, then demand for the VIE’s products could decline, which could adversely affect our business, results of operations and financial condition.

We are exposed to the risks of litigation and arbitration in the course of our operations.

We may from time to time be subject to various legal or administrative claims and proceedings arising from the ordinary course of business. Litigation or any other legal or administrative proceeding, regardless of the outcome, is likely to result in substantial cost and diversion of our resources, including our management’s time and attention.

If we fail to defend ourselves in these actions, we may be subject to restrictions, fines or penalties that will materially and adversely affect our operations. Even if we are successful in our attempt to defend ourselves in legal and regulatory actions or to assert our rights under various laws and regulations, the process of communicating with relevant regulators, defending ourselves and enforcing our rights against the various parties involved may be expensive and time-consuming. These actions could expose us to negative publicity, substantial monetary damages and legal defense costs, injunctive relief and criminal and civil fines and penalties, including but not limited to suspension or revocation of licenses to conduct business.

We may face tax liabilities for historical reporting errors.

In the ordinary course of our business, we are subject to complex income tax and other tax regulations, and significant judgment is required in the determination of a provision for income taxes. Although we believe our tax provisions are reasonable, if the PRC tax authorities successfully challenge our position and we are required to pay tax, interest and penalties in excess of our tax provisions, our financial condition and results of operations would be materially and adversely affected.

If we are classified as a PRC resident enterprise for PRC enterprise income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders and holders of our Ordinary Shares.

Under the PRC Enterprise Income Tax Law and its implementation rules, an enterprise established outside of the PRC with its “de facto management body” within the PRC is considered a “resident enterprise” and will be subject to the enterprise income tax on its global income at the rate of 25%. The implementation rules define the term “de facto management body” as the body that exercises full and substantial control and overall management over the business, productions, personnel, accounts and properties of an enterprise. In 2009, the State Administration of Taxation, or SAT, issued a circular, known as SAT Circular 82, which provides certain specific criteria for determining whether the “de facto management body” of a PRC-controlled enterprise that is incorporated offshore is located in China. Although this circular applies only to offshore enterprises controlled by PRC enterprises or PRC enterprise groups, not those controlled by PRC individuals or foreigners, the criteria set forth in the circular may reflect the SAT’s general position on how the “de facto management body” text should be applied in determining the tax resident status of all offshore enterprises. According to SAT Circular 82, an offshore incorporated enterprise controlled by a PRC enterprise or a PRC enterprise group will be regarded as a PRC tax resident by virtue of having its “de facto management body” in China, and will be subject to PRC enterprise income tax on its global income only if all of the following conditions are met: (i) the primary location of the day-to-day operational management is in the PRC; (ii) decisions relating to the enterprise’s financial and human resource matters are made or are subject to approval by organizations or personnel in the PRC; (iii) the enterprise’s primary assets, accounting books and records, company seals, and board and shareholder resolutions are located or maintained in the PRC; and (iv) at least 50% of voting board customers or senior executives habitually reside in the PRC. 

We believe none of our entities outside of China is a PRC resident enterprise for PRC tax purposes. However, the tax resident 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.” If the PRC tax authorities determine that Zerolimit Cayman is a PRC resident enterprise for enterprise income tax purposes, we may be required to withhold a 10% withholding tax from interest or dividends we pay to our noteholders and shareholders that are non-resident enterprises, including the holders of our Ordinary Shares. In addition, non-resident enterprise noteholders and shareholders (including holders of our Ordinary Shares) may be subject to PRC tax at a rate of 10% on gains realized on the sale or other disposition of the Ordinary Shares, if such income is treated as sourced from within the PRC. Furthermore, if we are deemed a PRC resident enterprise, dividends paid to our non-PRC individual shareholders (including the holders of Ordinary Shares) and any gain realized on the transfer of the Ordinary Shares by such shareholders may be subject to PRC tax at a rate of 20% (which, in the case of dividends, may be withheld at source by us). These rates may be reduced by an applicable tax treaty, but 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 the Ordinary Shares.

Risks Related to Doing Business in the PRC

Changes in the PRC’s economic, political or social conditions, as well as government policies, could have an adverse effect on our business and operations and the value of our Ordinary Shares.

All of our operations are conducted through the VIE located in China. Accordingly, our business, financial condition, results of operations and prospects may be influenced to a significant degree by political, economic, social conditions and government policies in China generally. While the Chinese economy has experienced significant growth over the past decades, growth has been uneven, both geographically and among various sectors of the economy. Any adverse changes in economic conditions in China, in the policies of the PRC government or in the laws and regulations in China could have a material adverse effect on the overall economic growth of China. Such developments could adversely affect our business and operating results, lead to reduction in demand for the products of the VIE and adversely affect our competitive position. The PRC government has implemented various measures to encourage economic growth and guide the allocation of resources. Some of these measures may benefit the overall Chinese economy, but may have a negative effect on us. In addition, in the past the PRC government has implemented certain measures, including interest rate adjustment, to control the pace of economic growth. These measures may affect our business and operating results.

Furthermore, our Company, the VIE, and our investors may face uncertainty about future actions by the government of China that could significantly affect the VIE’s financial performance and operations, including the enforceability of the contractual arrangements that constitute the VIE Agreements. We cannot assure you that the PRC government will not initiate possible governmental actions or scrutiny to us, which could substantially affect our operation and the value of our Ordinary Shares may depreciate quickly.

There are uncertainties regarding the interpretation and enforcement of PRC laws, rules and regulations.

All of the VIE’s operations are conducted in the PRC, and are governed by PRC laws, rules and regulations. The PRC legal system is a civil law system based on written statutes and prior court decisions may not be cited for reference. The PRC government authorities may strengthen oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers like us. Such actions taken by the PRC government authorities may intervene or influence the VIE’s operations at any time, which are beyond our control. Therefore, any such action may adversely affect our or the VIE’s operations and could completely limit or hinder our ability to offer or continue to offer securities to you and cause the value of such securities to significantly decline or become worthless.

In 1979, the PRC government began to promulgate a comprehensive system of laws, rules and regulations governing economic matters in general. The overall effect of legislation over the past four decades has significantly enhanced the protections afforded to various forms of foreign investment in China. However, the recently enacted laws, rules and regulations in China may not sufficiently cover all aspects of economic activities in China or may be subject to significant degrees of interpretation by PRC regulatory agencies. In particular, because these laws, rules and regulations are relatively new, and because of the limited number of published decisions and the nonbinding nature of such decisions, and because the laws, rules and regulations often give the relevant regulator significant discretion in how to enforce them, the interpretation and enforcement of these laws, rules and regulations involve uncertainties and can be inconsistent and unpredictable.

On February 17, 2023, with the approval of the State Council, the CSRC released the Trial Measures and five supporting guidelines, which came into effect on March 31, 2023. According to the Trial Measures, domestic companies that seek to offer or list securities overseas, both directly and indirectly, should fulfill the filing procedures and report relevant information to the CSRC. Based on the foregoing, we are required to complete necessary filing procedures with the CSRC pursuant to the Trial Measures. As of the date of this prospectus, we have prepared the filling application materials required by the Trial Measures, however, we cannot assure you that we will be able to get the clearance of filing procedures under the Trial Measures on a timely basis, or at all. Any failure by us to comply with such filing requirements under the Trial Measures may result in an order to rectify, warnings and fines against us and could materially hinder our ability to offer or continue to offer our securities. As the laws and regulations are relatively new, substantial uncertainties exist with respect to its interpretation and implementation regarding such laws and regulations. Furthermore, if the CSRC or other regulatory agencies later promulgate new rules or explanations requiring that we or the VIE obtain their approvals for this offering and any follow-on offering, we or the VIE may be unable to obtain such approvals, which could significantly limit or completely hinder our ability to offer or continue to offer securities to our investors.

Uncertainties regarding the enforcement of laws and the fact that rules and regulations in China may change with little advance notice, along with the risk that the Chinese government may take actions to strengthen oversight and control over offerings conducted overseas and/or foreign investment in China-based issuers which may intervene in or influence our operations, or could result in a material change in our or the VIE’s operations, financial performance and/or the value of our Ordinary Shares or impair our ability to raise money.

If it is later determined that the PCAOB is unable to inspect and investigate completely our auditor, our securities will be prohibited from trading in the United States under the Holding Foreign Companies Accountable Act (the HFCAA). The delisting of and prohibition from trading our securities, or the threat of their being delisted and prohibited from trading, may cause the value of our securities to significantly decline or become worthless.

Pursuant to the HFCAA, if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspections by the PCAOB for two consecutive years, the SEC will prohibit our shares from being traded on any U.S. stock exchange.

On December 18, 2020, the HFCAA was signed into law. The HFCAA has since then been subject to amendments by the U.S. Congress and interpretations and rulemaking by the SEC. On June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act (the “AHFCAA”), which proposes to reduce the period of time for foreign companies to comply with PCAOB audits from three to two consecutive years, thus reducing the time period before the securities of such foreign companies may be prohibited from trading or delisted. On December 29, 2022, the Consolidated Appropriations Act was signed into law, which contained, among other things, an identical provision of the AHFCAA, and reduced the number of consecutive non-inspection years required for triggering the prohibitions under the HFCAA from three years to two.

On December 16, 2021, the PCAOB issued a report to notify the SEC of its determination relating to the PCAOB’s inability to inspect or investigate completely registered public accounting firms headquartered in mainland China and Hong Kong. The inability of the PCAOB to conduct inspections of auditors in China made it more difficult to evaluate the effectiveness of these accounting firms’ audit procedures or quality control procedures as compared to auditors outside of China that are subject to the PCAOB inspections, which could cause existing and potential investors in issuers operating in China to lose confidence in such issuers’ procedures and reported financial information and the quality of financial statements.

On December 15, 2022, the PCAOB released a statement confirming it has secured complete access to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong, and it issued the 2022 HFCAA Determination Report to vacate its precious determinations to the contrary. The PCAOB is continuing to demand complete access, and it will act immediately to reconsider such determinations should China obstruct, or otherwise fail to facilitate the PCAOB’s access, at any time.

Our auditor, TPS, an independent registered public accounting firm headquartered in Sugar Land, Texas, issues the audit report included in this prospectus, is currently subject to PCAOB inspections, and has been inspected by the PCAOB on a regular basis.

Further developments related to the HFCAA could add uncertainties to our offering. We cannot assure you what further actions the SEC, the PCAOB or the stock exchanges will take to address these issues and what impact such actions will have on companies that have significant operations in the PRC and have securities listed on a U.S. stock exchange (including a national securities exchange or over-the-counter stock market). In addition, any additional actions, proceedings or new rules resulting from these efforts to increase U.S. regulatory access to audit information could create uncertainty for investors, the market price of our Ordinary Shares could be adversely affected, and we could be delisted if we and our auditor are unable to meet the PCAOB inspection requirement. Such a delisting would substantially impair your ability to sell or purchase our Ordinary Shares when you wish to do so, and would have negative impact on the price of our shares.

Under the PRC laws, the approval of and the filing with the CSRC or other PRC government authorities may be required in connection with this offering and our listing with Nasdaq as well as any of our future offerings and listings in an overseas market, and, if required, we cannot predict whether or for how long we will be able to obtain such approval or complete such filing.

Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the M&A Rules, adopted by six PRC regulatory agencies in 2006 and amended in 2009, requires an overseas special purpose vehicle, that is controlled directly or indirectly by the PRC companies or individuals and that has been formed for overseas listing purposes through acquisitions of PRC domestic interests held by such PRC companies or individuals, to obtain the approval of the CSRC prior to the listing and trading of such special purpose vehicle’s securities on an overseas stock exchange. The CSRC currently has not issued any definitive rule or interpretation concerning whether our offshore offerings are subject to the M&A Rules. The interpretation and application of the regulations remain unclear, and our offshore offerings may ultimately require approval of the CSRC. If the CSRC approval is required, it is uncertain whether we can or how long it will take us to obtain the approval and, even if we obtain such CSRC approval, the approval could be rescinded. Any failure to obtain or delay in obtaining the CSRC approval for any of our offshore offerings, or a rescission of such approval if obtained, would subject us to sanctions imposed by the CSRC or other PRC regulatory authorities, which could include fines and penalties on our operations in China, restrictions or limitations on our ability to pay dividends outside of China, and other forms of sanctions that may materially and adversely affect our business, financial condition, and results of operations.

On July 6, 2021, the relevant PRC government authorities issued Opinions on Strictly Cracking Down Illegal Securities Activities in Accordance with the Law. These opinions emphasized the need to strengthen the administration over illegal securities activities and the supervision on overseas listings by China-based companies and proposed to take effective measures, such as promoting the construction of relevant regulatory systems to deal with the risks and incidents faced by China-based overseas-listed companies. As a follow-up, on December 24, 2021, the CSRC issued a draft of the Provisions of the State Council on the Administration of Overseas Securities Offering and Listing by Domestic Companies, and issued a draft of Administration Measures for the Filing of Overseas Securities Offering and Listing by Domestic Companies for public comment. These draft measures propose to establish a new filing-based regime to regulate overseas offerings and listings by domestic companies. Specifically, an overseas offering and listing by a PRC company, whether directly or indirectly, or whether an initial or follow-on offering, must be filed with the CSRC. The examination and determination of an indirect offering and listing will be conducted on a substance-over-form basis, and an offering and listing shall be deemed as a PRC company’s indirect overseas offering and listing if the issuer meets the following conditions: (i) any of the operating income, gross profit, total assets, or net assets of the PRC enterprise in the most recent fiscal year was more than 50% of the relevant line item in the issuer’s audited consolidated financial statement for that year; and (ii) senior management personnel responsible for business operations and management consists of mostly PRC citizens or are ordinarily residents in the PRC, and the principal place of business is in the PRC or carried out in the PRC. The issuer or its affiliated PRC entity, as the case may be, shall file with the CSRC for its initial public offering, follow-on offering and other equivalent offering activities. Particularly, the issuer shall submit the filing with respect to its initial public offering and listing within three business days after its initial filing of the listing application, and submit the filing with respect to its follow-on offering within three business days after the completion of the follow-on offering. Failure to comply with the filing requirements may result in fines to the relevant PRC companies, suspension of their businesses, revocation of their business licenses and operation permits and fines on the controlling shareholder and other responsible persons. These draft measures also set forth certain regulatory red lines for overseas offerings and listings by PRC enterprises.

On February 17, 2023, the CSRC issued the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies, or the Trial Measures, which became effective on March 31, 2023. On the same date of the issuance of the Trial Measures, the CSRC circulated No. 1 to No. 5 Supporting Guidance Rules, the Notes on the Trial Measures, the Notice on Administration Arrangements for the Filing of Overseas Listings by Domestic Companies and the relevant CSRC Answers to Reporter Questions on the official website of the CSRC, or collectively, the Guidance Rules and Notice. The Trial Measures, together with the Guidance Rules and Notice, reiterate the basic supervision principles as reflected in the Draft Overseas Listing Regulations and regulate both direct and indirect overseas offering and listing by PRC domestic companies by adopting a filing-based regulatory regime. Pursuant to the Trial Measures, (i) an overseas offering and listing by a domestic company, whether directly or indirectly, shall be filed with the CSRC; and (ii) the issuer or its affiliated domestic company, as the case may be, shall file with the CSRC for its initial public offering, follow-on offering, issuance of convertible bonds, offshore relisting after going-private transactions and other equivalent offering activities in an overseas market. In addition, after a domestic company has offered and listed securities in an overseas market, it is required to file a report with the CSRC after the occurrence and public disclosure of certain material corporate events, including but not limited to, change of control and voluntary or mandatory delisting. As advised by our PRC counsel, the Global Law Firm, under applicable laws of PRC, we shall complete the relevant filing procedures with the CSRC before the completion of this offering and our listing on Nasdaq. As of the date of this prospectus, we have been in the process of filing with the CSRC in connection with this offering and our listing on Nasdaq. We may also be required to file with the CSRC in connection with any of our future offerings and listings in an overseas market, including follow-on offerings, issuance of convertible bonds, offshore relisting after going-private transactions, and other equivalent offering activities. If we fail to complete such filing procedures for this offering and our listing on Nasdaq as well as any future offshore offering or listing in an overseas market, including our follow-on offerings, issuance of convertible bonds, offshore relisting after going-private transactions, and other equivalent offering activities, we may face sanctions by the CSRC or other PRC regulatory authorities, which may include fines and penalties on us, restrictions on or delays to our financing transactions offshore, or other actions that could have a material and adverse effect on our business, financial condition, results of operations, reputation and prospects, as well as the trading price of our ordinary shares.

On February 24, 2023, the CSRC, Ministry of Finance of the PRC, National Administration of State Secrets Protection and National Archives Administration of China jointly revised the Provisions on Strengthening Confidentiality and Archives Administration for Overseas Securities Offering and Listing which was issued by the CSRC, National Administration of State Secrets Protection and National Archives Administration of China in 2009, or the Provisions. The revised Provisions are issued under the title of the Provisions on Strengthening Confidentiality and Archives Administration of Overseas Securities Offering and Listing by Domestic Companies, and came into effect on March 31, 2023 with the Trial Measures. One of the major revisions to the revised Provisions is expanding its application to cover indirect overseas offerings and listings, as is consistent with the Trial Measures. The revised Provisions require that, including but not limited to (a) a domestic company that plans to, either directly or through its overseas listed entity, publicly disclose or provide to relevant individuals or entities including securities companies, securities service providers and overseas regulators, any documents and materials that contain state secrets or working secrets of government agencies, shall first obtain approval from competent authorities according to law, and file with the secrecy administrative department at the same level; and (b) domestic company that plan to, either directly or through its overseas listed entity, publicly disclose or provide to relevant individuals and entities including securities companies, securities service providers and overseas regulators, any other documents and materials that, if leaked, will be detrimental to national security or public interest, shall strictly fulfill relevant procedures stipulated by applicable national regulations.

On or after March 31, 2023, any failure or perceived failure by the Company or PRC subsidiaries to comply with the above confidentiality and archives administration requirements under the revised Provisions and other PRC laws and regulations may result in that the relevant entities being held legally liable by competent authorities, and referred to a judicial organization to be investigated for criminal liability if suspected of committing a crime.

In addition, we cannot assure you that any new rules or regulations promulgated in the future will not impose additional requirements on us. If it is determined in the future that approval and filing from the CSRC or other regulatory authorities or other procedures, including the cybersecurity review under the Measures for Cybersecurity Review and the Draft Regulation on Network for Data Security (if implemented), are required for our offshore offerings, it is uncertain whether we can or how long it will take us to obtain such approval or complete such filing procedures and any such approval or filing could be rescinded or rejected. Any failure to obtain or delay in obtaining such approval or complete such filing procedures for our offshore offerings, or a rescission of any such approval or filing, if obtained by us, would subject us to sanctions by the CSRC or other PRC regulatory authorities for failure to seek CSRC approval or filing or other government authorization for our offshore offerings. These regulatory authorities may impose fines and penalties on our operations in China, limit our ability to pay dividends outside of China, limit our operating privileges in China, delay or restrict the repatriation of the proceeds from our offshore offerings into China or take other actions that could materially and adversely affect our business, financial condition, results of operations, and prospects, as well as the trading price of our listed securities. The CSRC or other PRC regulatory authorities also may take actions requiring us, or making it advisable for us, to halt our offshore offerings before settlement and delivery of the shares offered. Consequently, if investors engage in market trading or other activities in anticipation of and prior to settlement and delivery, they do so at the risk that settlement and delivery may not occur. In addition, if the CSRC or other regulatory authorities later promulgate new rules or explanations requiring that we obtain their approvals or accomplish the required filing or other regulatory procedures for our prior offshore offerings, we may be unable to obtain a waiver of such approval requirements, if and when procedures are established to obtain such a waiver.

Any uncertainties or negative publicity regarding such approval requirement could materially and adversely affect our business, prospects, financial condition, reputation, and the trading price of our securities.

Uncertainties exist with respect to the interpretation and implementation of newly enacted PRC Foreign Investment Law and its Implementation Rules and how they may impact the viability of our current corporate structure, corporate governance, and operations.

We have been advised by our PRC counsel that on March 15, 2019, the PRC National People’s Congress approved the PRC Foreign Investment Law (the “FIL”), which came into effect on January 1, 2020 and replaced the trio of existing laws regulating foreign investment in China, namely, the Sino-foreign Equity Joint Venture Enterprise Law, the Sino-foreign Cooperative Joint Venture Enterprise Law, and the Wholly Foreign-invested Enterprise Law, together with their implementation rules and ancillary regulations. On December 26, 2019, the PRC State Council approved the Implementation Rules of Foreign Investment Law, which came into effect on January 1, 2020. The PRC Foreign Investment Law and its Implementation Rules embody an expected PRC regulatory trend to rationalize its foreign investment regulatory regime in line with prevailing international practice and the legislative efforts to unify the corporate legal requirements for both foreign and domestic investments. However, since the PRC Foreign Investment Law is relatively new, substantial uncertainties exist with respect to its interpretation and implementation and future actions with respect to such laws and regulations promulgated thereunder could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or become worthless.

The PRC Foreign Investment Law specifies that foreign investments shall be conducted in line with the “negative list” issued by the State Council. A foreign invested enterprise under PRC law, or an FIE, would not be allowed to make investments in prohibited industries in the “negative list,” while the FIE must satisfy certain conditions stipulated in the “negative list” for investment in restricted industries. Although the decentralized distributed technology industry, in which the VIE operates is currently not subject to the foreign investment restrictions or prohibitions set forth on the “negative list,” it is uncertain whether the decentralized distributed technology industry will be subject to the “negative list” to be issued in the future. There are uncertainties as to how the PRC Foreign Investment Law would be further interpreted and implemented. We cannot assure you that the interpretation and implementation of the PRC Foreign Investment Law made by the relevant governmental authorities in the future will not materially impact the viability of our current corporate structure, corporate governance and business operations in any aspect. 

We may rely on dividends and other distributions on equity paid by WFOE to fund any cash and financing requirements we may have, and any limitation on the ability of WFOE to make payments to us and any tax we are required to pay could have a material adverse effect on our ability to conduct our business.

We are a Cayman Islands holding company and we may rely on dividends and other distributions on equity from WFOE for our cash requirements, including the funds necessary to pay dividends and other cash distributions to our shareholders and for services of any debt we may incur. WFOE’s ability to distribute dividends in turn depends on the payment it receives from the VIE as service fees pursuant to certain contractual arrangements among WFOE, the VIE and the VIE Shareholders entered into to comply with certain restrictions under PRC law on foreign investment. For more information on such contractual arrangements, see “Corporate History and Structure — the VIE Agreements.”

According to the Foreign Investment Law of the PRC and its implementing rules, which jointly established the legal framework for the administration of foreign-invested companies, a foreign investor may, in accordance with other applicable laws, freely transfer into or out of China its contributions, profits, capital earnings, income from asset disposal, intellectual property rights, royalties acquired, compensation or indemnity legally obtained, and income from liquidation, made or derived within the territory of China in RMB or any foreign currency, and any entity or individual shall not illegally restrict such transfer in terms of the currency, amount and frequency. According to the Company Law of the PRC and other Chinese laws and regulations, WFOE may pay dividends only out of its accumulated profits as determined in accordance with Chinese accounting standards and regulations. In addition, WFOE is required to set aside at least 10% of its accumulated after-tax profits, if any, each year to fund a certain statutory reserve fund, until the aggregate amount of such fund reaches 50% of its registered capital. Where the statutory reserve fund is insufficient to cover any loss WFOE incurred in the previous financial year, its current financial year’s accumulated after-tax profits shall first be used to cover the loss before any statutory reserve fund is drawn therefrom. Such statutory reserve funds and the accumulated after-tax profits that are used for covering the loss cannot be distributed to us as dividends. At its discretion, WFOE may allocate a portion of its after-tax profits based on Chinese accounting standards to a discretionary reserve fund. Any limitation on the ability of WFOE to distribute dividends or other payments to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our businesses, pay dividends or otherwise fund and conduct our business.

Renminbi is not freely convertible into other currencies. As result, any restriction on currency exchange may limit the ability of WFOE to use its potential future renminbi revenues to pay dividends to us. The Chinese government imposes controls on the convertibility of renminbi into foreign currencies and, in certain cases, the remittance of currency out of China. Shortages in availability of foreign currency may then restrict the ability of WFOE to remit sufficient foreign currency to our offshore entities for our offshore entities to pay dividends or make other payments or otherwise to satisfy our foreign-currency-denominated obligations. The renminbi is currently convertible under the “current account,” which includes dividends and trade and service-related foreign exchange transactions, but not under the “capital account,” which includes foreign direct investment and foreign currency debt, including loans we may secure for our onshore subsidiary. Currently, WFOE may purchase foreign currency for settlement of “current account transactions,” including payment of dividends to us, without the approval of the SAFE”) by complying with certain procedural requirements. However, the relevant Chinese governmental authorities may limit or eliminate our ability to purchase foreign currencies in the future for current account transactions. The Chinese government may continue to strengthen its capital controls, and additional restrictions and substantial vetting processes may be instituted by SAFE for cross-border transactions falling under both the current account and the capital account. Any existing and future restrictions on currency exchange may limit our ability to utilize revenues generated in renminbi to fund our business activities outside of China or pay dividends in foreign currencies to holders of our securities. Foreign exchange transactions under the capital account remain subject to limitations and require approvals from, or registration with, SAFE and other relevant Chinese governmental authorities. This could affect our ability to obtain foreign currency through debt or equity financing for our subsidiaries.

In response to the persistent capital outflow and the RMB’s depreciation against U.S. the dollar, the People’s Bank of China and the SAFE have implemented a series of capital control measures, including stricter vetting procedures for China-based companies to remit foreign currency for overseas acquisitions, dividend payments and shareholder loan repayments. For instance, the People’s Bank of China issued the Circular on Further Clarification of Relevant Matters Relating to offshore RMB Loans Provided by Domestic Enterprises, or the PBOC Circular 306, on November 22, 2016, which provides that offshore RMB loans provided by a domestic enterprise to offshore enterprises that it holds equity interests in shall not exceed 30% of the domestic enterprise’s ownership interest in the offshore enterprise. The PBOC Circular 306 may constrain WFOE’ ability to provide offshore loans to us. The PRC government may continue to strengthen its capital controls and WFOE’s dividends and other distributions may be subjected to tighter scrutiny in the future. Any limitation on the ability of WFOE to pay dividends or make other distributions to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends, or otherwise fund and conduct our business.

Under the Enterprise Income Tax Law and related regulations, dividends, interests, rent or royalties payable by a foreign invested enterprise, such as WFOE, to any of its foreign non-resident enterprise investors, and proceeds from any such foreign enterprise investor’s disposition of assets (after deducting the net value of such assets) are subject to a 10% withholding tax, unless the foreign enterprise investor’s jurisdiction of incorporation has a tax treaty with China that provides for a reduced rate of withholding tax. Undistributed profits earned by foreign-invested enterprises prior to January 1, 2008 are exempted from any withholding tax. The Cayman Islands, where our Company is incorporated, does not have such a tax treaty with China. Hong Kong has a tax arrangement with China that provides for a 5% withholding tax on dividends subject to certain conditions and requirements, such as the requirement that the Hong Kong resident enterprise own at least 25% of the PRC enterprise distributing the dividend at all times within the 12-month period immediately preceding the distribution of dividends and be a “beneficial owner” of the dividends. If WFOE declares and distributes profits to us, such payments will be subject to withholding tax, which will increase our tax liability and reduce the amount of cash available to our Company.

Cayman Islands is a party to a double tax treaty entered with the United Kingdom in 2010 but is otherwise not party to any double tax treaties that are applicable to any payments made to or by the Company.

Fluctuations in exchange rates could have a material adverse impact on our results of operations and the value of your investment.

The conversion of the Renminbi into foreign currencies, including U.S. dollars, is based on rates set by the People’s Bank of China. The Renminbi has fluctuated against the U.S. dollar, at times significantly and unpredictably. The value of the Renminbi against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in political and economic conditions in China and by China’s foreign exchange policies, among other things. We cannot assure you that Renminbi will not appreciate or depreciate significantly in value against the U.S. dollar in the future. It is difficult to predict how market forces or the PRC or U.S. government policy may impact the exchange rate between the Renminbi and the U.S. dollar in the future.

Significant fluctuation of the Renminbi may have a material adverse effect on your investment. For example, to the extent that we need to convert U.S. dollars into Renminbi for our operations, appreciation of the Renminbi against the U.S. dollar would have an adverse effect on the Renminbi amount we would receive from the conversion. Conversely, if we decide to convert our Renminbi into U.S. dollars for the purpose of making payments for dividends on our Ordinary Shares or for other business purposes, appreciation of the U.S. dollar against the Renminbi would have a negative effect on the U.S. dollar amount available to us. 

Very limited hedging options are available in China to reduce our exposure to exchange rate fluctuations. To date, we have not entered into any material hedging transactions in an effort to reduce our exposure to foreign currency exchange risk. While we may decide to enter into hedging transactions in the future, the availability and effectiveness of these hedges may be limited, and we may not be able to adequately hedge our exposure or at all. In addition, our currency exchange losses may be magnified by PRC exchange control regulations that restrict our ability to convert Renminbi into foreign currency.

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

The PRC government imposes controls on the convertibility of the Renminbi into foreign currencies and, in certain cases, the remittance of currency out of China. We receive all of our revenues in Renminbi. Under our current corporate structure, our Cayman Islands holding company may rely on dividend payments from our China subsidiary to fund any cash and financing requirements we may have. Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior approval of State Administration of Foreign Exchange, or SAFE, by complying with certain procedural requirements. Specifically, under the existing exchange restrictions, without prior approval of SAFE, cash generated from the operations of our China subsidiary in China may be used to pay dividends to our Company.

However, approval from or registration with appropriate government authorities is required where Renminbi is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of loans denominated in foreign currencies. As a result, we need to obtain SAFE approval to use cash generated from the operations of our China subsidiary and VIE to pay off their respective debt in a currency other than Renminbi owed to entities outside China, or to make other capital expenditure payments outside China in a currency other than Renminbi.

The PRC government has imposed restrictive foreign exchange policies. and stepped-up scrutiny of major outbound capital movement including overseas direct investment. More restrictions and substantial vetting process are put in place by SAFE to regulate cross-border transactions falling under the capital account. If any of our shareholders regulated by such policies fails to satisfy the applicable overseas direct investment filing or approval requirement timely or at all, it may be subject to penalties from the relevant PRC authorities. The PRC government may at its discretion further restrict access in the future to foreign currencies for current account transactions. If the foreign exchange control system prevents us from obtaining sufficient foreign currencies to satisfy our foreign currency demands, we may not be able to pay dividends in foreign currencies to our shareholders, including holders of the Ordinary Shares.

PRC regulation of loans to and direct investment in the VIE by offshore holding companies and governmental control of currency conversion may delay us from using the proceeds of this offering, to make loans or additional capital contributions to WFOE, which could materially and adversely affect our liquidity and our ability to fund and expand our business.

Any funds we transfer to WFOE, either as a shareholder loan or as an increase in registered capital, are subject to approval by or registration with relevant governmental authorities in China. According to the relevant PRC regulations on Foreign Investment Enterprises (“FIEs”) in China, capital contributions to our China subsidiary are subject to the information report with the MOFCOM or their respective local branches and registration with a local bank authorized by the SAFE. In addition, any foreign loan procured by WFOE cannot exceed statutory limits and is required to be registered with SAFE or its respective local branches. Any medium or long-term loan to be provided by us to the VIE must be registered with the National Development and Reform Commission, or NDRC, and the SAFE or its local branches. We may not be able to complete such registrations on a timely basis, with respect to future capital contributions or foreign loans by us to WFOE. If we fail to complete such registrations, our ability to use the proceeds of this offering, and to capitalize our PRC operations may be negatively affected, which could adversely affect our liquidity and our ability to fund and expand our business.

On March 30, 2015, the SAFE promulgated the Circular on Reforming the Management Approach Regarding the Foreign Exchange Capital Settlement of Foreign-Invested Enterprises, or SAFE Circular 19, which took effect on June 1, 2015. SAFE Circular 19 launched a nationwide reform of the administration of the settlement of the foreign exchange capitals of FIEs and allows FIEs to settle their foreign exchange capital at their discretion, but continues to prohibit FIEs from using the Renminbi fund converted from their foreign exchange capital for expenditure beyond their business scopes, providing entrusted loans or repaying loans between nonfinancial enterprises. The SAFE issued the Circular on Reforming and Regulating Policies on the Control over Foreign Exchange Settlement of Capital Accounts, or SAFE Circular 16, effective in June 2016. Pursuant to SAFE Circular 16, enterprises registered in China may also convert their foreign debts from foreign currency to Renminbi on a self-discretionary basis. SAFE Circular 16 provides an integrated standard for conversion of foreign exchange under capital account items (including but not limited to foreign currency capital and foreign debts) on a self-discretionary basis which applies to all enterprises registered in China. SAFE Circular 16 reiterates the principle that Renminbi converted from foreign currency-denominated capital of a company may not be directly or indirectly used for purposes beyond its business scope or prohibited by PRC laws or regulations, while such converted Renminbi shall not be provided as loans to its non-affiliated entities. As this circular is relatively new, there remains uncertainty as to its interpretation and application and any other future foreign exchange related rules. Violations of these Circulars could result in monetary or other penalties. SAFE Circular 19 and SAFE Circular 16 may limit our ability to use Renminbi converted from the net proceeds of this offering, to fund the establishment of new entities in China by the VIE, to invest in or acquire any other PRC companies through WFOE, or to establish a new consolidated VIE in China, which may adversely affect our business, financial condition and results of operations.

On October 23, 2019, the SAFE promulgated the Notice of the State Administration of Foreign Exchange on Further Promoting the Convenience of Cross-border Trade and Investment, or the SAFE Circular 28, which, among other things, allows all foreign-invested companies to use Renminbi converted from foreign currency-denominated capital for equity investments in China, as long as the equity investment is genuine, does not violate applicable laws, and complies with the negative list on foreign investment.

In light of the various requirements imposed by PRC regulations on loans to and direct investment in PRC entities by offshore holding companies, we cannot assure you that we will be able to complete the necessary government registrations or obtain the necessary government approvals on a timely basis, if at all, with respect to future loans made by us to WFOE or with respect to future capital contributions made by us to WFOE. If we fail to complete such registrations or obtain such approvals, our ability to use the proceeds we receive from our initial public offering and to capitalize or otherwise fund our PRC operations may be negatively affected, which could materially and adversely affect our liquidity and our ability to fund and expand our business.   

PRC regulations relating to the establishment of offshore special purpose companies by PRC residents may subject our PRC resident beneficial owners or WFOE to liability or penalties, limit our ability to inject capital into WFOE, limit WFOE’s ability to increase its registered capital or distribute profits to us, or may otherwise adversely affect us.

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

Under SAFE Circular 37, PRC residents who make, or have prior to the implementation of SAFE Circular 37 made, direct or indirect investments in offshore special purpose vehicles, or SPVs, will be required to register such investments with SAFE or its local branches. In addition, any PRC resident who is a direct or indirect shareholder of an SPV is required to update its filed registration with the local branch of SAFE with respect to that SPV, to reflect any material change. If our shareholders who are PRC residents or entities fail to make the required registration or to update the previously filed registration, WFOE may be prohibited from distributing their profits and any proceeds from any reduction in capital, share transfer or liquidation to us, and we may be restricted in our ability to contribute additional capital to WFOE. 

We have requested PRC residents who we know hold a direct or indirect interest in the Company to make the necessary applications, filings and registrations as required under SAFE Circular 37, and we have confirmed that all of these shareholders have completed the initial foreign exchange registrations with relevant banks. We cannot assure you, however, that all of these individuals may continue to make the required filings or updates in a timely manner, or at all. We can provide no assurance that we are or will in the future continue to be informed of identities of all PRC residents holding a direct or indirect interest in our Company. Any failure or inability by such individuals to comply with SAFE regulations may subject us to fines or legal sanctions, restrict our cross-border investment activities, and limit WFOE’s ability to distribute dividends to us. As a result, our business operations and our ability to make distributions to you could be materially and adversely affected.

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

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

It may be difficult for overseas regulators to conduct investigations or collect evidence within China.

There are significant legal and other obstacles to providing information needed for regulatory investigations or litigation initiated outside China. Although the authorities in China may establish a regulatory cooperation mechanism with the securities regulatory authorities of another country or region to implement cross-border supervision and administration, such cooperation with the securities regulatory authorities in the United States may not be efficient in the absence of mutual and practical cooperation mechanism. Furthermore, according to Article 177 of the PRC Securities Law, or Article 177, which became effective in March 2020, no overseas securities regulator is allowed to directly conduct investigations or evidence collection activities within the territory of the PRC. While detailed interpretation of or implementation rules under Article 177 have yet to be promulgated, the inability for an overseas securities regulator to directly conduct investigations or evidence collection activities within China may further increase difficulties faced by you in protecting your interests. See also “Risk Factors — Risks related to this Offering and the Ordinary Shares — You may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because we are incorporated under Cayman Islands law” for risks associated with investing in us as a Cayman Islands company.”

The M&A Rules and certain other PRC regulations establish complex procedures for some acquisitions of Chinese companies by foreign investors, which could make it more difficult for us to pursue growth through acquisitions in China.

Among other things, the M&A Rules adopted by six PRC regulatory agencies in 2006 and amended in 2009, established additional procedures and requirements that could make merger and acquisition activities by foreign investors more time consuming and complex. Such regulation requires, among other things, that the Ministry of Commerce be notified in advance of any change-of-control transaction in which a foreign investor takes control of a PRC domestic enterprise or a foreign company with substantial PRC operations, if certain thresholds under the Provisions on Thresholds for Prior Notification of Concentrations of Undertakings, issued by the State Council in 2008, are triggered. Moreover, the Anti-Monopoly Law promulgated by the Standing Committee of National People’s Congress, which became effective in 2008, requires that transactions which are deemed concentrations and involve parties with specified turnover thresholds must be cleared by State Administration for Market Regulation, or the SAMR, the successive authority of MOFCOM, before they can be completed. In addition, the security review rules issued by the State Council that became effective in September  2011 specify that mergers and acquisitions by foreign investors that raise “national defense and security” concerns and mergers and acquisitions through which foreign investors may acquire de facto control over domestic enterprises that raise “national security” concerns are subject to strict review by the Ministry of Commerce, and the rules prohibit any activities attempting to bypass a security review, including by structuring the transaction through a proxy or contractual control arrangement. In the future, we may grow our business by acquiring complementary businesses, which may be subject to SAMR merger review. Complying with the requirements of the above-mentioned regulations and other relevant rules to complete such transactions could be time consuming, and any required approval processes, including obtaining approval from the Ministry of Commerce or its local counterparts may delay or inhibit our ability to complete such transactions, which could affect our ability to expand our business or maintain our market share.

The General Office Central Committee of the Chinese Communist Party and the General Office of the State Council jointly issued the Opinions on Severe and Lawful Crackdown on Illegal Securities Activities, which was available to the public on July 6, 2021. These opinions emphasized the need to strengthen the administration over illegal securities activities and the supervision on overseas listings by China-based companies. These opinions proposed to take effective measures, such as promoting the construction of relevant regulatory systems, to deal with the risks and incidents facing China-based overseas-listed companies and the demand for cybersecurity and data privacy protection. The aforementioned policies and any related implementation rules to be enacted may subject us to additional compliance requirement in the future. We cannot assure you that we will remain fully compliant with all new regulatory requirements of these opinions or any future implementation rules on a timely basis, or at all.

Our PRC counsel has advised that 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.

We are an exempted company incorporated under the laws of the Cayman Islands, we conduct all of our operations in China and the majority of our assets are located in China. In addition, all of our current officers and directors are nationals and residents of China and all of them are currently located in China. As a result, it may be difficult for you to effect service of process upon us or those persons inside China. It may also be difficult for you to enforce in U.S. courts judgments obtained in U.S. courts based on the civil liability provisions of the U.S. federal securities laws against us and our officers and directors, as none of them currently resides in the United States or has substantial assets located in the United States. In addition, there is uncertainty as to whether the courts of the PRC would recognize or enforce judgments of U.S. courts against us or such persons, predicated upon the civil liability provisions of the securities laws of the United States or any state.

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

It may also be difficult for you or overseas regulators to conduct investigations or collect evidence within China. For example, in China, there are significant legal and other obstacles to obtaining information needed for shareholder investigations or litigation outside China or otherwise with respect to foreign entities. Although the authorities in China may establish a regulatory cooperation mechanism with its counterparts of another country or region to monitor and oversee cross-border securities activities, such regulatory cooperation with the securities regulatory authorities in the U.S. may not be efficient in the absence of a practical cooperation mechanism. Furthermore, according to Article 177 of the PRC Securities Law, or “Article 177,” which became effective in March 2020, no overseas securities regulator is allowed to directly conduct investigations or evidence collection activities within the territory of the PRC. Article 177 further provides that Chinese entities and individuals are not allowed to provide documents or materials related to securities business activities to foreign agencies without prior consent from the securities regulatory authority of the PRC State Council and the competent departments of the PRC State Council. While detailed interpretation of or implementing rules under Article 177 have yet to be promulgated, the inability for an overseas securities regulator to directly conduct investigation or evidence collection activities within China may further increase difficulties faced by you in protecting your interests.

Increases in labor costs in the PRC may adversely affect the VIE’s business and profitability and failure to comply with PRC labor laws may subject the VIE to penalties.

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

In addition, the VIE has been subject to stricter regulatory requirements with respect to labor contracts with its employees and the payment of various statutory employee benefits, including pensions, housing fund deposits, medical insurance, work-related injury insurance, unemployment insurance, and maternity insurance to designated government agencies for the benefit of their employees. Pursuant to the PRC Labor Contract Law, or the “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 the VIE decides to terminate some of its employees or otherwise changes its employment or labor practices, the Labor Contract Law and its implementation rules may limit the VIE’s ability to effect those changes in a desirable or cost-effective manner, which could adversely affect the VIE’s business and results of operations.

Companies operating in China are required by PRC labor-related laws and regulations to pay various statutory employee benefits, including pensions insurance, medical insurance, work-related injury insurance, unemployment insurance, maternity insurance and housing provident fund, to designated government agencies for the benefit of their employees and associates. The VIE has completed the social insurance registration and housing provident fund deposit registration but failed to make contributions in full on the social insurance fund and housing provident fund for all their employees, as required by the relevant PRC laws and regulations. Although the VIE has not received any order or notice from the local authorities nor any claims or complaints from their existing and former employees regarding their non-compliance with PRC labor-related laws and regulations for the years September 30, 2024 and 2023, we cannot rule out the possibility that the competent PRC labor authorities may order the VIE to rectify the non-compliance and pay the required contributions within a stipulated deadline and the VIE may be subject to a late fee of up to 0.05% per day. If the VIE still fails to rectify the non-compliance, the VIE may be subject to a fine ranging from one to three times the amount overdue, which could adversely affect our business, financial condition and results of operations.

The interpretation and implementation of labor-related laws and regulations are still constantly evolving, which may be further amended from time to time. Due to the constant evolution of the labor-related laws, we cannot assure you that the VIE’s current employment practices will not violate any future labor-related laws and regulations in China, which may subject the VIE to labor disputes or government investigations. If the VIE is deemed to have violated relevant labor laws and regulations, the VIE could be required to provide additional compensation to its employees, and our business, financial condition and results of operations could be materially and adversely affected.

Risks Related to this Offering and the Ordinary Shares

The initial public offering price of our Ordinary Shares may not be indicative of the market price of our Ordinary Shares after this offering. In addition, an active, liquid and orderly trading market for our Ordinary Shares may not develop or be maintained, and our share price may be volatile.

Prior to the completion of this offering, our Ordinary Shares were not traded on any market. Any active, liquid and orderly trading market for our Ordinary Shares may not develop or be maintained after this offering. Active, liquid and orderly trading markets usually result in less price volatility and more efficiency in carrying out investors’ purchase and sale orders. The market price of our Ordinary Shares could vary significantly as a result of a number of factors, some of which are beyond our control. In the event of a drop in the market price of our Ordinary Shares, you could lose a substantial part or all of your investment in our Ordinary Shares. The initial public offering price will be determined by us, based on numerous factors and may not be indicative of the market price of our Ordinary Shares after this offering. Consequently, you may not be able to sell our Ordinary Shares at a price equal to or greater than the price paid by you in this offering.

The following factors could affect our share price:

The stock markets in general have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. These broad market fluctuations may adversely affect the trading price of our Ordinary Shares. Securities class action litigation has often been instituted against companies following periods of volatility in the overall market and in the market price of a company’s securities. Such litigation, if instituted against us, could result in very substantial costs, divert our management’s attention and resources and harm our business, operating results and financial condition.

Our Ordinary Shares have never been publicly traded, and, as such, the price of our Ordinary Shares may fluctuate substantially.

Before this initial public offering, there was no public market for our Ordinary Shares. The initial public offering price for our Ordinary Shares will be determined through negotiations between the Underwriter and us and may vary substantially from the market price of our Ordinary Shares following this offering. An active public trading market may not develop after completion of this offering or, if developed, may not be sustained. The lack of an active market may impair your ability to sell your shares at the time you wish to sell them or at a price that you consider reasonable. An inactive market may also impair our ability to raise capital by selling shares and may impair our ability to acquire other products, technologies or businesses using our Ordinary Shares as consideration. Furthermore, if our Ordinary Shares are approved for listing on Nasdaq, there can be no guarantee that we will continue to satisfy the continued listing standards of Nasdaq. If we fail to satisfy the continued listing standards, we could be de-listed, which would have a negative effect on the price of our Ordinary Shares and impair your ability to sell your shares.

Following this offering, the market price of our Ordinary Shares may be highly volatile and may fluctuate or decline substantially as a result of a variety of factors, some of which are beyond our control or are related in complex ways, including:

In recent years, the stock markets generally have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of listed companies. Broad market and industry factors may significantly affect the market price of our Ordinary Shares, regardless of our actual operating performance. These fluctuations may be even more pronounced in the trading market for our Ordinary Shares shortly following this offering. If the market price of our Ordinary Shares after this offering does not ever exceed the initial public offering price, you may not realize any return on your investment in us and may lose some or all of your investment.

In addition, in the past, stockholders have instituted securities class action litigation following periods of market volatility. If we were to become involved in securities litigation, it could subject us to substantial costs, divert resources and the attention of management from our business and harm our business, results of operations, financial condition and reputation. These factors may materially and adversely affect the market price of our Ordinary Shares.

You will experience immediate and substantial dilution.

The initial public offering price of our shares is substantially higher than the pro forma net tangible book value per share of our Ordinary Shares. Assuming the completion of the offering, if you purchase shares in this offering, you will incur immediate dilution of approximately $[·] per share or approximately [·]% from the offering price of $4 per share, and after deducting estimated underwriting discounts, non-accountable expense allowance and estimated offering expenses payable by us. Accordingly, if you purchase shares in this offering, you will incur immediate and substantial dilution of your investment. See “Dilution.”

Because we do not expect to pay dividends in the foreseeable future after this offering, you must rely on a price appreciation of the Ordinary Shares for a return on your investment.

We currently intend to retain most, if not all, of our available funds and any future earnings after this offering to fund the development and growth of our business. As a result, we do not expect to pay any cash dividends in the foreseeable future. Therefore, you should not rely on an investment in the Ordinary Shares as a source for any future dividend income.

A sale or perceived sale of a substantial number of our Ordinary Shares may cause the price of our Ordinary Shares to decline.

If our shareholders sell substantial amounts of our Ordinary Shares in the public market, the market price of our Ordinary Shares could fall. Moreover, the perceived risk of this potential dilution could cause shareholders to attempt to sell their shares and investors to short our Ordinary Shares. These sales also make it more difficult for us to sell equity-related securities in the future at a time and price that we deem reasonable or appropriate.

We may be subject to penny stock regulations and restrictions, and you may have difficulty selling our Ordinary Shares.

The SEC has adopted regulations which generally define so-called “penny stocks” to be an equity security that has a market price of less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exemptions. If our Ordinary Shares become a “penny stock,” we may become subject to Rule 15g-9 under the Exchange Act, or the “Penny Stock Rule.” This rule imposes additional sales practice requirements on broker-dealers that sell such securities to persons other than established customers and “accredited investors” (generally individuals with a net worth of $1,000,000 or annual incomes exceeding $200,000, or $300,000 together with their spouses). For transactions covered by Rule 15g-9, a broker-dealer must make a special suitability determination for the purchaser’s written consent to the transaction prior to sale. As a result, this rule may affect the ability of broker-dealers to sell our securities and may affect the ability of purchasers to sell any of our securities to the secondary market.

For any transaction involving a penny stock, unless exempt, the rules require delivery, prior to any transaction in a penny stock, of a disclosure schedule prepared by the SEC relating to the penny stock market. Disclosure is also required to be made about sales commissions payable to both the broker-dealer and the registered representative and current quotations for the securities. Finally, monthly statements are required to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stock.

There can be no assurance that our Ordinary Shares will qualify for exemption from the Penny Stock Rule. In any event, even if our Ordinary Shares were exempt from the Penny Stock Rule, we would remain subject to Section 15(d)(6) of the Exchange Act, which gives the SEC the authority to restrict any person from participating in a distribution of penny stock, if the SEC finds that such a restriction would be in the public interest.

If securities or industry analysts do not publish research or reports about our business, or if they adversely change their recommendations regarding the Ordinary Shares, the market price for the Ordinary Shares and trading volume could decline.

The trading market for our Ordinary Shares will be influenced by research or reports that industry or securities analysts publish about our business. If industry or securities analysts decide to cover us and in the future downgrade our Ordinary Shares, the market price for our Ordinary Shares would likely decline. If one or more of these analysts cease to cover us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause the market price or trading volume for our Ordinary Shares to decline. 

If our stock becomes publicly traded, techniques employed by short sellers may drive down the market price of our Ordinary Shares.

Short selling is the practice of selling securities that the seller does not own but rather has borrowed from a third party with the intention of buying identical securities back at a later date to return to the lender. The short seller hopes to profit from a decline in the value of the securities between the sale of the borrowed securities and the purchase of the replacement shares, as the short seller expects to pay less in that purchase than it received in the sale. As it is in the short seller’s interest for the price of the security to decline, many short sellers publish, or arrange for the publication of, negative opinions regarding the relevant issuer and its business prospects in order to create negative market momentum and generate profits for themselves after selling a security. These short attacks have, in the past, led to selling of shares in the market, driving down the price of stock.

Public companies with substantial operations in the PRC (either through a VIE structure or otherwise) have been the subject of short selling. Much of the scrutiny and negative publicity has centered on allegations of a lack of effective internal control over financial reporting resulting in financial and accounting irregularities and mistakes, inadequate corporate governance policies or a lack of adherence thereto and, in many cases, allegations of fraud. As a result, many of these companies are now conducting internal and external investigations into the allegations and, in the interim, are subject to shareholder lawsuits and/or SEC enforcement actions.

It is not clear what effect such negative publicity could have on us. If we were to become the subject of any unfavorable allegations, whether such allegations are proven to be true or untrue, we could have to expend a significant amount of resources to investigate such allegations and/or defend ourselves. While we would strongly defend against any such short seller attacks, we may be constrained in the manner in which we can proceed against the relevant short seller by principles of freedom of speech, applicable law or issues of commercial confidentiality. Such a situation could be costly and time-consuming, and could distract our management from growing our business. Even if such allegations are ultimately proven to be groundless, allegations against us could severely impact our business operations, and any investment in our Ordinary Shares could be greatly reduced or even rendered worthless.

There can be no assurance that we will not be a passive foreign investment company (“PFIC”) for United States federal income tax purposes for any taxable year, which could subject United States holders of our Ordinary Shares to significant adverse United States federal income tax consequences.

A non-United States corporation will be a passive foreign investment company, or PFIC, for United States federal income tax purposes for any taxable year if either (i) at least 75% of its gross income for such taxable year is passive income or (ii) at least 50% of the value of its assets (based on average of the quarterly values of the assets) during such year is attributable to assets that produce or are held for the production of passive income. Based on the current and anticipated value of our assets and the composition of our income assets, we do not expect to be a PFIC for United States federal income tax purposes for our current taxable year ended September 30, 2021, or in the foreseeable future. However, the determination of whether or not we are a PFIC according to the PFIC rules is made on an annual basis and will depend on the composition of our income and assets and the value of our assets from time to time. Therefore, changes in the composition of our income or assets or value of our assets may cause us to become a PFIC. The determination of the value of our assets (including goodwill not reflected on our balance sheet) may be based, in part, on the quarterly market value of Ordinary Shares, which is subject to change and may be volatile.

The classification of certain of our income as active or passive, and certain of our assets as producing active or passive income, and hence whether we are or will become a PFIC, depends on the interpretation of certain United States Treasury Regulations as well as certain Internal Revenue Service, or IRS, guidance relating to the classification of assets as producing active or passive income. Such regulations guidance is potentially subject to different interpretations. If due to different interpretations of such regulations and guidance the percentage of our passive income or the percentage of our assets treated as producing passive income increases, we may be a PFIC in one or more taxable years.

If we are a PFIC for any taxable year during which a United States person holds Ordinary Shares, certain adverse United States federal income tax consequences could apply to such United States person. For more information see “Taxation — Material U.S. Federal Income Tax Consequences — Passive Foreign Investment Company.”

For as long as we are an emerging growth company, we will not be required to comply with certain reporting requirements, including those relating to accounting standards and disclosure about our executive compensation, that apply to other public companies.

We are classified as an “emerging growth company” under the JOBS Act. For as long as we are an emerging growth company, which may be up to five full fiscal years, unlike other public companies, we will not be required to, among other things, (i) provide an auditor’s attestation report on management’s assessment of the effectiveness of our system of internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act, (ii) comply with any new requirements adopted by the PCAOB requiring mandatory audit firm rotation or a supplement to the auditor’s report in which the auditor would be required to provide additional information about the audit and the financial statements of the issuer, (iii) provide certain disclosure regarding executive compensation required of larger public companies, or (iv) hold nonbinding advisory votes on executive compensation. We will remain an emerging growth company for up to five years, although we will lose that status sooner if we have more than $1.235 billion of revenues in a fiscal year, have more than $700 million in market value of our Ordinary Shares held by non-affiliates, or issue more than $1.0 billion of non-convertible debt over a three-year period.

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

To the extent that we rely on any of the exemptions available to emerging growth companies, you will receive less information about our executive compensation and internal control over financial reporting than issuers that are not emerging growth companies. If some investors find our Ordinary Shares to be less attractive as a result, there may be a less active trading market for our Ordinary Shares and our share price may be more volatile. 

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.

Prior to this offering, we have been a private company with limited accounting personnel and other resources with which to address our internal controls and procedures. Our independent registered public accounting firm has not conducted an audit of our internal control over financial reporting. However, in preparing our consolidated financial statements as of and for the fiscal years ended September 30, 2024 and 2023, and balance sheet data as of September 30, 2024 and 2023, we and our independent registered public accounting firm have identified material weaknesses in our internal control over financial reporting, as defined in the standards established by the PCAOB, and other control deficiencies. The material weaknesses identified included (i) a lack of accounting staff and resources with appropriate knowledge of U.S. GAAP and SEC reporting and compliance requirements; and (ii) a lack of formal internal controls over financial closing and reporting processes. Following the identification of the material weaknesses and control deficiencies, we plan 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; and (iii) setting up an internal audit function as well as engaging an external consulting firm to assist us with assessment of Sarbanes-Oxley compliance requirements and improvement of overall internal control. However, the implementation of these measures may not fully address the material weaknesses in our internal control over financial reporting. Our failure to correct the material weaknesses or our failure to discover and address any other material weaknesses or control deficiencies could result in inaccuracies in our financial statements and could also impair our ability to comply with applicable financial reporting requirements and related regulatory filings on a timely basis. As a result, our business, financial condition, results of operations and prospects, as well as the eventual trading price of our Ordinary Shares, may be materially and adversely affected. Moreover, ineffective internal control over financial reporting significantly hinders our ability to prevent fraud.

Upon the completion of this offering, we will become a public company in the United States subject to the Sarbanes-Oxley Act of 2002. Pursuant to Section 404 of the Sarbanes-Oxley Act, we will be required to file a report by our management on our internal control over financial reporting, including an attestation report on internal control over financial reporting issued by our independent registered public accounting firm. However, while we remain an emerging growth company, we will not be required to include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm. The presence of material weaknesses in internal control over financial reporting could result in financial statement errors which, in turn, could lead to errors in our financial reports and/or delays in our financial reporting, which could require us to restate our operating results. We might not identify one or more material weaknesses in our internal controls in connection with evaluating our compliance with Section 404 of the Sarbanes-Oxley Act. In order to maintain and improve the effectiveness of our disclosure controls and procedures and internal controls over financial reporting, we will need to expend significant resources and provide significant management oversight. Implementing any appropriate changes to our internal controls may require specific compliance training of our directors and employees, entail substantial costs in order to modify our existing accounting systems, take a significant period of time to complete and divert management’s attention from other business concerns. These changes may not, however, be effective in maintaining the adequacy of our internal control.

If we are unable to conclude that we have effective internal controls over financial reporting, investors may lose confidence in our operating results, the price of the Ordinary Shares could decline and we may be subject to litigation or regulatory enforcement actions. In addition, if we are unable to meet the requirements of Section 404 of the Sarbanes-Oxley Act, the Ordinary Shares may not be able to remain listed on the Nasdaq Capital Market.

Certain data and information in this prospectus were obtained from third-party sources and were not independently verified by us.

We have engaged Qingzhi International Consulting (Guangdong) Group Co., Ltd. (“Qingzhi”) to prepare a commissioned industry report that analyzes the decentralized distributed technology industry. The report is entitled “Distributed Technology Industry Analysis Report” and is dated June 2023 (the “Qingzhi report”). Information and data relating to the decentralized distributed technology industry included in this prospectus have been derived from the Qingzhi report. Statistical data included in the Qingzhi report also include projections based on a number of assumptions. The decentralized distributed technology industry may not grow at the rate projected by market data, or at all. Any failure of the decentralized distributed technology industry to grow at the projected rate may have a material adverse effect on our business and the market price of our Ordinary Shares. Furthermore, if any one or more of the assumptions underlying the market data is later found to be incorrect, actual results may differ from the projections based on these assumptions. 

We have not independently verified the data and information contained in the Qingzhi report or any third-party publications and reports Qingzhi has relied on in preparing its report. Data and information contained in such third-party publications and reports may be collected using third-party methodologies, which may differ from the data collection methods used by us. In addition, these industry publications and reports generally indicate that the information contained therein is believed to be reliable, but do not guarantee the accuracy and completeness of such information.

As a foreign private issuer, we are not subject to certain U.S. securities law disclosure requirements that apply to a U.S. domestic issuer, which may limit the information publicly available to our shareholders.

As a foreign private issuer, we are not required to comply with all of the periodic disclosure and current reporting requirements of the Exchange Act and therefore there may be less publicly available information about us than if we were a U.S. domestic issuer. As a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers, including:

We are required to file an annual report on Form 20-F within four months of the end of each fiscal year. Press releases related to financial results and material events will also be furnished to the SEC on Form 6-K. However, the information we are required to file with or furnish to the SEC will be less extensive and less frequent compared to that required to be filled with the SEC by U.S. domestic issuers. As a result, you may not be afforded the same protections or information that would be made available to you were you investing in a U.S. domestic issuer.

We will be a “controlled company” within the meaning of the Nasdaq listing rules, and as such may follow certain exemptions from certain corporate governance requirements that could adversely affect our public shareholders.

Following this offering, our founder, Mr. Guangqing Hu, will continue to own more than a majority of the voting power of our outstanding Ordinary Shares. Under the Nasdaq listing rules, a company of which more than 50% of the voting power is held by an individual, group, or another company is a “controlled company” and is permitted to phase in its compliance with the independent committee requirements. Although we do not intend to rely on the “controlled company” exemptions under the Nasdaq listing rules even if we are deemed a “controlled company,” we could elect to rely on these exemptions in the future. If we were to elect to rely on the “controlled company” exemptions, a majority of the members of our Board of Directors might not be independent directors and our nominating and corporate governance and compensation committees might not consist entirely of independent directors. Accordingly, if we rely on the exemptions, during the period we remain a controlled company and during any transition period following a time when we are no longer a controlled company, you would not have the same protections afforded to shareholders of companies that are subject to all of the corporate governance requirements of Nasdaq. As a “controlled company” our controlling shareholder will have substantial control over corporate matters after this offering.

Because we are a foreign private issuer and are exempt from certain Nasdaq corporate governance requirements, we may follow certain exemptions from certain corporate governance requirements that could adversely affect our public shareholders.

Nasdaq listing rules require listed companies to have, among other things, a majority of their board members be independent. As a foreign private issuer, however, we are permitted to, and may, follow home country practice in lieu of the above requirements, or we may choose to comply with the Nasdaq requirement within one year of listing. The corporate governance practice in our home country, the Cayman Islands, does not require a majority of our board to consist of independent directors. Since a majority of our Board of Directors will not consist of independent directors, fewer board members will be exercising independent judgment and the level of board oversight on the management of our company may decrease as a result. In addition, the Nasdaq listing rules also require U.S. domestic issuers to have a compensation committee, a nominating/corporate governance committee composed entirely of independent directors, and an audit committee with a minimum of three members. As a foreign private issuer, we are not subject to these requirements. The Nasdaq listing rules may require shareholder approval for certain corporate matters, such as requiring that shareholders be given the opportunity to vote on all equity compensation plans and material revisions to those plans and certain Ordinary Share issuances. We intend to comply with the requirements of Nasdaq listing rules in determining whether shareholder approval is required on such matters and to appoint a nominating and corporate governance committee. However, we may consider following home country practice in lieu of the requirements under Nasdaq listing rules with respect to certain corporate governance standards which may afford less protection to investors. Accordingly, you would not have the same protections afforded to shareholders of companies that are subject to all of the corporate governance requirements of Nasdaq. Our controlling shareholder will have substantial control over corporate matters after this offering.

As a foreign private issuer, we are permitted to adopt certain home country practices in relation to corporate governance matters that differ significantly from the Nasdaq listing standards. These practices may afford less protection to shareholders than they would enjoy if we complied fully with corporate governance listing standards.

As a foreign private issuer, we are permitted to take advantage of certain provisions in the Nasdaq listing standards that allow us to follow Cayman Islands law for certain governance matters. Certain corporate governance practices in the Cayman Islands may differ significantly from corporate governance listing standards as, except for general fiduciary duties and duties of care, Cayman Islands law has no corporate governance regime which prescribes specific corporate governance standards. Currently, we do not intend to rely on home country practice with respect to our corporate governance after we complete with this offering. However, if we choose to follow home country practice in the future, our shareholders may be afforded less protection than they otherwise would have under corporate governance listing standards applicable to U.S. domestic issuers.

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

We are an exempted company incorporated under the laws of the Cayman Islands. Our corporate affairs are governed by our memorandum and articles of association (“Memorandum and Articles of Association”), the Companies Act (As Revised) of the Cayman Islands, and the common law of the Cayman Islands. The rights of shareholders to take action against the directors, actions by our minority shareholders and the fiduciary duties of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands and from the common law of England, the decisions of whose courts are of persuasive authority, but are not binding, on a court in the Cayman Islands.

The rights of our shareholders and the fiduciary duties of our directors under Cayman Islands law are not as clearly established as they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands has a less developed body of securities laws than the United States. Some U.S. states, such as Delaware, have more fully developed and judicially interpreted bodies of corporate law than the Cayman Islands. In addition, Cayman Islands companies may not have standing to initiate a shareholder derivative action in a federal court of the United States. 

Shareholders of Cayman Islands exempted companies like us have no general rights under Cayman Islands law to inspect corporate records (other than the memorandum and articles of association and any special resolutions passed by such companies, and the register of mortgages and charges of such companies) or to obtain copies of lists of shareholders of these companies. Our directors have discretion under our amended and restated memorandum and articles of association (“Amended and Restated Memorandum and Articles of Association”) that will become effective immediately prior to completion of this offering to determine whether or not, and under what conditions, our corporate records may be inspected by our shareholders, but are not obliged to make them available to our shareholders. This may make it more difficult for you to obtain the information needed to establish any facts necessary for a shareholder motion or to solicit proxies from other shareholders in connection with a proxy contest.

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

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

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

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

You must rely on the judgment of our management as to the use of the net proceeds from this offering, and such use may not produce income or increase the price of our Ordinary Shares.

Our management will have considerable discretion in the application of the net proceeds received by us. You will not have the opportunity, as part of your investment decision, to assess whether proceeds are being used appropriately. The net proceeds may be used for corporate purposes that do not improve our efforts to maintain profitability or increase the Ordinary Share price. For instance, the net proceeds from this offering may be placed in research and development projects that do not produce income or do not lead to finished products.

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

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

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

Upon effectiveness of the registration statement of which this prospectus forms a part, we will be a public company in the United States. As a public company, we will be required to file periodic reports with the SEC upon the occurrence of matters that are material to our Company and shareholders. Although we may be able to attain confidential treatment of some of our developments, in some cases, we will need to disclose material agreements or results of financial operations that we would not be required to disclose if we were a private company. Our competitors would be able to gain access to this information, which would otherwise be confidential. This may give them advantages in competing with our Company. Similarly, as a U.S. public company, we will be governed by U.S. laws that our competitors, which are mostly private companies in the PRC, are not required to follow. To the extent that compliance with U.S. laws increases our expenses or decreases our competitiveness against such companies, our public company status could affect our results of operations.

Cayman Islands economic substance requirements may have an effect on our business and operations. 

Pursuant to the International Tax Cooperation (Economic Substance) Act, 2018 of the Cayman Islands, or the ES Act, that came into effect on January 1, 2019, a “relevant entity” is required to satisfy the economic substance test set out in the ES Act. Our Company is deemed to be a “relevant entity” since it is an exempted company incorporated in the Cayman Islands. Based on our Cayman Islands counsel’s current interpretation of the ES Act, we believe that our Company is a pure equity holding company since it only holds equity participation in other entities and only earns dividends and capital gains. Accordingly, for so long as our Company is a “pure equity holding company,” it is only subject to the minimum substance requirements, which require us to (i) comply with all applicable filing requirements under the Companies Act; and (ii) have adequate human resources and adequate premises in the Cayman Islands for holding and managing equity participations in other entities. However, there can be no assurance that we will not be subject to more requirements under the ES Act. Uncertainties over the interpretation and implementation of the ES Act may have an adverse impact on our business and operations.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

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

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

These forward-looking statements are subject to various and significant risks and uncertainties, including those which are beyond our control. Although we believe that our expectations expressed in these forward-looking statements are reasonable, our expectations may later be found to be incorrect. The forward-looking statements made in this prospectus relate only to events or information as of the date on which the statements are made in this prospectus. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. You should thoroughly read this prospectus and the documents that we refer to herein with the understanding that our actual future results may be materially different from and worse than what we expect. We qualify all of our forward-looking statements by these cautionary statements. We disclaim any obligation to update our forward-looking statements, except as required by law.

Industry Data and Forecasts

This prospectus contains data related to the VIE’s industry and market position in China and globally. This industry data includes projections that are based on a number of assumptions which have been derived from industry and government sources which we believe to be reasonable. The decentralized distributed technology industry may not grow at the rate projected by industry data, or at all. The failure of the industry to grow as anticipated is likely to have a material adverse effect on the VIE’s business and, accordingly, the market price of our Ordinary Shares. In addition, the rapidly changing nature of the decentralized distributed technology industry subjects any projections or estimates relating to the growth prospects or future condition of the VIE’s operations to significant uncertainties. Furthermore, if any one or more of the assumptions underlying the industry data turns out to be incorrect, actual results may, and are likely to, differ from the projections based on these assumptions.

USE OF PROCEEDS

We estimate that we will receive net proceeds from this offering of approximately US$8 million, or approximately US$[*] million if the Underwriter exercises its over-allotment option in full, after deducting underwriting discounts, non-accountable expense allowance and estimated offering expenses payable by us. These estimates are based upon an assumed initial public offering price of US$4 per Ordinary Share.

We plan to use the net proceeds of this offering (assuming no exercise of the over-allotment option) as follows in the order of priority:

The amounts and timing of any expenditures will vary depending on the amount of cash generated by our operations, and the rate of growth, if any, of our business, and our plans and business conditions. The foregoing represents our intentions as of the date of this prospectus based upon our current plans and business conditions to use and allocate the net proceeds of this offering. However, our management will have significant flexibility and discretion in applying the net proceeds of this offering. Unforeseen events or changed business conditions may result in application of the proceeds of this offering in a manner other than as described in this prospectus.

The foregoing represents our current intentions based upon our present plans and business conditions to use and allocate the net proceeds of this offering. Our management, however, will have broad discretion in the application of our net proceeds from this offering, and investors will be relying on the judgment of our management regarding the application of these proceeds. See “Risk Factors — Risks Related to this Offering and the Ordinary Shares — You must rely on the judgment of our management as to the use of the net proceeds from this offering, and such use may not produce income or increase the price of our Ordinary Shares” To the extent that the net proceeds we receive from this offering are not immediately applied for the above purposes, we plan to invest the net proceeds in bank deposits and low-risk bank financial products.

DIVIDEND POLICY

We have not previously declared or paid cash dividends. We do not have any plan to declare or pay any cash dividends on our Ordinary Shares in the foreseeable future after this offering. We intend to retain most, if not all, of our available funds and future earnings to operate and expand our business.

Our Board of Directors has complete discretion in deciding whether to distribute dividends, subject to certain restrictions under Cayman Islands law, namely that our company may only pay dividends out of profits or share premium, and provided always that in no circumstances may a dividend be paid if this would result in our company being unable to pay its debts as they fall due in the ordinary course of business. In addition, our shareholders may by ordinary resolution declare a dividend, but no dividend may exceed the amount recommended by our Board of Directors. Even if our Board of Directors decides to pay dividends, the timing, amount and the form of future dividends, if any, will depend upon, among other things, our future results of operations and cash flow, our capital requirements and surplus, the amount of distributions, if any, received by us from our subsidiaries, our financial condition, contractual restrictions and other factors that our Board of Directors may deem relevant.

We are an exempted company with limited liability incorporated in the Cayman Islands. We rely principally on dividends distributed by WFOE and payments from the VIE for our cash requirements, including distribution of dividends to our shareholders. Dividends distributed by our China subsidiary are subject to PRC taxes.

In addition, PRC regulations may restrict the ability of WFOE to pay dividends to us and only allow a PRC company to pay dividends out of its accumulated distributable after-tax profits as determined in accordance with its articles of association and the PRC accounting standards and regulations. See “Risk Factors —  Risks Related to Doing Business in the PRC — We may rely on dividends and other distributions on equity paid by WFOE to fund any cash and financing requirements we may have, and any limitation on the ability of WFOE to make payments to us and any tax we are required to pay could have a material adverse effect on our ability to conduct our business.” and “Regulation — Regulations Relating to Dividend Distribution.”

To the extent we pay any dividends on our Ordinary Shares, we will pay those dividends which are payable in respect of our Ordinary Shares to the depositary, as the registered holder of such Ordinary Shares, and the depositary then will pay such amounts to the holders of our Ordinary Shares, subject to the terms of the deposit agreement, including the fees and expenses payable thereunder. See “Description of Share Capital.” Cash dividends on our Ordinary Shares, if any, will be paid in U.S. dollars.

CAPITALIZATION

The following table sets forth our capitalization as of and for the fiscal years ended September 30, 2024 and 2023 presented on:

You should read this table in conjunction with the information under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes included elsewhere in this prospectus:

A $1.00 increase (decrease) in the assumed initial public offering price of $4 per Ordinary Share would increase (decrease) each of additional paid-in capital, total shareholders’ equity and total capitalization by $[•] million, assuming the number of Ordinary Shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts, non-accountable expense allowance and estimated expenses payable by us.

DILUTION

If you invest in our Ordinary Shares, your interest will be diluted for each Ordinary Share you purchase to the extent of the difference between the initial public offering price per Ordinary Share and our net tangible book value per Ordinary Share after this offering. Dilution results from the fact that the initial public offering price per Ordinary Share is substantially in excess of the net tangible book value per Ordinary Share attributable to the existing shareholders for our presently outstanding Ordinary Shares.

Our net tangible book value as of September 30, 2024 was a negative $[·], or a negative $[·] per Ordinary Share. Net tangible book value represents the amount of our total consolidated tangible assets, less the amount of our total consolidated liabilities. Dilution is determined by subtracting the net tangible book value per Ordinary Share (as adjusted for the offering) from the initial public offering price per Ordinary Share and after deducting the estimated discounts and non-accountable expenses to the Underwriter and the estimated offering expenses payable by us.

After giving effect to our sale of [  ] Ordinary Shares offered in this offering, based on the initial public offering price of $[  ] per Ordinary Share and after the deduction of the estimated discounts and non-accountable expense allowance to the Underwriter and the estimated offering expenses payable by us, our as adjusted net tangible book value as of September 30, 2023, would have been $[·], or $[·] per outstanding Ordinary Share. This represents an immediate increase in net tangible book value of $[·] per Ordinary Share, and an immediate dilution of $[·] per Ordinary Share to investors purchasing Ordinary Shares in this offering. The as adjusted information discussed above is illustrative only.

The following table illustrates such dilution:

If the Underwriter exercises its over-allotment option in full, the pro forma as adjusted net tangible book value per Ordinary Share after the offering would be $[·], the increase in net tangible book value per Ordinary Share would be $[·], and the immediate dilution per Ordinary Share to new investors in this offering would be $[·].

The following table summarizes, on a pro forma as adjusted basis as of September 30, 2023, the differences between existing shareholders and the new investors with respect to the number of Ordinary Shares purchased from us, the total consideration paid and the average price per Ordinary Share and per Ordinary Share paid before deducting underwriting discounts and estimated offering expenses payable by us.

The pro forma as adjusted information discussed above is illustrative only. Our net tangible book value following the completion of this offering is subject to adjustment based on the actual initial public offering price of the Ordinary Shares and other terms of this offering determined at pricing.

ENFORCEABILITY OF CIVIL LIABILITIES

We are incorporated under the laws of the Cayman Islands as an exempted company with limited liability. We are incorporated in the Cayman Islands in order to enjoy the following benefits associated with being a Cayman Islands exempted company:

However, certain disadvantages accompany incorporation in the Cayman Islands. These disadvantages include:

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

We conduct substantially all of our operations in China, and substantially all of our assets are located in China. All of our directors and officers are nationals of China and all of them are currently located in China. Additionally, substantially all of their assets are located in China. As a result, it may be difficult or impossible for a shareholder to effect service of process within the United States upon us or these persons, or to enforce against us or them judgments obtained in United States courts, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States. It may also be difficult for shareholder to enforce judgments obtained in U.S. courts based on the civil liability provisions of the U.S. federal securities laws against us and our executive officers and directors. Since the majority of our officers’ and directors’ residences are in China, it may make it difficult to enforce any judgments obtained from foreign courts against such persons.

We have appointed [•] as our agent to receive service of process with respect to any action brought against us in the United States District Court for the Central District of California under the federal securities laws of the United States or of any state in the United States or any action brought against us in the Supreme Court of the State of California in the County of San Francisco under the securities laws of the State of California.

Ogier, our counsel as to Cayman Islands law, and Global Law Office, our counsel as to PRC law, have advised us, respectively, that there is uncertainty as to whether the courts in the Cayman Islands and the PRC, respectively, would (i) recognize or enforce judgments of courts of the United States based on certain civil liability provisions of the securities laws of the United States and (ii) entertain original actions brought in the Cayman Islands or the PRC against us or our directors or officers predicated upon the securities laws of the United States or any state in the United States.

We have been advised by our Cayman Islands legal counsel, Ogier, that there is uncertainty as to whether the courts of the Cayman Islands would (i) recognize or enforce against us judgments of courts of the United States based on certain civil liability provisions of U.S. securities laws; and (ii) entertain original actions brought in each respective jurisdiction against us or our directors or officers predicated upon the securities laws of the United States or any state in the United States.

There is no statutory enforcement in the Cayman Islands of judgments obtained in the United States, although the courts of the Cayman Islands will in certain circumstances recognize and enforce a foreign judgment, without any re-examination or re-litigation of matters adjudicated upon, provided such judgment:

Subject to the above limitations, in appropriate circumstances, a Cayman Islands court may give effect in the Cayman Islands to other kinds of final foreign judgments such as declaratory orders, orders for performance of contracts and injunctions.

Global Law Office has further advised us that the PRC Civil Procedures Law governs the recognition and enforcement of foreign judgments. PRC courts may recognize and enforce foreign judgments in accordance with the PRC Civil Procedures Law based either on treaties between the PRC and the country where the judgment is made or on principles of reciprocity between jurisdictions.

The PRC does not have any treaties or other agreements with the United States or the Cayman Islands that provide for the reciprocal recognition and enforcement of foreign judgments. In addition, according to the PRC Civil Procedures Law, courts in the PRC will not enforce a foreign judgment against us or our directors and officers if they determine that the judgment violates the basic principles of PRC law or national sovereignty, security or public interest. As a result, it is uncertain whether a PRC court would enforce a judgment rendered by a court in the United States or the Cayman Islands. Under the PRC Civil Procedures Law, foreign shareholders may originate actions based on PRC law against us in the PRC, if they can establish a sufficient nexus to the PRC for a PRC court to have jurisdiction, and meet other procedural requirements, including, among others, the plaintiff must have a direct interest in the case, and there must be a concrete claim, a factual basis and a cause for the suit.

In addition, it will be difficult for U.S. shareholders to originate actions against us in the PRC in accordance with PRC laws because we are incorporated under the laws of the Cayman Islands and it will be difficult for U.S. shareholders, by virtue only of holding our Ordinary Shares, to establish a connection to the PRC for a PRC court to have jurisdiction as required under the PRC Civil Procedures Law.

CORPORATE HISTORY AND STRUCTURE

Corporate History

We are a holding company incorporated in the Cayman Islands. As a holding company with no material operations of our own, the majority of our operations are conducted through the VIE in China pursuant to contractual arrangements. Accordingly, when we refer to our business and operations, we are referring to the business of the VIE.

We are a pioneer technology company holding competitive advantages in the PRC in the development of secure, decentralized, distributed network solutions, employing both software and hardware to provide complete solutions for various industries and applications. We develop a variety of solutions relating to the need for secure, decentralized, distributed networks. A key function of our proprietary decentralized network technology is that it can be used to create and maintain unique networks, applicable in a variety of contexts to meet a multitude of business and market needs.

We commenced our commercial operations in 2017 in China. In the early stages of our establishment, we focused on building the overall technological framework to expedite the development process of the distributed network. From 2018 to 2019, we made breakthroughs in the technological framework, including the development of mobile deployment, peer-to-peer networking, and distributed storage. We also launched successive versions of our distributed network configuration tool software, including a demo version, internal test version, and public test version. In September 2021, we officially launched the Cloud Base Station Node Software, which marked a milestone in our business operations. Since 2021, we have begun generating revenue from software products developed based on distributed networks. In 2022, we obtained the national high-tech enterprise certification in China. In April 2023, we achieved the recognition as a specialized and sophisticated SME.

Our holding company Zerolimit Technology Holding Co. Ltd, or Zerolimit Cayman, was incorporated under the laws of the Cayman Islands on February 2, 2023 to facilitate off-shore financing activities, and our daily operations are conducted primarily through the VIE in China. On August 28, 2017, Zhenglian Technology (Shenzhen) Co., Ltd., or Zhenglian Shenzhen, the VIE, was incorporated pursuant to PRC laws. Zerolimit Technology Holding Co., Limited, or HK Zerolimit, our wholly-owned Hong Kong subsidiary, was established on March 13, 2023. Finally, on May 22, 2023, Zerolimit Holdings (Shenzhen) Co., Ltd was incorporated pursuant to PRC laws as a wholly foreign-owned enterprise, WFOE, and a wholly owned subsidiary of HK Zerolimit. WFOE has entered into a series of contractual arrangements with the VIE and its shareholders. As a result of our direct ownership in WFOE and the contractual arrangements with the VIE, we are considered the primary beneficiary of the VIE. The VIE Agreements by and between WFOE, the VIE and the VIE Shareholders are described in more detail below.

Corporate Structure

The following diagram illustrates our corporate structure, including our significant subsidiaries, and the VIE, as of the date of this prospectus:

The shareholders of Zerolimit Technology Holding Co. Ltd. are as follows:

Beneficial owners of the above are as follows: (a) Guangqing Hu beneficially owns 100% of these shares on behalf of Zerolimit Digital Technology Limited; (b) Kai Hu beneficially owns 100% of these shares on behalf of Zerolimit Excellence Limited; (c) Jian Gang beneficially owns 100% of these shares on behalf of Zerolimit Power Limited; and (d) Baifen Le, beneficially owns 100% of these shares on behalf of Zerolimit Virtue Limited.

The VIE equity interest holders include ZeroLimit Digital Technology Co., Ltd, Kai Hu, Jian Gang and Baifen Le, which hold 73%, 11%, 11% and 5% of the equity interests in the VIE, respectively; ZeroLimit Digital Technology Co., Ltd equity interest holders include Guangqing Hu and Zerolimit Origin Technology (Shenzhen) Co., Ltd, which hold 10% and 90% of the equity interests in ZeroLimit Digital Technology Co., Ltd, respectively; Zerolimit Origin Technology (Shenzhen) Co., Ltd equity interest holders include Guangqing Hu and Kai Hu, who hold 90% and 10% of the equity interests in the Zerolimit Origin Technology (Shenzhen) Co., Ltd, respectively.

Arrangements between Onshore and Offshore Entities

Contracts or arrangements between the offshore and onshore companies are discussed below, including the manner in which the Company’s operates and the impact on its economic rights and ability to control its subsidiaries.

On May 24, 2023, the Company consummated a reorganization pursuant to which, WFOE, Zhenglian Shenzhen and Zhenglian Shenzhen’s shareholders entered into a series of contractual arrangements. Such agreements are described under “Corporate History and Structure — The VIE Agreements” as follows: (1) Zerolimit Cayman is a holding company with no business operations other than holding the shares in Zerolimit HK (2) Zerolimit HK is a pass-through entity with no business operations other than holding equity interest in WFOE and (3) WFOE is exclusively engaged in the business of managing the operations of Zhenglian Shenzhen. The Company controls Zhenglian Shenzhen through contractual agreements, which are described under “Corporate History and Structure — The VIE Agreements.”

Pursuant to PRC laws, each entity formed under PRC law shall have certain business scope registered at the Administration for Market Regulation or its local counterpart. As such, WFOE’s business scope is to primarily engage in business development, technology service, technology consulting, intellectual property service and business management consulting. Since the sole business of WFOE is to provide Zhenglian Shenzhen with technical support, consulting services and other management services relating to its day-to-day business operations and management in exchange for a consulting fee solely at WFOE’s discretion and can be the net income of Zhenglian Shenzhen, such business scope is necessary and appropriate under the PRC laws. Zhenglian Shenzhen, on the other hand, has been granted a business scope different from WFOE to enable it to provide distributed network technology solutions.

The VIE Agreements

We are a holding company incorporated in the Cayman Islands and not a Chinese operating company. As a holding company with no material operations of our own, the majority of our operations are conducted through the VIE in the PRC pursuant to the VIE Agreements. The VIE Agreements were entered into by and among WFOE, the VIE, and the VIE’s shareholders and include the following agreements: Powers of Attorney, Equity Interest Pledge Agreement, Exclusive Consulting and Services Agreement, Exclusive Option Agreement, and a Spousal Consent Letter. Due to the PRC legal restrictions on foreign ownership in certain internet-related businesses we may explore and operate in the future. We control and receive the economic benefits of the VIE’s business operations through the VIE Agreements, and we consolidate the VIE for accounting purposes only because we met the conditions under U.S. GAAP to consolidate the VIE. Pursuant to the VIE Agreements, the VIE shall pay service fees in an amount equivalent to all of its net income to WFOE, while WFOE has the power to direct the activities of the VIE that can significantly impact the VIE’s economic performance, has the obligation to absorb the expected losses of the VIE, and has the right to receive substantially all of the economic benefits of the VIE. Such contractual arrangements are designed so that the operations of the VIE are solely for the benefit of WFOE and ultimately, the Company. As such, under U.S. GAAP, the Company is deemed to have a controlling financial interest in, and be the primary beneficiary of, the VIE for accounting purposes and must consolidate the VIE.

However, the VIE Agreements may not be as effective in providing operational control. For example, the VIE and the VIE Shareholders could breach their contractual arrangements with us by, among other things, failing to conduct the VIE’s operations in an acceptable manner or taking other actions that are detrimental to our interests. If we had direct ownership of the VIE, we would be able to exercise our rights as a shareholder to effect changes in the board of directors of the VIE, which in turn could implement changes, subject to any applicable fiduciary obligations, at the management and operational level. However, under the current contractual arrangements, we rely on the VIE and the VIE Shareholders to perform their obligations under such contractual arrangements so that we can exercise operational control for accounting purposes. The VIE Shareholders may not act in the best interests of our Company or may not perform their obligations under these contracts. We are also subject to the risk that the PRC government could disallow the VIE structure, which would likely result in a material change in our operations and, as a result, the value of our Ordinary Shares may depreciate significantly or become worthless. The VIE Agreements have not been tested in a court of law in China as of the date of this prospectus. Such risks exist throughout the period in which we intend to operate certain portions of our business through contractual arrangements with the VIE in accordance with the VIE Agreements.

The following is a summary of the VIE Agreements.

Agreements that provide us and the PRC Subsidiaries with effective control over the VIE

Powers of Attorney. Under the Powers of Attorney, dated May 24, 2023, executed by each VIE Shareholder, accepted by WFOE and acknowledged by the VIE, each of the VIE Shareholder irrevocably authorized the WFOE’s designee, to (i) attend the shareholders’ meeting of the VIE and execute relevant shareholders’ resolutions on behalf of the VIE Shareholder, (ii) exercise all the VIE Shareholder’s right that the VIE Shareholder is entitled to under the PRC laws promulgated from time to time and the articles of association of the VIE amended from time to time, including but not limited to, shareholders’ rights to vote, sell, transfer, pledge or dispose of all or a portion of the equity interests in the VIE, (iii) appoint and elect, as the VIE Shareholder’s authorized representative, the legal representative, chairman of the board of directors, directors, supervisors, general managers and other senior managements, (iv) execute documents, meeting minutes and relevant filling documents in relation to the registration of the VIE kept by competent administrations of industry and commerce, and (v) exercise all voting rights on behalf of the VIE Shareholder when it is bankrupted. The powers of attorney will remain effective until the shareholders are no longer registered VIE Shareholders.

Equity Interest Pledge Agreement. On May 24, 2023, the VIE Shareholders and WFOE entered into an Equity Interest Pledge Agreement. Under this agreement, the VIE Shareholders pledged their equity interests in the VIE to WFOE to secure the performance of their obligations under the exclusive option agreement and the power of attorney, and the VIE’s payment obligations under the Exclusive Consulting and Services Agreement as described below. Without WFOE’s prior written consent, the VIE Shareholders shall not transfer the equity interests pledged thereunder or create any other pledge or encumbrance on such equity interests during the term of the equity interest pledge agreement. The equity interest pledge agreements remain effective unless otherwise terminated by WFOE in the event of material breach by the VIE, or terminated pursuant to other agreements entered into among all parties to the Equity Interest Pledge Agreement.

Agreement that allows us and the PRC Subsidiaries to receive economic benefits from the VIE

Exclusive Consulting and Services Agreement. On May 24, 2023, the VIE and WFOE entered into an exclusive service agreement (the “Exclusive Consulting and Services Agreement”), pursuant to which agreement WFOE will be the exclusive provider of services and support reasonably requested by the VIE, including enterprise management and training, the research and development of computer software, information system software and related products and the sale and marketing of computer software, information system software and related products. Without WFOE’s written consent, the VIE shall not accept any technology consulting and services covered by the Exclusive Consulting and Services Agreement from any third party. The VIE agrees to pay service fees to WFOE on annual basis. In the event that the VIE fails to pay the service fee and other expenses in accordance with this agreement, the VIE shall additionally pay liquidated damage in an amount representing 0.05% late payment per day to WFOE. The service fees include the compensation that WFOE shall be paid for the provision of consultancy and services. The VIE shall additionally pay liquidated damage in an amount representing 0.05% late payment per day to WFOE. The VIE’s relevant shareholders will pledge their equity interests in the VIE to WFOE to secure all service Fee, liquidated damages, actual expenses and indemnifications payable by the VIE under this agreement. The Exclusive Consulting and Services Agreement will remain effective indefinitely unless otherwise terminated by WFOE on such expiration date upon prior written notice or earlier terminated pursuant to other agreements entered into among all parties to the Exclusive Consulting and Services Agreement.

Agreements that provide us and the PRC Subsidiaries with the option to purchase the equity interest in the VIE

Exclusive Option Agreement. On May 24, 2023, the VIE Shareholders, the VIE and WFOE entered into an exclusive option agreement (the “Exclusive Option Agreement), pursuant to which the VIE Shareholders and the VIE granted WFOE or its designees an irrevocable and exclusive right to purchase (i) all the equity held by the VIE Shareholders in the VIE for the amount in proportion to their respective contributions to the registered capital of the VIE, and (ii) all assets of the VIE for the net book value of the relevant assets. If the lowest price permitted under PRC law is higher than the corresponding capital contribution of the transfer equity and/or the net book value of the purchased assets, the VIE Shareholders and/or the VIE shall pay all the remaining of the excess amount to WFOE after deducting all the taxes and fees required by the applicable PRC Law. The Exclusive Option Agreement further provides that the VIE Shareholders shall not dispose of or encumber any of their equity interests in the VIE without the prior written consent of WFOE, and the VIE shall not dispose of or transfer any of its assets or income or distribute any dividends to the VIE Shareholders in any manner. The Exclusive Option Agreement remains effective unless otherwise terminated by WFOE or terminated pursuant to other agreements entered into among all parties to the Exclusive Option Agreement.

Spousal Consent. Pursuant to the Spousal Consent Letters dated May 24, 2023, the spouse of each applicable shareholder of the VIE unconditionally and irrevocably agreed that the equity interest in the VIE held by them and registered in their names will be disposed of pursuant to the Exclusive Consulting and Services Agreement, the Exclusive Option Agreement, the Equity Interest Pledge Agreement and the Powers of Attorney described above and below. Each of the signing spouse agreed not to assert any rights over the equity interest in the VIE held by such shareholder. In addition, in the event that any spouse obtains any equity interest in such VIE held by such shareholder for any reason, he or she agreed to be bound by and sign any legal documents substantially similar to the contractual arrangements described above, as may be amended from time to time.

In the opinion of Global Law Office, our PRC legal counsel, the VIE Agreements are not in violation of any prohibitive provisions of the current applicable PRC Laws, however, the relevant PRC regulatory authorities have broad discretion in determining whether the VIE structure violates PRC laws. Accordingly, the PRC regulatory authorities may take a view that is contrary to, or otherwise different from, the above opinion of our PRC legal counsel.

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

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes included elsewhere in this prospectus. This discussion contains forward-looking statements reflecting our current expectations that involve risks and uncertainties. See “Cautionary Note Regarding Forward-Looking Statements” for a discussion of the uncertainties, risks, and assumptions associated with these statements. Actual results and the timing of events could differ materially from those discussed in our forward-looking statements as a result of many factors, including those set forth under “Risk Factors” and elsewhere in this prospectus.

Unless otherwise indicated, all share amounts and per share amounts in this prospectus have been presented giving effect to a forward split of our Ordinary Shares at a ratio of 10,000:1 share and additional share issuances to our existing shareholders approved by our shareholders and Board of Directors on February 19, 2024.

Overview

Our mission is driving continuous advancement in internet technology. We dedicated to providing a comprehensive solution for global users in the transition to the new generation of the internet. Our distributed network infrastructure software products enable users to efficiently set up distributed networks or migrate existing centralized applications to distributed networks. We not only offer efficient network infrastructure tools but also provides complementary software development kits for decentralized applications. The development tools facilitate the entire process of decentralized application development, including coding, debugging, testing, and deployment, within an integrated environment.

Our revenue comes from Zhenglian Shenzhen’s (the VIE’s) software licensing and related services. For the fiscal years ended September 30, 2024 and 2023, our net revenue, mainly generated from software sales and related service, was $5,906,162 and $5,680,667 respectively, and net income was $2,711,275 and $2,522,852 respectively.

We have developed competitive advantages in our business and technological capabilities, including the following:

Key Factors Affecting Our Operating Results

Our results of operations have been, and are expected to continue to be, affected by a number of factors, which primarily include the following:

Results of Operations

For the Fiscal Years Ended September 30, 2024 and 2023

The following table summarizes the results of our operations for the fiscal years ended September 30, 2024 and 2023, respectively, and provides information regarding the dollar and percentage increase or (decrease) during such periods.

(All amounts, other than percentages, are in U.S. dollars)

Revenues

The following table presents revenue disaggregation by software products for the fiscal years ended September 30, 2024 and 2023, respectively.

Revenue increased by $225,495 or 4%, to $5,906,162 for the fiscal year ended September 30, 2024 from $5,680,667 for the fiscal year ended September 30, 2023. Despite the decrease of sales for Smart Metaverse Box and Decentralization Application Software, the increase in revenues in 2024 was primarily due to the increase of sales in Cloud Data Base Station Node Software and the launch of the new product of Enterprise Data Base Station Node Software and Hardware.

Cost of revenues

The following table presents cost of revenues by cost categories for the fiscal years ended September 30, 2024 and 2023, respectively.

Cost of revenues increased by $32,099 or 2.15%, to $1,525,402 for the fiscal year ended September 30, 2024 from $1,493,303 for the fiscal year ended September 30, 2023. The increase in cost of revenues was partly due to increase of intangible assets amortization.

Our gross profit increased by $193,396, or 4.62%, to $4,380,760 for the fiscal year ended September 30, 2024 from $4,187,364 for the fiscal year ended September 30, 2023. Overall gross profit margin kept stable at 74% for the fiscal year ended September 30, 2024 as compared to 74% for the fiscal year ended September 30, 2023.

Operating expenses

Selling and marketing expenses

The following table presents selling and marketing expenses for the fiscal years ended September 30, 2024 and 2023, respectively.

Selling and marketing expenses decreased by $6,882, or 1%, to $574,417 for the fiscal year ended September 30, 2024 as compared to $581,299 for the fiscal year ended September 30, 2023. On the one hand, we have made appropriate optimizations and reductions in personnel and office expenses; on the other hand, we have increased our expense in business publicity to generate more revenue through promotion.

General and administrative expenses

The following table presents general and administrative expenses for the fiscal years ended September 30, 2024 and 2023, respectively.

General and administrative (“G&A”) expenses decreased by $22,287 or 2%, to $1,260,104 for the fiscal year ended September 30, 2024 as compared to $1,282,391 for the fiscal year ended September 30, 2023. The decrease was primarily due to the decrease of provision for credit loss, and professional services.

Research and development expenses

Our research and development (R&D) expenses were $47,909 and $124,100 for the fiscal years ended September 30, 2024 and 2023, respectively. Our R&D expenses are all costs associated with the research and development of our potential new software or service offerings, as well as improvements in existing software. These costs, which primarily include salaries, contract services and supplies, are expensed as incurred on an ongoing basis. There were no material changes in our R&D expenses on a year-over-year basis.

Other income (expenses)

Other income was $440,299 and $581,146 for the fiscal years ended September 30, 2024 and 2023, respectively, which consisted primarily of VAT refund received for sales of software.

Provision for income tax

For the fiscal years ended September 30, 2024 and 2023, we made a current income tax provision of $235,195 and $277,576, respectively. For the fiscal years ended September 30, 2024 and 2023, we recorded a deferred tax credit of $7,841 and $19,708, respectively.

Net income

As a result of the foregoing, we recorded net income of $2,711,275 and $2,522,852 in the fiscal years ended September 30, 2024 and 2023, respectively.

Liquidity and Capital Resources

Our primary sources of liquidity consist of existing cash balances and cash flows from our operating activities, capital contribution from shareholders and loan from related parties and banks. We received proceeds from short-term bank loan of $694,028 and $425,332 for the fiscal years ended September 30, 2024 and 2023, respectively. We made a repayment of short-term bank loan of $416,417 for the fiscal year ended September 30, 2024. We received a capital contribution from our shareholders of nil and $238,113 for the fiscal years ended September 30, 2024 and 2023, respectively. We received a loan from related parties of $13,881 and $1,458,321 for the fiscal years ended September 30, 2024 and 2023, respectively. We made a prepayment of loan from related parties of $13,881 and $663,669 for the fiscal years ended September 30, 2024 and 2023, respectively.

As of September 30, 2024, we had cash and cash equivalents of $105,706.

We believe that our current levels of cash, combined with the net proceeds from this offering, will be sufficient to meet our anticipated cash needs for our operations and expansion plans for at least the next 12 months. We may, however, in the future require additional cash resources, due to changing business conditions, implementation of our strategy to expand our business, or other investments or acquisitions we may decide to pursue. If our own financial resources are insufficient to satisfy our capital requirements, we may seek to sell additional equity or debt securities or obtain additional credit facilities. The sale of additional equity securities could result in dilution to our shareholders. The incurrence of indebtedness would result in increased debt service obligations and could require us to agree to operating and financial covenants that would restrict our operations. Financing may not be available in amounts or on terms acceptable to us, if at all. Any failure by us to raise additional funds on terms favorable to us, or at all, could limit our ability to expand our business operations and could harm our overall business prospects.

In utilizing the proceeds that we expect to receive from this offering, we may make capital contributions to our PRC subsidiaries, acquire or establish new subsidiaries, or give loans to our subsidiaries. However, use of the proceeds by our PRC subsidiaries are subject to PRC regulations.

Our operations are primarily based in China. A significant portion of our transactions are settled in Renminbi and our financial statements are presented in U.S. dollars. Under existing PRC foreign exchange regulations, Renminbi may be converted into foreign currencies for current account items, including profit distributions, interest payments and trade- and service-related foreign exchange transactions, without prior SAFE approval as long as certain routine procedural requirements are fulfilled. Our PRC subsidiary is allowed to pay dividends in foreign currencies to us without prior SAFE approval by following certain routine procedural requirements. However, approval from or registration with competent government authorities is required where the Renminbi is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of loans denominated in foreign currencies. The PRC government may at its discretion restrict access to foreign currencies for current account transactions in the future. The ability of our PRC subsidiaries to make dividends or other cash payments to us is subject to various restrictions under PRC laws and regulations. The following table sets forth a summary of our cash flows for the periods indicated:

Cash Flow Summary

For the Fiscal Years Ended September 30, 2024 and 2023

The following summarizes the key components of our cash flows for the fiscal years ended September 30, 2024 and 2023:

Net cash used in operating activities for the fiscal year ended September 30, 2024 was $1,825,252, which was primarily attributable to a net income of $2,711,275, adjusted for non-cash items for $885,823 and adjustments for changes in working capital of $5,422,350. The adjustments for changes in working capital mainly included:

Net cash used in operating activities for the fiscal year ended September 30, 2023 was $1,393,210, which was primarily attributable to a net income of $2,522,852, adjusted for non-cash items for $859,846 and adjustments for changes in working capital of $4,775,908. The adjustments for changes in working capital mainly included:

Investing Activities:

Net cash used in investing activities was approximately $12,210 for the fiscal year ended September 30, 2024, attributable to the payments related to intangible assets from our ongoing research and development efforts.

Net cash used in investing activities was approximately $629,922 for the fiscal year ended September 30, 2023, primarily attributable to the payments related to intangible assets from our ongoing research and development efforts in the amount of approximately $593,670 and payments made to acquire office equipment in the amount of $36,252.

Financing Activities:

Net cash provided by financing activities was $277,611 and $1,458,097 for the fiscal year ended September 30, 2024 and 2023, respectively, mainly attributable to the below:

Based on current operating plan, our management believes that the Company will be able to meet future liquidity and capital requirement for at least next twelve months from the date of the issuance of the audited financial statements.

Disclosure of Contractual Obligations

There are no material contractual obligations as of September 30, 2024, and 2023, except for the operating lease commitment. See “— Commitment.”

Capital Expenditures on Intangible Assets

Our capital expenditures consist primarily of expenditures in the development of software as a result of our continued technological improvement on our products. Our capital expenditures for intangible assets amounted to $12,210 and $593,670 for the fiscal year ended September 30, 2024 and 2023, respectively.

We follow Financial Accounting Standards Board (FASB) ASC 985 to account for software development costs incurred for external use software. ASC985 requires all development costs to establish the technological feasibility of external-use software to be expensed as incurred. Development costs incurred after establishing technological feasibility to produce the ‘product master’, referred to as ‘production costs’, are capitalized to the extent recoverable by the net realizable value of the software product until the product is available for general release.

Our development projects for the fiscal years ended September 30, 2024 and 2023 are listed as below.