As filed with the Securities and Exchange Committee on August 15, 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

Solar Strategy Holdings Limited

(Exact name of registrant as specified in its charter)

Not Applicable

(Translation of Registrant’s name into English)​

Unit Nos. 1514-15
15/F, Pioneer Centre
750 Nathan Road
Kowloon, Hong Kong
+852 67528088

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

Cogency Global Inc.
122 East 42nd Street, 18th Floor
New York, NY 10168
(212) 947-7200

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

Copies to:

Approximate date of commencement of proposed sale to the public: Promptly after the effective date of this registration statement.

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

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

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

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

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

Emerging growth company ☒​

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

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act, 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 information in this prospectus is not complete and may be changed. We may not sell the securities until the registration statement filed with the U.S. Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting any offer to buy these securities in any jurisdiction where such offer or sale is not permitted.

SUBJECT TO COMPLETION PRELIMINARY PROSPECTUS DATED AUGUST 15, 2025

1,500,000 Class A Ordinary Shares

Solar Strategy Holdings Limited

This is an initial public offering of our Class A ordinary shares, par value $0.00001 per share, or Class A Ordinary Shares, of Solar Strategy Holdings Limited (“SSTR”). We are offering a total of 1,500,000 Class A Ordinary Shares. The underwriters may also purchase up to 225,000 Class A Ordinary Shares within 45 days to cover over-allotments, if any.

Prior to this offering, there has been no public market for our Class A Ordinary Shares. We anticipate that the initial public offering price will be US$4.00 per Class A Ordinary Share. We have applied to list the Class A Ordinary Shares on the Nasdaq under the symbol “ SSTR.”

Investors in our Class A Ordinary Shares are not purchasing equity securities of our subsidiaries that have substantive business operations but instead are purchasing equity securities of a Cayman Islands company. SSTR is a Cayman Islands company that conducts all of its operations through its subsidiaries.

Following the completion of this offering, our issued and outstanding share capital will consist of 11,500,000 Class A Ordinary Shares and          Class B ordinary shares, or Class B Ordinary Shares, and          will beneficially own     % of our issued and outstanding Class B Ordinary Shares and will be able to exercise approximately    % of the total voting power of our issued and outstanding share capital immediately following the completion of this offering. Each Class A Ordinary Share shall be entitled to one vote on all matters subject to the vote at general meetings of our company, and each Class B Ordinary Share shall be entitled to fifty (50) votes on all matters subject to the vote at general meetings of our company. See “Description of Share Capital.” Immediately following the completion of this offering, we will be a “controlled company” within the meaning of the Nasdaq rules. See “Principal Shareholders.”

Investing in our Class A Ordinary Shares involves a high degree of risk, including the risk of losing your entire investment. See “Risk Factors” beginning on page 17 to read about factors you should consider before buying our Class A Ordinary Shares.

We are a holding company incorporated in the Cayman Islands. The majority of our operations are in Hong Kong, a special administrative region of the People’s Republic of China (“China” or “PRC”). The holding company structure is not used to provide investors with exposure to foreign investment in China-based companies where Chinese law prohibits direct foreign investment in such operating companies. None of our subsidiaries is subject to any prohibitions or restrictions on direct foreign investment under Chinese laws. The holding company structure involves unique risks to the investors, and Chinese regulatory authorities could disallow this structure, which would likely result in a material change in our operations and/or a material change in the value of the securities it is registering for sale, including that such event could cause the value of such securities to significantly decline or become worthless. Investing in our Class A Ordinary Shares involves a high degree of risk, including the riskof losing your entire investment.

In the event that the PRC regulatory authorities disallow our business structure, any action taken by the PRC government could significantly limit or completely hinder our operations in Hong Kong and our ability and to offer or continue to offer securities to investors and could cause the value of such securities to significantly decline or be worthless. See “Risk Factors — Risks Related to Doing Business in Hong Kong — If the PRC government chooses to extend the oversight and controlover offerings that are conducted overseas and/or foreign investment in China-based issuers, such action may significantly limit orcompletely hinder our ability to offer or continue to offer Class A Ordinary Shares to investors and cause the value of our Class AOrdinary Shares to significantly decline or be worthless.” for further details.

We may be subject to unique risks due to uncertainty of the interpretation and the application of the PRC laws and regulations. We are also subject to the risks of uncertainty about any future actions of the PRC government or authorities in Hong Kong in this regard. Should the PRC government choose to exercise significant oversight and discretion over the conduct of our business, they may intervene in or influence our operations. Such governmental actions:

•

could result in a material change in our operations and/or the value of our Class A Ordinary Shares;

​

•

could significantly limit or completely hinder our ability to continue our operations;

​

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

•

could significantly limit or completely hinder our ability to offer or continue to offer our Class A Ordinary Shares to investors; and

​

•

may cause the value of our Class A Ordinary Shares to significantly decline or be worthless.

​

We are aware that recently, the PRC government initiated a series of regulatory actions and statements to regulate business operations in certain areas in China with little advance notice, including cracking down on illegal activities in the securities market, enhancing supervision over China-based companies listed overseas using a VIE structure, adopting new measures to extend the scope of cybersecurity reviews, and expanding its efforts in anti-monopoly enforcement. Since these statements and regulatory actions are new, it is highly uncertain how soon the legislative or administrative regulation making bodies will respond and what existing or new laws or regulations or detailed implementations and interpretations will be modified or promulgated, if any. It is also highly uncertain what the potential impact such modified or new laws and regulations will have on our operating subsidiaries’ daily business operations, their ability to accept foreign investments and the listing of our Class A Ordinary Shares on a U.S. or other foreign exchange. These actions could result in a material change in our operations and/or to the value of our Class A Ordinary Shares and could significantly limit or completely hinder our ability to offer or continue to offer our Class A Ordinary Shares to investors.

As of the date of this prospectus, we or any of our Hong Kong subsidiaries are not materially affected by recent statements by the PRC government indicating an intention to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers. Furthermore, pursuant to the Basic Law of the Hong Kong Special Administrative Region of the People’s Republic of China (“Basic Law”), national laws of mainland China do not apply in Hong Kong unless they are listed in Annex III of the Basic Law and applied locally by promulgation or local legislation. National laws that may be listed in Annex III are currently limited under the Basic Law to those which fall within the scope of defense and foreign affairs as well as other matters outside the limits of the autonomy of Hong Kong. National laws and regulations relating to data protection, cybersecurity and the anti-monopoly have not been listed in Annex III, so they do not apply directly to Hong Kong entities. While our Hong Kong subsidiaries have operations in Hong Kong, they currently do not have operations in mainland China, so that no permission or approval is required to obtain from Chinese authorities to operate our business. However, due to the long-arm application of the current PRC laws and regulations, the PRC government may exercise significant direct oversight and discretion over the conduct of our business and may intervene or influence our operations at any time, which could result in a material change in our operations and/or the value of our Class A Ordinary Shares. There remains regulatory uncertainty with respect to the implementation and interpretation of laws in China. We are also subject to the risks of uncertainty about any future actions of the PRC government or authorities in Hong Kong in this regard. Nevertheless, since these statements and regulatory actions made by the PRC government are relatively recent, it is highly uncertain how soon the legislative or administrative regulation making bodies will respond and what existing or new laws or regulations or detailed implementations and interpretations will be modified or promulgated, if any. If certain PRC laws and regulations were to become applicable to us or our Hong Kong subsidiaries in the future, the application of such laws and regulations may have a material adverse impact on our business, financial condition and results of operations and our ability to offer or continue to offer securities to investors, any of which may cause the value of our Class A Ordinary Shares, to significantly decline or become worthless. See “Risk Factors — Risks Related to Doing Business in Hong Kong — If the PRC government chooses to extend the oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers, such action may significantly limit or completely hinder our ability to offer or continue to offer Class A Ordinary Shares to investors and cause the value of our Class A Ordinary Shares to significantly decline or be worthless.”

Additionally, on December 28, 2021, the Cyberspace Administration of China, or the CAC, together with certain other PRC government authorities, jointly released the revised Cybersecurity Review Measures, or the CRM, which took effect on February 15, 2022, and replaced the previous draft issued on July 10, 2021. Pursuant to the revised CRM, (i) operators of critical information infrastructure, that intend to purchase network products and services and online platform operators that conduct data processing activities, in each case that affect or may affect national security, must be subject to the cybersecurity review, (ii) operators of network platforms seeking listing abroad that are in possession of more than one million users’ personal data must apply for the cybersecurity review, and (iii) relevant PRC government authorities may initiate cybersecurity review if they determine an operator’s network products or services or data processing activities affect or may affect national security. We and our Hong Kong subsidiaries currently are not deemed to be an “operator of critical information infrastructure” or a “data processor” that are required to file for cybersecurity review by the CAC before listing in the United States, because (a) as of date of this prospectus, none of us or our Hong Kong subsidiaries carries out any data possessing activities in mainland China or possesses personal

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

information of individuals from the mainland China; (b) we do not operate critical information infrastructure under the revised CRM nor place any reliance on collection and processing of any personal information to maintain our business operation; (c) data processed in our business should not have a bearing on national security nor affect or may affect national security; (d) as of the date of this prospectus, none of us or our Hong Kong subsidiaries has been informed by any PRC governmental authority of being classified as an “operator of critical information infrastructure” or a “data processor” that is subject to CAC cybersecurity review; and (e) pursuant to the Basic Law of the Hong Kong Special Administrative Region of the PRC, or the Basic Law, 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). The China Securities and Regulatory Commission, or the CSRC, published on February 17, 2023, and effected on March 31, 2023, the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies, or the Trial Measures, which regulate both direct and indirect overseas offering and listing of PRC-based companies by adopting a filing-based regulatory regime. According to the Trial Measures, if the issuer meets both of the following criteria for the CSRC filing, the overseas securities offering and listing conducted by such issuer shall be deemed as an indirect overseas offering and listing: (i) 50% or more of the issuer’s operating revenue, total profit, total assets or net assets as documented in its audited consolidated financial statements for the most recent accounting year is accounted for by domestic companies; and (ii) the main parts of the issuer’s business activities are conducted in mainland China, or its main places of business are located in mainland China, or the senior managers in charge of its business operation and management are mostly Chinese citizens or domiciled in mainland China. As of the date of this prospectus, we do not meet the two criteria and this offering and the listing of our Class A Ordinary Shares on a U.S. exchange are not subject to the CSRC filing procedures, based on the facts that (i) we do not, directly or indirectly, own or control any entity or subsidiary in mainland China, and do not intend to set up any subsidiary or to establish a variable interest entity (“VIE”) structure with any entity in mainland China, (ii) we are not ultimately controlled by any mainland Chinese company or individual directly or indirectly; (iii) we and our subsidiaries currently do not have any business activities, operations or assets in mainland China, except that some of our suppliers (representing less than 50% of our total procurement value) are based in mainland China, and (iv) none of member of the board of directors or our senior managements in charge of our business operations or management is a citizen of mainland China. Uncertainties still exist, however, due to the possibility that laws, regulations, or policies in the PRC could change rapidly in the future. In the event that (i) we or our subsidiaries do not receive or maintain required permissions or approvals, (ii) we or our subsidiaries inadvertently conclude that such permissions or approvals are not required, or (iii) applicable laws, regulations, or interpretations change and we or our subsidiaries are required to obtain such permissions or approvals in the future, we or our subsidiaries may be unable to obtain such permissions or approvals in a timely manner, or at all, and may face regulatory actions or other sanctions from mainland China and Hong Kong regulatory authorities if we or our subsidiaries fail to fully comply with any new regulatory requirements. Consequently, our or our subsidiaries’ operations and financial condition could be materially adversely affected and our ability to offer securities to investors could be significantly limited or completely hindered and the Class A Ordinary Shares currently being offered here may substantially decline in value and become worthless. For details of the associated risks, see “Risk Factors — Risks Related to Doing Business in Hong Kong — If the PRC government chooses to extend the oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers, such action may significantly limit or completely hinder our ability to offer or continue to offer Class A Ordinary Shares to investors and cause the value of our Class A Ordinary Shares to significantly decline or be worthless.”

We have been advised by JT&N (Hong Kong), our Hong Kong counsel, that based on their understanding of the current Hong Kong laws, as of the date of this prospectus, the Company and its operating subsidiaries, are not required to obtain any permissions or approvals from Hong Kong authorities before listing in the U.S. and issuing our Class A Ordinary Shares to foreign investors. No such permissions or approvals have been applied for by the Company and/or its subsidiaries or denied by any relevant authorities. As of the date of this prospectus, the operating subsidiaries received all requisite permissions or approvals from the Hong Kong authorities to operate their businesses in Hong Kong, including but not limited to their business registration certificates. However, we have been advised by JT&N (Hong Kong) that uncertainties still exist, due to the possibility that laws, regulations, or policies in Hong Kong could change rapidly in the future.

The Company’s Class A Ordinary Shares may be prohibited from trading on a national exchange or “over-the-counter” markets under the Holding Foreign Companies Accountable Act (the “HFCAA”) or may be delisted from Nasdaq if the Public Company Accounting Oversight Board (“PCAOB”) determines it is unable to inspect or fully investigate our auditor and as a result the exchange where our securities are traded may delist our securities. On June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act (the “AHFCAA”), which was signed into law on December 29, 2022, amending

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

the HFCAA and requiring the SEC to prohibit an issuer’s securities from trading on any U.S. stock exchange if its auditor is not subject to PCAOB inspections for two consecutive instead of three consecutive years. Pursuant to the HFCAA, the PCAOB issued a Determination Report on December 16, 2021, which found it was unable to inspect or investigate completely certain named registered public accounting firms headquartered in mainland China and Hong Kong. The Company’s independent registered public accounting firm, Guangdong Prouden CPAs GP, is headquartered in China but is not currently affected by or subject to the PCAOB’s Determination Report. Whether the PCAOB will continue to be able to satisfactorily conduct inspections of PCAOB-registered public accounting firms is subject to uncertainties and depends on a number of factors out of our and our auditor’s control. See “Risk Factors — The Company’s securities may be prohibited from trading in the United States and subject to delisting under the Holding Foreign Companies Accountable Act (the “HFCAA”), as amended by the Consolidated Appropriations Act, 2023, and related regulations, in the future if the PCAOB is unable to inspect or investigate completely the Company's auditor, which is headquartered in China for two consecutive years.”

We are an “emerging growth company” and a “foreign private issuer” as defined under the federal securities laws and will be subject to reduced public company reporting requirements. Please read the disclosures beginning on page 7 of this prospectus for more information.

Price US$4.00 Per Class A Ordinary Share

(1)

Does not include a non-accountable expense allowance equal to 1% of the gross proceeds of this offering, payable to the underwriters, or the reimbursement of certain expenses of the underwriters. For a description of the compensation to be received by the underwriters, see “Underwriting.”

​

This offering is being conducted on a firm commitment basis. The underwriters are obligated to take and pay for all of the Class A Ordinary Shares if any such Class A Ordinary Shares are taken. The underwriters expect to deliver the Class A Ordinary Shares against payment in U.S. dollars in New York, New York on or about        , 2025.

Neither the U.S. Securities and Exchange Commission nor any state securities 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.

Prospectus dated           , 2025

 

TABLE OF CONTENTS

We and the underwriters have not authorized anyone to provide any information or to make any representations other than those contained in this prospectus or in any free writing prospectuses prepared by us or on our behalf or to which we have referred you. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. This prospectus is an offer to sell only the Class A Ordinary Shares offered hereby, but 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 Class A 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.

Our functional currency and reporting currency are HK dollars. Amounts in US$ are presented for the convenience of the reader and are translated at the rate of US$1.00 = HK$ 7.7677, representing the noon buying rate set forth in the H.10 statistical release of the U.S. Federal Reserve Board on December 31, 2024. No representation is made that the HK$ amounts could have been, or could be, converted, realized or settled into US$ at that rate, or at any other rate. Historical and current exchange rate information may be found at https://www.federalreserve.gov/releases/h10/.

Until            , 2025 (the 25th day after the date of this prospectus), all dealers that buy, sell or trade the Class A Ordinary Shares, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the obligation of dealers to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

 

i

 

1

 

2

 

3

 

4

 

​

5

 

​

6

 

​

7

 

​

8

 

9

 

10

 

​

11

 

12

 

13

 

14

 

​

​

​

For the years ended December 31,

​

​

​

​

2023

​

​

2024

​

​

2024

​

​

​

​

HK$

​

​

HK$

​

​

US$

​

​

​

​

(in thousands, except share and per share data)

​

Summary Consolidated Statements of Operations Data

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Revenue

​

​

​

​

39,699

​

​

​

​

​

66,517

​

​

​

​

​

8,563

​

​

Cost of revenue

​

​

​

​

(32,430)

​

​

​

​

​

(42,873)

​

​

​

​

​

(5,518)

​

​

Selling and marketing expenses

​

​

​

​

(1,716)

​

​

​

​

​

(245)

​

​

​

​

​

(32)

​

​

General and administrative expenses

​

​

​

​

(16,285)

​

​

​

​

​

(12,244)

​

​

​

​

​

(1,576)

​

​

Total operating expenses

​

​

​

​

(18,001)

​

​

​

​

​

(12,489)

​

​

​

​

​

(1,608)

​

​

(Loss) income from operations

​

​

​

​

(10,732)

​

​

​

​

​

11,155

​

​

​

​

​

1,437

​

​

Total other (expenses) income, net

​

​

​

​

(4,997)

​

​

​

​

​

872

​

​

​

​

​

112

​

​

(Loss) income before income tax expense

​

​

​

​

(15,729)

​

​

​

​

​

12,027

​

​

​

​

​

1,549

​

​

Net (loss) income

​

​

​

​

(14,704)

​

​

​

​

​

9,918

​

​

​

​

​

1,277

​

​

Less: net (loss) income attributable to non-controlling interests

​

​

​

​

(778)

​

​

​

​

​

789

​

​

​

​

​

102

​

​

Net (loss) income attributable to the Company’s shareholders

​

​

​

​

(13,926)

​

​

​

​

​

9,129

​

​

​

​

​

1,175

​

​

Net (loss) earnings per share attributable to the Company’s shareholders, basic and diluted

​

​

​

​

(1.39)

​

​

​

​

​

0.91

​

​

​

​

​

0.12

​

​

Weighted average shares outstanding used in calculating basic and diluted net (loss) earnings per share, basic and diluted

​

​

​

​

10,000,000

​

​

​

​

​

10,000,000

​

​

​

​

​

10,000,000

​

​

​

​

​

As of December 31,

​

​

​

​

2023

​

​

2024

​

​

2024

​

​

​

​

HK$

​

​

HK$

​

​

US$

​

​

​

​

(in thousands)

​

Summary Consolidated Balance Sheets Data

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Cash and cash equivalents

​

​

​

​

1,113

​

​

​

​

​

19

​

​

​

​

​

2

​

​

Total current assets

​

​

​

​

114,382

​

​

​

​

​

62,622

​

​

​

​

​

8,061

​

​

Total assets

​

​

​

​

119,189

​

​

​

​

​

67,319

​

​

​

​

​

8,666

​

​

Total liabilities

​

​

​

​

105,024

​

​

​

​

​

43,236

​

​

​

​

​

5,566

​

​

Total equity

​

​

​

​

14,165

​

​

​

​

​

24,083

​

​

​

​

​

3,100

​

​

15

 

​

​

​

For the years ended December 31,

​

​

​

​

2023

​

​

2024

​

​

​

​

HK$

​

​

HK$

​

​

US$

​

​

​

​

(In thousands)

​

Summary Consolidated Statements of Cash Flows Data:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Net cash used in operating activities

​

​

​

​

(48,417)

​

​

​

​

​

(503)

​

​

​

​

​

(64)

​

​

Net cash used in investing activities

​

​

​

​

(256)

​

​

​

​

​

—

​

​

​

​

​

—

​

​

Net cash provided by (used in) financing activities

​

​

​

​

47,902

​

​

​

​

​

(591)

​

​

​

​

​

(77)

​

​

Net decrease in cash and cash equivalents

​

​

​

​

(771)

​

​

​

​

​

(1,094)

​

​

​

​

​

(141)

​

​

Cash and cash equivalents, beginning of the year

​

​

​

​

1,884

​

​

​

​

​

1,113

​

​

​

​

​

143

​

​

Cash and cash equivalents, end of the year

​

​

​

​

1,113

​

​

​

​

​

19

​

​

​

​

​

2

​

​

16

 

RISK FACTORS

An investment in our Class A Ordinary Shares involves significant risks. You are purchasing equity securities of a Cayman Islands holding company rather than equity securities of our subsidiaries that have substantive business operations in Hong Kong. Solar Strategy Holdings Limited is a Cayman Islands holding company, and it conducts its operations in Hong Kong through its Hong Kong subsidiaries. You should consider carefully all the information in this prospectus, including the risks and uncertainties described below, before making an investment in the Class A Ordinary Shares. Any of the following risks could have a material and adverse effect on our business, financial condition and results of operations. In any such case, the market price of the Class A Ordinary Shares could decline, and you may lose all or part of your investment.

Risks Related to Our Business and Industry

We might be affected by volatile solar power market and industry conditions; in particular, the demand for our services may decline, which may reduce our revenues and earnings.

Our business is affected by conditions in the solar power market and industry. We believe that the solar power market and industry may from time to time experience oversupply. When this occurs, many solar power project developers and solar system installers, may be adversely affected.

The solar power market is still at a relatively early stage of development, and future demand for solar power products and services is uncertain. Market data for the solar power industry is not as readily available as for more established industries, where trends are more reliably assessed from data gathered over a longer period of time. In addition, demand for solar power products and services in our largest end markets, including the U.S., may not develop or may develop to a lesser extent than we anticipate. Many factors may affect the viability of solar power technology and the demand for solar power products, including:

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the cost-effectiveness, performance and reliability of solar power products and services compared to conventional and other renewable energy sources and products and services;

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the availability of government incentives to support the development of the solar power industry;

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the availability and cost of capital, including long-term debt and tax equity, for solar projects;

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the success of other alternative energy technologies, such as wind power, hydroelectric power, clean hydrogen, geothermal power and biomass fuel;

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fluctuations in economic and market conditions that affect the viability of conventional and other renewable energy sources, such as increases or decreases in the prices of oil, gas and other fossil fuels;

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capital expenditures by end users of solar power products and services, which tend to decrease when the economy slows; and

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the availability of favorable regulation for solar power within the electric power industry and the broader energy industry.

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If solar power technology is not suitable for widespread adoption or if sufficient demand for solar products and services does not develop or takes longer to develop than we anticipate, our revenues may suffer and we may be unable to sustain our profitability.

The execution of our growth strategy depends upon the continued availability of third-party financing arrangements for us and our customers, which is affected by general economic conditions. Tight credit markets could depress demand or prices for solar power products and services, hamper our expansion and materially affect our results of operations.

Most solar projects in Hong Kong require financing for development and construction with a mixture of property owner and third-party solar investment. The cost of capital affects both the demand and price of solar power projects. A high cost of capital may materially reduce the internal rate of return for solar projects.

Furthermore, solar projects compete for capital with other forms of fixed income investments such as government and corporate bonds. Some classes of investors compare the returns of solar projects with bond

 

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yields and expect a similar or higher internal rate of return, adjusted for risk and liquidity. Higher interest rates could increase the cost of existing funding and present an obstacle for future funding that would otherwise spur the growth of the solar power industry. In addition, higher bond yields could result in increased yield expectations for solar projects, which would result in lower system prices. In the event that suitable funding is unavailable, our customers may be unable to pay for services they have agreed to purchase and we may be unable to develop our own solar power projects. It may also be difficult to collect payments from customers facing liquidity challenges due to either customer defaults or financial institution defaults on project loans. Constricted credit markets may impede our expansion plans and materially and adversely affect our results of operations. The cash flow of a solar power project is currently derived from government-funded or government-backed renewable incentive program known as Feed-In Tariffs (“FITs”). Consequently, the availability and cost of funding solar projects is determined in part based on the perceived sovereign credit risk of the country where a particular project is located.

In light of the uncertainty in the global credit and lending environment, we cannot make assurances that solar offtakers and property owners, as well as financial institutions will continue to offer funding to solar project developers at reasonable costs. An increase in interest rates or a decrease in funding of capital projects within the financial market could make it difficult to fund solar power projects and potentially reduce the demand for solar projects, which may materially and adversely affect our business, results of operations, financial condition and prospects.

Our future success depends partly on our ability to expand the pipeline of our energy business in Hong Kong’s solar market, which exposes us to a number of risks and uncertainties.

Historically, our provision of solar PV power project development and EPC services had accounted for substantially all of our revenues. While we plan to continue to monetize our current portfolio of solar projects in operation, we also intend to grow our energy business by developing and selling or operating more solar projects, including those that we develop. As we do, we will be increasingly exposed to the risks associated with these activities. Further, our future success largely depends on our ability to expand our solar PV project pipeline. The risks and uncertainties associated with our energy business, and our ability to expand our solar PV project pipeline, include:

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the uncertainty of being able to sell the projects, receive full payment for them upon completion, or receive payment in a timely manner;

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the need to raise significant additional funds to develop our solar projects, which we may be unable to obtain on commercially reasonable terms or at all;

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delays and cost overruns as a result of a number of factors, many of which are beyond our control, including construction and procurement price inflation, delays in regulatory approvals, grid connection, supply chain of our suppliers or availability of components, construction and installation, and customer acceptance testing;

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delays or denial of required regulatory approvals by relevant government authorities, as a result of, among others, poor management of permitting process, including lack or resources and opaqueness of administrative measures;

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diversion of significant management attention and other resources; and

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failure to execute our project pipeline expansion plan effectively.

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If we are unable to successfully expand our energy business, and, in particular, our solar PV project pipeline, we may be unable to expand our business, maintain our competitive position, improve our profitability and generate cash flows.

If we are unable to successfully attract new customers or retain and expand relationships with existing customers, our ability to grow our business in solar power projects, and our financial condition and results of operations, may be materially and adversely affected.

As a developer and solutions provider of engineering, procurement, and construction (EPC) projects for solar energy in Hong Kong, our business growth and financial success are highly dependent on our ability to

 

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secure new EPC contracts and maintain ongoing relationships with existing customers, including project owners and investors. The solar industry is competitive and rapidly evolving, with customers often considering multiple EPC providers before awarding contracts. If we fail to effectively market our services, differentiate our technical capabilities, or offer competitive pricing, we may not be able to attract sufficient new business.

Moreover, our existing customers may not continue to engage us for follow-on projects due to changes in their project development plans, shifts in investment priorities, dissatisfaction with our performance, competitive pressures, or other factors beyond our control. A failure to retain key customers or secure repeat business would limit our revenue base, reduce economies of scale, and erode our market position.

In addition, the success of solar EPC projects often depends on long-term relationships and trust, as customers seek providers that can reliably deliver high-quality projects on time and on budget. If we experience project delays, quality issues, cost overruns, or customer service deficiencies, it could damage our reputation and discourage future engagements.

The solar market’s cyclical nature and dependency on government incentives and regulatory policies also mean that the pool of available new projects can fluctuate significantly, making customer acquisition more challenging. If we are unable to expand our customer base or if existing customers significantly scale back their investments in solar energy or choose competitors over us, our revenue, profitability, and overall business operations would be materially and adversely affected.

Our revenue is mainly derived from projects which are non-recurrent in nature and there is no guarantee that our customers will provide us with new businesses.

Our revenue is typically derived from projects which are non-recurrent in nature and our customers are under no obligation to award projects to us. In 2023 and 2024, our customers primarily include residential, commercial, industrial and educational property owners as well as major solar offtaker, and we secured new businesses through invitations for tender by customers, leveraging our extensive network of consultants to promote our business among industry stakeholders. As of March 31,2025, we have 18 active EPC projects under construction, with a total estimated installed capacity of 4.6 MW. In addition, we have pipeline projects under planning with an estimated installed capacity of 17 MW. There is no assurance that we will be able to secure new contracts in the future. Accordingly, the number and scale of projects and the amount of revenue we are able to derive therefrom may vary significantly from period to period, and it may be difficult to forecast the volume of future business. In the event that we fail to secure new contracts or there is a significant decrease in the number of tender invitations or contracts available for bidding in the future, our business, financial position and prospects could be materially and adversely affected.

We rely on a limited number of major customers for a substantial portion of our revenue, and any loss or reduction in business from these customers could materially and adversely affect our business, financial condition, and results of operations.

Historically, we derived a significant portion of our revenue from a limited number of existing customers. In 2023, sales to our top two customers represented 76% and 17% of our total revenue, respectively. In 2024, sales to our top customer represented 89% of our total revenue. Our dependence on these key customers exposes us to risks associated with customer concentration. It is not possible for us to predict the future level of demand from our largest customer. If our largest customer elects not to do future business with us, or decrease of our services, or if our largest customer otherwise seeks to renegotiate terms of their existing agreements on terms less favorable to us, our business and results of operations would be adversely affected.

If any of these customers reduces the scope of their projects, experiences financial difficulties, delays payment, or terminates their relationship with us for any reason, our business, cash flow, and financial performance could be materially and adversely impacted. Additionally, we may not be able to quickly replace the revenue lost from these customers, which could lead to volatility in our results of operations and hinder our ability to achieve our growth plans.

Hong Kong government may revise, reduce or eliminate incentives and policy support program for solar and other renewable power, which could cause demand for our products to decline.

Currently, the solar power market in Hong Kong depends largely on the availability and size of government subsidy programs and economic incentives. The Hong Kong government has introduced the FiT,

 

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offering purchase prices for renewable energy that are significantly higher than normal grid electricity rates. The core principle behind the FiT is to enable renewable energy system owners to recover the costs of installation, operation, and maintenance. Under this government initiative, solar or wind energy generated can be sold to electricity providers at premium prices, incentivizing wide-scale adoption. The FiT applies to both solar and wind systems. Any distributed renewable energy system with a capacity up to 1 MW connected to the grid is eligible for FiT rates. We apply for full feed-in tariffs, ensuring that every unit of electricity generated receives FiT payments. Importantly, the FiT rate is guaranteed throughout the entire project lifecycle until the end of 2033.

However, the FiT and economic incentives in Hong Kong may be scheduled to be reduced or eliminated altogether after 2033, and it is likely that eventually incentives for solar and alternative energy technologies will be phased out completely. However, the Hong Kong government has expressed its intention to continue supporting various forms of “green” energies, including solar power, as part of broader policies towards the reduction of carbon emissions, and to continuously provide incentives and policy support program for investments in solar power that will directly benefit the solar industry. We believe that the near-term growth of the market partially depends on the availability and size of such government incentives.

While our solar PV projects may continue to offer attractive internal rates of return, there is a risk that the Hong Kong government may reduce or eliminate incentives for solar power, which may cause a decrease in demand and considerable downward pressure on solar systems and therefore negatively impact the value of our solar PV projects. The reduction, modification or elimination of government incentives in Hong Kong could therefore materially and adversely affect the growth of such markets or result in increased price competition, either of which could cause our revenues to decline and harm our financial results.

Unfavorable economic and industry conditions may have an adverse impact on our operating performance and results of operations.

The demand for solar products and services is influenced by macroeconomic factors, such as global economic conditions, demand for electricity, supply and prices of other energy products, such as oil, coal and natural gas, as well as government regulations and policies concerning the electric utility industry, clean and other alternative energy industries and the environment. As a result of global economic conditions, the Hong Kong government may implement measures that reduce the FiTs and other incentives designed to benefit the solar industry. A decrease in solar power tariffs will place downward pressure on the price of solar power in Hong Kong. In addition, reductions in oil and coal prices may reduce the demand for and the prices of solar power products and services. Our growth and profitability depend on the demand for and the prices of solar power products and services. While the direct impact of the effects of global trade tensions and tariff measures on solar power products has so far been limited, we are not immune to these broader market forces. If we experience negative market and industry conditions and demand for solar power products and services weakens as a result, our business and results of operations may be adversely affected.

Our project development and construction activities may not be successful, projects under development may not receive required permits, property rights, EPC agreements, interconnection and transmission arrangements, and financing or construction of projects may not commence or continue as scheduled, all of which could increase our costs, delay or cancel a project, and have a material adverse effect on our revenue and profitability.

The development and construction of solar PV projects involve known and unknown risks, many of which are not under our sole control. For example, we may be required to invest significant amounts of money for land use and interconnection rights, preliminary engineering and permitting and may incur legal and other expenses before we can determine whether a project is feasible; we may also need to engage and rely on third parties including, but not limited to, contractors and consultants. Success in developing a particular project is contingent upon, among other things:

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securing rooftop sites and related permits, including satisfactory environmental assessments;

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receipt of required land use and construction permits and approvals;

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receipt of rights to interconnect to the electric grid;

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availability of transmission capacity, potential upgrade costs to the transmission grid and other system constraints;

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payment of interconnection and other deposits (some of which are non-refundable);

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negotiation of satisfactory EPC agreements;

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obtaining construction financing, including debt, equity and tax credits; and

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timely and satisfactory execution and performance by the third parties that we engage.

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In addition, successful completion of a particular project may be adversely affected by numerous factors, including:

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changes in laws, regulations and policies and shifts in trade barriers and remedies, especially tariffs;

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shortage of raw materials, components and equipment as well as skilled and qualified labors in Hong Kong;

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delays in obtaining and maintaining required governmental permits and approvals;

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increased costs of raw materials, components and equipment as well as qualified and licensed labors;

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potential challenges from local residents, environmental organizations, and others who may not support the project;

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unforeseen engineering problems; subsurface land conditions; construction delays; cost over-runs; labor, equipment and materials supply shortages or disruptions;

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failure to enter into EPC agreements on terms favorable to us, or at all;

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additional complexities when conducting project development or construction activities in Hong Kong, including compliance with applicable laws and customs; and

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force majeure events, including adverse weather conditions, pandemics, supply chain disruptions, hostilities and other events beyond our control.

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If we are unable to complete the development of a solar project or we fail to meet any agreed upon system level capacity or other technical performance guarantees or warranties or other contract terms, or our projects cause grid interference or other damage, the EPC or other agreements related to the project may, depending on the specific terms of the agreements, be terminated and/or we may be subject to significant damages, penalties and other obligations relating to the project, including obligations to repair, replace or supplement materials for the project.

In general, we enter into EPC agreements in which we act as the general solutions provider for our customers in connection with the installation of their solar PV power projects. All essential costs are estimated at the time of entering into the EPC agreement for a particular project, and we bear the associated costs of project development and operation. These cost estimates are preliminary and may or may not be covered by contracts between us and the subcontractors, suppliers and other parties involved in the project. In addition, we require qualified, licensed subcontractors to install most of our solar power and battery storage systems. Shortages of components (which may be attributable to the shortage of raw materials or components) or skilled labor could significantly delay a project or otherwise increase our costs. Should miscalculations in planning a project occur, including those due to unexpected increases in commodity prices or labor costs, or delays in execution occur and we are unable to increase the EPC sales price commensurately, we may not achieve our expected margins or our results of operations may be adversely affected.

Developing and operating solar PV projects exposes us to various risks.

The development of solar PV projects can take many months or years to complete and may be delayed for reasons beyond our control. It often requires us to make significant up-front payments for, among other things, land use rights, interconnection work and permitting in advance of commencing construction, and revenue from these projects may not be recognized for several additional months following contract signing. Any inability or significant delays in entering into sales contracts with customers after making such up-front payments could adversely affect our business and results of operations. Furthermore, we may become constrained in our ability to simultaneously fund our other business operations and invest in other projects.

 

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Developing solar PV projects requires significant management attention to negotiate the terms of our engagement and monitor the progress of the projects which may divert management’s attention from other matters. Our revenue and liquidity may be adversely affected to the extent the market for solar projects weakens or we are not able to successfully complete the customer acceptance testing due to technical difficulties, equipment failure, or adverse weather, and we are unable to sell our solar projects at prices and on terms and timing that are acceptable to us. Additionally, we are subject to a variety of risks associated with intense market competition, changing regulations and policies, insufficient demand for solar or power, technological advancements and the failure of our power generation facilities.

We are subject to a variety of laws, regulations and policies of the government of Hong Kong where we do business. Any changes to these laws, regulations and policies may present technical, regulatory and economic barriers to the purchase and use of solar power products, solar projects and solar electricity, which may significantly reduce demand for our products and services or otherwise adversely affect our financial performance.

We are subject to a variety of laws and regulations in Hong Kong where we do business, some of which may conflict with each other and all of which are subject to change. These laws and regulations include energy regulations, export and import restrictions, tax laws and regulations, environmental regulations, labor laws, supply chain laws and regulations and other government requirements, approvals, permits and licenses. We may also face trade barriers and trade remedies such as export requirements, tariffs, taxes and other restrictions and expenses, including antidumping and countervailing duty orders, which could increase the prices of our supplies.

The market in Hong Kong for solar power, solar projects and solar electricity is heavily influenced by government regulations and policies concerning the electric utility industry, as well as policies disseminated by electric utilities. These regulations and policies often relate to electricity pricing and technical interconnection of customer-owned electricity generation, and could deter further investment in the research and development of alternative energy sources as well as customer purchases of solar power technology, which could result in a significant reduction in the potential demand for our solar power services and solar projects and solar electricity.

We expect that our solar power products and their installation will continue to be subject to government regulations and policies relating to safety, utility interconnection and metering, construction, environmental protection, and other related matters. Any new regulations or policies pertaining to solar power products may result in significant additional expenses to us and our customers, which could cause a significant reduction in demand for our solar power and battery storage products.

In our energy business, we are subject to numerous laws and regulations. Changes in applicable energy laws or regulations, or in the interpretations of these laws and regulations, could result in increased compliance costs or the need for additional capital expenditures. If we fail to comply with these requirements, we could also be subject to civil or criminal liability and the imposition of fines. Further, national, regional or local regulations and policies could be changed to provide for new rate programs that undermine the economic returns for both new and existing projects by charging additional, non-negotiable fixed or demand charges or other fees or reductions in the number of projects allowed under net metering policies. The Hong Kong government’s energy policies, law and regulation supporting the creation of organized merchant or wholesale electricity markets are currently, and may continue to be, subject to challenges, modifications and restructuring proposals, which may result in limitations on the commercial strategies available to us for the sale of our power.

Regulatory changes in Hong Kong where we are developing a solar project may make the continued development of the project infeasible or economically disadvantageous and any expenditure that we have previously made on the project may be wholly or partially written off. Any of these changes could significantly increase the regulatory related compliance and other expenses incurred by the projects and could significantly reduce or entirely eliminate any potential revenues that can be generated by one or more of the projects or result in significant additional expenses to us, our offtakers and customers, which could materially and adversely affect our business, financial condition, results of operations and cash flows.

We also face regulatory risks imposed by various transmission providers and operators, including grid transmission operators, and their corresponding market rules. These regulations may contain provisions that

 

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limit access to the transmission grid or allocate scarce transmission capacity in a particular manner, which could materially and adversely affect our business, financial condition, results of operations and cash flows.

Because the solar energy market in Hong Kong in which we compete is highly competitive and evolving quickly, because many of our competitors have greater resources than we do or are more adaptive, and because we have a limited track record in our energy business, we may not be able to compete successfully and we may not be able to maintain or increase our market share.

In our energy business, we compete in a more diversified and complicated landscape since the commercial and regulatory environments for solar project development and operation vary significantly from region to region and country to country. Our primary competitors are local and international developers and operators of solar projects. Some of our competitors may have advantages over us in terms of greater experience or resources in the operation, capital, financing, technical support and management of solar projects, in any particular markets or in general. As the solar power and renewable energy industry grows and evolves, we will also face new competitors who are not currently in the market. Our failure to adapt to changing market conditions and to compete successfully with existing or new competitors will limit our growth and will have a material adverse effect on our business and prospects.

Our operating results may fluctuate from period to period.

Our operating results may fluctuate from period to period based on a number of factors, including:

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the timing of completion of construction of solar projects;

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the timing and pricing of our services;

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the availability and cost of solar panels or other components and raw materials from our suppliers;

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changes in government incentive programs and regulations;

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the availability and cost of external financing for solar power applications;

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acquisition, investment and offering costs;

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geopolitical turmoil and natural disasters in Hong Kong;

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foreign currency fluctuations, particularly in Hong Kong dollars;

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our ability to establish and expand customer relationships;

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fluctuations in electricity rates due to changes in fossil fuel prices or other factors;

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allowances for credit losses;

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impairment of project assets;

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income taxes; and

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construction progress of solar projects and related revenue recognition.

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We base our planned operating expenses in part on our expectations of future revenues. A significant portion of our expenses will be fixed in the short-term. If our revenues for a particular period are lower than we expect, we may not be able to reduce our operating expenses proportionately, which would harm our operating results for the period. As a result, our results of operations may fluctuate from period to period and our interim and annual financial results may differ from our historical performance.

Fluctuations in exchange rates could adversely affect our business, including our financial condition and results of operations.

Fluctuations in exchange rates, particularly between the U.S. dollars and Hong Kong dollars may result in foreign exchange gains or losses. Volatility in foreign exchange rates will hamper, to some extent, our ability to plan our pricing strategy. To the extent that we are unable to pass along increased costs resulting from exchange rate fluctuations to our customers, our profitability may be adversely impacted. As a result,

 

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fluctuations in foreign currency exchange rates could have a material and adverse effect on our financial condition and results of operations.

A change in our effective tax rate can have a significant adverse impact on our business.

A number of factors may adversely impact our future effective tax rates, such as changes in the valuation of our deferred tax assets and liabilities; adjustments to provisional taxes upon finalization of various tax returns; adjustments to the interpretation of transfer pricing standards; changes in available tax credits; changes in tax laws or the interpretation of tax laws; changes in GAAP; and expiration of or the inability to renew tax rulings or tax holiday incentives. A change in our effective tax rate due to any of these factors may adversely influence our future results of operations.

Seasonal variations in demand linked to construction cycles and weather conditions may influence our results of operations.

Our business is subject to seasonal variations in demand linked to construction cycles and weather conditions. Demand for solar power projects and services in Hong Kong may also be subject to significant seasonality due to adverse weather conditions that can complicate the installation of solar power projects and negatively impact the construction schedules of solar projects. Seasonal variations could adversely affect our results of operations and make them more volatile and unpredictable.

We may face challenges from insufficient working capital and negative cash flow due to large accounts receivable.

Our business operations require significant working capital, particularly to fund project procurement, construction, and installation activities before payments are received from customers. In particular, large accounts receivable, which typically have extended payment cycles, may lead to cash flow gaps and strain our liquidity position. These receivable tend to build up, especially toward year-end, as we often need to advance funds for project execution ahead of customer payments. While we operate on our own credit terms, this need to provide upfront funding may result in short-term negative cash outflows. If we are unable to collect receivable on a timely basis or secure sufficient external financing to support our working capital needs, we may experience negative cash flows. This could limit our ability to fund ongoing projects, invest in new business opportunities, meet our financial obligations, or sustain operations. Prolonged working capital pressure may also adversely affect our profitability, financial condition, and growth prospects.

As at December 31, 2024, we had US$2.9 million in accounts receivable outstanding from the top customer for development services completed prior to December 31, 2024. As of the date of this prospectus, we have collected US$1 million, and the remaining accounts receivable balance remains unrealized. There is a risk that this receivable may not be paid in 2025 or at all. We had negative cash flows for 2023, and we had nearly breakeven cash flow for 2024. To the extent that we continue to have negative cash flow in future periods, we may need to allocate a portion of our cash reserves to fund such negative cash flow. We may also be required to raise additional funds through the issuance of equity or debt securities. There can be no assurance that the Company will be able to generate a positive cash flow from its operations, that additional capital or other types of financing will be available when needed or that these financings will be on terms favorable to us.

We have recorded negative cash flows from operating activities historically and may experience liquidity problems in the future.

We have recorded negative cash flows from operating activities historically. We recorded negative cash flow from operating activities of HK$48.4 million in 2023. In 2024, our operating cash flow improved significantly to a negative HK$0.5 million, nearly reaching breakeven. We cannot assure you that we will not experience cash outflows in the future, which may adversely affect our business, financial condition, results of operations and prospects.

We cannot assure you that we will not experience working capital deficiencies or accumulated deficits in the future, which could expose us to liquidity risks. If we fail to maintain sufficient cash and financing, we may not have sufficient cash flows to fund our business, operations and capital expenditure, and our business, financial condition, results of operations and prospectus will be adversely affected.

 

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We may be unable to generate sufficient cash flows or have access to external financing necessary to fund planned operations and make adequate capital investments in solar project development.

We anticipate that our operating and capital expenditures requirements may increase. To develop new projects, support future growth, achieve operating efficiencies and maintain service standard quality, we may need to make significant capital investments in facilities and capital equipment. We also anticipate that our operating costs may increase as we hire additional personnel, increase our sales and marketing efforts and invest in joint ventures and acquisitions.

Our operations are capital intensive. We cannot guarantee that we will continue to be able to extend existing or obtain new financing on commercially reasonable terms or at all. Also, we may not be able to raise capital via public equity and debt issuances due to market conditions and other factors, many of which are beyond our control. Our ability to obtain external financing is subject to a variety of uncertainties, including:

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our future financial condition, results of operations and cash flows;

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general market conditions for financing activities by solar power companies, including, but not limited to interest rates; and

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economic, political and other conditions in Hong Kong and elsewhere.

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If we are unable to obtain funding in a timely manner and on commercially acceptable terms, our growth prospects and future profitability may be adversely affected.

We may be subject to unexpected warranty expenses that may not be adequately covered by our insurance policies.

For solar projects built by us, we also provide a limited workmanship or balance of system warranty, typically lasting one year, against defects in engineering, design, installation and construction under normal use, operation and service conditions. To support this warranty, we are generally required to set aside retention money as security. If we fulfill our warranty obligations over the one-year period, the retention money will be released back to us. In resolving claims under the workmanship or balance of system warranty, we have the option of remedying through repair, refurbishment or replacement of equipment. We have also entered into similar workmanship warranties with our suppliers to back up our warranties.

As part of our energy business, before commissioning solar projects, we conduct performance testing to confirm that the projects meet the operational and capacity expectations set forth in the agreements. In limited cases, we also provide for an energy generation performance test designed to demonstrate that the actual energy generation for up to the first year meets or exceeds the modeled energy expectation (after adjusting for actual solar irradiation). In the event that the energy generation performance test performs below expectations, the appropriate party (EPC contractor or equipment provider) may incur liquidated damages capped at a percentage of the contract price. Potential warranty claims may exceed the scope or amount of coverage under our insurance and, if they do, they could materially and adversely affect our business.

Increases in labor costs, potential labor disputes and work stoppages or an inability to hire skilled engineering, sales and other personnel could adversely affect our business, results of operations, financial condition and prospects.

Our financial performance is affected by the availability of qualified personnel and the cost of labor. While our operations are not heavily dependent on any single specialist, we still rely on access to skilled labor across various functions. An increase in labor costs, work stoppages or disruptions in local labor markets or those of our suppliers, subcontractors, OEMs or transportation service providers, or other labor disruptions, could decrease our sales and increase our expenses. The competition for skilled engineering, sales and other personnel is intense in the region in which our operation covers. A significant increase in the salaries and wages paid by competing employers could result in a reduction of our labor force, increases in the salaries and wages that we must pay, or both. Additionally, we plan to expand the network of suppliers and subcontractors that we work with in Hong Kong and mainland China to diversify the supply chain and control or reduce cost of labor, but such efforts may be effective due to factors beyond our control. If we are unable to hire and retain skilled engineering, sales and other personnel, or if we fail to control the cost of contracted workers, our ability to execute our business plan, and our business, results of operations, financial condition and prospects, would suffer.

 

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If we are unable to attract, train, retain, and successfully integrate key personnel into our management team, our business may be materially and adversely affected.

Our future success depends, to a significant extent, on our ability to attract, train, and retain management, operations, sales, and technical personnel. Recruiting and retaining capable personnel, particularly those with expertise in the solar industry across a variety of technologies, are vital to our success. We are also dependent on the services of our executive officers and other members of our senior management team. The loss of one or more of these key associates or any other member of our senior management team could have a material adverse effect on our business. We may not be able to retain or replace these key associates and may not have adequate succession plans in place.

Compliance with environmental laws and regulations can be expensive, and noncompliance with these regulations may result in adverse publicity and potentially significant monetary damages, fines and the suspension or even termination of our business operations.

We are required to comply with all environmental regulations in Hong Kong. Our business generates noise and industrial waste in our operations and the risk of incidents with a potential environmental impact has increased as our business has expanded. We believe that we substantially comply with all relevant environmental laws and regulations. However, if more stringent regulations are adopted in the future, the costs of complying with these new regulations could be substantial. If we fail to comply with present or future environmental regulations, we may be required to pay substantial fines, suspend production or cease operations.

Our solar power projects must comply with the environmental regulations of Hong Kong, and we may incur expenses to comply with such regulations. If compliance is unduly expensive or unduly difficult, we may lose market share and our financial results may be adversely affected. Any failure by us to control our use or to restrict adequately the discharge of hazardous substances could subject us to potentially significant monetary damages, fines or suspensions of our business operations.

Corporate responsibility, specifically related to Environmental, Social and Governance (“ESG”) matters and unsuccessful management of such matters may adversely impose additional costs and expose us to new risks.

Public ESG and sustainability reporting is becoming more broadly expected by investors, shareholders and other third parties. Certain organizations that provide corporate governance and other corporate risk information to investors and shareholders have developed, and others may in the future develop, scores and ratings to evaluate companies and investment funds based upon ESG or “sustainability” metrics. Many investment funds focus on positive ESG business practices and sustainability scores when making investments and may consider a company’s ESG or sustainability scores as a reputational or other factor in making an investment decision. In addition, investors, particularly institutional investors, use these scores to benchmark companies against their peers and if a company is perceived as lagging, these investors may engage with such company to improve ESG disclosure or performance and may also make voting decisions, or take other actions, to hold these companies and their boards of directors accountable. We may face reputational damage in the event our corporate responsibility initiatives or objectives, including with respect to board diversity, do not meet the standards set by our investors, shareholders, lawmakers, listing exchanges or other constituencies, or if we are unable to achieve an acceptable ESG or sustainability rating from third party rating services. Ongoing focus on corporate responsibility matters by investors and other parties as described above may impose additional costs or expose us to new risks, including increased risk of investigation and litigation, and negative impacts on the value of our products and access to capital, which may put us at a commercial disadvantage relative to our peers.

Furthermore, we expect increased regulatory activity relating to climate change in the future, as the Hong Kong government in the future could implement restrictions on PV system in terms of emissions of carbon dioxide or other greenhouse gases, limitations or restrictions on water use, regulations on energy management and waste management, and other climate change-based rules and regulations, which may increase our expenses for compliance with these new standards and adversely affect our business and operating results.

 

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We face risks related to natural disasters, health epidemics and other catastrophes, which could significantly disrupt our operations.

Our business could be materially and adversely affected by natural disasters or other catastrophes, such as earthquakes, fire, floods, hail, windstorms, severe weather conditions, environmental accidents, power loss, communications failures, explosions, terrorist attacks and similar events. Our business could also be materially and adversely affected by public health emergencies, such as the outbreak of avian influenza, severe acute respiratory syndrome, or the 2019 novel coronavirus (COVID-19) or other local health epidemics in jurisdictions where we operate and global pandemics. If any of our employees is suspected of having contracted any contagious disease, we may, under certain circumstances, be required to quarantine those employees and the affected areas of our operations. As a result, we may have to temporarily suspend part or all of our facilities. Furthermore, authorities may impose restrictions on travel and transportation and implement other preventative measures in affected regions to deal with the catastrophe or emergency, which may lead to the temporary closure of our facilities and declining economic activity at large. A prolonged outbreak of any health epidemic or other adverse public health developments, in jurisdictions where we operate, could have a material adverse effect on our business operations.

We have limited insurance coverage and may incur significant losses resulting from operating hazards, product liability claims, project construction or business interruptions.

Our operations involve the use, handling, generation, processing, storage, transportation and disposal of hazardous materials, which may result in fires, explosions, spills and other unexpected or dangerous accidents causing personal injuries or death, property damages, environmental damages and business interruption. Although we currently carry third-party liability insurance against property damage, the policies for this insurance are limited in scope and may not cover all claims relating to personal injury, property or environmental damage arising from incidents on our properties or relating to our operations. Any occurrence of these or other incidents which are not insured under our existing insurance policies could have a material adverse effect on our business, financial condition or results of operations.

For projects we construct, we are exposed to risks associated with the design and construction that can create additional liabilities to our operations. We manage these risks by including contingencies to our construction costs, ensuring the appropriate insurance coverages are in place such as professional indemnity and construction all risk as well as obtaining indemnifications from our contractors where possible. However, there is no guarantee that these risk management strategies will always be successful.

We have identified material weaknesses in our internal control over financial reporting. If we are unable to remediate the material weaknesses, or if we identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal control over financial reporting, this may result in material misstatements of our consolidated financial statements or cause us to fail to meet our periodic reporting obligations.

Prior to this offering, we are a private company with limited accounting personnel and other resources with which to address our internal control over financial reporting in accordance with the requirements applicable to a U.S. public company. In connection with the audit of our consolidated financial statements included elsewhere in this prospectus, we and our independent registered public accounting firm identified two material weaknesses in our internal control over financial reporting. As defined in the standards established by the U.S. Public Company Accounting Oversight Board, or PCAOB, a “material weakness” is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

The material weaknesses identified relate to (i) our lack of formal internal control policies and internal independent supervision functions to establish formal risk assessment process and internal control framework; and (ii) our lack of accounting staff and resources with appropriate knowledge of U.S. Generally Accepted Accounting Principles (U.S. GAAP) and Securities and Exchange Commission (SEC) reporting and compliance requirements to design and implement formal period-end financial reporting policies and procedures to address complex U.S. GAAP technical accounting issue in accordance with U.S. GAAP and the SEC requirements. For details, see “Management’s Discussion and Analysis of Financial Condition and

 

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Results of Operations — Internal Control over Financial Reporting.” Neither we nor our independent registered public accounting firm undertook a comprehensive assessment of our internal control for purposes of identifying and reporting material weaknesses and other control deficiencies in our internal control over financial reporting. Had we performed a formal assessment of our internal control over financial reporting or had our independent registered public accounting firm performed an audit of our internal control over financial reporting, additional deficiencies may have been identified.

Following the identification of the material weaknesses, we have taken measures and plan to continue to take measures to remediate these deficiencies. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Internal Control over Financial Reporting.” However, the implementation of these measures may not fully address such weaknesses and deficiencies in our internal control over financial reporting. Our failure to correct these deficiencies or our failure to discover and address any other deficiencies could result in inaccuracies in our financial statements and impair our ability to comply with applicable financial reporting requirements and related regulatory filings on a timely basis. Moreover, ineffective internal control over financial reporting could significantly hinder our ability to prevent fraud.

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

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

Information Technology Systems and Data Security Breaches.

Our operations depend, in part, on how well it and its third party service providers protect networks, equipment, information technology (“IT”) systems and software against damage from a number of threats, including, but not limited to, cable cuts, natural disasters, intentional damage and destruction, fire, power loss, hacking, computer viruses, vandalism and theft. Our operations also depend on the timely maintenance, upgrade and replacement of networks, equipment, IT systems and software, as well as pre-emptive expenses to mitigate the risks of failures. Any of these and other events could result in information system failures, delays and/or increase in capital expenses. The failure of information systems or a component of information systems could, depending on the nature of any such failure, adversely impact the Company’s reputation and results of operations.

 

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We may face claims of intellectual property infringement, which could be time-consuming, costly to defend or settle and result in the loss of significant rights.

From time to time, third parties may assert against us and our customers and distributors their patent and other intellectual property rights to technologies that are important to our business.

Claims that our products, processes or technology infringe third-party intellectual property rights, regardless of their merit or resolution, could be costly to defend or settle and could divert the efforts and attention of our management and technical personnel. In addition, many of our customer and distributor agreements require us to indemnify and defend our customers or distributors from third-party infringement claims and pay damages in the case of adverse rulings. Claims of this sort also could harm our relationships with our customers or distributors and might deter future customers from doing business with us. We do not know whether we will prevail in these proceedings given the complex technical issues and inherent uncertainties in intellectual property litigation. If any pending or future proceedings result in an adverse outcome, we could be required to:

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cease the manufacture, use or sale of the infringing projects, processes or technology;

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pay substantial damages for infringement;

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expend significant resources to develop non-infringing projects, processes or technology;

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license technology from the third-party claiming infringement, which license may not be available on commercially reasonable terms, or at all;

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cross-license our technology to a competitor to resolve an infringement claim, which could weaken our ability to compete with that competitor; or

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pay substantial damages to our customers or end users to discontinue their use of or to replace infringing technology sold to them with non-infringing technology.

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Any of the foregoing results could have a material adverse effect on our business, financial condition and results of operations.

We may be subject to legal disputes or litigation in the future, which could materially and adversely affect our business, financial condition, and results of operations.

In the ordinary course of our business as a solar project developer and EPC solutions provider, we may become involved in various legal proceedings, disputes, or claims with customers, suppliers, contractors, employees, government authorities, or other third parties. These disputes could relate to, among other things, project delays, construction defects, contract performance, warranty claims, regulatory compliance, intellectual property rights, environmental matters, or employment issues.

While we endeavor to minimize legal risks through careful project management, quality assurance, and contractual protections, we cannot guarantee that legal proceedings will not arise. Any litigation or dispute, regardless of its merits or outcomes, could result in substantial costs, divert management attention and resources, and damage our reputation. Unfavorable outcomes in legal proceedings could also lead to monetary damages, penalties, injunctions, or other forms of relief that could materially impact our financial condition and operating results.

In addition, defending against litigation could require significant expenditures of time, money, and other resources, and even settlements could involve substantial payments or operational changes. The results of complex legal proceedings are difficult to predict. Moreover, complaints filed against us may not specify the amount of damages that plaintiffs seek, and we therefore may be unable to estimate the possible range of damages that might be incurred should these lawsuits be resolved against us. Even if we are able to estimate losses related to these actions, the ultimate amount of loss may be materially higher than our estimates. Any resolution of litigation, or threatened litigation, could involve the payment of damages or expenses by us, which may be significant or involve an agreement with terms that restrict the operation of our business. Even if any future lawsuits are not resolved against us, the costs of defending such lawsuits may be significant. These costs may exceed the dollar limits of our insurance policies or may not be covered at all by our insurance policies.

 

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Risks Related to Doing Business in Hong Kong

The majority of our operations are in Hong Kong, a special administrative region of the PRC. Due to the long-arm application of the current PRC laws and regulations, the PRC government may exercise significant direct oversight and discretion over the conduct of our business and may intervene or influence our operations at any time, which could result in a material change in our operations and/or the value of our Class A Ordinary Shares. To the extent that cash or assets of the business is in Hong Kong or a Hong Kong subsidiary of ours, the funds or assets may not be available to fund operations or for other use, because the Chinese government may, in the future, impose restrictions or limitations on our ability to move money out of Hong Kong to distribute earnings and pay dividends to and from the other entities within our organization or to reinvest in our business outside of Hong Kong.

We are a holding company incorporated in Cayman Islands and conduct a majority of our operations in Hong Kong through our Hong Kong subsidiaries. As of the date of this prospectus, we or any of our Hong Kong subsidiaries are not materially affected by recent statements by the PRC government indicating an intention to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers. Furthermore, pursuant to the Basic Law, national laws of mainland China do not apply in Hong Kong unless they are listed in Annex III of the Basic Law and applied locally by promulgation or local legislation. National laws that may be listed in Annex III are currently limited under the Basic Law to those which fall within the scope of defense and foreign affairs as well as other matters outside the limits of the autonomy of Hong Kong. National laws and regulations relating to data protection, cybersecurity and the anti-monopoly have not been listed in Annex III and so do not apply directly to Hong Kong.

However, due to long-arm provisions under the current PRC laws and regulations, there remains regulatory and legal uncertainty with respect to the implementation of laws and regulations of mainland China to Hong Kong. The PRC government may choose to exercise additional oversight and discretion over Hong Kong, and the policies, regulations, rules, and the enforcement of laws of the PRC government may change rapidly from time to time.

The PRC laws and regulations are evolving, and their enactment timetable, interpretation, enforcement, and implementation involve significant uncertainties and can change quickly with little advance notice. New laws, regulations, and other government directives in the PRC may also be costly to comply with, and such compliance, any associated inquiries or investigations, or any other government actions may:

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delay or impede our development;

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result in negative publicity or increase our operating costs;

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require significant management time and attention;

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cause devaluation of our securities or delisting; and

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

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We are aware that recently, the PRC government initiated a series of regulatory actions and statements to regulate business operations in certain areas in China, including cracking down on illegal activities in the securities market, enhancing supervision over China-based companies listed overseas using a VIE structure, adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement. Since these statements and regulatory actions are new, it is highly uncertain how soon the PRC legislative or administrative regulation making bodies will respond or what existing or new laws or regulations or detailed implementations and interpretations will be modified or promulgated, if any, or what the potential impact that any such modified or new laws and regulations would have on our daily business operation, the ability to accept foreign investments and list on a U.S. or other foreign exchange.

The PRC government may intervene or influence our operations at any time or may exert control over offerings conducted overseas and foreign investment in Hong Kong-based issuers, which may result in a material change in our operations and/or the value of our Class A Ordinary Shares. For example, there is

 

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currently no restriction or limitation under the laws of Hong Kong on the conversion of HK dollar into foreign currencies and the transfer of currencies out of Hong Kong and the laws and regulations of the PRC on currency conversion control do not currently have any material impact on the transfer of cash between the ultimate holding company and the Hong Kong subsidiaries. However, to the extent that cash or assets in the business is in Hong Kong or a Hong Kong subsidiary of ours, the funds or assets may not be available to fund operations or for other use, because the Chinese government may, in the future, impose restrictions or limitations on our ability to move money out of Hong Kong to distribute earnings and pay dividends to and from the other entities within our organization or to reinvest in our business outside of Hong Kong. Such restrictions and limitations, if imposed in the future, may delay or hinder the expansion of our business to outside of Hong Kong and may affect our ability to receive funds from our Hong Kong subsidiaries. The promulgation of new laws or regulations, or the new interpretation of existing laws and regulations, in each case, that restrict or otherwise unfavorably impact the ability or way we conduct our business, could require us to change certain aspects of our business to ensure compliance, which could decrease demand for our services, reduce revenues, increase costs, require us to obtain more licenses, permits, approvals or certificates, or subject us to additional liabilities. To the extent any new or more stringent measures are required to be implemented, our business, financial condition and results of operations could be adversely affected and such measures could materially decrease the value of our Class A Ordinary Shares, potentially rendering it worthless.

If the PRC government chooses to extend the oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers, such action may significantly limit or completely hinder our ability to offer or continue to offer Class A Ordinary Shares to investors and cause the value of our Class A Ordinary Shares to significantly decline or be worthless.

Recent statements by the PRC government have indicated an intent to exert more oversight and control over offerings that are conducted overseas and/or foreign investments in China-based issuers. On December 28, 2021, the Cyberspace Administration of China, or the CAC, and several other regulatory authorities in China jointly published the revised Cybersecurity Review Measures, or the CRM, took effect on February 15, 2022, and replaced the previous draft issued on July 10, 2021. Pursuant to the revised CRM, (i) operators of critical information infrastructure, that intend to purchase network products and services and online platform operators that conduct data processing activities, in each case that affect or may affect national security, must be subject to the cybersecurity review, (ii) if a network platform operator that are in possession of personal information of over one million users seeks for “foreign” listing, it must apply for the cybersecurity review, and (iii) relevant PRC government authorities may initiate cybersecurity review if they determine an operator’s network products or services or data processing activities affect or may affect national security. The CRM set out certain general factors which would be the focus in assessing the national security risk during a cybersecurity review, including without limitation, risks of influence, control or malicious use of critical information infrastructure, core data, important data or large amounts of personal information by foreign governments in relation to listing abroad.

Neither we nor any our Hong Kong subsidiaries currently is deemed to be an “operator of critical information infrastructure” or a “data processor” that are required to file for cybersecurity review by the CAC before listing in the United States, given that: (a) as of date of this prospectus, none of us or our Hong Kong subsidiaries carries out any data possessing activities in mainland China or possesses personal information of individuals from the mainland China; (b) we do not operate critical information infrastructure under the revised CRM nor place any reliance on collection and processing of any personal information to maintain our business operation; (c) data processed in our business should not have a bearing on national security nor affect or may affect national security; (d) as of the date of this prospectus, none of us or our Hong Kong subsidiaries has been informed by any PRC governmental authority of being classified as an “operator of critical information infrastructure” or a “data processor” that is subject to CAC cybersecurity review; and (e) pursuant to the Basic Law of the Hong Kong Special Administrative Region of the PRC, or the Basic Law, 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).

On February 17, 2023, the CSRC released the Trial Measures, which came into effect on March 31, 2023. On the same date of the issuance of the Trial Measures, the CSRC circulated several Supporting Guidance Rules, the Notes on the Trial Measures, the Notice on Administration Arrangements for the Filing of Overseas

 

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Listings by Domestic Enterprises 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 by providing substantially the same requirements for filings of overseas offering and listing by domestic companies, yet made the following updates compared to the Draft Overseas Listing Regulations: (a) further clarification of the circumstances prohibiting overseas issuance and listing; (b) further clarification of the standard of indirect overseas listing under the principle of substance over form, and (c) adding more details of filing procedures and requirements by setting different filing requirements for different types of overseas offering and listing. Pursuant to the Trial Measures, the Guidance Rules and Notice, domestic companies that seek to offer or list securities overseas, both directly and indirectly, should fulfill the filing procedure and report relevant information to the CSRC within three working days following its submission of initial public offerings or listing application. If the issuer meets both of the following criteria, the overseas securities offering and listing conducted by such issuer shall be deemed as indirect overseas offering and listing: (i) 50% or more of the issuer’s operating revenue, total profit, total assets or net assets as documented in its audited consolidated financial statements for the most recent accounting year is accounted for by domestic companies; and (ii) the main parts of the issuer’s business activities are conducted in China, or its main places of business are located in China, or the senior managers in charge of its business operation and management are mostly Chinese citizens or domiciled in China.

As of the date of this prospectus, we do not meet both criteria above, and our registered public offering in the United States and the listing on a U.S. stock exchange are not subject to the CSRC filing requirements, based on the facts that (i) we do not, directly or indirectly, own or control any entity or subsidiary in mainland China, and do not intend to set up any subsidiary or to establish a VIE structure with any entity in mainland China, (ii) we are not ultimately controlled by any mainland Chinese company or individual directly or indirectly; (iii) we and our subsidiaries currently do not have any business activities, operations or assets in mainland China, except that some of our suppliers (representing less than 50% of our total procurement value) are based in mainland China and (iv) none of member of the board of directors or our senior managements in charge of our business operations or management is a citizen of mainland China. However, we cannot assure you that relevant PRC government agencies, including the CSRC and CAC, would reach the same conclusion. We do not intend to seek approval of this offering from the CAC or the CSRC. Uncertainties still exist, however, due to the possibility that laws, regulations, or policies in the PRC could change rapidly in the future. It is uncertain whether the PRC government will adopt additional requirements or extend the existing requirements to apply to our Hong Kong subsidiaries. Any future action by the PRC government expanding the categories of industries and companies whose foreign securities offerings are subject to review by the CSRC or the CAC could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and could cause the value of such securities to significantly decline or be worthless.

In the event that (i) we or our subsidiaries do not receive or maintain required permissions or approvals, (ii) we or our subsidiaries inadvertently conclude that such permissions or approvals are not required, or (iii) applicable laws, regulations, or interpretations change and we or our subsidiaries are required to obtain such permissions or approvals in the future, we or our subsidiaries may be unable to obtain such permissions or approvals in a timely manner, or at all, and may face regulatory actions or other sanctions from mainland China and Hong Kong regulatory authorities if we or our subsidiaries fail to fully comply with any new regulatory requirements. Consequently, our or our subsidiaries’ operations and financial condition could be materially adversely affected and our ability to offer securities to investors could be significantly limited or completely hindered and the Class A Ordinary Shares currently being offered here may substantially decline in value and become worthless.

Compliance with existing or future data privacy related laws, regulations and governmental orders may entail significant expenses and could materially affect our business.

Although we are not subject to cybersecurity review by the CAC nor any other PRC authorities for this offering or required to obtain regulatory approval regarding the data privacy and personal information requirements from the CAC nor any other PRC authorities for our and our subsidiaries’ operations in Hong Kong, because a majority of our operations take place in Hong Kong, we are subject to a variety of laws and other obligations regarding data privacy and protection in Hong Kong.

 

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In particular, the Personal Data (Privacy) Ordinance (Chapter 486 of the Laws of Hong Kong) (the “PDPO” or the “Personal Data (Privacy) Ordinance”) imposes a duty on any data user who, either alone or jointly with other persons, controls the collection, holding, processing or use of any personal data which relates directly or indirectly to a living individual and can be used to identify that individual. Under the PDPO, data users shall take all practicable steps to protect the personal data they hold from any unauthorized or accidental access, processing, erasure, loss, or use. Once collected, such personal data should not be kept longer than necessary for the fulfilment of the purpose for which it is or is to be used and shall be erased if it is no longer required, unless erasure is prohibited by law or is not in the public interest. The PDPO also confers on the Privacy Commissioner for Personal Data (“Privacy Commissioner”) power to conduct investigations and institute prosecutions. The data protection principles (collectively, the “DPP” or the “Data Protection Principles”), which are contained in Schedule 1 to the PDPO, outline how data users should collect, handle, and use personal data, complemented by other provisions imposing further compliance requirements. The collective objective of DPPs is to ensure that personal data is collected on a fully informed basis and in a fair manner, with due consideration towards minimizing the amount of personal data collected. Once collected, the personal data should be processed in a secure manner and should only be kept for as long as necessary for the fulfilment of the purposes of using the data. Use of the data should be limited to or related to the original collection purpose. Data subjects are given certain rights, inter alia: (a) the right to be informed by a data user whether the data user holds personal data of which the individual is the data subject; (b) if the data user holds such data, to be supplied with a copy of such data; and (c) the right to request correction of any data they consider to be inaccurate. The Privacy Commissioner may carry out criminal investigations and institute prosecution for certain offenses. Depending on the severity of the cases, the Privacy Commissioner will decide whether to prosecute or refer cases involving suspected commission to the Department of Justice of Hong Kong. Victims may also seek compensation by civil action from data users for damage caused by a contravention of the PDPO. The Commissioner may provide legal assistance to the aggrieved data subjects if the Commissioner deems fit to do so.

We believe that we have been in compliance with the data privacy and personal information requirements of the PDPO. Moreover, we do not expect to be subject to any cybersecurity review by Hong Kong and PRC government authorities for this offering. However, if we or our subsidiaries conducting business operations in Hong Kong have violated certain provisions of the PDPO, we could face significant civil penalties and/or criminal prosecution, which could adversely affect our business, financial condition, and results of operations.

The enactment of the law of the PRC on Safeguarding National Security in the Hong Kong Special Administrative Region (the “Hong Kong National Security Law”) could impact our Hong Kong subsidiaries, which represent substantially all of our business.

On June 30, 2020, the Standing Committee of the PRC National People’s Congress adopted the Hong Kong National Security Law. This law defines the duties and government bodies of the Hong Kong National Security Law for safeguarding national security and four categories of offenses — secession, subversion, terrorist activities, and collusion with a foreign country or external elements to endanger national security — and their corresponding penalties. On July 14, 2020, the then U.S. President Donald Trump signed the Hong Kong Autonomy Act, or HKAA, into law, authorizing the U.S. administration to impose blocking sanctions against individuals and entities determined to have materially contributed to the erosion of Hong Kong’s autonomy. On August 7, 2020, the U.S. government imposed HKAA-authorized sanctions on eleven individuals, including former and current Chief Executives of HKSAR, Carrie Lam and John Lee, respectively. On October 14, 2020, the U.S. State Department submitted to relevant committees of Congress the report required under HKAA, identifying persons materially contributing to “the failure of the Government of China to meet its obligations under the Joint Declaration or the Basic Law.” The HKAA further authorizes secondary sanctions, including the imposition of blocking sanctions, against foreign financial institutions that knowingly conduct a significant transaction with foreign persons sanctioned under this authority. The imposition of sanctions may directly affect foreign financial institutions and any third parties or clients dealing with any foreign financial institution that is targeted. It is difficult to predict the full impact of the Hong Kong National Security Law and HKAA on Hong Kong and companies located in Hong Kong. If our Hong Kong subsidiaries, which represent substantially all of our business, are determined to be in violation of the Hong Kong National Security Law or the HKAA by competent authorities, our business operations, financial position and results of operations could be materially and adversely affected.

 

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The enforcement of laws and rules and regulations in PRC can change quickly with little advance notice. Additionally, the PRC laws and regulations and the enforcement of such that apply or are to be applied to Hong Kong can change quickly with little or no advance notice. As a result, the Hong Kong legal system embodies uncertainties which could limit the availability of legal protections, which could result in a material change in our subsidiaries’ operations and/or the value of the securities we are offering.

As one of the conditions for the handover of the sovereignty of Hong Kong to the PRC, the PRC accepted conditions such as Hong Kong’s Basic Law. The Basic Law guaranteed a high degree of autonomy for Hong Kong which ensured Hong Kong will retain its currency (the Hong Kong Dollar), legal system, and people’s rights and freedom for fifty years from 1997. This agreement has given Hong Kong the freedom to function with a high degree of autonomy. The Special Administrative Region of Hong Kong is responsible for its domestic affairs, including, but not limited to, the judiciary and courts of last resort, immigration, and customs, public finance, currencies, and extradition. Hong Kong continues using the English common law system.

However, if there are any changes in relation to the political arrangements which allows Hong Kong to function autonomously, this could potentially impact Hong Kong’s common law legal system and may in turn bring about uncertainty in, for example, the enforcement of our contractual rights. This could, in turn, materially and adversely affect the business and operations of our Hong Kong subsidiaries. Accordingly, we cannot predict the effect of future developments in the Hong Kong legal system, including the promulgation of new laws, changes to existing laws or the interpretation or enforcement thereof, or the pre-emption of local regulations by national laws. These uncertainties could limit the legal protections available to us, including the ability to enforce agreements with the clients.

There are political and legal risks associated with conducting business in Hong Kong, including the risks associated with the enactment of legislation to implement Article 23 of the Basic Law.

The majority of our operations are in Hong Kong. Accordingly, the business operations and financial conditions of our Hong Kong subsidiaries will be affected by the political and legal developments in Hong Kong. Any adverse economic, social and/or political conditions, material social unrest, strike, riot, civil disturbance or disobedience, as well as significant natural disasters, may affect the market and may adversely affect our operations. Given the relatively small geographical size of Hong Kong, any of such incidents may have a widespread effect on our business operations, which could in turn adversely and materially affect our business, results of operations and financial condition.

Hong Kong is a special administrative region of the PRC and the basic policies of the PRC regarding Hong Kong are reflected in the Basic Law, namely, Hong Kong’s constitutional document, which provides Hong Kong with a high degree of autonomy and executive, legislative and independent judicial powers, including that of final adjudication under the principle of “one country, two systems”. However, there is no assurance that there will not be any changes in the political arrangement between PRC and Hong Kong and the economic, political and legal environment in Hong Kong in the future. Since a majority of our operations are based in Hong Kong, any change of the political arrangements between Hong Kong and the PRC may pose an adverse impact to the stability of the economy in Hong Kong, thereby directly and adversely affecting our results of operations and financial positions.

Lastly, based on several development including the Hong Kong National Security Law passed in June 2020, the U.S. State Department has indicated that the United States no longer considers Hong Kong to have significant autonomy from China and President Trump signed an executive order and Hong Kong Autonomy Act, or HKAA, to remove Hong Kong’s preferential trade status and to authorize the U.S. administration to impose blocking sanctions against individuals and entities who are determined to have materially contributed to the erosion of Hong Kong’s autonomy. The United States may impose the same tariffs and other trade restrictions on exports from Hong Kong that it places on goods from mainland China. These and other recent actions may represent an escalation in political and trade tensions involving the U.S, China and Hong Kong, which could potentially harm our business. It is difficult to predict the full impact of the HKAA on Hong Kong and companies with operations in Hong Kong like us. Furthermore, legislative or administrative actions in respect of China-U.S. relations could cause investor uncertainty for affected issuers, including us, and the market price of our Class A Ordinary Shares could be adversely affected.

 

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

Our revenues and expenses will be denominated predominantly in Hong Kong dollars, which is the currency of Hong Kong, and the financial statements that we file with the SEC and provide to our shareholders are presented in United States dollars. Although the exchange rate between the Hong Kong dollar to the U.S. dollar has been pegged since 1983, we cannot assure you that the Hong Kong dollar will remain pegged to the U.S. dollar. Any significant fluctuations in the exchange rates between Hong Kong dollars to U.S. dollars may have a material adverse effect on our revenue and financial condition. For example, to the extent that we are required to convert U.S. dollars we receive from this offering into Hong Kong dollars for our operations, fluctuations in the exchange rates between Hong Kong dollars against the U.S. dollar would have an adverse effect on the amounts we receive from the conversion. We have not used any forward contracts, futures, swaps or currency borrowings to hedge our exposure to foreign currency risk.

Risks Related to Corporate Governance

As an exempted company incorporated in the Cayman Islands, we are permitted to adopt certain home country practices for corporate governance matters that differ significantly from the Nasdaq corporate governance listing standards; these practices may afford less protection to shareholders than they would enjoy if we complied fully with the corporate governance listing standards.

We have applied to list the Class A Ordinary Shares on the Nasdaq. The Nasdaq corporate governance listing standards permit a foreign private issuer like us to follow the corporate governance practices of its home country. Certain corporate governance practices in the Cayman Islands, which is our home country, may differ significantly from the Nasdaq corporate governance listing standards. For instance, we are not required to: (i) have a majority of the board be independent; (ii) have a compensation committee or a nominations or corporate governance committee consisting entirely of independent directors; or (iii) have regularly scheduled executive sessions with only independent directors each year. We intend to rely on some of these exemptions. As a result, you may not be provided with the benefits of certain corporate governance requirements of the Nasdaq.

We are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions applicable to U.S. domestic public companies.

Because we are 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:

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the rules under the Exchange Act requiring the filing of quarterly reports on Form 10-Q or current reports on Form 8-K with the SEC;

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the sections of the Exchange Act regulating the solicitation of proxies, consents, or authorizations in respect of a security registered under the Exchange Act;

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the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and

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the selective disclosure rules by issuers of material nonpublic information under Regulation FD.

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We will be required to file an annual report on Form 20-F within four months of the end of each fiscal year. In addition, we intend to publish our results on a quarterly basis through press releases, distributed pursuant to the rules and regulations of the Nasdaq. Press releases relating 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 timely than that required to be filed 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 are an emerging growth company within the meaning of the Securities Act and may take advantage of certain reduced reporting requirements.

We are an “emerging growth company”, as defined in the JOBS Act, and we may take advantage of certain exemptions from requirements applicable to other public companies that are not emerging growth

 

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companies including, most significantly, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 for so long as we remain an emerging growth company. As a result, if we elect not to comply with such auditor attestation requirements, our investors may not have access to certain information they may deem important. 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. Further, as an emerging growth company, we have elected to use the extended transition period for complying with new or revised financial accounting standards. As such, our financial statements may not be comparable to companies that comply with public company effective dates because of the potential differences in accounting standard used. We cannot predict if investors will find the Class A Ordinary Shares less attractive because we may rely on these provisions. If some investors find the Class A Ordinary Shares less attractive as a result, there may be a less active trading market for the Class A Ordinary Shares and the trading price of the Class A Ordinary Shares may be more volatile.

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

We are a public company and expect to incur significant legal, accounting and other expenses that we did not incur as a private company. The Sarbanes-Oxley Act of 2002, as well as rules subsequently implemented by the SEC and the Nasdaq, impose various requirements on the corporate governance practices of public companies. We expect these rules and regulations to increase our legal and financial compliance costs and to make some corporate activities more time-consuming and costly. As a company with less than US$1.235 billion in revenues for our last fiscal year, we qualify as an “emerging growth company” pursuant to the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. After we are no longer an “emerging growth company,” we expect to incur significant expenses and devote substantial management effort toward ensuring compliance with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 and the other rules and regulations of the SEC.

As a result of becoming a public company, we will need to increase the number of independent directors and adopt policies regarding internal controls and disclosure controls and procedures. We also expect that operating as a public company will make it more difficult and more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. In addition, we will incur additional costs associated with our public company reporting requirements. It may also be more difficult for us to find qualified persons to serve on our board of directors or as executive officers. We are currently evaluating and monitoring developments with respect to these rules and regulations, and we cannot predict or estimate with any degree of certainty the amount of additional costs we may incur or the timing of such costs.

In the past, shareholders of a public company often brought securities class action suits against the company following periods of instability in the market price of that company’s securities. If we were involved in a class action suit, it could divert a significant amount of our management’s attention and other resources from our business and operations, which could harm our results of operations and require us to incur significant expenses to defend the suit. Any such class action suit, whether or not successful, could harm our reputation and restrict our ability to raise capital in the future. In addition, if a claim is successfully made against us, we may be required to pay significant damages, which could have a material adverse effect on our financial condition and results of operations.

Our memorandum and articles of association contain anti-takeover provisions that could have a material adverse effect on the rights of holders of our Class A Ordinary Shares.

Our memorandum and articles of association contain provisions which could limit the ability of others to acquire control of our company or cause us to engage in change-of-control transactions. These provisions could have the effect of depriving our shareholders of an opportunity to sell their shares at a premium over prevailing market prices by discouraging third parties from seeking to obtain control of our company in a tender offer or similar transaction. Our board of directors has the authority, without further action by our shareholders, to issue preferred shares in one or more series and to fix their designations, powers, preferences,

 

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privileges, and relative participating, optional or special rights and the qualifications, limitations or restrictions, including dividend rights, conversion rights, voting rights, terms of redemption and liquidation preferences, any or all of which may be greater than the rights associated with our Class A Ordinary Shares. Preferred shares could be issued quickly with terms calculated to delay or prevent a change in control of our company or make removal of management more difficult. If our board of directors decides to issue preferred shares, the price of the Class A Ordinary Shares may fall and the voting and other rights of the holders of our Class A Ordinary Shares may be materially and adversely affected.

Risks Related to this Offering and the Trading Market

The Company’s securities may be prohibited from trading in the United States and subject to delisting under the Holding Foreign Companies AccountableAct (the “HFCAA”), as amended by the Consolidated Appropriations Act, 2023, and related regulations, in the future if the PCAOB is unable to inspect or investigate completely the Company’s auditor, which is headquartered in China for two consecutive years.

Pursuant to the HFCAA, if the SEC determines that the Company has 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 the Company’s securities from being traded on a national securities exchange or in the over-the-counter trading market in the United States.

On December 16, 2021, the PCAOB issued a report to notify the SEC of its determination that the PCAOB was unable to inspect or investigate completely registered public accounting firms headquartered in mainland China and Hong Kong and the auditor that issued the audit reports included in the financial statements for the fiscal year ended December 31, 2021 was subject to that determination. On December 15, 2022, the PCAOB removed mainland China and Hong Kong from the list of jurisdictions where it is unable to inspect or investigate completely registered public accounting firms.

The Company’s consolidated financial statements are currently audited by Guangdong Prouden CPAs GP, which is registered with and subject to regular inspection by PCAOB. 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 the Company uses an accounting firm headquartered in one of these jurisdictions to issue an audit report on the Company’s financial statements filed with the SEC, the Company would be identified as a Commission-Identified Issuer following the filing of the annual report on Form 20-F for the relevant fiscal year. In accordance with the HFCAA, the Company’s securities would be prohibited from being traded on a national securities exchange or in the over-the-counter trading market in the United States if the Company is identified as a Commission-Identified Issuer for two consecutive years in the future. If the Company’s shares are prohibited from trading in the United States, there is no certainty that the Company will be able to list on a non-U.S. exchange or that a market for the Company’s shares will develop outside of the United States. A prohibition of being able to trade in the United States would substantially impair your ability to sell or purchase the Company’s securities when you wish to do so, and the risk and uncertainty associated with delisting would have a negative impact on the price of the Company’s securities. Also, such a prohibition would significantly affect the Company’s ability to raise capital on terms acceptable to us, or at all, which would have a material adverse impact on the Company’s business, financial condition, and prospects.

An active trading market for the Class A Ordinary Shares may not develop and the trading price for the Class A Ordinary Shares may fluctuate significantly.

We will apply to list the Class A Ordinary Shares on the Nasdaq. Prior to the completion of this offering, there has been no public market for the Class A Ordinary Shares, and we cannot assure you that a liquid public market for the Class A Ordinary Shares will develop. If an active public market for the Class A Ordinary Shares does not develop following the completion of this offering, the market price and liquidity of the Class A Ordinary Shares may be materially and adversely affected. The initial public offering price for the Class A Ordinary Shares was determined by negotiation between us and the underwriters based upon several factors, and we cannot assure you that the trading price of the Class A Ordinary Shares after this offering will not decline below the initial public offering price. As a result, investors in our securities may experience a significant

 

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decrease in the value of their Class A Ordinary Shares, and may not be able to resell Class A Ordinary Shares at or above the price they paid, or at all.

The trading price of the Class A Ordinary Shares is likely to be volatile, which could result in substantial losses to investors.

The trading price of the Class A Ordinary Shares is likely to be volatile and could fluctuate widely due to factors beyond our control. The trading performances of Hong Kong or China-based companies’ securities after their offerings may affect the attitudes of investors toward Chinese companies listed in the United States in general and consequently may impact the trading performance of the Ordinary Shares, regardless of our actual operating performance. In addition, any negative news or perceptions about inadequate corporate governance practices or fraudulent accounting, corporate structure or matters of other Hong Kong or China-based companies may also negatively affect the attitudes of investors towards such companies in general, including us, regardless of whether we have conducted any inappropriate activities. Furthermore, securities markets may from time to time experience significant price and volume fluctuations that are not related to our operating performance, which may have a material and adverse effect on the trading price of the Class A Ordinary Shares.

In addition to market and industry factors, the price and trading volume for the Class A Ordinary Shares may be highly volatile for factors specific to our own operations, including the following:

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variations in our revenues, earnings and cash flows;

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•

announcements of new investments, acquisitions, strategic partnerships or joint ventures by us or our competitors;

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•

announcements of new solutions and expansions by us or our competitors;

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•

announcements of new policies, rules or regulations relating to the enterprising learning industry in China or Hong Kong;

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•

changes in financial estimates by securities analysts;

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•

detrimental adverse publicity about us, our solutions, our competitors or our industry;

​

•

additions or departures of key personnel;

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•

fluctuations of exchange rates between the Hong Kong dollar and the U.S. dollar; and

​

•

changes in local laws and regulations and government subsidy schemes for renewable and clean energy programs, such as the FiT.

​

Any of these factors may result in large and sudden changes in the volume and price at which the Class A Ordinary Shares will trade.

In the past, shareholders of public companies have often brought securities class action suits against those companies following periods of instability in the market price of their securities. If we were involved in a class action suit, it could divert a significant amount of our management’s attention and other resources from our business and operations and require us to incur significant expenses to defend the suit, which could harm our results of operations. Any such class action suit, whether or not successful, could harm our reputation and restrict our ability to raise capital in the future. In addition, if a claim is successfully made against us, we may be required to pay significant damages, which could have a material adverse effect on our financial condition and results of operations.

Our dual-class share structure with different voting rights will limit your ability to influence corporate matters and could discourage others from pursuing any change of control transactions that holders of our Class A ordinary shares may view as beneficial.

Immediately after the completion of this offering, our ordinary shares will consist of 11,500,000 Class A Ordinary Shares and      Class B Ordinary Shares, assuming the underwriters do not exercise their option to purchase additional Class A Ordinary Shares. In respect of matters requiring the votes of shareholders, holders of Class A Ordinary Shares will be entitled to one (1) votes per share, while holders of Class B

 

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Ordinary Shares will be entitled to fifty (50) votes per share. We will sell Class A Ordinary Shares in this offering. Our Class B Ordinary Shares are convertible at any time by the holder thereof into Class A Ordinary Shares on a one-for-one basis, while Class A Ordinary Shares are not convertible into Class B Ordinary Shares under any circumstances. Any conversions of Class B Ordinary Shares into Class A Ordinary Shares may dilute the percentage ownership of the existing holders of Class A Ordinary Shares within their class of Ordinary Shares. Such conversions may increase the aggregate voting power of the existing holders of Class A Ordinary Shares. In the event that we have multiple holders of Class B Ordinary Shares in the future and certain of them convert their Class B Ordinary Shares into Class A Ordinary Shares, the remaining holders who retain their Class B Ordinary Shares may experience increases in their relative voting power.

Immediately following the completion of this offering, Mr.        will beneficially own      Class B Ordinary Shares and       % of our total voting power, assuming that the underwriters do not exercise their option to purchase additional Class A Ordinary Shares. This is due to the disparate voting powers associated with our dual-class share structure. See “Capitalization” and “Principal Shareholders.” As a result of the dual-class share structure and the concentration of ownership, Mr.        will be able to determine the outcome of matters requiring shareholder approval, including those to be determined either by an ordinary resolution or a special resolution, such as decisions regarding change of directors, mergers, change of control transactions and other significant corporate actions. He may take actions that are not in the best interest of us or our other shareholders. In addition, no shareholder holding less than one third of all votes attaching to our issued and outstanding shares entitled to vote at our general meetings can requisition an extraordinary general meeting. This concentration of ownership may discourage, delay or prevent a change in control of our company, which could have the effect of depriving our other shareholders of the opportunity to receive a premium for their shares as part of a sale of our company and may reduce the price of our Class A Ordinary Shares. This concentrated control will limit your ability to influence corporate matters and could discourage others from pursuing any potential merger, takeover or other change of control transactions that holders of Class A Ordinary Shares may view as beneficial.

Furthermore, certain shareholder advisory firms have announced changes to their eligibility criteria for inclusion of shares of public companies on certain indices, including the S&P 500, to exclude companies with multiple classes of shares and companies whose public shareholders hold no more than 5% of total voting power from being added to such indices. In addition, several shareholder advisory firms have announced their opposition to the use of multiple class structures. As a result, the dual-class structure of our ordinary shares may prevent the inclusion of our Class A ordinary shares in such indices and may cause shareholder advisory firms to publish negative commentary about our corporate governance practices or otherwise seek to cause us to change our capital structure. Any such exclusion from indices could result in a less active trading market for the Class A Ordinary Shares. Any actions or publications by shareholder advisory firms critical of our corporate governance practices or capital structure could also adversely affect the value of the Class A Ordinary Shares.

Techniques employed by short sellers may drive down the market price of the Class A 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 short. These short attacks have, in the past, led to selling of shares in the market.

Public companies listed in the United States that have a substantial majority of their operations in China or Hong Kong 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.

 

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We may be the subject of unfavorable allegations made by short sellers in the future. Any such allegations may be followed by periods of instability in the market price of the Class A Ordinary Shares and negative publicity. If and when we 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 federal or state 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 shareholders’ equity, and the value of any investment in the Class A Ordinary Shares could be greatly reduced or rendered worthless.

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

The trading market for the Class A Ordinary Shares will be influenced by research or reports that industry or securities analysts publish about our business. If one or more analysts who cover us downgrade the Class A Ordinary Shares, the market price for the Class A 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 the Class A Ordinary Shares to decline.

Because the initial public offering price is substantially higher than the pro forma net tangible book value per share, you will experience immediate and substantial dilution.

The initial public offering price of the Class A Ordinary Shares is substantially higher than the net tangible book value per Class A Ordinary Share. Therefore, if you purchase the Class A Ordinary Shares in this offering, you will pay a price per Class A Ordinary Share that substantially exceeds our pro forma net tangible book value per Class A Ordinary Share after this offering. Based on the assumed initial public offering price of US$4.00 per Class A Ordinary Share, you will experience immediate dilution of US$3.67 per Class A Ordinary Share, representing the difference between the assumed initial public offering price and our pro forma net tangible book value per Class A Ordinary Share after giving effect to this offering at the initial public offering price. See “Dilution” for more details.

The sale or availability for sale of substantial amounts of the Class A Ordinary Shares could adversely affect their market price.

Sales of substantial amounts of the Class A Ordinary Shares in the public market after the completion of this offering, or the perception that these sales could occur, could adversely affect the market price of the Class A Ordinary Shares and could materially impair our ability to raise capital through equity offerings in the future. The Class A Ordinary Shares sold in this offering will be freely tradable without restriction or further registration under the Securities Act of 1933, as amended, or the Securities Act, and shares held by our existing shareholders may also be sold in the public market in the future subject to the restrictions in Rule 144 and Rule 701 under the Securities Act and the applicable lock-up agreements. There will be 11,500,000 Class A Ordinary Shares outstanding immediately after this offering, or 11,725,000 Class A Ordinary Shares if the underwriters exercise their option to purchase additional Class A Ordinary Shares in full. In connection with this offering, we, our directors and executive officers, and existing shareholders have agreed not to sell, transfer or dispose of any Class A Ordinary Shares, Class A Ordinary Shares or similar securities for a period of six (6) months from the closing of this offering without the prior written consent of the underwriters, subject to certain exceptions.

However, the underwriters may release these securities from these restrictions at any time, subject to applicable regulations of the Financial Industry Regulatory Authority, Inc. We cannot predict what effect, if any, market sales of securities held by our significant shareholders or any other shareholder or the availability of these securities for future sale will have on the market price of the Class A Ordinary Shares. See “Underwriting” and “Shares Eligible for Future Sale” for a more detailed description of the restrictions on selling our securities after this offering.

 

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We may need to raise additional capital in the future which could further dilute the ownership of existing shareholders.

Our capital needs in the future will depend upon factors such as its growth strategy and the success of our solar power projects. None of these factors can be predicted with certainty. We may need additional debt or equity financing in the future. We cannot assure investors that any additional financing, if required, will be available or, even if it is available that it will be on terms acceptable to us. If we raise additional funds by selling securities, the ownership of existing shareholders will be diluted. Any inability to obtain required financing could have a material adverse effect on our business, results of operations and financial condition.

Because we do not expect to pay dividends in the foreseeable future after this offering, you must rely on price appreciation of the Class A Ordinary Shares for 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 Class A Ordinary Shares as a source for any future dividend income.

Our board of directors has complete discretion as to 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 account, 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 declare and pay dividends, the timing, amount and form of future dividends, if any, will depend on our future results of operations and cash flows, 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 deemed relevant by our board of directors. Accordingly, the return on your investment in the Class A Ordinary Shares will likely depend entirely upon any future price appreciation of the Class A Ordinary Shares. There is no guarantee that the Class A Ordinary Shares will appreciate in value after this offering or even maintain the price at which you purchased the Class A Ordinary Shares. You may not realize a return on your investment in the Class A Ordinary Shares or even lose your entire investment in the Class A Ordinary Shares.

We have not determined a specific use for a portion of the net proceeds from this offering, and we may use these proceeds in ways with which you may not agree.

We have not determined a specific use for a portion of the net proceeds of this offering, and our management will have considerable discretion in deciding how to apply these proceeds. You will not have the opportunity to assess whether the proceeds are being used appropriately before you make your investment decision. You must rely on the judgment of our management regarding the application of the net proceeds of this offering. We cannot assure you that the net proceeds will be used in a manner that will improve our results of operations or increase the price of the Class A Ordinary Shares, nor that these net proceeds will be placed only in investments that generate income or appreciate in value.

You may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing original actions in the Cayman Islands or Hong Kong based on U.S. or other foreign laws against us, our management or the experts named in the prospectus.

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

Hong Kong is a Special Administrative Region of the PRC. A foreign judgment can be registered and enforced in Hong Kong either under the Foreign Judgments (Reciprocal Enforcement) Ordinance (Cap. 319)

 

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(the “Reciprocal Enforcement Ordinance”) or at common law. Registration of a foreign judgment under the Reciprocal Enforcement Ordinance can be made by an ex parte application to the local court but this avenue is limited to judgments entered in designated jurisdictions, which currently include: Australia, Austria, Belgium, Bermuda, Brunei, France, Germany, India, Israel, Italy, Malaysia, the Netherlands, New Zealand, Singapore and Sri Lanka. An action to enforce a foreign judgment at common law is a comparatively cumbersome process. It is, in essence, an independent suit in Hong Kong, and the judgment creditor must comply with the usual service procedures. Judgments entered in the U.S. can be enforced in Hong Kong only at common law. To be eligible for common-law recognition, the judgment must (1) be for a definite sum of money; (2) be final and conclusive; and (3) have been entered by a court with competent jurisdiction over the defendant. With respect to finality, a Hong Kong court will generally refrain from enforcing a judgment during the pendency of an appeal. This raises the possibility of undue delay and asset dissipation. With respect to a court with competent jurisdiction, this is determined by private international law rules applied by the Hong Kong courts. Jurisdiction can generally be established on the basis of the defendant’s physical presence in the foreign forum, appearance in the underlying legal proceeding, or prior contractual consent to jurisdiction. Under the common law and the Reciprocal Enforcement Ordinance, only limited defenses can be raised, such as that the foreign judgment was procured by fraud; the foreign judgment is contrary to Hong Kong public policy; the foreign court has no jurisdiction over the claim, etc.

Shareholders of Cayman Islands exempted companies like us have no general rights under Cayman Islands law to inspect corporate records (other than the memorandum and articles of associations) or to obtain copies of lists of shareholders of these companies. Our directors have discretion under our articles of association to determine whether or not, and under what conditions, our corporate records may be inspected by our shareholders, but are not 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. If we choose to follow home country practice, our shareholders may be afforded less protection than they otherwise would under rules and regulations applicable to U.S. domestic issuers.

In addition, we conduct substantially all of our business operations in Hong Kong, and substantially all of our directors and senior management are based in Hong Kong and the United Kingdom. The SEC, the U.S. Department of Justice, or the DOJ, and other authorities often have substantial difficulties in bringing and enforcing actions against non-U.S. companies and non-U.S. persons, including company directors and officers, in certain jurisdictions, including Hong Kong. Additionally, our public shareholders may have limited rights and few practical remedies in markets where we operate, as shareholder claims that are common in the United States, including class action suits based on securities law and fraud claims, generally are difficult or impossible to pursue as a matter of law or practicality in markets outside of the United States. Although the competent authorities may establish a regulatory cooperation mechanism with the securities regulatory authorities of another country or region to implement cross-border supervision and administration, the regulatory cooperation with the securities regulatory authorities in the United States has not been efficient in the absence of a mutual and practical cooperation mechanism.

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 Cayman Companies Act and the laws applicable to companies incorporated in the United States and their shareholders, see “Description of Share Capital — Differences in Corporate Law.”

You are purchasing equity securities of a Cayman Islands holding company rather than equity securities of our subsidiaries that have substantive business operations in Hong Kong. As a result, certain judgments obtained against us by our shareholders may not be enforceable.

We are a Cayman Islands exempted company with no business operations, and all of our assets are located outside of the United States. Substantially all of our current operations are conducted in Hong Kong

 

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

We will be a “controlled company” as defined under the Nasdaq corporate governance rules. As a result, we will qualify for exemptions from certain corporate governance requirements that would otherwise provide protection to shareholders of other companies.

Following the completion of this offering, we will be a “controlled company” as defined under the Nasdaq corporate governance rules because      will own more than      of our total voting power. For so long as we remain a controlled company, we may rely on certain exemptions from the corporate governance rules, including the rule that we have to establish a nominating and corporate governance committee composed entirely of independent directors. As a result, you will not have the same protection afforded to shareholders of companies that are subject to these corporate governance requirements. See “— As an exempted company incorporated in the Cayman Islands, we are permitted to adopt certain home country practices for corporate governance matters that differ significantly from the Nasdaq corporate governance listing standards; these practices may afford less protection to shareholders than they would enjoy if we complied fully with the corporate governance listing standards” and “— We are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions applicable to U.S. domestic public companies.” If we cease to be a foreign private issuer or if we cannot rely on the home country governance practice exemption for any reason, we may decide to invoke the exemptions available for a controlled company as long as we remain a controlled company.

There can be no assurance that we will not be a passive foreign investment company, or PFIC, for any taxable year, which could result in adverse U.S. federal income tax consequences to U.S. investors in the Class A Ordinary Shares.

In general, a non-U.S. corporation is a PFIC for U.S. federal income tax purposes for any taxable year in which (i) 50% or more of the average value of its assets (generally determined on a quarterly basis) consists of assets that produce, or are held for the production of, passive income, or (ii) 75% or more of its gross income consists of passive income. For purposes of the above calculations, a non-U.S. corporation that owns, directly or indirectly, at least 25% by value of the shares of another corporation is treated as if it held its proportionate share of the assets of the other corporation and received directly its proportionate share of the income of the other corporation. Passive income generally includes dividends, interest, investment gains and certain rents and royalties (other than rents and royalties that are derived in the conduct of an active business and meet certain requirements). Cash is generally a passive asset for these purposes. Goodwill and other intangibles generally are treated as active assets to the extent associated with business activities that produce active income.

Based on the current and expected composition of our income and assets and the estimated value of our assets, including goodwill and other intangibles, which is based on the expected price of the Class A Ordinary Shares in this offering, we do not expect to be a PFIC for our current taxable year. However, the application of the PFIC rules to a company like us is subject to certain uncertainties. Our PFIC status for any taxable year is an annual determination that can be made only after the end of that year and will depend on the composition of our income and assets and the value of our assets from time to time. The value of our goodwill and other intangibles may be determined, in large part, by reference to the market price of the Class A Ordinary Shares, which could be volatile. Therefore, because we currently hold, and will continue to hold a substantial amount of cash after this offering, we may be or become a PFIC for any taxable year if our market capitalization declines significantly after this offering. Accordingly, there can be no assurance that we will not be a PFIC for our current or any future taxable year. If we are a PFIC for any taxable year during which a U.S. investor owns Class A Ordinary Shares, the U.S. investor generally will be subject to adverse U.S. federal income tax consequences, including increased tax liability on disposition gains and certain “excess distributions” and

 

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additional reporting requirements. See “Taxation — Material U.S. Federal Income Tax Considerations — Passive Foreign Investment Company Rules.”

If we were deemed to be an “investment company” under the Investment Company Act, applicable restrictions could make it impractical for us to continue our business as contemplated and could have a material adverse effect on our business, results of operations and financial condition.

We intend to conduct our operations so that we will not be deemed to be an investment company under the Investment Company Act. Under Section 3(a)(1) of the Investment Company Act, an entity generally will be deemed to be an “investment company” for purposes of the Investment Company Act if, absent an applicable exemption: (a) it is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading securities; or (b) it is engaged or proposes to engage in the business of investing, reinvesting, owning, holding or trading in securities, and owns or proposes to acquire investment securities (other than U.S. government securities, securities issued by employees’ securities companies and securities issued by qualifying majority-owned subsidiaries of such entity) having a value exceeding 40% of the value of its total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. We are, and hold ourselves out to be, primarily engaged in the business of developing solar projects and providing EPC services in Hong Kong, and not in the business of investing, reinvesting or trading in securities. Accordingly, we do not believe that our company is what is frequently referred to as an “orthodox” investment company as defined in the Investment Company Act and described in the preceding paragraph.

The need to comply with Section 3(a)(1) and Rule 3a-1 under the Investment Company Act may cause us to restrict our business and subsidiaries with respect to how we invest excess cash pending use in our business. In addition, if we no longer meet the requirements of Section 3(a)(1) and Rule 3a-1, and no other exemption is available to us, we may take other actions in order to conduct our business in a manner that does not subject us to the registration and other requirements of the Investment Company Act. This may include adjusting our cash management investments, which may result in lower rates of returns, and/or liquidating all or a portion of our investment securities, including on unfavorable terms, and holding such amounts in cash, and/or acquiring assets or businesses that could change the nature of our business or potentially take other actions that may be viewed as adverse to the holders of the Class A Ordinary Shares, in order to conduct our business in a manner that does not subject us to the registration and other requirements of the Investment Company Act.

If anything were to happen which would cause our company to be deemed to be an investment company under the Investment Company Act, we may lose our ability to raise money in the U.S. capital markets and from U.S. lenders, and additional restrictions under the Investment Company Act could apply to us, all of which could make it impractical for us to continue our business as currently conducted. In addition, if we were to become inadvertently subject to the Investment Company Act, any violation of the Investment Company Act could subject us to material adverse consequences, including potentially significant regulatory penalties and the possibility that certain of our contracts could be deemed unenforceable. This would materially and adversely affect the value of the Class A Ordinary Shares and our ability to pay dividends in respect of our Class A ordinary shares.

 

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements that reflect our current expectations and views of future events, all of which are subject to risks and uncertainties. Forward-looking statements give our current expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historical or current facts. You can find many (but not all) of these statements by the use of words such as “approximates,” “believes,” “hopes,” “expects,” “anticipates,” “estimates,” “projects,” “intends,” “plans,” “will,” “would,” “should,” “could,” “may,” or other similar expressions in this prospectus. These statements are likely to address our growth strategy, financial results, and product and development programs. You must carefully consider any such statements and should understand that many factors could cause actual results to differ from our forward-looking statements. These factors may include inaccurate assumptions and a broad variety of other risks and uncertainties, including some that are known and some that are not. No forward-looking statement can be guaranteed and actual future results may vary materially. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to:

•

assumptions about our future financial and operating results, including revenue, income, expenditures, cash balances, and other financial items;

​

•

our ability to execute our growth, and expansion, including our ability to meet our goals;

​

•

current and future economic and political conditions;

​

•

our capital requirements and our ability to raise any additional financing which we may require;

​

•

our ability to retain, attract clients and further enhance our brand recognition;

​

•

our ability to hire and retain qualified management personnel and key employees in order to enable us to develop our business; and

​

•

other assumptions described in this prospectus underlying or relating to any forward-looking statements.

​

We describe certain material risks, uncertainties, and assumptions that could affect our business, including our financial condition and results of operations, under “Risk Factors.” We base our forward-looking statements on our management’s beliefs and assumptions based on information available to our management at the time the statements are made. We caution you that actual outcomes and results may, and are likely to, differ materially from what is expressed, implied or forecast by our forward-looking statements. Accordingly, you should be careful about relying on any forward-looking statements. Except as required under the federal securities laws, we do not have any intention or obligation to update publicly any forward-looking statements after the distribution of this prospectus, whether as a result of new information, future events, changes in assumptions, or otherwise.

Market and Industry Data

Unless otherwise indicated, information contained in this Prospectus concerning the Company’s industry and the markets in which it operates, including general expectations and market position, market opportunities and market share, is based on information from third-party sources (including industry publications, surveys and forecasts) and management studies and estimates.

Unless otherwise indicated, the Company’s estimates are derived from publicly available information released by independent industry analysts and third-party sources as well as data from the Company’s internal research and knowledge of the renewable energy market and economy, and include assumptions made by the Company which management believes to be reasonable based on their knowledge of the Company’s industry and markets. The Company’s internal research and assumptions have not been verified by any independent source, and it has not independently verified any third-party information. While the Company believes the market position, market opportunity and market share information included in this Prospectus is generally reliable, such information is inherently imprecise. In addition, projections, assumptions and estimates of the Company’s future performance and the future performance of the industry and markets in which it operates are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described under the heading “Forward-Looking Statements” and “Risk Factors”.

 

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USE OF PROCEEDS

We expect to receive total estimated net proceeds from this offering of approximately US$4.2 million, or approximately US$5.0 million if the underwriters exercise their over-allotment option in full, based on the estimated initial public offering price range set forth on the front cover of this prospectus, after deducting underwriting discounts and commissions and the estimated offering expenses payable by us. A US$1.00 increase (decrease) in the assumed initial public offering price of US$4.00 per Class A Ordinary Share would increase (decrease) the net proceeds to us from this offering by US$1.4 million, assuming the underwriters do not exercise their over-allotment option to purchase additional Class A Ordinary Shares and the number of Class A 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 and commissions and estimated expenses payable by us.

We intend to use the net proceeds we receive from this offering for the following purposes:

•

approximately 50% for investment in our EPC projects, including expenditure in raw material procurement and project construction;

​

•

approximately 30% for expansion in our marketing, promotion efforts and brand development;

​

•

approximately 10% for research and development of our rooftop solar technologies; and

​

•

approximately 10% for working capital and general corporate purposes.

​

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 significant flexibility and discretion to apply the net proceeds of this offering. If an unforeseen event occurs or business conditions change, we may use the proceeds of this offering differently than as described in this prospectus. To the extent that the net proceeds we receive from this offering are not immediately used for the above purposes, we intend to invest our net proceeds in short-term, interest-bearing bank deposits or financial instruments.

 

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DIVIDEND POLICY

Since our inception, we have not declared or paid cash dividends on our Class A Ordinary Shares. Any decision to pay dividends in the future will be subject to a number of factors, including our financial condition, results of operations, the level of our retained earnings, capital demands, general business conditions, and other factors our board of directors may deem relevant. We currently intend to retain most, if not all, of our available funds and any future earnings after this offering to fund the operation, development, and growth of our business, and, as a result, we do not expect to pay any dividends in the foreseeable future. Consequently, we cannot give any assurance that any dividends may be declared and paid in the future.

Under Cayman Islands law, a Cayman Islands company may pay a dividend on its shares out of either profit or share premium, 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 Class A Ordinary Shares in the future, as a holding company, we will be dependent on receipt of funds from our subsidiary. As a result, in the event that subsidiary incurs debt on in the future, its ability to pay dividends or other distributions to us may be limited. See “Risk Factors — Risks Related to this Offering and the Trading Market — If we were deemed to be an “investment company” under the Investment Company Act, applicable restrictions could make it impractical for us to continue our business as contemplated and could have a material adverse effect on our business, results of operations and financial condition.”

Cash dividends, if any, on our Class A Ordinary Shares will be paid in U.S. dollars.

 

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CAPITALIZATION

The following table sets forth our capitalization as of December 31, 2024:

•

on an actual basis; and

​

•

on a pro forma basis to reflect (i) the issuance and sale of the Class A Ordinary Shares by us in this offering at the assumed initial public offering price of $4.00 per share, after deducting the estimated underwriting discounts, and the estimated offering expenses payable by us, assuming the underwriter does not exercise the Over-Allotment Option; and (ii) the issuance and sale of the Class A Ordinary Shares by us in this offering will full exercise of the over-allotment option at the initial public offering price of US$4.00 per share, after deducting the estimated underwriting discounts, and the estimated offering expenses payable by us.

​

You should read this capitalization table in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the financial statements and the related notes appearing elsewhere in this prospectus.

(1)

The pro forma as adjusted information discussed above is illustrative only. Our additional paid-in capital, total shareholders’ equity and total capitalization following the completion of this offering are subject to adjustment based on the actual initial public offering price and other terms of this offering determined at pricing.

​

A $1.00 increase (decrease) in the assumed initial public offering price of $4.00 per Class A Ordinary Share, would increase (decrease) each of additional paid-in capital, total shareholders’ equity and total capitalization by US$1.4 million, assuming the number of Class A 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.

 

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An increase (decrease) of 1,000,000 in the number of Class A Ordinary Shares offered by us would increase (decrease) each of total shareholders’ equity and total capitalization by US$3.6 million, based on an assumed initial public offering price of US$4.00 per share, and after deducting the estimated underwriting discounts, non-accountable expense allowance, and estimated expenses payable by us.

 

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DILUTION

If you invest in our Class A 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 Class A Ordinary Share and our net tangible book value per Class A Ordinary Share after this offering. Dilution results from the fact that the initial public offering price per Class A Ordinary Share is substantially in excess of the net tangible book value per Class A Ordinary Share attributable to the existing shareholders for our presently outstanding Class A Ordinary Shares.

Our net tangible book value as of December 31, 2024, was US$3.1 million, or US$0.31 per Class A 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 Class A Ordinary Share (as adjusted for the offering) from the initial public offering price per Class A Ordinary Share and after deducting the estimated underwriting discounts and the estimated offering expenses payable by us.

After giving effect to our sale of 1,500,000 Class A Ordinary Shares offered in this offering based on an assumed initial public offering price of US$4.00 per Class A Ordinary Share, after deduction of the estimated underwriting discounts and the estimated offering expenses payable by us, our as adjusted net tangible book value as of December 31, 2024, would have been US$7.3 million, or US$0.64 per outstanding Ordinary Share. This represents an immediate increase in net tangible book value of US$0.33 per Class A Ordinary Share to the existing shareholders, and an immediate dilution in net tangible book value of US$3.67 per Class A Ordinary Share to investors purchasing Class A Ordinary Shares in this offering. The as-adjusted information discussed above is illustrative only.

The following table illustrates such dilution:

The following tables summarize, on an as-adjusted basis as of December 31, 2024, the differences between existing shareholders and the new investors with respect to the number of Class A Ordinary Shares purchased from us, the total consideration paid and the average price per Class A Ordinary Share before deducting the estimated underwriting discounts and the estimated offering expenses payable by us.

The as-adjusted information as 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 our Class A Ordinary Shares and other terms of this offering determined at the pricing.

 

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ENFORCEABILITY OF CIVIL LIABILITIES

We are incorporated under the laws of the Cayman Islands as an exempted company limited by shares. We are incorporated under the laws of the Cayman Islands because of certain benefits associated with being a Cayman Islands company, such as political and economic stability, an effective judicial system, a favorable tax system, the absence of foreign exchange control or currency restrictions, and the availability of professional and support services. The Cayman Islands, however, has a less developed body of securities laws as compared to the United States and provides significantly less protection for investors than the United States. Additionally, Cayman Islands companies may not have standing to sue in the Federal courts of the United States.

Substantially all of our assets are located in Hong Kong. In addition, all of our directors and officers are nationals or residents of jurisdictions other than the United States and a substantial portion of their assets are located outside the United States. As a result, it may be difficult for investors 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.

We have appointed Cogency Global Inc., located at 122 East 42nd Street, 18th Floor, New York, NY 10168, as our agent to receive service of process with respect to any action brought against us in the United States District Court for the Southern District of New York 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 New York in the County of New York under the securities laws of the State of New York.

Cayman Islands

Travers Thorp Alberga , our counsel with respect to the laws of the Cayman Islands, have advised us that there is uncertainty as to whether the courts of the Cayman Islands would (i) recognize or enforce judgments of United States courts obtained against us or our directors or officers predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States or (ii) entertain original actions brought in the Cayman Islands 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 Travers Thorp Alberga that, although there is no statutory enforcement in the Cayman Islands of judgments obtained in the federal or state courts of the United States (and the Cayman Islands are not a party to any treaties for the reciprocal enforcement or recognition of such judgments with the United States), the courts of the Cayman Islands may recognize as a valid judgment, a final and conclusive judgment in personam obtained in the federal or state courts of the United States against the Company under which a sum of money is payable (other than a sum of money payable in respect of multiple damages, taxes or other charges of a like nature or in respect of a fine or other penalty) or, in certain circumstances, an in personam judgment for non-monetary relief, and may give a judgment based thereon, provided that (a) such courts had proper jurisdiction over the parties subject to such judgment; (b) such courts did not contravene the rules of natural justice of the Cayman Islands; (c) such judgment was not obtained by fraud; (d) the enforcement of the judgment would not be contrary to the public policy of the Cayman Islands; (e) no new admissible evidence relevant to the action is submitted prior to the rendering of the judgment by the courts of the Cayman Islands; and (f) there is due compliance with the correct procedures under the laws of the Cayman Islands. However, the Cayman Islands courts are unlikely to enforce a judgment obtained from United States courts under civil liability provisions of the U.S. federal securities law if such judgment is determined by the courts of the Cayman Islands to give rise to obligations to make payments that are penal or punitive in nature. Because such a determination has not yet been made by a court of the Cayman Islands, it is uncertain whether such civil liability judgments from U.S. courts would be enforceable in the Cayman Islands. A Cayman Islands court may stay enforcement proceedings if concurrent proceedings are being brought elsewhere.

PRC and Hong Kong

Most of our executive officers and directors are located in Hong Kong, or have ties to the PRC and/or Hong Kong. Because of such ties of our officers and directors to mainland China or Hong Kong, we may be governed by PRC laws and regulations, in which circumstance the uncertainties in the interpretation and

 

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enforcement of PRC laws, rules and regulations would apply to us regardless of whether we have a VIE structure or direct ownership structure post-offering.

Since 1979, PRC legislation and regulations have significantly enhanced the protections afforded to various forms of foreign investments in China. However, China has recently enacted laws and regulations which may not sufficiently cover all aspects of economic activities in China. In particular, because these laws and regulations are relatively new, and because of the limited volume of published decisions and their non-binding nature, the interpretation and enforcement of these laws and regulations involve uncertainties, which may make it difficult for investors to bring actions against our executive officers and directors and obtain enforceable judgments. In addition, the PRC legal system is based on statutes. Prior court decisions may be cited for reference but have limited precedential value. Further, any litigation in China may be protracted and result in substantial costs and diversion of resources and management attention.

Han Kun Law Offices, our counsel as to the laws of PRC, has advised us that there may be difficulties in effecting service of legal process, enforcing foreign judgments or bringing actions in China against us based on foreign laws. Due to the lack of reciprocity and treaties between the United States and China, and cost and time constraints, it may be difficult for a shareholder to effect service of process within the United States upon these persons, or to enforce against the Company or some of the Company’s officers and directors 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. Even with the proposed service of process, it may also be difficult to enforce judgments obtained in U.S. courts based on the civil liability provisions of the U.S. federal securities laws against these officers and directors.

JT&N (Hong Kong), our counsel as to the laws of Hong Kong, has advised us that there is uncertainty as to whether the courts of Hong Kong would (i) recognize or enforce judgments of U.S. courts obtained against us or our directors or officers predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States, or (ii) entertain original actions brought in Hong Kong against us or our directors or officers predicated upon the securities laws of the United States or any state in the United States.

In addition, there is uncertainty as to whether the courts of the mainland China or Hong Kong would recognize or enforce judgments of U.S. courts against the officers and directors predicated upon the civil liability provisions of the securities laws of the United States or any state.

•

In the PRC, 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 by us against the officers or directors or the Company if they decide that the judgment violates the basic principles of PRC laws or national sovereignty, security, or the 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.

​

•

In Hong Kong, a judgment of a court in the United States predicated upon U.S. federal or state securities laws may be enforced in Hong Kong at common law by bringing an action in a Hong Kong court on that judgment for the amount due thereunder and then seeking summary judgment on the strength of the foreign judgment, provided that the foreign judgment, among other things, is (1) for a debt or a definite sum of money (not being taxes or similar charges to a foreign government taxing authority or a fine or other penalty), and (2) final and conclusive on the merits of the claim, but not otherwise. Such a judgment may not, in any event, be so enforced in Hong Kong if (a) it was obtained by fraud, (b) the proceedings in which the judgment was obtained were opposed to natural justice, (c) its enforcement or recognition would be contrary to the public policy of Hong Kong, (d) the court of the United States was not jurisdictionally competent, or (e) the judgment was in conflict with a prior Hong Kong judgment. Hong Kong has no arrangement for the reciprocal enforcement of judgments with the United States. As a result, there is uncertainty as to the enforceability in Hong Kong, in

​

 

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original actions or in actions for enforcement, of judgments of U.S. courts of civil liabilities predicated solely upon the federal securities laws of the United States or the securities laws of any state or territory within the United States.

Furthermore, there would be additional costs and issues with bringing an original action in foreign courts against the Company or the officers and directors to enforce liabilities based upon the U.S. Federal securities laws, and they still may be fruitless. See “Risk Factors — Risks Related to this Offering and the Trading Market — You may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing original actions in the Cayman Islands or Hong Kong based on U.S. or other foreign laws against us, our management or the experts named in the prospectus.”

 

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CORPORATE HISTORY AND STRUCTURE

Our Corporate History

We are a Cayman Islands exempted company limited by shares incorporated on April 25, 2025. Exempted companies are Cayman Islands companies conducting business mainly outside the Cayman Islands and, as such, are exempted from complying with certain provisions of the Companies Act (Revised) of the Cayman Islands (the “Cayman Companies Act”). The authorized share capital of the Company is US$10,000,000 divided into 1,000,000,000,000 ordinary shares with a par value of USD0.00001 each comprising (i) 800,000,000,000 Class A Ordinary Shares, (ii) 80,000,000,000 Class B Ordinary Shares and (iii) 120,000,000,000 shares of such class or series (however designated) as the board of directors may determine in accordance with our memorandum and articles of association. International Corporation Services Ltd was the sole shareholder holding one Class A Ordinary Share from date of incorporation to April 25, 2025. One Class A Ordinary Share was transferred to NexaSphere Acquisition Corporation on April 25, 2025.

On July 26, 2019, EcoFusion Holdings International Co. Limited was incorporated under the laws of Hong Kong.

On October 18, 2019, EcoFusion Energy Engineering Co. Limited was incorporated under the laws of Hong Kong.

On February 27, 2020, EcoFusion Engineering Solutions Co. Limited was incorporated under the laws of Hong Kong.

On May 25, 2022, EcoFusion Investment Co. Limited was incorporated under the laws of Hong Kong.

In anticipation of the IPO, we completed a series of reorganization steps:

•

On February 20, 2025, EcoFusion Energy Limited was incorporated under the laws of Hong Kong as a wholly-owned subsidiary of EcoFusion Holdings International Co. Limited with one issued share.

​

•

On February 21, 2025, EcoFusion Holdings International Co. Limited transferred 100% of its equity interests in the Company’s operating subsidiaries to EcoFusion Energy Limited.

​

•

On April 25, 2025, SSTR was incorporated under the laws of the Cayman Islands.

​

•

On April 25, 2025, EcoFusion Holdings International Co. Limited enters into a share exchange agreement with NexaSphere Acquisition Corporation and the Company, pursuant to which EcoFusion Holdings International Co. Limited issued 1,000 ordinary shares to NexaSphere Acquisition Corporation in exchange for the one Class A Ordinary Share of the Company held by NexaSphere Acquisition Corporation. As a result, EcoFusion Holdings International Co. Limited became the sole shareholder of the Company, holding one Class A Ordinary Share of the Company, representing 100% of its issued and outstanding share capital upon completion of the reorganization.

​

•

On April 25, 2025, EcoFusion Holdings International Co. Limited enters into a share exchange agreement with the Company, pursuant to which the Company issued 9,999,999 Class A Ordinary Shares to EcoFusion Holdings International Co. Limited in exchange for the one ordinary share of EcoFusion Energy Limited held by EcoFusion Holdings International Co. Limited. As a result, upon completion of the reorganization, EcoFusion Holdings International Co. Limited, being the sole shareholder of the Company, held 10,000,000 Class A Ordinary Share of the Company, representing 100% of its issued and outstanding share capital. The Company holds one ordinary share of EcoFusion Energy Limited, representing 100% of its issued and outstanding share capital.

​

Our Corporate Structure

The charts below illustrate our corporate structure (i) before the reorganization; (ii) as of the date of this prospectus; and (iii) upon completion of this offering (assuming the underwriters do not exercise the over-allotment option).

 

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Before the Reorganization

As of the Date of this Prospectus

Upon Completion of this Offering

For details of our principal shareholders’ ownership, please refer to the beneficial ownership table in the section captioned “Principal Shareholders” in this prospectus.

 

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

Overview

We are a leading distributed solar energy generation project developer and engineering, procurement, and construction (“EPC”) solutions provider based in Hong Kong. We specialize in the development, construction, and long-term operation of local solar photovoltaic (“PV”) assets. Leveraging our technical expertise and in-depth understanding of the local regulatory and property landscape, we deliver renewable energy solutions tailored to Hong Kong’s dense and diverse built environment — including residential rooftops, commercial and industrial buildings, schools and village houses.

Established in 2019, we are an early mover in Hong Kong’s solar energy sector. We initially focused on village rooftop solar projects and successfully completed a number of installations, gaining valuable experience and industry resources. Building on this foundation, we strategically expanded into the residential, commercial and industrial rooftop sectors, as well as schools, unlocking greater scale, revenue, and long-term value creation. As of March 31, 2025, we have completed 65 projects with a cumulative installed capacity of 11.9 MW, including 30 residential rooftop solar PV projects (7.5 MW), 25 commercial and industrial rooftop solar PV projects (3.4 MW) and 10 school rooftop solar PV projects (1.0 MW). In the fiscal years ending December 31, 2023 and 2024, residential, commercial and industrial rooftop projects accounted for approximately 100% and 79.8% of our total revenues, respectively.

As of March 31, 2025, we also have a strong project pipeline under construction, comprising 18 projects, including six residential projects, 11 commercial and industrial projects, and one school project. Upon completion, these projects are expected to add an additional 4.6 MW of installed capacity. Our early entry, sector diversification, and growing project pipeline have further solidified our leadership position in Hong Kong’s distributed solar market and strengthened our foundation for continued growth.

We build and deliver projects under two ownership models: (i) owner-funded ownership projects and (ii) offtaker-funded projects.

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EPC for Owner-Funded Projects — The installation of solar PV in these projects are funded by rooftop owners. We participate in competitive tenders where rooftop owners invest directly in their solar projects. Once awarded a contract, we provide turnkey EPC services, managing the entire process from design to final commissioning.

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EPC for Offtaker-Funded Projects — For rooftop owners who do not invest directly, we bring in external offtakers who finance the project in exchange for rights to the future power generation income. In these cases, we sign the EPC contract directly with the offtakers and manage the entire project development process from start to finish.

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Each EPC agreement outlines the scope of project development and EPC services we provide to customers, estimated capacity, and unit pricing. We manage the full project lifecycle, including design, regulatory compliance, material procurement (e.g., solar panels), and construction. We continuously seek diversified sourcing and supply channels to reduce project costs, including both equipment and labor.

Our customers include property owners and institutional solar offtakers. Our top offtaker customers contributed approximately 76% and 89% of our total revenues in 2023 and 2024, respectively. Each EPC agreement outlines the scope of project development and EPC services we provide to customers, estimated capacity, and unit pricing.

Supported by Hong Kong’s favorable and stable renewable energy policies, the local solar PV market still offers significant growth potential. We plan to deepen our market penetration through ongoing technology integration, alignment with carbon neutrality initiatives, regional expansion, and diversification into new customer segments such as public infrastructure and industrial facilities. As of March 31,2025, we have 18 active EPC projects under construction, with a total estimated installed capacity of 4.6 MW and expected to generate approximately HK$59.2 million (US$7.6 million) in revenue. In addition, we have pipeline projects under planning with an estimated installed capacity of 17 MW.

 

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We are committed to becoming a key player in Hong Kong’s green energy transformation — driven by innovation, committed to safety, and trusted by its partners. In 2023 and 2024, our revenues amounted to HK$39.7 million and HK$66.5 million (US$8.6 million), respectively, and we recorded net loss of HK$14.7 million in 2023 and net income of HK$9.9 million (US$1.3 million) in 2024. Our gross profit was HK$7.3 million and HK$23.6 million (US$3.0 million) in 2023 and 2024, respectively. The steady increase in revenue, net income and gross profit from 2023 to 2024 was as a result of our strategic expansion into residential, commercial and industrial rooftop solar PV projects, streamlined operations enhancing cost efficiency, and growing demand for renewable energy in Hong Kong. We believe that our overall revenue, net income and gross profit will continue to increase in future years, primarily driven by (i) economics of scale and increase of operating efficiency, and (ii) our continuous focus on deepening our market penetration in the Hong Kong solar PV market.

Key Factors That Affect Operating Results

We believe the following key factors may affect our financial condition and results of operations:

Demand from our major customers

We generated the majority of our revenue from a limited number of customers. In 2023, sales to our top two customers represented 76% and 17% of our total revenue, respectively. In 2024, sales to our top customer represented 89% of our total revenue. Our results of operations are affected significantly by demands of our largest customers.

Gross margin

Our gross margin is affected by changes in our revenue and cost of revenue. Our revenues are determined by the average selling prices of our products, as well as MW of products that we are able to sell. Our cost of revenue is affected by our ability to manage raw material costs and to efficiently manage our subcontractors. Our gross margin has significantly improved from 2023 to 2024, reflecting our focused efforts to enhance operational efficiency.

Inflation risk

Inflationary factors, such as increases in material costs, subcontracting costs, project related employee benefits expenses and miscellaneous project expenses, could impair our operating results. A high rate of inflation in the future may have an adverse effect on our ability to maintain current levels of gross margin and operating expenses as a percentage of revenue if the revenues do not increase with such increased costs.

We are exposed to risks of general economic downturn and deteriorating market conditions, such as Sino-U.S. trade conflicts

As our business and operations are based in Hong Kong, our business growth is primarily dependent upon the economy and market condition in Hong Kong and the PRC. We also leverage our strong business partnerships in mainland China for our supply network. The market conditions are directly affected by, among other things, the global and local political and economic environments, such as uncertainties about the Sino-U.S. trade conflicts. Any sudden downturn in the general economic environment or change to political environment in Hong Kong and the PRC beyond our control may adversely affect the financial market sentiment in general. Severe fluctuations in market and economic sentiments may also lead to a prolonged period of slowdowns in the real estate and construction industries. As such, our revenue and profitability may fluctuate and we cannot assure you that we will be able to maintain our historical financial performance in times of difficult or unstable economic conditions. See “Risk Factor — Risks related to Our Business and Industry — Unfavorable economic and industry conditions may have an adverse impact on our operating performance and results of operations.”

Key Operating Metrics

We manage our business using the following key operating metrics. We use these metrics to assess the progress of our business, make decisions on where to allocate capital, time and technology investments and assess the near-term and long-term performance of our business.

 

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The following tables set forth the major operating metrics for the periods indicated:

Key Components of Our Results of Operations

Revenue

We derive our revenue from designing, constructing, and delivering turnkey solar PV projects and sales of developed solar projects. In 2023 and 2024, our revenue amounted to HK$39.7 million and HK$66.5 million (US$8.6 million), respectively.

The following table sets forth a breakdown of our total revenue, in absolute amounts and as percentages of total revenue, for the years indicated:

Under our EPC agreements with our customers, we provide comprehensive solar PV solutions, ranging from the development of solar power projects to full turnkey EPC services to customers. Our offerings cover the entire solar PV project lifecycle up to delivery, including site assessment, system design, engineering, procurement, installation, and commissioning. We specialize in deploying high-performance solar PV systems on residential rooftops, commercial and industrial buildings, as well as schools, ensuring optimal energy production and efficiency.

Cost of Revenue

Our cost of revenue represents all costs and expenses incurred in order to generate revenue. Our cost of revenue primarily consists of (i) costs of purchasing raw materials and components; (ii) subcontractors’ service fees; and (iii) other costs related to contract performance, including supplies and tools. In 2023 and 2024, our cost of revenue amounted to HK$32.4 million and HK$42.9 million (US$5.5 million), respectively.

The following table sets forth the components of cost of revenue, both in absolute amounts and as percentages of our total cost of revenue, for the years indicated.

 

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We expect our cost of revenue to increase in absolute amounts in line with our expansion of business and customer base growth, primarily due to higher production and service delivery costs required to meet rising demand, and to decrease as a percentage of our revenue in the long run through economies of scale and improvement of operation efficiency.

Gross Profit

Our gross profit equals to our revenue less our cost of revenue. Our gross profit is primarily affected by our ability to generate revenue and the fluctuation of our cost. As a result of the foregoing, our gross profit was HK$7.3 million and HK$23.6 million (US$3.0 million) in 2023 and 2024, respectively, reflecting our focused efforts to enhance operational efficiency. We expect to sustain these elevated margins through continued emphasis on operational excellence and strategic cost management.

Operating Expenses

Our operating expenses consist of (i) selling and marketing expenses; and (ii) general and administrative expenses.

The following table sets forth a breakdown of our operating expenses, in absolute amounts and as percentages of our total operating expenses, for the years indicated.

Selling and marketing expenses.   Selling and marketing expenses mainly consist of advertising, transportation fee and other expenses related to selling and marketing activities. Our selling and marketing expenses were HK$1.7 million and HK$0.2 million (US$0.03 million) in 2023 and 2024, respectively. This reduction was primarily driven by changes in marketing strategy, which reduced the need for investments in public media advertising and trade show exhibitions. Our current marketing strategy emphasizes efficient, targeted approaches, including lateral referrals and leveraging our extensive network of consultants to promote our business among industry stakeholders. We plan to further refine our marketing efforts by adopting more precise and efficient strategies, focusing on high-impact, targeted initiatives. We intend to minimize expenditures on non-targeted, low-cost-effective public media advertising, prioritizing channels that offer greater return on investment.

As a result of our business model, which leverages industry investor resources and established networks to drive sales, our selling and marketing expenses have significantly decreased from 2023 to 2024. We expect these expenses to remain at relatively low levels in the foreseeable future, reflecting our efficient approach to customer acquisition and market presence. However, as our business expands and revenue grow, we expect an increase in selling and marketing expenses in absolute amounts to support continued customer relationship development and market expansion, while maintaining a low proportion of total revenue.

General and administrative expenses.   General and administrative expenses mainly consist of payroll expenses, operation and support expenses, rental expenses, expected credit losses of financial assets, office and

 

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utilities expenses, depreciation expenses and other miscellaneous administrative expenses. Our general and administrative expenses were HK$16.3 million and HK$12.2 million (US$1.6 million) in 2023 and 2024, respectively. The decrease from 2023 to 2024 reflects our ongoing efforts to streamline operations and enhance cost efficiency. We expect our general and administrative expenses to increase in absolute amounts in the foreseeable future, primarily due to expenses associated with IPO process. However, we aim to enhance administrative efficiency and optimize fixed operational costs to manage these expenses as a percentage of total revenue, while continuing to support our business objectives.

Our operating expenses have decreased in absolute amounts from HK$18.0 million in 2023 to HK$12.5 million (US$1.6 million) in 2024. The operating expenses as a percentage of our total revenue were 45.3% and 18.8% in 2023 and 2024, respectively, which was primarily attributable to our effective cost management and enhanced operational efficiencies. However, the decrease was partially offset by increased payroll expenses to support our expanding business scale.

We expect our operating expenses as a percentage of revenue to decrease over the long term, driven by enhanced brand awareness, improved sales and operational efficiencies, and economies of scale. In the near term, we expect that our operating expenses will increase due to professional service fees incurred in connection with our preparations to become a publicly listed company, as well as costs to support ongoing business expansion. These expectations are subject to uncertainties, including the timing and costs of our public listing process and future revenue growth.

Other (expenses) income, net

Our other (expenses) income, net consists of financial (expenses) income, net, electricity income and others. We recorded other expenses, net of HK$5.0 million in 2023, and we recorded other income, net of HK$0.9 million (US$0.1 million) in 2024.

Taxation

Cayman Islands

The Company incorporated in the Cayman Islands as an exempted company with limited liability under the Cayman Companies Act and accordingly, is exempted from Cayman Islands income tax. As such, the Company is not subject to tax on either income or capital gain. In addition, no withholding tax is imposed upon any payments of dividends by subsidiaries to the Company.

Hong Kong

The major operating subsidiaries of our company, registered in Hong Kong, are subject to Hong Kong profits tax on taxable income. Under the two-tiered profits tax regime effective April 1, 2018, the first HK$2 million of assessable profits is taxed at 8.25%, with profits above that amount taxed at 16.5%. Changes in tax laws or our taxable income levels could impact our future tax obligations.

Internal Control over Financial Reporting

Prior to this offering, we have been a private company with limited accounting personnel and other resources to address our internal controls and procedures. Our independent registered public accounting firm had not conducted an audit of our internal control over financial reporting. However, in connection with the audits of our consolidated financial statements for the years ended and as of December 31, 2023 and 2024, we identified two “material weaknesses” in our internal control over financial reporting, as defined in the standards established by the PCAOB, and other control deficiencies.

A “material weakness” is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

The material weaknesses identified are related to:

i) lack of formal internal control policies and internal independent supervision functions to establish formal risk assessment process and internal control framework; and

 

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ii) lack of accounting staff and resources with appropriate knowledge of U.S. Generally Accepted Accounting Principles (U.S. GAAP) and Securities and Exchange Commission (SEC) reporting and compliance requirements to design and implement formal period-end financial reporting policies and procedures to address complex U.S. GAAP technical accounting issue in accordance with U.S. GAAP and the SEC requirements.

To address the material weaknesses identified before this offering, as of the date of this prospectus disclosure, we have implemented a range of measures aimed at remediating the identified weaknesses, including but not limited to:

i) developing an overall internal control manual, appointing independent directors, establishing an audit committee, and strengthening corporate governance; and

ii) recruiting additional accounting and financial personnel with proficiency in U.S. GAAP and experience in SEC reporting; arranging recurring training sessions for our accounting staff, particularly concerning U.S. GAAP standards and SEC reporting obligations.

Results of Operations

For the years ended December 31, 2023 and 2024

The following table summarizes the results of our operations for the years ended December 31, 2023 and 2024, respectively, and provides information regarding the Hong Kong dollar in thousand and percentage increase or (decrease) during such periods.

Revenue

Our total revenue increased by 67.6%, from approximately HK$39.7 million for the year ended December 31, 2023 to approximately HK$66.5 million (US$8.6 million) for the year ended December 31,

 

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2024. The increase was mainly due to growth in our solar photovoltaic project activities, driven by higher project completion volumes and favorable market demand.

Cost of revenue

Our cost of revenue increased by 32.2% from HK$32.4 million for the year ended December 31, 2023 to HK$42.9 million (US$5.5 million) for the year ended December 31, 2024, primarily due to higher solar component costs and subcontract costs associated with increased sales scale and business expansion.

Gross profit

Our gross profit increased significantly by 225.3% from HK$7.3 million for the year ended December 31, 2023 to HK$23.6 million (US$3.0 million) for the year ended December 31, 2024, driven by higher revenue from increased solar PV project deliveries and cost reduction, which was achieved through enhanced project timeline management and bulk procurement for favorable component price.

Operating expenses

Our operating expenses decreased by 30.6% from HK$18.0 million for the year ended December 31, 2023 to HK$12.5 million (US$1.6 million) for the year ended December 31, 2024. This decrease was primarily attributable to strategic cost management initiatives, including reduced marketing expenditures and better customer credit management. We expect that our operating expenses will increase due to professional service fees for our public listing preparations and ongoing business growth.

Our selling and marketing expenses decreased by 85.7% from HK$1.7 million in 2023 to HK$0.2 million (US$0.03 million) in 2024, primarily driven by changes in marketing strategy, which reduced the need for investments in public media advertising and trade show exhibitions.

Our general and administrative expenses decreased by 24.8% from HK$16.3 million in 2023 to HK$12.2 million (US$1.6 million) in 2024. The decrease from 2023 to 2024 reflects our ongoing efforts to streamline operations and enhance cost efficiency.

Other (expenses) income, net

We had total other income, net of HK$0.9 million (US$0.1 million) for the year ended December 31, 2024, as compared to total other expenses, net of HK$5.0 million, which consist of (i) financial expenses, net of HK$4.4 million interests from shareholder loan, borrowing and long-term payable, and (ii) other expenses, net of HK$0.6 million for the year ended December 31, 2023.

Income tax benefit (expense)

We had income tax expense of HK$2.1 million (US$0.3 million) for the year ended December 31, 2024, as compared to income tax benefit of HK$1.0 million for the year ended December 31, 2023. This shift from income tax benefit to income tax expense was primarily attributable to the utilization of net operating loss carryforwards in 2024, driven by our shift to profitability. In 2023, we recognized a deferred tax asset for net operating loss carryforwards, based on expected future taxable income, contributing to the tax benefit.

Net (loss) income

As a result of the foregoing, we had net income of HK$9.9 million (US$1.3 million) for the year ended December 31, 2024, compared to net loss of HK$14.7 million for the year ended December 31, 2023.

Liquidity and Capital Resources

In assessing our liquidity, we monitor and analyze our cash on-hand and our operating and capital expenditure commitments. Our primary sources of liquidity include cash generated from our operations. We incurred net loss of HK$ 14.7 million and net income of HK$ 9.9 million, and net cash used in operating activities of HK$48.4 million and HK$0.5 million for the years ended December 31, 2023 and 2024, respectively. Although we had accumulated deficit of HK$ 22.5 million and cash balance of HK$ 19 thousand,

 

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meanwhile due to cash concentration arrangement as of December 31, 2024, the Group maintained positive working capital of HK$10.7 million and HK$20.0 million as of December 31, 2023, and 2024, respectively, reflecting improved liquidity.

During the years ended December 31, 2023, and 2024, in order to reach more efficient liquidity management, our cash inflows and outflows were centralized by our immediate holding company, EFHI with its subsidiaries out of the Group. Under this arrangement, the cash balance as of December 31, 2024, was HK$ 19 thousand due to the cash concentration arrangement. In preparation for an IPO, we have ceased relying on parent company for liquidity management since March 2025, and now independently manage its cash flows.

We believe our current working capital of HK$20.0 million is sufficient to support our operations for the next twelve months. However, we may require additional cash resources in the future due to changes in business conditions or opportunities for investments, acquisitions, or other capital expenditures. If our cash requirements exceed our available cash, we may seek to raise funds through equity offerings, debt financing, or credit facilities.

Cash Flows

The following table sets forth a summary of our cash flows for the years indicated.

Operating activities

For the year ended December 31, 2023, our net cash used in operating activities was HK$48.4 million, primarily driven by our net loss of HK$14.7 million and (i) adjusted to add back provision for doubtful accounts, impairment loss of project assets and depreciation of HK$4.9 million; (ii) adjusted for a deferred tax benefit of HK$1.0 million; (iii) adjusted for changes in operating assets and liabilities that positively affected operating cash flow, primarily due to an increase in accounts payable and amount due to a related party HK$50.2 million; and (iv) partially offset by changes in operating assets and liabilities that negatively affected operating cash flow, primarily due to an increase in project assets and a decrease in contract liabilities HK$87.8 million.

For the year ended December 31, 2024, our net cash used in operating activities decreased to HK$0.5 million, primarily driven by our net income of HK$9.9 million and (i) adjusted to add back provision for doubtful accounts, impairment losses of project assets, depreciation and deferred tax expense of HK$2.9 million; (ii) adjusted for changes in operating assets and liabilities that positively affected operating cash flow, primarily due to an increase in accounts payable and a decrease in project assets HK$56.5 million; and (iii) partially offset by changes in operating assets and liabilities that negatively affected operating cash flow, primarily due to an increase in accounts receivable and a decrease in contract liabilities HK$69.8 million. The significant reduction in cash outflows reflects our improved operational efficiency, as discussed in “Results of Operations.”

Investing activities

For the year ended December 31, 2023, our net cash used in investing activities was HK$0.3 million, primarily attributable to purchases of property, plant, and equipment for office facility. For the year ended December 31, 2024, we had no net cash used in or provided by investing activities, as no investment activities were conducted.

 

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Financing activities

For the year ended December 31, 2023, our net cash provided by financing activities was HK$47.9 million, primarily attributable to proceeds from shareholder contribution of HK$47.6 million, and proceeds from long-term payable of HK$0.8 million. This inflow was partially offset by repayments of long-term borrowing of HK$0.4 million, long-term payable of HK$0.1 million related to sale-and-leaseback transactions deemed as financing arrangement.

For the year ended December 31, 2024, our net cash used in financing activities was HK$0.6 million, primarily attributable to repayments of long-term borrowing of HK$0.4 million and long-term payable of HK$0.2 million, reflecting our efforts to reduce outstanding debt.

Material Cash Requirements

Our material cash requirements as of December 31, 2024 primarily include our long-term borrowing and long-term payable, capital expenditures, and working capital requirements.

Our long-term borrowing represents future maximum commitment relating to the principal amount and interests in connection with our borrowing. For details of our long-term borrowing, see Note 8 to our Consolidated Financial Statements.

Our long-term payable represents future maximum commitment relating to the principal amount and interests in connection with our sale-and-leaseback transactions deemed as financing arrangement. For details of our long-term payable, see Note 9 to our Consolidated Financial Statements.

Off-Balance Sheet Commitments and Arrangements

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

Contractual Obligations

The following table sets forth our contractual obligations as of December 31, 2024:

Quantitative and Qualitative Disclosure about Market Risk

Interest rate risk

Fluctuations in market interest rates may negatively affect the Group’s financial condition and results of operations. The Group is exposed to floating interest rate risk on cash deposit, and the risk due to changes in interest rates is not material. The Group has not used any derivative financial instruments to manage the interest risk exposure.

Concentration of credit risk

Assets that potentially subject the Group to significant concentrations of credit risk primarily consist of cash and cash equivalents, accounts receivable, amounts due from related parties, other receivables and

 

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deposits in prepaid expenses and other current assets. The maximum exposure of such assets to credit risk is their carrying amounts as of the balance sheet dates. All of the Group’s cash are held with financial institutions that Group’s management believes to be high credit quality. The Group conducts periodic reviews of the financial condition and payment practices of its customers to minimize collection risk on accounts receivable. Based on the Group’s historical experiences in collection of other receivables and amounts due from related parties, the Group consider the credit risk of these receivables to be low. Management conducts regular assessments on expected credit losses arising from non-performance by these counterparties. The Group evaluates its collection experience and long outstanding balances to determine the need for an allowance for doubtful accounts.

Concentration of customers and suppliers

The following customers represented more than 10% of the Group’s total revenue for the years ended December 31, 2023 and 2024:

*

Represented percentage less than 10%

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The following customers represented more than 10% of the Group’s total accounts receivable, net as of December 31, 2023 and 2024: