If only securities being registered on this Form
are being offered pursuant to dividend or interest reinvestment plans, please check the following box. ☐
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. ☒
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for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same offering. ☐
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pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number
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to General Instruction I.C. or a post-effective amendment thereto that shall become effective upon filing with the Commission pursuant
to Rule 462(e) under the Securities Act, check the following box. ☐
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Indicate by check mark whether the registrant
is an emerging growth company as defined in Rule 405 of the Securities Act of 1933.
If an emerging growth company that prepares its
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Act. ☐
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus, any applicable prospectus supplement
or amendment and the information incorporated by reference in this prospectus contain various forward-looking statements within the meaning
of Section 27A of the Securities Act and Section 21E of the Securities and Exchange Act of 1934, as amended (the “Exchange
Act”), which represent our expectations or beliefs concerning future events. Forward-looking statements include statements that
are predictive in nature, which depend upon or refer to future events or conditions, and/or which include words such as “believes,”
“plans,” “intends,” “anticipates,” “estimates,” “expects,” “may,”
“will” or similar expressions. In addition, any statements concerning future financial performance, ongoing strategies or
prospects, and possible future actions, which may be provided by our management, are also forward-looking statements. Forward-looking
statements are based on current expectations and projections about future events and are subject to risks, uncertainties, and assumptions
about our company, economic and market factors, and the industry in which we do business, among other things. These statements are not
guarantees of future performance, and we undertake no obligation to publicly update any forward-looking statements, whether as a result
of new information, future events, or otherwise, except as required by law. Actual events and results may differ materially from those
expressed or forecasted in forward-looking statements due to a number of factors. Factors that could cause our actual performance, future
results and actions to differ materially from any forward-looking statements include, but are not limited to, those discussed under the
heading “Risk Factors” in any of our filings with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange
Act. The forward-looking statements in this prospectus, the applicable prospectus supplement or any amendments thereto and the information
incorporated by reference in this prospectus represent our views as of the date such statements are made. These forward-looking statements
should not be relied upon as representing our views as of any date subsequent to the date such statements are made.
INDUSTRY AND MARKET DATA
Unless otherwise indicated, information contained
in this prospectus concerning our industry and the market in which we operate, including our market position, market opportunity and market
size, is based on information from various sources, on assumptions that we have made based on such data and other similar sources and
on our knowledge of the markets for our products. These data sources involve a number of assumptions and limitations, and you are cautioned
not to give undue weight to such estimates.
We have not independently verified any third-party
information. While we believe the market position, market opportunity and market size information included in this prospectus is generally
reliable, such information is inherently imprecise. In addition, projections, assumptions and estimates of our future performance and
the future performance of the industry in which we operate is necessarily subject to a high degree of uncertainty and risk due to a variety
of factors, including those described in the section titled “Risk Factors” and elsewhere in this prospectus. These and other
factors could cause results to differ materially from those expressed in the estimates made by the independent parties and by us.
OUR COMPANY
This summary highlights information contained
in the documents incorporated herein by reference. Before making an investment decision, you should read the entire prospectus, and our
other filings with the SEC, including those filings incorporated herein by reference, carefully, including the sections entitled “Risk
Factors” and “Special Note Regarding Forward-Looking Statements.”
Overview
We are a technology company. Our products and
services include: 1) a futures trading solution catering to clients using MetaTrader 5; 2) FXSC, a retail-orientated online trading education
website; 3) a foreign exchange (“Forex”) trading system that provides services to financial institutions outside of China;
and 4) technology hardware research and development, manufacture, and sales. Our mission is to become one of the key participants and
contributors in the global technology hardware supply chain and fintech blockchain ecosystem.
Futures trading system
In September 2019, we, through AGM Defi Lab, completed
our development of a futures trading software which integrates future trading API with MetaTrader 5, a well-known and advanced trading
software. However, during the third quarter of 2020, most futures brokers started to accept a new third-party software API connection
method in order to comply with newly enacted futures regulations and policies in China about the trading terminal API pass-through regulation,
which requires “pass through monitoring”. Brokers will need to know exactly who to use API from what third-party software
since, traditionally, brokers did not need to collect such information. All other software products on the market are required to comply
with the new rule. Accordingly, we were obligated to upgrade and transform the system to enable this new API connection method. We completed
the upgrading and transformation of the system at the end of first quarter of 2021. We plan to conduct new trials and improve the
solutions based on feedbacks.
FXSC, a retail-orientated online trading education
website
In July 2020, we launched FXSC through AGM Defi
Lab, a subscription-based online trading education and social trading network platform for Forex traders. FXSC provides trading education
to users through interactive trading simulation and trading contests, which enable users to choose and participate in available contests
and compete for prizes in a real-time streamed, interactive demo trading environment. FXSC also provides demo trading, also referred to
as virtual trading, paper trading, or trading simulation, which is designed to give users, especially the ones with limited knowledge
and skills, a risk-free trading environment to get familiar with the markets and trading tools. We plan to charge subscription fees directly
to end-users for using the social and educational features of the platform. In addition, through partnership with brokers that integrate
its accounts management system with FXSC, we plan to charge brokers a per client monthly service fee for their clients using FXSC. The
launch of FXSC is expected to build our brand. We plan to use some of the proceeds from this offering to invest in mass marketing of FXSC.
Forex trading system
Prior to September 2018,
through AGM Defi Lab, we provided Forex trading services, including computer program technical support and solution services and trading
platform application services, through a combination of in-house developed systems and applications, and the licensed trading platform
MetaTrader. In addition, we were engaged in Forex trading brokerage business and generated revenue from gains and losses from trades
and Forex brokerage fees and commissions. At the time, our clients were retail clients and brokerage firms located in China.
We voluntarily discontinued the Forex trading system due to a policy position by the PRC government that would no longer support the Forex
trading related business and would restrain certain accounts holding the deposits payable. In December 2021, we commenced the sale of
our trading system software to our brokerage clients and partners.
Technology hardware
research and development, manufacture, and sales
In third quarter of 2021,
we formed the company’s new growth strategy and the decision to enter into the ASIC chip research and development to be conducted
through AGM HK. In August 2021, we announced the launch of our first ASIC crypto Miner - KOI MINER C16 (“C16”). C16 is equipped
with the C3012 chip made by Semiconductor Manufacturing International Corp.’s N+1 process. C16 has a hash rate up to 113 TH/s
and a power efficiency ratio of 30 J/T, supporting the mining of Bitcoin, Bitcoin Cash (BCH) and other cryptocurrencies.
The competition of cryptocurrencies
mining equipment has grown intense in recent years. Our main competitors are Bitmain, a multinational semiconductor company, Canaan, a
supercomputing solutions provider, and MicroBT, a technology company based on block chain and artificial intelligence, all
of which are located in China and have both ASIC research and development capacities and deep supply chain connections in China.
C16’s parameters
have surpassed our competitors’ models, including: Antminer S19 pro of Bitmain, which has a power consumption of 3250W and hash
rate of 104TH/S, and AvalonMiner1246 of Canaan, which has an A1246 hash rate of 90TH/S, power consumption of 3420W
and power efficiency of 38J/T, and Whatminer M30S ++ of MicroBT, which has a hash rate of 112TH/S, power consumption
of 3472 W and power efficiency of 31 J/T. Since the launch of C16, we have received orders from buyers in the United States, Canada
and Europe.
We plan to use some of
the proceeds from this offering to develop the technology hardware business.
The COVID-19 Pandemic update
We are monitoring the global outbreak and spread
of the novel strain of coronavirus (COVID-19) and taking steps in an effort to identify and mitigate the adverse impacts on, and risks
to, our business (including but not limited to our employees, customers, other business partners, our manufacturing capabilities and capacity
and our distribution channels) posed by its spread and the governmental and community reactions thereto. We continue to assess and update
our business continuity plans in the context of this pandemic, including taking steps in an effort to help keep our workforces healthy
and safe. The spread of COVID-19 has caused us to modify our business practices (including employee travel, employee work locations in
certain cases, and cancellation of physical participation in certain meetings, events and conferences), and we expect to take further
actions as may be required or recommended by government authorities or as we determine are in the best interests of our employees, customers
and other business partners. We are also working with our suppliers to understand the existing and future negative impacts to our supply
chain and take actions in an effort to mitigate such impacts. Due to the speed with which the COVID-19 situation is developing, the global
breadth of its spread and the range of governmental and community reactions thereto, there is uncertainty around its duration and ultimate
impact; therefore, any negative impact on our overall financial and operating results (including without limitation our liquidity) cannot
be reasonably estimated at this time, but the pandemic could lead to extended disruption of economic activity and the impact on our financial
and operating results could be material. See “Risk Factors—The COVID-19 pandemic has adversely impacted, and poses risks to,
our business, the nature and extent of which are highly uncertain and unpredictable” contained in the 2020 Annual Report incorporated
by reference in this prospectus.
Recent Development
Strategic Partnership with HighSharp (Shenzhen
Gaorui) Electronic Technology Co., Ltd
As part of our plan to
expand into the hardware production business, in September 2021, we entered into a strategic partnership agreement with HighSharp (Shenzhen
Gaorui) Electronic Technology Co., Ltd (“HighSharp”), a fabless integrated circuit designer that provides advanced semiconductor
solutions for supercomputing hardware, pursuant to which, for a six-month period until March 25, 2022, HighSharp will provide the latest
ASIC chip technology and manufacturing services to us and we will be responsible for client development on a global basis, with a target
to generate orders of at least US$100 million during the six-month term until March 25, 2022. If we and HighSharp achieve the respective
targets, we and HighSharp plan to form a joint venture, joined by HighSharp’s key R&D team members, with the goal to integrate
next generation product research and development into fabless integrated circuit design capabilities that provide advanced semiconductor
solutions for supercomputing hardware. AGM Group Holdings, Inc. will own 60% of the equity and HighSharp will own 40% of the equity in
the joint venture.
Termination of Equity Transfer Agreement
with Yushu Kingo City Real Estate Development Co., Ltd.
On January 16, 2020, AGM Tianjin entered into
an equity transfer agreement (the “Equity Transfer Agreement”) with all the shareholders of Yushu Kingo City Real Estate Development
Co., Ltd. (“Yushu Kingo”), who collectively owns 100% of the equity interest in Yushu Kingo, pursuant to which agreement,
in exchange for 100% of the equity interest in Yushu Kingo, AGM Tianjin agreed to pay $20,000,000 in cash and cause AGM Holdings
to issue 2,000,000 Class A ordinary shares, valued at $15 per share, subject to the terms and conditions of the Agreement. AGM Tianjin
made advance payments in the amount of $4,937,663.72 (the “Advance Payment”).
On April 6, 2021, AGM Tianjin, Yushu Kingo and
its shareholders entered into a supplement agreement (“Supplement Agreement”) to the Equity Transfer Agreement. Pursuant to
the Supplement Agreement, if AGM Tianjin decided not to proceed with the acquisition contemplated by the Equity Transfer Agreement and
terminate such agreement on or before October 31, 2021, Yushu Kingo’s shareholders shall return the Advance Payment and pay an additional
10% interest to AGM Tianjin. If Yushu Kingo’s shareholders are unable to make such payment, Yushu Kingo’s shareholders agreed
to transfer the titles of real properties of Yushu Kingo to AGM Tianjin, valued with a 20% discount to market price. The parties further
agreed to conduct a new evaluation of Yushu Kingo’s assets and to enter into supplement agreement based on such evaluation.
Because of the COVID-19 pandemic, the quarantine
and travel restrictions in China, and the massive economic disruption as a result, Yushu Kingo was not able to complete its construction
projects and the audit and due diligence of Yushu Kingo was not completed on time. On October 4, 2021, AGM Tianjin terminated the Equity
Transfer Agreement and Supplement Agreement with the Yushu Kingo and its shareholders. On October 20, 2021, AGM Tianjin entered into an
agreement on transfer of creditor rights with a non-affiliated third party (the “Buyer”). Pursuant to the Transfer Agreement,
AGM Tianjin agrees to sell to the Buyer all of its rights and obligations under the Equity Transfer Agreement and the Supplement Agreement,
namely, the right to receive the Advance Payment plus interest, for a total purchase price of $5,000,000 (the “Purchase Price”),
$2,500,000 of which will be payable on or before December 31, 2021 and the remaining $2,500,000 will be payable on or before June 30,
2022. The Buyer agrees, in the event it fails to pay the Purchase Price on time, to pay as damages for breach of contract an amount equal
to four times China’s loan prime rate (LPR) of the Purchase Price due.
Change of Board of Directors
On April 30, 2021, Tingfu Xie tendered his resignation
as director, the chairman of the Nominating Committee, and a member of the Audit Committee and the Compensation Committee of the Company,
effective April 30, 2021. On the same day, at the recommendation of the Nominating Committee and the Compensation Committee, the
Board of Directors approved and confirmed the appointment of Jing Shi as the succeeding director, the chairwoman of the Nominating Committee
and a member of the Audit Committee and the Compensation Committee of the Company, effective April 30, 2021.
On May 7, 2021, the Company appointed
Dr. Bo Zhu as the Chief Strategy Officer.
On July 12, 2021, the Board of Directors and the
Compensation Committee of approved and confirmed the appointment of Junchen Li as the Co-Chief Executive Officer, effective July 12, 2021.
On September 15, 2021, the Board also approved the appointment of Chenjun Li as the director and the Chairman of the Board to replace
Bin Cao, whose employment agreement with the Company expired on May 19, 2021.
Registered Direct Offering and Concurrent Private
Placement
On December 14, 2021, pursuant to a securities
purchase agreement (the “Purchase Agreement”) with certain institutional investors (the “Purchasers”) dated December
10, 2021, the Company closed (a) a registered direct offering for the sale of 2,898,552 of its Class A ordinary shares, par value US$0.001
per share, and (b) a concurrent private placement, for the sale of unregistered warrants to purchase up to 1,449,276 Class A ordinary
shares (the “Investor Warrants”), for gross proceeds of approximately US$20 million. The purchase price for each Share and
the corresponding half Warrant is US$6.90. The Investor Warrants will be exercisable immediately from the date of issuance and have an
exercise price of US$8.30 per share. The Investor Warrants will expire 3.5 years from the date of issuance. Each Investor Warrant contains
anti-dilution provisions to reflect share dividends and splits or other similar transactions, as described in the Investor Warrants.
Pursuant to the Purchase Agreement, the Class
A ordinary shares were issued to the Purchasers in a registered direct offering and registered under the Securities Act of 1933, as amended
(the “Securities Act”), pursuant to a prospectus supplement to the Company’s currently effective registration statement
on Form F-3 (File No. 333-236897), which was initially filed with the SEC on March 5, 2020 and declared effective by the SEC on May 28,
2020. The Company filed the prospectus supplement for the Registered Direct Offering on December 13, 2021.
The Company issued the Investor Warrants to the
Purchasers in a concurrent private placement pursuant to an exemption from the registration requirements of the Securities Act contained
in Section 4(a)(2) thereof and/or Regulation D thereunder (the “Private Placement,” and together with the Registered Direct
Offering, the “Offering”).
FT Global Capital, Inc. (the “Placement
Agent”) acted as the exclusive placement agent in connection with the Offering under the terms of the Placement Agency Agreement,
dated December 10, 2021 between it and the Company (the “Placement Agency Agreement”) and, at closing of the Offering, received
a cash fee equal to 7.5% of the aggregate gross proceeds raised in the Offering as well as reimbursement of certain costs and expenses
of up to US$80,000. Additionally, the Company issued to the Placement Agent or its designees warrants (the “Placement Agent Warrants,”
and together with the Investor Warrants, the “Warrants”) for the purchase of 202,899 Class A ordinary shares with an exercise
price of US$8.30 per share, and with a term expiring 3.5 years from the date of issuance. The Placement Agent Warrants shall have the
same registration rights as the Warrants issued to the Purchasers in the Offering. The Placement Agent is also entitled to additional
tail compensation for any financings consummated by the Company within the 12-month period following the termination of the Placement
Agency Agreement, to the extent such financing is provided to the Company by investors that the Placement Agent had “wall-crossed”
on behalf of the Company in connection with the Offering.
The Company has agreed to file and maintain with
the SEC a registration statement (the “Registration Statement”) to register the Warrants and the Class A ordinary shares underlying
the Warrants (the “Warrant Shares”) within 30 calendar days from the closing of the Offering and to use its best efforts to
cause such registration statement to become effective within 60 calendar days following the closing of the Offering (or, in the event
of a review by the SEC, within 120 calendar days).
The Company agreed in the Purchase Agreement that
it would not issue any ordinary shares or ordinary share equivalents for sixty (60) days following the closing of the Offering subject
to certain exceptions. The Company agreed in the Placement Agency Agreement that it would not issue any ordinary shares or ordinary share
equivalents for one hundred twenty (120) days following the closing of the Offering without the consent of the Placement Agent, subject
to certain exceptions.
The Company agreed in the Purchase Agreement that
it will not issue any ordinary shares or ordinary share equivalents involve in a Variable Rate Transaction (as defined in the Purchase
Agreement) until the earlier of (x) the date the initial Registration Statement is declared effective by the SEC and (y) the date as of
which all of the holders of Investor Warrants may sell all of the Investor Warrant Shares without restriction pursuant to Rule 144 (including,
without limitation, volume restrictions) and without the need for current public information required by Rule 144(c)(1) (or Rule 144(i)(2),
if applicable). The Company further agreed that until the first anniversary of the earlier of (x) or (y) above, it would not issue or
enter into any agreement to issue any ordinary shares or ordinary share equivalents unless the Purchasers are offered a participation
right, subject to certain terms and conditions as set forth in the Purchase Agreement, to subscribe, on a pro rata basis, for up to 50%
of the securities offered in such offering.
Concurrently with the execution of the Purchase
Agreement, the officers and directors of the Company and shareholders of the Company holding 5% or more of the Company’s Class A
ordinary shares entered into lock-up agreements (the “Lock-Up Agreements”) pursuant to which they have agreed, among other
things, not to sell or dispose of any ordinary shares which are or will be beneficially owned by them for one hundred twenty (120) days
following the closing of the Offering, as well as similar lock-up agreements pursuant to the Placement Agency Agreement restricting sales
of ordinary shares for ninety (90) days after the closing of the Offering.
RISK FACTORS
You should carefully consider the risks incorporated
by reference in this prospectus before making an investment decision. You should also consider the matters described below and in “Risk
Factors” in “Item 3. Key Information—D. Risk factors” in the 2020 Annual Report, “Exhibit 99.3 Risk Factors”
in the Half-Year Report filed on Form 6-K on September 29, 2021, and all of the information included or incorporated by reference in this
prospectus before deciding whether to purchase our ordinary shares. Our business, financial condition and results of operations could
be materially and adversely affected by any of these risks or uncertainties. In that case, the trading price of our ordinary shares could
decline, and you may lose all or part of your investment. The risks also include forward-looking statements and our actual results may
differ substantially from those discussed in these forward-looking statements. See “Cautionary Note Regarding Forward-Looking Statements.”
Risks Relate to Our Business and Industry
Significant contributors to the bitcoin
network could propose amendments to its protocols and software which, if accepted and authorized, could negatively impact our business
and operations.
A small group of individuals contribute to the
Bitcoin Core Project on GitHub.com, which is a leading source of quasi-governance that works to ensure that the bitcoin blockchain remains
decentralized and governed by consensus. According to its website, “Bitcoin Core is an open source project which maintains and releases
Bitcoin client software called ‘Bitcoin Core.’ It is a direct descendant of the original Bitcoin software client released
by Satoshi Nakamoto after he published the famous Bitcoin whitepaper.” Bitcoin Core is powered by an open-source development community,
but it is maintained by a small group of maintainers and leading contributors.
This group of contributors is currently headed
by Wladimir J. van der Laan, the current lead maintainer. These individuals can propose refinements or improvements to the bitcoin network’s
source code through one or more software upgrades that alter the protocols and software that govern the bitcoin network and the properties
of bitcoin, including the irreversibility of transactions and limitations on the mining of new bitcoin. Proposals for upgrades and discussions
relating thereto take place on online forums. For example, there is an ongoing debate regarding altering the blockchain by increasing
the size of blocks to accommodate a larger volume of transactions.
The open-source structure of the bitcoin
network protocol may result in inconsistent and perhaps even ineffective changes to the bitcoin protocol. Failed upgrades or maintenance
to the protocol could damage the bitcoin network, which could adversely affect our business and the results of our operations.
The bitcoin network operates based on an open-source
protocol maintained by contributors, largely on the Bitcoin Core project on GitHub. As an open source project, bitcoin is not represented
by an official organization or authority. As the bitcoin network protocol is not sold and its use does not generate revenues for contributors,
contributors are generally not compensated for maintaining and updating the bitcoin network protocol. Although the MIT Media Lab’s
Digital Currency Initiative funds the current maintainer Wladimir J. van der Laan, among others, this type of financial incentive is not
typical. The lack of guaranteed financial incentive for contributors to maintain or develop the bitcoin network and the lack of guaranteed
resources to adequately address emerging issues with the bitcoin network may reduce incentives to address the issues adequately or in
a timely manner. Changes to a digital asset network which we are mining on may adversely affect an investment in us.
If demand for bitcoin declines, or if another
cryptocurrency replaces bitcoin as the most prominent cryptocurrency, our business and the results of our operations could suffer materially.
Although bitcoin is presently the most prominent
cryptocurrency, it is possible that another cryptocurrency could supplant it as the most prominent cryptocurrency, which could have a
materially negative effect of the demand for bitcoin and, therefore, on its conversion spot price. Alternatively, the demand for bitcoin
may fall for other reasons unknown to the Company.
Our ability to adopt technology in response
to changing security needs or trends poses a challenge to the safekeeping of our digital assets.
The history of digital asset exchanges has shown
that exchanges and large holders of digital assets must adapt to technological change in order to secure and safeguard their digital assets.
We rely on third party storage solutions and “cold storage” of our digital wallets to safeguard our digital assets from theft,
loss, destruction or other issues relating to hackers and technological attack; however, malicious actors may be able to intercept our
digital assets in the process of selling them. Further, we may move our digital assets to various exchanges to exchange them for fiat
currency, which will require us to rely on the security protocols of these exchanges to safeguard our digital assets. While these exchanges
purport to be secure, and while we believe them to be so, no security system is perfect and malicious actors may be able to intercept
our digital assets while we are in the process of selling them via such exchanges. Given the growth in their size and their relatively
unregulated nature, we believe these exchanges will become a more appealing target for malicious actors. To the extent we are unable to
identify and mitigate or stop new security threats, our digital assets may be subject to theft, loss, destruction or other attack, which
could adversely affect an investment in us.
Our mining operating costs outpace our mining
revenues, which could seriously harm our business or increase our losses.
Our mining operations are costly, and our expenses
may increase in the future. We intend to use funds on hand and from shares sold under the Purchase Agreement to continue to purchase bitcoin
mining machines. This expense increase may not be offset by a corresponding increase in revenue. Our expenses may be greater than we anticipate,
and our investments to make our business more efficient may not succeed and may outpace monetization efforts. Increases in our costs without
a corresponding increase in our revenue would increase our losses and could seriously harm our business and financial perform.
We have an evolving business model which
is subject to various uncertainties.
As bitcoin assets may become more widely available,
we expect the services and products associated with them to evolve. In order to stay current with the industry, our business model may
need to evolve as well. From time to time, we may modify aspects of our business model relating to our strategy. We cannot offer any assurance
that these or any other modifications will be successful or will not result in harm to our business. We may not be able to manage growth
effectively, which could damage our reputation, limit our growth and negatively affect our operating results. Further, we cannot provide
any assurance that we will successfully identify all emerging trends and growth opportunities in this business sector, and we may lose
out on those opportunities. Such circumstances could have a material adverse effect on our business, prospects or operations.
The development and acceptance of cryptographic
and algorithmic protocols governing the issuance of and transactions in cryptocurrencies is subject to a variety of factors that are difficult
to evaluate.
The use of cryptocurrencies to, among other things,
buy and sell goods and services and complete transactions, is part of a new and rapidly evolving industry that employs bitcoin assets
based upon a computer-generated mathematical and/or cryptographic protocol. Large-scale acceptance of cryptocurrencies as a means of payment
has not, and may never, occur. The growth of this industry in general, and the use of bitcoin, in particular, is subject to a high degree
of uncertainty, and the slowing or stopping of the development or acceptance of developing protocols may occur unpredictably. The factors
include, but are not limited to:
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continued worldwide growth in the adoption and use of cryptocurrencies as a medium to exchange;
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governmental and quasi-governmental regulation of cryptocurrencies and their use, or restrictions on or regulation of access to and operation of the network or similar bitcoin systems;
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changes in consumer demographics and public tastes and preferences;
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the maintenance and development of the open-source software protocol of the network;
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the increased consolidation of contributors to the bitcoin blockchain through mining pools;
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the availability and popularity of other forms or methods of buying and selling goods and services, including new means of using fiat currencies;
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the use of the networks supporting cryptocurrencies for developing smart contracts and distributed applications;
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general economic conditions and the regulatory environment relating to cryptocurrencies; and
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negative consumer sentiment and perception of bitcoin specifically and cryptocurrencies generally.
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The outcome of these factors could have negative
effects on our ability to continue as a going concern or to pursue our business strategy at all, which could have a material adverse effect
on our business, prospects or operations as well as potentially negative effect on the value of any bitcoin or other cryptocurrencies
we mine or otherwise acquire or hold for our own account, which would harm investors in our securities.
Banks and financial institutions may not
provide banking services, or may cut off services, to businesses that engage in bitcoin-related activities or that accept cryptocurrencies
as payment, including financial institutions of investors in our securities.
A number of companies that engage in bitcoin and/or
other bitcoin-related activities have been unable to find banks or financial institutions that are willing to provide them with bank accounts
and other services. Similarly, a number of companies and individuals or businesses associated with cryptocurrencies may have had and may
continue to have their existing bank accounts closed or services discontinued with financial institutions in response to government action,
particularly in China, where regulatory response to cryptocurrencies has been to exclude their use for ordinary consumer transactions
within its jurisdiction.
Subject to such restrictions, we also may be unable
to obtain or maintain these services for our business. The difficulty that many businesses that provide bitcoin and/or derivatives on
other bitcoin-related activities have and may continue to have in finding banks and financial institutions willing to provide them services
may be decreasing the usefulness of cryptocurrencies as a payment system and harming public perception of cryptocurrencies and could decrease
their usefulness and harm their public perception in the future.
If any person, institution or a pool of
them acting in concert obtains control of more than 50% of the processing power active on the Bitcoin network, such person, institution
or a pool of them could prevent new transactions from gaining confirmations, halt payments between users, and reverse previously completed
transactions, which would erode user confidence in Bitcoin.
If the award
of Bitcoins for solving blocks and transaction fees for recording transactions are not sufficiently high to incentivize miners, miners
may cease expending processing power to solve blocks. Miners ceasing operations would reduce the collective processing power on the Bitcoin
network, which would adversely affect the confirmation process for transactions and make the Bitcoin network more vulnerable to any person,
institution or a pool of them which has obtained over 50% control over the computing power on the Bitcoin network. In such event, such
person, institution or a pool of them could prevent new transactions from gaining confirmation, halt payments between users, and reverse
previously completed transactions. Such changes or any reduction in confidence in the confirmation process or processing power of the
Bitcoin network may erode user confidence in Bitcoin, which would decrease the demand for our products.
The administrators of the Bitcoin network’s
source code could propose amendments to the Bitcoin network’s protocols and software that, if accepted and authorized by the Bitcoin
network’s community, could adversely affect our business, results of operations and financial condition.
The Bitcoin network
is based on a cryptographic, algorithmic protocol that governs the end-user-to-end-user interactions between computers connected to the
Bitcoin network. A loosely organized group can propose amendments to the Bitcoin network’s source code through one or more software
upgrades that alter the protocols and software that govern the Bitcoin network and the properties of Bitcoins, including the irreversibility
of transactions and limitations on the mining of new Bitcoins. To the extent that a significant majority of the users and miners on the
Bitcoin network install such software upgrade(s), the Bitcoin network would be subject to new protocols and software that may render our
products less desirable, which in turn may adversely affect our business, results of operations and financial condition. If less than
a significant majority of the users and miners on the Bitcoin network install such software upgrade(s), the Bitcoin network could “fork.”
The acceptance of Bitcoin network software
patches or upgrades by a significant, but not overwhelming, percentage of the users and miners in the Bitcoin network could result in
a “fork” in the blockchain, resulting in the operation of two separate networks that cannot be merged. The existence of forked
blockchains could erode user confidence in Bitcoin and could adversely impact our business, results of operations and financial condition.
Bitcoin is based
on open-source software and has no official developer or group of developers that formally controls the Bitcoin network. Any individual
can download the Bitcoin network software and make any desired modifications, which are proposed to users and miners on the Bitcoin network
through software downloads and upgrades. However, miners and users must consent to those software modifications by downloading the altered
software or upgrade implementing the changes; otherwise, the changes do not become part of the Bitcoin network. Since the Bitcoin network’s
inception, changes to the Bitcoin network have been accepted by the vast majority of users and miners, ensuring that the Bitcoin network
remains a coherent economic system. However, a developer or group of developers could potentially propose a modification to the Bitcoin
network that is not accepted by a vast majority of miners and users, but that is nonetheless accepted by a substantial population of participants
in the Bitcoin network. In such a case, a fork in the blockchain could develop and two separate Bitcoin networks could result, one running
the pre-modification software program and the other running the modified version. An example is the introduction of a cryptocurrency known
as “Bitcoin cash” in mid-2017. This kind of split in the Bitcoin network could erode user confidence in the stability of the
Bitcoin network, which could negatively affect the demand for our products. Our marketing efforts to help grow our business may not be
effective.
Promoting awareness of our offerings is important
to our ability to grow our business and to attract new users can be costly. We believe that much of the growth in our user base and the
number of users on our platform will be attributable to paid marketing initiatives. Our marketing initiatives may become increasingly
expensive and generating a meaningful return on those initiatives may be difficult. Even if we successfully increase revenue as a result
of our paid marketing efforts, it may not offset the additional marketing expenses we incur.
If our marketing efforts are not successful in
promoting awareness of our clients, or if we are not able to cost-effectively manage our marketing expenses, our results of operations
could be adversely affected. If our marketing efforts are successful in increasing awareness of our offerings, this could also lead to
increased public scrutiny of our business and increase the likelihood of third parties bringing legal proceedings against us. Any of the
foregoing risks could harm our business, financial condition and results of operations.
Acceptance and/or widespread use of bitcoin
is uncertain.
Currently, there is a relatively limited use of
any bitcoin in the retail and commercial marketplace, thus contributing to price volatility that could adversely affect an investment
in our securities. Banks and other established financial institutions may refuse to process funds for bitcoin transactions, process wire
transfers to or from bitcoin exchanges, bitcoin-related companies or service providers, or maintain accounts for persons or entities transacting
in bitcoin. Conversely, a significant portion of bitcoin demand is generated by investors seeking a long-term store of value or speculators
seeking to profit from the short- or long-term holding of the asset. Price volatility undermines any bitcoin’s role as a medium
of exchange, as retailers are much less likely to accept it as a form of payment. Market capitalization for a bitcoin as a medium of exchange
and payment method may always be low.
The relative lack of acceptance of bitcoins in
the retail and commercial marketplace, or a reduction of such use, limits the ability of end users to use them to pay for goods and services.
Such lack of acceptance or decline in acceptances could have a material adverse effect on our ability to continue as a going concern or
to pursue our business strategy at all, which could have a material adverse effect on our business, prospects or operations and potentially
the value of bitcoins we mine or otherwise acquire or hold for our own account.
There is a lack of liquid markets, and possible
manipulation of blockchain/bitcoin-based assets.
Cryptocurrencies that are represented and trade
on a ledger-based platform may not necessarily benefit from viable trading markets. Stock exchanges have listing requirements and vet
issuers; requiring them to be subjected to rigorous listing standards and rules, and monitor investors transacting on such platform for
fraud and other improprieties. These conditions may not necessarily be replicated on a distributed ledger platform, depending on the platform’s
controls and other policies. The laxer a distributed ledger platform is about vetting issuers of bitcoin assets or users that transact
on the platform, the higher the potential risk for fraud or the manipulation of the ledger due to a control event. These factors may decrease
liquidity or volume or may otherwise increase volatility of investment securities or other assets trading on a ledger-based system, which
may adversely affect us. Such circumstances could have a material adverse effect on our ability to continue as a going concern or to pursue
our business strategy at all, which could have a material adverse effect on our business, prospects or operations and potentially the
value of any bitcoin or other cryptocurrencies we mine or otherwise acquire or hold for our own account, and harm investors.
Our operations, investment strategies and
profitability may be adversely affected by competition from other methods of investing in cryptocurrencies.
We compete with other users and/or companies that
are mining cryptocurrencies and other potential financial vehicles, including securities backed by or linked to cryptocurrencies through
entities similar to us. Market and financial conditions, and other conditions beyond our control, may make it more attractive to invest
in other financial vehicles, or to invest in cryptocurrencies directly, which could limit the market for our shares and reduce their liquidity.
The emergence of other financial vehicles and exchange-traded funds have been scrutinized by regulators and such scrutiny and the negative
impressions or conclusions resulting from such scrutiny could be applicable to us and impact our ability to successfully pursue our business
strategy or operate at all, or to maintain a public market for our securities. Such circumstances could have a material adverse effect
on our ability to continue as a going concern or to pursue our business strategy at all, which could have a material adverse effect on
our business, prospects or operations and potentially the value of any bitcoin or other cryptocurrencies we mine or otherwise acquire
or hold for our own account, and harm investors.
The development and acceptance of competing
blockchain platforms or technologies may cause consumers to use alternative distributed ledgers or other alternatives.
The development and acceptance of competing blockchain
platforms or technologies may cause consumers to use alternative distributed ledgers or an alternative to distributed ledgers altogether.
Our business utilizes presently existent digital ledgers and blockchains and we could face difficulty adapting to emergent digital ledgers,
blockchains, or alternatives thereto. This may adversely affect us and our exposure to various blockchain technologies and prevent us
from realizing the anticipated profits from our investments. Such circumstances could have a material adverse effect on our ability to
continue as a going concern or to pursue our business strategy at all, which could have a material adverse effect on our business, prospects
or operations and potentially the value of any bitcoin or other cryptocurrencies we mine or otherwise acquire or hold for our own account,
and harm investors.
If a malicious actor or botnet obtains control
of more than 50% of the processing power on a bitcoin network, such actor or botnet could manipulate blockchains to adversely affect us,
which would adversely affect an investment in us or our ability to operate.
If a malicious actor or botnet (a volunteer or
hacked collection of computers controlled by networked software coordinating the actions of the computers) obtains a majority of the processing
power dedicated to mining a bitcoin, it may be able to alter blockchains on which transactions of bitcoin reside and rely by constructing
fraudulent blocks or preventing certain transactions from completing in a timely manner, or at all. The malicious actor or botnet could
control, exclude or modify the ordering of transactions, though it could not generate new units or transactions using such control. The
malicious actor could “double-spend” its own bitcoin (i.e., spend the same bitcoin in more than one transaction) and prevent
the confirmation of other users’ transactions for as long as it maintained control. To the extent that such malicious actor or botnet
does not yield its control of the processing power on the network or the bitcoin community does not reject the fraudulent blocks as malicious,
reversing any changes made to blockchains may not be possible. The foregoing description is not the only means by which the entirety of
blockchains or cryptocurrencies may be compromised but is only an example.
Although there are no known reports of malicious
activity or control of blockchains achieved through controlling over 50% of the processing power on the network, it is believed that certain
mining pools may have exceeded the 50% threshold in bitcoin. The possible crossing of the 50% threshold indicates a greater risk that
a single mining pool could exert authority over the validation of bitcoin transactions. To the extent that the bitcoin ecosystem, and
the administrators of mining pools, do not act to ensure greater decentralization of bitcoin mining processing power, the feasibility
of a malicious actor obtaining control of the processing power will increase because the botnet or malicious actor could compromise more
than 50% mining pool and thereby gain control of blockchain, whereas if the blockchain remains decentralized it is inherently more difficult
for the botnet of malicious actor to aggregate enough processing power to gain control of the blockchain, may adversely affect an investment
in our common stock. Such lack of controls and responses to such circumstances could have a material adverse effect on our ability to
continue as a going concern or to pursue our new strategy at all, which could have a material adverse effect on our business, prospects
or operations and potentially the value of any bitcoin or other cryptocurrencies we mine or otherwise acquire or hold for our own account,
and harm investors.
We are subject to risks associated with
our need for significant electrical power. Government regulators may potentially restrict the ability of electricity suppliers to provide
electricity to mining operations, such as ours.
The operation of a bitcoin or other bitcoin mine
can require massive amounts of electrical power. Further, our mining operations can only be successful and ultimately profitable if the
costs, including electrical power costs, associated with mining a bitcoin are lower than the price of a bitcoin. As a result, any mine
we establish can only be successful if we can obtain sufficient electrical power for that mine on a cost-effective basis, and our establishment
of new mines requires us to find locations where that is the case. There may be significant competition for suitable mine locations, and
government regulators may potentially restrict the ability of electricity suppliers to provide electricity to mining operations in times
of electricity shortage or may otherwise potentially restrict or prohibit the provision or electricity to mining operations. According
to PRC Provisions on Supply and Use of Electricity (revised in 2019), excessive use of electricity or failure to use electricity in accordance
with the contract may result in stop of the power supply. Additionally, our miners could be materially adversely affected by a power outage.
PRC Electricity Law forbids users to build power plants without permission of Electric Department of the State Council. Given the power
requirement, it would not be feasible to run miners on back-up power generators or purchase power from personal power plant in the event
of a government restriction on electricity or a power outage.
Any shortage of electricity supply or increase
in electricity cost in a jurisdiction may negatively impact the viability and the expected economic return for bitcoin mining activities
in that jurisdiction. In addition, the significant consumption of electricity may have a negative environmental impact, including contribution
to climate change, which may give rise to public opinion against allowing the use of electricity for bitcoin mining activities or government
measures restricting or prohibiting the use of electricity for bitcoin mining activities.
We may not adequately respond to price fluctuations
and rapidly changing technology, which may negatively affect our business.
Competitive conditions within the bitcoin industry
require that we use sophisticated technology in the operation of our business. The industry for blockchain technology is characterized
by rapid technological changes, new product introductions, enhancements and evolving industry standards. New technologies, techniques
or products could emerge that might offer better performance than the software and other technologies we currently utilize, and we may
have to manage transitions to these new technologies to remain competitive. We may not be successful, generally or relative to our competitors
in the bitcoin industry, in timely implementing new technology into our systems, or doing so in a cost-effective manner. During the course
of implementing any such new technology into our operations, we may experience system interruptions and failures during such implementation.
Furthermore, there can be no assurances that we will recognize, in a timely manner or at all, the benefits that we may expect as a result
of our implementing new technology into our operations. As a result, our business and operations may suffer, and there may be adverse
effects on the price of our common stock.
Risks
Related to Doing Business in China
We
are a holding company, and will rely on dividends paid by our subsidiaries for our cash needs. Any limitation on the ability of our subsidiaries
to make dividend payments to us, or any tax implications of making dividend payments to us, could limit our ability to pay our parent
company expenses or pay dividends to holders of our Class A ordinary shares.
We
are a BVI holding company and conduct substantially all of our business through our subsidiaries in China. We may rely on dividends to
be paid by our PRC subsidiaries to fund our cash and financing requirements, including the funds necessary to pay dividends and other
cash distributions to our shareholders, to service any debt we may incur and to pay our operating expenses. If our PRC subsidiaries incur
debt on their own behalf in the future, the instruments governing the debt may restrict our PRC subsidiaries’ ability to pay dividends
or make other distributions to us.
Under
PRC laws and regulations, our PRC subsidiaries may pay dividends only out of their accumulated profits as determined in accordance with
PRC accounting standards and regulations. In addition, wholly foreign-owned enterprises are required to set aside at least 10% of their
accumulated after-tax profits each year, if any, to fund a certain statutory reserve fund, until the aggregate amount of such fund reaches
50% of its registered capital.
Our
PRC subsidiaries generate primarily all of their revenue in Renminbi, which is not freely convertible into other currencies. As a result,
any restriction on currency exchange may limit the ability of any one of our PRC subsidiaries to use its Renminbi revenues to pay dividends
to us. The PRC government may continue to strengthen its capital controls, and more restrictions and substantial vetting process may
be put forward by SAFE for cross-border transactions falling under both the current account and the capital account. Any limitation on
the ability of our PRC subsidiary to pay dividends or make other kinds of payments to us could materially and adversely limit our ability
to grow, make investments or acquisitions that could be beneficial to our business, pay dividends, or otherwise fund and conduct our
business.
In
addition, the Enterprise Income Tax Law, or EIT, and its implementation rules provide that a withholding tax rate of up to 10% will be
applicable to dividends payable by Chinese companies to non-PRC-resident enterprises unless otherwise exempted or reduced according to
treaties or arrangements between the PRC central government and governments of other countries or regions where the non-PRC resident
enterprises are incorporated. Any limitation on the ability of our PRC subsidiary to pay dividends or make other distributions to us
could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business,
pay dividends, or otherwise fund and conduct our business.
Pursuant
to the Arrangement between Mainland China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and Tax
Evasion on Income, or the Double Tax Avoidance Arrangement, the 10% withholding tax rate may be lowered to 5% if a Hong Kong resident
enterprise owns no less than 25% of a PRC entity. However, the 5% withholding tax rate does not automatically apply and certain requirements
must be satisfied, including, without limitation, that (a) the Hong Kong entity must be the beneficial owner of the relevant dividends;
and (b) the Hong Kong entity must directly hold no less than 25% share ownership in the PRC entity during the 12 consecutive months preceding
its receipt of the dividends. In current practice, a Hong Kong entity must obtain a tax resident certificate from the Hong Kong tax authority
to apply for the 5% lower PRC withholding tax rate. As the Hong Kong tax authority will issue such a tax resident certificate on a case-by-case
basis, we cannot assure you that we will be able to obtain the tax resident certificate from the relevant Hong Kong tax authority and
enjoy the preferential withholding tax rate of 5% under the Double Taxation Arrangement with respect to dividends to be paid by our PRC
subsidiaries to their immediate holding companies, AGM Defi Tech Limited and AGM Technology Limited. As of the date of this prospectus,
Beijing Keen Sense Technology Service Co., Ltd., AGM Tianjing Construction Development Co., Ltd. and Nanjing Lucun Semiconductor Co.
Ltd. currently do not have plans to declare and pay dividends to AGM Defi Tech Limited and AGM Technology Limited and we have not applied
for the tax resident certificate from the relevant Hong Kong tax authority. AGM Defi Tech Limited and AGM Technology Limited intend to
apply for the tax resident certificate when Beijing Keen Sense Technology Service Co., Ltd., AGM Tianjing Construction Development Co.,
Ltd. and Nanjing Lucun Semiconductor Co. Ltd. plan to declare and pay dividends to them. When Beijing Keen Sense Technology Service Co.,
Ltd., AGM Tianjing Construction Development Co., Ltd. and Nanjing Lucun Semiconductor Co. Ltd. plan to declare and pay dividends to AGM
Defi Tech Limited and AGM Technology Limited and when we intend to apply for the tax resident certificate from the relevant Hong
Kong tax authority, we plan to inform the investors through SEC filings, such as a current report on Form 6-K, prior to such actions.
The
Chinese government exerts substantial influence over the manner in which we must conduct our business activities. We are currently
not required to obtain approval from Chinese authorities to list on U.S exchanges, however, if our holding company or subsidiaries were
required to obtain approval in the future and were denied permission from Chinese authorities to list on U.S. exchanges, we will not
be able to continue listing on U.S. exchange, which would materially affect the interest of the investors.
The
Chinese government has exercised and continues to exercise substantial control over virtually every sector of the Chinese economy through
regulation and state ownership. Our ability to operate in China may be harmed by changes in its laws and regulations, including those
relating to taxation, environmental regulations, land use rights, property and other matters. The central or local governments of these
jurisdictions may impose new, stricter regulations or interpretations of existing regulations that would require additional expenditures
and efforts on our part to ensure our compliance with such regulations or interpretations. Accordingly, government actions in the future,
including any decision not to continue to support recent economic reforms and to return to a more centrally planned economy or regional
or local variations in the implementation of economic policies, could have a significant effect on economic conditions in China or particular
regions thereof, and could require us to divest ourselves of any interest we then hold in Chinese properties.
For
example, the Chinese cybersecurity regulator announced on July 2 that it had begun an investigation of Didi Global Inc. (NYSE: DIDI)
and two days later ordered that the company’s app be removed from smartphone app stores.
As
such, the Company’s business segments may be subject to various government and regulatory interference in the provinces in which
they operate. The Company could be subject to regulation by various political and regulatory entities, including various local and municipal
agencies and government sub-divisions. The Company may incur increased costs necessary to comply with existing and newly adopted laws
and regulations or penalties for any failure to comply.
Furthermore,
it is uncertain when and whether the Company will be required to obtain permission from the PRC government to list on U.S. exchanges
in the future, and even when such permission is obtained, whether it will be denied or rescinded. Although the Company is currently not
required to obtain permission from any of the PRC federal or local government to obtain such permission and has not received any denial
to list on the U.S. exchange, our operations could be adversely affected, directly or indirectly, by existing or future laws and regulations
relating to its business or industry. As a result, our ordinary shares may decline in value dramatically or even become worthless should
we become subject to new requirement to obtain permission from the PRC government to list on U.S. exchange in the future.
Recently,
the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council jointly issued
the Opinions on Severe and Lawful Crackdown on Illegal Securities Activities, which were available to the public on July 6, 2021.
These opinions emphasized the need to strengthen the administration over illegal securities activities and the supervision on overseas
listings by China-based companies. These opinions proposed to take effective measures, such as promoting the construction of relevant
regulatory systems, to deal with the risks and incidents facing China-based overseas-listed companies and the demand for cybersecurity
and data privacy protection. Moreover, the State Internet Information Office issued the Measures of Cybersecurity Review (Revised Draft
for Comments, not yet effective) on July 10, 2021, which require operators with personal information of more than 1 million
users who want to list abroad to file a cybersecurity review with the Office of Cybersecurity Review. The aforementioned policies and
any related implementation rules to be enacted may subject us to additional compliance requirement in the future. While we believe
that our operations are not affected by this, as these opinions were recently issued, official guidance and interpretation of the opinions
remain unclear in several respects at this time. Therefore, we cannot assure you that we will remain fully compliant with all new regulatory
requirements of these opinions or any future implementation rules on a timely basis, or at all.
The
approval of the China Securities Regulatory Commission may be required in connection with this offering, and, if required, we cannot
predict whether we will be able to obtain such approval.
The
Regulations on Mergers and Acquisitions of Domestic Companies by Foreign Investors, or the M&A Rules, adopted by six PRC regulatory
agencies requires an overseas special purpose vehicle formed for listing purposes through acquisitions of PRC domestic companies and
controlled by PRC companies or individuals to obtain the approval of the China Securities Regulatory Commission, or the CSRC, prior to
the listing and trading of such special purpose vehicle’s securities on an overseas stock exchange.
Our
PRC counsel has advised us based on their understanding of the current PRC laws, rules and regulations that the CSRC’s approval
is not required for the listing and trading of our ordinary shares on Nasdaq in the context of this offering, given that: (i) our
PRC subsidiary was incorporated as a wholly foreign-owned enterprise by means of direct investment rather than by merger or acquisition
of equity interest or assets of a PRC domestic company owned by PRC companies or individuals as defined under the M&A Rules that
are our beneficial owners; (ii) the CSRC currently has not issued any definitive rule or interpretation concerning whether
offerings like ours under this prospectus are subject to the M&A Rules; and (iii) no provision in the M&A Rules clearly
classifies contractual arrangements as a type of transaction subject to the M&A Rules.
However,
our PRC counsel has further advised us that there remain some uncertainties as to how the M&A Rules will be interpreted or implemented
in the context of an overseas offering and its opinions summarized above are subject to any new laws, rules and regulations or detailed
implementations and interpretations in any form relating to the M&A Rules. We cannot assure you that relevant PRC government agencies,
including the CSRC, would reach the same conclusion as we do. If it is determined that CSRC approval is required for this offering, we
may face sanctions by the CSRC or other PRC regulatory agencies for failure to seek CSRC approval for this offering. These sanctions
may include fines and penalties on our operations in the PRC, limitations on our operating privileges in the PRC, delays in or restrictions
on the repatriation of the proceeds from this offering into the PRC, restrictions on or prohibition of the payments or remittance of
dividends by our PRC subsidiary, or other actions that could have a material and adverse effect on our business, financial condition,
results of operations, reputation and prospects, as well as the trading price of our Class A ordinary shares. Furthermore, the CSRC
or other PRC regulatory agencies may also take actions requiring us, or making it advisable for us, to halt this offering before the
settlement and delivery of the Class A ordinary shares that we are offering. Consequently, if you engage in market trading or other
activities in anticipation of and prior to the settlement and delivery of the Class A ordinary shares we are offering, you would
be doing so at the risk that the settlement and delivery may not occur.
The
recent joint statement by the SEC and PCAOB, proposed rule changes submitted by Nasdaq, and the Holding Foreign Companies Accountable
Act all call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of
their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB. These developments could add uncertainties to our
offering.
On
April 21, 2020, SEC Chairman Jay Clayton and PCAOB Chairman William D. Duhnke III, along with other senior SEC staff, released a
joint statement highlighting the risks associated with investing in companies based in or have substantial operations in emerging markets
including China. The joint statement emphasized the risks associated with lack of access for the PCAOB to inspect auditors and audit
work papers in China and higher risks of fraud in emerging markets.
On
May 18, 2020, Nasdaq filed three proposals with the SEC to (i) apply minimum offering size requirement for companies primarily
operating in “Restrictive Market”, (ii) adopt a new requirement relating to the qualification of management or board
of director for Restrictive Market companies, and (iii) apply additional and more stringent criteria to an applicant or listed company
based on the qualifications of the company’s auditors.
On
May 20, 2020, the U.S. Senate passed the Holding Foreign Companies Accountable Act requiring a foreign company to certify it is
not owned or controlled by a foreign government if the PCAOB is unable to audit specified reports because the company uses a foreign
auditor not subject to PCAOB inspection. If the PCAOB is unable to inspect the Company’s auditors for three consecutive years,
the issuer’s securities are prohibited to trade on a U.S. stock exchange. On December 2, 2020, the U.S. House of Representatives
approved the Holding Foreign Companies Accountable Act. On December 18, 2020, the Holding Foreign Companies Accountable Act was
signed into law.
On
March 24, 2021, the SEC announced that it had adopted interim final amendments to implement congressionally mandated submission
and disclosure requirements of the Act. The interim final amendments will apply to registrants that the SEC identifies as having
filed an annual report on Forms 10-K, 20-F, 40-F or N-CSR with an audit report issued by a registered public accounting firm that is
located in a foreign jurisdiction and that the PCAOB has determined it is unable to inspect or investigate completely because of a position
taken by an authority in that jurisdiction. The SEC will implement a process for identifying such a registrant and any such identified
registrant will be required to submit documentation to the SEC establishing that it is not owned or controlled by a governmental entity
in that foreign jurisdiction, and will also require disclosure in the registrant’s annual report regarding the audit arrangements
of, and governmental influence on, such a registrant.
On
June 22, 2021, the U.S. Senate passed a bill which, if passed by the U.S. House of Representatives and signed into law, would reduce
the number of consecutive non-inspection years required for triggering the prohibitions under the Holding Foreign Companies Accountable
Act from three years to two.
On
September 22, 2021, the PCAOB adopted a final rule implementing the HFCAA, which provides a framework for the PCAOB to use when determining,
as contemplated under the HFCAA, whether the PCAOB is unable to inspect or investigate completely registered public accounting firms
located in a foreign jurisdiction because of a position taken by one or more authorities in that jurisdiction.
On
December 2, 2021, the SEC issued amendments to finalize rules implementing the submission and disclosure requirements in the HFCA Act.
The rules apply to registrants that the SEC identifies as having filed an annual report with an audit report issued by a registered public
accounting firm that is located in a foreign jurisdiction and that PCAOB is unable to inspect or investigate completely because of a
position taken by an authority in foreign jurisdictions.
On
December 16, 2021, SEC announced that the PCAOB designated China and Hong Kong as the jurisdictions
where the PCAOB is not allowed to conduct full and complete audit inspections as mandated under the HFCAA. The Company’s auditor,
JLKZ CPA LLP, is based in Flushing, New York, and therefore is not affected by this mandate by the PCAOB.
The
lack of access to the PCAOB inspection in China prevents the PCAOB from fully evaluating audits and quality control procedures of the
auditors based in China. As a result, the investors may be deprived of the benefits of such PCAOB inspections. The inability of the PCAOB
to conduct inspections of auditors in China makes it more difficult to evaluate the effectiveness of these accounting firms’ audit
procedures or quality control procedures as compared to auditors outside of China that are subject to the PCAOB inspections, which could
cause existing and potential investors in our stock to lose confidence in our audit procedures and reported financial information and
the quality of our financial statements.
Our
auditor, the independent registered public accounting firm that issues the audit report included elsewhere in this prospectus, as an
auditor of companies that are traded publicly in the United States and a firm registered with the PCAOB, is subject to laws in the United
States pursuant to which the PCAOB conducts regular inspections to assess our auditor’s compliance with the applicable professional
standards. Our auditor is headquartered in Flushing, New York, and is subject to inspection by the PCAOB on a regular basis.
However,
the recent developments would add uncertainties to our offering and we cannot assure you whether Nasdaq or regulatory authorities would
apply additional and more stringent criteria to us after considering the effectiveness of our auditor’s audit procedures and quality
control procedures, adequacy of personnel and training, or sufficiency of resources, geographic reach or experience as it relates to
the audit of our financial statements. It remains unclear what the SEC’s implementation process related to the above rules will
entail or what further actions the SEC, the PCAOB or Nasdaq will take to address these issues and what impact those actions will have
on U.S. companies that have significant operations in the PRC and have securities listed on a U.S. stock exchange. In addition, the above
amendments and any additional actions, proceedings, or new rules resulting from these efforts to increase U.S. regulatory access
to audit information could create some uncertainty for investors, the market price of our ordinary shares could be adversely affected,
and we could be delisted if we and our auditor are unable to meet the PCAOB inspection requirement or being required to engage a new
audit firm, which would require significant expense and management time.
The
Opinions recently issued by the General Office of the Central Committee of the Communist Party of China and the General Office of the
State Council may subject us to additional compliance requirement in the future.
Recently,
the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council jointly issued
the Opinions, which were made available to the public on July 6, 2021. The Opinions emphasized the need to strengthen the administration
over illegal securities activities and the supervision on overseas listings by China-based companies. These opinions proposed to take
effective measures, such as promoting the construction of relevant regulatory systems, to deal with the risks and incidents facing China-based
overseas-listed companies and the demand for cybersecurity and data privacy protection. The aforementioned policies and any related implementation
rules to be enacted may subject us to additional compliance requirement in the future. As the Opinions were recently issued, official
guidance and interpretation of the Opinions remain unclear in several respects at this time. Therefore, we cannot assure you that we
will remain fully compliant with all new regulatory requirements of the Opinions or any future implementation rules on a timely basis,
or at all.
The
approval of the China Securities Regulatory Commission may be required in connection with this offering, and, if required, we cannot
predict whether we will be able to obtain such approval.
The
Regulations on Mergers and Acquisitions of Domestic Companies by Foreign Investors, or the M&A Rules, adopted by six PRC regulatory
agencies requires an overseas special purpose vehicle formed for listing purposes through acquisitions of PRC domestic companies and
controlled by PRC companies or individuals to obtain the approval of the China Securities Regulatory Commission, or the CSRC, prior to
the listing and trading of such special purpose vehicle’s securities on an overseas stock exchange.
Our
PRC counsel has advised us based on their understanding of the current PRC laws, rules and regulations that the CSRC’s approval
is not required for the listing and trading of our ordinary shares on Nasdaq in the context of this offering, given that: (i) our PRC
subsidiary was incorporated as a wholly foreign-owned enterprise by means of direct investment rather than by merger or acquisition of
equity interest or assets of a PRC domestic company owned by PRC companies or individuals as defined under the M&A Rules that are
our beneficial owners; (ii) the CSRC currently has not issued any definitive rule or interpretation concerning whether offerings like
ours under this prospectus are subject to the M&A Rules; and (iii) no provision in the M&A Rules clearly classifies contractual
arrangements as a type of transaction subject to the M&A Rules.
However,
our PRC counsel has further advised us that there remains some uncertainties as to how the M&A Rules will be interpreted or implemented
in the context of an overseas offering and its opinions summarized above are subject to any new laws, rules and regulations or detailed
implementations and interpretations in any form relating to the M&A Rules. We cannot assure you that relevant PRC government agencies,
including the CSRC, would reach the same conclusion as we do. If it is determined that CSRC approval is required for this offering, we
may face sanctions by the CSRC or other PRC regulatory agencies for failure to seek CSRC approval for this offering. These sanctions
may include fines and penalties on our operations in the PRC, limitations on our operating privileges in the PRC, delays in or restrictions
on the repatriation of the proceeds from this offering into the PRC, restrictions on or prohibition of the payments or remittance of
dividends by our PRC subsidiary, or other actions that could have a material and adverse effect on our business, financial condition,
results of operations, reputation and prospects, as well as the trading price of our ordinary shares. Furthermore, the CSRC or other
PRC regulatory agencies may also take actions requiring us, or making it advisable for us, to halt this offering before the settlement
and delivery of the ordinary shares that we are offering. Consequently, if you engage in market trading or other activities in anticipation
of and prior to the settlement and delivery of the ordinary shares we are offering, you would be doing so at the risk that the settlement
and delivery may not occur.
Risks
Related to Our Ordinary Shares
The
exercise of the Warrants may further dilute the ordinary shares and adversely impact the price of our ordinary shares.
As
of January 4, 2022, we had 24,254,842 Class A ordinary shares outstanding. Up to an additional 1,652,175 ordinary shares (approximately
6.81% of our issued and outstanding shares as of January 4, 2022) may be issued pursuant to the exercise of the Warrants. Such issuance
will cause a reduction in the proportionate ownership and voting power of all other shareholders. Additionally, we cannot assure you
that the Selling Shareholders will be able to sell the ordinary shares at a price per shares that is equal to or greater than the exercise
price paid by the Selling Shareholders.
Securities
analysts may not cover our ordinary shares and this may have a negative impact on the market price of our ordinary shares.
The
trading market for our ordinary shares will depend, in part, on the research and reports that securities or industry analysts publish
about us or our business. We do not have any control over independent analysts (provided that we have engaged various non-independent
analysts). We do not currently have and may never obtain research coverage by independent securities and industry analysts. If no independent
securities or industry analysts commence coverage of us, the trading price for our ordinary shares would be negatively impacted. If we
obtain independent securities or industry analyst coverage and if one or more of the analysts who covers us downgrades our ordinary shares,
changes their opinion of our ordinary shares or publishes inaccurate or unfavorable research about our business, our share price would
likely decline. If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, demand for our ordinary
shares could decrease and we could lose visibility in the financial markets, which could cause the price and trading volume of our ordinary
shares to decline.
DECEMBER
2021 OFFERING
Summary
of Terms of the Investor Warrants
On
December 10, 2021, we entered into a Purchase Agreement with certain purchasers, pursuant to which, on December 14, 2021, we sold 2,898,552
Class A ordinary shares in a Registered Direct Offering and also sold the Investor Warrants to purchase up to 1,449,276 Investor Warrant
shares in a concurrent private placement (the “Private Placement,” and together with the Registered Direct Offering, the
“Offering”).
The
gross proceeds of the Offering of $20,000,000, before deducting placement agent fees and other expenses, are being used for working capital
and general business purposes.
The
Investor Warrants and Placement Agent Warrants have a term of three and one-half years immediately exercisable on the date of issuance
to purchase an aggregate of up to 1,449,276 Class A ordinary shares at an exercise price of $8.30 per share.
The
Offering was conducted pursuant to a placement agency agreement, dated December 10, 2021 (the “Placement Agency Agreement”),
between the Company and the Placement Agent, on a “reasonable best efforts” basis. The Company paid the Placement Agent a
cash fee of $1,500,000, or seven point five percent (7.5%) of the aggregate gross proceeds raised in this Offering, $80,000 as accountable
expense in legal fee reimbursement of the aggregate gross proceeds raised in the Offering. Additionally, the Company issued the Placement
Agent the Placement Agent Warrants to purchase up to 202,899 Placement Agent Warrant Shares.
Summary
of Terms of the Investor Warrants
Exercisability. The
Investor Warrants are immediately exercisable on the date of issuance to purchase an aggregate of up to 1,449,276 Class A ordinary shares
at an exercise price of $8.30 per share. The Investor Warrants will be exercisable, at the option of each holder, in whole or in part
by delivering to us a duly executed exercise notice and, at any time a registration statement registering the issuance of our Class A
ordinary shares underlying the Investor Warrants under the Securities Act of 1933, as amended (the “Securities Act”) is effective
and available for the issuance of such shares, or an exemption from registration under the Securities Act is available for the issuance
of such shares, by payment in full in immediately available funds for the number of our Class A ordinary shares purchased upon such exercise.
If a registration statement or current prospectus is not effective or available for the registration of the Investor Warrants or the
resale of the our Class A ordinary shares underlying the Investor Warrants under the Securities Act, at any time after the six-month
anniversary of the closing date of the offering, the holder may, in its sole discretion, elect to exercise the Investor Warrants through
a cashless exercise, in which case the holder would receive upon such exercise the net number of our Class A ordinary shares determined
according to the formula set forth in the Investor Warrants.
Exercise
Limitation. A holder will not have the right to exercise any portion of the Investor Warrants if the holder (together with its
affiliates) would beneficially own in excess of 4.99% (or, upon election of the holder, 9.99%) of the number of our ordinary shares outstanding
immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the Investor
Warrants. Any holder may increase or decrease such percentage, but in no event may such percentage be increased to more than 9.99%, provided
that any increase will not be effective until the 61st day after such election.
Exercise
Price Adjustment. The exercise price of the Investor Warrants is subject to appropriate adjustment in the event of certain stock
dividends and distributions, stock splits, stock combinations, reclassifications or similar events affecting our ordinary shares and
also upon any distributions of assets, including cash, stock or other property to our shareholders. The exercise price of the Investor
Warrants will also be reduced, in the event that the Company subsequently sells ordinary shares or common stock equivalents at a price
which is less than the then current exercise price of the Investor Warrants, to a price equal to the per share price of the common stock
in such subsequent sale.
Participation
Rights. If at any time we grant, issue or sell any our ordinary shares or Common Stock Equivalents (as defined in the Purchase
Agreement) or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any our Class A ordinary
shares (the “Purchase Rights”), the holder of the Investor Warrants will be entitled to acquire, upon the terms applicable
to such Purchase Rights, subject to the beneficial ownership limitations, the aggregate Purchase Rights which the holder of the Investor
Warrants could have acquired if the holder had held the number of our Class A ordinary shares acquirable upon complete exercise of the
Investor Warrants.
Fundamental
Transactions. If, at any time while this Warrant is outstanding, (i) the Company (or any subsidiary), directly or indirectly, in
one or more related transactions effects any merger or consolidation of the Company with or into another person, (ii) the Company (or
any subsidiary), directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all
or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender
offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of ordinary shares are permitted
to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of
the outstanding ordinary shares, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification,
reorganization or recapitalization of the ordinary shares or any compulsory share exchange pursuant to which the ordinary shares are
effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or
more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation,
a reorganization, recapitalization, spin-off, merger or scheme of arrangement) with another Person or group of Persons whereby such other
Person or group acquires more than 50% of the outstanding ordinary shares (not including any ordinary shares held by the other Person
or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase
agreement or other business combination), then, upon any subsequent exercise of this Warrant, the holder shall have the right to receive,
for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such fundamental transaction,
at the option of the holder, the number of ordinary shares of the successor or acquiring corporation or of the Company, if it is the
surviving corporation, and any additional consideration receivable as a result of such fundamental transaction by a holder of the number
of ordinary shares for which this Warrant is exercisable immediately prior to such fundamental transaction.
Summary
of Terms of the Placement Agent Warrants
Exercisability. The
Placement Agent Warrants are immediately exercisable on the date of issuance to purchase an aggregate of up to 202,899 Class A ordinary
shares at an exercise price of $8.30 per share. The Placement Agent Warrants will be exercisable, at the option of each holder, in whole
or in part by delivering to us a duly executed exercise notice and, at any time a registration statement registering the issuance of
our Class A ordinary shares underlying the Placement Agent Warrants under the Securities Act is effective and available for the issuance
of such shares, or an exemption from registration under the Securities Act is available for the issuance of such shares, by payment in
full in immediately available funds for the number of our Class A ordinary shares purchased upon such exercise. The Placement Agent Warrants
will not be exercisable on a cashless basis.
Exercise
Limitation. A holder will not have the right to exercise any portion of the Placement Agent Warrants if the holder (together
with its affiliates) would beneficially own in excess of 4.99% (or, upon election of the holder, 9.99%) of the number of our ordinary
shares outstanding immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the
terms of the Placement Agent Warrants. Any holder may increase or decrease such percentage, but in no event may such percentage be increased
to more than 9.99%, provided that any increase will not be effective until the 61st day after such election.
Exercise
Price Adjustment. The exercise price of the Placement Agent Warrants is subject to appropriate adjustment in the event of certain
stock dividends and distributions, stock splits, stock combinations, reclassifications or similar events affecting our ordinary shares
and also upon any distributions of assets, including cash, stock or other property to our shareholders.
Fundamental
Transactions. If, at any time while this Warrant is outstanding, (i) the Company (or any subsidiary), directly or indirectly, in
one or more related transactions effects any merger or consolidation of the Company with or into another person, (ii) the Company (or
any subsidiary), directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all
or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender
offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of ordinary shares are permitted
to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of
the outstanding ordinary shares, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification,
reorganization or recapitalization of the ordinary shares or any compulsory share exchange pursuant to which the ordinary shares are
effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or
more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation,
a reorganization, recapitalization, spin-off, merger or scheme of arrangement) with another Person or group of Persons whereby such other
Person or group acquires more than 50% of the outstanding ordinary shares (not including any ordinary shares held by the other Person
or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase
agreement or other business combination), then, upon any subsequent exercise of this Warrant, the holder shall have the right to receive,
for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such fundamental transaction,
at the option of the holder, the number of ordinary shares of the successor or acquiring corporation or of the Company, if it is the
surviving corporation, and any additional consideration receivable as a result of such fundamental transaction by a holder of the number
of ordinary shares for which this Warrant is exercisable immediately prior to such fundamental transaction.
SELLING
SHAREHOLERS
The
Class A ordinary shares being offered by the Selling Shareholders are the Warrant Shares issuable upon exercise of all of the Warrants.
We are registering Warrant Shares in order to permit the Selling Shareholders to offer such shares for resale from time to time.
The
following table sets forth certain information with respect to each Selling Shareholder, including (i) the ordinary shares beneficially
owned by the Selling Shareholder prior to this offering, (ii) the number of Warrant Shares being offered by the Selling Shareholder
pursuant to this prospectus and (iii) the Selling Shareholder’s beneficial ownership after completion of this offering. The
registration of the Warrant Shares does not necessarily mean that the Selling Shareholders will sell all or any of such ordinary shares,
but the number of ordinary shares and percentages set forth in the final two columns below assume that all ordinary shares being offered
by the Selling Shareholders are sold. The final two columns also assume the exercise of all of the Warrants held by the Selling Shareholders
as of January 4, 2022, without regard to any limitations on exercise described in this prospectus or in the Warrants. See “Plan
of Distribution.”
The
table is based on information supplied to us by the Selling Shareholders, with beneficial ownership and percentage ownership determined
in accordance with the rules and regulations of the SEC, and includes voting or investment power with respect to ordinary shares.
This information does not necessarily indicate beneficial ownership for any other purpose. In computing the number of ordinary shares
beneficially owned by a Selling Shareholder and the percentage ownership of that Selling Shareholder, ordinary shares subject to warrants
held by that Selling Shareholder that are exercisable immediately, are deemed outstanding. Such ordinary shares, however, are not deemed
outstanding for the purposes of computing the percentage ownership of any other shareholder.
This
prospectus covers the resale of up to an aggregate of 1,652,175 ordinary shares that are issuable to the Selling Shareholders upon the
exercise of the Warrants and that may be sold or otherwise disposed of by the Selling Shareholders. The Investor Warrants and Placement
Agent Warrants are immediately exercisable for a term of three and one-half years after the date of issuance at an exercise price of
$8.30 per share. See section titled “December 2021 Offering” on page 21 of this prospectus for further details
relating to the Warrant Shares and the Warrants.
|
|
Number of
Class A Ordinary Shares
Beneficially
Owned Prior to
Offering(1)
|
|
|
Maximum
Number of
Class A
Ordinary
Shares
to be Sold
Pursuant
to this
Prospectus(2)
|
|
|
Number of
Class A Ordinary Shares
Beneficially
Owned After
Offering(3)
|
|
|
Percentage
Beneficially
Owned
After
Offering(3)
|
|
Anson East Master Fund LP(4)
|
|
|
120,773
|
|
|
|
120,773
|
|
|
|
0
|
|
|
|
-
|
%
|
Anson Investments Master Fund LP(5)
|
|
|
362,319
|
|
|
|
362,319
|
|
|
|
0
|
|
|
|
-
|
%
|
Hudson Bay Master Fund Ltd.(6)
|
|
|
983,092
|
|
|
|
483,092
|
|
|
|
500,000
|
|
|
|
2.06
|
%
|
Sabby Volatility Warrant Master Fund, Ltd.(7)
|
|
|
1,449,906
|
|
|
|
483,092
|
|
|
|
966,814
|
|
|
|
3.99
|
%
|
F. Alec Orudjev(8)
|
|
|
35,000
|
|
|
|
35,000
|
|
|
|
0
|
|
|
|
-
|
%
|
Jian Ke(9)
|
|
|
167,899
|
|
|
|
167,899
|
|
|
|
0
|
|
|
|
-
|
%
|
TOTAL
|
|
|
3,118,989
|
|
|
|
1,652,175
|
|
|
|
1,466,814
|
|
|
|
6.05
|
%
|
(1)
|
All of the Warrants that are exercisable for the Warrant Shares offered
hereby contain certain beneficial ownership limitations, which provide that a holder of the Warrants will not have the right to exercise
any portion of its Warrants if such holder, together with its affiliates, would beneficially own in excess of 4.99% of the number of our
Class A ordinary shares outstanding immediately after giving effect to such exercise, provided that upon at least 61 days’ prior
notice to us, a holder may increase or decrease such limitation up to a maximum of 9.99% of the number of ordinary shares outstanding
(such limitation, a “Beneficial Ownership Limitation”). As a result, the number of ordinary shares reflected in this column
as beneficially owned by each Selling Shareholder includes (a) any outstanding ordinary shares held by such Selling Shareholder,
and (b) if any, the number of ordinary shares subject to the Warrants exercisable for the Warrant Shares and any other warrants that
may be held by such Selling Shareholder, in each case which such Selling Shareholder has the right to acquire immediately and without
it or any of its affiliates beneficially owning more than 4.99% of the number of outstanding ordinary shares as of January 10, 2022.
|
(2)
|
Represents
the total number of Warrant Shares owned by each of the Selling Shareholders, assuming full
exercise of the Warrants.
|
(3)
|
The
number of shares owned and the percentage of beneficial ownership after this offering set
forth in these columns are based on 24,254,842 ordinary shares outstanding as of January
4, 2022 and assumes full exercise of the Warrants that are exercisable for the 1,652,175
Warrant Shares. The calculation of beneficial ownership reported in such columns takes into
account the effect of the Beneficial Ownership Limitations in any warrants held by the Selling
Shareholders after this offering. In computing the number of ordinary shares beneficially
owned by a Selling Shareholder and the percentage ownership of that Selling Shareholder,
ordinary shares subject to warrants held by that Selling Shareholder that are exercisable
immediately, are deemed outstanding. Such ordinary shares, however, are not deemed outstanding
for the purposes of computing the percentage ownership of any other shareholder.
|
(4)
|
Includes
(i) 241,546 Class A ordinary shares issued to such Selling Shareholder in the Registered
Direct Offering, and (ii) Investor Warrants to purchase up to 120,773 Investor Warrant Shares
issued the Private Placement. Anson Advisors Inc and Anson Funds Management LP, the Co-Investment
Advisers of Anson East Master Fund LP, hold voting and dispositive power over the Common
Shares held by Anson. Bruce Winson is the managing member of Anson Management GP LLC, which
is the general partner of Anson Funds Management LP. Moez Kassam and Amin Nathoo are directors
of Anson Advisors Inc. Mr. Winson, Mr. Kassam and Mr. Nathoo each disclaim beneficial ownership
of these Common Shares except to the extent of their pecuniary interest therein. The principal
business address of Anson is Walkers Corporate Limited, Cayman Corporate Centre, 27 Hospital
Road, George Town, Grand Cayman KY1-9008, Cayman Islands.
|
(5)
|
Includes
(i) 724,638 Class A ordinary shares issued to such Selling Shareholder in the Registered
Direct Offering, and (ii) Investor Warrants to purchase up to 362,319 Investor Warrant
Shares issued in the Private Placement. Anson Advisors Inc and Anson Funds Management LP,
the Co-Investment Advisers of Anson Investments Master Fund LP, hold voting and dispositive
power over the Common Shares held by Anson. Bruce Winson is the managing member of Anson
Management GP LLC, which is the general partner of Anson Funds Management LP. Moez Kassam
and Amin Nathoo are directors of Anson Advisors Inc. Mr. Winson, Mr. Kassam and Mr. Nathoo
each disclaim beneficial ownership of these Common Shares except to the extent of their pecuniary
interest therein. The principal business address of Anson is Walkers Corporate Limited, Cayman
Corporate Centre, 27 Hospital Road, George Town, Grand Cayman KY1-9008, Cayman Islands.
|
(6)
|
Includes
(i) 500,000 Class A ordinary shares beneficially owned by the Selling Shareholder as of close of business on January 4, 2022,
and (iii) Investor Warrants to purchase up to 483,092 Investor Warrant Shares issued in the Private Placement. Hudson Bay’s
Investor Warrants currently specify a Beneficial Ownership Limitation of 9.99%. Hudson Bay Capital Management LP, the investment
manager of Hudson Bay Master Fund Ltd., has voting and investment power over these securities. Sander Gerber is the managing member
of Hudson Bay Capital GP LLC, which is the general partner of Hudson Bay Capital Management LP. Each of Hudson Bay Master Fund Ltd.
and Sander Gerber disclaims beneficial ownership over these securities.
|
|
|
(7)
|
Includes
(i) 966,814 Class A ordinary shares issued to such Selling Shareholder in the Registered Direct Offering, and (iii) Investor
Warrants to purchase up to 483,092 Investor Warrant Shares issued in the Private Placement. Sabby
Management, LLC, the investment manager of Sabby Volatility Warrant Master Fund, Ltd. (“Sabby”), and Hal Mintz, manager
of Sabby Management, LLC, share voting and investment power with respect to these securities. Each of Sabby Management, LLC and Hal
Mintz disclaims beneficial ownership over the securities listed except to the extent of their pecuniary interest therein. The address
of Sabby is 10 Mountainview Road, Suite 205, Upper Saddle River, NJ 07458.
|
|
|
(8)
|
Includes
35,000 Class A ordinary shares issuable upon the exercise of the placement agent warrants issued in connection with the Private Placement.
Mr. Orudjev is the General Counsel of FT Global Capital, Inc. (Member FINRA/SIPC), 1688 Meridian Avenue, Suite 700 Miami Beach, FL
33139.
|
|
|
(9)
|
Includes
167,899 Class A ordinary shares issuable upon the exercise of the placement agent warrants issued in connection with the Private
Placement. Mr. Ke is the President of FT Global Capital, Inc. (Member FINRA/SIPC), 1688 Meridian Avenue, Suite 700 Miami Beach, FL
33139.
|