20-F

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20-F

☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended March 31, 2023

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________.

OR

☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report:

Commission file number: 001-40306

UTime Limited

(Exact name of Registrant as Specified in its Charter)

Cayman Islands

(Jurisdiction of Incorporation or Organization)

7th Floor, Building 5A

Shenzhen Software Industry Base, Nanshan District

Shenzhen, People’s Republic of China 518061

(Address of Principal Executive Offices)

Hengcong Qiu

Tel: (86) 755 86512266

7th Floor, Building 5A

Shenzhen Software Industry Base, Nanshan District

Shenzhen, People’s Republic of China 518061

(Name, Telephone, E-mail and/or Facsimile Number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading symbol	Name of Each Exchange On Which Registered
Ordinary shares, par value US$ $0.0001 per share	UTME	NASDAQ Capital Market

Securities registered or to be registered pursuant to Section 12(g) of the Act:

None

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

None

(Title of Class)

The number of outstanding shares of each of the issuer’s classes of capital or common stock as of August 8, 2023 was: 13,567,793 ordinary shares, par value $0.0001 per share.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ☐ No ☒

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Emerging growth company ☒

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐

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

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

☒ U.S. GAAP ☐ International Financial Reporting Standards as issued by the International Accounting Standards Board ☐ Other

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow:

Item 17 ☐ Item 18 ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

UTIME LIMITED

FORM 20-F ANNUAL REPORT

TABLE OF CONTENTS

		Page
	PART I	1
Item 1.	Identity of Directors, Senior Management and Advisers	4
Item 2.	Offer Statistics and Expected Timetable	4
Item 3.	Key Information	4
Item 4.	Information On The Company	70
Item 4A.	Unresolved Staff Comments	111
Item 5.	Operating And Financial Review And Prospects	112
Item 6.	Directors, Senior Management And Employees	123
Item 7.	Major Shareholders And Related Party Transactions	129
Item 8.	Financial Information	130
Item 9.	The Offer And Listing	134
Item 10.	Additional Information	135
Item 11.	Quantitative And Qualitative Disclosures About Market Risk	158
Item 12.	Description Of Securities Other Than Equity Securities	158
	PART II	159
Item 13.	Defaults, Dividend Arrearages And Delinquencies	159
Item 14.	Material Modifications To The Rights Of Security Holders And Use Of Proceeds	159
Item 15.	Controls And Procedures	159
Item 16.	[Reserved]	161
Item 16A.	Audit Committee Financial Expert	161
Item 16B.	Code Of Ethics	161
Item 16C.	Principal Accountant Fees and Services	161
Item 16D.	Exemptions From The Listing Standards For Audit Committees	161
Item 16E.	Purchases Of Equity Securities By The Issuer And Affiliated Purchasers	161
Item 16F.	Change In Registrant’s Certifying Accountant	161
Item 16G.	Corporate Governance	162
Item 16H.	Mine Safety Disclosure	162
Item 16I.	Disclosure Regarding Foreign Jurisdictions That Prevent Inspections.	162
Item 16J.	Insider Trading Policies	162
	PART III	163
Item 17.	Financial Statements	163
Item 18.	Financial Statements	163
Item 19.	Exhibits	163

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PART I

CERTAIN INFORMATION

In this annual report on Form 20-F, unless otherwise indicated, “we,” “us,” “our,” the “Company” or similar terms refer to UTime Limited, a Cayman Islands exempted company, and/or its wholly-owned subsidiaries, other than the variable interest entity, unless the context otherwise indicates; and “VIE” refers to the variable interest entity, United Time Technology Co., Ltd. UTime Limited’s operations in China are conducted primarily through the VIE and its subsidiaries in China, and UTime Limited does not conduct any business on its own. The financial results of the VIE and its subsidiaries are consolidated into our financial statements for accounting purposes, but we do not hold any equity interest in the VIE or any of its subsidiaries. Investors are purchasing an interest in UTime Limited, a Cayman Islands holding company.

Please see Item 3. Key Information - D. Risk Factors- Risks Related to Doing Business in China” beginning on page 44 for a detailed description of various risks related to doing business in China and other information that should be considered before making a decision to purchase any of our securities.

For details on the effects of HFCA Act on us, see “Item 3. Key Information - D. Risk Factors - Risks Related to Doing Business in China - Our ordinary shares may be delisted under the HFCA Act if the PCAOB is unable to adequately inspect audit documentation located in China. The delisting of our ordinary shares, or the threat of their being delisted, may materially and adversely affect the value of your investment. Additionally, the inability of the PCAOB to conduct adequate inspections deprives our investors with the benefits of such inspections. Furthermore, on June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act, and on December 29, 2022, a legislation entitled “Consolidated Appropriations Act, 2023” (the “Consolidated Appropriations Act”) was signed into law by President Biden, which contained, among other things, an identical provision to Accelerating Holding Foreign Companies Accountable Act and amended the Holding Foreign Companies Accountable Act by reducing the period of time for foreign companies to comply with PCAOB audits to two consecutive years, instead of three, thus reducing the time period before our securities may be prohibited from trading or delisted.” on page 47.

GLOSSARY OF TERMS

The following is a glossary of the electronics industry and the PRC and Indian legal systems used in this annual report on Form 20-F. Other defined terms may be found in the body of this annual report.

AQSIQ	Administration of Quality Supervision, Inspection and Quarantine
BIS	Bureau of Indian Standards
BOM	bill of materials
CAB	Conformance Assessment Body
CAC	Cyberspace Administration of China
CCB	China Construction Bank
CCI	Competition Commission of India
CNCA	Certification and Accreditation Administration of China
CPA	Consumer Protection Act, 1986
CRBZ	China Resources Bank of Zhuhai Co., Ltd.
CSRC	China Securities Regulatory Commission
DGFT	Directorate General of Foreign Trade
DOT	The Department of Telecommunication, Government of India
EMS	Electronics Manufacturing Services
EPF Act	Employees’ Provident Funds and Miscellaneous Provisions Act, 1952
ESI Act	Employees’ State Insurance Act, 1948
FDI	Foreign Direct Investment
FEMA	Foreign Exchange and Management Act, 1999
FEMA Rules, 2019	Foreign Exchange Management (Non-debt Instruments) Rules, 2019
FLA	Foreign Liabilities and Assets
Gratuity Act	Payment of Gratuity Act, 1972
HFCA Act	The Holding Foreign Companies Accountable Act
ID	Industrial Design
IE Code	Importer Exporter Code Number
IMF	International Monetary Fund
IoT	Internet of Things
IPR	Intellectual Property Right
JV	joint venture
mAh	Milliamp hour
MD	Mechanic Design

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MIIT	Ministry of Industry and Information Technology
MOFCOM	Ministry of Commerce of the PRC
MRP	Material Requirements Planning
NCLT	National Company Law Tribunal
NDRC	National Development and Reform Commission
ODM	Original Design Manufacturer
OEM	Original Equipment Manufacturer
OGL	Open General License
PCAOB	Public Company Accounting Oversight Board (United States)
PCBA	Printed circuit board and assembly
PFIC	passive foreign investment company
POSH Act	Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013
PRC	People’s Republic of China
RBI	Reserve Bank of India
Rs.	Indian Rupee
SAFE	State Administration of Foreign Exchange
SCNPC	Standing Committee of the National People’s Congress
SEBI	Securities and Exchange Board of India
Shops Act	Shops and Commercial Establishments Act
SMF	Single Master Form
SMT	Surface Mounting Technology
TM Act	Trade Marks Act, 1999
TQM	Total Quality Management
VIE	Variable Interest Entity, which refers to United Time Technology Co., Ltd.
WOS	Wholly owned subsidiary

Unless the context indicates otherwise, all references to “China” and the “PRC” refer to the People’s Republic of China, all references to “Renminbi” or “RMB” are to the legal currency of the People’s Republic of China and all references to “U.S. dollars,” “dollars” and “$” are to the legal currency of the United States. This annual report contains translations of Renminbi amounts into U.S. dollars at specified rates solely for the convenience of the reader. We make no representation that the Renminbi or U.S. dollar amounts referred to in this report could have been or could be converted into U.S. dollars or Renminbi, as the case may be, at any particular rate or at all. On March 31, 2023, the cash buying rate announced by the People’s Bank of China was RMB6.8717 to $1.00.

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FORWARD-LOOKING STATEMENTS

This report contains “forward-looking statements” for purposes of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 that represent our beliefs, projections and predictions about future events. All statements other than statements of historical fact are “forward-looking statements,” including any projections of earnings, revenue or other financial items, any statements of the plans, strategies and objectives of management for future operations, any statements concerning proposed new projects or other developments, any statements regarding future economic conditions or performance, any statements of management’s beliefs, goals, strategies, intentions and objectives, and any statements of assumptions underlying any of the foregoing. Words such as “may”, “will”, “should”, “could”, “would”, “predicts”, “potential”, “continue”, “expects”, “anticipates”, “future”, “intends”, “plans”, “believes”, “estimates” and similar expressions, as well as statements in the future tense, identify forward-looking statements.

These statements are necessarily subjective and involve known and unknown risks, uncertainties and other important factors that could cause our actual results, performance or achievements, or industry results, to differ materially from any future results, performance or achievements described in or implied by such statements. Actual results may differ materially from expected results described in our forward-looking statements, including with respect to correct measurement and identification of factors affecting our business or the extent of their likely impact, and the accuracy and completeness of the publicly available information with respect to the factors upon which our business strategy is based or the success of our business.

Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of whether, or the times by which, our performance or results may be achieved. Forward-looking statements are based on information available at the time those statements are made and management’s belief as of that time with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause such differences include, but are not limited to, those factors discussed under the headings “Risk Factors,” “Operating and Financial Review and Prospects,” and elsewhere in this report.

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ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not Applicable.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not Applicable.

ITEM 3. KEY INFORMATION

Our Holding Company Structure and Contractual Arrangements with the VIE

UTime Limited is not a Chinese operating company, but rather a Cayman Islands holding company with no equity ownership in the VIE. Our Cayman Islands holding company does not conduct business operations directly. We conduct our operations in China through the VIE and its subsidiaries in China. Our WFOE in China has maintained a series of contractual arrangements with the VIE and its shareholders, which established the VIE structure. Investing in UTime Limited’s ordinary shares is highly speculative and involves a significant degree of risk. This variable interest entity structure involves unique risks to investors. There is no limitation or restriction on foreign investment in the industry where our VIE operates at present. We adopt the VIE structure, because Chinese laws prohibit foreign investors from holding more than 50% of equity interests in value-added telecommunication businesses, which we may explore and operate in the future, and our indirectly wholly-owned Chinese subsidiary, Shenzhen UTime Technology Consulting Co., Ltd., or UTime WFOE, as a foreign invested enterprise under Chinese laws, is not eligible to operate a value-added telecommunication business in China. Instead, our VIE and subsidiaries of VIE located inside the PRC are the Chinese operating companies. We do not have any equity ownership of the VIE, instead we receive the economic benefits of the VIE’s business operations through certain contractual arrangements. Accordingly, we operate the businesses in China through the VIE and its subsidiaries, and rely on contractual arrangements among UTime WFOE, the VIE and its shareholders to control the business operations of the VIE. The VIE is consolidated for accounting purposes, but are not entities in which our Cayman Islands holding company, or our investors, own equity. Investors in our ordinary shares are not purchasing equity interest in the VIE in China, but instead are purchasing equity interest in a holding company incorporated in the Cayman Islands. Investors in our ordinary shares may never directly hold equity in the VIE and its subsidiaries.

A series of contractual agreements, including business operation agreement, equity pledge agreement, exclusive technical consultation and service agreement, exclusive call option agreement, power of attorney and spousal consent letters, have been entered into by and among UTime WFOE, the VIE and its respective shareholders. These contractual agreements enable us to: (i) determine the most significant economic activities of the VIE; (ii) receive substantially all of the economic benefits of the VIE; and (iii) have an exclusive option to purchase all or part of the equity interest in and/or assets of the VIE when and to the extent permitted by PRC laws.

Despite the lack of legal majority ownership, our Cayman Island holding company is considered the primary beneficiary of the VIE and consolidates the VIE and its subsidiaries as required by Accounting Standards Codification topic 810, Consolidation. Accordingly, we treat the VIE as our consolidated entities under U.S. GAAP and we consolidate the financial results of the VIE in our consolidated financial statements in accordance with U.S. GAAP. For more details of these contractual arrangements, see “Item 4. Information on the Company-4A. History and Development of the Company-Contractual Arrangements with the VIE and its Respective Shareholders.”

However, the contractual agreements may not be as effective as the control provided by having a direct ownership in the VIE and we may incur substantial costs to enforce the terms of the arrangements. We have no direct or indirect equity interests in the VIE or any of its subsidiaries. Uncertainties in the PRC legal system may limit our ability, as a Cayman Islands holding company, to enforce these contractual agreements. The contractual agreements have not been tested in a court of law. Meanwhile, there are very few precedents as to whether contractual agreements would be judged to form effective control over the relevant VIE through the contractual arrangements, or how contractual arrangements in the context of a VIE should be interpreted or enforced by the PRC courts. Should legal actions become necessary, we cannot guarantee that the court will rule in favor of the enforceability of the VIE contractual arrangements. In the event we are unable to enforce these contractual arrangements, or if we suffer significant delay or other obstacles in the process of enforcing these contractual arrangements, we may not be able to determine the most significant economic activities of the VIE, and our ability to conduct our business may be materially adversely affected. In addition, the enforceability of the various contracts described above by our company against the VIE is dependent upon the shareholders of the VIE. If the shareholders of the VIE fail to perform their obligations under the contractual arrangements, we could be unable to enforce the contractual arrangements that enable us to consolidate the VIE’s operations and financial results in our financial statements in accordance with U.S. GAAP as the primary beneficiary. If this happens, we would need to deconsolidate the VIE. The majority of our assets, including the necessary licenses to conduct business in China are held by the VIE and its PRC subsidiaries and a significant part of our revenues are generated by the VIE and its subsidiaries. Any event that results in the deconsolidation of the VIE would have a material effect on our operations and result in the value of our ordinary shares diminishing substantially or even become worthless. See “Item 3. Key Information-D. Risk Factors-Risks Related to Our Corporate Structure-We do not hold direct equity interest in the VIE. We rely on contractual arrangements with our VIE and its shareholders for a large portion of our business operations, which may not be as effective as direct ownership in providing operational control.” and “-The shareholders of our VIE may have potential conflicts of interest with us, which may materially and adversely affect our business and financial condition.”

4

We are subject to risks due to the uncertainty of the interpretation and application of the laws and regulations of the PRC, regarding the VIE and the VIE structure, including, but not limited to, regulatory review of overseas listing of PRC companies through a special purpose vehicle, and the validity and enforcement of the contractual arrangements with the VIE. It is uncertain whether any new PRC laws or regulations relating to the VIE structure will be adopted or if adopted, what they would provide. If we or the VIE is found to be in violation of any existing or future PRC laws or regulations, or fail to obtain or maintain any of the required permits or approvals, the relevant PRC regulatory authorities would have broad discretion to take action in dealing with such violations or failures.

If the PRC government deems that our contractual arrangements with the VIE do not comply with PRC regulatory restrictions on foreign investment in the relevant industries, or if these regulations or the interpretation of existing regulations change or are interpreted differently in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations. Our Cayman Islands holding company, our PRC subsidiaries and the VIE, and investors of our company face uncertainty about potential future actions by the PRC government that could affect the enforceability of the contractual arrangements with the VIE and, consequently, significantly affect the financial performance of the VIE and our company as a whole. We are also subject to the risk that the Chinese regulatory authorities could disallow the VIE structure, which could result in a material change in our operations and the value of our ordinary shares, including that it could cause the value of our ordinary shares to significantly decline or become worthless. See “Item 3. Key Information-D. Risk Factors-Risks Related to Our Corporate Structure- UTime Limited is a holding company with no material operation. We conduct substantially all of our operations through the VIE and its subsidiaries, and we rely on contractual arrangements with the VIE and its shareholders to operate our business. If the PRC government deems that the agreements that establish the structure for operating some of our operations in China do not comply with PRC regulations relating to the relevant industries, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations.” and “-Substantial uncertainties exist with respect to the interpretation and implementation of the newly enacted PRC Foreign Investment Law and its Implementation Regulations and how they may impact the viability of our current corporate structure, corporate governance, business operations and financial results.”

We face various risks and uncertainties related to doing business in China. Our business operations are primarily conducted in China, and we are subject to complex and evolving PRC laws and regulations. For example, we face risks associated with regulatory approvals on overseas offerings conducted by and foreign investment in China-based issuers, the use of the VIE, anti-monopoly regulatory actions, and oversight on cybersecurity and data privacy. Recently, the PRC government has indicated an intent to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers, and initiated a series of regulatory actions and made a number of public statements to regulate business operations in China, some of which are published with little advance notice, including cracking down on illegal activities in the securities market, enhancing supervision over China-based companies listed overseas using variable interest entity structure, adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement. These risks could result in a material adverse change in our operations and the value of our ordinary shares, significantly limit or completely hinder our ability to continue to offer ordinary shares to investors, or cause the value of such ordinary shares to significantly decline or become worthless. For a detailed description of risks related to doing business in China, “Item 3. Key Information-D. Risk Factors-Risks Related to Doing Business in China.”

Risks and uncertainties arising from the legal system in China, including risks and uncertainties regarding the enforcement of laws and quickly evolving rules and regulations in China, could result in a material adverse change in our operations and the value of our ordinary shares. For more details, see “Item 3. Key Information-D. Risk Factors-Risks Related to Doing Business in China-Uncertainties with respect to the PRC legal system and changes in laws and regulations in China could adversely affect us.”

Permissions Required from the PRC Authorities for Our Operations

Our operations in China are governed by PRC laws and regulations. As of the date of this annual report, each of UTime WFOE, the VIE and the VIE’s subsidiaries in China has obtained the requisite licenses and permits from the PRC government authorities that are material for the business operations in China. UTime WFOE, the VIE and the VIE’s subsidiaries in China are not operating in an industry that prohibits or limits foreign investment. As a result, UTime WFOE, the VIE and the VIE’s subsidiaries in China are not required to obtain any permission from Chinese authorities to operate other than those requisite for a domestic company in China will need to engage in the businesses similar to ours. Such licenses and permissions include, among others, the Business License, Certificate of the Customs of the People’s Republic of China on Registration of A Customs Declaration Entity, and other relevant permits required for operating our business. Neither have we nor our subsidiaries or the VIE or the VIE’s subsidiaries received any denial of permissions for their operation.

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Furthermore, the PRC government has recently indicated an intent to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers. Accordingly, there have been certain new or draft laws, regulations in relation to cybersecurity and data privacy, offerings conducted overseas by, and foreign investment in, China-based issuers (the “New Regulations”). For more detailed information, see “Item 4. Information on the Company-B. Business Overview-Regulations-Regulations on Overseas Listings.” And “Item 4. Information on the Company-B. Business Overview-Regulations-Regulation on Information Security and Censorship.” According to the New Regulations, we may be required to fulfill filing, reporting procedures and obtain approval from the China Securities Regulatory Commission, or the CSRC, in connection with follow-on offering and other equivalent overseas offing activities in an overseas market, and may be required to go through cybersecurity review by the Cyberspace Administration of China, or the CAC. If the New Regulations are enacted as currently proposed and we fail to obtain the relevant approval or complete other filing procedures thereof, for any future overseas offering or listing, we may face sanctions by the CSRC or other PRC regulatory authorities, which may include fines and penalties on our operations in China, limitations on our operating privileges in China, restrictions on or prohibition of the payments or remittance of dividends by our subsidiaries in China, restrictions on or delays to our future financing transactions offshore, or other actions that could have a material and adverse effect on our business. Any failure of us to fully comply with new regulatory requirements may significantly limit or completely hinder our ability to continue to offer our ordinary shares, cause significant disruption to our business operations, and severely damage our reputation, which could materially and adversely affect our financial condition and results of operations and cause our ordinary shares to significantly decline in value or become worthless. For more detailed information, see “Item 3. Key Information-D. Risk Factors-Risks Related to Doing Business in China-We may be required to obtain permission or approval or other compliance procedures from Chinese authorities to operate and issue ordinary shares to foreign investors in our offering and/or listing on the NASDAQ Capital Market, and if required and we or the VIE or the VIE’s subsidiaries are not able to obtain such permission or approval in a timely manner, our ordinary shares may substantially decline in value and become worthless.

On July 6, 2021, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council jointly issued the “Opinions on Severely Cracking Down on Illegal Securities Activities According to Law,” or the Opinions. The Opinions emphasized the need to strengthen the administration over illegal securities activities, and the need to strengthen the supervision over overseas listings by Chinese companies. Effective measures, such as promoting the construction of relevant regulatory systems will be taken to deal with the risks and incidents of China-concept overseas listed companies, and cybersecurity and data privacy protection requirements and similar matters. The Opinions and any related implementing rules to be enacted may subject us to compliance requirement in the future. Given the current regulatory environment in the PRC, we are still subject to the uncertainty of different interpretation and enforcement of the rules and regulations in the PRC adverse to us, which may take place quickly with little advance notice.

On December 28, 2021, thirteen PRC regulatory agencies, namely, the CAC, the NDRC, the Ministry of Industry and Information Technology, the Ministry of Public Security, the Ministry of State Security, the Ministry of Finance, MOFCOM, SAMR, CSRC, the People’s Bank of China, the National Radio and Television Administration, National Administration of State Secrets Protection and the National Cryptography Administration, jointly adopted and published the Measures for Cybersecurity Review, which further restates and expands the applicable scope of the cybersecurity review and took effect on February 15, 2022. Pursuant to Measures for Cybersecurity Review, if a network platform operator holding personal information of over one million users seeks for “foreign” listing, it must apply for the cybersecurity review. In addition, operators of critical information infrastructure purchasing network products and services are also obligated to apply for the cybersecurity review for such purchasing activities. Although the Measures for Cybersecurity Review provides no further explanation on the extent of “network platform operator” and “foreign” listing, we do not believe we are obligated to apply for a cybersecurity review pursuant to the Measures for Cybersecurity Review, considering that (i) we are not in possession of or otherwise holding personal information of over one million users and it is also very unlikely that we will reach such threshold in the near future; (ii) as of the date of this annual report, we have not received any notice or determination from applicable PRC governmental authorities identifying it as a critical information infrastructure operator.

6

On February 17, 2023, the CSRC promulgated the Trial Administrative Measures of the Overseas Securities Offering and Listing by Domestic Companies (the “Trial Measures”) and five supporting guidelines, which became effective on March 31, 2023. According to the Trial Measures, among other requirements, any domestic companies that seek to offer or list securities overseas, both directly and indirectly, should fulfil the filing procedures with the CSRC within three business days after the submission of the overseas offering and listing application. The Trial Measures provide that if an issuer meets both of the following criteria, the overseas offering and listing of securities conducted by such issuer shall be determined as an indirect overseas offering and listing by a PRC domestic enterprise and is therefore subject to the filing and reporting requirements as required thereunder: (i) any of the operating revenue, total profits, total assets or net assets of the PRC domestic enterprise(s) of the issuer in the most recent fiscal year accounts for more than 50% of the corresponding item in the issuer’s audited consolidated financial statements for the same period; and (ii) the main parts of the issuer’s operation activities are conducted in mainland China, or the principal operation premises are located in mainland China, or the majority of senior management personnel in charge of its business operations and management are PRC citizens or have habitual residences located in mainland China. The Trial Measures further stipulate that the determination as to whether a PRC domestic company is indirectly offering and listing securities in an overseas market shall be made on a substance-over-form basis. According to one of the Guidelines for Overseas Listing, where an issuer does not fall within the circumstances as stipulated aforementioned, but the risk factors disclosed in the submitted listing application documents pursuant to the relevant overseas market regulations are mainly related to mainland China, the securities companies and the PRC counsels of the issuer shall, act in accordance with the Trial Measures for Overseas Listing and follow the principle of substance-over-form, conduct comprehensive demonstration and identification with regard to whether the issuer falls within the scope which is subject to the filing requirements under the Trial Measures for Overseas Listing. If a PRC company fails to complete required filing procedures or conceals any material fact or falsifies any major content in its filing documents, such PRC company may be subject to administrative penalties, such as order to rectify, warnings, fines, and its controlling shareholders, actual controllers, the person directly in charge and other directly liable persons may also be subject to administrative penalties, such as warnings and fines. On the same day, the CSRC also held a press conference for the release of the Trial Measures and issued the Notice on Administration for the Filing of Overseas Offering and Listing by Domestic Companies, which, among others, clarifies that PRC domestic companies that have already been listed overseas on or before the effective date of the Trial Measures for Overseas Listing (i.e., March 31, 2023) can be deemed as existing issuers, or the Existing Issuers. Existing Issuers are not required to complete the filling procedures immediately for their historical offerings and listing, and they are required to file with the CSRC when they conduct subsequent financing activities. We do not believe that we are required to obtain the approval from or complete the filing with the CSRC because we became a public company before the Trial Measures went into effect. If in the future we are going to conduct any offering or financing in the U.S., we will complete filing procedures with the CSRC pursuant to the requirements of the Trial Measures. In addition, we have not received any formal inquiry, notice, warning, sanction, or objection from the CSRC with respect our listing on the Nasdaq Capital Market.

In addition, on February 24, 2023, the CSRC, together with Ministry of Finance of the PRC, National Administration of State Secrets Protection and National Archives Administration of China, revised the Provisions on Strengthening Confidentiality and Archives Administration for Overseas Securities Offering and Listing which was issued by the CSRC, National Administration of State Secrets Protection and National Archives Administration of China in 2009, or the Provisions. The revised Provisions is issued under the title the Provisions on Strengthening Confidentiality and Archives Administration of Overseas Securities Offering and Listing by Domestic Companies, and came into effect on March 31, 2023 together with the Trial Measures. One of the major revisions to the revised Provisions is expanding its application to cover indirect overseas offering and listing, as is consistent with the Trial Measures. The revised Provisions require that, including but not limited to (a) a domestic company that plans to, either directly or indirectly through its overseas listed entity, publicly disclose or provide to relevant individuals or entities including securities companies, securities service providers and overseas regulators, any documents and materials that contain state secrets or working secrets of government agencies, shall first obtain approval from competent authorities according to law, and file with the secrecy administrative department at the same level; and (b) domestic company that plans to, either directly or indirectly through its overseas listed entity, publicly disclose or provide to relevant individuals and entities including securities companies, securities service providers and overseas regulators, any other documents and materials that, if leaked, will be detrimental to national security or public interest, shall strictly fulfill relevant procedures stipulated by applicable national regulations. Where a PRC domestic company, after completing the relevant procedures, provides to securities companies, securities service providers or other entities with any documents and materials that contain state secrets or working secrets of government agencies, or any other documents and materials that would be detrimental to national security or public interest if leaked, a non-disclosure agreement must be signed between the provider and receiver of such information according to the relevant PRC laws and regulations, which must specify, among others, the obligations and liabilities on confidentiality held by such securities companies and securities service providers. Specifically, when a PRC domestic company provides accounting archives or copies of accounting archives to any entities including securities companies, securities service providers or overseas regulators and individuals, it must complete the due procedures in compliance with applicable national regulations.

As of the date of this annual report, no relevant laws or regulations in the PRC explicitly require us to seek approval from the CSRC or the CAC or any other PRC governmental authorities for our offering and/or list on the NASDAQ Capital Market. Furthermore, we have not received any penalty, investigation or warning in connection with the operations of UTime WFOE, the VIE and VIE’s subsidiaries from the CSRC or the CAC or any other PRC governmental authorities, nor have we or the VIE or the VIE’s subsidiaries received any inquiry, notice, warning or sanctions regarding our offering from the CSRC or any other PRC governmental authorities. We believe that we, the VIE and the VIE’s subsidiaries have received has obtained all permissions and approvals to operate their respective business and are not required to obtain additional permission or approval from Chinese authorities to issue our ordinary shares to foreign investors or list on the NASDAQ Capital Market based on the PRC laws, regulations and rules currently in effect. However, since these statements and regulatory actions are newly published, however, official guidance and related implementation rules have not been issued, we are subject to the risks of uncertainty of any future actions of the PRC government in this regard including the risk that we inadvertently conclude that the permissions or approvals discussed here are not required, that applicable laws, regulations or interpretations change such that we or the VIE or the VIE’s subsidiaries are required to obtain approvals in the future, or that the PRC government could disallow our structure, which would likely result in a material change in our operations, including our ability to continue our existing structure, carry on the daily business operations of the VIE and the VIE’s subsidiaries, our ability to accept foreign investments, and our listing on an U.S. exchange. These adverse actions could cause the value of our ordinary shares to significantly decline or become worthless. We or the VIE or the VIE’s subsidiaries may also be subject to penalties and sanctions imposed by the PRC regulatory authorities, including the CSRC, if we or the VIE or the VIE’s subsidiaries fail to comply with such rules and regulations, which would likely adversely affect the ability of our securities to be listed on a U.S. exchange, which would likely cause the value of our ordinary shares to significantly decline or become worthless. See “—D. Risk Factors—Risks Relating to Our Corporate Structure” and “—D. Risk Factors—Risks Relating to Doing Business in the PRC” for more information.

7

Cash and Asset Flows through Our Organization

Our Hong Kong subsidiary, or UTime HK, may transfer funds to UTime WFOE through an increase in the registered capital or loans to UTime WFOE. However, the receipt of funds by UTime WFOE through an increase in registered capital or loans requires UTime WFOE to apply for, seek approval from or register with the relevant PRC authorities or the local bank and this process may be time consuming. Because UTime Limited and its subsidiaries do not have equity ownership in the VIE, they are not able to make direct capital contributions to the VIE and its subsidiaries. However, they may transfer cash to the VIE by loans or by making payment to the VIE for inter-group transactions.

UTime WFOE has the exclusive right to provide or designate any entity to provide the VIE with business support, technical and consulting services in exchange for service fees from the VIE, pursuant to the Exclusive Technical Consultation and Service Agreement, which is part of the contractual arrangements. These service fees shall be recognized as expenses of VIE, with a corresponding amount as revenue by UTime WFOE and then completely eliminate in consolidation level. For income tax purposes, UTime WFOE and the VIE will file income tax returns on a separate company basis. The service fees paid are recognized as a tax deduction by the VIE and as revenue by UTime WFOE. The PRC’s statutory Enterprise Income Tax (“EIT”) rates is 25%. Any limitation on the ability of the VIE to pay service fees to UTime WFOE, or any tax implications of making service fees payments to UTime WFOE, could have a material adverse effect on UTime WFOE’s financial condition. In addition, UTime WFOE may provide loans to the VIE, subject to statutory limits and restrictions.

Our business is conducted by the VIE, including its subsidiaries. In addition to funds generated from sales of mobile handsets and other products, the VIE’s operations may be financed by loans from UTime WFOE, which may receive funds from UTime Limited, through either capital contributions or loans, directly or indirectly. Funds from the VIE to UTime Limited are remitted as service fees to UTime WFOE, which, in turn, makes distributions or pays dividends to UTime HK, then to UTime Limited. Both investment in Chinese companies, which are governed by the Foreign Investment Law, and the dividends and distributions from UTime WFOE to UTime HK, then to UTime Limited are subject to regulations and restrictions on dividends and other payment to parties outside of China. Applicable PRC law permits payment of dividends to UTime Limited by our PRC subsidiaries only out of their net income, if any, which are determined in accordance with PRC accounting standards and regulations. Our PRC subsidiary and the VIE and its subsidiaries in China are required to set aside a portion of their net income, if any, each year to fund general reserves for appropriations until such reserves have reached 50% of such company’s registered capital. These reserves are not distributable as cash dividends. In addition, registered share capital and capital reserve accounts are also restricted from withdrawal in the PRC, up to the amount of net assets held in each PRC company.

As a Cayman Islands holding company, UTime Limited may receive dividends from UTime WFOE through UTime HK, our intermediary holding companies in Hong Kong. The PRC EIT Law and its implementing rules provide that dividends paid by a PRC entity to a non-resident enterprise for income tax purposes are subject to PRC withholding tax at a rate of 10%, subject to reduction by an applicable tax treaty with China. According to the Arrangement Between the Mainland of China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and Tax Evasion on Income and relevant implanting notice, if UTime HK satisfies all the requirements under the tax arrangement and receives approval from the relevant tax authority, the dividends paid to UTime HK would be subject to withholding tax at a reduced rate of 5%. See “Item 3. Key Information-D. Risk Factors-Risks Related to Doing Business in China-There are significant uncertainties under the PRC Enterprise Income Tax Law relating to the withholding tax liabilities of our PRC Subsidiary, and dividends payable by our PRC Subsidiary to us through our Hong Kong subsidiary s may not qualify to enjoy certain treaty benefits”.

In addition, to the extent our cash is in the PRC or a PRC entity, the funds may not be available to distribute dividends to our investors, or for other use outside of the PRC, due to interventions in or the imposition of restrictions and limitations on the ability of us, our subsidiaries, or the VIE and the VIE’s subsidiaries by the PRC government to transfer cash. The PRC government imposes controls on the convertibility of Renminbi into foreign currencies and, in certain cases, the remittance of currency out of China. All of the VIE and VIE’s PRC subsidiaries’ income are received in Renminbi and shortages in foreign currencies may restrict our ability to pay dividends or other payments, or otherwise satisfy our foreign currency denominated obligations, if any. Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and expenditures from trade-related transactions, can be made in foreign currencies without prior approval from SAFE as long as certain procedural requirements are met. Approval from appropriate government authorities is required if Renminbi is converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of loans denominated in foreign currencies. Our cash dividends, if any, will be paid in U.S. dollars. The PRC government may, at its discretion, impose restrictions on access to foreign currencies for current account transactions and if this occurs in the future, we may not be able to pay dividends in foreign currencies to our shareholders. See “D. Risk Factors - Risks Related to Doing Business in China- Governmental control of currency conversion may limit our ability to utilize our net revenues effectively and affect the value of your investment.” In contrast, presently, there is no foreign exchange control or restrictions on capital flows into and out of Hong Kong. Hence, our Hong Kong subsidiary is able to transfer cash without any limitation to its direct parent company, UTime Limited, under normal circumstances.

As of the date of this annual report, there have not been any dividends or distributions by and among UTime Limited, its subsidiaries, the VIE and subsidiaries of VIE, to investors. UTime Limited has not declared or paid any cash dividends, nor does it have any present plan to pay any cash dividends on its ordinary shares in the foreseeable future. We currently intend to retain most, if not all, of our available funds and any future earnings to operate and expand our business.

In addition, as of the date of this annual report, no amounts owed under the contractual arrangements has been settled by or between the VIE and its subsidiaries, and UTime WFOE. The VIE intends to distribute earnings or settle amounts owed under the contractual arrangements. We anticipate that, to the extent that the VIE requires funds from us for its operations, UTime Limited will provide funds in the manner described above, and to the extent that VIE generates positive cash flow from its operations in excess of its requirements for its operations, it will transfer such excess funds to UTime Limited, through service payments to UTime WFOE.

8

Our subsidiaries and the VIE conduct business transactions that include trading activities, provision of services and intercompany advances. The transactions and cash flows that have occurred between UTime Limited (“Parent”), VIE and its consolidated subsidiaries (“VIE”), UTime WFOE that are the primary beneficiary of the VIE (“WFOE”), an aggregation of other entities that are consolidated (“other entities”) are summarized as the following:

	31-Mar-21																31-Mar-22																31-Mar-23
	RMB																RMB																RMB
	Parent			VIE			WFOE		Other entities			Elimination			Consolidated		Parent			VIE			WFOE		Other entities			Elimination			Consolidated		Parent		VIE			WFOE		Other entities			Elimination			Consolidated
Intercompany receivables
Opening		6,972			38,912			-		28			(45,912	)		-		6,466			45,985			-		392			(52,843	)		-		73,346		48,619			-		921			(122,886	)		-
Sales		-			-			-		402			(402	)		-		-			-			-		-			-			-		-		-			-		-			-			-
Receipts		-			(3,815	)		-		(38	)		3,853			-		-			(1,283	)		-		-			1,283			-		-		(149	)		-		-			149			-
Payments on behalf of Parent/WFOE/Other entities by VIE		-			13,900			-		-			(13,900	)		-		-			5,430			-		542			(5,972	)		-		-		1,772			-		(7	)		(1,765	)		-
IPO Proceeds received by other entities on behalf of Parent		-			-			-		-			-			-		88,263			-			-		-			(88,263	)		-		-		-			-		-			-			-
Down payment for financing services on behalf of Parent		-			-			-		-			-			-		(19,003	)		-			-		-			19,003			-		-		-			-		-			-			-
Expenses charged by other entities		-			(203	)		-		-			203			-		-			-			-		-			-			-		-		-			-		-			-			-
Exchange difference		(506	)		(2,809	)		-		-			3,315			-		(2,381	)		(1,513	)		-		(13	)		3,907			-		6,047		3,794			-		74			(9,915	)		-
Closing		6,466			45,985			-		392			(52,843	)		-		73,345			48,619			-		921			(122,885	)		-		79,393		54,036			-		988			(134,417	)		-
Intercompany payables
Opening		15,146			38			3		30,650			(45,837	)		-		26,846			237			8		25,604			(52,695	)		-		31,493		927			11		90,208			(122,639	)		-
Purchase		-			199			-		-			(199	)		-		-			-			-		-			-			-		-		-			-		-			-			-
Payments		-			-			-		(3,956	)		3,956			-		-			-			-		(1,283	)		1,283			-		-		-			-		(57	)		57			-
Payments on behalf of Parent/WFOE/Other entities by VIE		12,857			-			5		1,003			(13,865	)		-		5,619			700			3		(350	)		(5,972	)		-		1,539		-			5		-			(1,544	)		-
IPO Proceeds received by other entities on behalf of Parent		-			-			-		-			-			-		-			-			-		88,263			(88,263	)		-		-		-			-		-			-			-
Down payment for financing services on behalf of Parent		-			-			-		-			-			-		-			-			-		(19,003	)		19,003			-		-		-			-		-			-			-
Exchange difference		(1,157	)		-			-		(2,093	)		3,250			-		(973	)		(10	)		-		(3,024	)		4,007			-		2,602		73			-		7,675			(10,350	)		-
Closing		26,846			237			8		25,604			(52,695	)		-		31,492			927			11		90,207			(122,637	)		-		35,634		1,000			16		97,826			(134,476	)		-

9

Financial Information Related to the Condensed Consolidated VIE

Set forth below are the condensed consolidating schedule showing the financial position, results of operations and cash flows for the Parent, the VIE, the WFOE and the other entities, elimination and consolidated total (in thousands of RMB or US$) as of and for the years ended March 31, 2020, 2021 and 2022.

Selected Condensed Consolidated Statements of Comprehensive Loss Data

	Year Ended March 31, 2021																		Year Ended March 31, 2022																		Year ended March 31, 2023
	RMB																		RMB																		RMB																		US$
	Parent			VIE			WFOE			Other entities			Elimination			Consolidated			Parent			VIE			WFOE			Other entities			Elimination			Consolidated			Parent			VIE			WFOE			Other entities			Elimination			Consolidated			Consolidated
Net sales (1)		-			240,742			-			6,559			(402	)		246,899			-			273,979			-			1,529			-			275,508			-			200,450			-			97			-			200,547			29,184
Cost of sales (1)		-			222,567			-			6,364			(199	)		228,732			-			259,908			-			1,815			-			261,723			-			170,428			-			54			-			170,482			24,809
Gross profit (loss)		-			18,175			-			195			(203	)		18,167			-			14,071			-			(286	)		-			13,785			-			30,022			-			43			-			30,065			4,375
Operating expenses		4,009			26,800			3			2,656			(771	)		32,697			6,483			38,885			3			2,804			111			48,286			69,220			43,266			1			1,931			(309	)		114,109			16,606
Loss from operations		(4,009	)		(8,625	)		(3	)		(2,461	)		568			(14,530	)		(6,483	)		(24,814	)		(3	)		(3,090	)		(111	)		(34,501	)		(69,220	)		(13,244	)		(1	)		(1,888	)		(309	)		(84,044	)		(12,231	)
Investment loss from VIE/subsidiaries		12,618			-			-			-			(12,618	)		-			32,350			-			-			-			(32,350	)		-			18,396			-			-			-			(18,396	)		-			-
Interest expenses		-			2,461			-			-			-			2,461			-			4,875			-			-			-			4,875			-			6,149			-			-			-			6,149			895
Loss before income taxes		(16,627	)		(11,086	)		(3	)		(2,461	)		13,186			(16,991	)		(38,833	)		(29,689	)		(3	)		(3,090	)		32,239			(39,376	)		(87,616	)		(19,393	)		(1	)		(1,888	)		18,705			(90,193	)		(13,126	)
Income tax benefit		-			(364	)		-			-			-			(364	)		-			(46	)		-			-			-			(46	)		-			(171	)		-			-			-			(171	)		(25	)
Net loss		(16,627	)		(10,722	)		(3	)		(2,461	)		13,186			(16,627	)		(38,833	)		(29,643	)		(3	)		(3,090	)		32,239			(39,330	)		(87,616	)		(19,222	)		(1	)		(1,888	)		18,705			(90,022	)		(13,101	)

(1) Relates mainly to changes in accounts receivable and accounts payable relating to transaction as mentioned in note (1), i.e. sales of Semi-Knocked Down (“SKD”) from UTime Trading to Do Mobile.

10

Selected Condensed Consolidated Balance Sheets Data

	31-Mar-22																		31-Mar-23
	RMB																		RMB																		US$
	Parent			VIE			WFOE			Other entities			Elimination			Consolidated			Parent			VIE			WFOE			Other entities			Elimination			Consolidated			Consolidated
Assets
Current Assets
Cash and cash equivalents		1			192			3			66496			-			66,692			2			277			5			71,650			-			71,934			10,468
Restricted cash		-			500			-			-			-			500			-			500			-			-			-			500			73
Accounts receivable, net		-			22,391			-			26			-			22,417			-			52,242			-			66			-			52,308			7,612
Prepaid expenses and other current assets, net		23,195			42,431			-			189			-			65,815			25,109			70,202			-			197			-			95,508			13,899
Intercompmany receivables (1)		73,345			48,619			-			921			(122,885	)		-			79,393			54,036			-			988			(134,417	)		-			-
Due from related parties		-			1,422			-			-			-			1,422			-			584			-			-			-			584			85
Inventories		-			36,018			-			53			-			36,071			-			16,169			-			-			-			16,169			2,353
Total current assets		96,541			151,573			3			67,685			(122,885	)		192,917			104,504			194,010			5			72,901			(134,417	)		237,003			34,490
Non-Current assets
Property and equipment, net		-			38,227			-			43			-			38,270			-			61,411			-			18			-			61,429			8,939
Operating lease right-of-use assets, net		-			16,319			-			-			-			16,319			-			13,030			-			-			-			13,030			1,896
Intangible assets, net		-			2,592			-			-			-			2,592			-			1,677			-			-			-			1,677			244
Long-term investments		1,610			-			-			-			(1,610	)		-			(18,929	)		-			-			-			18,929			-			-
Equity method investment		-			-			-			-			-			-			-			-			-			-			-			-			-
Other non-current assets		-			541			-			-			-			541			-			-			-			-			-			-			-
Total non-current assets		1,610			57,679			-			43			(1,610	)		57,722			(18,929	)		76,118			-			18			18,929			76,136			11,079
Total Assets		98,151			209,252			3			67,728			(124,495	)		250,639			85,575			270,128			5			72,919			(115,488	)		313,139			45,569
Liabilities and Stockholder’s equity
Current liabilities
Accounts payable		-			74,497			-			34			-			74,531			-			126,683			-			8			-			126,691			18,437
Short-term borrowings		-			35,780			-			-			-			35,780			-			53,935			-			-			-			53,935			7,849
Current portion of long-term borrowings		-			800			-			-			-			800			-			1080			-			-			-			1080			157
Due to related parties		289			3728			-			482			-			4,499			313			4705			-			482			-			5,500			800
Lease liability		-			3,360			-			-			-			3,360			-			3,673			-			-			-			3,673			535
Other payables and accrued liabilities		1382			42,423			-			343			-			44,148			5,539			48,941			-			292			-			54,772			7,971
Intercompmany payables (1)		31,492			927			11			90,207			(122,637	)		-			35,634			1000			16			97,826			(134,476	)		-			-
Income tax payables		-			18			-			-			-			18			-			18			-			-			-			18			3
Total current liabilities		33,163			161,533			11			91,066			(122,637	)		163,136			41,486			240,035			16			98,608			(134,476	)		245,669			35,752
Non-current liabilities
Long-term borrowings		-			8,020			-			-			-			8,020			-			6,870			-			-			-			6,870			1,000
Government grants		-			-			-			-			-			-			-			8,697			-			-			-			8,697			1,266
Deferred tax liability		-			466			-			-			-			466			-			295			-			-			-			295			43
Lease liability - non-current		-			14,549			-			-			-			14,549			-			10,876			-			-			-			10,876			1,583
Total non-current liabilities		-			23,035			-			-			-			23,035			-			26,738			-			-			-			26,738			3,892
Total liabilities		33,163			184,568			11			91,066			(122,637	)		186,171			41,486			266,773			16			98,608			(134,476	)		272,407			39,644
Ordinary shares		5			-			-			-			-			5			9			-			-			-			-			9			1
Additional paid-in capital		152,236			72,413			-			807			(73,220	)		152,236			216,504			72,413			-			807			(73,220	)		216,504			31,507
Accumulated deficit		(88,277	)		(49,427	)		(8	)		(26,419	)		75,854			(88,277	)		(175,893	)		(66,738	)		(11	)		(27,813	)		94,562			(175,893			(25,597	)
Accumulated other comprehensive income		1,024			2,218			-			2274			(4,492	)		1,024			3,469			507			-			1,848			(2,356	)		3,469	)		502
Total UTime Limited shareholder’s equity		64,988			25,204			(8	)		(23,338	)		(1,858	)		64,988			44,089			6,182			(11	)		(25,158	)		18,988			44,089			6,413
Non-controlling interests		-			(520	)		-			-			-			(520	)		-			(2,827	)		-			(531	)		-			(3,357	)		(488	)
Total shareholders’ equity		64,988			24,684			(8	)		(23,338	)		(1,858	)		64,468			44,089			3,355			(11	)		(25,689	)		18,988			40,732			5,925
Total liabilities and shareholders’ equity		98,151			209,252			3			67,728			(124,495	)		250,639			85,575			270,128			5			72,919			(115,488	)		313,139			45,569

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Selected Condensed Consolidated Cash Flows Data

	Year Ended March 31, 2021																		Year Ended March 31, 2022																		Year Ended March 31, 2023
	RMB																		RMB																		RMB																		US$
	Parent			VIE			WFOE			Other entities			Elimination			Consolidated			Parent			VIE			WFOE			Other entities			Elimination			Consolidated			Parent			VIE			WFOE			Other entities			Elimination			Consolidated
Cash flows from operating  activities:
Net loss		(16,627	)		(10,722	)		(3	)		(2,461	)		13,186			(16,627	)		(38,833	)		(29,643	)		(3	)		(3,090	)		32,239			(39,330	)		(87,616	)		(19,222	)		(1	)		(1,888	)		18,705			(90,022	)		(13,101	)
Adjustments to reconcile net loss from operations to net cash provided by (used in) operating activities
Depreciation and amortization		-			3,921			-			33			-			3,954			-			4,277			-			56			-			4,333			-			5,770			-			24			-			5,794			843
Allowances for obsolete inventories, net		-			7,092			-			497			-			7,589			-			1,664			-			(1,371	)		-			293			-			(281	)		-			(126	)		-			(407	)		(59	)
Provision for doubtful account, net		-			(836	)		-			-			-			(836	)		-			1379			-			2027			-			3406			-			-			-			-			-			-			-
Loss on disposal of property and equipment		-			-			-			-			-			-			-			10			-			-			-			10			-			184			-			-			-			184			27
Loss on equity method investment		-			833			-			-			-			833			-			-			-			-			-			-			63,656			-			-			-			-			63,656			9,264
Impairment of intangible asset		-			-			-			-			-			-			-			348			-			-			-			348			-			(171	)		-			-			-			(171	)		(25	)
Equity loss of subsidiaries		12,618			-			-			-			(12,618	)		-			32,350			-			-			-			(32,350	)		-			18,396												(18,396	)		-			-
Net changes in operating assets and liabilities:
Accounts receivable		-			21,475			-			2			-			21,477			-			(5,724	)		-			(1	)		-			(5,725	)		-			(27,522	)		-			(42	)		-			(27,564	)		(4,011	)
Prepaid expenses and other current assets		(8,424	)		(18,373	)		-			624			-			(26,173	)		(1,173	)		7329			-			(220	)		-			5936			-			(25,861			-			(10	)		-			(25,871	)		(3,765	)
Intercompany receivables (1)		506			(7,073	)					(364	)		6,931			-			2381			(2,634	)		-			(529	)		782			-			-			(1,623	)		-			7			1,616			-			-
Inventories		-			(15,881	)		-			4,947			-			(10,934	)		-			(8,128	)		-			3,499			-			(4,629	)		-			20,446			-			181			-			20,627			3,002
Accounts payable		-			(10,987	)		-			1,063			-			(9,924	)		-			26170			-			1,154			-			27324			-			17,978			-			1,651			-			19,629			2,856
Other payables and accrued liabilities, and lease liabilities		131			27,205			-			657			-			27,993			1269			(14,636	)		-			1443			-			(11,924	)		4,026			4,913			-			(51	)		-			8,888			1,293
Intercompany payables (1)		11,700			199			5			(5,046	)		(6,858	)		-			5,619			689			3			(5,629	)		(682	)		-			1,539			-			5			(54	)		(1,490	)		-			-
Related parties		(23	)		527			-			23			-			527			-			(699	)		-			-			-			(699	)		-			881			5			(54	)		(1,490	)		-			(110	)
Government grants		-			(400	)		-			-			-			(400	)		-			-			-			-			-			-			-			-			-			-			-			881			128
Other non-current assets		-			-			-			-			-			-			-			(208	)		-			-			-			(208	)		-			541			-			-			-			541			79
Net cash provided by (used in) operating activities		(119	)		(3,020	)		2			(25	)		641			(2,521	)		1,613			(19,806	)		-			(2,661	)		(11	)		(20,865	)		1			(15,270	)		4			(308	)		435			(15,138	)		(2,203	)
Investing activities:
Payment for property and equipment		-			-			-			-			-			-			-			(5,858	)		-			-			-			(5,858	)		-			(2,593	)		-			-			-			(2,593	)		(377	)
Payment for intangible assets		-			(2,201	)		-			-			-			(2,201	)		-			-			-			-			-			-			-			(307	)		-			-			-			(307	)		(45	)
Cash received from consolidation, net of cash acquired		-			-			-			-			-			-			-			28			-			-			-			28			-			-			-			-			-			-			-
Net cash used in investing activities		-			(2,201	)		-			-			-			(2,201	)		-			(5,830	)		-			-			-			(5,830	)		-			(2,900	)		-			-			-			(2,900	)		(422	)
Financing activities:
Proceeds from short-term borrowings		-			47,600			-			-			-			47,600			-			46,500			-			-			-			46,500			-			66,300			-			-			-			66,300			9,648
Loan received from a shareholder		-			900			-			-			-			900			-			5,980			-			-			-			5,980			-			4,010			-			-			-			4,010			584
Proceeds from long-term borrowings		-			-			-			-			-			-			-			9,000			-			-			-			9,000			-						-			-			-						-
Repayment of loan from a shareholder		-			(1,500	)		-			-			-			(1,500	)		-			(3,000	)		-			-			-			(3,000	)		-			(3,000	)		-			-			-			(3,000	)		(437	)
Repayment of short-term borrowings		-			(31,800	)		-			-			-			(31,800	)		-			(41,520	)		-			-			-			(41,520	)		-			(48,145	)		-			-			-			(48,145	)		(7,006	)
Repayments of long-term borrowings		-			(1,200	)		-			-			-			(1,200	)		-			(5,760	)		-			-			-			(5,760	)		-			(870	)		-			-			-			(870	)		(127	)
Down payment for financing services		-			-			-			-			-			-			-			-			-			(19,003	)		-			(19,003	)		-			-			-			-			-			-			-	-
Contribution in a subsidiary by a shareholder		-			-			-			-			-			-			-			6,429			-			-			-			6,429			-			-			-			-			-			-			-
Proceeds from issuance of ordinary shares through initial public offering		-			-			-			-			-			-			-			-			-			88,262			-			88,262			-			-			-			-			-			-			-
Net cash provided by financing activities		-			14,000			-			-			-			14,000			-			17,629			-			69,259			-			86,888			-			18,295			-			-			-			18,295			2,662
																																																								-
Effect of exchange rate changes on cash and cash equivalent and restricted cash		125			(838	)		-			499			(641	)		(855	)		(1,618	)		(106	)		-			(765	)		11			(2,478	)		-			(42	)		-			5,464			(437	)		4,985			725
Net increase (decrease) in cash and cash equivalent and restricted cash		6			7,941			2			474			-			8,423			(5	)		(8,113	)		-			65,833			-			57,715			1			84			3			5,156			(2	)		5,242			763
Cash and cash equivalents and restricted cash at beginning of year		-			864			1			189			-			1,054			6			8,805			3			663			-			9,477			1			692			3			66,496			-			67,192			9,778
Cash and cash equivalents and restricted cash at end of year		6			8,805			3			663			-			9,477			1			692			3			66,496			-			67,192			2			776			6			71,652			(2	)		72,434			10,541

Notes to elimination adjustments to the unaudited condensed consolidating schedules

The significant elimination adjustments to the unaudited condensed consolidating schedules consist of the following:

(1) Relates to the elimination between the receivables of UTime Technology (HK) Company Limited, a subsidiary of United Time Technology Co., Ltd., against the trade payable of India Private Ltd., a non-VIE subsidiary of UTime Limited, relating to sales of Semi-Knocked Down (“SKD”) from UTime Trading to Do Mobile India Private Ltd.. In addition, it relates to the elimination between the other receivables of VIE and subsidiaries of VIE against the other payables of UTime Limited relating to (i) expenses paid by VIE and subsidiaries of VIE on behalf of UTime Limited; (ii) payments of capital contributions to Bridgetime Limited by UTime Technology (HK) Company Limited on behalf of UTime Limited; (3) IPO Proceeds received by UTime International Limited on behalf of UTime Limited; and (4) down payment for financing services paid by UTime International Limited on behalf of UTime Limited.

12

3.A. [Reserved]

3.B. Capitalization and Indebtedness

Not Applicable.

3.C. Reasons For The Offer And Use Of Proceeds

Not Applicable.

3.D. Risk Factors

An investment in our ordinary shares involves a high degree of risk. You should carefully consider the risks and uncertainties described below together with all other information contained in this annual report, including the matters discussed under the headings “Forward-Looking Statements” and “Operating and Financial Review and Prospects” before you decide to invest in our ordinary shares. We are a holding company with substantial operations in China and are subject to a legal and regulatory environment that in many respects differs from the United States. If any of the following risks, or any other risks and uncertainties that are not presently foreseeable to us, actually occur, our business, financial condition, results of operations, liquidity and our future growth prospects could be materially and adversely affected.

Risk Factors Summary

Risks Related to Our Business and Industry

● We have incurred significant losses and we may continue to experience losses in the future.

● Because material amounts of our funds are held in banks where only limited protection on deposit accounts is required, the failure of any bank in which we deposit our funds could result in a loss of those funds to the extent exceeding the amounts protected and could, depending on the amount involved, affect our ability to continue in business.

● We may need to raise additional capital or obtain loans from financial institutions from time to time and our operations could be curtailed if we are unable to obtain the required additional funding when needed. We may not be able to do so when necessary, and/or the terms of any financings may not be advantageous to us.

● We generate a significant portion of our net revenues from a small number of major customers and key projects and any loss of business from these customers or key projects could reduce our net revenues and significantly harm our business.

● The outbreak of the coronavirus in China, India and across the world may have a material adverse effect on our business.

● We depend on third party service providers for logistics and aftersales services, and any failure of our third party service providers to perform may have a material negative impact on our business.

● We rely on outsourcing manufacturers to produce a majority of our products. If we encounter issues with them, our business and results of operations could be materially and adversely affected.

● Our expansion into new product categories and scenarios, and substantial increases in product lines may expose us to new challenges and more risks.

● Our international expansion is subject to a variety of costs and risks and we may not be successful, which could adversely affect our profitability and operating results.

● Our use of open source software could materially adversely affect our business, financial condition, operating results and cash flow.

● We operate in a rapidly evolving industry. If we fail to keep up with technological developments and changing requirements of our customers, business, financial condition and results of operations may be materially and adversely affected.

● We face intense competition from onshore and offshore third party software providers in the mobile phone market, and, if we are unable to compete effectively, we may lose customers and our revenues may decline. The lack of technological development and increase in competition may lead to a decline in our sustainable growth.

● We may undertake acquisitions, investments, joint ventures or other strategic alliances in the future, which could expose us to new operational, regulatory and market risks. In addition, such future undertakings may not be successful, which may adversely affect our business, results of operations, financial condition and prospects.

● The international nature of our business exposes us to risks that could adversely affect our financial condition and results of operations.

13

● Inadequacy of skilled personnel may lead to decline in sales of mobile phones by us.

● Our success depends substantially on the continuing efforts of our senior executives and other key personnel, and our business may be severely disrupted if we lose their services.

● We could be impacted by unfavorable results of legal proceedings, including the pending proceeding against Do Mobile, and may, from time to time, be involved in future litigation in which substantial monetary damages are sought.

● Compromised product quality of our mobile products may damage our brand and reputation of and customers could stop using our mobile handsets

● We may not be able to successfully sustain our growth strategy into new geographic markets and innovative consumer electronic products. Inability to effectively manage growth, our current and planned resources and related issues could materially and adversely affect our business of and impact future financial performance.

● We are dependent on raw materials and mobile device components from off shore entities and from local markets, and an increase in their cost could have an adverse effect on our business.

● We have engaged in transactions with related parties, and such transactions present possible conflicts of interest that could have an adverse effect on our business and results of operations.

● We may be adversely affected by product liability exposure claims.

● Our management and auditors identified material weaknesses in our internal control over financial reporting that, if not properly remediated, could result in material misstatements in our consolidated financial statements that could cause investors to lose confidence in our reported financial information and have a negative effect on the trading price of our ordinary shares.

● Our internal controls over financial reporting may not be effective and our independent registered public accounting firm may not be able to certify as to their effectiveness, which could have a significant and adverse effect on our business and reputation.

● We are subject to various anti-corruption and anti-bribery laws, including the U.S. Foreign Corrupt Practices Act, and U.K., PRC and Indian anti-corruption and anti-bribery laws; any determination that we have violated such laws could damage our business and reputation, limit our ability to bid for certain business opportunities, and subject us to significant criminal and civil penalties, civil litigation (such as shareholder derivative suits), and commercial liabilities.

● The agreements governing the loan facilities we currently have contain restrictions and limitations that could significantly affect our ability to operate our business, raise capital, as well as significantly affect our liquidity, and therefore could adversely affect our results of operations.

● Defaults under either of our loan agreements with each of SRCB and CRBZ could result in a substantial loss of our assets.

Risks Related to Our Corporate Structure

● 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 ordinary shares.

● Minfei Bao, our founder, and director, and Min He, will continue to have significant influence over us after our initial public offering, including control over decisions that require the approval of shareholders, which could limit your ability to influence the outcome of matters submitted to shareholders for a vote.

● We are a “controlled company” within the meaning of Nasdaq’s Rules and, as a result, may rely on exemptions from certain corporate governance requirements that provide protection to shareholders of other companies.

● Change in the tax regime in India will increase tax burden on us.

● We may become subject to taxation in the Cayman Islands, which would negatively affect our results.

● We are subject to various changing laws and regulations regarding regulatory matters, corporate governance and public disclosure that have increased both our costs and the risk of non-compliance.

● Because we are incorporated under the laws of the Cayman Islands, you may face difficulties in protecting your interests, and your ability to protect your rights through the U.S. Federal courts may be limited.

14

Risks Related to Doing Business in China

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

● Uncertainties with respect to the PRC legal system and changes in laws and regulations in China could adversely affect us.

● The approval of or filing and reporting with the CSRC or other PRC government authorities may be required in connection with our overseas offerings under PRC law, and, if required, we cannot predict whether or for how long we will be able to obtain such approval or complete such filing or reporting procedures.

● The PRC government exerts substantial influence over the manner in which we conduct our business activities. The PRC government may also intervene or influence our operations at any time, which could result in a material change in our operations and our ordinary shares could decline in value or become worthless. Any actions by the PRC government to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers could significantly limit or completely hinder our ability to offer or continue to offer ordinary shares to investors and cause the value of our ordinary shares to significantly decline or become worthless

● Our ordinary shares may be delisted under the HFCA Act if the PCAOB is unable to adequately inspect audit documentation located in China. The delisting of our ordinary shares, or the threat of their being delisted, may materially and adversely affect the value of your investment. Additionally, the inability of the PCAOB to conduct adequate inspections deprives our investors with the benefits of such inspections. Furthermore, on June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act, and on December 29, 2022, a legislation entitled “Consolidated Appropriations Act, 2023” (the “Consolidated Appropriations Act”) was signed into law by President Biden, which contained, among other things, an identical provision to Accelerating Holding Foreign Companies Accountable Act and amended the Holding Foreign Companies Accountable Act by reducing the period of time for foreign companies to comply with PCAOB audits to two consecutive years, instead of three, thus reducing the time period before our securities may be prohibited from trading or delisted.

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

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

● PRC regulations relating to foreign exchange registration of overseas investment by PRC residents may subject our PRC resident beneficial owners or our PRC Subsidiary to liability or penalties, limit our ability to inject capital into our PRC Subsidiary, limit our PRC Subsidiary’s ability to increase their registered capital or distribute profits to us, or may otherwise adversely affect us.

● Any failure to comply with PRC regulations regarding the registration requirements for employee stock incentive plans may subject the PRC plan participants or us to fines and other legal or administrative sanctions.

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

Risks Related to Doing Business in India

● Our business activities in India could be subject to Indian competition laws, and any violation or alleged violation thereof may negatively impact our operations.

● Our business is substantially affected by prevailing economic, political and other prevailing conditions in India, and any downshift or perceived downshift in the Indian economy could negatively impact our business.

● Introduction of 5G compatible mobile handsets and other new technologies may be expensive, and if we are unable to provide 5G compatible mobile handsets, our business will suffer.

● We are subject to supervision and regulation by the Reserve Bank of India (or “RBI”) and the Department of Telecommunication, and any non-compliance may adversely impact our business.

● Our operating results may be adversely affected by law and regulations to which we are subject.

● Non-compliance with the Indian labor law requirements may invite criminal and civil actions against us in India.

● Do Mobile is subject to new certification regulations for mobile handsets introduced by the Department of Telecommunications, Government of India.

● Do Mobile is non-compliant with respect to certain issuances of its share capital and may be subject to regulatory action by the Registrar of Companies and Ministry of Corporate Affairs, which could adversely affect our business operations and profitability.

● Do Mobile is delayed in complying with reporting guidelines under the provisions of the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 (which replaced erstwhile Foreign Exchange Management (Transfer or issue of security by a person resident outside India) Regulations, 2017) and may be subject to regulatory action by the Reserve Bank of India, which could adversely affect our business and operations.

● Any foreign direct investment in Do Mobile from an entity of a country, which shares a land border with India or the beneficial owner of an investment into India who is situated in or is a citizen of any such country, shall invest only with governmental approval. Any delay in obtaining such governmental approval could adversely affect business operations and cash flow position of Do Mobile.

15

Risks Related to Our Ordinary Shares

● The trading prices of our ordinary shares are likely to be volatile, which could result in substantial losses to investors.

● Sales of a substantial number of our ordinary shares in the public market by our existing shareholders could cause our share price to fall.

● There are no assurance that our securities, including our ordinary shares, will continue to be listed or, if listed, that we will be able to comply with the continued listing standards of Nasdaq, which could limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions.

● Future issuance of our ordinary shares could cause dilution of ownership interests and adversely affect our stock price.

● Shares eligible for future sale may depress our stock price.

● We may issue preference shares to investor that grant them superior rights than holders of our ordinary shares without obtaining shareholder approval.

● If securities or industry analysts do not publish or cease publishing research reports about us, if they adversely change their recommendations regarding our ordinary shares or if our operating results do not meet their expectations, the price of our ordinary shares could decline.

● As a foreign private issuer, we are subject to different U.S. securities laws and NASDAQ governance standards than domestic U.S. issuers. This may afford less protection to holders of our ordinary shares, and you may not receive corporate and company information and disclosure that you are accustomed to receiving or in a manner in which you are accustomed to receiving it.

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

● As an “emerging growth company” under the JOBS Act, we are allowed to postpone the date by which we must comply with some of the laws and regulations intended to protect investors and to reduce the amount of information we provide in our reports filed with the SEC, which could undermine investor confidence in our company and adversely affect the market price of our ordinary shares.

● If we are classified as a passive foreign investment company, United States taxpayers who own our ordinary shares may have adverse United States federal income tax consequences.

Risks Related to Our Business and Industry

We have incurred significant losses and we may continue to experience losses in the future.

We have incurred significant losses in the past. In fiscal year 2022 and 2023, respectively, we had losses from operations of RMB34.5 million and RMB84.0 million (US$12.2 million), and net losses of RMB39.3 million and RMB90.0 million (US$13.1 million). We also had net cash used by operating activities of RMB20.9 million in fiscal year 2022, and cash used in operations of RMB15.1 million (US$2.2 million) in fiscal year 2023. We may continue to have an adverse effect on our shareholders’ equity and working capital in the future.

We cannot assure you that we will be able to generate profits or positive cash flow from operating activities in the future. Our ability to achieve profitability depends in large part on our ability to manage our costs and expenses. We intend to manage and control our costs and expenses as a proportion of our total revenues, but there can be no assurance that we will achieve this goal. We may experience losses in the future due to our continued investments in technology, talent, content and other initiatives. In addition, our ability to achieve and sustain profitability is affected by various factors, some of which are beyond our control, such as changes in macroeconomic and regulatory environment or competitive dynamics in the industry. Accordingly, you should not rely on our financial results of any prior period as an indication of our future performance.

Because material amounts of our funds are held in banks where only limited protection on deposit accounts is required, the failure of any bank in which we deposit our funds could result in a loss of those funds to the extent exceeding the amounts protected and could, depending on the amount involved, affect our ability to continue in business.

At March 31, 2023, we had cash on hand of $10.5 million. Of that amount, approximately $10.4 million was held in banks and other financial institutions in Hong Kong, and $0.1 million in the PRC. The Hong Kong government provides deposit protection up to a maximum amount of HK$500,000 (approximately U.S.$63,698 based on the midpoint exchange rate for October 28, 2022 reported by “Historical Exchange Rates” at http://www.oanda.com/fx-for-business/historical-rates) for each depositor in any individual bank in Hong Kong. We understand that in the event of a bank failure of a bank in the PRC, a PRC-government agency is to provide some, unspecified, protections of deposit accounts to individual depositors. After three interest rate hikes in 2011, there were recommendations in early 2012 from China’s economists that a formal insurance system from China’s central bank is necessary to protect depositors’ assets. On May 1, 2015, the new “Deposit Insurance Regulations” became effective in the PRC and provide that the maximum protection would be up to RMB500,000 (including principal and interest) per depositor per insured financial institution. Depending upon the amounts of funds we have on deposit in a Hong Kong or mainland China financial institution that fails, our inability to have immediate access to our cash, and the lack of deposit protection in excess of applicable protection limits, could impair our operations, and, if we are not able to access needed funds to pay our suppliers, employees and other creditors, we may be unable to continue in business.

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We may need to raise additional capital or obtain loans from financial institutions from time to time and our operations could be curtailed if we are unable to obtain the required additional funding when needed. We may not be able to do so when necessary, and/or the terms of any financings may not be advantageous to us.

As of the fiscal year ended March 31, 2022 and 2023, respectively, we had accumulated deficit of RMB88.3 million and RMB175.9 million (US$25.6 million). Due to our accumulated deficit, we may need to obtain additional funding from outside sources, including from the sales of our securities, grants or other forms of financing. Our accumulated deficit increases the difficulty in completing such sales or securing alternative sources of funding, and there can be no assurances that we will be able to obtain such funding on favorable terms or at all. If we are unable to obtain sufficient financing from the sale of our securities or from alternative sources, we may be required to reduce, defer or discontinue certain of our research and development and operating activities or we may not be able to continue as a going concern. If we cannot continue as a going concern, our shareholders may lose their entire investment in our ordinary shares. Future reports from our independent registered public accounting firm may contain statements expressing doubt about our ability to continue as a going concern.

We generate a significant portion of our net revenues from a small number of major customers and key projects and any loss of business from these customers or key projects could reduce our net revenues and significantly harm our business.

We have derived, and believe that in the foreseeable future we will continue to derive, a significant portion of our net revenues from a small number of major customers and key projects. Our top three customers in fiscal year 2022 accounted for approximately 42.3%, 19.8% and 5.5% of our net revenues in fiscal year 2022. For the year ended March 31, 2023, our top three customers accounted for approximately 22.2%, 12.9% and 12.9% of our net revenues.

Our ability to maintain close relationships with our major customers is essential to the growth and profitability of our business. However, the volume of work performed for a specific customer is likely to vary from year-to-year and project-to-project, especially since we are generally not the exclusive service solutions provider for our customers, some of our customers have in-house research and development capabilities, and we do not have long-term purchase commitments from any of our customers. A major customer in one year may not provide the same level of net revenues for us in any subsequent year. The products we provide to our customers, and the net revenues and income from those products, may decline or vary as the type and quantity of products changes over time. In addition, reliance on any individual customer for a significant portion of our net revenues may give that customer a degree of pricing leverage when negotiating contracts and terms of service with us.

In addition, a number of factors not within our control could cause the loss of, or reduction in, business or revenues from any customer, and these factors are not predictable. These factors include, among others, a customer’s decision to re-negotiate the royalty payment of a contract if the volume of unit sales exceeds original expectations, pricing pressure from competitors, a change in a customer’s business strategy, or failure of a mobile chipset manufacturer or mobile device OEM to develop competitive products. Our customers may also choose to pursue alternative technologies and develop alternative products in addition to, or in lieu of, our products, either on their own or in collaboration with others, including our competitors. The loss of any major customer or key project, or a significant decrease in the volume of customer demand or the price at which we sell our products to customers, could materially adversely affect our financial condition and results of operations.

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The outbreak of the coronavirus in China, India and across the world may have a material adverse effect on our business.

Our business could be materially and adversely affected by the outbreak of the Coronavirus Disease 2019 (“COVID-19” or the “coronavirus”), or the coronavirus, in China. On January 30, 2020, the World Health Organization declared the coronavirus outbreak a “Public Health Emergency of International Concern” and on March 10, 2020, declared it to be a pandemic. Actions taken around the world to help mitigate the spread of the coronavirus include restrictions on travel, and quarantines in certain areas, and forced closures for certain types of public places and businesses. The coronavirus and actions taken to mitigate it have had and are expected to continue to have an adverse impact on the economies and financial markets of many countries, including the geographical area in which the Company operates.

Our headquarters (Shenzhen) and our factory (Guizhou) are located in China. As this virus is transmitted between humans, the Chinese government has imposed travel restrictions in certain parts of the country and several businesses operating in China have scaled back operations. Although COVID-19 has gradually eased around the world, the lasting effect of the coronavirus outbreak could materially disrupt our business and operations, slow down the overall economy, curtail consumer spending, interrupt our sources of supply, and make it difficult to adequately staff our operations. As a result, our operating results, financial condition and cash flows could be materially adversely impacted.

In China, the government has been implementing a “Zero-Covid” policy since the coronavirus started, which policy entails very strict quarantine or unexpected lockdown measures with little advance notice. Since its implementation, and in particular with respect to the Omicron outbreak, the impact of the “Zero-Covid” policy on the Company’s business, financial condition, and results of operations include, but are not limited to, the following:

Our headquarters (Shenzhen) and our factory (Guizhou), located in China, have suffered strict quarantine measures and lockdown. In particular, from March 2022 to November 2022, our headquarters (Shenzhen) and our factory (Guizhou) have experienced quarantine-related shutdowns for about 15 business days and 10 business days, respectively. Additionally, about one-third of the Company’s employees from each department have experienced quarantine periods ranging from 3 days to 17 days. The key operating activities of the Company’s business, including design, testing and manufacturing, have been heavily disrupted by the unexpected quarantine. Even though the Company has implemented certain procedures to mitigate the negative impact of quarantine, such as remote work options, online meetings, etc., these procedures have also limited employees’ contributions. Accordingly, the Company’s operational efficiency has diminished significantly.

Due to the domestic and global travel restrictions, the Company has been forced to significantly reduce both domestic and international business travel. From March 2022 until January 2023, the Company’s business travel activities dropped approximately 60%, and only one international business trip occurred. Travel restrictions have been negatively impacting the Company’s business expansion activities in Mexico and Japan, since the Company has been struggling to deploy its own team to Mexico to commence its operational expansion and has to maintain a minimum level of business activities there, and to visit or invite Japan client on site.

The coronavirus is impacting several areas of the world, including Asia and the United States. Many factories in China closed during February 2020 at the mandate of the Chinese government and did not reopen until March 2020. This has impacted the manufacturing productivity of our factories as well as those of our suppliers, and therefore the amount of inventory we receive and can ship to customers. The Chinese government stopped enforcing the Zero Covid policy in January 2023, and we have resumed normal operations since March 2023. We are doing everything we can to keep customer production running and to keep things as smooth and stable as possible. However, the coronavirus could negatively impact our sales performance, our vendors and suppliers.

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The impact of COVID-19 on our business, financial condition, and results of operations include, but are not limited to, the following:

● The outbreak of Omicron (a variant of Covid) since January 2022 also adversely affected our business. Our headquarters (Shenzhen) and our factory (Guizhou), located in China, have suffered strict quarantine measures and lockdown. In particular, from March 2022 until now, its headquarters (Shenzhen) and its factory (Guizhou) have experienced quarantine-related shutdowns for about 15 business days and 10 business days, respectively. About one-third of the Company’s employees from each department experienced quarantine periods ranging from 3 days to 17 days. Our logistics channels were also negatively impacted by the outbreak of Omicron and the quarantine and travel restrictions due to the strict policy. Total revenue for fiscal year ended March 31, 2023 is approximately US$1.9 million less than previously expected. The Company continued suffering delayed orders of about US$2.2 million until since April 2022, which were restarted in February 2023 and has fully delivered by the Company to the customers by June 2023.

● On March 24, 2020, the Indian government ordered a 21-day nationwide lockdown, followed by another order on April 14, 2020 and which was extended until May 31, 2020 with numerous relaxations which inter alia permitted opening of businesses and offices with certain restrictions. On May 30, 2020, the Indian government further extended the lockdown in specific areas identified as “containment zones” until June 30, 2020 and permitted the re-opening of the economy in a phased manner in areas outside the containment zones. The Indian Ministry of Home Affairs announced that from July 1, 2020 to July 30, 2020, lockdown measures were only imposed in containment zones. In all other areas, most activities were permitted. From August 1, 2020, night curfews were removed and all inter-and intra-state travel and transportation was permitted. However, the respective state/union territory governments have been empowered to prohibit activities in areas outside containment zones or impose such restrictions as deemed necessary to contain the spread of COVID-19, which has slowed down the rate of resumption of business activities. Due to the lockdown, our operations in India were halted for several weeks. Since May 11, 2020, we resumed our sales operations in various parts of India (except those falling under containment zones). While the Indian government lifted the lockdown throughout India and took requisite steps to bring back the Indian economy on track in early 2021, a second larger outbreak of COVID-19 occurred in India in March 2021. To curb the spread of the virus, various state governments have announced lockdowns and imposed curbs on movement and economic activities of different time periods. The lockdown in Delhi, the capital of India, has been lifted to a large extent. While the governments of each affected state have commenced easing the lockdown restrictions, the same may be extended or made stringent to control the spread of COVID-19. Such restrictions on continued business activities will have a detrimental impact on our business in India.

● Our logistics channels have been negatively impacted by the outbreak, which may delay our products delivery. As a result, our revenue and account receivables outside of India has been negatively impacted in fiscal year 2021, 2022 and 2023. Some of our orders have been delayed due to nationwide lockdowns in Mainland China, Europe, the United States, South America and Africa. However, to date, none of these orders have been returned or cancelled. We had no delayed orders excluding India before October 2020. However, from October 2020 to April 2021, delayed orders started to increase again due to the worsened situation relating to COVID-19 outside China. Although we had approximately US$1.2 million orders delayed by COVID-19 as of early April 2021, we have managed to complete all of them and we have no additional orders delayed by COVID-19 as of the date of this annual report.

● Some of our customers have been and could continue to be negatively impacted by the outbreak, which may reduce their orders. Our customers may reduce their future purchases from us if they are not able to complete the manufacture of their products due to the shortage of components from other suppliers. Although to date, none of our customers have terminated contracts with us, our revenue and income has been and may continue to be negatively impacted.

● The situation may worsen if the COVID-19 outbreak continues. Certain of our customers have requested, and additional customers may request, additional time to pay us or fail to pay us on time, or at all, which may require us to record additional allowances. We are currently working with customers on finalizing payment schedules and have not experienced significant collection issues so far. We will continue to closely monitor our collections.

● The global stock markets have experienced, and may continue to experience, significant decline from the COVID-19 outbreak. It is possible that the price of our ordinary shares will decline significantly after the date of this report, in which case you may lose your investment.

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We depend on third party service providers for logistics and aftersales services, and any failure of our third party service providers to perform may have a material negative impact on our business.

We outsource all of our transportation and logistics services, as well as after-sale services, for our products to third-party service providers. We rely on these outsourcing partners to bring our products to our customers and provide after sale services. While these arrangements allow us to focus on our main business, they also reduce our direct control over the logistics and aftersales services provided to our customers. Any failure of our logistics partners to perform may have a material negative impact on the timely delivery of our products and customer satisfaction. In addition, logistics in our primary locations or transit to final destinations may be disrupted for a variety of reasons including, natural and man-made disasters, information technology system failures, commercial disputes, military actions or economic, business, labor, environmental, public health, or political issues. We may also be unable to pass any increase in logistics costs to our customers. Errors that occur in product maintenance processes can compromise our products and services, adversely affect customer experience, and harm our business.

We rely on outsourcing manufacturers to produce a majority of our products. If we encounter issues with them, our business and results of operations could be materially and adversely affected.

We rely on outsourcing manufacturers to produce a majority of our products. However, the volume of orders designated to a specific manufacturer is likely to vary from year-to-year and project-to-project, especially since we generally do not enter into exclusive relationship with the manufacturers and we do not have long-term or fixed-term purchase commitments with any of our outsourcing manufacturers. A major manufacturer in one year may not provide the same amount of products to us in any subsequent year. The products each manufacturer supplies us may decline or vary our customer orders change over time. Additionally, our contracts with these manufacturers can be terminated at any time. Therefore, we may not be able to maintain a long-term cooperative relationship with our outsourcing manufacturers for our existing products. We may also experience operational difficulties with our outsourcing manufacturers, including reductions in the availability of production capacity, failure to comply with product specifications, insufficient quality control, failure to meet production deadlines, increases in manufacturing costs and longer lead time. Our outsourcing manufacturers may experience disruptions in their manufacturing operations due to equipment breakdowns, labor strikes or shortages, natural disasters, component or material shortages, cost increases, violation of environmental, health or safety laws and regulations, or other problems. We may be unable to pass the cost increases to our customers. We may have disputes with our outsourcing manufacturers, which may result in litigation expenses, divert our management’s attention and cause supply shortages to us. In addition, we may not be able to identify outsourcing manufacturers who are capable of producing new products we target to launch in the future.

Our expansion into new product categories and scenarios, and substantial increases in product lines may expose us to new challenges and more risks.

We strive to continue to expand and diversify our product offerings to cover additional scenarios in the mobile or IoT era. Expanding into new product categories and scenarios outside of the mobile phone and accessories category, such as to wearable devices, speakers and related consumer electronics and substantially increasing our product lines involve new risks and challenges. Our potential lack of familiarity with new products and scenarios and the lack of relevant customer data relating to these products may make it more difficult for us to anticipate user demand and preferences. We may misjudge market demand, resulting in inventory buildup and possible inventory write-downs. We may not be able to effectively control our costs and expenses in rolling out these new product categories and scenarios. We may have certain quality issues and experience higher return rates on new products, receive more customer complaints and face costly product liability claims, such as injury allegedly or actually caused by our products, which would harm our brand and reputation as well as our financial performance.

Furthermore, we may need to price our new products more aggressively to penetrate new markets, and gain market share or remain competitive. It may be difficult for us to achieve profitability in the new product categories and our profit margin, if any, may be lower than we anticipate, which would adversely affect our overall profitability and results of operations.

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Our international expansion is subject to a variety of costs and risks and we may not be successful, which could adversely affect our profitability and operating results.

We intend to expand or enter into new geographic markets, such as the United States and Canada, where we have limited or no experience in marketing, selling our products and deploying our services. International expansion has required and will continue to require us to invest significant capital and other resources and our efforts may not be successful. Our expansion may be subject to risks such as: brand awareness, sales and distribution network, differences in customer preference, political and economic instability, trade restrictions, difficulties in forming and managing local staff and teams, lesser degrees of intellectual property protection.

The occurrence of any of these risks could negatively affect our international business and consequently our business and operating results. In addition, the concern over these risks may also prevent us from entering into or releasing certain of our products in certain markets.

Our use of open source software could materially adversely affect our business, financial condition, operating results and cash flow.

Certain of our technology and our suppliers’ technology may contain or may be derived from “open source” software, which, under certain open source licenses, may offer accessibility to a portion of a product’s source code and may expose related intellectual property to adverse licensing conditions. Licensing of such technology may impose certain obligations on us if we were to distribute derivative works of the open source software. For example, these obligations may require us to make source code for derivative works available or license such derivative works under a particular type of license that is different from what we customarily use to license our technology. While we believe we have taken appropriate steps and employ adequate controls to protect our intellectual property rights, our use of open source software presents risks that, if we inappropriately use open source software, we may be required to reengineer our technology, discontinue the sale of our technology, release the source code of our proprietary technology to the public at no cost or take other remedial actions, which could adversely affect our business, operating results and financial condition. There is a risk that open source licenses could be construed in a way that could impose unanticipated conditions or restrictions on our ability to commercialize our products or solutions, which could adversely affect our business, operating results and financial condition.

We operate in a rapidly evolving industry. If we fail to keep up with technological developments and changing requirements of our customers, business, financial condition and results of operations may be materially and adversely affected.

The mobile industry is rapidly evolving and subject to continuous technological developments. Our success depends on our ability to keep up with these technological developments and the resulting changes in customers’ demands. There may also be changes in the industry landscape as different types of platforms compete with one another for market share. If we do not adapt our software and service platform solutions to such changes in an effective and timely manner as more mobile operating system platforms become available in the future, we may suffer a loss in market share. Given that we operate in a rapidly evolving industry, we also need to continuously invest significant resources in research and development in order to enhance our existing products and to respond to changes in customer preference, new challenges and industry changes in a timely and effective manner. If we fail to keep up with technological developments and continue to innovate to meet the needs of our customers, our software and service platform solutions may become less attractive to customers, which in turn may adversely affect our reputation, competitiveness, results of operations and prospects.

We face intense competition from onshore and offshore third party software providers in the mobile phone market, and, if we are unable to compete effectively, we may lose customers and our revenues may decline. The lack of technological development and increase in competition may lead to a decline in our sustainable growth.

The mobile phone market is highly fragmented and competitive, and we expect competition to persist and intensify from both existing competitors and new market entrants. We believe that the principal competitive factors in our industry are reliability and efficiency, performance, product features and functionality, development complexity and time-to-market, price, support for multiple architectures and processors, interoperability with other systems, support for emerging industry and customer standards and protocols and levels of training, technical services and customer support.

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The market in which we operate is highly competitive and is subject to frequent changes due to technological improvements and advancements, availability of new and alternative services and frequently changing client preferences and demands. Our ability to anticipate changes in technology and regulatory standards and to develop and introduce new and enhanced products successfully on a timely basis will be a significant factor in our ability to grow and to remain competitive. The development and acquisition of technology requires substantial investments, and we cannot guarantee that we will be able to achieve the technological advances that may be necessary for us to remain competitive. If we fail to update the technology used in their handsets, it will be challenging for us to experience sustained growth in both existing and new markets and consequently, we may lose our market share and revenue.

We may undertake acquisitions, investments, joint ventures or other strategic alliances in the future, which could expose us to new operational, regulatory and market risks. In addition, such future undertakings may not be successful, which may adversely affect our business, results of operations, financial condition and prospects.

We intend to grow both organically by expanding our current business lines and geographic coverage and through acquisitions, investments, joint ventures or other strategic alliances if the appropriate opportunities arise. These potential business plans, acquisitions, investments, joint ventures and strategic alliances may expose us to new operational, regulatory and market risks, as well as risks associated with additional capital requirements. In addition, we may not be able to identify suitable future acquisition or investment candidates or joint venture or alliance partners. Even if we identify suitable candidates or partners, we may be unable to complete an acquisition, investment or alliance on terms commercially acceptable to us. If we fail to identify appropriate candidates or partners, or complete desired acquisitions, investments or alliances, we may not be able to implement our strategies effectively or efficiently.

In addition, our ability to successfully integrate acquired companies and their operations may be adversely affected by a number of factors, including, among others, the ability to capitalize on anticipated synergies, diversion of resources and management’s attention, difficulties in retaining personnel of the acquired companies, unanticipated problems or legal liabilities and tax and accounting issues. If we fail to integrate any acquired company efficiently, our earnings, revenues, gross margins, operating margins and business operations could be adversely affected. The integration of acquired companies is a complex, time-consuming and expensive process.

Security and privacy breaches may expose us to liability and harm our reputation and business.

As part of our business, we may receive and process information about our employees, customers and partners, and we may store (or contract with third parties to store) our customers’ data. There are numerous laws governing privacy and the storage, sharing, use, disclosure and protection of personally identifiable information and user data. Specifically, personally identifiable and other confidential information is increasingly subject to legislation and regulations in numerous domestic and international jurisdictions. The regulatory framework for privacy protection in China and worldwide, including India and the United States, is currently evolving and is likely to remain uncertain for the foreseeable future. We could be adversely affected if legislation or regulations in China and elsewhere on the world where we have business operations are expanded to require changes in business practices or privacy policies, or if the relevant governmental authorities in China and elsewhere on the world where we have business operations interpret or implement their legislation or regulations in ways that negatively affect our business, financial condition and results of operations.

For example, in the PRC, governmental authorities have enacted a series of laws and regulations to enhance the protection of privacy and data. The Civil Code of the PRC (issued by the PRC National People’s Congress on May 28, 2020 and effective from January 1, 2021) provides legal basis for privacy and personal information infringement claims under the Chinese civil laws. PRC regulators, including the CAC, the Ministry of Industry and Information Technology, and the Ministry of Public Security, have been increasingly focused on regulation in data security and data protection. The PRC regulatory requirements regarding cybersecurity are evolving. For instance, various regulatory bodies in China, including the CAC the Ministry of Public Security and the State Administration for Market Regulation, have enforced data privacy and protection laws and regulations with varying and evolving standards and interpretations. On November 7, 2016, the Standing Committee of the PRC National People’s Congress issued the Cybersecurity Law of the PRC, or Cybersecurity Law, which became effective on June 1, 2017.The Cybersecurity Law is the first PRC law that systematically lays out the regulatory requirements on cybersecurity and data protection, subjecting many previously under-regulated or unregulated activities in cyberspace to government scrutiny. The Cybersecurity Law requires network operators to perform certain functions related to cybersecurity protection and the strengthening of network information management. For instance, under the Cybersecurity Law, network operators of key information infrastructure, including network operators of key information infrastructures in public communications and information industry, generally shall, during their operations in the PRC, store the personal information and important data collected and produced within the territory of the PRC and their purchase of network products and services that may affect national securities shall be subject to national cybersecurity review. Pursuant to the Cybersecurity Law, network operators must not, without users’ consent, collect their personal information, and may only collect users’ personal information necessary to provide their services. Providers are also obliged to provide security maintenance for their products and services and shall comply with provisions regarding the protection of personal information as stipulated under the relevant laws and regulations. The legal consequences of violation of the Cybersecurity Law include penalties of warning, confiscation of illegal income, suspension of related business, winding up for rectification, shutting down the websites, and revocation of business license or relevant permits.

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Further, the Standing Committee of the National People’s Congress of the PRC promulgated the PRC Data Security Law on June 10, 2021, which became effective from September 1, 2021. Also, the PRC Personal Information Protection Law was enacted on August 20, 2021, which became effective on November 1, 2021.These two laws, together with the Cybersecurity Law, form the over-arching framework that governs data protection and cybersecurity in China. The Cybersecurity Law has a focus on cybersecurity and the protection of the critical information infrastructure, while the PRC Data Security Law focuses on regulating “important data” and data processing activities that would have an impact on national security. The PRC Personal Information Protection Law focuses on protecting personal information. See “Item 4. Information on the Company-B. Business Overview-Regulations-Regulation on Information Security and Censorship.”

Following the promulgation of the above laws, the PRC governmental authorities have enacted or are in the process of formulating a series of regulations and policies to enhance the protection of cybersecurity, data security and personal information. On October 29, 2021, the CAC published the Safety Assessment Measures for Data Outbound Transfer (Draft for Comments). On November 14, 2021, the CAC published the Regulations of Cyber Data Security Management (Draft for Comments), requiring that, among others, data processors handling important data or the data processors to be listed overseas to complete an annual data security assessment and file a data security assessment report to applicable regulators. On December 28, 2021, the CAC and other PRC governmental authorities jointly released the Measures for Cybersecurity Review, which took effect on February 15, 2022, requiring that, among others, operators of “critical information infrastructure” or data processors holding over one million users’ personal information which intends to be listed in a foreign country are subject to a cybersecurity review. On November 14, 2021, the CAC released the Regulations on Network Data Security (draft for public comments), or the draft Regulations on Network Data Security, which reiterates that data processors that process the personal information of more than one million users listing in a foreign country should apply for a cybersecurity review. Currently, the draft Regulations on Network Data Security has been released for public comment only, and its implementation provisions and anticipated adoption or effective date remains substantially uncertain and may be subject to change. On July 7 2022, the CAC published the Safety Assessment Measures for Data Outbound Transfer, which took effect on September 1, 2022. See “Item 4. Information on the Company-B. Business Overview-Regulations-Regulation on Information Security and Censorship.”

Compliance with the Cybersecurity Law, the PRC National Security Law, the Data Security Law, the Cybersecurity Review Measures, the Personal Information Protection Law, as well as additional laws and regulations that PRC regulatory bodies may enact in the future, may result in additional expenses to us and subject us to negative publicity, which could harm our reputation among customers and negatively affect the trading price of our ordinary shares in the future. As of the date of this annual report, we do not expect that the current PRC laws on cybersecurity or data security would have a material adverse impact on our business operations and our offering. We do not believe the VIE or the VIE’s subsidiaries are among the “operator of critical information infrastructure,” “data processor” carrying out data processing activities that affect or may affect national security, or “operator of network platform” holding personal information of more than one million users as mentioned above, and we have not been involved in any investigations on cybersecurity or data security initiated by related governmental regulatory authorities, and we have not received any inquiry, notice, warning, or sanction in such respect.

However, there remains uncertainty as to how these laws and regulations will be interpreted or implemented and whether the PRC regulatory agencies, including the CAC, may adopt new laws, regulations, rules, or detailed implementation and interpretation related to the PRC laws on cybersecurity or data security. We cannot assure you that PRC regulatory agencies, including the CAC, would take the same view as we do, and we cannot assure you that we will comply with such regulations in all respects and we may be ordered to rectify or terminate any actions that are deemed illegal by regulatory authorities or face other penalties, which could materially and adversely affect our business, financial condition, and results of operation. If any such new laws, regulations, rules, or implementation and interpretation comes into effect, we will take all reasonable measures and actions to comply with and to minimize the adverse effect of such laws on us.

While we take security measures relating to service platform solutions, specifically, and our operations, generally, those measures may not prevent security breaches that could harm our business and we cannot assure you that the measures we have taken or will take are adequate under the Cybersecurity Law and other relevant laws and regulations. Advances in computer capabilities, inadequate technology or facility security measures or other factors may result in a compromise or breach of our systems and the data we store and process. Our security measures may be breached as a result of actions by third parties or employee error or malfeasance. A party who is able to circumvent our security measures or exploit inadequacies in our security measures, could, among other things, misappropriate proprietary information (including information about our employees, customers and partners and our customers’ information), cause the loss or disclosure of some or all of this information, cause interruptions in our operations or our customers’ or expose our customers to computer viruses or other disruptions or vulnerabilities. Any compromise of our systems or the data it stores or processes could result in a loss of confidence in the security of our service platform solutions, damage our reputation, disrupt our business, lead to legal liability and adversely affect our financial condition and results of operations. Moreover, a compromise of our systems could remain undetected for an extended period of time, exacerbating the impact of that compromise. Actual or perceived vulnerabilities may lead to claims against us by our customers, partners or other third parties, which could be material. While our customer agreements typically contain provisions that seek to limit our liability, there is no assurance these provisions will be enforceable and effective under applicable law. In addition, the cost and operational consequences of implementing further data protection measures could be significant.

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We are vulnerable to technology infrastructure failures, which could harm our reputation and business.

We rely on our technology infrastructure for many functions, including selling our service platform solutions, supporting our customers and billing, collecting and making payments. We also rely on our own technology infrastructure, which is located on a third-party site, as well as the technology infrastructure of third parties, to provide some of our back-end services. This technology infrastructure may be vulnerable to damage or interruption from natural disasters, power loss, telecommunication failures, terrorist attacks, computer intrusions and viruses, software errors, computer denial-of-service attacks and other events. A significant number of the systems making up this infrastructure are not redundant, and our disaster recovery planning is not sufficient for every eventuality. This technology infrastructure is also subject to break-ins, sabotage and intentional acts of vandalism by internal employees, contractors and third parties. Despite any precautions we or our third-party partners may take, such problems could result in, among other consequences, interruptions in our services and loss of data, which could harm our reputation, business and financial condition. We do not carry business interruption insurance sufficient to protect us from all losses that may result from interruptions in our services as a result of technology infrastructure failures or to cover all contingencies. Any interruption in the availability of our websites and on-line interactions with customers and partners would create a large volume of questions and complaints that would need to be addressed by our support personnel. If our support personnel cannot meet this demand, customer and partner satisfaction levels may fall, which in turn could cause additional claims, reduced revenue, reputation damage or loss of customers.

We may not be able to continue to use or adequately protect our intellectual property rights, which could harm our business reputation and competitive position.

We believe that patents, trademarks, trade secrets, copyright, software registration and other intellectual property we use are important to our business. We rely on a combination of patent, trademark, copyright, software registration and trade secret protection laws in China, the United States, the Philippines, Kenya and other jurisdictions, as well as confidentiality procedures and contractual provisions to protect our intellectual property and brand name. Risks related to mis-branded counterfeit, unlawful copying can lead to security problems, loss of consumer confidence, losing out on the brand image, reputation and goodwill. Presently, “Do Mobile” is not a registered trademark in India. Any failure by us to maintain or protect our intellectual property rights, including any unauthorized use of our intellectual property by third parties or use of “UTime” or “Do Mobile” as a company name to conduct software or services business, may adversely affect our current and future revenues and our reputation.

In addition, the validity, enforceability and scope of protection available under intellectual property laws with respect to the mobile and Internet industries in China, where a significant part of our business and operations are located, are uncertain and still evolving. Implementation and enforcement of PRC intellectual property-related laws have historically been deficient, ineffective and hampered by corruption and local protectionism. Accordingly, protection of intellectual property rights in China may not be as effective as in the United States or other countries. Furthermore, policing unauthorized use of proprietary technology is difficult and expensive, and we may need to resort to litigation to enforce or defend patents issued to us or to determine the enforceability, scope and validity of our proprietary rights or those of others. Such litigation and an adverse determination in any such litigation, if any, could result in substantial costs and diversion of resources and management attention, which could harm our business and competitive position.

We also may be required to enter into license agreements with certain third parties to use their intellectual property for our business operations. If such third parties fail to perform under these license agreements or if the agreements are terminated for any reason, our business and results of operations may be negatively impacted. Furthermore, if we are deemed to be using third parties’ intellectual property without due authorization, we may become subject to legal proceedings or sanctions, which may be time-consuming and costly to defend, divert management attention and resources or require us to enter into licensing agreements, which may not be available on commercial terms, or at all.

The international nature of our business exposes us to risks that could adversely affect our financial condition and results of operations.

We conduct our business throughout the world in multiple locations. Our corporate structure also spans multiple jurisdictions, with our parent company incorporated in the Cayman Islands and structured as a holding company and intermediate and operating subsidiaries incorporated in mainland China, Hong Kong and India. As a result, we are exposed to risks typically associated with conducting business internationally, many of which are beyond our control. These risks include, among others:

● significant currency fluctuations between the U.S. dollar and other currencies in which we transact business;

● difficulty in identifying appropriate mobile chipset manufacturers, mobile device OEMs, mobile operators and/or joint venture partners, and establishing and maintaining good relationships with them;

● legal uncertainty owing to the overlap and inconsistencies of different legal regimes, problems in asserting contractual or other rights across international borders and the burden and expense of complying with the laws and regulations of various jurisdictions;

● potentially adverse tax consequences, such as scrutiny of transfer pricing arrangements by authorities in the countries in which we operate;

● adverse effect of inflation and increase in labor costs;

● current and future tariffs and other trade barriers, including restrictions on technology and data transfers;

● general global economic downturn;

● unexpected changes in political environment and regulatory requirements; and

● terrorist attacks and other acts of violence or war.

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The potential for war or terrorist attacks may also cause uncertainty and cause our business to suffer in ways that we cannot predict. Our business could also be adversely affected by the outbreaks of epidemics in China and globally, such as the coronavirus which originated in Wuhan, China at the end of 2019, Ebola virus disease, H1N1 flu, H7N9 flu, avian flu, Severe Acute Respiratory Syndrome, or SARS, or other epidemics. Past occurrences of epidemics have caused different degrees of damage to the national and local economies in India. A recurrence of an outbreak of any kind of epidemic could cause a slowdown in the levels of economic activity generally, which may adversely affect our business, financial condition and results of operations. Should major public health issues, including pandemics, arise, we could be adversely affected by more stringent employee travel restrictions, additional limitations in freight services, governmental actions limiting the movement of products between regions, delays in production ramps of new products and disruptions in the operations of our component suppliers.

The occurrence of any of these events could have a material adverse effect on our results of operations and financial condition.

Furthermore, we are in the process of implementing policies and procedures designed to facilitate compliance with laws and regulations in various jurisdictions applicable to us, but there can be no assurance that our employees, contractors or agents will not violate such laws and regulations or our policies. Any such violations could, individually or in the aggregate, materially and adversely affect our financial condition and operating results.

Inadequacy of skilled personnel may lead to decline in sales of mobile phones by us.

Competition in our industry for qualified employees, especially technical employees, is intense, and our competitors directly target our employees from time to time. We have also experienced employees leaving us to start competing businesses or to join the in-house research and development teams of our customers. The loss of the technical knowledge and industry expertise of any of these individuals could seriously impede our success. Moreover, the loss of these individuals, particularly to a competitor, some of which are in a position to offer greater compensation, and any resulting loss of customers or trade secrets and technological expertise could further lead to a reduction in our market share and adversely affect our business. If we are required to increase the compensation payable to our qualified employees to compete with certain competitors with greater resources than we have or to discourage employees from leaving us to start competing businesses, our operating expenses will increase which, in turn, will adversely affect our results or operations.

Moreover, our sales team plays a pivotal role in the success of the business of every organization. The unique and important role of sales is to bridge the gap between the potential customer’s needs and the products/services that the organization offers that can fulfil their needs. Every organization strives to have best sales team who possess skill set for understanding consumer behavior and consumer needs and excellent communication skill. Our growth strategy places significant dependence on the experience and the continued efforts of our sales executives. There has always been dearth of such skilled sales personnel, and we may need to incur significant expenditure for attracting skilled sales personnel and for retaining its existing sales team. We may not be able to retain our existing sales team or attract and recruit new sales executives in the future. This may result in drop in sale of mobile handsets and will consequently have an adverse effect on our revenue and sustained growth.

Our success depends substantially on the continuing efforts of our senior executives and other key personnel, and our business may be severely disrupted if we lose their services.

Our future success heavily depends upon the continued services of our senior executives and other key employees. In particular, we rely on the expertise, experience, customer relationships and reputation of Minfei Bao, our founder and a director serving on the Board of Directors. We currently do not maintain key man life insurance for any of the senior members of our management team or other key employees. If one or more of our senior executives or key employees are unable or unwilling to continue in their present positions, it could disrupt our business operations, and we may not be able to replace them easily or at all. In addition, competition for senior executives and key employees in our industry is intense, and we may be unable to retain our senior executives and key employees or attract and retain new senior executive and key employees in the future, in which case our business may be severely disrupted, and our financial condition and results of operations may be materially and adversely affected.

If any of our senior executives or key employees joins a competitor or forms a competing company, it may lose customers, know-how and other key employees and staff members to them. Also, if any of our business development managers, who generally keep a close relationship with our customers, joins a competitor or forms a competing company, we may lose customers, and our net revenues may be materially and adversely affected. Additionally, there could be unauthorized disclosure or use of our technical knowledge, practices or procedures by such employees. All of our executives and key employees have entered into employment agreements with us that contain non-competition provisions, non-solicitation and nondisclosure covenants. However, if any dispute arises between our executive officers or key employees and us, such non-competition, non-solicitation and nondisclosure provisions might not provide effective protection to us, especially in China, where most of these executive officers and key employees reside, in light of the uncertainties with China’s legal system.

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We could be impacted by unfavorable results of legal proceedings, including the pending proceeding against Do Mobile, and may, from time to time, be involved in future litigation in which substantial monetary damages are sought.

The Company is subject to various legal proceedings and claims that have arisen in the ordinary course of business, from time to time, and new claims may arise in the future.

On September 17, 2018, Wukai Song, the majority shareholder in Bridgetime, filed a complaint with the NCLT against Ekta Grover and Yunchuan Li, the directors of Do Mobile at the time, alleging mismanagement of corporate affairs, embezzlement of funds and absenting themselves from the management of Do Mobile. Further, Mr. Song sought the following relief from the NCLT:

● prevent Ms. Grover and Mr. Li from exercising any of their powers as directors of Do Mobile;

● restrain Ms. Grover and Mr. Li from operating the bank account of Do Mobile and restraining DBS Bank from acting on the instructions of Ms. Grover and Mr. Li;

● permit the company secretary of Do Mobile to carry out the daily affairs of Do Mobile, which are ordinarily carried out by the directors of a company, until a new board of directors of Do Mobile is constituted and to file an application seeking extension of the date for holding an annual general meeting beyond September 30, 2018;

● appoint Mr. Amit Kumar and Mr. Huiyun Chen as interim directors of Do Mobile; and

● direct Ms. Grover and Mr. Li, directors of Do Mobile, to hand over all documents and material related to Do Mobile in their possession, back to Do Mobile and sign all statutory documents and filings to be made for the time period when they were acting as directors of Do Mobile.

On November 16, 2018 and November 15, 2018, Ms. Grover and Mr. Li, respectively, filed an answer with the NCLT. Further, on November 17, 2018, Mr. Wukai Song filed an application for interim relief seeking removal of Ms. Grover and Mr. Li from the board of directors of Do Mobile.

On September 30, 2019, the NCLT issued its interim order, which allowed Mr. Wukai Song to carry out certain statutory compliances of Do Mobile, and the NCLT has also directed Ms. Grover, director of Do Mobile, to handover the digital signature of directors to Mr. Wukai Song for carrying out said statutory compliances and undertaking its business pending resolution of the litigation.

Since the litigation involves Ms. Ekta Grover and Mr. Li Yunchuan, who were the directors of Do Mobile, and who resigned on December 24, 2020 and March 3, 2021 respectively, such directors could no longer attend to the affairs of Do Mobile. As a result, Do Mobile did not have an effective board and was facing significant challenges in its daily operation. For instance, Do Mobile was unable to undertake certain corporate actions, such as: (a) convening and holding board meetings of Do Mobile as mandatorily required under the provisions of the Companies Act, 2013 every year; (b) convening an annual general meeting where among other things, the Do Mobile shareholders approve and adopt the financial statements of Do Mobile as required under the Companies Act, 2013; (c) reporting annual compliances with the provisions of the Companies Act, 2013 through various e-forms with the office of the Registrar of Companies, Ministry of Corporate Affairs; (d) submitting an annual report titled ‘Foreign Liabilities and Assets’ each year as required by companies receiving foreign direct investment and other related compliances under Foreign Exchange Management Act, 1999; and (e) maintenance of statutory registers as required under various applicable laws.

Do Mobile was also made a party to two other matters initiated in connection with the aforesaid matter before the NCLT. These matters, which were filed at Tis Hazari court (district court) in Delhi, India were (i) Do Mobile Pvt. Ltd. v. DBS Bank Ltd. (civil suit no. 813/2019); and (ii) Ekta Grover v. Do Mobile India Pvt. Ltd. (civil suit no. 917/2019).

The above-mentioned instances of non-compliance expose Do Mobile to potential fines and penalties. Do Mobile directors and officers may also be prosecuted for such non-compliance under the official-in-default doctrine in the Companies Act, 2013, should they fail to undertake their statutory duties to act in the best interest of Do Mobile.

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The litigation against Ekta Grover and Yunchuan Li is still pending before Delhi Bench of the NCLT and the last date of hearing in this matter was on September 23, 2021. However, the matter could not be taken up on the designated date and has been postponed. The next of date of hearing is yet to be announced. Do Mobile is awaiting intimation regarding the revised date of hearing in this matter. In order to amicably settle such ongoing litigation between Do Mobile and its directors, Do Mobile and Ms. Grover have entered into a settlement agreement, dated January 16, 2020 (“Settlement Agreement”). In terms of the Settlement Agreement, Do Mobile and Ms. Grover have arrived at the following understanding:

● Ms. Grover has agreed to withdraw the litigation initiated by her against Do Mobile at the Tis Hazari court. She has also agreed not to file any claim before any tribunal or court against Do Mobile and its officers in future. In furtherance of the aforesaid, Ms. Grover has filed a withdrawal application in relation to the matter of Ekta Grover v. Do Mobile India Pvt. Ltd. (civil suit no. 917/2019) before Tis Hazari Court, New Delhi, India, consequent to which the said matter has been disposed-off as settled/ withdrawn by the Tis Hazari Court, Delhi, India vide its order dated February 23, 2021.

● Do Mobile has agreed to withdraw the name of Ms. Grover from the ongoing litigation before the NCLT by filing a withdrawal application before the NCLT. Do Mobile has also agreed that it will not file any claim against Ms. Grover pursuant to her resignation from the board of directors of Do Mobile. Mr. Wukai Song (through his authorized representative) filed a withdrawal application before the NCLT on January 21, 2021 requesting it to permit unconditional withdrawal of the petition filed by him against Ms. Grover and Mr. Li in their capacity as the directors of Do Mobile due to his inability to pursue the matter in light of the restrictions imposed due to the COVID-19 pandemic. However, the NCLT has yet to pass an order allowing the application and the requested withdrawal of the petition.

● In consideration of the settlement so arrived, Do Mobile has issued a post-dated cheque dated April 10, 2020 for INR 5,00,000/- (Indian Rupees Five Lakhs Only) to Ms. Grover towards her full and final settlement of all claims against Do Mobile. However, this cheque could not be en-cashed due to the lockdown. Consequently, Do Mobile issued another cheque for the same amount dated January 10, 2021 which has been en-cashed by Ms. Ekta Grover.

● Ms. Grover also agreed to cooperate in the appointment of new directors of Do Mobile as recommended by Do Mobile.

● Do Mobile also agreed to change its registered office, which was situated at 3A/41, First Floor, WEA, Sat Nagar, Karol Bagh, New Delhi, India, to another location. The registered office of Do Mobile is now located at House No. 25, Street No. 7, Goyala Vihar, Near Saint Thomas School, New Delhi - 110071. Necessary filings with the jurisdictional Registrar of Companies have been made in this regard by Do Mobile.

The matter of Do Mobile Pvt. Ltd. v. DBS Bank Ltd. (civil suit no. 813/2019) was initiated by Mr. Li in the Tis Hazari district court to seek revival of the authority granted to him and Ms. Grover to operate the bank account of Do Mobile. Since the dispute regarding the powers of Mr. Li and Ms. Grover in their capacity as directors of Do Mobile was pending before the NCLT, the district court refused to grant any interim relief to the then directors of Do Mobile. An application seeking withdrawal of the matter was filed by Do Mobile on April 1, 2021. The court vide its order dated June 3, 2022 has allowed the application requesting withdrawal of the suit and the matter stands dismissed.

Since the litigation commenced, all major decisions for Do Mobile have been made by the Company’s group headquarters in Shenzhen, China. Such decisions include those relating to the type and quantum of products to be released in the market. Furthermore, all sales are being made and the marketing strategy for Do Mobile is being formulated from the corporate headquarter in Shenzhen, China. However, Do Mobile is making its own decisions relating to customer acquisition, recruitment of sales forces and office administration.

In order to avoid operational challenges in Do Mobile on account of ongoing litigation at the NCLT, the Company nominated the following persons to manage the daily operations of Do Mobile:

● Andy Liu, Vice President of Overseas Department at UTime SZ, managed daily external affairs related to clients, vendors, products, sales & purchase, marketing, business development, etc. from October 2019 until his resignation in August 2020. Since Mr. Liu’s resignation, Mr. Wukai Song has been managing these affairs at Do Mobile.

● Wukai Song manages daily internal affairs related to finance, human resource, office administration, etc.

● Do Mobile has also appointed another officer in India, Tarun Garg, to manage the banking and accounting operations of Do Mobile, as its Finance Head with effect from June 1 2020. He is working in close coordination with Shibin Yu, Chief Financial Officer of the Company, and Wendy Long, an accountant from corporate headquarters in Shenzhen, China. In addition to this, Tarun Garg is also assisting Wukai Song in relation to day-to-day operations of the Do Mobile in India.

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In order to avoid operational challenges due to the on-going litigation in the NCLT, effective December 18, 2020, Do Mobile appointed two new directors on its board, Mr. Song and Aayushi Gautam. The board of Do Mobile at that point in time consisted of two directors, Mr. Song and Ms. Gautam. Ms. Grover and Mr. Li both have resigned from their directorship in Do Mobile with effect from December 24, 2020 and March 3, 2021 respectively. Further, one share of Do Mobile which was held by Ms. Grover has been transferred by her to Ms. Aayushi Gautam. Do Mobile has also appointed Mr. Tarun Garg as its Finance Head, effective June 1, 2020. As a result of the constitution of a new board of directors, Do Mobile has been able to overcome its operational challenges. Do Mobile appointed Mr. Tarun Garg as an additional director on its board with effect from August 9, 2022. Thereafter, Ms. Aayushi Gautam resigned from her directorship in Do Mobile with effect from September 10, 2022. At present, the board of Do Mobile consists of two directors, Mr. Song and Mr. Garg.

Regarding the construction contract dispute between UTime GZ and Guizhou Branch of Guangdong Jian ‘an Fire Electromechanical Engineering Co., Ltd (“Guangdong Jian’an”), on December 1, 2021, the People’s Court of Honghuagang District of Zunyi City, Guizhou Province (“Honghuagang Court”) issued the civil judgment (No. (2021) Qian 0302 Min Chu 20364 ), ruling that the defendant UTime GZ shall pay the amount of RMB 2,230,293.46 to the plaintiff Guangdong Jian’an within 10 days from the effective date of the judgment. On December 24, 2021, Utime GZ has appealed to the Intermediate People’s Court of Zunyi City, Guizhou Province (“Zunyi Intermediate Court”). On April 25, 2022, the Intermediate People’s Court of Zunyi City issued a civil ruling (No. (2022) Qian 03 Min Zhong 642). The Zunyi Intermediate Court held that the facts determined in the first instance were basically unclear and ruled to revoke the civil judgment of No. (2021) Qian 0302 Min Chu 20364. The case was remanded to the Honghuagang Court for retrial. On December 22, 2022, Honghuagang Court issued the civil judgment (No. (2022) Qian 0302 Min Chu 9108) after retrial, ruling that UTime GZ shall pay the amount of RMB 2,230,293.46 to the plaintiff Guangdong Jian’an within 10 days from the effective date of the judgment. Utime GZ has appealed to Zunyi Intermediate Court. On April 26, 2023, the Zunyi Intermediate Court issued a civil ruling (No. (2023) Qian 03 Min Zhong No. 671). The Zunyi Intermediate Court rejected the appeal and upheld the original judgment. On May 29, 2023, Guangdong Jian’an, Utime GZ, Jietongda and Utime SZ entered into the Implementation of Settlement Agreement based on the civil judgment (No. (2022) Qian 0302 Minchu 9108), with Utime SZ as the guarantor. According to the Implementation of Settlement Agreement, with regard to the payment of RMB 223,0293.46 and the first instance case acceptance fee of RMB 25,440, starting from June 2023, Utime GZ and Jietongda promise to pay RMB 300,000 Guangdong Jian’an before the end of each month (“Settlement Payment”), and complete the above payment before the end of January 2024. If either Utime SZ and Jietongda fails to make payment in accordance with this agreement, Guangdong Jian’an has the right to resume enforcement of all outstanding payments. As of the date of this annual report, the Settlement Payment has been being paid by Jietongda.

Utime SZ and Dongguan Qinling Electronic Technology Co., Ltd (“Dongguan Qinling”) had a sales contract dispute case. On September 29, 2020, People’s Court of Futian District of Shenzhen, Guangdong Province (“Futian Court”) issued the civil judgment (No.（2019）Yue 0304 Min Chu 51640), ruling that the defendant Dongguan Qinling should return the loan amount of RMB 300,000 and pay relevant interest to the plaintiff Utime SZ within 10 days from the effective date of the judgment. As of the date of this annual report, Dongguan Qinling has not actually performed the judgment, and has not paid any payment and interest to Utime SZ. Furthermore, the business license of Dongguan Qinling has been revoked, and it is unable for Dongguan Qinling to perform this judgment for now.

Besides, there is a case for sales contract dispute between UTime SZ and Jiangsu Jutai Technology Co., Ltd (“Jiangsu Jutai”). On July 27, 2022, Futian Court issued the civil judgment (No. (2021) Yue 0304 Min Chu 41025), ruling that 1) confirming that the “Procurement Framework Contract” (Contract No. CG20201231001) and “Purchase Order Contract” (Order No. SUTPOORD2020121921045) signed between the plaintiff UTime SZ and the defendant Jiangsu Jutai were terminated on March 12, 2021; 2) The defendant Jiangsu Jutai shall compensate the plaintiff UTime SZ with a loss of RMB 239,547 within ten days from the effective date of the judgment; 3) The defendant Jiangsu Jutai shall pay a guarantee fee of RMB 700 and a lawyer’s fee of RMB 30,000 to the plaintiff UTime SZ within ten days from the effective date of the judgment. On June 28, 2023, UTime SZ and Jiangsu Jutai entered into a Settlement Agreement based on the civil judgment (No. (2021)Yue 0304 Min Chu 41025). According to the Settlement Agreement, Jiangsu Jutai shall pay the full amount of the judgment amount of RMB 243,222.3 (calculated at 90% of the judgment amount, “Settlement Amount”) to UTime SZ in a lump sum before June 30, 2023. Jiangsu Jutai paid the Settlement Amount to UTime SZ on June 30, 2023.

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Utime SZ and Shenzhen Wanhua Supply Chain Co., Ltd (“Shenzhen Wanhua”) had a entrustment agreement contract dispute case. On March 31, 2023, People’s Court of Shenzhen Qianhai Cooperation Zone, Guangdong Province issued the civil judgment ((No. (2023) Yue 0391 Min Chu 762), ruling that 1) the defendant Shenzhen Wanhua shall pay the plaintiff UTime SZ USD 76,639.91 within seven days from the effective date of the judgment; 2) the defendant Shenzhen Wanhua shall compensate the plaintiff UTime SZ for the overdue payment loss within seven days from the effective date of the judgment (the calculation method for the overdue payment loss is based on USD 76,639.91 , and from December 14, 2022, it shall be paid according to the same period US dollar loan interest rate standard of Bank of China until the actual settlement date). As of the date of this annual report, Shenzhen Wanhua has not actually performed the judgment, and has not paid any payment and interest to Utime SZ.

UTime SZ and Shenzhen Zhonghang Jiayikang Electronics Co., Ltd. (“Jiayikang”) had a sales contract dispute. Jiayikang requests the judgment to 1) order the defendant UTime SZ to repay the outstanding payment to the plaintiff Jiayikang, totaling RMB 2,224,638.78; 2) order to calculate the loss of overdue payment from March 1, 2020 to the date when the principal of the loan has been fully repaid, with RMB 2,224,638.78 as the base number and 50% higher than the standard of one-year loan market quotation rate published by the National Interbank lending market Center authorized by the People’s Bank of China: the current loss of overdue payment is temporarily calculated to be RMB 354,736.94 by December 15, 2022. As of the date of this annual report, the judgment of the first instance of this case has not been issued.

Regardless of the merit of particular claims, litigation may be expensive, time consuming, disruptive to our operations and distracting to management. For instance, if such litigation against Do Mobile stays pending, there will be no effective board of Do Mobile, which may lead to serious complications for Do Mobile. Continued non-compliance may impact Do Mobile’s operations negatively, which could result in the imposition of substantial penalties by the government and lead to prosecution of our management. Therefore, our business operations could be negatively impacted by unfavorable results of legal proceedings.

In addition, we may from time to time be involved in future litigation in which substantial monetary damages are sought. Litigation claims may relate to intellectual property, contracts, employment, securities and other matters arising out of the conduct of our current and past business activities. Any claims, whether with or without merit, could be time consuming, expensive to defend and could divert management’s attention and resources. We may maintain insurance against some, but not all, of these potential claims, and the levels of insurance we do maintain may not be adequate to fully cover any and all losses. Nonetheless, the results of any future litigation or claims are inherently unpredictable, and such outcomes could have a material adverse effect on our results of operations, cash from operating activities or financial condition.

Compromised product quality of our mobile products may damage our brand and reputation of and customers could stop using our mobile handsets

Quality of any product plays a vital role towards its demand and any failure to maintain quality standards may impact sales and revenues. Much of the mobile products we sell, for instance, the mobile handsets sold by Do Mobile, are being manufactured by third party vendors. Though we conduct frequent vendor inspections in an effort to ensure that these vendors adhere to our prescribed quality standards; however, there remains an element of risk about the quality of mobile handsets as we cannot guarantee that our inspections will capture all existing or latent defects. Our inability to maintain the quality of our products, may materially impact our reputation and business.

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We may not be able to successfully sustain our growth strategy into new geographic markets and innovative consumer electronic products. Inability to effectively manage growth, our current and planned resources and related issues could materially and adversely affect our business of and impact future financial performance.

We have experienced rapid growth since we commenced operations. Our rapid expansion may expose us to new challenges and risks. Currently we are not involved in any other business vertical and are solely dependent upon revenue from its mobile handset business. In the event, our mobile handset vertical becomes vulnerable due to any unforeseen circumstance or we become unable to successfully augment our existing business of sale of mobile handsets, then our business and financial condition could material adverse effect. Even if we introduce any new service or product as a part of its business operations, it may take time to establish in a highly competitive Asian market, hence, there can be no assurance that we will be able to achieve its intended return on investments.

A further principal component of our growth strategy is to expand the geographical scope of our business. This growth strategy will require deployment of additional funds and resources, continued expansion and enhancement of our infrastructure and technology, improvement of our operational and financial systems and controls, and will also entail procuring additional approvals, permissions and licenses from regulatory authorities. This will put strain on our funds position and there will always be a requirement of infusion of additional capital. For example, we currently manage all of our human resources functions with a traditional and basic system and expect that we will need to upgrade our current system as we continue to increase our headcount. We also need to expand, train and manage our growing employee base. In addition, our management will be required to obtain, maintain or expand relationships with mobile chipset manufacturers, mobile device OEMs and mobile operators, as well as other third-party business partners. We cannot assure you that our current and planned personnel, infrastructure, systems, procedures and controls will be adequate to support our expanding operations. As we enter new markets, such expansion may subject us to various challenges, including those relating to our lack of familiarity with the culture, legal regulations and economic conditions of the new regions, difficulties in selection and appointment of distributors, display centers, staffing and managing such operations. The risks involved in entering new geographical markets may be higher than expected, and we may face significant competition in such markets. By expanding into new markets, we may be exposed to significant liabilities and could lose some or all of our investment in such regions. If we fail to manage our expansion effectively, our business, results of operations and prospects may be materially and adversely affected. Any delay or non-availability of additional capital will also impact our growth curve and may lead to stagnation and loss of business.

Continuous expansion also involves challenges relating to recruitment, training and retention of human resources of caliber. Failure to train and retain employees may result in attrition, which will put pressure on us for recruitment, which may also lead to increased human resource costs, which may also impact our financial position.

We are dependent on raw materials and mobile device components from off shore entities and from local markets, and an increase in their cost could have an adverse effect on our business.

The stability or variability in the prices of materials or components depends on various factors which could have an adverse effect on our business and accordingly, a major fluctuation should not be ruled out in the future. Several components used in handsets sold by us are sourced from offshore companies, primarily from China. The price and availability of the materials or components depends on several factors beyond our control, including supplier’s preferability, overall economic conditions, production levels, market demand for such material, production and transportation cost, duties, taxes and trade restrictions. Any impact on supply of components for any reason whatsoever will have direct impact on our business.

We have engaged in transactions with related parties, and such transactions present possible conflicts of interest that could have an adverse effect on our business and results of operations.

We have entered into a number of transactions with related parties, including our significant shareholders and directors. For example, we have entered into several transactions with persons or our founder and a director of us, Minfei Bao, where we borrowed funds from him for additional working capital demand. See “Item 7. Major Shareholders And Related Party Transactions - B. Related Party Transactions - Loans from Mr. Bao”. We may in the future enter into additional transactions with entities in which members of our board of directors and other related parties hold ownership interests.

Transactions with related parties present potential for conflicts of interest, as the interests of related party may not align with the interests of our shareholders. Although we believe that these transactions were in our best interests, we cannot assure you that these transactions were entered into on terms as favorable to us as those that could have been obtained in an arms-length transaction. We may also engage in transactions with related parties in the future. These transactions, individually or in the aggregate, may have an adverse effect on our business and results of operations or may result in government enforcement actions or other litigation.

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We may be adversely affected by product liability exposure claims.

We face an inherent business risk of exposure to product liability claims in the event that our products fail to perform to their specifications. In case of any product liability claim, we may need to incur significant expenditure in defending any such claims. We may incur losses relating to these claims or the defense of these claims.

We may also be required to participate in recalls involving our mobile products, if any prove to be defective, or we may voluntarily initiate a recall or make payments related to such claims as a result of various industry or business practices or the need to maintain good customer relationships. Such a recall would result in a diversion of resources. Where defective designs or defective components parts cause significant bodily damage or injury, our liability risks will increase.

We do not maintain product liability insurance, and to the extent we do obtain such insurance in the future, we cannot assure investors that it will be sufficient to cover all product liability claims, that such claims will not exceed our insurance coverage limits or that such insurance will continue to be available on commercially reasonable terms, if at all. Any product liability claim brought against us could have a material adverse effect on the results of our operations.

Our management and auditors identified material weaknesses in our internal control over financial reporting that, if not properly remediated, could result in material misstatements in our consolidated financial statements that could cause investors to lose confidence in our reported financial information and have a negative effect on the trading price of our ordinary shares.

Prior to our initial public offering, we were a private company with limited accounting personnel and other resources with which we address our internal control over financial reporting. In connection with the audits of our consolidated financial statements included in this annual report, we and our independent registered public accounting firm identified two material weaknesses in our internal control over financial reporting. A “material weakness” is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. 

We did not maintain appropriately designed entity-level controls impacting the control environment, risk assessment procedures, and effective monitoring controls to prevent or detect material misstatements to the consolidated financial statements. These deficiencies were attributed to: (i) our lack of sufficient qualified financial reporting and accounting personnel with an appropriate knowledge under accounting principles generally accepted in the United States (“U.S. GAAP”), and (ii) our lack of comprehensive accounting policies and procedures manual in accordance with U.S. GAAP. We are taking remedial measures to improve the effectiveness of our controls, including by hiring additional accounting and finance personnel and by seeking to engage an outside consultant. The existence of material weaknesses is an indication that there is a more than remote likelihood that a material misstatement of our financial statements will not be prevented or detected in a future period, and the process of designing and implementing effective internal controls and procedures will be a continual effort that may require us to expend significant resources to establish and maintain a system of controls that is adequate to satisfy our reporting obligations as a public company. We cannot assure you that the measures we take will be sufficient to remediate the material weaknesses identified by our management and Audit Alliance LLP or that we will implement and maintain adequate controls over our financial processes and reporting in the future in order to avoid additional material weaknesses or controlled deficiencies in our internal control over financing reporting. If our remediation efforts are not successful or other material weaknesses or control deficiencies occur in the future, we may be unable to report our financial results accurately or on a timely basis, which could cause our reported financial results to be materially misstated and result in the loss of investor confidence and cause the trading price of our ordinary shares to decline. Moreover, ineffective controls could significantly hinder our ability to prevent fraud.

Our internal controls over financial reporting may not be effective and our independent registered public accounting firm may not be able to certify as to their effectiveness, which could have a significant and adverse effect on our business and reputation.

We will be in a continuing process of developing, establishing, and maintaining internal controls and procedures that will allow our independent registered public accounting firm to attest to, our internal controls over financial reporting if and when required to do so under Section 404 of the Sarbanes-Oxley Act. Although our independent registered public accounting firm is not required to attest to the effectiveness of our internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act until the date we are no longer an emerging growth company and neither a large accelerated filer nor an accelerated filer, our management will be required to report on our internal controls over financial reporting under Section 404 of the Sarbanes-Oxley Act. If we fail to achieve and maintain the adequacy of our internal controls, we would not be able to conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act. At such time, our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our controls are documented, designed or operating. Moreover, our testing, or the subsequent testing by our independent registered public accounting firm, may reveal other material weaknesses or that the material weaknesses described above have not been fully remediated. If we do not remediate the material weaknesses described above, or if other material weaknesses are identified or we are not able to comply with the requirements of Section 404 of the Sarbanes-Oxley Act in a timely manner, our reported financial results could be materially misstated or could subsequently require restatement, we could receive an adverse opinion regarding our internal controls over financial reporting from our independent registered public accounting firm and we could be subject to investigations or sanctions by regulatory authorities, which would require additional financial and management resources, and the market price of our ordinary shares could decline.

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We are subject to various anti-corruption and anti-bribery laws, including the U.S. Foreign Corrupt Practices Act, and U.K., PRC and Indian anti-corruption and anti-bribery laws; any determination that we have violated such laws could damage our business and reputation, limit our ability to bid for certain business opportunities, and subject us to significant criminal and civil penalties, civil litigation (such as shareholder derivative suits), and commercial liabilities.

We are subject to anti-corruption and anti-bribery laws in the United States, United Kingdom, China, and India that prohibit certain improper payments made directly or indirectly to government departments, agencies, and instrumentalities; officials of those government departments, agencies, and instrumentalities; political parties and their officials; candidates for political office; officials of public international organizations; persons acting on behalf of the foregoing; and commercial counterparties. These laws include the U.S. Foreign Corrupt Practices Act, the PRC Criminal Law, the PRC Anti-Unfair Competition Law, the Prevention of Corruption Act 1988 of India, the Indian Penal Code, 1860, the Prevention of Money Laundering Act, 2002 and anti-corruption laws in various Indian states.

We are engaged in business in a number of countries that are regarded as posing significant risks of corruption. Of particular note, we conduct operations, have agreements with state-controlled enterprises and other third parties and make sales in the PRC, and we have research and development activities in India, each of which may be exposed to corruption risk. It is our policy to implement safeguards and procedures to prohibit these practices by our employees, officers, directors, or by third parties acting on our behalf. However, we cannot rule out the risk that any of our employees, officers, directors, or third parties acting on our behalf may engage in breaches of our policies or anti-corruption laws, for which we might be held responsible.

Allegations of violations of these anti-corruption and anti-bribery laws, and investigation into such allegations, could negatively affect our reputation, business, operating results, and financial condition. The violation of these laws may result in substantial monetary and even criminal sanctions, follow-on civil litigation (such as shareholder derivative suits), and monitoring of our compliance program by the United States or other governments, each of which could negatively affect our reputation, business, operating results, and financial condition. In addition, the United States or other governments may seek to hold us liable for violations of these laws committed by companies in which we invest or acquire.

The agreements governing the loan facilities we currently have contain restrictions and limitations that could significantly affect our ability to operate our business, raise capital, as well as significantly affect our liquidity, and therefore could adversely affect our results of operations.

We have incurred certain indebtedness under loan facilities with various lenders including Shenzhen Rural Commercial Bank (“SRCB”) and China Resources Bank of Zhuhai Co., Ltd (“CRBZ”).

Covenants governing our loan facilities with SRCB and CRBZ restrict, among other things, our ability to:

● incur or permit to exist any additional indebtedness;

● guarantee or otherwise become liable with respect to the obligations of another party or entity;

● acquire any assets, except in the ordinary course of business, or make any investments;

● use the loan hereunder for investment in fixed assets or equity, or for investment in securities or futures market; and

● complete a merger, division, transfer of equity and creditor’s rights, external investment, material increase of debt financing, or a sale of all or substantially all of our assets.

We have been subject to certain financial covenants from our lenders. Our credit agreements with SRCB require us to meet certain monthly revenue targets, each for a term of three years. These credit agreements require us to maintain monthly revenue at least RMB3.0 million (US$0.5 million). Such monthly revenue amounts shall be deposited into an account established by UTime SZ and under the supervision of SRCB. UTime SZ may withdraw funds from such account only after ensuring that the applicable principal and interest of the SRCB loans are paid off as they become due on a monthly basis. Apart from the aforementioned restriction, UTime SZ is able to fully control the funds in the supervision account. However, if UTime SZ fails to meet the minimum monthly revenue covenant in the credit agreement, SRCB shall have the right to raise the interest rate by 50% from the date of funding (i.e. July 16, 2021) or to accelerate the loan.

In addition to the above-mentioned financial covenants, the SRCB and CRBZ loan documents contain customary events of default, including but not limited to: non-payment of principal, interest and fees or other amounts; violation of covenants; inaccuracy of representations and warranties; and certain bankruptcy and other insolvency events. If UTime SZ is in breach of any of these credit agreements, the applicable lender shall have the right to dispose of the collateral in accordance with the law.

Our ability to comply with these and other provisions under our outstanding loans may be affected by events beyond our control. Although as of the date of this annual report, we believe we are in compliance with all of our loan covenants, such covenants and obligations are ongoing, and the breach of any such covenants or obligations not otherwise waived or cured could result in a default under the applicable debt obligations and could trigger acceleration of those obligations.

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Any defaults under our loan arrangements could adversely affect our growth, our financial condition, our results of operations and our ability to make payments on our debt. The ability to make payments of principal and interest on indebtedness will depend on our financial condition, which is subject to general economic conditions, industry cycles and financial, business and other factors affecting our operations, many of which are beyond our control. If sufficient cash flow is not generated from operations to service such debt, we may be required, among other things, to:

● seek additional financing in the debt or equity markets;

● delay, curtail or abandon altogether our research & development or investment plans;

● refinance or restructure all or a portion of our indebtedness; or

● sell selected assets.

Such measures might be insufficient to service the indebtedness. In addition, any such financing, refinancing or sale of assets may not be available on commercially reasonable terms, or at all. In addition, we may not be able to grow market share, take advantage of future opportunities or respond to competitive pressures or unanticipated requirements, which could negatively impact our business, operating results and financial condition.

Defaults under either of our loan agreements with each of SRCB and CRBZ could result in a substantial loss of our assets.

Historically, we have mortgaged our assets to obtain loans with various banking institutions. We have mortgaged our office owned by UTime SZ and pledged accounts receivables equal to RMB22,500,000 (US$3.5 million) owned by UTime SZ under our credit agreement with CCB, which was terminated in November 2020. Additionally, we have mortgaged our office owned by UTime SZ under our credit agreement with CRBZ. See “Item 5. Operating And Financial Review And Prospects- Liquidity and Capital Resources - Financing Activities.”

A failure to repay any of the indebtedness under either of our loan agreements with SRCB or CRBZ as they become due or to otherwise comply with the covenants contained in any of such agreements could result in an event of default thereunder. If not cured or waived, an event of default under any of such agreements could enable the lender thereunder to declare all borrowings outstanding on such debt, together with accrued and unpaid interest and fees, to be due and payable and terminate all commitments to extend further credit. Such lenders could also elect to foreclose on our assets securing such debt. In such an event, the Company may not be able to refinance or repay all of its indebtedness, pay dividends or have sufficient liquidity to meet operating and capital expenditure requirements. Any such acceleration could cause us to lose a substantial portion of our assets and will substantially adversely affect our ability to continue our operations.

Controversies affecting China’s trade with the United States could harm our operations.

In July 2018 and again in September 2018, the United States imposed tariffs on a wide range of products and other goods from China. In May 2019, negotiations on tariffs and other trade matters between the United States and China came to a halt, and both sides escalated the trade dispute. In June 2019, trade talks resumed between the United States and China, and the United States indicated it would not impose additional tariffs at this time. Although negotiation resumed in the second half of 2019 between the United States and China and the two countries reached a trade deal in January 2020, it is possible the United States will impose additional tariffs. Given our major manufacturing in China, the imposition of tariffs by the United States presents negative effect for us. Tariffs that have already been announced and implemented have covered certain of our products. The trade controversy between the United States and China is still evolving, and we cannot predict future trade policy. However, future tariffs could cover more or all of our products, resulting in an adverse effect on our operations, including customer demand from the United States.

Risks Related to Our Corporate Structure

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 ordinary shares.

We are a holding company and conduct substantially all of our business through our operating subsidiaries, including limited liability companies established in China and in India. We will rely on dividends paid by our subsidiaries for our cash needs, 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.

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We rely on dividends and other distributions on equity paid by our PRC Subsidiary to fund any cash and financing requirements we may have, and any limitation on the ability of our PRC Subsidiary to make payments to us could have a material adverse effect on our ability to conduct our business. If our PRC Subsidiary incurs debt on its own behalf in the future, the instruments governing the debt may restrict its ability to pay dividends or make other distributions to us. Under PRC laws and regulations, our PRC Subsidiary, which is a wholly foreign-owned enterprise, may pay dividends only out of its accumulated profits as determined in accordance with PRC accounting standards and regulations. In addition, a wholly foreign-owned enterprise is required to set aside at least 10% of its 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. Such reserve funds cannot be distributed to us as dividends. At its discretion, a wholly foreign-owned enterprise may allocate a portion of its after-tax profits based on PRC accounting standards to an enterprise expansion fund, or a staff welfare and bonus fund.

Our PRC Subsidiary generates primarily all of its revenue in Renminbi, which is not freely convertible into other currencies. As result, any restriction on currency exchange may limit the ability of our PRC Subsidiary 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 State Administration of Foreign Exchange (the “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 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.

With respect to Do Mobile, our Indian subsidiary, any limitation on declaration and payment of dividend may create a barrier for us to meet our cash and financing requirements and this could have a material adverse effect on our ability to conduct our business. As per the extant provisions of Indian laws and regulations, our Indian subsidiary (being a wholly foreign owned company), may pay dividends only out of its profits from the current year or previous years or its free reserves subject to the treatment and adjustment prescribed in applicable Indian law, i.e., the Companies Act, 2013. Pursuant to applicable Indian taxation law until March 31, 2020, it was necessary for our Indian subsidiary to pay tax on the dividend declared and distributed to the shareholders and, a non-resident shareholder of an Indian company was not liable to pay any tax in India on the dividends received by it. However, Finance Act, 2020 (which became effective on April 1, 2020) amends certain provisions relating to taxation of dividends declared by Indian companies, and provides that any distribution of dividend from April 1, 2020 onwards will only be subject to tax in the hands of the recipient shareholder and the Indian companies are not required to pay any tax on the dividend declared and distributed to the shareholders. Furthermore, non-resident shareholders would now be paying tax on the dividend income as per the rate prescribed under the relevant double taxation avoidance agreements or Indian law, whichever is more beneficial. The said amendments shall entitle foreign investors to claim credit in their country of residence of tax paid in India in respect of dividend distributed by domestic companies. The change in the tax regime by Indian Government regarding payment of taxes may increase tax burden in the hands of the parent company of our Indian Subsidiary.

Minfei Bao, our founder and director, and Min He will continue to have significant influence over us after our initial public offering, including control over decisions that require the approval of shareholders, which could limit your ability to influence the outcome of matters submitted to shareholders for a vote.

As of the date of this annual report, Minfei Bao beneficially owns 4,380,000 of our ordinary shares, or 32.28% of our issued and outstanding ordinary shares, through Grandsky Phoenix Limited, a British Virgin Islands company, of which Mr. Bao controls 100% of the equity interest. As of the date of this annual report, Min He, one of our directors, beneficially owns 137,793 of our ordinary shares, or 1.02% of our issued and outstanding ordinary shares through HMercury Capital Limited, a British Virgin Islands company, of which Mr. He is the controlling shareholder. As long as Mr. Bao owns or controls a significant amount of our outstanding voting power of our ordinary shares, Mr. Bao, or Mr. Bao and Mr. He, if they act together, has or have the ability to exercise substantial control over all corporate actions requiring shareholder approval, irrespective of how our other shareholders may vote, including:

● the election and removal of directors and the size of our board of directors;

● any amendment of our memorandum or articles of association; or

● the approval of mergers, consolidations and other significant corporate transactions, including a sale of substantially all of our assets.

Moreover, beneficial ownership of our ordinary shares by Mr. Bao may also adversely affect the trading price of our ordinary shares on Nasdaq to the extent investors perceive disadvantages in owning shares of a company with a controlling shareholder. As a result, this concentration of ownership may not be in the best interests of our other shareholders.

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We are a “controlled company” within the meaning of Nasdaq’s Rules and, as a result, may rely on exemptions from certain corporate governance requirements that provide protection to shareholders of other companies.

We are a “controlled company” as defined under Nasdaq’s Rules because Mr. Bao holds more than 50% of our voting power, and we continue to be a controlled company upon completion of our initial public offering. For so long as we remain a controlled company under that definition, we are permitted to elect to rely, and may rely, on certain exemptions from the obligation to comply with certain corporate governance requirements, including:

● the requirement that our directors must be selected or recommended solely by independent directors; and

● the requirement that we have a corporate governance and nominating committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities.

As a result, you will not have the same protections afforded to shareholders of companies that are subject to all of the corporate governance requirements of the NASDAQ Stock Market Rules, if we utilize such exemptions. We currently do not intend to utilize the controlled company exemptions. To the extent we cease to qualify as a controlled company, we will no longer be able to rely on any of these exemptions.

Change in the tax regime in India will increase tax burden on us.

Bridgetime Limited holds 99.99% shareholding in Do Mobile in India. Until March 31, 2020, a non-resident shareholder of an Indian company was not liable to pay any tax in India on the dividends received by it. However, with the introduction of the Finance Act, 2020 (which became effective from April 1, 2020), non-resident shareholders will now be paying tax on the dividend income distributed by an Indian company from April 1, 2020 onwards as per the rate prescribed under the relevant double taxation avoidance agreements or Indian law, whichever is more beneficial. Accordingly, this will increase tax burden on Bridgetime Limited. Further, there are number of taxes and other levies imposed at the level of the Central Government and State Government in India. In addition to income tax, it includes: (i) goods and service tax; (ii) stamp duty charges; and (iii) surcharges and cess. These tax rates may increase in future creating more financial burden on Do Mobile and may affect the overall tax efficiency of Do Mobile. Additional tax exposure could adversely affect its business and results of operations.

We may become subject to taxation in the Cayman Islands, which would negatively affect our results.

We have received an undertaking from the Financial Secretary of the Cayman Islands that, in accordance with section 6 of the Tax Concessions Act (As Revised) of the Cayman Islands, until the date falling 20 years after October 15, 2018, being the date of such undertaking, no law which is enacted in the Cayman Islands imposing any tax to be levied on profits, income, gains or appreciations shall apply to us or our operations and, in addition, that no tax to be levied on profits, income, gains or appreciations or which is in the nature of estate duty or inheritance tax shall be payable (i) on or in respect of the shares, debentures or other obligations of our company or (ii) by way of the withholding in whole or in part of a payment of dividend or other distribution of income or capital by our company to its members or a payment of principal or interest or other sums due under a debenture or other obligation of our company. If we otherwise were to become subject to taxation in the Cayman Islands, our financial condition and results of operations could be materially and adversely affected. See “Item 10.E. Taxation - Cayman Islands Taxation”.

We are subject to various changing laws and regulations regarding regulatory matters, corporate governance and public disclosure that have increased both our costs and the risk of non-compliance.

We are subject to rules and regulations by various governing bodies, including, for example, the SEC, which is charged with the protection of investors and the oversight of companies whose securities are publicly traded, and to new and evolving regulatory measures under applicable law. Our efforts to comply with new and changing laws and regulations have resulted in and are likely to continue to result in, increased general and administrative expenses and a diversion of management time and attention from revenue-generating activities to compliance activities.

Moreover, because these laws, regulations and standards are subject to varying interpretations, their application in practice may evolve over time as new guidance becomes available. This evolution may result in continuing uncertainty regarding compliance matters and additional costs necessitated by ongoing revisions to our disclosure and governance practices. If we fail to address and comply with these regulations and any subsequent changes, we may be subject to penalty and our business may be harmed.

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Because we are incorporated under the laws of the Cayman Islands, you may face difficulties in protecting your interests, and your ability to protect your rights through the U.S. Federal courts may be limited.

We are a Cayman Islands exempted company with limited liability and substantially all of our assets will be located outside the United States. In addition, most of our directors and officers are nationals or residents of jurisdictions other than the United States and all or a substantial portion of their assets are located outside the United States. As a result, it may be difficult for investors to effect service of process within the United States upon us or our directors or executive officers, or enforce judgments obtained in the United States courts against us or our directors or officers.

Further, mail addressed to us and received at our registered office will be forwarded unopened to the forwarding address supplied by our directors. Our directors will only receive, open or deal directly with mail which is addressed to them personally (as opposed to mail which is only addressed to us). We, our directors, officers, advisors or service providers (including the organization which provides registered office services in the Cayman Islands) will not bear any responsibility for any delay, howsoever caused, in mail reaching this forwarding address.

Our corporate affairs are governed by our amended and restated memorandum and articles of association, the Companies Act (As Revised) (as the same may be supplemented or amended from time to time) and the common law of the Cayman Islands. The rights of shareholders to take action against the directors, actions by minority shareholders and the fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from judicial precedent in the Cayman Islands as well as from English common law, the decisions of whose courts are of persuasive authority, but are not technically binding on a court in the Cayman Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under Cayman Islands law are not as clearly established as they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands has a less exhaustive body of securities laws as compared to the United States, and certain states, such as Delaware, have more fulsome and judicially interpreted bodies of corporate law. As a result, there may be significantly less protection for investors than is available to investors in companies organized in the United States, particularly Delaware. In addition, Cayman Islands companies may not have standing to initiate a shareholders’ derivative action in a Federal court of the United States.

The Cayman Islands courts are also unlikely:

● to recognize or enforce against us judgments of courts of the United States based on the civil liability provisions of United States securities laws; and

● to impose liabilities against us, in original actions brought in the Cayman Islands, based on the civil liability provisions of United States securities laws that impose liabilities that are penal in nature.

In those circumstances, although there is no statutory enforcement in the Cayman Islands of judgments obtained in the United States, the courts of the Cayman Islands will recognize and enforce a foreign money judgment of a foreign court of competent jurisdiction without retrial on the merits based on the principle that a judgment of a competent foreign court imposes upon the judgment debtor an obligation to pay the sum for which judgment has been given provided certain conditions are met. For a foreign judgment to be enforced in the Cayman Islands, such judgment must be final and conclusive and for a liquidated sum, and must not be in respect of taxes or a fine or penalty, inconsistent with a Cayman Islands judgment in respect of the same matter, impeachable on the grounds of fraud or obtained in a manner, and or be of a kind the enforcement of which is, contrary to natural justice or the public policy of the Cayman Islands (awards of punitive or multiple damages may well be held to be contrary to public policy). A Cayman Islands Court may stay enforcement proceedings if concurrent proceedings are being brought elsewhere.

Like many jurisdictions in the United States, in certain circumstances Cayman Islands law permits mergers and consolidations between Cayman Islands companies and between Cayman Islands companies and non-Cayman Islands companies (provided that is facilitated by the laws of that other jurisdiction) and any such company may be the surviving entity for the purposes of mergers or the consolidated company for the purposes of consolidations. For these purposes, (a) “merger” means the merging of two or more constituent companies and the vesting of their undertaking, property and liabilities in one of such companies as the surviving company and (b) a “consolidation” means the combination of two or more constituent companies into a consolidated company and the vesting of the undertaking, property and liabilities of such companies to the consolidated company. In order to effect such a merger or consolidation, the directors of each constituent company must approve a written plan of merger or consolidation, which must, in most instances, then be authorized by a special resolution (usually a majority of 66 2/3% in value) of the shareholders of each constituent company and such other authorization, if any, as may be specified in such constituent company’s articles of association. A merger between a Cayman parent company and its Cayman subsidiary or subsidiaries does not require authorization by a resolution of shareholders provided a copy of the plan of merger is given to every member of each subsidiary company to be merged (unless waived by such member). For this purpose a subsidiary is a company of which at least 90% of the votes cast at its general meeting are held by the parent company. The consent of each holder of a fixed or floating security interest over a constituent company is required unless this requirement is waived by a court in the Cayman Islands. The plan of merger or consolidation must be filed with the Registrar of Companies who, if satisfied that the requirements of the Companies Act (As Revised) which includes certain other formalities, have been complied with, will register it. The filing must include a declaration as to the solvency of the consolidated or surviving company, a list of the assets and liabilities of each constituent company and an undertaking that a copy of the certificate of merger or consolidation will be given to the members and creditors of each constituent company and published in the Cayman Islands Gazette. Dissenting shareholders have the right to be paid the fair value of their shares (which, if not agreed between the parties, will be determined by the Cayman Islands court) if they follow the required procedures, subject to certain exceptions. Court approval is not required for a merger or consolidation which is effected in compliance with these statutory procedures.

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In addition, there are statutory provisions that facilitate the reconstruction and amalgamation of companies in certain circumstances, provided that the arrangement is approved by a majority in number of each class of shareholders and creditors with whom the arrangement is to be made, and who must in addition represent two-thirds in value of each such class of shareholders or creditors, as the case may be, that are present and voting either in person or by proxy at a meeting, or meetings, convened for that purpose. The convening of the meetings and subsequently the arrangement must be sanctioned by the Grand Court of the Cayman Islands. While a dissenting shareholder has the right to express to the court the view that the transaction ought not be approved, the court can be expected to approve the arrangement if it determines that:

● the company is not proposing to act illegally or beyond the scope of its corporate authority and the statutory provisions as to the required majority vote have been met;

● the shareholders have been fairly represented at the meeting in question, the statutory majority are acting bona fide without coercion of the minority to promote interests adverse to those of the class and that the meeting was properly constituted;

● the arrangement is such that it may reasonably be approved by an intelligent and honest man of that share class acting in respect of his interest; and

● the arrangement is not one which would be more properly sanctioned under some other provision of the Companies Act, or that would amount to “fraud on the minority.”

If the arrangement and reconstruction is approved, the dissenting shareholder would have no rights comparable to appraisal rights, which would otherwise ordinarily be available to dissenting shareholders of U.S. corporations, providing rights to receive payment in cash for the judicially determined value of the shares.

In addition, there are further statutory provisions to the effect that, when a take-over offer is made and approved by holders of 90.0% in value of the shares affected (within four months after the making of the offer), the offeror may, within two months following the expiry of such period, require the holders of the remaining shares to transfer such shares on the terms of the offer. An objection can be made to the Grand Court of the Cayman Islands, but this is unlikely to succeed unless there is evidence of fraud, bad faith, collusion or inequitable treatment of shareholders.

Further, transactions similar to a merger, reconstruction and/or an amalgamation may in some circumstances be achieved through other means to these statutory provisions, such as a share capital exchange, asset acquisition or control, through contractual arrangements, of an operating business.

As a result of all of the above, public shareholders may have more difficulty in protecting their interests in the face of actions taken by management, members of the board of directors or controlling shareholders than they would as public shareholders of a U.S. company.

Provisions of our amended and restated memorandum and articles of association or Cayman Islands law could delay or prevent an acquisition of our company, even if the acquisition may be beneficial to our shareholders, could make it more difficult for you to change management, and could have an adverse effect on the market price of our ordinary shares.

Provisions in our amended and restated memorandum and articles of association may discourage, delay or prevent a merger, acquisition or other change in control that shareholders may consider favorable, including transactions in which shareholders might otherwise receive a premium for their shares. In addition, these provisions may frustrate or prevent any attempt by our shareholders to replace or remove our current management by making it more difficult to replace or remove our board of directors. Such provisions may reduce the price that investors may be willing to pay for our ordinary shares in the future, which could reduce the market price of our ordinary shares. These provisions include:

● a prohibition on shareholder action through written consent;

● a requirement that extraordinary general meetings of shareholders be called only by a majority of the board of directors or, in limited circumstances, by the board upon shareholder requisition;

● an advance notice requirement for shareholder proposals and nominations to be brought before an annual general meeting;

● the authority of our board of directors to issue preference shares with such terms as our board of directors may determine; and

● a requirement of approval of not less than two-thirds of the votes cast by shareholders entitled to vote thereon in order to amend any provisions of our amended and restated memorandum and articles of association.

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UTime Limited is a holding company with no material operation. We conduct substantially all of our operations through the VIE and its subsidiaries, and we rely on contractual arrangements with the VIE and its shareholders to operate our business. If the PRC government deems that the agreements that establish the structure for operating some of our operations in China do not comply with PRC regulations relating to the relevant industries, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations.

We are a holding company incorporated in the Cayman Islands and our PRC Subsidiary is considered foreign-invested enterprise. As a holding company with no material operations of our own, we conduct a substantial majority of our operations through the VIE and its subsidiaries. In December 2018, UTime HK established a wholly owned subsidiary in China, UTime WFOE, our wholly-owned foreign enterprise (“WFOE”). In March 2019, we obtained control over UTime SZ via UTime WFOE by entering into a series of contractual arrangements with UTime SZ, our VIE, and its shareholder. In August 2019, the amended and restated contractual agreements were entered into among UTime SZ, our VIE, and its shareholders, which were further amended and restated in September 2019.

UTime WFOE has entered into a series of contractual arrangements with our VIE and its shareholders, respectively, which enable us to (i) determine the most significant economic activities of the VIE, (ii) receive substantially all of the economic benefits of our VIE, and (iii) have an exclusive option to purchase all or part of the equity interests and assets in our VIE when and to the extent permitted by PRC laws. As a result of these contractual arrangements, we have control over and are considered the primary beneficiary of our VIE for accounting purposes and hence consolidate its financial results into our consolidated financial statements under U.S. GAAP. See “Item 4A. - History and Corporate Structure - Contractual Arrangements with the VIE and its Respective Shareholders” for further details.

In the opinion of B&D Law Firm, our PRC legal counsel, (i) the ownership structures of the VIE in China and UTime WFOE, both currently and immediately after giving effect to our initial public offering, comply with all existing PRC laws and regulations; and (ii) the contractual arrangements between UTime WFOE, our VIE and its shareholders governed by PRC law are valid, binding and enforceable, and will not result in any violation of PRC laws or regulations currently in effect. However, our PRC legal counsel has also advised us that there are substantial uncertainties regarding the interpretation and application of current and future PRC laws, regulations and rules. The contractual arrangements have not been tested in a court of law. Accordingly, the PRC regulatory authorities may ultimately take a view that is contrary to the opinion of our PRC legal counsel. It is uncertain whether any new PRC laws or regulations relating to the VIE structure will be adopted or if adopted, what they would provide. If we or our VIE is found to be in violation of any existing or future PRC laws or regulations, or fail to obtain or maintain any of the required permits or approvals, the relevant PRC regulatory authorities would have broad discretion to take action in dealing with such violations or failures, including:

● revoking the business license and/or operating licenses of our WFOE or our VIE;

● discontinuing or placing restrictions or onerous conditions on our operations through any transactions between our WFOE and our VIE;

● imposing fines, confiscating the income from our WFOE or our VIE, or imposing other requirements with which we or our VIE may not be able to comply;

● requiring us to restructure our ownership structure or operations, including terminating the contractual arrangements with our VIE and deregistering the equity pledges of our VIE, which in turn would affect our ability to consolidate, derive economic interests from, or determine the most significant economic activities of the VIE; or

● restricting or prohibiting our use of the proceeds of our initial public offering to finance our business and operations in China.

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Furthermore, new PRC laws, rules and regulations may be introduced to impose additional requirements that may be applicable to our corporate structure and contractual arrangements. See “Risks Related to Our Corporate Structure-Substantial uncertainties exist with respect to the interpretation and implementation of the newly enacted PRC Foreign Investment Law and its Implementation Regulations and how they may impact the viability of our current corporate structure, corporate governance, business operations and financial results.” Occurrence of any of these events could materially and adversely affect our business and financial condition and results of operations.

The imposition of any of these penalties would result in a material and adverse effect on our ability to conduct our business and the market price of our ordinary shares. In addition, it is unclear what impact the PRC government actions would have on us and on our ability to consolidate the financial results of our VIE in our consolidated financial statements, if the PRC government authorities were to find our legal structure and contractual arrangements to be in violation of PRC laws and regulations, or if these regulations change or are interpreted differently in the future. If the imposition of any of these government actions causes us to lose our right to direct the activities of our VIE or our right to receive substantially all the economic benefits and residual returns from our VIE and we are not able to restructure our ownership structure and operations in a satisfactory manner, we would no longer be able to consolidate the financial results of our VIE in our consolidated financial statements, which may cause the value of our ordinary shares to significantly decline or even become worthless. Either of these results, or any other significant penalties that might be imposed on us in this event, would have a material change in our operation and a material adverse effect on our financial condition and results of operations, could significantly limit or completely hinder our ability to offer ordinary shares to investors and could cause the value of our ordinary shares to significantly decline or be worthless.

We do not hold direct equity interest in the VIE. We rely on contractual arrangements with our VIE and its shareholders for a large portion of our business operations, which may not be as effective as direct ownership in providing operational control.

UTime Limited is a Cayman Islands holding company and does not hold direct equity interest in the VIE. We have relied and expect to continue to rely on contractual arrangements with our VIE and its shareholders to conduct certain of our key businesses. These contractual arrangements may not be as effective as the control provided by having a direct ownership in our VIE. For example, our VIE and its shareholders could breach their contractual arrangements with us by, among other things, failing to conduct their operations in an acceptable manner or taking other actions that are detrimental to our interests. We have no direct or indirect equity interests in the VIE or any of its subsidiaries.

If we had direct ownership of our VIE, we would be able to exercise our rights as a shareholder to effect changes in the board of directors of our VIE, which in turn could implement changes, subject to any applicable fiduciary obligations, at the management and operational level. However, under the current contractual arrangements, we rely on the performance by our VIE and its shareholders of their obligations under the contracts to exercise control over our VIE. The shareholders of our consolidated VIE may not act in the best interests of our Company or may not perform their obligations under these contracts. Such risks exist throughout the period in which we intend to operate certain portions of our business through the contractual arrangements with our VIE. All of these contractual arrangements are governed by PRC law and provide for the resolution of disputes through arbitration in the PRC. The legal environment in the PRC is not as developed as in some other jurisdictions, such as the United States. If any disputes relating to these contracts remains unresolved, we will have to enforce our rights under these contracts through the operations of PRC laws and arbitration, litigation and other legal proceedings and therefore will be subject to uncertainties in the PRC legal system. In the event we are unable to enforce these contractual arrangements, we may not be able to determine the most significant economic activities of the VIE and we may be precluded from operating our business, which would have a material adverse effect on our financial condition and results of operations. Therefore, our contractual arrangements with our VIE may not be as effective in ensuring our control over the relevant portion of our business operations as direct ownership would be. If we are unable to assert our contractual control rights over the assets of the VIE that conduct all or substantially all of our operations, our ordinary shares may decline in value or become worthless.

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We may not be able to consolidate the financial results of some of our affiliated companies or such consolidation could materially adversely affect our operating results and financial condition.

A substantial majority of our business is conducted through UTime SZ, which currently is considered for accounting purposes as a VIE, and we are considered as the primary beneficiary, enabling us to consolidate our financial results in our consolidated financial statements. In the event that in the future the VIE would no longer meet the definition of a VIE, or we are deemed not to be the primary beneficiary, we would not be able to consolidate line by line the VIE’s financial results in our consolidated financial statements for PRC purposes. Also, if in the future an affiliate company becomes a VIE and we become the primary beneficiary, we would be required to consolidate that entity’s financial results in our consolidated financial statements for PRC purposes. If such entity’s financial results were negative, this could have a corresponding negative impact on our operating results for PRC purposes. However, any material variations in the accounting principles, practices, and methods used in preparing financial statements for PRC purposes from the principles, practices, and methods generally accepted in the United States and in the SEC accounting regulations must be discussed, quantified, and reconciled in financial statements for the United States and SEC purposes.

Any failure by our VIE or its shareholders to perform their obligations under our contractual arrangements with them would have a material and adverse effect on our business.

We refer to the shareholders of our VIE as its nominee shareholders because although they remain the holders of equity interests on record in our VIE, pursuant to the terms of the relevant power of attorney, such shareholders have irrevocably authorized our WFOE or any individual duly appointed by WFOE to exercise their rights as a shareholder of the relevant VIE. However, if our VIE or its shareholders fail to perform their respective obligations under the contractual arrangements, we may have to incur substantial costs and expend additional resources to enforce such arrangements. We may also have to rely on legal remedies under PRC laws, including seeking specific performance or injunctive relief, and claiming damages, which we cannot assure, will be effective under PRC law. For example, if the shareholders of our VIE refuse to transfer their equity interest in our VIE to us or our designee if we exercise the purchase option pursuant to these contractual arrangements, or if they otherwise act in bad faith toward us, then we may have to take legal actions to compel them to perform their contractual obligations.

Our contractual arrangements are governed by PRC laws. Accordingly, these contracts would be interpreted in accordance with PRC laws, and any disputes would be resolved in accordance with PRC legal procedures, which may not protect you as much as those of other jurisdictions, such as the United States.

All of the agreements under our contractual arrangements are governed by PRC laws and provide for the resolution of disputes through arbitration in China. Accordingly, these contracts would be interpreted in accordance with PRC laws and any disputes would be resolved in accordance with PRC legal procedures. The legal system in the PRC is not as developed as in some other jurisdictions, such as the United States. As a result, uncertainties in the PRC legal system could limit our ability to enforce these contractual arrangements. See “Risks Related to Doing Business in China -Changes in China’s economic, political or social conditions or government policies could have a material adverse effect on our business and operations.” Meanwhile, there is very little precedent and formal guidance as to how contractual arrangements in the context of a VIE should be interpreted or enforced under PRC laws. There remain significant uncertainties regarding the ultimate outcome of such arbitration should legal action become necessary. In addition, under PRC laws, rulings by arbitrators are final, parties cannot appeal the arbitration results in courts, and if the losing parties fail to carry out the arbitration awards within a prescribed time limit, the prevailing parties may only enforce the arbitration awards in PRC courts through arbitration award recognition proceedings, which would require additional expenses and delay. In the event we are unable to enforce these contractual arrangements, or if we suffer significant delays or other obstacles in the process of enforcing these contractual arrangements, we may not be able to determine the most significant economic activities of the VIE, and our ability to conduct our business may be negatively affected.

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PRC regulation of loans to and direct investment in PRC entities by offshore holding companies to PRC entities may delay or prevent us from making loans or additional capital contributions to our PRC operating subsidiaries.

As an offshore holding company of our PRC Subsidiary, we may make loans to our PRC Subsidiary, our VIE and the VIE’s subsidiaries, or may make additional capital contributions to our PRC Subsidiary, subject to satisfaction of applicable governmental registration and approval requirements.

Any loans we extend to our PRC Subsidiary, which are treated as foreign-invested enterprises under PRC law, cannot exceed the statutory limit and must be registered with the local counterpart of the SAFE.

We may also decide to finance our PRC Subsidiary by means of capital contributions. According to the relevant PRC regulations on foreign-invested enterprises in China, these capital contributions are subject to registration with or approval by local Administration for Market Regulation (“AMR”). In addition, the PRC government also restricts the convertibility of foreign currencies into Renminbi and use of the proceeds. On March 30, 2015, SAFE promulgated the Notice of the State Administration of Foreign Exchange on Reforming the Administration of Foreign Exchange Settlement of Capital of Foreign-invested Enterprises, or SAFE Circular 19, which took effect and replaced certain previous SAFE regulations from June 1, 2015. SAFE further promulgated the Notice of the State Administration of Foreign Exchange on Reforming and Standardizing the Foreign Exchange Settlement Management Policy of Capital Account, or SAFE Circular 16, effective on June 9, 2016, which, among other things, amend certain provisions of SAFE Circular 19. According to SAFE Circular 19 and SAFE Circular 16, the flow and use of the Renminbi capital converted from foreign currency denominated registered capital of a foreign-invested company is regulated such that Renminbi capital may not be used for business beyond its business scope or to provide loans to persons other than affiliates unless otherwise permitted under its business scope. Violations of the applicable circulars and rules may result in severe penalties, including substantial fines as set forth in the Foreign Exchange Administration Regulations. If our VIE requires financial support from us or our WOS in the future and we find it necessary to use foreign currency-denominated capital to provide such financial support, our ability to fund our VIE’s operations will be subject to statutory limits and restrictions, including those described above. These circulars may limit our ability to transfer any foreign currency we hold, including the net proceeds from our initial public offering, to our VIE and our PRC subsidiary, which may adversely affect our liquidity and our ability to fund and expand our business in China. Despite the restrictions under these SAFE circulars, our PRC Subsidiary may use its income in Renminbi generated from their operations to finance the VIE through entrustment loans to the VIE or loans to the VIE’s shareholders for the purpose of making capital contributions to the VIE. In addition, our PRC Subsidiary can use Renminbi funds converted from foreign currency registered capital to carry out any activities within their normal course of business and business scope. On October 23, 2019, the SAFE promulgated the Notice of the State Administration of Foreign Exchange on Further Promoting the Convenience of Cross-border Trade and Investment, or the SAFE Circular 28, which, among other things, allows all foreign-invested companies to use Renminbi converted from foreign currency-denominated capital for equity investments in China, as long as the equity investment is genuine, does not violate applicable laws, and complies with the negative list on foreign investment.

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

If the chops of our PRC subsidiary and the VIE are not kept safely, are stolen or are used by unauthorized persons or for unauthorized purposes, the corporate governance of these entities could be severely and adversely compromised.

In China, a company chop or seal serves as the legal representation of the company towards third parties even when unaccompanied by a signature. Each legally registered company in China is required to maintain a company chop, which must be registered with the local Public Security Bureau. In addition to this mandatory company chop, companies may have several other chops which can be used for specific purposes. The chops of our PRC subsidiary, the VIE and its subsidiaries generally held securely by personnel designated or approved by us in accordance with our internal control procedures. To the extent those chops are not kept safe, are stolen or are used by unauthorized persons or for unauthorized purposes, the corporate governance of these entities could be severely and adversely compromised and those corporate entities may be bound to abide by the terms of any documents so chopped, even if they were chopped by an individual who lacked the requisite power and authority to do so.

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

As of the date of this annual report, Mr. Bao and Mr. He hold 96.95% and 3.05% equity interest in UTime SZ, respectively. The shareholders of our VIE may have potential conflicts of interest with us. The shareholders may breach, or cause our VIE to breach, or refuse to renew, the existing contractual arrangements we have with them and our VIE, which would have a material and adverse effect on our ability to determine the most significant economic activities of the VIE and receive economic benefits from it. For example, the shareholders may be able to cause our agreements with our VIE to be performed in a manner adverse to us by, among other things, failing to remit payments due under the contractual arrangements to us on a timely basis. We cannot assure you that when conflicts of interest arise the shareholders will act in the best interests of our Company or such conflicts will be resolved in our favor. Currently, we do not have any arrangements to address potential conflicts of interest between the shareholders and our Company. If we cannot resolve any conflict of interest or dispute between us and the shareholders, we would have to rely on legal proceedings, which could result in disruption of our business and subject us to substantial uncertainty as to the outcome of any such legal proceedings.

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Currently, we do not have any arrangements to address potential conflicts of interest between these shareholders and our company, except that we could exercise our purchase option under the exclusive call option agreements with these shareholders to request them to transfer all of their equity interests in the VIE to a PRC entity or individual designated by us, to the extent permitted by PRC law. For Mr. Bao, who is our director and also a major shareholder of the VIE, we rely on him to abide by the laws of the Cayman Islands, which provide that directors and officers owe a fiduciary duty to the company that requires them to act in good faith and in what they believe to be the best interests of the company and not to use their position for personal gains. The shareholders of the VIE have executed powers of attorney to appoint our WFOE to vote on their behalf and exercise voting rights as shareholders of the VIE. If we cannot resolve any conflict of interest or dispute between us and the shareholders of the VIE, we would have to rely on legal proceedings, which could result in disruption of our business and subject us to substantial uncertainty as to the outcome of any such legal proceedings.

The shareholders of our VIE may be involved in personal disputes with third parties or other incidents that may have an adverse effect on their equity interests in our VIE and the validity or enforceability of our contractual arrangements with our VIE and its shareholder. For example, in the event that one of the shareholders of our VIE divorces his spouse, the spouse may claim that the equity interest of our VIE held by such shareholder is part of their community property and should be divided between such shareholder and his spouse. If such claim is supported by the court, the relevant equity interest may be obtained by the shareholder’s spouse or any third party who is not subject to obligations under our contractual arrangements, which could result in a loss of our major influence on the VIE. Similarly, if any of the equity interests of our VIE is inherited by a third party on whom the current contractual arrangements are not binding, we could lose our economic benefits over the VIE or have to incur unpredictable costs to maintain such economic benefits, which could cause significant disruption to our business and operations and harm our financial condition and results of operations.

Although under our current contractual arrangements, each of the spouses of Mr. Bao and Mr. He have executed spousal consent letters, under which each of them agreed that she will not take any actions or raise any claims to interfere with the performance by her spouse of the obligations under these contractual arrangements, including claiming community property ownership on the equity interest, and renounce any and all right and interest related to the equity interest that she may be entitled to under applicable laws. We cannot assure you that these undertakings and arrangements will be complied with or effectively enforced. In the event that any of them is breached or becomes unenforceable and leads to legal proceedings, it could disrupt our business, distract our management’s attention and subject us to substantial uncertainties as to the outcome of any such legal proceedings.

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

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

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

As part of our contractual arrangements with our VIE, our VIE and its subsidiaries hold certain assets that are material to the operation of certain portion of our business, including intellectual property and premise. If our VIE goes bankrupt and all or part of its assets become subject to liens or rights of third-party creditors, we may be unable to continue some or all of our business activities, which could materially and adversely affect our business, financial condition and results of operations. Under the contractual arrangements, our VIE may not, in any manner, sell, transfer, mortgage or dispose of its assets or legal or beneficial interests in the business without our prior consent. However, in the event that the shareholders breach this obligation and voluntarily liquidate our VIE, or our VIE declares bankruptcy, or all or part of its assets become subject to liens or rights of third-party creditors, we may be unable to continue some or all of our operations, which could materially and adversely affect our business, financial condition and results of operations. Furthermore, if our VIE or its subsidiaries undergo a voluntary or involuntary liquidation proceeding, its shareholders or unrelated third-party creditors may claim rights to some or all of its assets, hindering our ability to operate our business, which could materially and adversely affect our business, financial condition and results of operations.

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Substantial uncertainties exist with respect to the interpretation and implementation of the newly enacted PRC Foreign Investment Law and its Implementation Regulations and how they may impact the viability of our current corporate structure, corporate governance, business operations and financial results.

On March 15, 2019, the National People’s Congress approved the Foreign Investment Law, which took effect on January 1, 2020. On December 26, 2019, the Regulation on the Implementation of the Foreign Investment Law of the People’s Republic of China, was issued by the State Council and came into force on January 1, 2020. The Foreign Investment Law defines the “foreign investment” as the investment activities in China conducted directly or indirectly by foreign investors in the following manners: (i) a foreign investor, individually or collectively with other investors establishes a foreign-invested enterprise within China; (ii) a foreign investor acquires stock shares, equity shares, shares in assets, or other like rights and interests of an enterprise within China; (iii) a foreign investor, individually or collectively with other investors, invests and establishes new projects within China; and (iv) a foreign investor invests through other approaches as stipulated by laws, administrative regulations, or otherwise regulated by the State Council. Since the Foreign Investment Law is relatively new, uncertainties exist in relation to its interpretation and implementation. The Foreign Investment Law does not explicitly classify whether variable interest entities that are controlled through contractual arrangements would be deemed as foreign invested enterprises if they are ultimately “controlled” by foreign investors. The VIE structure, has been adopted by many PRC-based companies, including us. Though these regulations do not explicitly classify contractual arrangements as a form of foreign investment, there is no assurance that foreign investment via contractual arrangements would not be interpreted as a type of indirect foreign investment activities under the definition in the future. In addition, it has a catch-all provision under definition of “foreign investment” that includes investments made by foreign investors in China through other means as provided by laws, administrative regulations or the State Council. The Foreign Investment Law still leaves leeway for future laws, administrative regulations or provisions of the State Council to provide for contractual arrangements as a form of foreign investment. Therefore, there can be no assurance that our control over our VIE through contractual arrangements will not be deemed as foreign investment in the future under the PRC laws and regulations.

The Foreign Investment Law grants national treatment to foreign-invested entities, except for those foreign-invested entities that operate in industries specified as either “restricted” or “prohibited” from foreign investment in a “negative list”. The Foreign Investment Law provides that foreign-invested entities operating in “restricted” or “prohibited” industries will require market entry clearance and other approvals from relevant PRC government authorities. On December 27, 2021, the Ministry of Commerce of the PRC (the “MOFCOM”) and the National Development and Reform Commission (the “NDRC”) jointly issued the latest version of Negative List (Edition 2021), which became effective on January 1, 2022. See “Regulations - Regulations relating to Foreign Investment - The Guidance Catalogue of Industries for Foreign Investment”. Currently, our business related to the operation of designing, manufacturing and marketing mobile communication devices, and selling a variety of related accessories falls within the permitted category. However, we cannot assure you that our current operations or any newly-developed business in the future will still deemed to be “permitted” in the “negative list”, which may be promulgated or be amended from time to time by the MOFCOM and the NDRC. If our control over our VIE through contractual arrangements are deemed as foreign investment in the future, and any business of our VIE is “restricted” or “prohibited” from foreign investment under the “negative list” promulgated or amended in the future, we may be deemed to be in violation of the Foreign Investment Law, the contractual arrangements that allow us to have control over our VIE may be deemed as invalid and illegal, and we may be required to unwind such contractual arrangements and/or restructure our business operations, any of which may have a material adverse effect on our business operation.

Furthermore, if future laws, administrative regulations or provisions mandate further actions to be taken by companies with respect to existing contractual arrangements, we may face substantial uncertainties as to whether we can complete such actions in a timely manner, or at all. Failure to take timely and appropriate measures to cope with any of these or similar regulatory compliance challenges could materially and adversely affect our current corporate structure and business operations.

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Risks Related to Doing Business in China

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

Substantially most of our assets and operations are located in China. Accordingly, our business, financial condition, results of operations and prospects may be influenced to a significant degree by political, economic and social conditions in China generally. The Chinese economy differs from the economies of most developed countries in many respects, including the level of government involvement, level of development, growth rate, control of foreign exchange and allocation of resources. Although the Chinese government has implemented measures emphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive assets, and the establishment of improved corporate governance in business enterprises, a substantial portion of productive assets in China is still owned by the government. In addition, the Chinese government continues to play a significant role in regulating industry development by imposing industrial policies. The Chinese government also exercises significant control over China’s economic growth through allocating resources, controlling payment of foreign currency-denominated obligations, setting monetary policy, and providing preferential treatment to particular industries or companies.

While the Chinese economy has experienced significant growth over the past decades, growth has been uneven, both geographically and among various sectors of the economy, and the rate of growth has been slowing since 2012. Any adverse changes in economic conditions in China, in the policies of the Chinese government or in the laws and regulations in China could have a material adverse effect on the overall economic growth of China. Such developments could adversely affect our business and operating results, lead to reduction in demand for our services and adversely affect our competitive position. The Chinese government has implemented various measures to encourage economic growth and guide the allocation of resources. Some of these measures may benefit the overall Chinese economy, but may have a negative effect on us. For example, our financial condition and results of operations may be adversely affected by government control over capital investments or changes in tax regulations. In addition, in the past the Chinese government has implemented certain measures, including interest rate adjustment, to control the pace of economic growth. These measures may cause decreased economic activity in China, which may adversely affect our business and operating results.

Uncertainties with respect to the PRC legal system and changes in laws and regulations in China could adversely affect us.

We conduct our business primarily through the VIE and its subsidiaries. Our operations in China are governed by PRC laws and regulations. The PRC legal system is a civil law system based on written statutes. Unlike the common law system, prior court decisions under the civil law system may be cited for reference but have limited precedential value. In addition, any new or changes in PRC laws and regulations related to foreign investment in China could affect the business environment and our ability to operate our business in China.

From time to time, we may have to resort to administrative and court proceedings to enforce our legal rights. Any administrative and court proceedings in China may be protracted, resulting in substantial costs and diversion of resources and management attention. Since PRC administrative and court authorities have significant discretion in interpreting and implementing statutory provisions and contractual terms, it may be more difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection we enjoy than in more developed legal systems. These uncertainties may impede our ability to enforce the contracts into which we have entered and could materially and adversely affect our business and results of operations. Furthermore, the PRC legal system is based in part on government policies and internal rules, some of which are not published on a timely basis or at all and may have retroactive effect. As a result, we may not be aware of our violation of any of these policies and rules until sometime after the violation. Such unpredictability towards our contractual, property and procedural rights could adversely affect our business and impede our ability to continue our operations.

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We may be required to obtain permission or approval or other compliance procedures from Chinese authorities to operate and issue ordinary shares to foreign investors in our offering and/or listing on the NASDAQ Capital Market, and if required, if we or the VIE or the VIE’s subsidiaries are not able to obtain such permission or approval in a timely manner, our ordinary shares may substantially decline in value and become worthless.

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 was available to the public on July 6, 2021. These opinions emphasized the need to strengthen the administration over illegal securities activities and the supervision on overseas listings by China-based companies. These opinions proposed to take effective measures, such as promoting the construction of relevant regulatory systems, to deal with the risks and incidents facing China-based overseas-listed companies and the demand for cybersecurity and data privacy protection. The aforementioned policies and any related implementation rules to be enacted may subject us to additional compliance requirement in the future. As of the date of this annual report, we have not received or denied any permission from the PRC authorities regarding our listing on the Nasdaq Capital Market. 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. We face uncertainty about future actions by the PRC government that could significantly affect the operating company’s financial performance and the enforceability of the VIE Agreements.

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 was available to the public on July 6, 2021. These opinions emphasized the need to strengthen the administration over illegal securities activities and the supervision on overseas listings by China-based companies. These opinions proposed to take effective measures, such as promoting the construction of relevant regulatory systems, to deal with the risks and incidents facing China-based overseas-listed companies and the demand for cybersecurity and data privacy protection. The aforementioned policies and any related implementation rules to be enacted may subject us to additional compliance requirement in the future. As of the date of this annual report, we have not received or denied any permission from the PRC authorities regarding our listing on the Nasdaq Capital Market. 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. We face uncertainty about future actions by the PRC government that could significantly affect the operating company’s financial performance and the enforceability of the VIE Agreements.

In addition, on February 24, 2023, the CSRC, together with Ministry of Finance of the PRC, National Administration of State Secrets Protection and National Archives Administration of China, revised the Provisions on Strengthening Confidentiality and Archives Administration for Overseas Securities Offering and Listing which was issued by the CSRC, National Administration of State Secrets Protection and National Archives Administration of China in 2009, or the Provisions. The revised Provisions is issued under the title the Provisions on Strengthening Confidentiality and Archives Administration of Overseas Securities Offering and Listing by Domestic Companies, and came into effect on March 31, 2023 together with the Trial Measures. One of the major revisions to the revised Provisions is expanding its application to cover indirect overseas offering and listing, as is consistent with the Trial Measures. The revised Provisions require that, including but not limited to (a) a domestic company that plans to, either directly or indirectly through its overseas listed entity, publicly disclose or provide to relevant individuals or entities including securities companies, securities service providers and overseas regulators, any documents and materials that contain state secrets or working secrets of government agencies, shall first obtain approval from competent authorities according to law, and file with the secrecy administrative department at the same level; and (b) domestic company that plans to, either directly or indirectly through its overseas listed entity, publicly disclose or provide to relevant individuals and entities including securities companies, securities service providers and overseas regulators, any other documents and materials that, if leaked, will be detrimental to national security or public interest, shall strictly fulfill relevant procedures stipulated by applicable national regulations. Where a PRC domestic company, after completing the relevant procedures, provides to securities companies, securities service providers or other entities with any documents and materials that contain state secrets or working secrets of government agencies, or any other documents and materials that would be detrimental to national security or public interest if leaked, a non-disclosure agreement must be signed between the provider and receiver of such information according to the relevant PRC laws and regulations, which must specify, among others, the obligations and liabilities on confidentiality held by such securities companies and securities service providers. Specifically, when a PRC domestic company provides accounting archives or copies of accounting archives to any entities including securities companies, securities service providers or overseas regulators and individuals, it must complete the due procedures in compliance with applicable national regulations.  

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As of the date of this annual report, no currently effective laws or regulations in the PRC explicitly require us to seek approval from the CSRC or any other PRC governmental authorities for our offering and/or list on the NASDAQ Capital Market, nor has we, any of our subsidiaries or the VIE or the VIE’s subsidiaries received any inquiry, notice, warning or sanctions regarding our planned offering from the CSRC or any other PRC governmental authorities. We believe that we are not required to obtain permission or approval from Chinese authorities to operate and issue these ordinary shares to foreign investors or list on the NASDAQ Capital Market based on the PRC laws, regulations and rules currently in effect. There is also the possibility that we may not be able to obtain or maintain such approval or that we inadvertently concluded that such approval was not required. Any failure of us to fully comply with new regulatory requirements may significantly limit or completely hinder our ability to continue to offer our ordinary shares, cause significant disruption to our business operations, and severely damage our reputation, which would materially and adversely affect our financial condition and results of operations and cause our ordinary shares to significantly decline in value or become worthless.

The PRC government exerts substantial influence over the manner in which we conduct our business activities. The PRC government may also intervene or influence our operations at any time, which could result in a material change in our operations and our ordinary shares could decline in value or become worthless.

We are currently not required to obtain approval from Chinese authorities to list on U.S. exchanges nor the execution of contractual arrangements with the VIE (“VIE Agreements”), however, if our VIE or the holding company 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, continue to offer ordinary shares to investors. The loss of permission or denial will have a material, negative impact on our investors and would likely significantly reduce of our price of ordinary shares.

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 the PRC may be significantly 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 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 our operations in China.

For example, the Chinese cybersecurity regulator announced on July 2, 2021, that it had begun an investigation of a U.S.-listed company with Chinese operations and two days later ordered that the company’s app be removed from smartphone app stores. Similarly, our business segments may be subject to various government and regulatory interference in the regions in which we operate. We could be subject to regulation by various political and regulatory entities, including various local and municipal agencies and government sub-divisions. We 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 we will be required to obtain permission from the PRC government to list on U.S. exchanges or enter into VIE Agreements in the future, and even when such permission is obtained, whether it will be denied or rescinded. Although we are currently not required to obtain permission from any of the PRC central or local government to obtain such permission and has not received any denial to list on the U.S. exchange and or enter into VIE Agreements, our operations could be adversely affected, directly or indirectly, by existing or future laws and regulations relating to our business or industry. Recent statements by the Chinese government indicating an intent, and the PRC government may take actions to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in PRC-based issuers, which could significantly limit or completely hinder our ability to offer or continue to offer ordinary shares to investors and cause the value of our ordinary shares to significantly decline or become worthless.

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Changes in international trade policies, trade dispute or the emergence of a trade war, may have a material adverse effect on our business.

Political events, international trade disputes, and other business interruptions could harm or disrupt international commerce and the global economy, and could have a material adverse effect on us and our customers, service providers, network carriers and other partners.

International trade disputes could result in tariffs and other protectionist measures that could adversely affect our business. Tariffs could increase the cost of the goods and products which could affect consumers’ discretionary spending levels and therefore adversely impact our business. In addition, political uncertainty surrounding international trade disputes and the potential of the escalation to trade war and global recession could have a negative effect on consumer confidence, which could adversely affect our business.

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

We are an exempted company incorporated under the laws of the Cayman Islands and as such rely on dividends and other distributions on equity from our PRC Subsidiary to satisfy part of our liquidity requirements. Pursuant to the PRC Enterprise Income Tax Law, a withholding tax rate of 10% currently applies to dividends paid by a PRC “resident enterprise” to a foreign enterprise investor, unless any such foreign investor’s jurisdiction of incorporation has a tax treaty with China that provides for preferential tax treatment.

Pursuant to the Arrangement between the 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 came into effect on December 8, 2006, and four conventions implemented as of June 11, 2008, December 20, 2010, December 29, 2015 and December 6, 2019, such withholding tax rate may be lowered to 5% if a Hong Kong resident enterprise owns no less than 25% of a PRC enterprise. Under the Circular on Certain Issues with Respect to the Enforcement of Dividend Provisions in Tax Treaties issued in February 2009 by the SAT, the taxpayer needs to satisfy certain conditions to enjoy the benefits under a tax treaty. These conditions include: (i) the taxpayer must be the beneficial owner of the relevant dividends, and (ii) the corporate shareholder to receive dividends from the PRC Subsidiary must have met the direct ownership thresholds during the 12 consecutive months preceding the receipt of the dividends. However, if the main purpose of an offshore arrangement is to obtain a preferential tax treatment, the PRC tax authorities have the discretion to adjust the preferential tax rate enjoyed by the relevant offshore entity. Further, the SAT promulgated the Notice on How to Understand and Recognize the “Beneficial Owner” in Tax Treaties in 2009, which limits the “beneficial owner” to individuals, enterprises or other organizations normally engaged in substantive operations, and sets forth certain detailed factors in determining “beneficial owner” status; and based on the Announcement on Certain Issues with Respect to the “Beneficial Owner” in Tax Treaties, issued on February 3, 2018, and effective on April 1, 2018, that the business activities conducted by the applicant do not constitute substantive business activities is one of the factors which are not conductive to the determination of an applicant’s status as a “beneficial owner”.

In addition, the Administrative Measures for Non-Resident Enterprises to Enjoy Treatments under Tax Treaties, or SAT Public Notice No.60, which became effective in August 2015, require non-resident enterprises to determine whether they are qualified to enjoy the preferential tax treatment under the tax treaties and file relevant report and materials with the tax authorities. In October 2019, the State Administration of Taxation (SAT) issued the Announcement of the SAT on Issuing the Measures for the Administration of Non-resident Taxpayers’ Enjoyment of Treaty Benefits (SAT Public Notice No.35), which took effect on January 1, 2020, while SAT Public Notice No.60 will be abolished at the same time. SAT Public Notice No.35 stipulates that non-resident taxpayers can enjoy tax treaty benefits via the “self-assessment of eligibility, claiming treaty benefits, retaining documents for inspection” mechanism. There are also other conditions for enjoying the reduced withholding tax rate according to other relevant tax rules and regulations. As of March 31, 2023 and 2022, we did not record any withholding tax on the retained earnings of our subsidiaries in the PRC as we intended to re-invest all earnings generated from our PRC Subsidiary for the operation and expansion of our business in China, and we intend to continue this practice in the foreseeable future. Should our tax policy change to allow for offshore distribution of our earnings, we would be subject to a significant withholding tax. We cannot assure you that our determination regarding our qualification to enjoy the preferential tax treatment will not be challenged by the relevant tax authority or we will be able to complete the necessary filings with the relevant tax authority and enjoy the preferential withholding tax rate of 5% under the Double Taxation Arrangement with respect to dividends to be paid by our PRC Subsidiary to UTime HK, our Hong Kong subsidiary.

Our ordinary shares may be delisted under the HFCA Act if the PCAOB is unable to adequately inspect audit documentation located in China. The delisting of our ordinary shares, or the threat of their being delisted, may materially and adversely affect the value of your investment. Additionally, the inability of the PCAOB to conduct adequate inspections deprives our investors with the benefits of such inspections. Furthermore, on June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act, and on December 29, 2022, a legislation entitled “Consolidated Appropriations Act, 2023” (the “Consolidated Appropriations Act”) was signed into law by President Biden, which contained, among other things, an identical provision to Accelerating Holding Foreign Companies Accountable Act and amended the Holding Foreign Companies Accountable Act by reducing the period of time for foreign companies to comply with PCAOB audits to two consecutive years, instead of three, thus reducing the time period before our securities may be prohibited from trading or delisted. 

The HFCA Act, which was signed into law on December 18, 2020, states if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspection for the PCAOB for three consecutive years beginning in 2021, the SEC shall prohibit our shares from being traded on a national securities exchange or in the over-the-counter trading market in the United States. On December 2, 2021, the SEC adopted final amendments implementing the disclosure and submission requirements of the HFCA Act, pursuant to which the SEC will identify an issuer as a “Commission-Identified Issuer” if the issuer has filed an annual report containing an audit report issued by a registered public accounting firm that the PCAOB has determined it is unable to inspect or investigate completely, and will then impose a trading prohibition on an issuer after it is identified as a Commission-Identified Issuer for three consecutive years. On December 16, 2021, the PCAOB issued a report to notify the SEC of its determination that the PCAOB is unable to inspect or investigate completely registered public accounting firms headquartered in mainland China and Hong Kong.

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On August 26, 2022, the PCAOB announced that it had signed the Statement of Protocol with the CSRC and the MOFCOM. The terms of the Statement of Protocol would grant the PCAOB complete access to audit work papers and other information so that it may inspect and investigate PCAOB-registered accounting firms headquartered in mainland China and Hong Kong. According to the PCAOB, its December 2021 determinations under the HFCA ACT remain in effect. The PCAOB is required to reassess these determinations by the end of 2022. Under the PCAOB’s rules, a reassessment of a determination under the HFCAA may result in the PCAOB reaffirming, modifying or vacating the determination.

Our auditor Audit Alliance LLP. (“AA”), 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 its compliance with the applicable professional standards. Our auditor is headquartered in Singapore, and is subject to inspection by the PCAOB on a regular basis.

However, majority of the audit workpapers for our company and the VIE’s operations are located in China, and the PCAOB is currently unable to conduct inspections in China without the approval of Chinese government authorities, but access to audit work and papers may be available in the near future, as a result of the Statement of Proposal. If the PCAOB does gain such access, there is no assurance that it may not later be determined that the PCAOB is unable to inspect or investigate our auditor completely, and investors may be deprived of the benefits of such inspection. Any audit reports not issued by auditors that are completely inspected by the PCAOB, or a lack of PCAOB inspections of audit work undertaken in China that prevents the PCAOB from regularly evaluating our auditor’ audits and their quality control procedures, could result in a lack of assurance that our financial statements and disclosures are adequate and accurate, then such lack of inspection could cause our securities to be delisted from the stock exchange.

Whether the PCAOB will be able to conduct inspections of our auditor before the issuance of our financial statements on the annual report on Form 20-F for the year ending March 31, 2024 which is due by July 31, 2024, or at all, is subject to substantial uncertainty and depends on a number of factors out of our and our auditor’s control. If our shares are prohibited from trading in the United States, there is no certainty that we will be able to list on additional non-U.S. exchange to facilitate the trading in our securities. Such a prohibition would substantially impair your ability to sell or purchase our shares when you wish to do so, and the risk and uncertainty associated with delisting would have a negative impact on the price of our shares. Also, such a prohibition would significantly affect our ability to raise capital on terms acceptable to us, or at all, which would have a material adverse impact on our business, financial condition, and prospects.

On June 22, 2021, the U.S. Senate passed a bill which would reduce the number of consecutive non-inspection years required for triggering the prohibitions under the HFCA Act from three years to two, and on December 29, 2022, a legislation entitled “Consolidated Appropriations Act, 2023” (the “Consolidated Appropriations Act”) was signed into law by President Biden, which contained, among other things, an identical provision to Accelerating Holding Foreign Companies Accountable Act and amended the Holding Foreign Companies Accountable Act by reducing the period of time for foreign companies to comply with PCAOB audits to two consecutive years, instead of three, thus reducing the time period before our securities may be prohibited from trading or delisted

Recent joint statement by the SEC and the Public Company Accounting Oversight Board (United States), or the “PCAOB,” rule changes by Nasdaq, and an act passed by the U.S. Senate 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 negatively affect our securities.

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 a minimum offering size requirement for companies primarily operating in a “Restrictive Market,” (ii) adopt a new requirement relating to the qualification of management or the board of directors 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 auditor. On October 4, 2021, the SEC approved Nasdaq’s revised proposal for the rule changes.

On May 20, 2020, the U.S. Senate passed the HFCA Act, requiring a foreign company to certify it is not owned or manipulated 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 auditor for three consecutive years, the issuer’s securities are prohibited to trade on a national exchange or in the over-the-counter trading market in the United States. On December 2, 2020, the U.S. House of Representatives approved the HFCA Act. On December 18, 2020, the HFCA Act was signed into law.

On June 4, 2020, the U.S. President issued a memorandum ordering the President’s working group on financial markets, or the “PWG,” to submit a report to the President within 60 days of the date of the memorandum that should include recommendations for actions that can be taken by the executive branch and by the SEC or PCAOB to enforce U.S. regulatory requirements on Chinese companies listed on U.S. stock exchanges and their audit firms. 

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On August 6, 2020, the PWG released a report recommending that the SEC take steps to implement the five recommendations outlined in the report. In particular, to address companies from jurisdictions that do not provide the PCAOB with sufficient access to fulfill its statutory mandate, or “NCJs”, the PWG recommends enhanced listing standards on U.S. stock exchanges. This would require, as a condition to initial and continued exchange listing, PCAOB access to work papers of the principal audit firm for the audit of the listed company. Companies unable to satisfy this standard as a result of governmental restrictions on access to audit work papers and practices in NCJs may satisfy this standard by providing a co-audit from an audit firm with comparable resources and experience where the PCAOB determines it has sufficient access to audit work papers and practices to conduct an appropriate inspection of the co-audit firm. The report permits the new listing standards to provide for a transition period until January 1, 2022 for listed companies, but would apply immediately to new listings once the necessary rulemakings and/or standard-setting are effective.  

On August 10, 2020, the SEC announced that SEC Chairman had directed the SEC staff to prepare proposals in response to the PWG Report, and that the SEC was soliciting public comments and information with respect to these proposals. If we are listed on Nasdaq and fail to meet the new listing standards before the deadline specified thereunder due to factors beyond our control, we could face possible de-listing from the Nasdaq Capital Market, deregistration from the SEC, and/or other risks, which may materially and adversely affect, or effectively terminate, the trading of our Ordinary Shares in the United States. 

The HFCA Act requires certain issuers of securities to establish that they are not owned or controlled by a foreign government. Specifically, an issuer must make this certification if the PCAOB is unable to audit specified reports because the issuer has retained a foreign public accounting firm not subject to inspection by the PCAOB. Furthermore, if the PCAOB is unable to inspect the issuer’s public accounting firm for three consecutive years, the issuer’s securities are banned from trade on a national exchange or in the over-the-counter trading market in the United States or through other methods.

On March 24, 2021, the SEC announced that it had adopted interim final amendments to implement congressionally mandated submission and disclosure requirements of the HFCA 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 the Accelerating HFCA Act, which, if passed by the U.S. House of Representatives and signed into law, would decrease the number of non-inspection years for foreign companies to comply with PCAOB audits from three to two, thus reducing the time period before their securities may be prohibited from trading or delisted.

On September 22, 2021, the PCAOB adopted a final rule implementing the HFCA Act, which provides a framework for the PCAOB to use when determining, as contemplated under the HFCA Act, 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 November 5, 2021, the SEC approved the PCAOB’s Rule 6100, Board Determinations Under the Holding Foreign Companies Accountable Act. Rule 6100 provides a framework for the PCAOB to use when determining, as contemplated under the HFCA Act, whether it 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, which became effective on January 10, 2022. The rules apply to registrants that the SEC identifies as having filed an annual report with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction and that PCAOB is unable to inspect or investigate completely because of a position taken by an authority in foreign jurisdictions.

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On December 16, 2021, the PCAOB issued a report on its determinations that it is unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered in mainland China and in Hong Kong because of positions taken by mainland China and Hong Kong authorities in those jurisdictions. The PCAOB has made such designations as mandated under the HFCA Act. Pursuant to each annual determination by the PCAOB, the SEC will, on an annual basis, identify issuers that have used non-inspected audit firms and thus are at risk of such suspensions in the future. As of the date of this annual report, our auditor is not subject to the determinations announced by the PCAOB on December 16, 2021. On August 26, 2022, the PCAOB signed the Statement of Protocol (SOP) Agreements with the China Securities Regulatory Commission (CSRC) and China’s Ministry of Finance. The SOP, together with two protocol agreements governing inspections and investigations (together, the “SOP Agreements”), establish a specific, accountable framework to make possible complete inspections and investigations by the PCAOB of audit firms based in mainland China and Hong Kong, as required under U.S. law. On December 15, 2022, the PCAOB Board determined that the PCAOB was able to secure complete access to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong and voted to vacate its previous determinations to the contrary. However, should PRC authorities obstruct or otherwise fail to facilitate the PCAOB’s access in the future, the PCAOB Board will consider the need to issue a new determination.

On December 23, 2022, the Accelerating HFCA Act was signed into law, which amended the HFCA Act by requiring the SEC to prohibit an issuer’s securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for two consecutive years instead of three. On December 29, 2022, the Consolidated Appropriations Act was signed into law by President Biden. The Consolidated Appropriations Act contained, among other things, an identical provision to Accelerating HFCA Act, which reduces the number of consecutive non-inspection years required for triggering the prohibitions under the HFCA Act from three years to two.

The SEC may propose additional rules or guidance that could impact us if our auditor is not subject to PCAOB inspection in the future.

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 the companies that have significant operations in the PRC and have securities listed on a U.S. stock exchange (including a national securities exchange or over-the-counter stock market). In addition, 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 Class A 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.

Furthermore, new laws and regulations or changes in laws and regulations in both the United States and China could affect our ability to list our securities on the Nasdaq Capital Market, which could materially impair the market for and the market price of our securities.

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

We are an exempted company incorporated under the laws of the Cayman Islands, we conduct substantially most of our operations in China and substantially most of our assets are located in China. In addition, most of our senior executive officers and directors, including Mr. Minfei Bao, Mr, Yihuang Chen, Mr. Honggang Cao, Ms. Na Cai, Mr. Hengcong Qiu, Mr. Shibin Yu, Mr. Xiaoqian Jia, and Mr. Hailin Xie, are PRC nationals and reside within China for a significant portion of the time. As a result, it may be difficult for you to effect service of process upon us or those persons inside mainland China. It may also be difficult for you to enforce in U.S. courts judgments obtained in U.S. courts based on the civil liability provisions of the U.S. federal securities laws against us and our officers and directors who reside and whose assets are located outside the United States. In addition, there is uncertainty as to whether the courts of the Cayman Islands or the PRC would recognize or enforce judgments of U.S. courts against us or such persons predicated upon the civil liability provisions of the securities laws of the United States or any state.

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

See also “Risks Related to our Corporate Structure - Because we are incorporated under the laws of the Cayman Islands, you may face difficulties in protecting your interests, and your ability to protect your rights through the U.S. Federal courts may be limited” for risks associated with investing in us as a Cayman Islands company.

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There are uncertainties under the PRC laws relating to the procedures for U.S. regulators to investigate and collect evidence from companies located in the PRC.

According to Article 177 of the newly amended PRC Securities Law which became effective in March 2020 (the “Article 177”), the securities regulatory authority of the PRC State Council may collaborate with securities regulatory authorities of other countries or regions in order to monitor and oversee cross border securities activities. Article 177 further provides that overseas securities regulatory authorities are not allowed to carry out investigation and evidence collection directly within the territory of the PRC, and that any Chinese entities and individuals are not allowed to provide documents or materials related to securities business activities to overseas agencies without prior consent of the securities regulatory authority of the PRC State Council and the competent departments of the PRC State Council.

Our PRC legal counsel, B&D Law Firm, has advised us of their understanding that (i) the Article 177 is applicable in the limited circumstances related to direct investigation or evidence collection conducted by overseas authorities within the territory of the PRC (in such case, the foregoing activities are required to be conducted through collaboration with or by obtaining prior consent of competent Chinese authorities); (ii) from the view of the internal logical relations of the Article 177, it seems that the Article 177 does not limit or prohibit the Company, as a company duly incorporated in Cayman Islands and to be listed on NASDAQ, from providing the required documents or information to NASDAQ or the SEC pursuant to applicable Listing Rules and U.S. securities laws; and (iii) as the Article 177 is relatively new and there is no implementing rules or regulations which have been published regarding application of the Article 177, it remains unclear how the law will be interpreted, implemented or applied by the Chinese Securities Regulatory Commission or other relevant government authorities. As of the date hereof, we are not aware of any implementing rules or regulations which have been published regarding application of Article 177. However, we cannot assure you that relevant PRC government agencies, including the securities regulatory authority of the PRC State Council, would reach the same conclusion as we do. As such, there are uncertainties as to the procedures and time requirement for the U.S. regulators to bring about investigations and evidence collection within the territory of the PRC.

Our principal business operation is conducted in the PRC. In the event that the U.S. regulators carry out investigation on us and there is a need to conduct investigation or collect evidence within the territory of the PRC, the U.S. regulators may not be able to carry out such investigation or evidence collection directly in the PRC under the PRC laws. The U.S. regulators may consider cross-border cooperation with securities regulatory authority of the PRC by way of judicial assistance, diplomatic channels or regulatory cooperation mechanism established with the securities regulatory authority of the PRC. However, there is no assurance that the U.S. regulators could succeed in establishing such cross-border cooperation in a specific case or could establish the cooperation in a timely manner. If U.S. regulators are unable to conduct such investigations, such U.S. regulators may determine to suspend and ultimately delist our ordinary shares from the Nasdaq Capital Market or choose to suspend or de-register our SEC registration.

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

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

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

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

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

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

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

The PRC government imposes controls on the convertibility of the Renminbi into foreign currencies and, in certain cases, the remittance of currency out of China. We receive substantially all of our revenues in Renminbi. Under our current corporate structure, our Cayman Islands exempted company primarily relies on dividend payments from our PRC Subsidiary to fund any cash and financing requirements we may have. Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and trade and service-related foreign exchange transactions, can be made in foreign currencies without prior approval of SAFE by complying with certain procedural requirements. Specifically, under the existing exchange restrictions, without prior approval of SAFE, cash generated from the operations of our PRC Subsidiary in China may be used to pay dividends to our company. However, approval from or registration with appropriate government authorities is required where Renminbi is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of loans denominated in foreign currencies. As a result, we need to obtain SAFE approval to use cash generated from the operations of our PRC Subsidiary, VIE and UTime GZ to pay off their respective debt in a currency other than Renminbi owed to entities outside China, or to make other capital expenditure payments outside China in a currency other than Renminbi.

In light of the flood of capital outflows of China in 2016 due to the weakening RMB, the PRC government has imposed more restrictive foreign exchange policies and stepped up scrutiny of major outbound capital movement including overseas direct investment. More restrictions and substantial vetting process are put in place by SAFE to regulate cross-border transactions falling under the capital account. If any of our shareholders regulated by such policies fails to satisfy the applicable overseas direct investment filing or approval requirement timely or at all, it may be subject to penalties from the relevant PRC authorities. The PRC government may at its discretion further restrict access in the future to foreign currencies for current account transactions. If the foreign exchange control system prevents us from obtaining sufficient foreign currencies to satisfy our foreign currency demands, we may not be able to pay dividends in foreign currencies to our shareholders.

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

The Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the M&A Rules, and other recently adopted regulations and rules concerning mergers and acquisitions established additional procedures and requirements that could make merger and acquisition activities by foreign investors more time consuming and complex. For example, the M&A Rules require that MOFCOM be notified in advance of any change-of-control transaction in which a foreign investor takes control of a PRC domestic enterprise, if (i) any important industry is concerned, (ii) such transaction involves factors that impact or may impact national economic security, or (iii) such transaction will lead to a change in control of a domestic enterprise which holds a famous trademark or PRC time-honored brand. Moreover, the Anti-Monopoly Law promulgated by the SCNPC effective in 2008 requires that transactions which are deemed concentrations and involve parties with specified turnover thresholds (i.e., during the previous fiscal year, (i) the total global turnover of all operators participating in the transaction exceeds RMB10 billion (US$1.5 billion) and at least two of these operators each had a turnover of more than RMB400 million (US$60.9 million) within China, or (ii) the total turnover within China of all the operators participating in the concentration exceeded RMB2 billion, and at least two of these operators each had a turnover of more than RMB400 million (US$60.9 million) within China) must be cleared by MOFCOM before they can be completed.

In addition, in 2011, the General Office of the State Council promulgated a Notice on Establishing the Security Review System for Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, also known as Circular 6, which officially established a security review system for mergers and acquisitions of domestic enterprises by foreign investors. Further, MOFCOM promulgated the Regulations on Implementation of Security Review System for the Merger and Acquisition of Domestic Enterprises by Foreign Investors, effective 2011, to implement Circular 6. Under Circular 6, a security review is required for mergers and acquisitions by foreign investors having “national defense and security” concerns and mergers and acquisitions by which foreign investors may acquire the “de facto control” of domestic enterprises with “national security” concerns. Under the foregoing MOFCOM regulations, MOFCOM will focus on the substance and actual impact of the transaction when deciding whether a specific merger or acquisition is subject to security review. If MOFCOM decides that a specific merger or acquisition is subject to a security review, it will submit it to the Inter-Ministerial Panel, an authority established under Circular 6 led by the NDRC, and MOFCOM under the leadership of the State Council, to carry out security review. The regulations prohibit foreign investors from bypassing the security review by structuring transactions through trusts, indirect investments, leases, loans, control through contractual arrangements or offshore transactions. Moreover, the Anti-Monopoly Law requires that the MOFCOM shall be notified in advance of any concentration of undertaking if certain thresholds are triggered.

In the future, we may grow our business by acquiring complementary businesses. Complying with the requirements of the above-mentioned regulations and other relevant rules to complete such transactions could be time consuming, and any required approval processes, including obtaining approval from MOFCOM or its local counterparts may delay or inhibit our ability to complete such transactions, which could affect our ability to expand our business or maintain our market share. It is unclear whether our business would be deemed to be in an industry that raises “national defense and security” or “national security” concerns. However, MOFCOM or other government agencies may publish explanations in the future determining that our business is in an industry subject to the security review, in which case our future acquisitions in China, including those by way of entering into contractual control arrangements with target entities, may be closely scrutinized or prohibited. There is no assurance that, if we plan to make an acquisition, we can obtain such approval from the MOFCOM or any other relevant PRC governmental authorities for our mergers and acquisitions, and if we fail to obtain those approvals, we may be required to suspend our acquisition and be subject to penalties. Any uncertainties regarding such approval requirements could have a material adverse effect on our business, results of operations and corporate structure. Any action by the PRC government to exert more oversight and control over foreign investment in China-based companies could result in a material change in our operation, cause the value of our ordinary shares to significantly decline or become worthless, and significantly limit, or completely hinder our ability to continue to offer our ordinary shares to investors.

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

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

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Under SAFE Circular 37, PRC residents who make, or have prior to the implementation of SAFE Circular 37 made, direct or indirect investments in offshore special purpose vehicles, or SPVs, will be required to register such investments with SAFE or its local branches. In addition, any PRC resident who is a direct or indirect shareholder of a SPV, is required to update its filed registration with the local branch of SAFE with respect to that SPV, to reflect any material change. Moreover, any subsidiary of such SPV in China is required to urge the PRC resident shareholders to update their registration with the local branch of SAFE. If any PRC shareholder of such SPV fails to make the required registration or to update the previously filed registration, the subsidiary of such SPV in China may be prohibited from distributing its profits or the proceeds from any capital reduction, share transfer or liquidation to the SPV, and the SPV may also be prohibited from making additional capital contributions into its subsidiary in China. On February 13, 2015, SAFE promulgated the Circular on Further Simplifying and Improving the Policies Concerning Foreign Exchange Control on Direct Investment, or SAFE Circular 13, which became effective on June 1, 2015. Under SAFE Circular 13, applications for foreign exchange registration of inbound foreign direct investments and outbound overseas direct investments, including those required under SAFE Circular 37, will be filed with qualified banks instead of SAFE. The qualified banks will directly examine the applications and accept registrations under the supervision of SAFE.

If our shareholders who are PRC residents or entities do not complete their registration with the local SAFE branches, our PRC Subsidiary may be prohibited from distributing their profits and any proceeds from any reduction in capital, share transfer or liquidation to us, and we may be restricted in our ability to contribute additional capital to our PRC Subsidiary. Moreover, failure to comply with SAFE registration requirements could result in liability under PRC laws for evasion of applicable foreign exchange restrictions.

Mr. Bao and Mr. He, who indirectly hold a majority of our shares, and who are known to us as being PRC residents have completed the initial SAFE registration in connection with our financings and will update their registration filings with SAFE under SAFE Circular 37 when any changes should be registered under SAFE Circular 37.

However, we may not at all times be fully aware or informed of the identities of all our shareholders or beneficial owners that are required to make or update such registrations, and we cannot compel our beneficial owners to comply with SAFE registration requirements. As a result, we cannot assure you that all of our shareholders or beneficial owners who are PRC residents or entities have complied with, and will in the future make or obtain any applicable registrations or approvals required by, SAFE regulations. Failure by such shareholders or beneficial owners to comply with SAFE regulations or failure by us to amend the foreign exchange registrations of our PRC Subsidiary, could subject us to fines or legal sanctions, restrict our overseas or cross-border investment activities, limit our subsidiary’s ability to make distributions or pay dividends or affect our ownership structure, which could adversely affect our business and prospects.

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Any failure to comply with PRC regulations regarding the registration requirements for employee stock incentive plans may subject the PRC plan participants or us to fines and other legal or administrative sanctions.

In February 2012, SAFE promulgated the Notices on Issues Concerning the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plans of Overseas Publicly Listed Company, or SAFE Circular 7. Under SAFE Circular 7 and other relevant rules and regulations, PRC residents who participate in stock incentive plan in an overseas publicly listed company are required to register with SAFE or its local branches and complete certain other procedures. Participants of a stock incentive plan who are PRC residents must retain a qualified PRC agent, which could be a PRC subsidiary of such overseas publicly listed company or another qualified institution selected by such PRC subsidiary, to conduct the SAFE registration and other procedures with respect to the stock incentive plan on behalf of its participants. Such participants must also retain an overseas entrusted institution to handle matters in connection with their exercise of share-based awards, the purchase and sale of corresponding shares or interests and fund transfers. In addition, the PRC agent is required to amend the SAFE registration with respect to the stock incentive plan if there is any material change to the stock incentive plan, the PRC agent or the overseas entrusted institution or other material changes. We and our PRC employees who have been granted share-based awards are subject to SAFE Circular 7 and other relevant rules and regulations these regulations.Failure of our PRC share-based award holders to complete their SAFE registrations may subject these PRC residents to fines and legal sanctions and may also limit our ability to contribute additional capital into our PRC subsidiary, limit our PRC subsidiary’s ability to distribute dividends to us, adopt additional incentive plans for our directors or employees under PRC law or otherwise materially adversely affect our business. As of the date of this annual report, we are preparing for such SAFE registrations for PRC share-based award holders.

In addition, the State Administration of Taxation, or the SAT, has issued certain circulars concerning employee share options and restricted shares. Under these circulars, our employees working in China who exercise share options or are granted restricted shares will be subject to PRC individual income tax. Our PRC subsidiary has obligations to file documents related to employee share options or restricted shares with relevant tax authorities and to withhold individual income taxes of those employees who exercise their share options. If our employees fail to pay or we fail to withhold their income taxes according to relevant laws and regulations, we may face sanctions imposed by the tax authorities or other PRC government authorities.

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

Under the PRC Enterprise Income Tax Law and its implementation rules, an enterprise established outside of the PRC with “de facto management body” within the PRC is considered a “resident enterprise” and will be subject to the enterprise income tax on its global income at the rate of 25%. The implementation rules define the term “de facto management body” as the body that exercises full and substantial control and overall management over the business, productions, personnel, accounts and properties of an enterprise. In 2009, the State Administration of Taxation, or SAT, issued the Circular on Issues Concerning the Identification of Chinese-Controlled Overseas Registered Enterprises as Resident Enterprises in Accordance With the Actual Standards of Organizational Management, known as SAT Circular 82, which has been revised by the Decision of the State Administration of Taxation on Issuing the Lists of Invalid and Abolished Tax Departmental Rules and Taxation Normative Documents on December 29, 2017 and by the Decision of the State Council on Cancellation and Delegation of a Batch of Administrative Examination and Approval Items on November 8, 2013. Circular 82 has provided certain specific criteria for determining whether the “de facto management body” of a PRC-controlled enterprise that is incorporated offshore is located in China. Further to SAT Circular 82, the SAT issued the Administrative Measures for Enterprise Income Tax of PRC-Controlled Offshore Incorporated Resident Enterprises (Trial), or SAT Bulletin 45, effective 2011, to provide more guidance on the implementation of SAT Circular 82. SAT Bulletin 45 clarified certain issues in the areas of resident status determination, post-determination administration and competent tax authorities’ procedures.

According to SAT Circular 82, an offshore incorporated enterprise controlled by a PRC enterprise or a PRC enterprise group will be regarded as a PRC tax resident by virtue of having its “de facto management body” in China and will be subject to PRC enterprise income tax on its global income only if all of the following conditions are met: (i) the places where the senior management and senior management departments responsible for the daily production, operation and management of the enterprise perform their duties are mainly located within the territory of the PRC; (ii) decisions relating to the enterprise’s financial matters (such as money borrowing, lending, financing and financial risk management) and human resource matters (such as appointment, dismissal and salary and wages) are made or are subject to approval by organizations or personnel in the PRC; (iii) the enterprise’s primary assets, accounting books and records, company seals, and board and shareholder resolutions, are located or maintained in the PRC; and (iv) at least 50% of voting board members or senior executives habitually reside in the PRC. Although SAT Circular 82 and SAT Bulletin 45 only apply to offshore incorporated enterprises controlled by PRC enterprises or PRC enterprise groups and not those controlled by PRC individuals or foreigners, the determination criteria set forth therein may reflect the SAT’s general position on how the term “de facto management body” could be applied in determining the tax resident status of offshore enterprises, regardless of whether they are controlled by PRC enterprises, individuals or foreigners.

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

We believe that none of our entities outside of China is a PRC resident enterprise for PRC tax purposes. See “Regulation - Regulations on Tax - PRC Enterprise Income Tax”. However, the tax resident status of an enterprise is subject to determination by the PRC tax authorities and uncertainties remain with respect to the interpretation of the term “de facto management body.” Our PRC legal counsel has also advised us that there is a risk that the PRC tax authorities may deem us as a PRC resident enterprise since a substantial majority of the members of our management team are located in China. If the PRC tax authorities determine that we are a PRC resident enterprise for enterprise income tax purposes, we will be subject to the enterprise income tax on our global income at the rate of 25% and we will be required to comply with PRC enterprise income tax reporting obligations. In addition, we may be required to withhold a 10% withholding tax from dividends we pay to our shareholders that are non-resident enterprises, and non-resident enterprise shareholders may be subject to PRC tax on gains realized on the sale or other disposition of ordinary shares, if such income is treated as sourced from within the PRC. Furthermore, if we are deemed a PRC resident enterprise, dividends payable to our non-PRC individual shareholders and any gain realized on the transfer of ordinary shares by such shareholders may be subject to PRC tax at a rate of 20% unless a reduced rate is available under an applicable tax treaty. It is unclear whether non-PRC shareholders of our company would be able to claim the benefits of any tax treaties between their country of tax residence and the PRC in the event that we are treated as a PRC resident enterprise. Any such tax may reduce the returns on your investment in the ordinary shares.

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

On December 10, 2009, SAT issued the Notice on Strengthening Administration of Enterprise Income Tax for Share Transfers by Non-PRC Resident Enterprises, or SAT Circular 698, with retroactive effect from January 1, 2008. Pursuant to the SAT Circular 698, where a non-resident enterprise transfers the equity interests of a PRC resident enterprise indirectly by disposition of the equity interests of an overseas holding company, or an Indirect Transfer, and such overseas holding company is located in a tax jurisdiction that: (i) has an effective tax rate less than 12.5% or (ii) does not tax foreign income of its residents, the non-resident enterprise, being the transferor, shall report to the competent tax authority of the PRC resident enterprise this Indirect Transfer.

On February 3, 2015, the SAT issued the Announcement of the State Administration of Taxation on Several Issues Relating to Enterprise Income Tax of Transfers of Assets between Non-resident Enterprises, or SAT Bulletin 7. SAT Bulletin 7 has introduced a new tax regime that is significantly different from the previous one under former SAT Circular 698 (which was repealed by the Announcement of the State Administration of Taxation on Matters Concerning Withholding of Income Tax of Non-resident Enterprises at Source by SAT). SAT Bulletin 7 extends its tax jurisdiction to not only Indirect Transfers set forth under former SAT Circular 698 but also transactions involving transfer of other taxable assets through offshore transfer of a foreign intermediate holding company. In addition, SAT Bulletin 7 provides clearer criteria than former SAT Circular 698 for assessment of reasonable commercial purposes and has introduced safe harbors for internal group restructurings and the purchase and sale of equity of a same listed foreign enterprise by a non-resident enterprise through a public securities market. SAT Bulletin 7 also brings challenges to both foreign transferor and transferee (or other person who is obligated to pay for the transfer) of taxable assets. Where a non-resident enterprise transfers taxable assets indirectly by disposing of the equity interests of an overseas holding company, which is an Indirect Transfer, the non-resident enterprise, being the transferor, or the transferee, or the PRC entity that directly owns the taxable assets, may report such Indirect Transfer to the relevant tax authority. Using a “substance over form” principle, the PRC tax authority may disregard the existence of the overseas holding company if it lacks a reasonable commercial purpose and was established for the purpose of reducing, avoiding or deferring PRC tax. As a result, gains derived from such Indirect Transfer may be subject to PRC enterprise income tax, and the transferee or other person who is obligated to pay for the transfer is obligated to withhold the applicable taxes, currently at a rate of 10% for the transfer of equity interests in a PRC resident enterprise. Both the transferor and the transferee may be subject to penalties under PRC tax laws if the transferee fails to withhold the taxes and the transferor fails to pay the taxes. However, according to the aforesaid safe harbor rule, the PRC tax would not be applicable to the transfer by any non-resident enterprise of our ordinary shares acquired and sold on public securities markets.

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On October 17, 2017, SAT issued the Announcement of the State Administration of Taxation on Issues Concerning the Withholding of Non-resident Enterprise Income Tax at Source, or SAT Bulletin 37, which, among others, repealed the Circular 698 on December 1, 2017. SAT Bulletin 37 further details and clarifies the tax withholding methods in respect of income of non-resident enterprises under Circular 698. And certain rules stipulated in SAT Bulletin 7 are replaced by SAT Bulletin 37. Where the non-resident enterprise fails to declare the tax payable pursuant to Article 39 of the Enterprise Income Tax Law, the tax authority may order it to pay the tax due within required time limits, and the non-resident enterprise shall declare and pay the tax payable within such time limits specified by the tax authority; however, if the non-resident enterprise voluntarily declares and pays the tax payable before the tax authority orders it to do so within required time limits, it shall be deemed that such enterprise has paid the tax in time.

We face uncertainties as to the reporting and other implications of certain past and future transactions where PRC taxable assets are involved, such as offshore restructuring, sale of the shares in our offshore subsidiaries and investments. Our company may be subject to withholding obligations if our company is transferee in such transactions, under SAT Bulletin 37 and SAT Bulletin 7. For transfer of shares in our company by investors who are non-PRC resident enterprises, our PRC Subsidiary may be required to expend valuable resources to comply with SAT Bulletin 37 and SAT Bulletin 7 or to request the relevant transferors from whom we purchase taxable assets to comply with these circulars, or to establish that our company should not be taxed under these circulars, which may have an adverse effect on our financial condition and results of operations.

The approval of or filing and reporting with the CSRC or other PRC government authorities may be required in connection with our overseas offerings under PRC law, and, if required, we cannot predict whether or for how long we will be able to obtain such approval or complete such filing and reporting procedures.

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 CSRC prior to the listing and trading of such special purpose vehicle’s securities on an overseas stock exchange. However, the application of the M&A Rules remains unclear.

Our PRC legal 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 our initial public offering, given that: (i) our PRC Subsidiary was incorporated as wholly foreign-owned enterprises 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; and (ii) 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 legal counsel has further advised us that there remains some uncertainty as to how the M&A Rules will be interpreted or implemented in the context of an overseas offering and its opinions summarized above are subject to any new laws, rules and regulations or detailed implementations and interpretations in any form relating to the M&A Rules. The interpretation and application of the regulations remain unclear, and our future overseas offerings may ultimately require approval of the CSRC. If the CSRC approval is required, it is uncertain whether we can or how long it will take us to obtain the approval and, even if we obtain such CSRC approval, the approval could be rescinded. Any failure to obtain or delay in obtaining the CSRC approval for any of our future overseas offerings, or a rescission of such approval if obtained by us, would subject us to sanctions imposed by the CSRC or other PRC regulatory authorities, which could include fines and penalties on our operations in China, restrictions or limitations on our ability to pay dividends outside of China, and other forms of sanctions that may materially and adversely affect our business, financial condition, and results of operations.

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 Strictly Cracking Down on Illegal Securities Activities, or the Opinions, which was made available to the public on July 6, 2021. The Opinions emphasized the need to strengthen the administration over illegal securities activities, and the need to strengthen the supervision over overseas listings by Chinese companies. Pursuant to the Opinions, Chinese regulators are required to accelerate rulemaking related to the overseas issuance and listing of securities, and update the existing laws and regulations related to data security, cross-border data flow, and management of confidential information. As the Opinions was recently issued, there are great uncertainties with respect to the interpretation and implementation thereof. The Chinese government may promulgate relevant laws, rules and regulations that may impose additional and significant obligations and liabilities on overseas listed Chinese companies regarding data security, cross-border data flow, and compliance with China’s securities laws. These laws and regulations can be complex and stringent, and many are subject to change and uncertain interpretation, which could result in claims, change to our data and other business practices, regulatory investigations, penalties, increased cost of operations, or declines in user growth or engagement, or otherwise affect our business. It is uncertain whether or how these new laws, rules and regulations and the interpretation and implementation thereof may affect us, but among other things, our ability and the ability of our subsidiaries to obtain external financing through the issuance of equity securities overseas could be negatively affected.

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Numerous regulations, guidelines and other measures are expected to be adopted under the umbrella of or in addition to the Cybersecurity Law and Data Security Law. Effective measures, such as promoting the construction of relevant regulatory systems will be taken to deal with the risks and incidents of China-concept overseas listed companies, and cybersecurity and data privacy protection requirements and similar matters. On July 10, 2021, the CAC issued a revised draft of the Measures for Cybersecurity Review for public comments. Further, on On December 28, 2021, thirteen PRC regulatory agencies, namely, the CAC, the NDRC, the Ministry of Industry and Information Technology, the Ministry of Public Security, the Ministry of State Security, the Ministry of Finance, MOFCOM, SAMR, CSRC, the People’s Bank of China, the National Radio and Television Administration, National Administration of State Secrets Protection and the National Cryptography Administration, jointly adopted and published the Measures for Cybersecurity Review (2021), which became effective on February 15, 2022. The Measures for Cybersecurity Review (2021) authorized the relevant government authorities to conduct cybersecurity review on a range of activities that affect or may affect national security, and required that, among others, in addition to “operator of critical information infrastructure” any “operator of network platform” holding personal information of more than one million users which seeks to list in a foreign stock exchange should also be subject to cybersecurity review, and further elaborated the factors to be considered when assessing the national security risks of the relevant activities. On November 14, 2021, the CAC released the Regulations on Network Data Security (draft for public comments), or the draft Regulations on Network Data Security, which reiterates that data processors that process the personal information of more than one million users listing in a foreign country should apply for a cybersecurity review. The draft Regulations on Network Data Security will accept public comments until December 13, 2021. We do not believe the VIE or the VIE’s subsidiaries are among the “operator of critical information infrastructure,” “data processor” carrying out data processing activities that affect or may affect national security, or “operator of network platform” holding personal information of more than one million users as mentioned above, however, the revised draft Regulations on Network Data Security is in the process of being formulated and subject to further changes, and the Opinions remain unclear on how it will be interpreted, amended and implemented by the relevant PRC governmental authorities.

On July 7, 2022, the CAC promulgated the Outbound Data Transfer Security Assessment Measures, which became effective on September 1, 2022. According to the Outbound Data Transfer Security Assessment Measures, to provide data abroad under any of the following circumstances, a data processor shall declare security assessment for its outbound data transfer to the CAC through the local cyberspace administration at the provincial level: (i) where the data processor will provide important data abroad; (ii) where operator of critical information infrastructure or the data processor processing the personal information of more than one million individuals will provide personal information abroad; (iii) where the data processor who has provided personal information of 100,000 individuals or sensitive personal information of 10,000 individuals in total abroad since January 1 of the previous year, will provide personal information abroad; and (iv) other circumstances where the security assessment is required as prescribed by the CAC. Prior to declaring security assessment for outbound data transfer, the data processor shall conduct self-assessment on the risks of the outbound data transfer. For outbound data transfers that have been carried out before the effectiveness of the Outbound Data Transfer Security Assessment Measures, if it is not in compliance with these measures, rectification shall be completed within six months starting from September 1, 2022. Since the Outbound Data Transfer Security Assessment Measures is extremely new, there remain substantial uncertainties about its interpretation and implementation, it is unclear whether we shall declare a security assessment. As of the date of this annual report, we have not received any penalty, investigation or warning with respect to our business operation from the CAC, nor have we received any notice or instructions from the CAC requiring us to declare a security assessment. If it is determined in the future that we are required to declare a security assessment, it is uncertain whether we can or how long it will take us to complete such declaration or rectification.

On February 17, 2023, the CSRC promulgated the Trial Administrative Measures of the Overseas Securities Offering and Listing by Domestic Companies (the “Trial Measures”) and five supporting guidelines, which became effective on March 31, 2023. According to the Trial Measures, among other requirements, any domestic companies that seek to offer or list securities overseas, both directly and indirectly, should fulfil the filing procedures with the CSRC within three business days after the submission of the overseas offering and listing application. The Trial Measures provide that if an issuer meets both of the following criteria, the overseas offering and listing of securities conducted by such issuer shall be determined as an indirect overseas offering and listing by a PRC domestic enterprise and is therefore subject to the filing and reporting requirements as required thereunder: (i) any of the operating revenue, total profits, total assets or net assets of the PRC domestic enterprise(s) of the issuer in the most recent fiscal year accounts for more than 50% of the corresponding item in the issuer’s audited consolidated financial statements for the same period; and (ii) the main parts of the issuer’s operation activities are conducted in mainland China, or the principal operation premises are located in mainland China, or the majority of senior management personnel in charge of its business operations and management are PRC citizens or have habitual residences located in mainland China. The Trial Measures further stipulate that the determination as to whether a PRC domestic company is indirectly offering and listing securities in an overseas market shall be made on a substance-over-form basis. According to one of the Guidelines for Overseas Listing, where an issuer does not fall within the circumstances as stipulated aforementioned, but the risk factors disclosed in the submitted listing application documents pursuant to the relevant overseas market regulations are mainly related to mainland China, the securities companies and the PRC counsels of the issuer shall, act in accordance with the Trial Measures for Overseas Listing and follow the principle of substance-over-form, conduct comprehensive demonstration and identification with regard to whether the issuer falls within the scope which is subject to the filing requirements under the Trial Measures for Overseas Listing. If a PRC company fails to complete required filing procedures or conceals any material fact or falsifies any major content in its filing documents, such PRC company may be subject to administrative penalties, such as order to rectify, warnings, fines, and its controlling shareholders, actual controllers, the person directly in charge and other directly liable persons may also be subject to administrative penalties, such as warnings and fines. On the same day, the CSRC also held a press conference for the release of the Trial Measures and issued the Notice on Administration for the Filing of Overseas Offering and Listing by Domestic Companies, which, among others, clarifies that PRC domestic companies that have already been listed overseas on or before the effective date of the Trial Measures for Overseas Listing (i.e., March 31, 2023) can be deemed as existing issuers, or the Existing Issuers. Existing Issuers are not required to complete the filling procedures immediately for their historical offerings and listing, and they are required to file with the CSRC when they conduct subsequent financing activities  We do not believe that we are required to obtain the approval from or complete the filing with the CSRC because we became a public company before the Trial Measures went into effect. If in the future we are going to conduct any offering or financing in the U.S., we will complete filing procedures with the CSRC pursuant to the requirements of the Trial Measures. In addition, we have not received any formal inquiry, notice, warning, sanction, or objection from the CSRC with respect our listing on the Nasdaq Capital Market.

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In addition, on February 24, 2023, the CSRC, together with Ministry of Finance of the PRC, National Administration of State Secrets Protection and National Archives Administration of China, revised the Provisions on Strengthening Confidentiality and Archives Administration for Overseas Securities Offering and Listing which was issued by the CSRC, National Administration of State Secrets Protection and National Archives Administration of China in 2009, or the Provisions. The revised Provisions is issued under the title the Provisions on Strengthening Confidentiality and Archives Administration of Overseas Securities Offering and Listing by Domestic Companies, and came into effect on March 31, 2023 together with the Trial Measures. One of the major revisions to the revised Provisions is expanding its application to cover indirect overseas offering and listing, as is consistent with the Trial Measures. The revised Provisions require that, including but not limited to (a) a domestic company that plans to, either directly or indirectly through its overseas listed entity, publicly disclose or provide to relevant individuals or entities including securities companies, securities service providers and overseas regulators, any documents and materials that contain state secrets or working secrets of government agencies, shall first obtain approval from competent authorities according to law, and file with the secrecy administrative department at the same level; and (b) domestic company that plans to, either directly or indirectly through its overseas listed entity, publicly disclose or provide to relevant individuals and entities including securities companies, securities service providers and overseas regulators, any other documents and materials that, if leaked, will be detrimental to national security or public interest, shall strictly fulfill relevant procedures stipulated by applicable national regulations. Where a PRC domestic company, after completing the relevant procedures, provides to securities companies, securities service providers or other entities with any documents and materials that contain state secrets or working secrets of government agencies, or any other documents and materials that would be detrimental to national security or public interest if leaked, a non-disclosure agreement must be signed between the provider and receiver of such information according to the relevant PRC laws and regulations, which must specify, among others, the obligations and liabilities on confidentiality held by such securities companies and securities service providers. Specifically, when a PRC domestic company provides accounting archives or copies of accounting archives to any entities including securities companies, securities service providers or overseas regulators and individuals, it must complete the due procedures in compliance with applicable national regulations.

Uncertainties regarding the enforcement of laws and the fact that rules and regulations in China can change quickly with little advance notice, along with the risk that the Chinese government may intervene or influence operations of the VIE or the VIE’s subsidiaries at any time, or may exert more control over offerings conducted overseas and/or foreign investment in China-based issuers could result in a material change in our operations, financial performance and/or the value of our ordinary shares or impair our ability to raise capital on terms acceptable to us, or at all. We cannot assure you that any new rules or regulations promulgated in the future will not impose additional requirements on us. If it is determined in the future that approval and filing from the CSRC or other regulatory authorities or other procedures, such as a cybersecurity review, are required for our future overseas offerings, it is uncertain whether we can or how long it will take us to obtain such approval or complete such filing procedures and any such approval or filing could be rescinded or rejected. Any failure to obtain or delay in obtaining such approval or completing such filing procedures for our overseas offerings, or a rescission of any such approval or filing if obtained by us, would subject us to sanctions by the CSRC or other PRC regulatory authorities for failure to seek CSRC approval or filing or other government review or authorization for our overseas offerings. These regulatory authorities may impose fines and penalties on our operations in China, limit our ability to pay dividends outside of China, limit our operating privileges in China, delay or restrict the repatriation of the proceeds from our overseas offerings into China or take other actions that could materially and adversely affect our business, financial condition, results of operations, and prospects, as well as the trading price of our listed ordinary shares. The CSRC or other PRC regulatory authorities also may take actions requiring us, or making it advisable for us, to halt our overseas offerings before settlement and delivery of the shares offered. Consequently, if investors engage in market trading or other activities in anticipation of and prior to settlement and delivery, they do so at the risk that settlement and delivery may not occur. In addition, if the CSRC or other regulatory authorities later promulgate new rules or explanations requiring that we obtain their approvals or accomplish the required filing or other regulatory procedures for our prior overseas offerings, we may be unable to obtain a waiver of such approval requirements, if and when procedures are established to obtain such a waiver. Any uncertainties or negative publicity regarding such approval requirement could materially and adversely affect our business, prospects, financial condition, reputation, and the trading price of our listed ordinary shares.

Failure to make adequate contributions to various government-sponsored employee benefits plans as required by PRC laws and regulations may subject us to penalties.

Companies operating in China are required to participate in various government-sponsored employee benefit plans, including certain social insurance, housing provident funds and other welfare-oriented payment obligations, and contribute to the plans in amounts equal to certain percentages of salaries, including bonuses and allowances, of employees up to a maximum amount specified by the local government from time to time at locations where the labor relations between us and our employees are based. The laws and regulations on employee benefit plans have not been enforced consistently by the local governments in China given the different levels of economic development in different locations. Following local common practice, we do not pay certain social insurance or housing fund contributions for each of our employees and the amount we paid was lower than the requirements of relevant PRC regulations. Therefore, in our consolidated financial statements, we have made an estimate and accrued a provision in relation to the potential make-up of our contributions for these plans. If we are determined by local authorities to have failed to make adequate contributions to any employee benefits as required by relevant PRC laws and regulations, we may face late fees or fines in relation to the underpaid employee benefits. As a result, our financial condition and results of operations may be materially and adversely affected.

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Increases in labor costs and enforcement of stricter labor laws and regulations in the PRC may adversely affect our business and our profitability.

China’s overall economy and the average wage in China have increased in recent years and are expected to continue to grow. The average wage level for our employees has also increased in recent years. We expect that our labor costs, including wages and employee benefits, will continue to increase. Unless we are able to pass on these increased labor costs to those who pay for our services, our profitability and results of operations may be materially and adversely affected.

In addition, we have been subject to stricter regulatory requirements in terms of entering into labor contracts with our employees and paying various statutory employee benefits, including pensions, housing fund, medical insurance, work-related injury insurance, unemployment insurance and maternity insurance to designated government agencies for the benefit of our employees. Pursuant to the PRC Labor Contract Law and its implementation rules, employers are subject to stricter requirements in terms of signing labor contracts, minimum wages, paying remuneration, determining the term of employee’s probation and unilaterally terminating labor contracts. In the event that we decide to terminate some of our employees or otherwise change our employment or labor practices, the PRC Labor Contract Law and its implementation rules may limit our ability to effect those changes in a desirable or cost-effective manner, which could adversely affect our business and results of operations.

In October 2010, the SCNPC promulgated the Law on Social Insurance of the PRC, effective on July 1, 2011. On April 3, 1999, the State Council promulgated the Regulations on the Administration of Housing Provident Fund, which was amended on March 24, 2002. Companies registered and operating in China are required under the Law on Social Insurance of the PRC and the Regulations on the Administration of Housing Provident Fund to apply for social insurance registration and housing fund deposit registration within 30 days of their establishment and to pay for their employees different social insurance including pension insurance, medical insurance, work-related injury insurance, unemployment insurance and maternity insurance to the extent required by law. We could be subject to orders by the competent labor authorities for rectification and failure to comply with the orders which may further subject us to administrative fines. See “Regulations - Regulations on Labor Protection”.

As the interpretation and implementation of labor-related laws and regulations are still evolving, we cannot assure you that our employment practices do not and will not violate labor-related laws and regulations in China, which may subject us to labor disputes or government investigations. We cannot assure you that we have complied or will be able to comply with all labor-related law and regulations including those relating to obligations to make social insurance payments and contribute to the housing provident funds. If we are deemed to have violated relevant labor laws and regulations, we could be required to provide additional compensation to our employees and our business, financial condition and results of operations will be adversely affected.

If our preferential tax treatments are revoked, become unavailable or if the calculation of our tax liability is successfully challenged by the PRC tax authorities, we may be required to pay tax, interest and penalties in excess of our tax provisions, and our results of operations could be materially and adversely affected.

The PRC government has provided tax incentives to our VIE. These incentives include reduced enterprise income tax rates. For example, under the Enterprise Income Tax Law and its implementation rules, the statutory enterprise income tax rate is 25%. However, the income tax of an enterprise that has been determined to be a high and new technology enterprise can be reduced to a preferential rate of 15%, and the certificate of a high and new technology enterprise is valid for three years.

Our VIE has obtained the Certificate of High and New Technology Enterprise since November 2, 2015, which is renewed on December 23, 2021 and is thus eligible to enjoy a preferential tax rate of 15% for the periods presented, to the extent it has taxable income under the PRC Enterprise Income Tax Law. Any increase in the enterprise income tax rate applicable to our VIE in China, or any discontinuation or retroactive or future reduction of any of the preferential tax treatments currently enjoyed by our VIE, could adversely affect our business, financial condition and results of operations. In addition, in the ordinary course of our business, we are subject to complex income tax and other tax regulations and significant judgment is required in the determination of a provision for income taxes. Although we believe our tax provisions are reasonable, if the PRC tax authorities successfully challenge our position and we are required to pay tax, interest and penalties in excess of our tax provisions, our financial condition and results of operations would be materially and adversely affected.

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Discontinuation of any of the government subsidies or imposition of any additional taxes and surcharges could adversely affect our financial condition and results of operations.

Our VIE and UTime GZ have received various financial subsidies from PRC local government authorities. The financial subsidies result from discretionary incentives and policies adopted by PRC local government authorities. Meanwhile, to promote our productions and operations, our VIE and UTime GZ built cooperative relations with government authorities, based on which financial subsidies and a series of other governmental supports are provided for the purpose of facilitation of more tax payment to the local tax authorities. In order to attract investment, the Management Committee of Guizhou Xinpu Economic Development Zone offers preferential policies to UTime GZ, the PRC Subsidiary of our VIE, to establish its operations in Xinpu Economic Development Zone. As of the date of this annual report, UTime GZ has received subsidies of approximately RMB1.2 million (US$0.2 million) in the form of logistics and employees’ rent subsidies for public rental housing from the Management Committee of Guizhou Xinpu Economic Development Zone. However, local governments may decide to change, withdraw or discontinue such financial subsidies at any time. The discontinuation of such financial subsidies or imposition of any additional taxes could adversely affect our financial condition and results of operations.

If the custodians or authorized users of controlling non-tangible assets of our company, including our corporate chops and seals, fail to fulfill their responsibilities, or misappropriate or misuse these assets, our business and operations could be materially and adversely affected.

Under PRC laws, legal documents for corporate transactions are executed using the chops or seal of the signing entity or with the signature of a legal representative whose designation is registered and filed with the relevant branch of the Administration for Market Regulation.

Although we usually utilize company seals to enter into contracts, the designated legal representatives of our PRC Subsidiary, VIE and UTime GZ have the apparent authority to enter into contracts on behalf of such entities without chops and bind such entities. All designated legal representatives of our PRC Subsidiary, VIE and UTime GZ are members of our senior management team who have signed employment agreements with us or our PRC Subsidiary, VIE and UTime GZ under which they agree to abide by various duties they owe to us. In order to maintain the physical security of our chops and chops of our PRC entities, we generally store these items in secured locations accessible only by the authorized personnel in the legal or finance department of PRC Subsidiary, VIE and UTime GZ. Although we monitor such authorized personnel, there is no assurance such procedures will prevent all instances of abuse or negligence. Accordingly, if any of our authorized personnel misuse or misappropriate our corporate chops or seals, we could encounter difficulties in maintaining control over the relevant entities and experience significant disruption to our operations. If a designated legal representative obtains control of the chops in an effort to obtain control over PRC Subsidiary, VIE and UTime GZ, we or our PRC Subsidiary, VIE and UTime GZ would need to pass a new shareholder or board resolution to designate a new legal representative and we would need to take legal action to seek the return of the chops with the relevant authorities, or otherwise seek legal redress for the violation of the representative’s fiduciary duties to us, which could involve significant time and resources and divert management attention away from our regular business. In addition, the affected entity may not be able to recover corporate assets that are sold or transferred out of our control in the event of such a misappropriation if a transferee relies on the apparent authority of the representative and acts in good faith.

We face certain risks relating to the real properties that we lease.

We lease real properties from third parties primarily for our office and processing workshops being used in China, and most of our lease agreements for these properties have not been registered with the PRC governmental authorities as required by PRC laws. Although the failure to do so does not in itself invalidate the leases, we may be ordered by the PRC government authorities to rectify such noncompliance and, if such noncompliance were not rectified within a given period of time, we may be subject to fines imposed by PRC government authorities ranging from RMB1,000 and RMB10,000 for each lease agreement that has not been registered with the relevant PRC governmental authorities.

Most of the proof of ownership or proof of right to lease in relation to our leased real properties have not been provided to us by the relevant lessors. Therefore, we cannot assure you that such lessors are entitled to lease the relevant real properties to us. If the lessors are not entitled to lease the real properties to us and the owners of such real properties decline to ratify the lease agreements between us and the respective lessors, we may not be able to enforce our rights to keep leasing such properties under the respective lease agreements against the owners. As of the date of this annual report, we are not aware of any claim or challenge brought by any third parties concerning the use of our leased properties. If our lease agreements are claimed as null and void by third parties who are the real owners of such leased real properties, we could be required to vacate the properties, in the event of which we could only initiate the claim against the lessors under relevant lease agreements for indemnities for their breach of the relevant leasing agreements.

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Furthermore, the registered office of UTime SZ is 64D-403, Tian Zhan Building F2, Tian’an Che Kung Temple Industrial Zone, Xiangmi Lake, Futian District, Shenzhen, while the principal executive office is located at 7^th Floor, Building 5A, Shenzhen Software Industry Base, Nanshan District, Shenzhen. According to PRC laws, rules and regulations, a company shall register its main office as registered office. Where a company fails to undergo the relevant modification registration in accordance with relevant regulations for any modification of the contents of company registration, the company registration authority shall order the company to register within a prescribed time limit, and, if the company fails to do so, impose a fine of not less than RMB10,000 but not more than RMB100,000 on the company.

We cannot assure you that suitable alternative locations are readily available on commercially reasonable terms, or at all, and if we are unable to relocate our offices or processing workshops in a timely manner, our operations may be interrupted.

Risks Related to Doing Business in India 

Our business activities in India could be subject to Indian competition laws, and any violation or alleged violation thereof may negatively impact our operations.

The Competition Commission of India (“CCI”) is the market regulator in India and the Competition Act, 2002 specifically provides that any agreement which restricts the production, supply, distribution, acquisition or control of goods or provision of services, which causes or is likely to cause an appreciable adverse effect on competition (AAEC) within India, is prohibited and void. Anti-competitive agreements may include horizontal and vertical agreements. The definition of the term ‘agreement’ envisaged under the Competition Act, 2002 is wide enough to include any tacit or explicit practice, any arrangement, understanding or action in concert. Any company entering into such kind of agreements may come under the investigation by CCI, and if found violating provisions of the Competition Act, 2002, may be subjected to prosecution and penalty which may extend to 10% of the turnover of preceding 3 financial years. Therefore, any exclusive supply or exclusive distribution agreement(s) may lead to competition law concerns.

Further, any combinations, such as merger, amalgamation, acquisition or similar arrangement, which meet a certain asset/turnover threshold as prescribed in the Competition Act, 2002 mandates CCI approval which involves complex filing requirements. CCI has extra territorial jurisdiction, to investigate, order inquiry and pass order, in respect of the acts taken place outside India which has or may have appreciable adverse effect in India.

Therefore, our business activities of are also subject to the provisions of the Competition Act, 2002 and any violation or alleged violation thereof may seriously impact our operations and business and our parent companies.

Our business is substantially affected by prevailing economic, political and other prevailing conditions in India, and any downshift or perceived downshift in the Indian economy could negatively impact our business.

Do Mobile is a company incorporated in India, and the substantial portion of our assets and employees are located in India. Therefore, we are highly dependent on prevailing economic conditions in India and its operational results are significantly affected by factors influencing the Indian economy. Factors that may adversely affect the Indian economy, and hence results of our operations, may include:

a) any increase in foreign exchange rates;

b) any increase in interest rates or the inflation;

c) any scarcity of credit or other financing in India, resulting in an adverse impact on economic conditions in India and scarcity of financing of our business developments and expansions;

d) per capita income;

e) changes in Indian tax rates and other monetary policies;

f) political instability, terrorism or military conflict in India or in countries in the region or globally including India’s neighboring countries;

g) occurrence of natural or man-made disasters;

h) prevailing regional or global economic conditions, including in India’s principal export markets; and

i) other significant regulatory or economic developments in or affecting India or its telecom sector.

Any downshift or perceived downshift in the Indian economy could negatively impact our business, results of operations and financial condition.

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Introduction of 5G compatible mobile handsets and other new technologies may be expensive, and if we are unable to provide 5G compatible mobile handsets, our business will suffer.

In the Indian market, 5^th Generation (5G) cellular network technology is being unveiled and once 5G tenders are issued, mobile manufacturing companies are required to update the technology to make 5G compatible mobile handsets. Updating to 5G technology will be a costly affair for us. In order to remain in business and ahead of competition, we will need to upgrade their handsets or otherwise integrate 5G capabilities into its products and services so as to provide 5G services. If we are not able to provide 5G compatible mobile handsets, then its market share will get significantly eroded, thus having material adverse effect on its operations and revenues.

We are subject to supervision and regulation by the Reserve Bank of India (or “RBI”) and the Department of Telecommunication, and any non-compliance may adversely impact our business.

Do Mobile is a wholly owned subsidiary of a foreign company. The foreign investment in India is regulated by the Reserve Bank of India and business of telecommunication is regulated by the Department of Telecommunication. Currently, the business of Do Mobile falls within the meaning of “manufacturing sector.” Foreign investment in manufacturing sector is automatically permitted and an Indian company can sell its products, without obtaining any government permission. Any change in legislative and regulatory requirements may impact the business activity of Do Mobile and may also lead to higher cost of compliance. This may adversely impact our business.

Our operating results may be adversely affected by law and regulations to which we are subject.

We are required to comply with central, state, local and foreign laws and regulations governing the protection of the environment and occupational health and safety, including laws stringent norms prescribed by Bureau of Indian Standards and Department of Telecommunication. We cannot assure you that we will at all times be in complete compliance with such laws, regulations and norms. If we violate or fail to comply with the requirements, we could be fined or otherwise sanctioned by regulators. In some instances, such a fine or sanction could be material. In addition, these requirements may become more stringent over time and we cannot assure you that we will not incur material costs or liabilities in the future. These could include new regulations that we may be unable to comply with and this will impact our business.

Moreover, there are number of taxes and other levies imposed at the level of the Central Government and State Government in India. These include: (i) income tax; (ii) goods and service tax; (iii) state duty; (iv) stamp duty charges; and (v) other taxes and surcharges. These tax rates may increase in future creating more financial burden on us and may affect our overall tax efficiency. Additional tax exposure could adversely affect its business and results of operations.

Non-compliance with the Indian labor law requirements may invite criminal and civil actions against us in India.

India has stringent labor legislation that protects the interests of workers, including legislation that govern relationships with employees, in such areas as minimum wage and maximum working hours, overtime, working conditions, and hiring and terminating of employees. Do Mobile is irregular in labor law compliances, primarily relating to maintenance of statutory records and registers. Do Mobile has not obtained any registration under applicable Shops and Establishment Act, wherever applicable. Furthermore, Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, mandatorily requires companies to have a defined policy on Prevention of Sexual Harassment at Workplace and must set up an Internal Complaints Committee to redress grievances related to sexual harassment. Do Mobile neither has any defined written policy on Prevention of Sexual Harassment nor have constituted any Internal Complaints Committee to redress the issues relating to sexual harassment at workplace. Any non-compliance of applicable labor laws, will expose Do Mobile and its key managerial personnel to penalties and fines which may impact our operations and growth.

Do Mobile is subject to new certification regulations for mobile handsets introduced by the Department of Telecommunications, Government of India.

The Department of Telecommunication, Government of India (“DOT”) is a nodal regulator to regulate the telecommunication industry in India. DOT issues several regulations and guidelines to govern the telecommunication market. Since Do Mobile is involved in marketing and selling of mobile handset, the business activity of Do Mobile falls within the ambit of telecommunication.

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Recently, the Telecommunication Engineering Centre of DOT has notified the Procedure for Mandatory Testing and Certification of Telecommunication (“Certification Procedures”) vide its notification dated October 2, 2018 as per the Indian Telegraph Act, 1885 and the Indian Telegraph Rules, 1951. The Certification Procedure has been enforced in phases. Phase-I came into effect from October 1, 2019 for the telecom equipment covered under Simplified Certification Scheme prescribed by the Government of India (i.e. SCS) which inter alia included two wire telecom equipment, modem, G3 fax machine, ISDN CPE and in respect of certain telecom equipment under General Certification Scheme prescribed by the Government of India (i.e. GCS) which inter alia included cord-less phones and PABX. Thereafter, Phase II was enforced from October 1, 2020 and covered equipment which inter alia covered transmission terminal equipment, PON (passive optical network) family of broadband equipment and feedback devises. The DOT vide its notification dated September 22, 2021 has announced mandatory certification of certain equipment under Phase III and Phase IV with effect from July 01, 2022 and February 01, 2022 respectively. However, DOT vide an amendment notification dated January 31, 2022 has extended the date of mandatory certification of Phase IV products from February 01, 2022 to July 01, 2022. DOT through another amendment notification dated June 13, 2022 has extended the date of mandatory certification of Phase III and Phase IV products by one year i.e. from July 01, 2022 to July 01, 2023.

In accordance with the Certification Procedures, every original equipment manufacturer, importer and dealer of the telecom equipment (i.e., mobile phones) engaged in sale or import of any telecom equipment in India is required to mandatorily obtain a certificate from Telecommunication Engineering Centre and mark or affix the equipment with the appropriate certification label. Additionally, in order to obtain the Certification, it is mandatory that the equipment needs to be tested only from a designated Conformance Assessment Body (“CAB”) or recognized CAB of Mutual Recognition Agreement partner country. The Certification Procedures mandate the certification of mobile handsets manufactured by mobile manufacturers and mobile manufacturer cannot sell the mobile handsets without such certification.

The Ministry of Electronics and Information Technology (MEITY) also carries out compulsory registration of specified goods (including mobile phones) under the Electronics and Information Technology (Requirement for Compulsory Registration) Order, 2012, as amended, which is similar to Certification Procedures prescribed by DOT.

In order to address the regulatory overlap with respect to mandatory testing procedures, recently, the DOT (in consultation with MEITY) vide its notification dated May 24, 2022 (“Exemption Notification”), has exempted ‘Mobile user equipment/ mobile handset’ from prior mandatory testing and certification in respect of parameters as determined by the concerned authority.

Do Mobile is not engaged in manufacturing mobile handsets and outsources such manufacture to third-party manufacturers. We believe post the Exemption Notification, the Certification Procedures as prescribed by DOT will not be applicable to such third-party manufacturers. However, third-party manufacturers will still be required to obtain certification as prescribed by MEITY. The cost of obtaining the certification will result in an increase of the cost of mobile handsets and thus, may impact sales of mobile handsets of Do Mobile. Therefore, we will be required to more carefully assess the market when launching new models of our products.

Do Mobile is non-compliant with respect to certain issuances of its share capital and may be subject to regulatory action by the Registrar of Companies and Ministry of Corporate Affairs, which could adversely affect our business operations and profitability.

Do Mobile, being an Indian company, is required to comply with certain procedures with respect to its share capital. However, there have been some lapses on the part of Do Mobile with respect to its share capital. Procedural lapses include but are not limited to:

a) Under the extant provisions of Companies Act, 2013, an Indian company cannot issue and allot shares in excess of its authorized share capital. The board of directors of Do Mobile at their meeting dated December 15, 2017 had approved and allotted 483,940 shares of Rs. 10 to Bridgetime. The authorized share capital of Do Mobile as on December 15, 2017 was Rs. 35,000,000. Whereas, on account of the aforesaid allotment the paid-up share capital of Do Mobile increased to Rs. 35,509,150, which was in excess of its then authorized share capital of Rs. 35,000,000.

b) There have been certain inconsistencies regarding historical increases in authorized share capital of Do Mobile from Rs. 35,000,000 to Rs. 50,000,000.

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c) In terms of Section 89 of the Companies Act, 2013 read with the Companies (Management and Administration) Rules, 2014, a person whose name is entered in the register of members of a company but who does not hold the beneficial interest in such shares must file a declaration to such effect with the company in the prescribed form. Further, every person holding beneficial interest in shares of a company must file with the company, a declaration disclosing such interest in the prescribed form. Such declarations are to be noted by the company in its register of members and make filings with the Registrar of Companies evidencing the same. Ms. Grover held 1 share of Do Mobile as a nominee of Bridgetime, parent company of Do Mobile, and her name was entered in the register of members. Thus, Ms. Grover had the registered ownership and Bridgetime Limited has beneficial ownership of said 1 share. No declaration with respect to registered and beneficial ownership of 1 share has been made by Ms. Grover and Bridgetime Limited respectively, nor has Do Mobile made any filing in this regard with the Registrar of Companies. Pursuant to Ms. Grover’s resignation, the said share was transfer to Ms. Aayushi Gautam who is now its registered owner while Bridgetime Limited continues to the beneficial owner of the said share. A declaration with respect to the registered and beneficial ownership of this one share is yet to be made by Do Mobile with the Registrar of Companies.

Do Mobile may be subject to regulatory action by the Registrar of Companies and Ministry of Corporate Affairs on account of the aforesaid non-compliances in relation to issuance of its share capital, thus exposing it to certain fines and penalties. Directors and key management of Do Mobile are also liable for such non-compliance and may be subjected to fines and penalties.

In addition to the aforesaid, Do Mobile has not maintained its statutory registers and minutes of the meetings of the board of directors and shareholders as mandated under the extant provisions of the Companies Act, 2013. Do Mobile has also not been in compliance with regard to the holding of its board meetings at regular intervals as provided under the Companies Act, 2013 read with rules and regulations made thereunder.

While no penalties have been imposed on Do Mobile for the aforesaid non-compliance thus far, Do Mobile cannot assure that any regulatory authorities will not impose any penalty on Do Mobile or will not take any penal action with respect to the aforesaid non-compliance. If any adverse actions are taken against Do Mobile, results of operations and profitability of Do Mobile could be adversely affected.

Do Mobile is delayed in complying with reporting guidelines under the provisions of the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 (which replaced erstwhile Foreign Exchange Management (Transfer or issue of security by a person resident outside India) Regulations, 2017) and may be subject to regulatory action by the Reserve Bank of India, which could adversely affect our business and operations.

Under the extant provisions of Foreign Exchange Management Act, 1999 read with Foreign Exchange Management (Non-debt Instruments) Rules, 2019, every Indian company receiving foreign direct investment for issuance of shares shall within a period of 30 days from the date of issue of shares to the foreign entity file a form FC-GPR (now part of Single Entity Master Form) with the Reserve Bank of India. There has been some delay on the part of Do Mobile in complying with aforesaid filing of form FC-GPR within the stipulated timelines. Also, in terms of the Foreign Exchange Management (Non-debt Instruments) Rules, 2019, an Indian company receiving foreign direct investment must file an annual report titled ‘Foreign Liabilities and Assets’ (“FLA”) on or before July 15 of each year. Do Mobile has not filed its FLA for the financial year 2017-18, 2018-19, 2019-20, 2020-21 and 2021-22 with the Reserve Bank of India. While no penalties have been imposed on Do Mobile for the aforesaid non-compliances thus far; there cannot be any assurance that Reserve Bank of India will not impose any penalty on Do Mobile or will not take any penal action in relation aforesaid non-compliances. If any penalties or other penal measures are enforced, this could adversely affect our business and operations.

Any foreign direct investment in Do Mobile from an entity of a country, which shares a land border with India or the beneficial owner of an investment into India who is situated in or is a citizen of any such country, shall invest only with governmental approval. Any delay in obtaining such governmental approval could adversely affect business operations and cash flow position of Do Mobile.

Do Mobile liquidity and its working capital requirements are mainly met through foreign direct investment. Do Mobile’s potential investors are either based out of China, or such investments are from persons or entities whose ultimate beneficial ownership is situated in or is from a citizen of such countries which share land borders with India including China. Additionally, as per current corporate structure, Mr. Bao Minfei, who is a citizen of China, holds ultimate beneficial ownership in Do Mobile indirectly through various subsidiaries. The Government of India vide Notification S.O. 1278 (E) dated April 22, 2020 (i.e., Foreign Exchange Management (Non-debt Instruments) Amendment Rules, 2020) introduced a crucial amendment in the provisions of the FEMA Rules and has now stipulated that any investment by an entity of a country, which shares land border with India, or where the beneficial owner of an investment into India is situated in or is a citizen of any such country, can be made only upon seeking prior approval of the Government of India. These restrictions will also apply in the case of transfer of ownership. Although Mr. Bao’s existing beneficial ownership in Do Mobile is not subject to approval, any new investment in Do Mobile by a Chinese entity or Chinese citizen or entities that are beneficially owned by Chinese entities or citizens, will be subject to prior approval of the Government of India. The Government of India will grant approval depending upon the facts and circumstances of each case. Any delay in receipt of such approvals, will adversely impact operations and cash flow position of Do Mobile and will put Do Mobile in a challenging position.

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Risks Related to Our Ordinary Shares

The trading prices of our ordinary shares are likely to be volatile, which could result in substantial losses to investors.

The market price of the ordinary shares on Nasdaq may fluctuate after listing as a result of several factors, including the following:

● volatility in the mobile telecommunications and IoT industry, both in China and internationally;

● variations in our operating results;

● risks relating to our business and industry, including those discussed above;

● strategic actions by us or our competitors;

● reputational damage from accidents or other adverse events related to our company or its operations;

● investor perception of us, the technology sector in which we operate, the investment opportunity associated with the ordinary shares and our future performance;

● addition or departure of our executive officers or directors;

● changes in financial estimates or publication of research reports by analysts regarding our ordinary shares, other comparable companies or our industry generally;

● trading volume of our ordinary shares;

● future sales of our ordinary shares by us or our shareholders;

● domestic and international economic, legal and regulatory factors unrelated to our performance; or

● the release or expiration of lock-up or other transfer restrictions on our outstanding ordinary shares.

Furthermore, the stock markets often experience significant price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. These fluctuations often have been unrelated or disproportionate to the operating performance of those companies. These broad market and industry fluctuations, as well as general economic, political and market conditions such as recessions or interest rate changes may cause the market price of ordinary shares to decline.

Sales of a substantial number of our ordinary shares in the public market by our existing shareholders could cause our share price to fall.

Sales of a substantial number of our ordinary shares in the public market, or the perception that these sales might occur, could depress the market price of our ordinary shares and could impair our ability to raise capital through the sale of additional equity securities. We are unable to predict the effect that sales may have on the prevailing market price of our ordinary shares. All of the ordinary shares owned by our directors, officers and existing shareholders are subject to lock-up agreements with the underwriters in our initial public offering that restrict the shareholders’ ability to transfer our ordinary shares until after October 3, 2021. Substantially all of our outstanding ordinary shares will become eligible for unrestricted sale upon expiration of the lock-up period. In addition, ordinary shares issued or issuable upon exercise of options and warrants vested as of the expiration of the lock-up period will be eligible for sale at that time. Sales of ordinary shares by these shareholders could have a material adverse effect on the trading price of our ordinary shares.

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There are no assurance that our securities, including our ordinary shares, will continue to be listed or, if listed, that we will be able to comply with the continued listing standards of Nasdaq, which could limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions.

Even though our ordinary shares are currently listed on the NASDAQ, we cannot assure you that we will be able to meet NASDAQ’s continued listing requirement or maintain other listing standards. If our ordinary shares are delisted by NASDAQ, and we are not able to list our securities on another national securities exchange, we expect our securities could be quoted on an over-the-counter market. If this were to occur, then, we could face significant material adverse consequences, including:

● less liquid trading market for our securities;

● more limited market quotations for our securities;

● determination that our ordinary shares are a “penny stock” that requires brokers to adhere to more stringent rules and possibly resulting in a reduced level of trading activity in the secondary trading market for our securities;

● more limited research coverage by stock analysts;

● loss of reputation; and

● more difficult and more expensive equity financings in the future.

The National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which are referred to as “covered securities.” If our ordinary shares remain listed on NASDAQ, our ordinary shares will be covered securities. Although the states are preempted from regulating the sale of our securities, the federal statute does allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular case. If our securities were no longer listed on NASDAQ and therefore not “covered securities”, we would be subject to regulation in each state in which we offer our securities.

Future issuance of our ordinary shares could cause dilution of ownership interests and adversely affect our stock price.

We may choose to raise additional capital due to market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans. To the extent that additional capital is raised through the sale of our equity or convertible debt securities, the issuance of such securities could result in further dilution to our shareholders or result in downward pressure on the price of our ordinary shares

Shares eligible for future sale may depress our stock price.

As of the date of this annual report, we had 8,267,793 ordinary shares outstanding. All of the ordinary shares of held by affiliates are restricted or control securities under Rule 144 promulgated under the Securities Act. Sales of ordinary shares under Rule 144 or another exemption under the Securities Act or pursuant to a registration statement could have a material adverse effect on the price of the ordinary shares and could impair our ability to raise additional capital through the sale of equity securities.

We may issue preference shares to investor that grant them superior rights than holders of our ordinary shares without obtaining shareholder approval.

Our amended and restated memorandum and articles of association authorize our board of directors to issue one or more series of preference shares and set the terms of the preference shares without seeking any further approval from our shareholders. Any preference shares that are issued may rank ahead of our ordinary shares, in terms of dividends, liquidation rights and voting rights.

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If securities or industry analysts do not publish or cease publishing research reports about us, if they adversely change their recommendations regarding our ordinary shares or if our operating results do not meet their expectations, the price of our ordinary shares could decline.

The trading market for our ordinary shares will be influenced by the research and reports that industry or securities analysts may publish about us, our business, our market or our competitors. Securities and industry analysts currently publish limited research on us. If there is limited or no securities or industry analyst coverage of our company, the market price and trading volume of our ordinary shares would likely be negatively impacted. Moreover, if any of the analysts who may cover us downgrade our ordinary shares, provide more favorable relative recommendations about our competitors or if our operating results or prospects do not meet their expectations, the market price of our ordinary shares could decline. If any of the analysts who may cover us were to cease coverage or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause our share price or trading volume to decline.

As a foreign private issuer, we are subject to different U.S. securities laws and NASDAQ governance standards than domestic U.S. issuers. This may afford less protection to holders of our ordinary shares, and you may not receive corporate and company information and disclosure that you are accustomed to receiving or in a manner in which you are accustomed to receiving it.

As a foreign private issuer, the rules governing the information that we disclose differ from those governing U.S. corporations pursuant to the Exchange Act. Although we intend to report quarterly financial results and report certain material events, we are not required to file quarterly reports on Form 10-Q or provide current reports on Form 8-K disclosing significant events within four days of their occurrence and our quarterly or current reports may contain less information than required for domestic issuers. In addition, we are exempt from the SEC’s proxy rules, and proxy statements that we distribute will not be subject to review by the SEC. Our exemption from Section 16 rules regarding sales of ordinary shares by insiders means that you will have less data in this regard than shareholders of U.S. companies that are subject to the Exchange Act. As a result, you may not have all the data that you are accustomed to having when making investment decisions with respect to U.S. public companies.

As a foreign private issuer, we are exempt from complying with certain corporate governance requirements of the NASDAQ applicable to a U.S. issuer. As the corporate governance standards applicable to us are different than those applicable to domestic U.S. issuers, you may not have the same protections afforded under U.S. law and the Nasdaq Stock Market rules as shareholders of companies that do not have such exemptions.

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

We could cease to be a foreign private issuer if a majority of our outstanding voting securities are directly or indirectly held of record by U.S. residents and we fail to meet additional requirements necessary to avoid loss of foreign private issuer status. The regulatory and compliance costs to us under U.S. securities laws as a U.S. domestic issuer may be significantly higher than costs we incur as a foreign private issuer, which could have a material adverse effect on our business and financial results.

As an “emerging growth company” under the JOBS Act, we are allowed to postpone the date by which we must comply with some of the laws and regulations intended to protect investors and to reduce the amount of information we provide in our reports filed with the SEC, which could undermine investor confidence in our company and adversely affect the market price of our ordinary shares.

For so long as we remain an “emerging growth company” as defined in the JOBS Act, we have taken and intend to continue to take advantage of certain exemptions from various requirements that are applicable to public companies that are not “emerging growth companies” including:

● being permitted to provide only two years of audited financial statements, in addition to any required unaudited interim financial statements, with correspondingly reduced “Item 5. Operating And Financial Review And Prospects” disclosure;

● not being required to comply with the auditor attestation requirements for the assessment of our internal control over financial reporting provided by Section 404 of the Sarbanes-Oxley Act of 2002;

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● not being required to comply with any requirements adopted by the Public Company Accounting Oversight Board requiring mandatory audit firm rotation or a supplement to the auditor’s report in which the auditor would be required to provide additional information about the audit and our financial statements;  

● reduced disclosure obligations regarding executive compensation; and

● not being required to hold a nonbinding advisory vote on executive compensation or seek shareholder approval of any golden parachute payments not previously approved.

We have taken and intend to continue to take advantage of certain of these exemptions until we are no longer an “emerging growth company.” We will remain an emerging growth company until the earlier of: (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of our initial public offering, (b) in which we have total annual gross revenue of at least $1.235 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our ordinary shares that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, and (2) the date on which we have issued more than $1 billion in non-convertible debt during the prior three-year period.

If we are classified as a passive foreign investment company, United States taxpayers who own our ordinary shares may have adverse United States federal income tax consequences.

A non-U.S. corporation such as ourselves will be classified as a passive foreign investment company (“PFIC”) for any taxable year if, for such year, either

● At least 75% of our gross income for the year is passive income; or

● The average percentage of our assets (determined at the end of each quarter) during the taxable year which produce passive income or which are held for the production of passive income is at least 50%.

Passive income generally includes dividends, interest, rents and royalties (other than rents or royalties derived from the active conduct of a trade or business) and gains from the disposition of passive assets.

If we are determined to be a PFIC for any taxable year (or portion thereof) that is included in the holding period of a U.S. taxpayer who holds our ordinary shares, the U.S. taxpayer may be subject to increased U.S. federal income tax liability and may be subject to additional reporting requirements.

Taking the amount of cash we raised in our initial public offering into account, together with any other assets held for the production of passive income, it is possible that, for our 2021 taxable year or for any subsequent year, more than 50% of our assets may be assets which produce passive income. We will make this determination following the end of any particular tax year. Although the law in this regard is unclear, we treat our consolidated affiliated entities as being owned by us for United States federal income tax purposes, not only because we exercise effective control over the operation of such entities but also because we are entitled to substantially all of their economic benefits. For purposes of the PFIC analysis, in general, a non-U.S. corporation is deemed to own its pro rata share of the gross income and assets of any entity in which it is considered to own at least 25% of the equity by value.

For a more detailed discussion of the application of the PFIC rules to us and the consequences to U.S. taxpayers if we were determined to be a PFIC, see “Taxation - Material U.S. Federal Income Tax Considerations - Passive Foreign Investment Company”.

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ITEM 4. INFORMATION ON THE COMPANY

4A. History and Development of the Company

We commenced our operations in June 2008 through UTime SZ, a PRC company established by Mr. Bao, Mr. Junlin Zhou and Mr. Bo Tang. As of March 31, 2017, Mr. Bao, Mr. Zhou and Mr. Tang held 52%, 28% and 20% of the equity interests of UTime SZ, respectively. In February 2018, Mr. Bao acquired the equity interests of UTime SZ held by Mr. Zhou and Mr. Tang and became UTime SZ’s sole shareholder. In April 2019, UTime SZ approved a board resolution and in August 2019 approved a shareholder resolution, both of which approved Mr. He, the controlling shareholder of HMercury Capital Limited, to purchase a RMB21.4 million equity interest in UTime SZ which has been received as of the date of this annual report. On September 3, 2019, UTime SZ approved a shareholder resolution to allow Mr. Bao to invest an additional RMB23.9 million equity interest in UTime SZ, for which the consideration primarily consisted of the amount due to Kaiweixin of RMB23.0 million as of March 31, 2019. Kaiweixin was controlled by Mr. Bao through an entrust agreement with Mr. Wukai Song, who owned 100% of equity interest of Kaiweixin and Mr. Bao assumed all creditor rights after Kaiweixin was deregistered on June 21, 2019. As of the date of this annual report, Mr. Bao and Mr. He held 96.95% and 3.05% equity interests of UTime SZ, respectively.

Beginning in late 2018, the following transactions were undertaken to reorganize the legal structure (the “Reorganization”) of the Company. In October 2018, UTime Limited was incorporated in the Cayman Islands. In November 2018, UTime HK, a WOS of the Company, was incorporated in Hong Kong and in December 2018, UTime WFOE, a WOS of the Company, was incorporated in China, respectively.

In March 2019, UTime WFOE entered into a series of contractual agreements with our VIE, UTime SZ and its principal shareholder, Mr. Bao, which were further amended and restated in August and September of 2019, respectively, and were entered into among UTime WFOE, VIE, Mr. Bao and Mr. He, respectively. Pursuant to these agreements, we believe that these contractual arrangements enable us to (1) have power to direct the activities that most significantly affects the economic performance of UTime SZ and its subsidiaries, and (2) receive the economic benefits of UTime SZ and its subsidiaries that could be significant to UTime SZ and its subsidiaries. As a result of these contractual arrangements, under U.S. GAAP, the Company is considered the primary beneficiary of UTime SZ for accounting purpose and is able to consolidate UTime SZ and its subsidiaries in its consolidated financial statements.

Do Mobile is a Company subsidiary that was incorporated by the Company on October 24, 2016 in New Delhi, India. Do Mobile is an operating entity that sells cell phone products and provides after-sale services of our own in-house brand in India. Prior to the Reorganization, the majority of Do Mobile’s equity interests were held by Mr. Bao through an entrustment agreement with Mr. Wukai Song through a holding company, Bridgetime. Bridgetime was incorporated on September 5, 2016 in the BVI under the laws of the BVI, with Mr. Wukai Song owning 70% of the equity interest of Bridgetime through an entrust agreement between him and Mr. Bao, and Mr. Yunchuan Li owning 30% of the equity interest of Bridgetime. Do Mobile has w.e.f. 15.04.2022 changed its registered office from House No. 25, Street No. 7, Goyala Vihar, Near Saint Thomas School, New Delhi-110071 to another location. The registered office of Do Mobile is now situated at New State Bank of Patyal New Sabzi Mandi Azadpur, New Delhi 110033. Further, Do Mobile is yet to make its annual filings with the Registrar of Companies in respect of the FY 2021-22.

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On March 5, 2018, Bridgetime issued 100,000 ordinary shares to Mr. Wukai Song, changing the shareholders’ structure of Bridgetime so that Mr. Wukai Song owned a 90% equity interest in Bridgetime, which were controlled by Mr. Bao through an entrust agreement between him and Mr. Wukai Song, and Mr. Li owning 10% of equity interest. On December 5, 2018, Bridgetime approved a board resolution that appointed and registered Mr. Yihuang Chen a new director. On March 11, 2019, Bridgetime approved a board resolution that transferred 1 share of Do Mobile to Mr. Yihuang Chen and made him nominal shareholder of Do Mobile, removed Mr. Li as the director of Bridgetime and authorized representative of Do Mobile, and appointed Mr. Wukai Song as the authorized representative of Do Mobile. On April 4, 2019, Bridgetime approved a board resolution that forfeited 15,000 ordinary shares of Bridgetime held by Mr. Li, cancelled those shares accordingly and amended Bridgetime’s memorandum of association that changed the number of its authorized shares from 150,000 to 135,000 at a par value of US$1.00. After this, Mr. WuKai Song owned 100% of the equity interest of Bridgetime, which was controlled by Mr. Bao through an entrust agreement between him and Mr. Wukai Song. On May 23, 2019, Bridgetime approved a board resolution that transferred the 135,000 ordinary shares owned by Mr. Wukai Song to UTime Limited. As a result, Bridgetime is currently a WOS of the Company. Since inception, Bridgetime has only made nominal investments in Do Mobile and no substantial business operations have occurred.

On May 20, 2019, the Company approved a board resolution that agreed to transfer 12,000,000 of its ordinary shares then owned by Mr. Bao to Grandsky Phoenix Limited, a company that was established under the laws of the BVI and 100% owned by Mr. Bao.

On June 3, 2019, the Company entered into a share subscription agreement with HMercury Capital Limited, a company that was incorporated under the laws of the BVI and controlled by Mr. He, one of our directors, pursuant to which HMercury Capital Limited purchased an aggregate of 377,514 of the Company’s ordinary shares. On the same day, the Company approved a board resolution for issuance of 377,514 of the Company’s ordinary shares at par value US$0.0001 to HMercury Capital Limited based on the share subscription agreement. As a result, Mr. Bao, through Grandsky Phoenix Limited, and Mr. He, through HMercury Capital Limited, owned 96.95% and 3.05% of the equity interest of the Company, respectively.

On April 29, 2020, the Company approved a board resolution that agreed to repurchase 7,620,000 and 239,721 ordinary shares, which were subsequently cancelled, at par value from Grandsky Phoenix Limited and HMercury Capital Limited, respectively, pursuant to a share repurchase agreement that the Company entered into with Grandsky Phoenix Limited and HMercury Capital Limited on April 29, 2020. On August 13, 2020, the Company approved a board resolution and signed capital contribution letter with Grandsky Phoenix Limited and HMercury Capital Limited, respectively. Based on the capital contribution letter, each shareholder opted not to receive the consideration for the Repurchased Shares and made a pure capital contribution in the sum of the purchase price in favor of the Company without the issue of additional shares of the Company. In April 2021, we completed our initial public offering of 3,750,000 ordinary shares. As a result, Mr. Bao, through Grandsky Phoenix Limited, and Mr. He, through HMercury Capital Limited, own 4,380,000 ordinary shares, representing 52.98% of equity interest and 137,793 ordinary shares, representing 1.66% of equity interest of the Company, respectively, as of the date of this annual report.

On February 7, 2019, UTime India Private Limited (“UTime India”) is incorporated in India and became a wholly owned subsidiary of UTime Trading.

On November 1, 2021, Guangxi Utime Technology Co., Ltd. (“UTime Guangxi”) is incorporated in Guangxi, China and became a wholly owned subsidiary of UTime Trading.

On December 17, 2021, UTime Trading acquired 51% of the equity interest of Gesoper S De R.L. De C.V. (“Gesoper”). Gesoper is incorporated in Mexico and is a subsidiary of UTime Trading.

On January 17, 2022, Gesoper S De R.L. De C.V. (“Gesoper”) acquired 85% of Firts Communications And Technologies De Mexico S.A. De C.V. (“Firts”) equity interest. Firts was incorporated in Mexico and is a subsidiary of Gesoper.

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The following diagram illustrates our corporate structure as of the date of this annual report.

Ownership and Organization Chart

 

As of the date of this annual report, details of the material subsidiaries of the Company and UTime SZ are set forth below:

Name	Date of Incorporation	Jurisdiction of Incorporation	Percentage of beneficial ownership	Principal Activities
Subsidiaries of the Company
UTime International Limited	November 1, 2018	Hong Kong	100%	Investment holding company
Shenzhen UTime Technology Consulting Co., Ltd.	December 18, 2018	China	100%	Investment holding company
Bridgetime Limited	September 5, 2016	British Virgin Island	100%	Investment holding company
Do Mobile India Private Ltd.	October 24, 2016	India	99.99%	Sales of in-house brand products in India
VIE
United Time Technology Co., Ltd.	June 12, 2008	China	100%	Research and development of products, and sales
Subsidiaries of the VIE
Guizhou United Time Technology Co., Ltd. (“UTime GZ”)	September 23, 2016	China	UTime SZ’s subsidiary	Manufacturing
UTime Technology (HK) Company Limited (“UTime Trading”)	June 25, 2015	Hong Kong	UTime SZ’s subsidiary	Trading
UTime India Private Limited (“UTime India”)	February 7, 2019	India	UTime Trading’s Subsidiary	Trading
Guangxi Utime Technology Co., Ltd. (“UTime Guangxi”)	November 1, 2021	China	UTime Trading’s Subsidiary	Manufacturing of mobile devices and components
Gesoper S De R.L. De C.V. (“Gesoper”)	October 21, 2020	Mexico	UTime Trading’s subsidiary	Trading
Firts Communications And Technologies De Mexico S.A. De C.V. (“Firts”)	November 12, 2021	Mexico	Gesoper’s subsidiary	Trading

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Contractual Arrangements with the VIE and its Respective Shareholders

We conduct substantially all of our business in the PRC through a series of contractual arrangements with our VIE and its shareholders. The VIE and its subsidiaries hold the requisite licenses and permits necessary to conduct the Company’s business. In addition, the VIE and its subsidiaries hold the assets necessary to operate the Company’s business and generate substantially all of the Company’s revenues.

Our contractual arrangements with our VIE and its respective shareholders allow us to: (i) determine the most significant economic activities of the VIE; (ii) receive substantially all of the economic benefits of our VIE; and (iii) have an exclusive option to purchase all or part of the equity interest in and/or assets of our VIE when and to the extent permitted by PRC laws.

As a result of our direct ownership in UTime WFOE and the contractual arrangements with our VIE, we are regarded as the primary beneficiary of our VIE for accounting purposes, and we treat the VIE and its subsidiaries as our consolidated affiliated entities under U.S. GAAP. We have consolidated the financial results of our VIE and its subsidiaries in our consolidated financial statements in accordance with U.S. GAAP.

The following is a summary of the contractual arrangements by and among UTime WFOE, the VIE and the shareholders of the VIE and their spouses, as applicable.

Power of Attorney. Pursuant to a series of powers of attorney issued by each shareholder of the VIE, each shareholder of the VIE irrevocably authorizes UTime WFOE or any natural person duly appointed by UTime WFOE to exercise on the behalf of such shareholder with respect to all matters concerning the shareholding of such shareholder in the VIE, including without limitation, attending shareholders’ meetings of the VIE, exercising all the shareholders’ rights and shareholders’ voting rights, and designating and appointing the legal representative, the chairperson, directors, supervisors, the chief executive officer and any other senior management of the VIE.

On September 4, 2019, UTime WFOE, the VIE and Mr. Bao, a shareholder of the VIE, entered into the second amended and restated power of attorney, while UTime WFOE, the VIE and Mr. He, a shareholder of the VIE, entered into an amended and restated power of attorney, which contain terms substantially similar to the power of attorney executed by the shareholders of the VIE described above.

Equity Pledge Agreement. Pursuant to the Equity Pledge Agreement entered into among UTime WFOE, the VIE and the shareholders of the VIE, the shareholders of the VIE agreed to pledge their 100% equity interests in the VIE to UTime WFOE to secure the performance of the VIE’s obligations under the applicable existing exclusive call option agreement, power of attorney, exclusive technical consultation and service agreement, business operation agreement and also the equity pledge agreement. If events of default defined therein occur, upon giving written notice to the VIE shareholders, UTime WFOE may exercise its rights to enforce the pledged equity interest to the extent permitted by PRC laws.

On September 4, 2019, UTime WFOE, the VIE and the shareholders of the VIE entered into the second amended and restated equity pledge agreement, which contains terms substantially similar to the equity pledge agreement described above.

As of the date of this annual report, we have completed the equity pledge registration with the competent Administration for Market Regulation in accordance with the PRC Property Rights Law and the Civil Code of the PRC.

Spouse Consent Letter. Pursuant to a series of spousal consent letters, executed by the spouses of the shareholders of the VIE, Mr. Bao and Mr. He, such signing spouses confirmed and agreed that the equity interests of the VIE are the own property of their applicable spouses and shall not constitute the community property of the couples. Such spouses also irrevocably waived any potential right or interest that may be granted by operation of applicable law in connection with the equity interests of the VIE held by their applicable spouses.

On September 4, 2019, Mr. Bao’s spouse executed the second amended and restated spousal consent letter while Mr. He’s spouse executed an amended and restated spousal consent letter, which contains terms substantially similar to the spousal consent letter described above.

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Business Operation Agreement. Pursuant to the business operation agreement entered into among UTime WFOE, the VIE and the shareholders of the VIE, the shareholders of the VIE agreed that without the prior written consent of UTime WFOE or any party designated by UTime WFOE, the VIE shall not engage in any transaction which may have a material or adverse effect on any of its assets, businesses, employees, obligations, rights or operations (except for those occurring in the due course of business or in day-to-day business operations, or those already disclosed to UTime WFOE and with the explicit prior written consent of UTime WFOE). In addition, the VIE and its shareholders jointly agreed to accept and strictly implement any proposal made by UTime WFOE from time to time regarding the employment and removal of the VIE’s employees, its day-to-day business management and the financial management system of the VIE.

On September 4, 2019, UTime WFOE, the VIE and the shareholders of the VIE entered into the second amended and restated business operation agreement, which contains terms substantially similar to the business operation agreement described above.

Exclusive Technical Consultation and Service Agreement. Pursuant to the exclusive technical consultation and service agreement entered into between UTime WFOE and the VIE, dated March 19, 2019, UTime WFOE has the exclusive right to provide or designate any entity to provide the VIE business support, technical and consulting services. Pursuant to such agreement, the VIE agreed to pay UTime WFOE (i) the service fees equal to the sum of 100% of the net income of the VIE of that year or such other amount otherwise agreed by UTime WFOE and the VIE; and (ii) a service fee otherwise confirmed by UTime WFOE and the VIE for specific technical services and consulting services provided by UTime WFOE in accordance with the VIE’s needs from time to time. The exclusive consultation and service agreement will continue to be valid unless the written agreement is signed by all parties thereto to terminate it or a mandatory termination is requested in accordance with applicable PRC laws and regulations.

Exclusive call option agreement. Pursuant to the exclusive call option agreement entered into among UTime WFOE, the VIE and the shareholders of the VIE, each of the shareholders has irrevocably granted UTime WFOE an exclusive option to purchase all or part of its equity interests in the VIE, and the VIE has irrevocably granted UTime WFOE an exclusive option to purchase all or part of its assets.

With regard to the equity transfer option, the total transfer price to be paid by UTime WFOE or any other entity or individual designated by UTime WFOE for exercising such option shall be the capital contribution mirrored by the corresponding transferred equity in the registered capital of the VIE, provided that if the lowest price permitted by the then-effective PRC laws is lower than the above capital contribution, the transfer price shall be the lowest price permitted by the PRC laws. With regard to the asset purchase option, the transfer price to be paid by UTime WFOE or any other entity or individual designated by UTime WFOE for exercising such option shall be the lowest price permitted by the then-effective PRC laws.

On September 4, 2019, UTime WFOE, VIE and the shareholders of VIE entered into the second amended and restated exclusive call option agreement, which contains terms substantially similar to the exclusive call option agreement described above.

4B. Business Overview

We are committed to providing cost-effective mobile devices to consumers globally and to helping low-income individuals from established markets, including the United States, and emerging markets, including India and countries in South Asia and Africa, have better access to updated mobile technology.

We are mainly engaged in the design, development, production, sales and brand operation of mobile phones, accessories and related consumer electronics. We also provide Electronics Manufacturing Services (“EMS”), including Original Equipment Manufacturer (“OEM”), which we manufacture products solely pursuant to customers’ orders, and Original Design Manufacturer (“ODM”) services, which we not only manufacture but also design products based on clients’ demand, for well-known brands, such as TCL Communication Technology Holdings, Ltd., a subsidiary of TCL Corporation, Swagtek Inc., Shanghai Sunvov Communications Technology Co., Ltd. and T2Mobile International Limited. Our operations are based in China but most of our products are sold overseas, including India, Brazil, the United States, and other emerging markets countries in South Asia, Africa and Europe. We have two in-house brands, “UTime,” which is our middle-to-high end label and targets middle class consumers from emerging markets; and “Do”, our low- to mid-end brand, which is positioned to target grassroots consumers and price-sensitive consumers in emerging markets. Our prime end user groups are segmented into regions like South America, South Asia, Southeast Asia and Africa.

We value systematic management and organize production with strictly high-quality standards and production technology. We continuously endeavor to improve our overall manufacturing service level, to strengthen our cost control processes, and to enhance our ability to respond rapidly to market dynamics in order to ensure a sustainable development in our EMS segment, especially in Printed Circuit Board and Assembly (“PCBA”) for consumer electronic products.

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Market Opportunities

Global Mobile Phone Market Overview 

We believe that the global mobile phone market has huge potential and broad development prospects

Benefiting from the continuous upgrading of communication technologies and mobile phone parts, we believe that the global mobile phone market is currently maintaining a steady growth trend. With the advent of the Fifth-Generation (“5G”) era, we estimate that the average annual shipments value of mobile phones worldwide are expected to increase steadily from 2019 to 2022.

Due to a fast increase in the population of Fourth-Generation (“4G”) mobile phones from 2013 to 2015, we believe that the global mobile phone shipments volume reached its peak and the speed has tended to slow down because of the saturated market of 4G mobile phones. However, we estimate that the mobile phone manufacturing industry, especially in China, will continue to grow and we expect the mobile phone shipments value will increase mainly driven by the growing demand for 5G mobile phones.

Tablets and wearable devices, especially smart watch, are the next driven markets that we believe have great opportunities. 5G implementation will bring more orders of tablets and smart accessories in both developed and emerging markets.

We believe that the industry is in a transitional period and product performance continues to evolve.

The strong demand for new products triggered by technology upgrades and functional innovations has driven the mobile phone industry to achieve rapid penetration rate. However, as the industry matures and enters the transition period from 4G to 5G, we believe that the industry growth rate will slow down along with product homogenization. At the same time, we believe that the gradual increase driven by the demand of 5G will make the relevant manufacturers in the mobile phone industry pay more attention to the sales growth brought by higher quality products, which may also encourage the users to increase their frequency in changing models.

Emerging Markets Mobile Phone Markets Overview

The market starts late and has great potential to grow.

Consumer electronics, for instance, mobile phones, focus more on emerging markets, where disposable income is growing fast and the market is far less penetrated. Emerging markets are typically referred to as areas in Asia, South America, Eastern Europe and Africa. The populations in those areas are large and the increasing household income makes consumer electronics, like mobile phones, more affordable. We believe that predicted rapid economic development, the release of demographic dividends (in the form of an accelerated economic growth and improved productivity from youth) and the construction of communication technology facilities will drive rapid growth in sales in emerging markets.

The proportion of smartphones has increased with a stronger demand.

Currently, we believe the proportion of feature phones is still higher than that of smartphones. However, with the gradual maturity of emerging markets, the smartphones market continues to expand. The market share of smartphones in this market has increased, and we anticipate there will be a large structural improvement. Combining the factors of great growth potential in emerging markets and the demand for smartphones due to the development of 5G infrastructure, we believe that the smartphone shipment volume is expected to increase over from 2019 to 2022.

Why We are Focusing on Emerging Markets

We estimate that from 2019 to 2022, the average annual growth rate of smartphone shipments in the world’s major emerging markets, represented by Africa, Latin America, and other South Asia countries, among others, will be significantly higher than the annual growth of smartphone shipments in global established markets. Therefore, we believe that emerging markets will be the main sources of growth in global mobile phone sales for many years to come.

As far as emerging markets are concerned, feature phones still retain a large market share. On one hand, due to the differences in the level of economic development in various countries, a certain proportion of the population in emerging markets has not obtained got access to mobile phones, and the upgrade of telecommunication infrastructures from Second-Generation (“2G”) to Third-Generation (“3G”) and 4G is constrained due to a shortage of foundational funding in emerging markets. Meanwhile, emerging markets can be affected by factors like shortage of power supply and lagging telecommunication infrastructure, extending the life cycle of feature phones in the market to a certain extent. In summary, feature phones still have a large market and structural demand in major emerging markets around the world.

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On the other hand, emerging markets generally have a relatively younger population structure in terms of age. Millions of young people rush into labor market every year, forming a rigid demand for mobile phone consumption.

Reinforce our Focus in Established Markets

We have developed a partnership with Quality One Wireless LLC, our client in the United States, through ODM orders since 2015, and those orders contributed a significant portion, over 10%, of our entire revenue stream from 2017 to 2019. In fiscal year 2023, orders from Quality One Wireless LLC contributed 1.3% of total revenue. We also develop other clients like Swagetk Inc., which has become the largest client in the United States, representing 4.7% and 7.7% of the total revenue in fiscal year 2022 and 2023. To align our corporate strategy with the global trend of consumer electronics, especially mobile phones, we believe that expanding our business in established markets, like the United States and European countries, is vital to our future. Compared to emerging markets, established markets are well developed in terms of telecommunication infrastructure and more saturated.

In fiscal year 2022, We entered the Japan market through an ODM order and we are developing our first tablet product for our Japanese client. Tablets have a relatively higher margin compared to some of our other products ranging from 25% to 30% due to our client’s demand. We launched the tablet and deliver the order to our Japanese client in September 2022. Japanese customer like Ohyama Co. Ltd., contributed 8.0% of our entire revenue for the fiscal year 2023 and we are expecting more orders and higher portion of the entire revenue from Japanese market.

We are transforming from an EMS provider to a comprehensive technology company engaging in the design, development, production, sales and brand operation of mobile phones, accessories and related consumer electronics. We intend to bring our own products to established markets, including the United States, Canada and European countries. Our Amazon stores have been established in Europe, and we believe that our recently launched products like triple-proof mobile phones and sunglasses with built-in speakers will be competitive in those markets. We are actively evaluating the feasibility of business opportunities with wireless carriers, such as Verizon, AT&T, Sprint and T-Mobile, in the United States.

Our Strategies

We intend to achieve our mission through successful execution of the key elements of our growth strategy, which include:

Optimize the structure of OEM/ODM customers and orders.

We have accumulated business resources and experience in both domestic and overseas OEM/ODM markets for the last decade. We are seeking to leverage our first mover advantage in changing markets to become an international enterprise through continuous innovation. In addition, we will seek to optimize current customer and order structure by deprioritizing small and unstable customers and eliminating low margin orders to increase our gross profit margin. Small customers typically cannot provide sustainable OEM/ODM orders when comparing to large customers, like TCL, and those small customers tend to negotiate a lower price per order that can decrease gross margin. Therefore, keeping relatively large clients will help us maintain sustainable OEM/ODM orders and a higher margin.

Develop our own brand and enhance brand recognition.

We have sought, and will continue to develop, our brands by delivering a superior user experience to our customers in emerging markets, such as India, Southeast Asia and Africa. We are seeking to offer an enhanced shopping experience by effectively managing our existing distribution network and upgrading our franchised stores. Our first step will be to open (direct-sell) retail stores in key and high-traffic locations in India and to establish a comprehensive sales network with our distributors. Then, we intend to replicate this pattern in other emerging markets and adjust it accordingly. As a result, we intend to increase our market share and expand our brand recognition for both “UTime” and “Do”.

Expand our (local) sales network overseas.

We are seeking to develop and expand our sales network in Mexico and to establish a representative office in the United States. In addition, we plan to further explore the African and South American markets. We believe that the representative office will help us strengthen our business network and marketing channels in the United States and other North American regions, for instance, through participating in telecom and technology exhibitions. We will seek to strengthen our efficient sales network and streamline our supply chain process to keep our products and services at a reasonable price level in order to increase our user base.

As part of our expansion strategy, we are actively evaluating opportunities for strategic cooperation with telecommunication carriers through our existing clients in Southern Asia, Africa, the United States and South America. We intend to expand into more markets including emerging and established markets through business with carriers. We have acquired two companies in Mexico in fiscal year 2022 and have built our local team there to develop business with local telecom carriers, such as, Firts, and have started with OEM/ODM orders. Meanwhile, our Mexican subsidiaries are in the process of becoming certified vendors of these local telecom carriers. Once the process is completed, we will be able to use our “UTime” and “Do” brands.

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Dual-brand pricing strategy.

We plan to restructure our existing product pipeline by developing the “Do” and “UTime” brands at the same time, but targeted to different segments. Through the “Do” brand, we target customers who are price-sensitive and cost-effective, and let them enjoy the latest communication technology products with an affordable price. At the same time, through the “UTime” brand, we target the newly emerging quasi-middle-class customer base in both established and emerging market countries.

Expand and diversify our product portfolio.

We plan to expand and diversify our product portfolio to meet the fast-changing market. More types of consumer electronics will be added and offered to our customers. We plan to develop a range of distinctive electronic products, including triple-proof mobile phones that are water-proof, dust-proof and puncture-, shock-, pressure- and impact-proof, portable Bluetooth speakers, sunglasses with built-in speakers, tablets, and wearable devices, among others.

Our Products and Services

We design, manufacture, and distribute mobile phones and other consumer electronics through our operation plants in and outside China. Our products are categorized into three major categories:

Feature phones

Feature phones do not have an independent operating system nor adapted third party software applications. Feature phones have tangible keyboards, smaller screen size that is usually below 3 inches, and integrate basic functions, such as cellular call and cellular message. Camera, FM radio and Bluetooth are typically optional functions.

Smartphones

Smartphones have an independent operating system and allow for installation of software applications developed by third parties. Compared with feature phones, smartphones tend to have a full view display without tangible keyboards. Screen size is usually over 5 inches. Our smartphone products are Android-based and certified as Android Enterprise Recommended by Google.

Face masks

Since March 2020 the Company has participated in efforts to stop the spread of the COVID-19 epidemic, namely, by serving as a temporary distributor of face masks to an existing overseas client in Brazil. The Company does not intend for this revenue stream to become part of its long-term business strategy and ceased face masks orders in 2020.

Others

Our other products mainly consists of cell phone accessories, parts of mobile phone and molds for mobile phones, as well as other consumer electronic accessories. Our mobile phone accessories contain two categories. One is for our OEM/ODM clients, mainly including spare parts and supplemental components that we sell to our clients. The other is for our in-house brand including consumer electronics, such as, power bank, Bluetooth speaker, and spare parts like batteries, chargers, and cell phone shells.

Most of our products are produced through OEM/ODM orders received from our long-term clients and sold overseas. The following charts display our product contribution for the years ended March 31, 2021, 2022 and 2023:

	Year ended March 31,
	2021				2022				2023
Category	Amount		%		Amount		%		Amount				%
	RMB				RMB				RMB		US$
	(in thousands, except for percentages)
Feature phone		144,032		58.4		111,066		40.3		106,279		15,466		53.0
Smart phone		56,885		23.0		154,143		56.0		73,819		10,742		36.8
Face mask		44,747		18.1		-		-		-		-		-
Others		1,235		0.5		10,299		3.7		20,449		2,976		10.2
Total		246,899		100.0		275,508		100.0		200,547		29,184		100.0

Do Feature Phones

Do Feature Phones are a feature phones with dual-SIM function that offer our customers a cost-effective product by implementing call features like Speed Dial, Auto-Call Recording with folder and Blacklist. Built with 1.77 to 2.4 inches bright display, batteries sized from 800 to 1450 mAh, a physical numeric keyboard and a loud front-facing speaker, Do Feature Phones offer reliable voice experience to customers and enrich leisure experience by attaching Bluetooth and FM radio function inside. Do Feature Phones also enable end users an expandable memory card slot up to 32 GB.

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Do Smartphones

The Smartphones are Android-based 4G VoLTE smartphone that is certified as Android Enterprise Recommended by Google. The Do Mate 1 equips with a 5.7-inch durable full display, 2000 to 3000 mAh batteries, a set of 5 to 13 plus 0.3 MP dual rear camera and 8 MP front camera with flash. Do Smartphones have Mode SC 9832E, a product of Spreadtrum Communications, Inc. or MT 6580, a product of MediaTek Inc., processor, 1 to 2GB RAM and 8 to 16GM ROM and light, proximity and gravity sensors inside. Do Smartphones also enable end users to experience Dual-SIM with Micro and Nano SIM card.

Others

The Bluetooth speaker has a 400 mAh capacity battery and 4 Omega/3W speaker power. Play mode contains: Micro card, Line-in and Bluetooth connection. The Bluetooth Box uses Bluetooth 5.0 profiles and has 12-meter connection distance. Output power is 15W with two batteries of 2500 mAh. Its frequency range is from 2.4 to 2.480 GHz. The Bluetooth glasses apply Bluetooth 5.0 profile and True Wireless Stereo, the battery size is 70 mAh.

Our Operations

Order Placement and Fulfillment Process

 

Procurement

We adopt an order-oriented procurement model. Specifically, according to our forecasts towards the market and customer orders, we estimate the total demand and actual demand of materials through Material Requirements Planning (“MRP”), plus a certain level of inventory, and finally place the procurement order to our suppliers. MRP is a production planning, scheduling, and inventory control system used to manage manufacturing processes. Most MRP systems are software-based, but it is possible to conduct MRP by hand as well.

The main raw materials purchased by us can be classified into electronic components, optical components, electronic components and packaging materials, and structural devices. According to the different procurement areas, the Company’s procurement activities can be divided into domestic procurement and overseas procurement. The raw materials from overseas mainly include baseband chips and memory which originally produced outside of China, and we purchase other raw materials primarily in mainland China.

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Production

 

Our production schedule department is responsible for coordinating all the materials planning, production planning and shipping planning, arranging the production of our own factories, outsourcing factories and other ODMs. We also focus on improving production efficiency and cost control while meeting customer needs. We determine the applicable production method based on our sales prospects, capacity utilization, cost control requirements and other factors. Our production cycle takes on average 75 days, which was calculated from receiving orders to completing production, for each new launched OEM/ODM order or own brand product. Usually, we will spend about 40 days in preparation including material procurement, prototyping, testing and obtaining certifications. Then, it takes approximately 30 days for mass production and fulfill the OEM/ODM order.

Our Factory

We established our own factory in Guizhou, China through UTime GZ. We have built a diversified flexible manufacturing system that adopts multi-order, small-batch production methods to meet market differentiation needs under a global strategy. With the continuous growth of business and the entry into the emerging markets, we are always striving to meet the needs of customers, taking into account the factors such as sales forecast and orders, capacity utilization, cost control requirements and product positioning. Our factory takes almost all the production assignments including our orders from OEM/ODM clients and our own brand products. However, before assigning the order to our factory, the production management department will evaluate the overall cost and production schedule, if the order failed to meet our cost budget, we will outsource the order to our collaborating factories.

On October 6, 2021, we entered into an investment agreement (the “Investment Agreement”) with the local government of Jiangnan, Nanning (the “Jiangnan Government”) pursuant to which UTime SZ agreed to invest an aggregate of RMB 150 million (approximately US$23.2 million) by establishing manufacturing facilities and producing electronic devices at Jiangnan, Nanning. Our second factory in Nanning went into service in May, 2022.

Outsourcing Factories

Our production management department is responsible for the resource development and management of factories on which we rely to outsource our manufacturing needs. We manage the outsourced manufacturers by imposing certain requirements such as processing requirements, limiting labor costs, and imposing quality control and other special requirements. We signed an entrusted production agreement with the outsourcing manufacturers. We are responsible for the product design and development as well as the raw materials procurement. The outsourcing manufacturer is responsible for processing and assembling products according to our requirements. We provide design and production plans to the outsourcing manufacturers and guide them to finish qualified products.

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For the feature phones offering to our American clients, we cooperate with other ODMs. We provide bill of materials (“BOM”) requirements to other ODMs, and they participate in design, raw materials procurement, manufacturing and sell finished products to us. We often assist other ODMs in managing the production process and offer critical structural components referring to PCBA, mobile screen and batteries, to ensure production yield and product quality, as well as “Just-in-time” delivery rates.

For our “Do” brand, we cooperate with an outsourced factory in India due to cost consideration. The Indian government imposes a higher import tax on finished goods than the partially assembled one, such as a Semi-Knocked Down (“SKD”) for consumer electronics. Therefore, we ship SKD to Do Mobile from our factory operated by UTime GZ and finish final assembling process in our outsourced factory in India.

Quality Control Management

We believe that the quality of our products is crucial to our continued growth. We place great emphasis on quality control and have implemented Total Quality Management (“TQM”) to manage our operations. Before entering our production flow, the raw materials must be certified for quality. We also perform inspections on raw materials in the mass production flow.

Our quality control system covers each stage of our production process. When we establish or adapt an assembly line for a new product or model, we trial-run the assembly line to produce a sample for quality examination. The assembly line can start mass production only if the produced sample is of adequate quality. When the in-progress product moves from one work station to another one along the assembly line, it must be checked for quality by the responsible assembly specialists in both work stations. A product may be shipped out of manufacturing facility only after it passes all quality control examinations and is properly documented as such. By logging and breaking down the pass rates along our products in the production process, we are able to identify our quality control weak spots, and improve our operation accordingly.

Supply Chain Management

Supply Chain Management Process

 

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Materials, Products and Other Suppliers

We purchase key components from our suppliers, such as chips, batteries, mainboard, screens, battery chargers and controllers. We strategically select our suppliers to minimize over-concentration, control our cost and maintain a good relationship with our suppliers.

To reduce over-concentration of supply, to manage costs and to control product quality, we generally engage at least two (2) suppliers for each of our key components. We select our suppliers based on a variety of criteria, including, among others, production capacity, technological sophistication, quality assurance, professional certification, manpower adequacy, financial position and environmental compliance. In addition, we review the performance of our suppliers quarterly, and make necessary adjustments to our supply chain, including termination of under-performing suppliers. Although we have been able to maintain good and long-lasting relationships with our suppliers, we do not formally engage them under long-term contracts or on an exclusive basis, so we retain considerable pricing power in the meantime.

Distribution and Logistics

We deliver our products to overseas end customers through the services provided by the third-party supply chain companies. The third-party supply chain companies provide import and export customs declaration, customs clearance, logistics and other services, so that we can operate more efficiently. In order to reduce the concentration of third-party delivery supply chain companies, we usually have more than three delivery supply chain companies to provide services at the same time.

Our Technology

We are an EMS service provider, mainly offering OEM/ODM services to our engaged clients. We continue investing in technology to improve our ability in design, production, testing and software application. Our subsidiary, UTime SZ, is a national certified high technology enterprise that has certain benefits in tax deduction and government grants through 2024 and the certification is renewable every three years.

Our technology focuses on process optimization, which can contribute to improved accuracy or efficiency during production, and industrial design as well as mechanical design, which enables us to meet requirements from our OEM/ODM clients and fulfill the orders.

Major technologies applied in our operations are listed below:

Number		Category	Name	Description	Source
	1	Production	SMT Production line	The length of each SMT production line is 28 meters with antistatic function attached.	Purchased
	2	Production	Assembly line	The assembly line has a capacity of 45 operators working together	Purchased
	3	Testing	General Testing line	N/A	Purchased
	4	Design	Mobile phone Industrial Design Patent	An exterior used for smartphones	Self-developed
	5	Production	PCBA Calibration Fixture Tools	A clip that improves the accuracy for assembly activities	Self-developed
	6	Design	Flex Print Circuit Board (FPCB) for Smartphone	Circuit board used in smartphones with enhanced function	Self-developed
	7	Testing	Application for Water proof Test	Application used to test water damage of electronic components	Self-developed
	8	Design	Application for Access to Public Warning System	Application installed in mobile phones to enhance signal	Self-developed
	9	Design	Call Filter	Application installed in mobile phones to filter harmful incoming messages	Self-developed

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Research and Development

Our research and development activities include two major sections, which are our EMS section and our own brand section. EMS section’s purpose is to allocate a significant amount of resources and funds to developing cost-effective and reliable products for the OEM/ODM clients and ensuring that these products meet their exacting requirements for functionality and reliability. Own brand section’s purpose is to launch new products to obtain more market shares. Our research and development initiatives are led by our internal teams and are supported by third parties as needed. Our product management team and our sales and marketing team spend their time interacting with a combination of end users, distributors in our target markets, and wireless carriers to better understand the market requirements for our products. Once defined, our design and manufacturing team develops and tests the products against these requirements to be delivered to our clients and to be sold to the end users.

Customers

The majority of our selling items are the feature phones and the smartphones as mentioned above. Our sales depend heavily on our major clients, TCL Communication Limited , Vida Resources Pte Ltd. and Soluciones Profesionales Empresariales En Revolucion Sa. De. CV , representing 22.2%, 12.9% and 12.9% of the total revenue for fiscal year 2023, respectively. We regularly provide OEM and ODM business for them. In addition, we export our in-house brand products to emerging markets.

The following is a list of our top three customers for the fiscal year 2023:

Country/Area	Customer	Brand	Percentage of total revenue
Asia	TCL Communication Limited	ODM		22.2	%
Africa	Vida Resources Pte Ltd.	ODM		12.9	%
Mexico	Soluciones Profesionales Empresariales En Revolucion Sa. De. CV	ODM		12.9	%

The following is a list of our top three customers for the fiscal year 2022:

Country/Area	Customer	Brand	Percentage of total revenue
South America	Philco Eletronicos S/A	ODM		42.3	%
Asia	TCL Communication Limited	ODM		19.8	%
United States	PCD International	ODM		5.5	%

The following is a list of our top three customers for the fiscal year 2021:

Country/Area	Customer	Brand	Percentage of total revenue
Asia	TCL Communication Limited	ODM		41.3	%
United States	Swagtek Inc.	ODM		6.8	%
Asia	Shanghai Sunvov Communications Technology Co., Ltd.	ODM		6.3	%

Customer Services

To meet the requirements of our OEM and ODM customers, we support customized services for them. We assist our customers in research and development while launching new mobile products based on our industry experience. To date, we have maintained long-term cooperation with our main customers listed above. We have also built nearly 800 service centers for our in-house brand customer in India. During the one-year warranty period that we provide on our phone products, customers can phone returned or repaired according to the actual situation.

Global Operations

Historically, most of our OEM and ODM customers have come from established markets, including the United States, and emerging economies, including India and countries in South Asia and Africa, which have contributed considerably to our revenue. In line with our vision to expand globally, we started to use our new brand name “Do” in India in 2017 to develop in-house brand business. Emerging markets are the main consideration for our in-house brand sales and marketing, and historically India has been the primary focus of Do Mobile because of its large population. However, due to a negative change of business environment in India since mid-2020, we have decided to shift our strategic focus from India to Latin America. Mexico is our first step for business expansion in Latin America and in December 2021, we have acquired two local companies in telecom industries to expand our business in Mexico with local telecom carriers. We also plan to establish a representative office in the United States to further strengthen our business network in established markets.

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Sales and Marketing

China and other markets

We directly provide OEM and ODM business for our customers in China and overseas. In order to maintain close relationships with these customers, we have built a strong marketing team consisting of 15 sales force members, including a domestic client division, overseas client division and key accounts division. Our marketing efforts consist of product marketing and orders partner marketing. Product marketing focuses on ensuring OEM/ODM requirements related to products. Order partner marketing focuses on engaging sustainable clients, participating in telecom and technology exhibitions, as well as developing supplemental sales tools, industry trade show materials and brand awareness.

India

We decided to close our Indian subsidiary due to our strategic shift, our Indian operations were maintained at a limited level since fiscal year 2022. Our Indian subsidiary is under the process of cancellation.

United States

We cooperate with our clients in the United States through ODM orders. We intend to strengthen our business connections by establishing a representative office in the United States. This office will help us increase our marketing efforts, such as by participating in conferences and events that focus on the United States and other regions in North America. Our operation in this region through online platform Amazon were maintained at a relatively low level and only launched our experimental products.

Mexico

We have started to develop Mexico market as part of a broader corporate strategic shift, in connection with which we have decided to shift our emerging markets from India to Mexico. As a result, we have acquired two local companies in Mexico during the fiscal year 2022 and started business with local telecom carriers through ODM/OEM orders in August, 2022. We are in the process of obtaining vendor certificates with these telecom carriers and plan to sell products through these carriers with our own brand “UTime” and “Do”.

Africa

We entered the African market through ODM orders, including smartphones and feature phones, in 2018. Our African team contains two account managers, a product manager and two marketing specialists, because having a local distribution network is our main focus in the African market. We stopped cooperation with online platform, such as Jumia, during the fiscal year 2022 and have been focusing solely on local distribution channels.

Japan

We started to develop Japanese market through ODM orders of tablet and intended to expand this market. Our tablet products are fully tailored and designed according to client’s demand. A team of five specialists were formed including one project manager, two product specialists and two marketing specialists. Differed from our cellphone products, tablet products adopted a special strategy that focusing on unique design and tailorship to meeting various demand from both customer end and business end and we expected much high margin from our tablet products. Japanese market will be our strategic focus and we intend to develop more clients and more tailored products.

Seasonality

Our business has historically been subject to seasonal fluctuations, which may be caused by product launches and various promotional events hosted by us and our distributors. Although we have generally experienced higher sales during the fourth quarter since our customers usually launch new products during the fourth quarter of the calendar years, this pattern does not repeat itself every year. We typically experience our lowest sales volume in the first quarter of each year.

Competition

Overall Competition Landscape

We operate in a highly competitive environment serving industrial enterprises and end customers. Competition in our market is high and tends to increase. Price is a major source of competition, while product quality, differentiation, service, research, development and commercialization capacity, and distribution channels are also critical factors. Competition in our industry is intense and has been characterized by technology levels, production scale and economies of scale, evolving industry standards, frequent new product introductions and rapid changes in end user requirements.

We face competition from manufacturers that also provide EMS, such as Wentai and XiaoMi, to the extent industrial enterprises decide to engage and outsource production. We also face competition from mobile phone manufacturers that have a portfolio of products covering low-end feature phones and high-end smartphones, such as Samsung Electronics Co. Ltd. We also face competition from mobile phone companies who also target emerging markets, such as, Shenzhen Transsion Holding Limited. We believe that we compete favorably with respect to the factors described above.

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Our Competitive Strengths

We believe that the following competitive strengths have contributed to, or will contribute to, our recent and ongoing growth:

● Experienced management. Our core management team members (Chief Executive Officer, Chief Operating Officer and Chief Manufacturing Officer) have at least 10 years of experience in the mobile phone industry, and most of them formerly worked at well-known publicly traded companies.

● Comprehensive global industry ecosystem. Our integration of development, manufacturing, PCBA, Industrial Design (“ID”), Mechanic Design (“MD”), sales and after-sale services in China, India, Africa, the United States and South America, combined with our extensive industry experience, provides us a comprehensive global ecosystem for our products. We acquired two companies in Mexico which are mainly focus on business with telecom carriers and manage local distributors and after-sales services.

● Strong production capacity. Currently, we have six high-end Surface Mounting Technology (“SMT”) production lines and test lines, eleven assembly lines of which six lines are leased, and four leased packaging lines. Each SMT has a production capacity of 600,000 units per month, and our monthly assembling capacity has reached over one million units. Due to the seasonality of the mobile phone industry, we also cooperate with six manufacturers to fulfill our peak season orders, and we believe this strategy is cost-effective.

● Niche market positioning. We have accumulated extensive business resources and partners both domestic and abroad over the past 10 years, and we have laid our focus in the middle and low-end markets of developing countries, where the markets are fairly new and generally devoid of intense competition that could create new demands, ahead of our competitors in the same industry segment, such as the markets in Mexico.

● Cost-effective products. We primarily cover two product categories: 13 types of smartphones and 8 types of feature phones. We believe our products are comparable in quality to the large brands and are price competitive. We believe we fit the needs of low-to-mid income groups of many developing countries and we believe we avoid the vicious competition from large international brands.

Intellectual Property

Protection of our intellectual property is a strategic priority for our business. We rely on a combination of patent, copyright, trademark and trade secret laws, as well as confidentiality agreements, to establish and protect our proprietary rights. Except for certain licenses for the off-the-shelf software used in connection with our day-to-day operations, we generally do not rely on third-party licenses of intellectual property for use in our business.

As of the date of this annual report, we had obtained 41 patents and 44 registered software copyrights, registered 43 trademarks inside and outside of China, and submitted 6 additional trademark applications.

Patents. We had 41 registered patents in China, which cover technologies for PCAB processing, Industrial Design and testing process. All registered patents in China are currently registered under the name of UTime SZ owning 33 and UTime GZ owning 8. Among them, 19 registered patents were granted as utility model patents, 19 registered patents were granted as design patents and 3 registered patents were granted as invention patents. We also have 1 pending patent in China.

Software copyrights. We maintain a portfolio of copyright-protected software. We had 44 registered software copyrights in China.

Trademarks. We had 23 registered trademarks in China and 20 registered trademarks outside of China in Africa, Asia, America and Europe. We also have 6 pending trademark applications outside of China in the Philippines, Kenya and other jurisdictions.

Domain names. We had 3 registered domain names in China and 3 global domain names.

In addition to the foregoing protections, we generally control access to and use of our proprietary and other confidential information through the use of internal and external controls, such as use of confidentiality agreement with our employees and outside consultants.

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Employees

As of the date of this annual report, we had 262 full-time employees and no part-time employees. Our employees are not represented by a labor organization or covered by a collective bargaining agreement. We believe we maintain good relationships with our employees. The table below sets forth the breakdown of our employees by function as of the date of this annual report:

Function	Number of Employees		% of Total
Administration and Human Resources		18		6.9	%
Finance and Accounting		13		5.0	%
Production		121		46.2	%
Procurement		6		2.3	%
Sales and Marketing		14		5.3	%
Customer Services		5		1.9	%
Research and Development		23		8.8	%
Quality Control		38		14.5	%
Project and Scheduling		24		9.1	%
Total		262		100	%

Properties

Our headquarters are located in Shenzhen, China, where we own the office building with an aggregate floor area of approximately 640 square meters. Our operations facilities, including those for accounting, supply chain management, quality assurance and customer services, are located at our headquarters. We have supply chain management, sales and marketing, communication and business development personnel at our office in Shenzhen. Our manufacturing facilities, including those for engineering and assembling, are located at our leased factory in Guizhou. Our second factory was established in May 2022 and started operation since then.

We currently lease and occupy approximately 17,478 square meters of office and factory space in Guizhou, China. These leases vary in duration from 1 year to 5 years. We believe that our facilities are adequate to meet our needs for the immediate future.

Insurance

We do not maintain property insurance policies covering potential damage to our property. We also do not maintain business interruption insurance or general third-party liability insurance, nor do we maintain product liability insurance or key-man insurance.

Regulations

China 

This section sets forth a summary of the most significant rules and regulations that affect our business activities in China.

Regulations relating to Foreign Investment

The Guidance Catalogue of Industries for Foreign Investment

Investment activities in the PRC by foreign investors are subject to the Catalogue for the Guidance of Foreign Investment Industry, or the Catalogue, which was promulgated and is amended from time to time by the MOFCOM and the NDRC. The Foreign Investment Catalogue which was promulgated jointly by MOFCOM and the NDRC, on June 28, 2017 and became effective on July 28, 2017, classifies industries into three categories with regard to foreign investment: (1) “encouraged”, (2) “restricted”, and (3) “prohibited”. The latter two categories are included in a negative list, which was first introduced into the Foreign Investment Catalog in 2017 and specified the restrictive measures for the entry of foreign investment.

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On June 28, 2018, MOFCOM and NDRC jointly promulgated the Special Administrative Measures for Access of Foreign Investment (Negative List), or the Negative List (Edition 2018), which replaced the negative list attached to the Foreign Investment Catalogue in 2017. On June 30, 2019, MOFCOM and NDRC jointly issued the Special Administrative Measures for Access of Foreign Investment (Negative List), or the Negative List (Edition 2019), which replaced the Negative List (Edition 2018), and the Catalogue of Industries for Encouraging Foreign Investment (Edition 2019), or the Encouraging Catalogue (Edition 2019), which replaced the encouraged list attached to the Foreign Investment Catalogue in 2017. On June 23, 2020, MOFCOM and NDRC jointly issued the Special Administrative Measures for Access of Foreign Investment (Negative List), or the Negative List (Edition 2020), which replaced the Negative List (Edition 2019).

On December 27, 2021, the NDRC and the MOFCOM promulgated the latest Special Entry Management Measures (Negative List) for the Access of Foreign Investment (Edition 2021), or the Negative List (Edition 2021), which came into effect on January 1, 2022. Pursuant to the Negative List (Edition 2021), any industry that is not listed in any of the restricted or prohibited categories is classified as a permitted industry for foreign investment. Establishment of wholly foreign-owned enterprises is generally allowed for industries outside of the Negative List. For the restricted industries within the Negative List, some are limited to equity or contractual joint ventures, while in some cases Chinese partners are required to hold the majority interests in such joint ventures. In addition, restricted category projects are subject to higher-level government approvals and certain special requirements. Foreign investors are not allowed to invest in industries in the prohibited category. Industries not listed in the Negative List are generally open to foreign investment unless specifically restricted by other PRC regulations.

In addition, the NDRC and the Ministry of Commerce promulgated the Encouraged Industry Catalogue for Foreign Investment (Edition 2020), or the Encouraging Catalogue (Edition 2020), which came into effect on January 27, 2021 and replaced the Encouraging Catalogue (Edition 2019) effective on July 30, 2019. The Encouraging Catalogue (Edition 2020) is divided into two parts, namely the Nationwide Catalogue of Encouraged Industries for Foreign Investment and the Catalogue of Priority Industries for Foreign Investment in Central and Western China. The Nationwide Catalogue of Encouraged Industries for Foreign Investment lists a total of 480 industry sectors that encourage foreign investments; the Catalogue of Priority Industries for Foreign Investment in Central and Western China lists industry sectors that each province and city wish to introduce.

In October 2016, the MOFCOM issued the Interim Measures for Record-filing Administration of the Establishment and Change of Foreign-invested Enterprises or FIE Record-filing Interim Measures, which was revised in June 2018. Pursuant to FIE Record-filing Interim Measures, the establishment and change of FIE are subject to record-filing procedures, instead of prior approval requirements, provided that the establishment or change does not involve special entry administration measures. If the establishment or change of FIE matters involves the special entry administration measures, the approval of the MOFCOM or its local counterparts is still required. Pursuant to the Announcement [2016] No. 22 of the NDRC and the MOFCOM dated October 8, 2016, the special entry administration measures for foreign investment apply to restricted and prohibited categories specified in the Catalogue, and the encouraged categories are subject to certain requirements relating to equity ownership and senior management under the special entry administration measures. However, as the PRC Foreign Investment Law has taken effect, the MOFCOM and the SAMR, jointly approved the Foreign Investment Information Report Measures on December 19, 2019, which went into effect on January 1, 2020. According to the Foreign Investment Information Report Measures, which repealed the FIE Record-filing Interim Measures, foreign investors or FIEs shall report their investment-related information to the competent local counterparts of the MOFCOM through the Enterprise Registration System and National Enterprise Credit Information Notification System.

Currently, our business related to the operation of designing, manufacturing and marketing mobile communication devices, and selling a variety of related accessories falls within the permitted category.

The Foreign Investment Law

On March 15, 2019, the National People’s Congress approved the Foreign Investment Law, which took effect on January 1, 2020 and replaced three existing laws on foreign investments in China, namely, the PRC Sino-foreign Equity Joint Venture Law, the PRC Sino-foreign Cooperative Joint Venture Law and the PRC Wholly Foreign-owned Enterprise Law, together with their implementation rules and ancillary regulations. On December 26, 2019, the Regulation on the Implementation of the Foreign Investment Law of the People’s Republic of China, was issued by the State Council and came into force on January 1, 2020. The organization form, organization and activities of foreign-invested enterprises shall be governed, among others, by the PRC Company Law and the PRC Partnership Enterprise Law. Foreign-invested enterprises established before the implementation of this Law may retain the original business organization and so on within five years after the implementation of this Law. The Foreign Investment Law embodies an expected PRC regulatory trend to rationalize its foreign investment regulatory regime in line with prevailing international practice and the legislative efforts to unify the corporate legal requirements for both foreign and domestic invested enterprises in China. The Foreign Investment Law establishes the basic framework for the access to, and the promotion, protection and administration of foreign investments in view of investment protection and fair competition.

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According to the Foreign Investment Law, “foreign investment” refers to investment activities directly or indirectly conducted by one or more natural persons, business entities, or otherwise organizations of a foreign country (collectively referred to as “foreign investor”) within China, and the investment activities include the following situations: (i) a foreign investor, individually or collectively with other investors establishes a foreign-invested enterprise within China; (ii) a foreign investor acquires stock shares, equity shares, shares in assets, or other like rights and interests of an enterprise within China; (iii) a foreign investor, individually or collectively with other investors, invests and establishes new projects within China; and (iv) a foreign investor invests through other approaches as stipulated by laws, administrative regulations, or otherwise regulated by the State Council.

According to the Foreign Investment Law, the State Council will publish or approve to publish the “negative list” for special administrative measures concerning foreign investment. The Foreign Investment Law grants national treatment to foreign-invested entities, or FIEs, except for those FIEs that operate in industries deemed to be either “restricted” or “prohibited” in the “negative list”. The Foreign Investment Law provides that FIEs operating in foreign restricted or prohibited industries will require market entry clearance and other approvals from relevant PRC governmental authorities. If a foreign investor is found to invest in any prohibited industry in the “negative list”, such foreign investor may be required to, among other aspects, cease its investment activities, dispose of its equity interests or assets within a prescribed time limit and have its income confiscated. If the investment activity of a foreign investor is in breach of any special administrative measure for restrictive access provided for in the “negative list”, the relevant competent department shall order the foreign investor to make corrections and take necessary measures to meet the requirements of the special administrative measure for restrictive access. On December 27, 2021, MOFCOM and NDRC jointly issued the latest version of Negative List (Edition 2021). See “Regulations - Regulations relating to Foreign Investment - The Guidance Catalogue of Industries for Foreign Investment”.

Besides, the PRC government will establish a foreign investment information reporting system, according to which foreign investors or foreign-invested enterprises shall submit investment information to the competent department for commerce concerned through the enterprise registration system and the enterprise credit information publicity system, and a security review system under which the security review shall be conducted for foreign investment affecting or likely affecting the state security.

Furthermore, the Foreign Investment Law provides that foreign invested enterprises established according to the existing laws regulating foreign investment may maintain their structure and corporate governance within five years after the implementing of the Foreign Investment Law.

In addition, the Foreign Investment Law also provides several protective rules and principles for foreign investors and their investments in the PRC, including, among others, that a foreign investor may freely transfer into or out of China, in Renminbi or a foreign currency, its contributions, profits, capital gains, income from disposition of assets, royalties of intellectual property rights, indemnity or compensation lawfully acquired, and income from liquidation, among others, within China; local governments shall abide by their commitments to the foreign investors; governments at all levels and their departments shall enact local normative documents concerning foreign investment in compliance with laws and regulations and shall not impair legitimate rights and interests, impose additional obligations onto FIEs, set market access restrictions and exit conditions, or intervene with the normal production and operation activities of FIEs; except for special circumstances, in which case statutory procedures shall be followed and fair and reasonable compensation shall be made in a timely manner, expropriation or requisition of the investment of foreign investors is prohibited; and mandatory technology transfer is prohibited.

Company Law

Pursuant to the PRC Company Law, promulgated by the Standing Committee of the National People’s Congress (the “SCNPC”) on December 29, 1993, effective as of July 1, 1994, and as revised on December 25, 1999, August 28, 2004, October 27, 2005, December 28, 2013 and October 26, 2018, the establishment, operation and management of corporate entities in the PRC are governed by the PRC Company Law. The PRC Company Law defines two types of companies: limited liability companies and companies limited by shares.

Our PRC Subsidiary is a limited liability company. Unless otherwise stipulated in the related laws on foreign investment, foreign invested companies are also required to comply with the provisions of the PRC Company Law.

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Regulations Relating to Overseas Investment

On December 26, 2017, the NDRC issued the Management Rules for Overseas Investment by Enterprises, or the NDRC Order 11. As defined in the NDRC Order 11, “overseas investment” refers to the investment activities conducted by an enterprise located in the territory of China, either directly or through an offshore enterprise under its control, by making investment with assets and equities or providing financing or a guarantee in order to acquire overseas ownership, control, management rights and other related interests. Furthermore, overseas investment by a Chinese individual through overseas enterprises under his/her control is also subject to the NDRC Order 11. According to the NDRC Order 11, (i) direct overseas investment by Chinese enterprises or indirect overseas investment by Chinese enterprises or individuals in sensitive industries or sensitive countries and regions requires prior approval by the NDRC; (ii) direct overseas investment by Chinese enterprises in non-sensitive industries and non-sensitive countries and regions requires prior filing with the NDRC; and (iii) indirect overseas investment of over US$300 million by Chinese enterprises or individuals in non-sensitive industries and non-sensitive countries and regions requires reporting with the NDRC. Uncertainties remain with respect to the application of the NDRC Order 11, there are very few interpretations, implementation guidance or precedents to follow in practice. We are not sure if UTime Limited was to use a portion of the proceeds raised from our initial public offering to fund investments in and acquisitions of complementary business and assets outside of China, such use of U.S. dollars funds held outside of China would be subject to the NDRC Order 11. We will continue to monitor any new rules, interpretation and guidance promulgated by the NDRC and communicate with the NDRC and its local branches to seek their opinions, when necessary.

Regulations Relating to Manufacture and Sale of Mobile Phones

General Administration of Manufacturing and Selling Mobile Phones

According to the Administrative Regulations for Compulsory Product Certification, which was promulgated by the General Administration of Quality Supervision, Inspection and Quarantine PRC (the “AQSIQ”) (which has merged into the State Administration for Market Regulation) on July 3, 2009, products specified by the state shall not be delivered, sold, imported or used in other business activities until they are certified (the “Compulsory Product Certification”) and labeled with China Compulsory Certification mark. For products that are subject to Compulsory Product Certification, the state implements unified product catalogs (the “3C Catalog”), unified compulsory requirements, standards and compliance assessment procedures in technical specification, unified certification marks and unified charging standards. Pursuant to the First Batch Compulsory Product Certification Product Catalog (the “First Batch 3C Product Catalog”) by the AQSIQ and the Certification and Accreditation Administration of the People’s Republic of China (the “CNCA”) on December 3, 2001, mobile user terminals and CDMA digital cellular mobile station are required to obtain the Compulsory Product Certification in order to be delivered, sold, imported or used.

The Regulations on Radio Administration of the PRC jointly issued by the State Council and the Central Military Commission on November 11, 2016 and became effective on December 1, 2016, provide requirements concerning verification and approval of the models of radio transmission equipment. Pursuant to this law, except for micro-power short-range radio transmission equipment, whoever manufactures or imports other radio transmission equipment for sales or use on the domestic market shall apply to the State Radio Administration for model verification and approval. Whoever manufactures or imports radio transmission equipment that has not obtained model verification and approval for sales or use on the domestic market shall be ordered by the relevant radio administration to make correction and subject to fines.

In addition, the Administrative Measures for the Network Access of Telecommunications Equipment, which was promulgated by the Ministry of Information Industry on May 10, 2001 and revised by the Ministry of Industry and Information Technology (the “MIIT”) on September 23, 2014 provide that the State applies the network access permit system to the telecommunications terminal equipment, radio communications equipment, and equipment relating to network interconnection that is connected to public telecommunications networks. The telecommunications equipment subject to the network access permit system shall obtain the Telecommunications Equipment Network Access Permit issued by the MIIT (the “Network Access Permit”). Without the Network Access Permit, no telecommunications equipment is allowed to be connected to the public telecommunications networks for use nor sold on the domestic market. In the event of an application for the Network Access Permit, a production enterprise shall submit a testing report issued by a telecommunications equipment testing institution or a Compulsory Product Certification. In the event of an application for the network access permit for radio transmission equipment, a Radio Transmission Equipment Type Approval Certificate issued by the MIIT shall also be submitted.

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Regulations on Production Safety

Pursuant to the Production Safety Law of the PRC, or the Production Safety Law, which took effect on November 1, 2002 and was amended on August 31, 2014, the entities that are engaged in production and business operation activities must implement national industrial standards which guarantee the production safety and comply with production safety requirements provided by the laws, administrative regulations and national or industrial standards. An entity must take effective measures for safety production, maintain safety facilities, examine the safety production procedures, educate and train employees and take any other measures to ensure the safety of its employees and the public. An entity or its relevant persons-in-charge which has failed to perform such safety production liabilities will be required to make amends within a time limit or face administrative penalties. If it fails to amend within the prescribed time limit, the production and business operation entity may be ordered to suspend business for rectification, and serious violations may result in criminal liabilities.

Regulations on Product Quality

The PRC Product Quality Law, or the Product Quality Law, which was promulgated by the MOFCOM in February 1993 and most recently amended in December 2018, applies to all production and sale activities in China. Pursuant to this law, products offered for sale must satisfy the relevant quality and safety standards. Enterprises may not produce or sell counterfeit products in any fashion, including forging brand labels or giving false information regarding a product’s manufacturer. Any producer or seller producing or selling products that do not conform to the national standards or trade standards for ensuring human health and the personal or property safety shall be ordered to stop production or sale of the products; the products illegally produced or sold shall be confiscated; a fine no less than the equivalent of, but not more than three times, the value of the products illegally produced or sold (including those already sold and those not yet sold, hereinafter the same) shall be imposed concurrently; if there are illegal proceeds, such proceeds shall be confiscated concurrently; if the circumstances are serious, the business license shall be revoked. If the case constitutes a crime, criminal liability shall be investigated. Where a defective product causes physical injury to a person or damage to another person’s property, the victim may claim compensation from the manufacturer or from the seller of the product. If the seller pays compensation and it is the manufacturer that should bear the liability, the seller has a right of recourse against the manufacturer and may seek full reimbursement from the manufacturer. Similarly, if the manufacturer pays compensation and it is the seller that should bear the liability, the manufacturer has a right of recourse against the seller and may seek full reimbursement from the seller.

Pursuant to the General Principles of the Civil Law of the PRC promulgated by the National People’s Congress, or NPC, on April 12, 1986 and amended on August 27, 2009, both manufacturers and sellers shall be held liable where the defective products result in property damages or bodily injuries to others. Pursuant to the Tort Liability Law of the PRC promulgated by the Standing Committee of the NPC on December 26, 2009 and effective from July 1, 2010, manufacturers shall assume tort liabilities where the defects in products cause damages to others. Sellers shall assume tort liabilities where the defects in products that have caused damages to others are attributable to the sellers. The aggrieved party may claim for compensation from the manufacturer or the seller of the defected product that has caused damage.

On May 28, 2020, the Third Session of the 13^th National People’s Congress passed the Civil Code of the People’s Republic of China which took effect on January 1, 2021, and replaced the Tort Liability Law of the PRC. According to the Civil Code of the People’s Republic of China, the aggrieved party shall be entitled to require the manufacturer or seller to assume the tort liability by ceasing infringement, removing the obstruction, or eliminating the danger when the defect of a product endangers the personal or property safety.

Regulations on Consumer Protection

The PRC Consumer Protection Law, as amended on October 25, 2013 and effective on March 15, 2014, sets out the obligations of business operators and the rights and interests of the consumers. Pursuant to this law, business operators must guarantee that the commodities they sell satisfy the requirements for personal or property safety, provide consumers with authentic information about the commodities, and guarantee the quality, function, usage and term of validity of the commodities. Failure to comply with the Consumer Protection Law may subject business operators to civil liabilities such as refunding purchase prices, exchange of commodities, repairing, ceasing damages, compensation, and restoring reputation, and even subject the business operators or the responsible individuals to criminal penalties if business operators commit crimes by infringing the legitimate rights and interests of consumers. The amended PRC Consumer Protection Law further strengthens the protection of consumers and imposes more stringent requirements and obligations on business operators, especially on the business operators through the Internet. For example, the consumers are entitled to return the goods (except for certain specific goods) within seven days upon receipt without any reasons when they purchase the goods from business operators via the Internet. The consumers whose interests have been damaged due to their purchase of goods or acceptance of services on online marketplace platforms may claim damages from sellers or service providers.

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Where business operators use internet, television, telephone, mail or other means to provide goods or services, or provide securities, insurance, banking or other financial services, they shall provide consumers with information in regard to themselves and the goods or services provided such as business address, contact information, quantity and quality, price or fees, term and method of performance, safety precautions, risk warnings, after-sale services, and civil liabilities. Consumers whose legitimate rights and interests are infringed while purchasing goods or receiving services via an online trading platform shall have the right to claim compensation from the vendor of the goods or the provider of the services. If the goods or services a business operator provide have caused personal injuries to consumers or other victims, the business operator shall compensate for the medical expenses, nursing expenses, transportation expenses and other reasonable fees for treatment and rehabilitation as well as the reduced income for loss of working time.

According to the Civil Code of the People’s Republic of China effective on January 1, 2021, producers shall bear tortious liability for any damage caused by their defective products, while distributors shall bear tortious liability for any damage caused due to defects resulting from their own fault.

Registrations on Import and Export of Goods

The major PRC laws and regulations governing import and export of goods are Foreign Trade Law of the PRC, or the Foreign Trade Law, Regulations of the PRC on the Administration of Import and Export of Goods, or the Regulations on Import and Export of Goods, Customs Law of the PRC and Provisions of the Customs of the PRC on the Administration of Registration of Customs Declaration Entities.

Pursuant to the Customs Law of the People’s Republic of China promulgated by the SCNPC on January 22, 1987, as amended on April 29, 2021, unless otherwise stipulated, the declaration of import and export goods may be made by consignees and consignors themselves, and such formalities may also be completed by their entrusted customs brokers that have registered with the Customs. The consignees and consignors for import or export of goods and the customs brokers engaged in customs declaration shall register with the Customs in accordance with the laws. The Regulations on Import and Export Duties of the People’s Republic of China, promulgated by the State Council on March 7, 1985, as amended on March 1, 2017, further stipulated that, unless otherwise provided by the relevant laws and regulations, goods permitted to be imported into or exported out of China shall be subject to payment of customs duties. The consignees of imported goods, consigners of exported goods or owners of inward articles shall undertake the obligation of the payment of customs duties. The State Council also promulgated implementation rules and tariff schedules to regulate the items and rates of the customs duties.

In accordance with the Measures for the Archival Filing and Registration of Foreign Trade Business Operators amended on May 10, 2021, any foreign trade business operator undertaking the import or export of goods or technology shall go through the archival filing and registration to the MOFCOM or the institutions entrusted by the MOFCOM. But those for whom there is no need to make archival filing and registration as prescribed by laws, administrative regulations and the provisions of the MOFCOM shall be excluded. In case a foreign trade business operator fails to go through the archival filing and registration according to the present Measures, the customs shall not handle the formalities for declaration of release for import and export.

Pursuant to the Administrative Provisions of the Customs of the People’s Republic of China on Record-filing of Customs Declaration Entities promulgated by the General Administration of Customs on November 19, 2021 and became effective on January 1, 2022, a consignor or consignee of imported and exported goods shall go through customs declaration entity record-filing formalities with the competent customs in accordance with the applicable provisions. Customs declaration entities may handle customs declarations business within the customs territory of the PRC.

According to the Import and Export Commodity Inspection Law of the People’s Republic of China promulgated by the SCNPC on February 21, 1989, as amended on April 29, 2021 and its implementation rules, the imported and exported goods that are subject to compulsory inspection listed in the catalog compiled by the import and export commodity inspection department established by the State Council shall be inspected by the commodity inspection organizations, and the imported and exported goods that are not subject to statutory inspection shall be subject to random inspection. Consignees and consignors or their entrusted customs brokers may apply for inspection to the goods inspection authorities.

Regulation on Security Review

In August 2011, the MOFCOM promulgated the Rules of Ministry of Commerce on Implementation of Security Review System of Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the MOFCOM Security Review Rule, which came into effect on September 1, 2011, to implement the Notice of the General Office of the State Council on Establishing the Security Review System for Mergers and Acquisitions of Domestic Enterprises by Foreign Investors promulgated on February 3, 2011. Under these regulations, a security review is required for foreign investors’ mergers and acquisitions having “national defense and security” implications and mergers and acquisitions by which foreign investors may acquire “de facto control” of domestic enterprises having “national security” implications. In addition, when deciding whether a specific merger or acquisition of a domestic enterprise by foreign investors is subject to a security review, the MOFCOM will look into the substance and actual impact of the transaction. The MOFCOM Security Review Rule further prohibits foreign investors from bypassing the security review requirement by structuring transactions through proxies, trusts, indirect investments, leases, loans, control through contractual arrangements or offshore transactions.

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On December 19, 2020, the NDRC and MOFCOM promulgated the Measures for the Security Review of Foreign Investments which became effective on January 18, 2021. Under the Security Review of Foreign Investments, for foreign investments that affect or may affect national security, security review shall be conducted by the office led by NDRC and MOFCOM. For the purpose of these Measures, the term “foreign investment” refers to the investment activities carried out by foreign investors directly or indirectly within the territory of the PRC, including the following circumstances:

● where foreign investors invest, solely or jointly with other investors, in new projects or establishing enterprises in the PRC;

● where foreign investors acquire equity or assets of domestic enterprises by way of merger and acquisition; or

● where foreign investors make investments in the PRC in any other form.

Regulation on Information Security and Censorship

On July 1, 2015, the Standing Committee of the National People’s Congress promulgated the PRC National Security Law, which came into effect on the same day. The PRC National Security Law provides that the state shall safeguard the sovereignty, security and cyber security development interests of the state, and that the state shall establish a national security review and supervision system to review, among other things, foreign investment, key technologies, internet and information technology products and services, and other important activities that are likely to impact the national security of the PRC.

The SCNPC promulgated the Cybersecurity Law of the PRC, or the Cybersecurity Law, which became effective on June 1, 2017, to protect cyberspace security and order. Pursuant to the Cybersecurity Law, any individual or organization using the network must comply with the constitution and the applicable laws, follow the public order and respect social moralities, and must not endanger cyber security, or engage in activities by making use of the network that endanger the national security, honor and interests, or infringe on the fame, privacy, intellectual property and other legitimate rights and interests of others. The Cybersecurity Law sets forth various security protection obligations for network operators, which are defined as “owners and administrators of networks and network service providers”, including, among others, complying with a series of requirements of tiered cyber protection systems; verifying users’ real identity; localizing the personal information and important data gathered and produced by key information infrastructure operators during operations within the PRC; and providing assistance and support to government authorities where necessary for protecting national security and investigating crimes. To comply with these laws and regulations, we have adopted security policies and measures to protect our cyber system and user information.

On July 6, 2021, certain PRC regulatory authorities issued Opinions on Strictly Cracking Down on Illegal Securities Activities, which, among others, provides for improving relevant laws and regulations on data security, cross-border data transmission, and confidential information management. It provided that efforts will be made to revise the regulations on strengthening the confidentiality and file management relating to the offering and listing of securities overseas, to implement the responsibility on information security of overseas listed companies, and to strengthen the standardized management of cross-border information provision mechanisms and procedures.

On June 10, 2021, the Standing Committee of the PRC National People’s Congress published the PRC Data Security Law, which took effect on September 1, 2021. The PRC Data Security Law requires data processing, which includes the collection, storage, use, processing, transmission, provision, publication of data, to be conducted in a legitimate and proper manner. The PRC Data Security Law provides for data security and privacy obligations on entities and individuals carrying out data activities. The PRC Data Security Law also introduces a data classification and hierarchical protection system based on the importance of data in economic and social development, and the degree of harm it may cause to national security, public interests, or legitimate rights and interests of individuals or organizations if such data are tampered with, destroyed, leaked, illegally acquired or illegally used. The appropriate level of protection measures is required to be taken for each respective category of data. For example, a processor of important data is required to designate the personnel and the management body responsible for data security, carry out risk assessments of its data processing activities and file the risk assessment reports with the competent authorities. State core data, i.e. data having a bearing on national security, the lifelines of national economy, people’s key livelihood and major public interests, shall be subject to stricter management system. Moreover, the PRC Data Security Law provides a national security review procedure for those data activities which affect or may affect national security and imposes export restrictions on certain data and information. In addition, the PRC Data Security Law also provides that any organization or individual within the territory of the PRC shall not provide any foreign judicial body and law enforcement body with any data without the approval of the competent PRC governmental authorities.

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On August 17, 2021, the State Council promulgated the Regulations on Security Protection of Critical Information Infrastructure, which became effective on September 1, 2021. Pursuant to such regulation, critical information infrastructure refers to any important network facilities and information systems of an important industry and field such as public communication and information service, energy, transport, water conservation, finance, public services, e-government affairs and national defense related science and technology industry, and other industries and fields that may seriously endanger national security, people’s livelihood and public interest in case of damage, function loss or data leakage. In addition, relevant administration departments of each important industry and field are responsible for formulating eligibility criteria and determining the critical information infrastructure in the respective industry or field. The operators will be informed by the relevant regulatory authority about the final determination as to whether they are categorized as “critical information infrastructure operators.”

On August 20, 2021, the Standing Committee of the National People’s Congress of the PRC promulgated the PRC Personal Information Protection Law, which integrates the scattered rules with respect to personal information rights and privacy protection and took effect on November 1, 2021. Pursuant to the PRC Personal Information Protection Law, “personal information” refers to any kind of information related to an identified or identifiable individual as electronically or otherwise recorded but excluding the anonymized information. The processing of personal information includes the collection, storage, use, processing, transmission, provision, disclosure and deletion of personal information. The PRC Personal Information Protection Law applies to the processing of personal information of individuals within the territory of the PRC, as well as personal information processing activities outside the territory of the PRC, for the purpose of providing products or services to natural persons located within China, for analyzing or evaluating the behaviors of individuals located within China, or for other circumstances as prescribed by laws and administrative regulations. The PRC Personal Information Protection Law provides a personal information processor may process the personal information of this individual only under the following circumstances: (i) where consent is obtained from the individual; (ii) where it is necessary for the execution or performance of a contract to which the individual is a party, or where it is necessary for carrying out human resource management pursuant to employment rules legally adopted or a collective contract legally concluded; (iii) where it is necessary for performing a statutory responsibility or statutory obligation; (iv) where it is necessary in response to a public health emergency, or for protecting the life, health or property safety of a natural person in the case of an emergency; (v) where the personal information is processed within a reasonable scope to carry out any news reporting, supervision by public opinions or any other activity for public interest purposes; (vi) where the personal information, which has already been disclosed by an individual or otherwise legally disclosed, is processed within a reasonable scope; or (vii) any other circumstance as provided by laws or administrative regulations. In principle, the consent of an individual must be obtained for the processing of his or her personal information, except under the circumstances of the aforementioned items (ii) to (vii). Where personal information is to be processed based on the consent of an individual, such consent shall be a voluntary and explicit indication of intent given by such individual on a fully informed basis. If laws or administrative regulations provide that the processing of personal information shall be subject to the separate consent or written consent of the individual concerned, such provisions shall prevail. In addition, the processing of the personal information of a minor under 14 years old must obtain the consent by a parent or a guardian of such minor and the personal information processors must adopt special rules for processing personal information of minors under 14 years old. The PRC Personal Information Protection Law also contains certain specific provisions with respect to the obligations of a personal information processor and imposes further obligations on a personal information processor that provides for basic internet platform services, has large amount of users, or has complicated business activities. These obligations include, without limitation, formulation of an independent institution mainly comprising of outside members to supervise personal information processing activities, termination of provision of services for product or service providers on the platform whose personal information processing activities are in material violation of laws and regulations, and issuing personal information protection social responsibilities reports regularly.

On November 14, 2021, the CAC published the Regulations on Network Data Security (draft for public comments), or the draft Regulations on Network Data Security, which reiterates that data processors that process the personal information of more than one million users intends to list overseas should apply for a cybersecurity review. In addition, data processors that process important data or are listed overseas shall carry out an annual data security assessment on their own or by engaging a data security services institution, and the data security assessment report for the prior year should be submitted to the local cyberspace affairs administration department before January 31 of each year.

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On December 28, 2021, thirteen PRC regulatory agencies, namely, the CAC, the NDRC, the Ministry of Industry and Information Technology, the Ministry of Public Security, the Ministry of State Security, the Ministry of Finance, MOFCOM, SAMR, CSRC, the People’s Bank of China, the National Radio and Television Administration, National Administration of State Secrets Protection and the National Cryptography Administration, jointly adopted and published the Measures for Cybersecurity Review (2021), which became effective on February 15, 2022. The Measures for Cybersecurity Review (2021) authorized the relevant government authorities to conduct cybersecurity review on a range of activities that affect or may affect national security, and required that, among others, in addition to “operator of critical information infrastructure” any “operator of network platform” holding personal information of more than one million users which seeks to list in a foreign stock exchange should also be subject to cybersecurity review. The Measures for Cybersecurity Review (2021) further elaborated the factors to be considered when assessing the national security risks of the relevant activities, including, among others, (i) the risk of core data, important data or a large amount of personal information being stolen, leaked, destroyed, and illegally used or exited the country; (ii) the risk of critical information infrastructure, core data, important data or a large amount of personal information being affected, controlled, or maliciously used by foreign governments if going public; and (iii) the risks of network information security. The cybersecurity review will also look into the potential national security risks from overseas IPOs.

On July 7, 2022, the CAC promulgated the Outbound Data Transfer Security Assessment Measures, which became effective on September 1, 2022. According to the Outbound Data Transfer Security Assessment Measures, to provide data abroad under any of the following circumstances, a data processor shall declare security assessment for its outbound data transfer to the CAC through the local cyberspace administration at the provincial level: (i) where the data processor will provide important data abroad; (ii) where operator of critical information infrastructure or the data processor processing the personal information of more than one million individuals will provide personal information abroad; (iii) where the data processor who has provided personal information of 100,000 individuals or sensitive personal information of 10,000 individuals in total abroad since January 1 of the previous year, will provide personal information abroad; and (iv) other circumstances where the security assessment is required as prescribed by the CAC. Prior to declaring security assessment for outbound data transfer, the data processor shall conduct self-assessment on the risks of the outbound data transfer. For outbound data transfers that have been carried out before the effectiveness of the Outbound Data Transfer Security Assessment Measures, if it is not in compliance with these measures, rectification shall be completed within six months starting from September 1, 2022.

Regulations on Intellectual Property Rights

The PRC has adopted comprehensive legislation governing intellectual property rights, including patents, trademarks, copyrights and domain names.

Patents

Pursuant to the PRC Patent Law, promulgated in December 2008 and which was revised by the SCNPC on October 17, 2020 and became effective on June 1, 2021, and its implementation rules, most recently amended on January 9, 2010, patents in China fall into three categories: invention, utility model and design. An invention patent is granted to a new technical solution proposed in respect of a product or method or an improvement of a product or method. A utility model is granted to a new technical solution that is practicable for application and proposed in respect of the shape, structure or a combination of both of a product. A design patent is granted to a new design of the shape, pattern, or a combination thereof, as well as a combination of the color, shape and pattern, of the entirety or a portion of a product, which creates an aesthetic feeling and is fit for industrial application. Under the PRC Patent Law, the term of patent protection starts from the date of application. The duration of patent right for inventions shall be twenty years, and the duration of patent right for utility models shall be ten years, and the duration of patent right for designs shall be 15 years, counted from the date of filing. The PRC Patent Law adopts the principle of “first-to-file” system, which provides that where more than one person files a patent application for the same invention, a patent will be granted to the person who files the application first.

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Existing patents can become narrowed, invalid or unenforceable due to a variety of grounds, including lack of novelty, creativity, and deficiencies in patent application. In China, a patent must have novelty, creativity and practical applicability. Under the PRC Patent Law, novelty means that before a patent application is filed, no identical invention or utility model has been publicly disclosed in any publication in China or overseas or has been publicly used or made known to the public by any other means, whether in or outside of China, nor has any other person filed with the patent authority an application that describes an identical invention or utility model and is recorded in patent application documents or patent documents published after the filing date. Creativity means that, compared with existing technology, an invention has prominent substantial features and represents notable progress, and a utility model has substantial features and represents any progress. Practical applicability means an invention or utility model can be manufactured or used and may produce positive results. Patents in China are filed with the State Intellectual Property Office, or SIPO. Normally, the SIPO publishes an application for an invention patent within 18 months after the filing date, which may be shortened at the request of applicant. The applicant must apply to the SIPO for a substantive examination within three years from the date of application.

Article 20 of the PRC Patent Law provides that, for an invention or utility model completed in China, any applicant (not just Chinese companies and individuals), before filing a patent application outside of China, must first submit it to the SIPO for a confidential examination. Failure to comply with this requirement will result in the denial of any Chinese patent for the relevant invention. This added requirement of confidential examination by the SIPO has raised concerns by foreign companies who conduct research and development activities in China or outsource research and development activities to service providers in China.

Patent Enforcement

Unauthorized use of patents without consent from owners of patents, forgery of the patents belonging to other persons, or engagement in other patent infringement acts, will subject the infringers to infringement liability. Serious offences such as forgery of patents may be subject to criminal penalties.

When a dispute arises out of infringement of the patent owner’s patent right, Chinese law requires that the parties first attempt to settle the dispute through mutual consultation. However, if the dispute cannot be settled through mutual consultation, the patent owner, or an interested party who believes the patent is being infringed, may either file a civil legal suit or file an administrative complaint with the relevant patent administration authority. A Chinese court may issue a preliminary injunction upon the patent owner’s or an interested party’s request before instituting any legal proceedings or during the proceedings. Damages for infringement are calculated as the loss suffered by the patent holder arising from the infringement, or the benefit gained by the infringer from the infringement. If it is difficult to ascertain damages in this manner, damages may be determined by using a reasonable multiple of the license fee under a contractual license. Statutory damages may be awarded in the circumstances where the damages cannot be determined by the above mentioned calculation standards. Generally, the patent owner has the burden of proving that the patent is being infringed. However, if the owner of an invention patent for manufacturing process of a new product alleges infringement of its patent, the alleged infringer has the burden of proof.

As of the date of this annual report, we had 43 patents granted in China.

Trademark Law

The PRC Trademark Law and its implementation rules protect registered trademarks. The PRC Trademark Office of National Intellectual Property Administration is responsible for the registration and administration of trademarks throughout the PRC. The Trademark Law has adopted a “first-to-file” principle with respect to trademark registration. The validity period of registered trademarks is ten years from the date of approval of trademark application, and may be renewed for another ten years provided relevant application procedures have been completed within twelve months before the end of the validity period. As of the date of this annual report, we owned 23 registered trademarks in different applicable trademark categories in China and we owned 20 registered trademarks in different applicable trademark categories outside of China and were in the process of applying to register 6 trademarks outside of China.

In addition, pursuant to the PRC Trademark Law, counterfeit or unauthorized production of the label of another person’s registered trademark, or sale of any label that is counterfeited or produced without authorization will be deemed as an infringement to the exclusive right to use a registered trademark. The infringing party will be ordered to stop the infringement immediately, a fine may be imposed and the counterfeit goods will be confiscated. The infringing party may also be held liable for the right holder’s damages, which will be equal to the gains obtained by the infringing party or the losses suffered by the right holder as a result of the infringement, including reasonable expenses incurred by the right holder for stopping the infringement. If the gains or losses are difficult to determine, the court may render a judgment awarding damages of no more than RMB5 million.

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Software Copyright Law

The newly amended Copyright Law or the Copyright Law, consists of 67 articles in six chapters, and came into force on June 1, 2021. The Copyright Law provides that Chinese citizens, legal entities or unincorporated organizations, whether published or not, shall enjoy copyright in their works, which refer to ingenious intellectual achievements in the fields of literature, art and science that can be presented in a certain form. The purpose of the Copyright Law aims to encourage the creation and dissemination of works that are beneficial for the construction of socialist spiritual civilization and material civilization and promote the development and prosperity of Chinese culture. The term of protection for copyrighted software of legal persons is fifty years and ends on December 31 of the 50^th year from the date of first publishing of the software.

In order to further implement the Computer Software Protection Regulations promulgated by the State Council in 2001, and amended subsequently, the State Copyright Bureau issued the Computer Software Copyright Registration Procedures in 2002, which apply to software copyright registration, license contract registration and transfer contract registration.

As of the date of this annual report, we had registered 44 software copyrights in China.

Regulation on Domain Name

The domain names are protected under the Administrative Measures on the Internet Domain Names of China promulgated by MIIT on November 5, 2004 and effective on December 20, 2004, and was replaced by the Administrative Measures on the Internet Domain Names promulgated by MIIT on August 24, 2017, which became effective on November 1, 2017. MIIT is the major regulatory body responsible for the administration of the PRC Internet domain names, under supervision of which China Internet Network Information Center, or CNNIC, is responsible for the daily administration of CN domain names and Chinese domain names. On September 25, 2002, CNNIC promulgated the Implementation Rules of Registration of Domain Name, or the CNNIC Rules, which was renewed on June 5, 2009 and May 29, 2012, respectively. Pursuant to the Administrative Measures on the Internet Domain Names and the CNNIC Rules, the registration of domain names adopts the “first to file” principle and the registrant shall complete the registration via the domain name registration service institutions. In the event of a domain name dispute, the disputed parties may lodge a complaint to the designated domain name dispute resolution institution to trigger the domain name dispute resolution procedure in accordance with the CNNIC Measures on Resolution of the Top Level Domains Disputes, file a suit to the People’s Court or initiate an arbitration procedure.

As of the date of this annual report, we had registered 14 domain names.

Regulations on Labor Protection

The principal laws that govern employment include: (i) the Labor Law of the PRC, or the Labor Law, promulgated by the SCNPC on July 5, 1994, which has been effective since January 1, 1995 and most recently amended on December 29, 2018; and (ii) the Labor Contract Law of the PRC, or the Labor Contract Law, which was promulgated by the SCNPC on June 29, 2007, came into effect on January 1, 2008, and was amended on December 28, 2012 and became effective as of July 1, 2013, and the Implementation Regulations on Labor Contract Law, which was promulgated on September 18, 2008, and became effective since the same day.

According to the Labor Law, an employer shall develop and improve its rules and regulations to safeguard the rights of its workers. An employer shall develop and improve its labor safety and health system, stringently implement national protocols and standards on labor safety and health, conduct labor safety and health education for workers, guard against labor accidents and reduce occupational hazards. Labor safety and health facilities must comply with relevant national standards. An employer must provide workers with the necessary labor protection gear that complies with labor safety and health conditions stipulated under national regulations, as well as provide regular health checks for workers that are engaged in operations with occupational hazards. Laborers engaged in special operations shall have received specialized training and have obtained the pertinent qualifications. An employer shall develop a vocational training system. Vocational training funds shall be set aside and used in accordance with national regulations and vocational training for workers shall be carried out systematically based on the actual conditions of the company.

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The Labor Contract Law and its implementation rules regulate both parties through a labor contract, namely the employer and the employee, and contain specific provisions involving the terms of the labor contract. It is stipulated under the Labor Contract Law and the Implementation Regulations on Labor Contract Law that a labor contract must be made in writing. If an employer fails to enter into a written employment contract with an employee within one year from the date on which the employment relationship is established, the employer must rectify the situation by entering into a written employment contract with the employee and pay the employee twice the employee’s salary for the period from the day following the lapse of one month from the date of establishment of the employment relationship to the day prior to the execution of the written employment contract. In addition, an employer is obligated to sign an indefinite term labor contract with an employee if the employer continues to employ the employee after two consecutive fixed term labor contracts. The Labor Contract Law and its implementation rules also require compensation to be paid upon certain terminations, which significantly affects the cost of reducing workforce for employers. In addition, if an employer intends to enforce a non-compete provision in an employment contract or non-competition agreement with an employee, it has to compensate the employee on a monthly basis during the term of the restriction period after the termination or expiry of the labor contract. Employers in most cases are also required to provide severance payment to their employees after their employment relationships are terminated.

Enterprises in China are required by PRC laws and regulations to participate in certain employee benefit plans, including social insurance funds, namely a pension plan, a medical insurance plan, an unemployment insurance plan, a work-related injury insurance plan and a maternity insurance plan, and a housing provident fund, and contribute to the plans or funds in amounts equal to certain percentages of salaries, including bonuses and allowances, of the employees as specified by the local government from time to time at locations where they operate their businesses or where they are located.

According to the Interim Regulations on the Collection and Payment of Social Insurance Premiums, the Regulations on Work Injury Insurance, the Regulations on Unemployment Insurance and the Trial Measures on Employee Maternity Insurance of Enterprises, enterprises in the PRC shall provide benefit plans for their employees, which include basic pension insurance, unemployment insurance, maternity insurance, work injury insurance and basic medical insurance. An enterprise must provide social insurance by processing social insurance registration with local social insurance agencies, and shall pay or withhold relevant social insurance premiums for or on behalf of employees. The Law on Social Insurance of the PRC, which was promulgated by the SCNPC on October 28, 2010, became effective on July 1, 2011, and was most recently updated on December 29, 2018, has consolidated pertinent provisions for basic pension insurance, unemployment insurance, maternity insurance, work injury insurance and basic medical insurance, and has elaborated in detail the legal obligations and liabilities of employers who do not comply with relevant laws and regulations on social insurance. Without force majeure reasons, employers must not suspend or reduce their payment of social insurance for employees, otherwise, competent governmental authorities will have the power to enforce employers to pay up social insurance within a prescribed time limit, and a fine of 0.05% of the unpaid social insurance can be charged on the part of the employers per day commencing from the first day of default. Provided that the employers still fail to make the payment within the prescribed time limit, a fine of over one time and up to three times of the unpaid sum of social insurance can be charged.

According to the Regulations on the Administration of Housing Provident Fund, which was promulgated by the State Counsel and became effective on April 3, 1999, and was amended on March 24, 2002 and was partially revised on March 24, 2019 by Decision of the State Council on Revising Some Administrative Regulations (Decree No. 710 of the State Council), housing provident fund contributions by an individual employee and housing provident fund contributions by his or her employer shall belong to the individual employee. Registration by PRC companies at the applicable housing provident fund management center is compulsory and a special housing provident fund account for each of the employees shall be opened at an entrusted bank.

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The employer shall timely pay up and deposit housing provident fund contributions in full amount and late or insufficient payments shall be prohibited. The employer shall process housing provident fund payment and deposit registrations with the housing provident fund administration center. Under the circumstances where financial difficulties do exist due to which an employer is unable to pay or pay up housing provident funds, permission of labor union of the employer and approval of the local housing provident funds commission must first be obtained before the employer can suspend or reduce their payment of housing provident funds. With respect to companies who violate the above regulations and fail to process housing provident fund payment and deposit registrations or open housing provident fund accounts for their employees, such companies shall be ordered by the housing provident fund administration center to complete such procedures within a designated period. Those who fail to process their registrations within the designated period shall be subject to a fine ranging from RMB10,000 to RMB50,000. When companies breach these regulations and fail to pay up housing provident fund contributions in full amount as due, the housing provident fund administration center shall order such companies to pay up within a designated period, and may further apply to the People’s Court for mandatory enforcement against those who still fail to comply after the expiry of such period.

Regulations on Tax

PRC Enterprise Income Tax

The PRC Enterprise Income Tax Law, or EIT Law, which was promulgated on March 16, 2007 and took effect on January 1, 2008, and further amended on February 24, 2017 and December 29, 2018, imposes a uniform enterprise income tax rate of 25% on all PRC resident enterprises, including foreign-invested enterprises, unless they qualify certain exceptions. The enterprise income tax is calculated based on the PRC resident enterprise’s global income as determined under PRC tax laws and accounting standards. Under the PRC EIT Law, an enterprise established outside China with “de facto management bodies” within China is considered a “resident enterprise” for PRC enterprise income tax purposes and is generally subject to a uniform 25% enterprise income tax rate on its worldwide income. Under the implementation regulations to the PRC Enterprise Income Tax Law, a “de facto management body” is defined as the body that exercises full and substantial control and overall management over the business, productions, personnel, accounts and properties of an enterprise. If a non-resident enterprise sets up an organization or establishment in the PRC, it will be subject to enterprise income tax for the income derived from such organization or establishment in the PRC and for the income derived from outside the PRC but with an actual connection with such organization or establishment in the PRC. However, if non-resident enterprises have not formed permanent establishments or premises in the PRC, or if they have formed permanent establishments or premises in the PRC but their relevant income derived in the PRC is not related to those establishments, then their enterprise income tax would be set at a rate of 10% for their income sourced from inside the PRC.

The PRC EIT Law and its implementation rules, which was promulgated on December 6, 2007 and took effect on January 1, 2008 and partly amended on April 23, 2019 and became effective on the same date, permit certain “high and new technology enterprises strongly supported by the state” that independently own core intellectual property and meet statutory criteria, to enjoy a reduced 15% enterprise income tax rate. On January 29, 2016, the State Administration for Taxation, or SAT, the Ministry of Science and Technology and the Ministry of Finance jointly issued the Administrative Rules for the Certification of High and New Technology Enterprises specifying the criteria and procedures for the certification of High and New Technology Enterprises, and the certificate of a high and new technology enterprise, is valid for three years.

Pursuant to Circular of the State Administration of Taxation on Printing and Distributing the Implementing Measures for Special Tax Adjustments (for Trial Implementation), effective on January 1, 2008, enterprises shall adopt a reasonable transfer pricing method when conducting transactions with their affiliates. Tax authorities have the power to assess whether related transactions conform to the principle of equity and make adjustments accordingly. Therefore, the invested enterprise should faithfully report relevant information of its related transactions. Pursuant to the Announcement of the State Administration of Taxation on Issuing the Administrative Measures for Special Tax Adjustment and Investigation and Mutual Consultation Procedures, effective on May 1, 2017, an enterprise may adjust and pay taxes at its own discretion when it receives a special tax adjustment risk warning or identifies its own special tax adjustment risks, and the tax authorities may also carry out special tax investigation and adjustment in accordance with the relevant provisions in regard to enterprises that adjust and pay taxes at their own discretion.

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In January 2009, the SAT promulgated the Provisional Measures for the Administration of Withholding of Enterprise Income Tax for Non-resident Enterprises, or the Non-resident Enterprises Measures, which was repealed by Announcement of the State Administration of Taxation on Issues Relating to Withholding at Source of Income Tax of Non-resident Enterprises in December 2017. According to the new announcement, it shall apply to handling of matters relating to withholding at source of income tax of non-resident enterprises pursuant to the provisions of Article 37, Article 39 and Article 40 of the Enterprise Income Tax Law. According to Article 37, Article 39 of the Enterprise Income Tax Law, income tax over non-resident enterprise income pursuant to the provisions of the third paragraph of Article 3 shall be subject to withholding at the source, where the payer shall act as the withholding agent. The tax amount for each payment made or due shall be withheld by the withholding agent from the amount paid or payable. Where a withholding agent fails to withhold tax or perform tax withholding obligations pursuant to the provisions of Article 37, the taxpayer shall pay tax at the place where the income is derived. Where the taxpayer fails to pay tax pursuant to law, the tax authorities may demand payment of the tax amount payable, from a payer of the taxpayer with payable tax amounts from other taxable income items in China.

On April 30, 2009, the MOFCOM and the SAT jointly issued the Circular on Issues Concerning Treatment of Enterprise Income Tax in Enterprise Restructuring Business, or Circular 59, which became effective retroactively as of January 1, 2008 and was partially revised on January 1, 2014. By promulgating and implementing this circular, the PRC tax authorities have enhanced their scrutiny over the direct or indirect transfer of equity interests in a PRC resident enterprise by a Non-resident Enterprise.

On February 3, 2015, the SAT issued the Announcement of the State Administration of Taxation on Several Issues Relating to Enterprise Income Tax of Transfers of Assets between Non-resident Enterprises, or SAT Bulletin 7, which was partially abolished on December 29, 2017. SAT Bulletin 7 extends its tax jurisdiction to transactions involving transfer of immovable property in China and assets held under the establishment, and placement in China, of a foreign company through the offshore transfer of a foreign intermediate holding company. SAT Bulletin 7 also addresses transfer of the equity interest in a foreign intermediate holding company broadly. In addition, SAT Bulletin 7 introduces safe harbor scenarios applicable to internal group restructurings. However, it also brings challenges to both the foreign transferor and transferee of the Indirect Transfer as they have to assess whether the transaction should be subject to PRC tax and to file or withhold the PRC tax accordingly.

On October 17, 2017, the SAT issued the Announcement of the State Administration of Taxation on Issues Concerning the Withholding of Non-resident Enterprise Income Tax at Source, or SAT Bulletin 37, which came into effect on December 1, 2017 and was revised on June 15, 2018. The SAT Bulletin 37 further clarifies the practice and procedure of withholding of non-resident enterprise income tax.

If non-resident investors were involved in our private equity financing, if such transactions were determined by the tax authorities to lack reasonable commercial purpose, we and our non-resident investors may be at risk of being required to file a return and be taxed under SAT Bulletin 7 and we may be required to expend valuable resources to comply with SAT Bulletin 7 or to establish that we should not be held liable for any obligations under SAT Bulletin 7.

PRC Value Added Tax

According to the Temporary Regulations on Value-added Tax, which was most recently amended on November 19, 2017, and the Detailed Implementing Rules of the Temporary Regulations on Value-added Tax, which was amended on October 28, 2011, and became effective on November 1, 2011, all taxpayers selling goods, providing processing, repair or replacement services or importing goods within the PRC shall pay Value-Added Tax. The tax rate of 17% shall be levied on general taxpayers selling or importing various goods; the tax rate of 17% shall be levied on the taxpayers providing processing, repairing or replacement service; the applicable rate for the export of goods by taxpayers shall be zero, unless otherwise stipulated.

On January 1, 2012, the State Council officially launched a pilot value-added tax reform program, or the Pilot Program, applicable to businesses in selected industries. Businesses in the Pilot Program would pay value added tax, or VAT, instead of business tax. The Pilot Program initially applied only to transportation industry and “modern service industries” in Shanghai and would be expanded to eight trial regions (including Beijing and Guangdong province) and nationwide if conditions permit. The pilot industries in Shanghai included industries involving the leasing of tangible movable property, transportation services, research and development and technical services, information technology services, cultural and creative services, logistics and ancillary services, certification and consulting services. Revenues generated by advertising services, a type of “cultural and creative services”, are subject to the VAT tax rate of 6%. According to official announcements made by competent authorities in Beijing and Guangdong province, Beijing launched the same Pilot Program on September 1, 2012, and Guangdong province launched it on November 1, 2012.

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On May 24, 2013, the MOFCOM and the SAT issued the Circular on Tax Policies in the Nationwide Pilot Collection of Value Added Tax in Lieu of Business Tax in the Transportation Industry and Certain Modern Services Industries, or the Pilot Collection Circular. The scope of certain modern services industries under the Pilot Collection Circular extends to the inclusion of radio and television services.

On March 23, 2016, the MOFCOM and the SAT jointly issued the Circular on the Pilot Program for Overall Implementation of the Collection of Value Added Tax Instead of Business Tax, or Circular 36, which took effect on May 1, 2016. Pursuant to the Circular 36, all of the companies operating in construction, real estate, finance, modern service or other sectors which were required to pay business tax are required to pay VAT, in lieu of business tax. The VAT rate is 6%, except for rate of 11% for real estate sale, land use right transferring and providing service of transportation, postal sector, basic telecommunications, construction, real estate lease; rate of 17% for providing lease service of tangible property; and rate of zero for specific cross-bond activities.

At the State Council executive meeting on March 28, 2018, China’s State Council has announced the VAT rate on manufacturing is to be cut by one percent to 16% which took effect on May 1, 2018. On April 4, 2018, the Ministry of Finance and the SAT promulgated the Notice on Adjusting Value-added Tax Rates, which reduced the tax rates for sale, import and export of goods, as well as the deduction rate for taxpayer’s purchaser of agricultural products. According to the Announcement on Relevant Policies for Deepening the Value-Added Tax Reform, which is jointly issued by Ministry of Finance, SAT and the General Administration of Customs on March 20, 2019 and took effect on April 1, 2019, The tax rate of 16% applicable to the VAT taxable sale or import of goods by a general VAT taxpayer shall be adjusted to 13%.

According to the Circular of the SAT on Printing and Distributing the Administrative Measures for Tax Refund (Exemption) for Exported Goods (for Trial Implementation), effective on May 1, 2005, unless otherwise provided by law, for the goods as exported via an export agency, the exporter may, after the export declaration and the conclusion of financial settlement for sales, file a report to competent State Taxation Bureau for the approval of refund or exemption of VAT or consumption tax on the strength or the relevant certificates.

PRC Dividend Withholding Tax

Under the PRC tax laws effective prior to January 1, 2008, dividends paid to foreign investors by foreign-invested enterprises were exempt from PRC withholding tax. Pursuant to the EIT Law and the Implementation Rules, dividends generated after January 1, 2008 and payable by a foreign-invested enterprise in China to its foreign enterprise investors are subject to a 10% withholding tax, unless any such foreign investor’s jurisdiction of incorporation has a tax treaty with China that provides for a different withholding arrangement.

Pursuant to an Arrangement Between the Mainland of 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 came into effect on December 8, 2006, and other applicable PRC laws and regulations, if a Hong Kong resident enterprise is determined by the competent PRC tax authority to have satisfied the relevant conditions and requirements under such Double Tax Avoidance Arrangement and other applicable laws and regulations, the 10% withholding tax on the dividends the Hong Kong resident enterprise receives from a PRC resident enterprise may be reduced to 5%. According to the Announcement of the SAT on Issuing the Measures for the Administration of Non-resident Taxpayers’ Enjoyment of Treaty Benefits effective on January 1, 2020, non-resident taxpayers can enjoy tax treaty benefits via the “self-assessment of eligibility, claiming treaty benefits, retaining documents for inspection” mechanism. Non-resident taxpayers who have self-assessed that they are eligible for the treaty benefits can claim such tax treaty benefits accordingly provided that they have collected and retained relevant supporting documents for inspection by the tax authorities in their post-filing administration process. Pursuant to the Announcement on Certain Issues with Respect to the “Beneficial Owner” in Tax Treaties, issued by the SAT on February 3, 2018, and effective on April 1, 2018, when determining an applicant’s “beneficial owner” status regarding tax treatments in connection with dividends, interests or royalties in tax treaties, several factors set forth below will be taken into account, although the actual analysis will be fact-specific: (i) whether the applicant is obligated to pay more than 50% of his or her income in 12 months to residents in a third country or region; (ii) whether the business operated by the applicant constitutes a substantial business operation; and (iii) whether the counterparty country or region to the tax treaties does not levy any tax or grant tax exemption on relevant incomes or levy tax at an extremely low rate. The applicant must submit relevant documents to the competent tax authorities to prove his or her “beneficial owner” status. Although our WFOE is currently wholly owned by UTime International Limited, we cannot assure you that we will be able to enjoy the preferential withholding tax rate of 5% under the China-HK Taxation Arrangement.

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Regulations on Foreign Exchange

The principal regulations governing foreign currency exchange in China are the PRC Foreign Exchange Administration Regulations, which were promulgated by the State Council on January 29, 1996 and last amended on August 5, 2008. Under the Foreign Exchange Administration Regulations, payments of current account items, such as profit distributions and trade and service-related foreign exchange transactions can be made in foreign currencies without prior approval from State Administration of Foreign Exchange, or SAFE, by complying with certain procedural requirements. However, approval from or registration with appropriate government authorities is required where RMB is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of foreign currency-denominated loans.

On August 29, 2008, SAFE issued the Circular on the Relevant Operating Issues Concerning the Improvement of the Administration of the Payment and Settlement of Foreign Currency Capital of Foreign-Invested Enterprises, or SAFE Circular 142, regulating the conversion by a foreign-invested enterprise of foreign currency-registered capital into RMB by restricting how the converted RMB may be used. SAFE Circular 142 provides that the RMB capital converted from foreign currency registered capital of a foreign-invested enterprise may only be used for purposes within the business scope approved by the applicable government authority and may not be used for equity investments within China. SAFE also strengthened its oversight of the flow and use of the RMB capital converted from foreign currency registered capital of foreign-invested enterprises. The use of such RMB capital may not be changed without SAFE’s approval, and such RMB capital may not in any case be used to repay RMB loans if the proceeds of such loans have not been used. On March 30, 2015, SAFE issued SAFE Circular 19, which took effective and replaced SAFE Circular 142 on June 1, 2015. Although SAFE Circular 19 allows for the use of RMB converted from the foreign currency-denominated capital for equity investments in China, the restrictions continue to apply as to foreign-invested enterprises’ use of the converted RMB for purposes beyond the business scope, for entrusted loans or for inter-company RMB loans. SAFE promulgated the Notice of the State Administration of Foreign Exchange on Reforming and Standardizing the Foreign Exchange Settlement Management Policy of Capital Account, or SAFE Circular 16, effective on June 9, 2016, which reiterates some of the rules set forth in SAFE Circular 19, but changes the prohibition against using RMB capital converted from foreign currency-denominated registered capital of a foreign-invested company to issue RMB entrusted loans to a prohibition against using such capital to issue loans to non-associated enterprises. Violations of SAFE Circular 19 or SAFE Circular 16 could result in administrative penalties.

On November 19, 2012, SAFE promulgated the Circular of Further Improving and Adjusting Foreign Exchange Administration Policies on Foreign Direct Investment, which was most recently amended in May 14, 2015, substantially amends and simplifies the current foreign exchange procedure. Pursuant to this circular, the opening of various special purpose foreign exchange accounts (e.g., pre-establishment expenses accounts, foreign exchange capital accounts and guarantee accounts), the reinvestment of lawful incomes derived by foreign investors in China (e.g. profit, proceeds of equity transfer, capital reduction, liquidation and early repatriation of investment), and purchase and remittance of foreign exchange as a result of capital reduction, liquidation, early repatriation or share transfer in a foreign-invested enterprise no longer require SAFE approval, and multiple capital accounts for the same entity may be opened in different provinces, which was not possible before. In addition, SAFE promulgated the Circular on Printing and Distributing the Provisions on Foreign Exchange Administration over Domestic Direct Investment by Foreign Investors and the Supporting Documents in May 2013, which specifies that the administration by SAFE or its local branches over direct investment by foreign investors in the PRC shall be conducted by way of registration and banks shall process foreign exchange business relating to the direct investment in China based on the registration information provided by SAFE and its branches.

On February 13, 2015, SAFE promulgated the Circular on Further Simplifying and Improving the Policies Concerning Foreign Exchange Control on Direct Investment, or SAFE Circular 13, which took effect on June 1, 2015. SAFE Circular 13 delegates the authority to enforce the foreign exchange registration in connection with the inbound and outbound direct investment under relevant SAFE rules to certain banks and therefore further simplifies the foreign exchange registration procedures for inbound and outbound direct investment.

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Regulations on loans to and direct investment in the PRC entities by offshore holding companies

According to the Implementation Rules for the Provisional Regulations on Statistics and Supervision of Foreign Debt promulgated by SAFE on September 24, 1997 and the Interim Provisions on the Management of Foreign Debts promulgated by SAFE, the NDRC and the MOFCOM and effective from March 1, 2003, loans by foreign companies to their subsidiaries in China, which accordingly are FIEs, are considered foreign debt, and such loans must be registered with the local branches of the SAFE. Under the provisions, the total amount of accumulated medium-term and long-term foreign debt and the balance of short-term debt borrowed by a FIE is limited to the difference between the total investment and the registered capital of the foreign-invested enterprise.

On January 12, 2017, the People’s Bank of China promulgated the Circular of the People’s Bank of China on Matters relating to the Macro-prudential Management of Comprehensive Cross-border Financing, or PBOC Circular 9, which took effect on the same date. The PBOC Circular 9 established a capital or net assets-based constraint mechanism for cross-border financing. Under such mechanism, a company may carry out cross-border financing in Renminbi or foreign currencies at their own discretion. The total cross-border financing of a company shall be calculated using a risk-weighted approach and shall not exceed an upper limit. The upper limit is calculated as capital or assets multiplied by a cross-border financing leverage ratio and multiplied by a macro-prudential regulation parameter.

In addition, according to PBOC Circular 9, as of the date of the promulgation of PBOC Circular 9, a transition period of one year is set for foreign-invested enterprises and during such transition period, FIEs may apply either the current cross-border financing management mode, namely the mode provided by Implementation Rules for the Provisional Regulations on Statistics and Supervision of Foreign Debt and the Interim Provisions on the Management of Foreign Debts, or the mode in this PBOC Circular 9 at its sole discretion. After the end of the transition period, the cross-border financing management mode for FIEs will be determined by the People’s Bank of China and SAFE after assessment based on the overall implementation of this PBOC Circular 9.

According to applicable PRC regulations on FIEs, capital contributions from a foreign holding company to its PRC subsidiaries, which are considered FIEs, may be made when approval by or registration with the SAFE and MOFCOM or their respective local counterpart is obtained.

Regulations on Foreign Exchange Registration of Offshore Investment by PRC Residents

On July 4, 2014, SAFE issued the Circular on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents’ Offshore Investment and Financing and Roundtrip Investment through Special Purpose Vehicles, or SAFE Circular 37, and its implementation guidelines, which abolished and superseded the Circular on Several Issues concerning Foreign Exchange Administration for Domestic Residents to Engage in Financing and in Return Investments via Overseas Special Purpose Companies, SAFE Circular 75. Pursuant to SAFE Circular 37 and its implementation guidelines, PRC residents (including PRC institutions and individuals) must register with local branches of SAFE in connection with their direct or indirect offshore investment in an overseas special purpose vehicle, or SPV, directly established or indirectly controlled by PRC residents for the purposes of offshore investment and financing with their legally owned assets or interests in domestic enterprises, or their legally owned offshore assets or interests. Such PRC residents are also required to amend their registrations with SAFE when there is a change to the basic information of the SPV, such as changes of a PRC resident individual shareholder, the name or operating period of the SPV, or when there is a significant change to the SPV, such as changes of the PRC individual resident’s increase or decrease of its capital contribution in the SPV, or any share transfer or exchange, merger, division of the SPV. Failure to comply with the registration procedures set forth in the Circular 37 may result in restrictions being imposed on the foreign exchange activities of the relevant onshore company, including the payment of dividends and other distributions to its offshore parent or affiliate, the capital inflow from the offshore entities and settlement of foreign exchange capital, and may also subject relevant onshore company or PRC residents to penalties under PRC foreign exchange administration regulations.

Mr. Bao and Mr. He, our PRC resident shareholders, have completed the required registrations with the local counterpart of SAFE in relation to our financing and restructuring to our shareholding structure.

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Regulations on Dividend Distributions

The principal regulations governing distribution of dividends paid by wholly foreign-owned enterprises include:

● Company Law of the PRC (1993), as amended in 1999, 2004, 2005, 2013 and 2018;

● The Foreign Investment Law, which came into effect on January 1, 2020;

● The Implementation of the Foreign Investment Law of the People’s Republic of China, which came into effect on January 1, 2020.

Under these laws and regulations, foreign-invested enterprises in China may pay dividends only out of their accumulated profits, if any, determined in accordance with PRC accounting standards and regulations. In addition, a wholly foreign-owned enterprise in China is required to set aside at least 10% of its after-tax profit based on PRC accounting standards each year to its general reserves until the accumulative amount of such reserves reach 50% of its registered capital. These reserves are not distributable as cash dividends. The foreign-invested enterprise has the discretion to allocate a portion of its after-tax profits to staff welfare and bonus funds. A PRC company is not permitted to distribute any profits until any losses from prior fiscal years have been offset. Profits retained from prior fiscal years may be distributed together with distributable profits from the current fiscal year.

Regulations on Stock Incentive Plans

Pursuant to the Notice on Issues Concerning the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plan of Overseas Publicly Listed Company, issued by SAFE on February 15, 2012, employees, directors, supervisors and other senior management participating in any stock incentive plan of an overseas publicly listed company who are PRC citizens or who are non PRC citizens residing in China for a continuous period of not less than one year, subject to a few exceptions, are required to register with SAFE through a domestic qualified agent, which could be a PRC subsidiary of such overseas listed company, and complete certain other procedures. Failure to complete the SAFE registrations may subject them to fines and legal sanctions and may also limit our ability to contribute additional capital into our wholly foreign owned subsidiary in China and limit this subsidiary’s ability to distribute dividends to us. The PRC agents shall, on behalf of the PRC residents who have the right to exercise the employee share options, apply to SAFE or its local branches for an annual quota for the payment of foreign currencies in connection with the PRC residents’ exercise of the employee share options. The foreign exchange proceeds received by the PRC residents from the sale of shares under the stock incentive plans granted and dividends distributed by the overseas listed companies must be remitted into the bank accounts in the PRC established by the PRC agents before distribution to such PRC residents. In addition, the PRC agents shall quarterly submit the form for record-filing of information of the Domestic Individuals Participating in the Stock Incentive Plans of Overseas Listed Companies with SAFE or its local branches. We and our PRC citizen employees who have been granted share options, or PRC optionees, are subject to the Stock Option Rules. If we or our PRC optionees fail to comply with the Individual Foreign Exchange Rule or the Stock Option Rules, we and our PRC optionees may be subject to fines and other legal sanctions. In addition, the PRC agents are required to amend the SAFE registration with respect to the stock incentive plan if there is any material change to the stock incentive plan. Moreover, the SAFE Circular 37 provides that PRC residents who participate in a share incentive plan of an overseas unlisted special purpose company may register with local branches of SAFE before exercising rights.

In addition, the SAT has issued circulars concerning employee share options, under which our employees working in the PRC who exercise share options will be subject to PRC individual income tax. Our PRC subsidiaries have obligations to file documents related to employee share options with relevant tax authorities and to withhold individual income taxes of those employees who exercise their share options. If our employees fail to pay or if we fail to withhold their income taxes as required by relevant laws and regulations, we may face sanctions imposed by the PRC tax authorities or other PRC government authorities.

Regulations on Overseas Listings

On August 8, 2006, six PRC regulatory agencies, namely, the Ministry of Commerce, the State Assets Supervision and Administration Commission, SAT, SAIC, China Securities Regulatory Commission, or the CSRC, and SAFE, jointly adopted the Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the M&A Rules, which became effective on September 8, 2006 and were amended on June 22, 2009. The M&A Rules purport, among other things, to require that offshore special purpose vehicles, or SPVs, that are controlled by PRC companies or individuals and that have been formed for overseas listing purposes through acquisitions of PRC domestic interest held by such PRC companies or individuals, to obtain the approval of the CSRC prior to publicly listing their securities on an overseas stock exchange. On September 21, 2006, the CSRC published a notice on its official website specifying documents and materials required to be submitted to it by SPVs seeking CSRC approval of their overseas listings. While the application of the M&A Rules remains unclear, our PRC legal counsel has advised us that based on its understanding of the current PRC laws, rules and regulations and the M&A Rules, prior approval from the CSRC is not required under the M&A Rules for the listing and trading of our ordinary shares on the NASDAQ given that (i) our PRC Subsidiary was directly established by us as a wholly foreign-owned enterprise, and we have not acquired any 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 after the effective date of the M&A Rules, and (ii) no provision in the M&A Rules clearly classifies the contractual arrangements as a type of transaction subject to the M&A Rules.

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On July 6, 2021, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council jointly issued the “Opinions on Severely Cracking Down on Illegal Securities Activities According to Law,” or the Opinions. The Opinions emphasized the need to strengthen the administration over illegal securities activities, and the need to strengthen the supervision over overseas listings by Chinese companies. Effective measures, such as promoting the construction of relevant regulatory systems will be taken to deal with the risks and incidents of China-concept overseas listed companies, and cybersecurity and data privacy protection requirements and similar matters. The Opinions and any related implementing rules to be enacted may subject us to compliance requirement in the future. Given the current regulatory environment in the PRC, we are still subject to the uncertainty of different interpretation and enforcement of the rules and regulations in the PRC adverse to us, which may take place quickly with little advance notice.

On February 17, 2023, the CSRC promulgated the Trial Administrative Measures of the Overseas Securities Offering and Listing by Domestic Companies (the “Trial Measures”) and five supporting guidelines, which became effective on March 31, 2023. According to the Trial Measures, among other requirements, any domestic companies that seek to offer or list securities overseas, both directly and indirectly, should fulfil the filing procedures with the CSRC within three business days after the submission of the overseas offering and listing application. The Trial Measures provide that if an issuer meets both of the following criteria, the overseas offering and listing of securities conducted by such issuer shall be determined as an indirect overseas offering and listing by a PRC domestic enterprise and is therefore subject to the filing and reporting requirements as required thereunder: (i) any of the operating revenue, total profits, total assets or net assets of the PRC domestic enterprise(s) of the issuer in the most recent fiscal year accounts for more than 50% of the corresponding item in the issuer’s audited consolidated financial statements for the same period; and (ii) the main parts of the issuer’s operation activities are conducted in mainland China, or the principal operation premises are located in mainland China, or the majority of senior management personnel in charge of its business operations and management are PRC citizens or have habitual residences located in mainland China. The Trial Measures further stipulate that the determination as to whether a PRC domestic company is indirectly offering and listing securities in an overseas market shall be made on a substance-over-form basis. According to one of the Guidelines for Overseas Listing, where an issuer does not fall within the circumstances as stipulated aforementioned, but the risk factors disclosed in the submitted listing application documents pursuant to the relevant overseas market regulations are mainly related to mainland China, the securities companies and the PRC counsels of the issuer shall, act in accordance with the Trial Measures for Overseas Listing and follow the principle of substance-over-form, conduct comprehensive demonstration and identification with regard to whether the issuer falls within the scope which is subject to the filing requirements under the Trial Measures for Overseas Listing. If a PRC company fails to complete required filing procedures or conceals any material fact or falsifies any major content in its filing documents, such PRC company may be subject to administrative penalties, such as order to rectify, warnings, fines, and its controlling shareholders, actual controllers, the person directly in charge and other directly liable persons may also be subject to administrative penalties, such as warnings and fines.

On the same day, the CSRC also held a press conference for the release of the Trial Measures and issued the Notice on Administration for the Filing of Overseas Offering and Listing by Domestic Companies, which, among others, clarified that (1) domestic companies that have submitted valid applications for their indirect overseas offering and listing prior to the effective date of the Trial Measures, March 31, 2023, but have not yet obtained approval from overseas regulatory authorities or stock exchanges, are allowed to reasonably arrange the timing for submitting their filing applications with the CSRC, and must complete the filing before the completion of their overseas offering and listing; (2) domestic companies that have obtained approval from overseas regulatory authorities or stock exchanges for their indirect overseas offering and listing prior to the effective date of the Trial Measures but have not yet completed their indirect overseas listing, are granted a six-month transition period from March 31, 2023. If these domestic companies fail to complete their indirect overseas offering and listing within such six-month transition period, they will be required to make filings with the CSRC pursuant to the Trial Measures; and (3) the CSRC will solicit opinions from relevant regulatory authorities and complete the filing of the overseas listing of companies seeking listing with contractual arrangements if they duly meet the compliance requirements, and support the development and growth of these companies by enabling them to utilize two markets and two kinds of resources.

In addition, on February 24, 2023, the CSRC, together with Ministry of Finance of the PRC, National Administration of State Secrets Protection and National Archives Administration of China, revised the Provisions on Strengthening Confidentiality and Archives Administration for Overseas Securities Offering and Listing which was issued by the CSRC, National Administration of State Secrets Protection and National Archives Administration of China in 2009, or the Provisions. The revised Provisions is issued under the title the Provisions on Strengthening Confidentiality and Archives Administration of Overseas Securities Offering and Listing by Domestic Companies, and came into effect on March 31, 2023 together with the Trial Measures. One of the major revisions to the revised Provisions is expanding its application to cover indirect overseas offering and listing, as is consistent with the Trial Measures. The revised Provisions require that, including but not limited to (a) a domestic company that plans to, either directly or indirectly through its overseas listed entity, publicly disclose or provide to relevant individuals or entities including securities companies, securities service providers and overseas regulators, any documents and materials that contain state secrets or working secrets of government agencies, shall first obtain approval from competent authorities according to law, and file with the secrecy administrative department at the same level; and (b) domestic company that plans to, either directly or indirectly through its overseas listed entity, publicly disclose or provide to relevant individuals and entities including securities companies, securities service providers and overseas regulators, any other documents and materials that, if leaked, will be detrimental to national security or public interest, shall strictly fulfill relevant procedures stipulated by applicable national regulations. Where a PRC domestic company, after completing the relevant procedures, provides to securities companies, securities service providers or other entities with any documents and materials that contain state secrets or working secrets of government agencies, or any other documents and materials that would be detrimental to national security or public interest if leaked, a non-disclosure agreement must be signed between the provider and receiver of such information according to the relevant PRC laws and regulations, which must specify, among others, the obligations and liabilities on confidentiality held by such securities companies and securities service providers. Specifically, when a PRC domestic company provides accounting archives or copies of accounting archives to any entities including securities companies, securities service providers or overseas regulators and individuals, it must complete the due procedures in compliance with applicable national regulations.

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Enforceability of Civil Liabilities

We conduct substantially most of our operations in China and substantially most of our assets are located in China. In addition, most of our senior executive officers reside within China for a significant portion of the time and most are PRC nationals. As a result, it may be difficult or impossible for a shareholder to effect service of process within the United States upon us or these persons, or to enforce against us or them judgments obtained in United States courts, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States. It may also be difficult for a shareholder to enforce judgments obtained in U.S. courts based on the civil liability provisions of the U.S. federal securities laws against us and our executive officers and directors.

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

India

This section sets forth a summary of the most significant laws, rules and regulations that affect our business activities in India.

Regulations relating to Foreign Investment under Foreign Exchange and Management Act, 1999

Foreign Investment in India and Regulatory Approvals

Investment by person resident outside India in an Indian entity is regulated by the provisions laid down in the Foreign Exchange and Management Act, 1999 (“FEMA”), as amended from time to time by the Foreign Exchange Department of the Reserve Bank of India (“RBI”).

Foreign Direct Investment (“FDI”) is freely permitted in almost all sectors. Under the FDI Policy, investments can be made by non-residents in the equity shares; fully, compulsorily and mandatorily convertible debentures; or fully, compulsorily and mandatorily convertible preference shares, partly paid equity shares and warrants of an Indian company, through two routes: (a) the Automatic Route; and (b) the Government Route. Under the automatic route, the non-resident investor or the Indian company does not require any approval from the Reserve Bank or Government of India for the investment. An Indian company, not engaged in any activity/sectors where FDI is prohibited, can issue shares or convertible debentures to a person resident outside India, subject to entry routes and sectoral caps prescribed in the FDI Policy. FDI in activities covered under the approval route requires prior approval of the Government which are considered by respective ministry/ department of the Government of India, as the case may be. In few sectors, there is prohibition on FDI in any form. It is pertinent to note that 100% FDI through automatic route is allowed in all activities/ sectors which are neither covered in automatic route, approval route nor in prohibited sector.

RBI has issued the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 (“FEMA Rules, 2019”), vide Notification No. S.O. 3732(E) dated October 17, 2019 (which replaced erstwhile Foreign Exchange Management (Transfer or issue of security by a person resident outside India) Regulations, 2017), which is a principal regulation governing foreign investment in an Indian entity by any person resident outside India.

FEMA Rules, 2019 stipulates that any investment in an Indian entity by a person resident outside India (which also includes a body corporate incorporated outside India) shall always remain subject to the entry routes, sectoral caps and other conditions laid down therein. Therefore, in order to subscribe, purchase or sell equity instruments (including equity shares) of an Indian company, a person resident outside India must adhere to terms and conditions given in Schedule 1 of FEMA Rules, 2019.

Since Do Mobile operates in the manufacturing sector, it is permitted to receive 100% FDI under the automatic route as per the provisions of FEMA Rules, 2019.

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Important Compliances pertaining to FDI under FEMA Rules, 2019

Pricing Guidelines on Issuance of Shares and Filing of Form FC-GPR for Allotment of Shares

Pricing: Any Indian company intending to issue equity instruments including equity shares to a person resident outside India must ensure that the price of such equity instruments shall not be less than: (a) the price worked out on the basis of Securities and Exchange Board of India (SEBI) guidelines in case of listed companies or in case of a company going through a delisting process as per SEBI (Delisting of Equity Shares) Regulations, 2021; and (b) the valuation of such equity instruments arrived at as per any internationally accepted pricing methodology on arm’s length basis duly certified by a SEBI registered Merchant Banker or a Chartered Accountant or a practicing Cost Accountant, in case of an unlisted Indian Company.

Filing Requirements: Allotment of shares by an Indian entity to a person resident outside India (including a body corporate incorporated outside India) will require an Indian entity to file form FC-GPR (Foreign Currency-Gross Provisional Return) within 30 days from the date of allotment of shares, in the manner prescribed by the RBI, along with a certificate from the company secretary of the Indian company certifying the eligibility to issue shares in terms of FEMA Rules, 2019 and a certificate from SEBI registered Merchant Banker or Chartered Accountant indicating the manner of arriving at the price of the shares issued to the persons resident outside India. Such certificates along with the Form FC-GPR must be submitted to the Foreign Exchange Department of RBI.

Do Mobile is also required to adhere to the aforesaid compliances regarding allotment of shares to its parent company Bridgetime Limited and or to its prospective investors.

Compliance of Pricing Guidelines on Transfer of Shares and Filing of Form FC-TRS for Transfer of Shares

Pricing: Any transfer of the equity instruments (including shares) of an Indian entity from a resident Indian to a person resident outside India or vice-versa, will be subject to the pricing guidelines and reporting requirements prescribed under the FEMA Rules, 2019.

In the case of transfer of equity instruments (including shares) from a person resident in India to a person resident outside India, price of such equity instruments transferred shall not be less than:

a) the price worked out in accordance with the relevant SEBI guidelines in case of a listed Indian company;

b) the price at which a preferential allotment of shares can be made under the SEBI guidelines, as applicable, in case of a listed Indian company or in case of a company going through a delisting process as per the SEBI (Delisting of Equity Shares) Regulations, 2021.

c) in case of an unlisted Indian Company, the valuation of equity instruments done as per any internationally accepted pricing methodology for valuation on an arm’s length basis duly certified by a Chartered Accountant or a SEBI registered Merchant Banker or a practicing Cost Accountant.

In the case of transfer of equity instruments (including shares) by a person resident outside India to a person resident in India, the price of equity instruments (including shares) transferred shall not exceed:

a) The price worked out in accordance with the relevant SEBI guidelines in case of a listed Indian company;

b) The price at which a preferential allotment of shares can be made under the SEBI guidelines, as applicable, in case of a listed Indian company or in case of a company going through a delisting process as per the SEBI (Delisting of Equity Shares) Regulations, 2021. The price is determined for such duration as specified in the SEBI guidelines, preceding the relevant date, which shall be the date of purchase or sale of shares;

c) The valuation of equity instruments done as per any internationally accepted pricing methodology for valuation on an arm’s length basis duly certified by a Chartered Accountant or a Securities and Exchange Board of India registered Merchant Banker or a practicing Cost Accountant, in case of an unlisted Indian Company.

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The principal intent of the government is that the person resident outside India is not guaranteed any assured exit price at the time of making such investment/ agreement and shall exit at the price prevailing at the time of exit. The above pricing guidelines are also applicable for issue of shares/preference shares against payment of lump sum technical know-how fee/royalty due for payment/repayment or conversion of external commercial borrowings in convertible foreign currency into equity shares/fully compulsorily and mandatorily convertible preference shares or capitalization of pre incorporation expenses/import payables (with prior approval of Government).

Filing Requirements: Any transfer of shares of Indian entity from a person resident outside India to a person resident in India or vice-versa will also require the filing of form FC-TRS (Foreign Currency - Transfer of Shares) with the RBI within 60 days of transfer of equity instruments or receipt/remittance of funds, whichever is earlier.

In the case of buy-back of shares pursuant to a scheme of merger /de-merger/ amalgamation of Indian companies approved by National Company Law Tribunal, the filing of form FC-TRS is mandatory by Indian companies.

Reporting under Single Master Form

RBI has issued guidelines on ‘Foreign Investment in India - Reporting in Single Master Form’ vide A.P (DIR Series) Circular No. 30 dated June 07, 2018 to integrate the extant reporting structures of various types of foreign investment in India in a Single Master Form (“SMF”), which is required to be filed online. With effect from September 1, 2018, the reporting requirements for foreign investment in India, irrespective of the instrument through which foreign investment is made, has been integrated into a SMF. SMF subsumes filing of form FC-GPR, FC-TRS, Form ESOP, Form DRR, Form DI and other forms into one single form.

Filing of Foreign Liabilities and Assets Annual Return

An Indian Company which has received FDI in the previous year including the current year, should submit Foreign Liabilities and Assets Annual Return in form FLA to RBI on or before the 15^th day of July of each year. Year for this purpose shall be reckoned as April to March.

Repatriation of Dividend

Dividends declared by Indian companies are freely repatriable without any restrictions (net after Tax deduction at source or Dividend Distribution Tax, if any, as the case may be). The repatriation is governed by the provisions of the Foreign Exchange Management (Current Account Transactions) Rules, 2000.

Repatriation of Interest

Interest on fully, mandatorily and compulsorily convertible debentures is also freely repatriable without any restrictions (net of applicable taxes). The repatriation is governed by the provisions of the Foreign Exchange Management (Current Account Transactions) Rules, 2000.

Regulations relating to Overseas Investment under FEMA

Investment in Joint Venture or Wholly Owned Subsidiary

RBI has issued the Foreign Exchange Management (Transfer or Issue of any Foreign Security) Regulations, 2004 (“ODI Regulations”) pursuant to the provisions of FEMA to govern the investment in a foreign entity by an Indian party, including an Indian company. The foreign entities in which such overseas investment is made are referred to as joint venture (“JV”) or wholly owned subsidiary (“WOS”). An Indian company is allowed to make overseas investment in JV or WOS either by way of contribution towards capital or subscription to the memorandum of association of JV or WOS. Further, overseas direct investment is also permitted by way of purchase of existing shares of JV or WOS through market or stock exchange, excluding the portfolio investment.

Like FDI, Indian companies can make overseas investment under automatic route and approval route.

An Indian company may make overseas direct investment in JV or its WOS up to 400% of its net worth (as per its last audited balance sheet) without any prior regulatory approval. However, if this limit is breached, then prior approval from RBI is required.

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The eligible ceiling limit under prior approval of RBI is also required if financial commitment by an Indian party becomes equal or exceeds US$1 billion in a financial year (April to March), even when the total financial commitment of an Indian party is within the eligible limit of automatic route. Further, an Indian party is eligible to extend loan/guarantee as a part of financial commitment only to JV or WOS in which it has equity participation. However, if an Indian party wants to extend loan/ guarantee as a part of financial commitment without equity contribution in JV or WOS, it may apply to RBI under the approval route. It may be note that term ‘financial commitment’ as used in above paragraphs means amount of direct investment by way of contribution to equity, loan and 100% of the amount of guarantees and 50% of the performance guarantees issued by an Indian party to or on behalf of its JV or WOS.

Reporting of Overseas Investment

An Indian company undertaking FC should approach an authorized dealer category - I bank (“AD Bank”) with an application in Form ODI (Master Document on Reporting) and prescribed enclosures / documents in Form ODI for effecting FC, such as, certified copy of the board resolution, statutory auditors certificate and valuation report, along with Form A2. Additionally, all transactions relating to a JV / WOS should be routed through one branch of an AD Bank to be designated by the Indian Party.

Pricing of Overseas Investment

While subscribing any shares by an India company in JV or WOS, it is relevant to consider that if such financial commitment is more than US$5 million, valuation of the shares should be made by a Category I Merchant Banker registered with SEBI or an Investment Banker / Merchant Banker outside India registered with the appropriate regulatory authority in the foreign country. In all other cases the valuation should be carried out by a Chartered Accountant or a Certified Public Accountant.

Regulatory compliances under Companies Act, 2013

The Companies Act, 2013 (“Companies Act, 2013”) is a principal law regulating the rights and duties of a company incorporated in India. Do Mobile being an Indian company is under an obligation to undertake several compliances mentioned under the Companies Act, 2013.

Board of Directors

A private limited company is required to have minimum 2 directors and maximum 15 directors on its board of directors (“Board”). However, a private limited company may appoint more than 15 directors after passing a special resolution by its members in general meeting. Further, in terms of the Companies Act it is mandatory to have at least one director who stays in India for a total period of not less than 182 days during a financial year (April to March).

Dividends

As per the Companies Act, 2013 a company may if authorized by its articles of association (“Articles”), pay dividends in proportion to the amount paid-up on each share. A company in its general meeting may declare dividends, but no dividend shall exceed the amount recommended by the Board of a company. The shareholders do not have any power to declare any dividend, however, the same shall be approved by the shareholders in the annual general meeting of the company. Similarly, under the Companies Act, the dividend shall be declared or paid only out of profits of the company of that year after providing depreciation or out of the profits of the company for any previous financial year or years after providing for depreciation remaining undistributed, or out of both. Dividends are generally declared as a percentage of the par value of a company’s equity shares.

Bonus Shares

In addition to permitting dividends to be paid out of current or retained earnings as described above, the Companies Act, 2013 permits a company to distribute an amount transferred from the reserve or surplus in the company’s profit and loss account to its shareholders in the form of fully paid-up bonus shares. The Companies Act, 2013 permits issue of bonus shares when authorized by its Articles and shall not be issued in lieu of dividend. Bonus shares are distributed to shareholders in the proportion recommended by the Board of the company which has been authorized in annual general meeting.

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Pre-emptive Rights and Issue of Additional Shares

The Companies Act, 2013 gives equity shareholders a right to subscribe for new shares in proportion to their respective existing shareholdings, unless otherwise determined by a special resolution passed by a general meeting of the shareholders. Under the Companies Act, in the event of an issuance of securities, subject to the limitations set forth above, a company must first offer the new shares to the shareholders on a fixed record date through “letter of offer”. The Companies Act, 2013 permits any other person authorized by special resolution passed in a general meeting of the shareholders to subscribe new share of the company either for cash or consideration and company shall comply with the provisions of private placement for such issue to other person.

Meetings of Shareholders

A company must convene an annual general meeting of its shareholders each year within 15 months from the previous annual general meeting or within 6 months of the end of the previous fiscal year, whichever is earlier. In certain circumstances a 3 months extension may be granted by the Registrar of Companies to hold the annual general meeting. In addition, the board may convene an extraordinary general meeting of shareholders when necessary or at the request of a shareholder or shareholders holding at least 10% of the paid up capital carrying voting rights. Written notice setting out the agenda of any meeting must be given at least 21 days prior to the date of the general meeting to the shareholders of record, excluding the days of mailing and date of the meeting.

Register of Shareholders; Record Dates; Transfer of Shares

A company is required to maintain a register of shareholders either in physical form or held in electronic form. For the purpose of determining the shares entitled to annual dividends, the register is closed for a specified period prior to the annual general meeting. The date on which this period begins is the record date.

Audit and Annual Report

Under the Companies Act, a company must file its annual report with the Registrar of Companies within 30 days from the date of the annual general meeting. At least 21 days before the annual general meeting of shareholders, a company must distribute a detailed version of the company’s audited balance sheet and profit and loss account and the reports of the board of directors and the auditors thereon. A company must also file an annual return containing a list of the company’s shareholders and other company information, within 60 days of the conclusion of the annual general meeting.

Compliances on Employment or Labor Laws

In India, labor laws are considered as social-welfare legislation to govern the conditions of employment, with an aim to provide social security and to safeguard interests of both the employer and the employees. Labor law defines the rights and obligations as workers/employees and employers with respect to the workplace health and safety, employment standards including adequate wages, and limited hours of work.

An Indian company is governed by several labor laws, pursuant to which it has to mandatorily provide the employment benefits to its employees which include equal remuneration, gratuity, bonus, pension, provident funds (social security), employees’ insurance, maternity benefits and all other benefits to which an Indian company is mandatorily required to comply with.

Besides that, an Indian company must comply with the filing of periodical filings requirements and maintenance of registers under different labor statutes. The Shops and Establishment Act, Payment of Gratuity Act, 1972, Maternity Benefit Act, 1961 and Employees’ State Insurance Act, 1948 are some of the important labor laws which are applicable to an Indian company. Moreover, an Indian company is under an obligation to get the registration done under the Shops and Establishment Act and any other statute which obliges an Indian company to get itself registered mandatorily. An Indian company has exposure to various sanctions, fines, and penalties under the relevant laws upon non-compliance or violations of the provisions.

There are numerous Central and State labor legislations in India. The important ones and those relevant in relation to Do Mobile are described herein below:

1. Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (“EPF Act”): The EPF Act provides for the institution of provident funds, pension funds, and deposit linked insurance funds for employees. It applies to all factories and establishments employing 20 or more persons or class of persons. An establishment to which the EPF Act applies shall continue to be governed by the EPF Act, notwithstanding that the number of persons employed therein at any time falls below 20. Once an establishment gets covered under the EPF Act, branches of such establishment situated at any other place shall also be treated as parts of the same establishment. Employees drawing wages exceeding Rs. 15,000/- per month are excluded from the provisions of the EPF Act.

2. Employees’ State Insurance Act, 1948 (“ESI Act”): The ESI Act is a social welfare legislation enacted with the objective of providing certain benefits to employees in case of sickness, maternity and employment injury. It is applicable to all factories and establishment employing 10 or more persons with respect to the employees, including casual, temporary or contract employees drawing wages less than Rs. 21,000/- per month. The existing total employee state insurance contribution is 4% of wages, where the employer contribution is 3.25% and employees’ contribution is 0.75% of wages.

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3. Payment of Gratuity Act, 1972 (“Gratuity Act”): Under the Gratuity Act, employee needs to provide continuous service of 5 years to be eligible to receive gratuity. Gratuity becomes payable to an employee on retirement, resignation or termination of employment due to death/disablement on account of accident/disease. Condition of providing minimum 5 years of continuous service is not applicable in case of death/disablement. The Gratuity Act is applicable to every establishment in which 10 or more persons are employed or were employed on any day of the preceding 12 months. The gratuity is payable at the rate of 15 days wages based on the wages last drawn, for every year of completed service or part thereof in excess of 6 months, subject to an aggregate amount of Rs. 20,00,000/-. However, if an employee has the right to receive higher gratuity under a contract or under an award, then the employee is entitled to get higher gratuity.

4. The Shops and Commercial Establishments Act (“Shops Act”): The Shops Act of the respective States in India generally contain provisions relating to registration of an establishment, working hours, overtime, leave, notice pay, working conditions for women employees, etc. Certain industries like IT and IT-enabled services have been given relaxations by various State Governments in respect of the observance of certain provisions of their respective Shops Act.

5. Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (“POSH Act”): The POSH Act was enacted by the Indian Parliament to provide protection against sexual harassment of women at workplace and prevention and redressal of complaints of sexual harassment and for matters connected therewith. The POSH Act makes it mandatory for every organization to frame an anti-sexual harassment policy. Further an organization having 10 or more employees is required to constitute an Internal Complaints Committee to entertain complaints that may be made by an aggrieved woman.

Applicability of Social Security Schemes i.e. Employees Provident Fund and Employees Pension Scheme to Expatriates working in India

The Government of India (Ministry of Labor and Employment) has extended the applicability of the Employees’ Provident Fund Scheme (EPFS) and the Employees’ Pension Scheme (EPS), notified under the EPF Act, to international workers through its notification Nos. G.S.R. 705(E) and 706(E), both dated October 01, 2008.

“International Worker” means:

a) an Indian employee having worked or going to work in a foreign country with which India has entered into a social security agreement and being eligible to avail the benefits under a social security programme of that country, by virtue of the eligibility gained or going to gain, under the said agreement; or

b) an employee other than an Indian employee, holding other than an Indian passport, working for an establishment in India to which the Act applies.

The aforesaid notifications further define the term “excluded employee” with reference to an international worker to mean “an international worker, who is contributing to a social security program of his/her country of origin, either as a citizen or resident, with whom India has entered into a social security agreement on a reciprocity basis and enjoying the status of a detached worker for the period and terms, as specified in such an agreement”.

Pursuant to the above notifications, every international worker employed with an establishment in India to whom the EPF Act applies (the EPF Act applies to an establishment employing 20 or more employees) would be required to become a member of the Employees Provident Fund, unless he/she qualifies as an excluded employee. International workers working in India with an establishment to which the EPF Act applies are required to contribute 12% of their salary (which includes basic pay, dearness allowance, retaining allowance and cash value of food concessions) under the EPF Act. However, in case the expatriates are from such countries with which India has entered into Social Security Agreements and are making contributions towards social security in their home countries, such expatriates would not be required to make contribution under the EPF Act. An International Worker may withdraw the full amount of accumulations in the fund on retirement from services at any time after the attainment of 58 years or on retirement on account of permanent or total incapacity to work due to bodily or mental infirmity.

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New Labor Law Codes in India

Since many of the Indian labor laws are overlapping and archaic in nature, the Indian government has amalgamated twenty-nine existing labor laws into four codes, namely, the Code on Wages, 2019, the Industrial Relations Code, 2020, the Occupational Safety, Health and Working Conditions Code, 2020 and the Code of Social Security, 2020 (collectively referred to as the “Codes”). These four Codes together consolidate laws relating to: (i) wages; (ii) industrial relations; (iii) safety, working conditions and welfare and (iv) social security. The Code on Wages, 2019 already received Presidential assent on August 8, 2019 and the rest of the three Codes, i.e., the Industrial Relations Code, 2020; the Occupational Safety, Health and Working Conditions Code, 2020 and the Code of Social Security, 2020, received Presidential assent on September 28, 2020. The four Codes post receiving Presidential assent have also been published in the Official Gazette of India, they will however, be brought into force only once the appointed date for their implementation is notified by the Central Government. Accordingly, till date the earlier labour laws are in force and governing conditions of employment in India.

Regulations related to Consumer Protection

With changing times, the economic and business environment of India also went through a change. India has now become a global trading partner with the world. This indeed exposed customers not only to new products but also new problems. The increase in usage of mobile handsets in India required protecting the interests of the consumers against deficiency in services and harassment by way of unfair trade practices and poor quality products. The Consumer Protection Act, 1986 (“CPA 1986”) was the law of the Parliament of India which addresses the aforementioned concerns of the consumers in India. This statute also casts obligation on the traders, service providers and person to provide customer satisfaction through guarantee of quality, function, usage and after sales-services. The Indian Government recently on July 20, 2020 introduced the Consumer Protection Act, 2019 (“CPA 2019”) replacing the erstwhile CPA 1986. Accordingly, CPA 2019 will now overhaul the administration and settlement of consumer disputes in India in place of CPA 1986. CPA 2019 now specifically provides for prevention of unfair trade practice by e-commerce platforms and for the same Consumer Protection (E-Commerce) Rules, 2020 are promulgated.

Forums for Redressal under CPA 2019

With the aim to redress the consumer disputes, CPA 2019 provides for establishment of different consumer commissions i.e. District Consumer Disputes Redressal Commission, State Consumer Disputes Redressal Commission and National Consumer Disputes Redressal Commission. CPA 2019 lays down the pecuniary jurisdiction in relation to each of the aforesaid commissions for the purpose of entertaining the dispute arose in relation of value of particular goods or service. Accordingly, in case the consumer finds deficiency in goods or services, then he can file a complaint against the person before appropriate commission having pecuniary jurisdiction to entertain the dispute for such deficiency. In addition to the aforesaid redressal commissions, CPA 2019 provides for an establishment of the Central Consumer Protection Authority which is, inter alia, empowered to conduct investigations into violations of consumer rights, institute complaints and order discontinuance of unfair trade practices to promote, protect and enforce the rights of consumers.

Regulations governing the Intellectual Property Rights

Intellectual Property Right (“IPR”) is a legal right governing the use of creations of the human mind. In India, there are several legislations which protects different IPRs, like trademark, patent, copyright, and domain name.

Trademark under Trade Marks Act, 1999

With the globalization of trade, brand names, trade names and marks have attained an immense value that require uniform minimum standards of protection and efficient procedures. India being a member nation to World Trade Organization has ratified the Agreement on Trade-Related Aspects of Intellectual Property Rights along with other member nations of WTO. In view of the same, India has amended and repealed its old Indian Trade and Merchandise Marks Act, 1958 and enacted new Trade Marks Act, 1999 (“TM Act”), to align with the international systems and practices.

The TM Act envisages the recognition and protection of the well-known trademark. The TM Act also provides for registration of trademarks, duration, removal, renewal and revocation of the trade mark. The Indian judiciary has been proactive in the protection of trademarks, and it has extended the protection to domain names under the TM Act. The trademark is initially registered for a period of 10 years, which is calculated from the date of filing of the application and in case of convention application from the date of priority.

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Further, the registration of the trademark may be renewed for a period of 10 years from the date of expiration of the original registration or of the last renewal of registration. Such renewal application should be made at least 6 months prior to expiry of registration of the trademark. However, if such renewal application not is made within the said period, it can be filed within 6 months after the expiry of registration or the renewal as the case may be along with a late filing fee. Additionally, if such late filing fee is not paid, upon expiry of one year from the date of expiry of registration or the renewal as the case may be, such trademark will automatically be removed from the register of trademarks of concerned authority.

Regulations governing Import and Export of Goods

In India, the import and export of goods is governed by the Foreign Trade (Development & Regulation) Act, 1992 and India’s Export Import (EXIM) Policy. India’s Directorate General of Foreign Trade (“DGFT”) is the nodal authority to regulate all matters related to EXIM Policy. Importers are required to register with DGFT to obtain an Importer Exporter Code Number (“IE Code”) for undertaking import activities. Moreover, an exporter is not allowed to take benefits of exports from DGFT without having IE Code. After an IEC has been obtained, the source of items for import must be identified and declared by an importer.

The Indian Trade Classification - Harmonized System (ITC-HS) allows for the free import of most goods without a special import license. Majority of import items fall within the scope of India’s EXIM Policy regulation of Open General License (OGL) which means that they are deemed to be freely importable without restrictions and without a license, except to the extent that they are regulated by the provisions of the EXIM Policy or any other law. Imports of items not covered by OGL are regulated.

4C. Organizational Structure

The following chart reflects our organizational structure as of the date of this annual report. For descriptions of our subsidiaries and variable interest entity, please see “4A. History and Development of the Company.”

4D. Property, Plants and Equipment

Under PRC law, land is owned by the state. “Land use rights” are granted to an individual or entity after payment of a land use right fee is made to the applicable state or rural collective economic organization. Land use rights allow the holder the right to use the land for a specified long-term period. We do not currently own any real estate or land use rights. For descriptions of our leased properties, please see “Item 4B. Business Overview - Facilities.”

ITEM 4A. UNRESOLVED STAFF COMMENTS

Not Applicable

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ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The following discussion and analysis should be read in conjunction with our consolidated financial statements, the notes to those financial statements and other financial data that appear elsewhere in this annual report. In addition to historical information, the following discussion contains forward-looking statements based on current expectations that involve risks and uncertainties. Actual results and the timing of certain events may differ significantly from those projected in such forward-looking statements due to a number of factors, including those set forth in “Risk Factors” and elsewhere in this report. Our consolidated financial statements are prepared in conformity with U.S. GAAP.

5A. Operating Results

We design, manufacture, and distribute mobile phones and other consumer electronics through our operation plants in China. Our products are categorized into the following major categories: feature phone, smartphone, face mask and mobile phone accessories. Most of our products are produced to fulfill OEM/ODM orders received from our long-term clients and sold globally, including India, Brazil, the United States, and other emerging markets in South Asia and Africa as well as Europe. The following charts display our products contribution for the fiscal years ended March 31, 2021, 2022 and 2023.

The following table sets forth our revenues by type of contract and as a percentage of revenue for the fiscal years indicated:

	Year ended March 31,
	2021				2022				2023
Category	Amount				Amount				Amount
	RMB		%		RMB		%		RMB		US$		%
	(in thousands, except for percentages)
OEM/ODM		195,995		79.4		273,979		99.4		200,450		29,170		100
In-house brand		6,157		2.5		1,529		0.6		97		14		—
Face mask		44,747		18.1		—		—		—		—		—
Total		246,899		100		275,508		100		200,547		29,184		100

The following table sets forth our revenues by product lines and as a percentage of revenue for the fiscal years indicated:

	Year ended March 31,
	2021				2022				2023
Category	Amount				Amount				Amount
	RMB		%		RMB		%		RMB		US$		%
	(in thousands, except for percentages)
Feature phone		144,032		58.4		111,066		40.3		106,279		15,466		53
Smart phone		56,885		23.0		154,143		56		73,819		10,742		36.8
Face mask		44,747		18.1		—		—		—		—		—
Others		1,235		0.5		10,299		3.7		20,449		2,976		10.2
Total		246,899		100		275,508		100		200,547		29,184		100

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The following table sets forth our revenues by geographic region and as a percentage of revenue for the fiscal years indicated:

	Year ended March 31,
	2021				2022				2023
Category	Amount				Amount				Amount
	RMB		%		RMB		%		RMB		US$		%
	(in thousands, except for percentages)
PRC		112,400		45.5		70,314		25.5		82,481		12,003		41.1
Hong Kong		30,030		12.2		18,949		6.9		14,228		2,071		7.1
India		6,157		2.5		1,529		0.6		97		14		0
Africa		19,536		7.9		25,905		9.4		39,515		5,750		19.7
The United States		17,277		7.0		28,154		10.2		18,158		2,642		9.1
Mexico		—		—		12,372		4.5		29,085		4,233		14.5
South America		45,743		18.5		118,285		42.9		951		137		0.5
Japan		—		—		—		—		16,032		2,333		8
Others		15,756		6.4		—		—		16,032		2,333		8
Total		246,899		100		275,508		100		200,547		29,183		100

Overview

The table below sets forth certain line items from our consolidated statement of comprehensive loss for the fiscal years ended March 31, 2021, 2022 and 2023:

	Year ended March 31,
	2021			2022			2023
	RMB			RMB			RMB			US$
	(in thousands)
Revenues		246,899			275,508			200,547			29,184
Costs of sales		228,732			261,723			170,482			24,809
Gross profit		18,167			13,785			30,065			4,375
Operating expenses		32,697			48,286			114,109			16,606
Interest expenses		2,461			4,875			6,149			895
Loss before income taxes		(16,991	)		(39,376	)		(90,193	)		(13,126	)
Income tax benefits		(364	)		(46	)		(171	)		(25	)
Net loss		(16,627	)		(39,330	)		(90,022	)		(13,101	)

● We incurred net loss of RMB16.6 million and net loss of RMB39.3 million for the fiscal years ended March 31, 2021 and 2022, respectively. The 137% increase was mainly due to the decrease of gross profit, increase of operating expenses and increase of interest expenses. For the fiscal years ended March 31, 2022 and 2023, we incurred net loss of RMB39.3 million and RMB90.0 million (US$13.1 million). The 128.9% increase was mainly due to the increase of operating expenses, partially offset by the increase of gross profit and decrease of interest expenses

● OEM/ODM revenue increased from RMB196.0 million for the year ended March 31, 2021 to RMB274.0 million (US$43.2 million) for the year ended March 31, 2022, representing a 40% increase, which was mainly due to the increase in smart phone and feature phone sales to customers in South America, Africa and Mexico, partially offset by the decrease in OEM/ODM sales in China. OEM/ODM revenue decreased from RMB274.0 million for the year ended March 31, 2022 to RMB200.5 million (US$29.2 million) for the year ended March 31, 2023, representing a 27% decrease, which was mainly due to the decrease in smart phone and feature phone sales to customers in South America and the United states, partially offset by the increase in OEM/ODM sales in Mexico, Japan, Africa and China.

● In-house brand products generated RMB6.2 million and RMB1.5 million (US$0.2 million) for the fiscal years ended March, 2021 and 2022, respectively, representing a 75% decrease, which was primarily due to restrictions of business activities in India. In-house brand products generated RMB1.5 million and RMB0.1 million (US$0.01 million) for the fiscal years ended March, 2022 and 2023, respectively, representing a 94% decrease. Due to an overall change of business environment in India since July 2021, we have decided to make a strategic shift and switch focus from India to Mexico. We acquired two local companies in Mexico during fiscal year 2022 and plan to further develop business with local telecom carriers in Mexico. Meanwhile, our business in India has been maintained at a limited level to fulfill existing orders.

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● Due to an overall change of business environment in India since July 2021, we have decided to make a strategic shift and switch focus from India to Mexico. We acquired two local companies in Mexico during fiscal year 2022 and plan to further develop business with local telecom carriers in Mexico. Meanwhile, our business in India has been maintained at a limited level to fulfill existing orders. Our Indian subsidiary maintained at the minimal level during fiscal year 2022 and is under the process of cancellation.   

● We established sales channels in South America, Mexico and Africa in 2022. We had a rapid growth in OEM/ODM revenue, especially in sales of smart phone products, in these areas, such that aggregate sales in South America, Mexico and Africa contributed 26.4% and 56.8% of total revenue for the fiscal year ended March 31, 2021 and 2022, respectively. We had a rapid growth in OEM/ODM revenue, especially in sales of feature phone and tablets, in these areas, such that aggregate sales in Mexico Japan, and Africa contributed 13.9% and 42.2% of total revenue for the fiscal year ended March 31, 2022 and 2023, respectively.

● Operating expenses consist of selling expenses, general and administrative expenses, research and development (“R&D”) expenses and other (income) expense. The increase in operating expense for the fiscal year ended March 31, 2022 (compared to year ended March 31, 2021) was mainly due to the increase in general and administrative expenses, increase in R&D expenses and increase in selling expenses. The increase in operating expense for the fiscal year ended March 31, 2023 (compared to year ended March 31, 2022) was mainly due to the increase in general and administrative expenses, increase in R&D expenses and increase in selling expenses.

● Exchange rate between RMB and US Dollar considerably affected our financial results as more than 50% of our products were sold to customers outside of mainland China, and the exchange rate between the Indian Rupee and US Dollar considerably affected our financial results as our subsidiaries, Do Mobile, operated in India. We incurred RMB3.7 million, RMB2.3 million and RMB3.2 million of exchange loss for fiscal years ended March 31, 2021, 2022 and 2023, respectively, mainly due to fluctuations of exchange rates of RMB against US Dollar.

● We provided impairment reserve of RMB 7.6 million, RMB0.3 million and RMB0.4 million (US$0.05 million) on obsolete inventory for the fiscal years ended March 31, 2021,2022 and 2023. We also reversed allowances of RMB0.8 million and provided allowance of RMB3.5 million and RMB nil on doubtful receivables for the fiscal years ended March 31, 2021, 2022 and 2023, respectively.

● We developed Japanese market through ODM orders during the fiscal year 2023, and we intended to further develop this market as our strategic focus. We provided tailored tablet products to our client and will offer more types of tablet products for both customer end and business end. Revenue from Japanese client represents approximately 8% of our total revenue and the portion is expected to be higher in the future.

Comparison of the fiscal years ended March 31, 2023 and 2022

Revenue

Revenue for the year ended March 31, 2023 was RMB200.5 million (US$29.2 million), a decrease of RMB75.0 million, or 27.2%, from RMB275.5 million for the year ended March 31, 2022. The decrease was attributable to the decrease in OEM/ODM sales of RMB73.5 million and the decrease of in-house brand sales of RMB1.5 million. 

Cost of sales

Cost of sales for the fiscal year ended March 31, 2023 was RMB170.5 million (US$24.8 million), a decrease of RMB91.2 million, or 34.9%, from RMB261.7 million for the year ended March 31, 2022. The decrease was mainly due to the decrease of revenue and change of product mix.

Our cost of sales mainly consists of cost of raw materials, third party processing fees and rental of building and machinery.

We import screens and mother boards from overseas and purchase camera, battery and electronic components from domestic markets for mobile phone processing and assembling.

We provided impairment reserve on obsolete inventory of RMB0.3 million and wrote off RMB0.4 million (US$0.06 million), which are recorded in cost of sales for the years ended March 31, 2022 and 2023.

Gross profit

Gross profit for the year ended March 31, 2023 was RMB30.1 million (US$4.4 million), representing an increase of RMB16.3 million, or 118.1%, from the gross profit of RMB13.8 million for the year ended March 31, 2022 as a result of factors mentioned above.

Overall gross profit margin for the fiscal year ended March 31, 2023 was 15.0%, or 10.0% higher, as compared to gross profit margin of 5.0% for the fiscal year ended March 31, 2022. The increase was mainly due to increase of sales of higher-end feature phones, tablets and technical services provided to customers, which had contributed to higher margin in the year ended March 31, 2023.

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Operating expenses

	Year ended March 31,
	2022				2023
	RMB		US$		RMB			US$
	(in thousands)
Selling expenses		5,459		860		7,391			1,076
General and administrative expenses(1)		25,429		4,006		94,432			13,742
R&D related expenses(1)		14,070		2,216		15,980			2,326
Other (income) expenses, net		3,328		524		(3,694	)		(538	)
Total		48,286		7,606		114,109			16,606

(1) These expenses are combined as general and administrative expenses in consolidated statements of comprehensive income (loss).

Our operating expenses consist of selling expenses, general and administrative expenses, R&D expenses and other expenses, net. Operating expenses increased by RMB65.8 million, or 136.3%, from RMB48.3 million for the year ended March 31, 2022 to RMB114.1 million (US$16.6 million) for year ended March 31, 2023. The net increase in our operating expenses was attributed to (i) increase in general and administrative expenses by RMB69.0 million (ii) increase in R&D expenses by RMB1.9 million (iii) increase in selling expenses by RMB1.9 million and (iv) net decrease of other income by RMB7.0 million for the year ended March 31, 2023.

Selling expenses consist of salary and benefits, business travel, shipping expenses, entertainment, market promotion and other expenses relating to our sales and marketing activities. The increase in selling expense was mainly due to increase expenses on moulds and consumables.

General and administrative expenses primarily include salary and benefits to our accounting, human resources, design and executive office staff, rental expenses, property management and utilities, office supplies. The increase was mainly due to (i) issuance of 5,300,000 shares of common stock valued at $9,301,500 to participants and (ii) increase in manpower costs in new subsidiaries in Mexico and Guangxi, China.

R&D related expenses mainly consist of salary and benefits, material and consumables and other expenses to carry out R&D activities. The increase in R&D expenses was mainly due to increase in R&D expenses incurred in the new subsidiary in Guangxi, China. R&D related expenses are included in general and administrative expenses in the income statement.

Other expenses, net for the year ended March 31, 2023 was net income of RMB3.7 million (US$0.5 million), as compared to net expense of RMB3.3 million for the year ended March 31, 2022. The increase of income was mainly attributed to the exchange gain due to appreciation of U.S. Dollar against RMB and changes in doubtful account provision, partially offset by decrease in government subsidy.

Income tax benefits

Income tax deferred benefit is RMB0.05 million and RMB0.1 million for the years ended March 31, 2022 and 2023, respectively.

Net loss

As a result of the above, net loss was RMB90.0 million (US$13.1 million) for the year ended March 31, 2023 compared to net loss of RMB39.3 million for the year ended March 31, 2022.

Comparison of the fiscal years ended March 31, 2022 and 2021

Revenue

Revenue for the year ended March 31, 2022 was RMB275.5 million (US$43.4 million), an increase of RMB28.6 million, or 11.6%, from RMB246.9 million for the year ended March 31, 2021. The increase was attributable to the increase in OEM/ODM sales of RMB78.0 million, partially offset by the decrease in sales of face masks of RMB44.8 million and the decrease of in-house brand sales of RMB4.6 million.

Cost of sales

Cost of sales for the fiscal year ended March 31, 2022 was RMB261.7 million (US$41.2 million), an increase of RMB33.0 million, or 14.4%, from RMB228.7 million for the year ended March 31, 2021. The increase was in line with the Increase of revenue.

Our cost of sales mainly consists of cost of raw materials, third party processing fees and rental of building and machinery.

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We import screens and mother boards from overseas and purchase camera, battery and electronic components from domestic markets for mobile phone processing and assembling.

We provided impairment reserve on obsolete inventory of RMB7.6 million and RMB0.3 million (US$0.05 million), which are recorded in cost of sales for the year ended March 31, 2021 and 2022.

Gross profit

Gross profit for the year ended March 31, 2022 was RMB13.8 million (US$2.2 million), representing a decrease of RMB4.4 million, or 24.1%, from the gross profit of RMB18.2 million for the year ended March 31, 2021 as a result of factors mentioned above.

Overall gross profit margin for the fiscal year ended March 31, 2022 was 5.00%, or 2.4% lower, as compared to gross profit margin of 7.4% for the fiscal year ended March 31, 2021. The decrease was mainly due to squeeze of margin in feature phone sales for the fiscal year ended March 31, 2022 and cessation of face mask sales in 2020, which had contributed to higher margin in fiscal year 2021.

Operating expenses

	Year ended March 31,
	2021		2022
	RMB		RMB		US$
	(in thousands)
Selling expenses		4,127		5,459		860
General and administrative expenses(1)		18,502		25,429		4,006
R&D related expenses(1)		7,193		14,070		2,216
Other expenses, net		2,875		3,328		524
Total		32,697		48,286		7,606

(1) These expenses are combined as general and administrative expenses in consolidated statements of comprehensive income (loss).

Our operating expenses consist of selling expenses, general and administrative expenses, R&D expenses and other expenses, net. Operating expenses increased by RMB15.6 million, or 47.7%, from RMB32.7 million for the year ended March 31, 2021 to RMB48.3 million (US$7.6 million) for year ended March 31, 2022. The net increase in our operating expenses was attributed to (i) increase in general and administrative expenses by RMB6.9 million (ii) increase in R&D expenses by RMB6.9 million (iii) increase in selling expenses by RMB1.3 million and (iv) net increase of other income by RMB0.5 million for the year ended March 31, 2022.

Selling expenses consist of salary and benefits, business travel, shipping expenses, entertainment, market promotion and other expenses relating to our sales and marketing activities. The increase in selling expense was mainly due to increase in shipping and customs handling expenses.

General and administrative expenses primarily include salary and benefits to our accounting, human resources, design and executive office staff, rental expenses, property management and utilities, office supplies. The increase was mainly due to the compensation for the independent directors of the Company, office rental and other general and administration expenses incurred to support the activities of new subsidiaries carried out in Mexico and China.

R&D related expenses mainly consist of salary and benefits, material and consumables and other expenses to carry out R&D activities. The increase in R&D expenses was mainly due to increase in expenses on moulds and consumables for R&D activities. R&D related expenses are included in general and administrative expenses in the income statement.

Other expenses, net for the year ended March 31, 2022 was net expense of RMB3.3 million (US$0.5 million), as compared to net expense of RMB2.9 million for the year ended March 31, 2021. The increase was mainly attributed to changes in doubtful account provision, partially offset by increase in government subsidy and the decrease in exchange loss of U.S. Dollar against RMB.

Income tax benefits

Income tax benefits is RMB0.3 million and RMB0.05 million for the year ended March 31, 2021 and 2022, respectively.

Net loss

As a result of the above, net loss was RMB39.3 million (US$6.2 million) for the year ended March 31, 2022 compared to net loss of RMB16.6 million for the year ended March 31, 2021.

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5B. Liquidity and Capital Resources

As of March 31, 2023, we had current assets of RMB237.0 million (US$34.5 million) and current liabilities of RMB245.7 million (US$35.8 million), resulting in a working capital deficit of approximately RMB8.7 million (US$1.3 million). As of March 31, 2022, we had current assets of RMB192.9 million and current liabilities of RMB163.1 million, resulting in a working capital of approximately RMB29.8 million.

We had accumulated deficit of RMB88,277 and RMB175,893 (US$25.6 million) as of March 31, 2022 and 2023, respectively. For the fiscal year ended March 31, 2023, we incurred a net loss of RMB85.5 million (US$12.4 million). Our net cash outflow was RMB15.1 million (US$2.2 million) from operations for the fiscal year ended March 31, 2023, an increase of cash outflow of RMB5.8 million compared to the net cash outflow of RMB20.9 million for the fiscal year ended March 31, 2022 as a result of strengthen control on turnover of inventory. We continue to focus on improving operational efficiency and cost reductions, developing core cash-generating business and enhancing efficiency. We expect that the existing and future cash generated from operation will be sufficient to fund the future operating expenses and capital expenditure requirements.

Cash, Cash Equivalents and restricted cash

The following table sets forth certain historical information with respect to our statements of cash flows:

	Year ended March 31,
	2021			2022			2023
	RMB			RMB			RMB			US$
	(in thousands)
Net cash used in operating activities		(2,521	)		(20,865	)		(15,138	)		(2,203	)
Net cash used in investing activity		(2,201	)		(5,830	)		(2,900	)		(422	)
Net cash provided by financing activities		14,000			86,888			18,295			2,662
Effect of exchange rate changes on cash and cash equivalents		(855	)		(2,478	)		4,985			725
Net  increase in cash and cash equivalents and restricted cash		8,423			57,715			5,242			762

We had cash, cash equivalent and restricted cash of approximate RMB9.5 million, RMB67.2 million and RMB72.4 million (US$10.6 million) as of March 31, 2021 and 2022 and March 31, 2023, respectively.

Operating activities

Net cash used in operating activities was RMB15.1 million (US$2.2 million) for the year ended March 31, 2023. The balance represented an increase of cash flow of RMB5.8 million (US$1.1 million), or 27.5%, from RMB20.9 million used in the year ended March 31, 2022. Net loss for the year ended March 31, 2023 was RMB90.0 million (US$13.1 million), representing a decrease of RMB50.7 million, or 128.9%, from a net loss of RMB39.3 million for the year ended March 31, 2022. The difference between net loss and the net cash used in operating activities are attributed to the changes in various asset and liability account balances throughout the year ended March 31, 2023. Major changes are i) increase of accounts receivable in the amount of RMB27.6 million (US$4.0 million, a decrease to cash) resulted from a decline in sales, ii) increase of accounts payable in the amount of RMB19.6 million (US$2.9 million, an increase to cash), iii) decrease of RMB20.6 million (US$3.0 million, an increase to cash) in the ending inventory balance as of March 31, 2023, iv) increase of RMB25.9 million (US$3.8 million) in prepayment and other current assets (a decrease to net cash) v) increase of RMB8.9 million (US$1.3 million) in other payables and accrued liabilities (an increase to net cash), vi) increase of RMB0.9 million (US$0.1 million) in net amount of related parties (an increase to net cash) during the year ended March 31, 2023. In addition, the Company had non-cash expenses relating to depreciation and amortization in the amount of RMB5.8 million (US$0.8 million), written-off provision for obsolete inventory of RMB0.4 million (US$0.1 million), and issuance of common stock as incentive of RMB63.7 million (US$9.3 million).

Net cash used in operating activities was RMB20.9 million (US$3.3 million) for the year ended March 31, 2022 as compared with RMB2.5 million for the year ended March 31, 2021. Net loss for the year ended March 31, 2022 was RMB39.3 million (US$6.2 million) compared to RMB16.6 million for the year ended March 31, 2021. The difference between net loss and the net cash used in operating activities are attributed to the changes in various asset and liability account balances throughout the year ended March 31, 2022. Major changes are (i) increase of accounts receivable in the amount of RMB5.7 million (US$0.9 million, a decrease to cash), (ii) increase of accounts payable in the amount of RMB27.3 million (US$4.3 million, an increase to cash), (iii) increase of RMB4.6 million (US$0.7 million, a decrease to cash) in the ending inventory balance as of March 31, 2022, (iv) decrease of RMB5.9 million (US$0.9 million, an increase to cash) in prepayment and other current assets, and (v) decrease of RMB11.9 million (US$1.9 million, a decrease to cash) in other payables and accrued liabilities. In addition, the Company had non-cash expenses relating to depreciation and amortization in the amount of RMB4.3 million (US$0.7 million), provision of RMB0.3 million (US$0.04 million) for obsolete inventory and provision of RMB3.4 million (US$0.5 million) on doubtful receivables

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Investing activities

Net cash used in investing activities for fiscal year ended March 31, 2023 was RMB2.9 million (US$0.4 million) as compared to net cash used in investing activities of RMB5.8 million for the fiscal year ended March 31, 2024. Cash used in the year ended March 31, 2022 were for payments of property and equipment of RMB2.6 million (US$0.4 million).

Net cash used in investing activities for fiscal year ended March 31, 2022 was RMB5.8 million (US$0.9 million) as compared to net cash used in investing activities of RMB2.2 million for the fiscal year ended March 31, 2021. Cash used in the year ended March 31, 2022 were for payments of property and equipment of RMB5.9 million (US$0.9 million).

Financing activities

Net cash provided by financing activities for year ended March 31, 2023 was RMB18.3 million (US$2.7 million) as compared to RMB86.9 million for the year ended March 31, 2022. The cash inflow was mainly attributable to proceeds from short-term borrowings.

Net cash provided by financing activities for year ended March 31, 2022 was RMB86.9 million as compared to RMB14.0 million for the year ended March 31, 2021. The cash inflow was mainly attributable to proceeds from issuance of ordinary shares through IPO, capital contributions and short-term and long-term borrowings.

On November 13, 2020, UTime SZ entered into a credit agreement with China Resources Bank of Zhuhai Co., Ltd., according to which China Resources Bank of Zhuhai Co., Ltd. agreed to provide UTime SZ with a credit facility of up to RMB22 million with a two-year term from November 13, 2020 to November 13, 2022. On November 18, 2020, UTime SZ entered into a working capital loan agreement with China Resources Bank of Zhuhai Co., Ltd. to borrow RMB22 million as working capital for one year at an annual effective interest rate of 5.5%. The Company repaid the loan on November 18, 2021 and borrowed RMB22 million as working capital for one year at an annual effective interest rate of 5.5% on November 22, 2021. The Company repaid the loan on November 21, 2022. The loan is secured by the office owned by UTime SZ and guaranteed by UTime GZ, Mr. Bao and his spouse.

In November 2020, UTime SZ and TCL Factoring executed a factoring agreement, pursuant to which UTime SZ received a revolving credit facility and may submit unlimited number of loan applications, so long as, among other conditions, the balance of the loan does not exceed the credit line. The annual effective interest rate range is from 8.0% to 9.0%. TCL Factoring has the right of recourse to UTime SZ, and as a result, these transactions were recognized as secured borrowings. UTime SZ agreed to pledge to TCL Factoring its accounts receivable from TCL Huizhou. This credit facility was also guaranteed respectively by Mr. Bao and UTime GZ, each for an amount up to RMB20 million. UTime SZ agreed not to withdraw, utilize or dispose the accounts receivables paid to it by TCL Huizhou without the prior consent of TCL Factoring. As of March 31, 2022 and 2023, UTime SZ obtained loans under the factoring agreement at the total amount of RMB4.98 million and RMB7.8 million, respectively.

In July 2021, UTime SZ entered into a credit agreement with Bank of Communications to borrow RMB10 million for an unfixed term. On July 19, 2021, UTime SZ obtained a loan under this working capital loan agreement at the amount of RMB3 million which is due on July 6, 2022. The loan was guaranteed by Mr. Bao and his spouse. The loan bears a fixed interest rate of 4.6% per annum and will be due on July 6, 2022. The loan was fully repaid in July 2022.

In August 2021, UTime SZ entered into a credit line agreement with Shenzhen Nanshan Baosheng County Bank Co., Ltd. (“Baosheng County Bank”) according to which Baosheng County Bank agreed to provide UTime SZ with a credit facility of up to RMB3 million with a one-year term from July 28, 2021 to July 28, 2022. On August 23, 2021, UTime SZ entered into a working capital loan agreement with Baosheng County Bank to borrow RMB3 million as working capital for one year at an annual effective interest rate of 8.0%. It is payable at monthly installment of RMB0.1 million from September 2021 to August 2022, with a balloon payment of the remaining balance in the last installment. The loan was fully repaid in August 2022.

On December 2, 2021, UTime SZ entered into a working capital loan agreement with China Resources Bank of Zhuhai Co., Ltd., to borrow RMB2 million as working capital at an annual effective interest rate of 8.0%. The loan was repaid in October 2022.

In November 2021, UTime SZ entered into a credit agreement with PingAn Bank Co., Ltd. to borrow RMB2 million for a term of 3 years, with an annual effective rate of 12.96%. The loan is guaranteed by Mr. Bao and his spouse. As of March 31, 2023 UTime SZ obtained loans under the credit agreement at the total amount of RMB2 million which will be due on November 2023.

On November 24, 2022, UTime SZ entered into a working capital loan agreement with China Resources Bank of Zhuhai Co., Ltd., to borrow RMB22 million as working capital at an annual effective interest rate of 5.5%. The loan is secured by the office owned by UTime SZ and guaranteed by UTime GZ, Mr. Bao and his spouse. The loan will be due in November 2023.

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On December 5, 2022, UTime SZ entered into working capital loan agreements with China Resources Bank of Zhuhai Co., Ltd., to borrow RMB2 million as working capital at an annual effective interest rate of 8.0%. The loan will be due on October 25, 2023.

On August 31, 2022, UTime SZ entered into a credit line agreement with Shenzhen Nanshan Baosheng County Bank Co., Ltd. (“Baosheng County Bank”) according to which Baosheng County Bank agreed to provide UTime SZ with a credit facility of up to RMB3 million with a one-year term from August 31, 2022 to August 31, 2023. On August 31, 2022, UTime SZ entered into a working capital loan agreement with Baosheng County Bank to borrow RMB3 million as working capital for one year at an annual effective interest rate of 8.0%. It is payable at monthly installment of RMB0.1 million from September 2021 to August 2022, with a balloon payment of the remaining balance in the last installment. The loan is secured by the office owned by UTime SZ and guaranteed by UTime Guangxi, Mr. Bao and his spouse.

On May 19, 2022, UTime SZ entered into a credit line agreement with WeBank Co., Ltd. (“WeBank”) according to which WeBank agreed to provide UTime SZ with a credit facility of up to RMB1.99 million with a two-year term from May 19, 2022 to May 19, 2024, with an annual effective interest rate of 9.45%. The loan is guaranteed by Mr. Bao. As of March 31, 2023 UTime SZ loans under the credit agreement was RMB1.99 million.

On May 19, 2022, UTime SZ entered into a credit line agreement with WeBank Co., Ltd. (“WeBank”) according to which WeBank agreed to provide UTime SZ with a credit facility of up to RMB1 million with a two-year term from May 19, 2022 to May 19, 2024, with an annual effective interest rate of 9%. The loan is guaranteed by Mr. Bao. As of March 31, 2023 UTime SZ loans under the credit agreement was RMB1 million.

On May 18, 2022, UTime SZ entered into a credit line agreement with WeBank Co., Ltd. (“WeBank”) according to which WeBank agreed to provide UTime SZ with a credit facility of up to RMB3 million with a two-year term from May 18, 2022 to May 18, 2024, with an annual effective interest rate of 11.34%. The loan is guaranteed by Mr. Bao. As of March 31, 2023 UTime SZ loans under the credit agreement was RMB1.7 million.

On January 10, 2023, UTime SZ entered into a working capital loan agreement with China CITIC Bank, to borrow RMB 3 million as working capital at an annual effective interest rate of 4.35%. The loan will be due in January 2024.

On December 2, 2022, UTime SZ entered into a loan agreement with Industrial and Commercial Bank of China (“ICBC”), to borrow RMB 5 million as working capital at an annual effective interest rate of 3.75%. The loan will be due in 12 months.

On December 7, 2022, UTime SZ entered into a loan agreement with Industrial and Commercial Bank of China (“ICBC”), to borrow RMB 5 million as working capital at an annual effective interest rate of 3.75%. The loan will be due in 12 months.

On June 29, 2021, UTime SZ entered into a credit agreement with Shenzhen Rural Commercial Bank to borrow RMB7 million for a term of 3 years, which is payable at monthly installment of RMB0.07 million from August 2022 to July 2024, with a balloon payment of the remaining balance in the last installment. The loan bears a fixed interest rate of 4.5% per annum. The loan was secured by real estate owned by Mr. Bao and guaranteed by Mr. Bao. As of March 31, 2022 and 2023, the balance of the loan was RMB7 million and RMB6.4 million, respectively. Out of the total outstanding loan balance, current portion amounted were RMB0.56 million and RMB0.84 million, which is presented as current liabilities in the consolidated balance sheet and the remaining balance of RMB6.44 million and RMB5.53 million, which is presented as non-current liabilities in the consolidated balance sheet as of March 31, 2022 and 2023, respectively.

In July 2021, UTime SZ entered into a credit agreement with Shenzhen Rural Commercial Bank to borrow RMB2 million for a term of 3 years, which is payable at monthly installment of RMB0.02 million from July 2021 to July 2024, with a balloon payment of the remaining balance in the last installment. The loan is secured by real estate owned by Mr. Bao and guaranteed by Mr. Bao. As of March 31, 2022 and 2023, the balance of the loan are RMB1.82 million and RMB1.58 million, respectively. Out of the total outstanding loan balance, current portion amounted were RMB0.24 million and RMB0.24 million, which is presented as current liabilities in the consolidated balance sheet and the remaining balance of RMB1.58 million and RMB1.34 million, which is presented as non-current liabilities in the consolidated balance sheet as of March 31, 2022 and 2023, respectively.

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Contractual Obligations 

In December 2017, UTime SZ signed a property sale contract with Shenzhen Fumeibang Technology Co., Ltd (“Fumeibang”), previously known as “BuTa Entertainment” for selling office real estate in Nanshan District, Shenzhen, China for a cash price of RMB20.1 million (US$3.1 million). BuTa Entertainment agreed to lease the office estate back to the Company for a term of up to 3 years, with an annual rental payment of approximately RMB1.0 million (US$0.15 million). According the lease agreement, the eleven months from February 2018 to December 2018 is free of rental charge.

In September 2019, UTime SZ signed a lease agreement with Fumeibang for a term of one year, with an annual rental payment of approximately RMB1.0 million (US$0.15 million) and was most recently renewed on April 1, 2022.

On September 1, 2017, UTime GZ entered a lease agreement with Guizhou Jietongda Technology Co., Ltd. (“Jietongda”). Jietongda agreed to lease the factory building located in Xinpu District of Guizhou, China to UTime GZ, for a term of up to 4.5 years, with an annual rental payment of approximately RMB 4.2 million (US$0.6 million).

During the year ended March 31, 2020, UTime GZ entered into supplementary agreement with Jietongda and modified the original warehouse lease contract effective since September 1, 2017. Total lease amount reduced from RMB18.9 million (US$2.7 million) to RMB7.5 million (US$1.1 million) for the 4 years and 6 months’ lease period.

On September 1, 2017, UTime GZ entered into a lease agreement with Jietongda. Jietongda agreed to lease the equipment for processing mobile phones to UTime GZ, for a term of up to 5 years, with an annual rental payment of approximately RMB0.6 million (US$0.1 million).

In November 2021, UTime Guangxi entered into a Factory Lease Agreement to lease Factory for production from Nanning Industrial Investment Group Cp., Ltd, for a term of up to 5 years, with a monthly rental payment of RMB 384,853.8 (including 6 months rent-free period).

In March 2022, UTime Guangxi entered into a Lease Agreement to lease dormitory for staff from Nanning Industrial Investment Group Cp., Ltd, for a term from March 25, 2022 to March 31, 2027, with a monthly rental payment of RMB 30,706.06.

The following table sets forth our contractual obligations as of March 31, 2023, which included the lease and loan arrangement described above:

Payments due by period (in thousands)
Contractual obligations	Total		Less than 1 year		1-2 years		2-3 years		More than 3 years
Short term borrowings		53,935		53,935		-		-		-
Current portion of long-term borrowings		1,080		1,080		-		-		-
Long term borrowings		6,870		-		1,080		5,790		-
Operating lease payments		16,506		4,575		4,575		7,356		-
Total		78,391		59,590		5,655		13,146		-

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5C. Research and Development, Patents and Licenses, etc.

See the discussion under the headings “Research and Development” and “Intellectual Property” in Item 4 above.

5D. Trend Information

The factors that will most significantly affect results of operations will be (i) the industry outlook of cell phone and consumer electronics, (ii) the sustainability of our client source, (iii) the development and penetration of existing market and new market, (iv) the ability of our R&D capacity, and (v) the outbreak of coronavirus. Our revenues will be significantly impacted by the combination of the above factors discussed.

The global consumer electronics, network communication and other products have a shorter update cycle, which has brought huge market demand and is expected to maintain rapid development in the future. However, the shorter product update cycle and increasing market demand also strengthen the competition. Overall, demand of feature phones is decreasing and being replaced by smartphones while smartphones are upgraded faster and demand of them becomes more unstable.

OEM/ODM orders were our principal source of revenue, which contributed 99.4% and 99.99% to our revenue, for the fiscal years ended March 31, 2022 and 2023, respectively. Revenue from TCL Communication Limited accounted for 19.8% and 22.2% of total revenue, for the fiscal years ended March 31, 2022 and 2023, respectively. Sustaining the customer source may help us secure our OEM/ODM orders. We developed a few new customers in mainland China and Southeast Asia. We also developed business in Mexico and Africa. During the fiscal year ended March 31, 2022 and 2023, aggregate sales in Mexico, Japan and Africa contributed 13.9% and 42.2% of total revenue, respectively.

The implementation of our strategy in new markets depends on our R&D capacity in feature phones, smartphones and other consumer electronics considerably. If we had sufficient R&D capacity, we might have the opportunity to penetrate the existing market faster, retain more market shares and be able to develop another replicable market.

Although we intend to grow our in-house brands, it is expected that in the near term, both OEM/ODM orders and sale of our own in-house brand sales will be our principal sources of cash flow over the next two years. Cash flow from the OEM/ODM orders depends on the quantity and the price of the order, whereas cash flow from sale of in-house brand cell phone product depends on the quality of production and the profit obtained by the production. An increase in OEM/ODM orders or sale of in-house brand cell phone products will enable us to expand our operations with the increasing internally-generated funds and may allow us to obtain equity and debt financing more easily or on better terms, lessening the difficulty of obtaining financing.

A decline in sales (i) will reduce our internally-generated cash flow, which in turn will reduce the available funds for securing clients and developing existing markets, (ii) will increase the difficulty of obtaining equity and debt financing and worsen the terms on which such financing may be obtained, and (iii) will affect the activities of R&D which considerably determines our development in new products and new markets.

The continuing outbreak of the coronavirus in China and globally (i) could affect our production utilization and logistics, which could directly affect our timely delivery of our products and collection of cash flow, (ii) if outbreaks recur worldwide, the entire industry could be negatively affected, leading to a certain extent of shortages in supply that could eventually raise key components price overall. As a consequence, our production cost could increase whereas our profit could decrease.

A change of overall business environment in India (i) could affect our business stability by the unfavorable local policies, which could directly impact our local development, (ii) could lower growth expectation of the consumer electronic market that may force us to search and development other emerging markets with ideal growth potential.

Other than the foregoing, the management is unaware of any trends, events or uncertainties that will have, or are reasonably expected to have, a material impact on sales, revenues or expenses.

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5E. Critical Accounting Estimates

Management’s discussion and analysis of financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (US GAAP). The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expense during the reporting period.

We have identified the following accounting estimates and assumptions which involve significant subjectivity and judgment, and changes to such estimates or assumptions could have a material impact on our financial condition or operating results. Therefore, we consider an understanding of the variability and judgment required in making these estimates and assumptions to be critical in fully understanding and evaluating our reported financial results.

Allowances of Doubtful Accounts

Description: Accounts receivable and other receivables are reflected in our consolidated balance sheets at their estimated collectible amounts. A substantial majority of our accounts receivable are derived from sales to well-known technological clients. We follow the allowance method of recognizing uncollectible accounts receivable and other receivables, pursuant to which we regularly assess our ability to collect outstanding customer invoices and make estimates of the collectability of accounts receivable and other receivables. We provide an allowance for doubtful accounts when we determine that the collection of an outstanding customer receivable is not probable.

Judgments and Uncertainties: The allowance for doubtful accounts is reviewed on a timely basis to assess the adequacy of the allowance. We take into consideration (a) historical bad debts experience, (b) any circumstances of which we are aware of a customer’s or debtor’s inability to meet its financial obligations, (c) changes in our customer or debtor payment history, and (d) our judgments as to prevailing economic conditions in the industry and the impact of those conditions on our customers and debtors.

Sensitivity of Estimate to Change: The uncollectible amounts estimated are based on review on regular basis. If circumstances change, such that the financial conditions of our customers or debtors are adversely affected and they are unable to meet their financial obligations to us, we may need to record additional allowances, which would result in a reduction of our net income.

Impairment of Inventories

Description: Inventories of the Company consist of raw materials, finished goods and work in process. Inventories are stated at lower of cost or net realizable value with cost being determined on the weighted average method. Inventory is stated at cost unless an impairment exists, in which case it is written down to fair value in accordance with GAAP.

Judgments and Uncertainties: The Company assesses the valuation of inventory and periodically writes down the value for estimated excess and obsolete inventory based upon the product life-cycle. The market value of the inventories are estimated based on the current market situation and historical experience on similar inventories.

Sensitivity of Estimate to Change: Should the estimates or expectations used in determining estimated net realizable value deteriorate in the future, we may be required to recognize additional impairment charges and write-offs and such amounts could be material.

Impairment of long-lived assets

Description: We review the carrying value of long-lived assets to be held and used when events and circumstances warrants such a review. The carrying value of a long-lived asset is considered impaired when the anticipated undiscounted cash flow from such asset is separately identifiable and is less than its carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair market value of the long-lived asset.

Judgments and Uncertainties: Since the market value of the assets cannot be obtained reliably, we evaluate the impairment of the long-lived assets by comparing the carrying value of the assets to an estimate of future undiscounted cash flows expected to be generated from the use of the assets and their eventual disposition based on the historical trends and existing macroeconomic conditions.

Sensitivity of Estimate to Change: Should the estimates or expectations deteriorate in the future, we may be required to recognize additional impairment charges and write-offs and such amounts could be material.

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ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

6.A. Directors, Executive Officers and Key Employees

The following table sets forth the name, age, positions and a brief description of the business experience of each of our directors, executive officers and key employees as of the date hereof.

Name	Age	Position
Hengcong Qiu	38	Chief Executive Officer and Chairman of the Board of Directors
Minfei Bao	50	Director
Yihuang Chen	43	Chief Operating Officer
Honggang Cao	42	Chief Manufacturing Officer
Shibin Yu	39	Chief Financial Officer
Xiaoqian Jia	40	Independent Director and Chair of Nominating and Corporate Governance Committee
Na Cai	37	Independent Director and Chair of Audit Committee
Hailin Xie	43	Independent Director and Chair of Compensation Committee

There are no family relationships among our directors and officers. There are no arrangements or understandings with major shareholders, customers, suppliers or others, pursuant to which any person referred to above was selected as a director or member of senior management. The address of each of our directors and executive officers is c/o UTime Limited, 7th Floor, Building 5A, Shenzhen Software Industry Base, Nanshan District, Shenzhen, People’s Republic of China, 518061.

Executive Officers and Directors

Hengcong Qiu has been served as our Chief Executive Officer and Chairman of the Board of Directors since May 2023. Before joining our company, Mr. Qiu served as a Marketing VP of Shenzhen Radical Stone Weiye Fund Management Co., Ltd. between September 2020 to September 2021. He was responsible for the fund-raising business, sales management, branch and subsidiary management as well as partner institution management. Prior to that, Mr. Qiu served as a VP at Zhuhai Huiyin Chengyuan Investment Management Co., Ltd. from August 2017 until August 2020. He was responsible for fund raising business as well as client management. From June 2015 to July 2017, Mr. Qiu served as Sales Director at Shenzhen Radical Stone Weiye Fund Management Co., Ltd. From December 2011 to August 2015, Mr. Qiu served as a Department Manager in Everbright Bank. Mr. Qiu earned a bachelor’s degree in Guangdong University of Technology in China and is currently enrolled in EMBA program in Tsinghua University.

Minfei Bao is our founder and has served as our director since December 2019. Between December 2019 to May 2023, Mr. Bao was our Chief Executive Officer, and between October 2018 to May 2023, he served as our Chairman of the Board of Directors. Mr. Bao has also served as the Chief Executive Officer of UTime SZ since June 2008. From March 2006 to March 2008, Mr. Bao served as the general manager at United Creation Technology Co., Ltd., a mobile phone manufacturer (currently publicly traded on Chinese National Equities Exchange And Quotations Co., Ltd., or NEEQ). From March 1999 to March 2006, Mr. Bao served as Vice President at TCL Communication Technology Holdings Limited, a global mobile terminal manufacturer and internet service provider. From May 1997 to March 1999, Mr. Bao served as a manager in wireless technology application department at UTStarcom Incorporated, a global telecom infrastructure provider (NASDAQ: UTSI). Mr. Bao received a B.A. from the University of Electronic Science and Technology of China (UESTC). We believe Mr. Bao’s extensive experience qualifies him to serve on our board of directors.

Yihuang Chen has served as our Chief Operating Officer since December 2019 and has been the Senior Vice President of Product of UTime SZ since March 2015. From July 2011 to August 2015, Mr. Chen served as a Vice President of Product at Shenzhen Hongyu Technology Co., Ltd, an optical and optoelectronic materials provider. From April 2009 to June 2011, Mr. Chen served as a Vice President at Shenzhen Suopuxunda Technology Co., Ltd, a mobile terminal provider. From July 2008 to March 2009, Mr. Chen served as a Director of Product at Beijing Songliankate Co., Ltd. From July 2003 to June 2008, Mr. Chen served as a Senior Project Manager and Senior Structural Engineer at Amoi Technology Co., Ltd, a mobile terminal manufacturer and service provider (currently publicly traded on Shanghai Stock Exchange). Mr. Chen received a B.A. from the Guilin University of Technology.

Honggang Cao has served as our Chief Manufacturing Officer since December 2019 and has been the Senior Vice President of Manufacture of UTime SZ since December 2010. From December 2009 to 2010, Mr. Cao served as the Head of Quality Control and Procurement Manager at Shenzhen Geli Telecommunication Technology Co., Ltd. From September 2006 to August 2008, Mr. Cao served as the Head of Quality Control at United Creation Technology Co., Ltd, a mobile phone manufacturer (currently publicly traded on NEEQ). From July 2004 to August 2006, Mr. Cao served as a Quality Engineer at TCL Communication Technology Holdings Limited, a global mobile terminal manufacturer and internet service provider. Mr. Cao received a B.A. from the North University of China.

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Shibin Yu has served as our Chief Financial Officer since December 2019 and has been the financial manager and controller of UTime SZ since March 2019. From June 2017 to March 2019, Mr. Yu served as a senior associate at BDO China Shu Lun Pan Certified Public Accountants LLP. From November 2013 to April 2017, Mr. Yu served as the Taxation Supervisor at Edan Instruments, Inc, a Medical Electronic Equipment manufacturer (currently publicly traded on SZSE: 300326). From February 2012 to September 2013, Mr. Yu served as the Accounting Head at Shenzhen Dazu Photovoltaic Technology Co., Ltd, a photovoltaic equipment provider. Mr. Yu received a B.A. from Dezhou University. Mr. Yu is also qualified as a Certified Public Accountants in China and is a CFA Charterholder.

Xiaoqian Jia has served as our director since May 2023. Mr. Jia has been serving as Chief Executive Officer of CORNS (Singapore)’s Thailand Operation Center since 2022. From 2021 to 2022, Mr. Jia served as COO and operating director of YD PLASTICS. He formulated development and sales strategies, annual plans, and budgets for investment operations. Prior to YD PLASTICS, Mr. Jia served as CEO of Beijing Dynamic Future Technology Education Co. between 2020 and 2021. From 2016 to 2018, Mr. Jia served as Chief Operating Officer of Harbin Wright Brothers Flight Technology Co., Ltd. As COO, Mr. Jia assisted the technical research and development department to improve simulators. Mr. Jia also assisted in implementing product promotion and project implementation and completed the launch of 1000 simulation machines in the Chinese market. Mr. Jia earned a bachelor’s degree in Electronic Computer Communication Engineering from Nanyang Technological University and a master’s degree in Business Administration from University of Southampton. He is pursuing PhD degree of Business Administration in the Bangkokthonburi University.

Na Cai has over 10 years of financial and managerial experience in the technology and financial service industry and has served as our director since July 2023. Since 2015, Ms. Cai has served as a director of Bluestone Securities (HK) Co., Limited and the Chief Financial Officer of Bluestone International Holdings (HK) Co., Ltd. She was the Finance Manager at Shenzhen Qianhai Sanchuan Asset Management Co., Ltd. between 2013 and 2015. From 2011 to 2013, Ms. Cai served as the Finance Controller of Shenzhen Qingfengyuan Environmental Protection Technology Co., Ltd. During her tenure, Ms. Cai demonstrated leadership and experience in financial management, strategy development, and operations. Ms. Cai received her bachelor’s degree from Taishan Medical College, now known as Shandong First Medical University.

Hailin Xie, a director since July 2023, has over 20 years of business development and managerial experience in the healthcare industry. Since 2000, Mr. Xie has established several businesses in the healthcare industry that research, develop, and manufacture health supplements in China. Mr. Xie is the Chairman of Guangxi Fuxingyi Investment Group and the President of Guangxi God Fly Investment Group. Mr. Xie attended Guangxi University, where he majored in marketing.

Each of our directors will serve as a director until our next annual general meeting and until their successors are duly elected and qualified.

Board Diversity Matrix

The table below provides certain information regarding the diversity of our board of directors as of the date of this annual report.

Board Diversity Matrix
Country of Principal Executive Offices:	China
Foreign Private Issuer	Yes
Disclosure Prohibited under Home Country Law	No
Total Number of Directors	5
	Female	Male	Non-Binary	Did Not Disclose Gender
Part I: Gender Identity
Directors	1	4	-	-
Part II: Demographic Background
Underrepresented Individual in Home Country Jurisdiction	-
LGBTQ+	-
Did Not Disclose Demographic Background	-

6.B. Compensation

For the fiscal years ended March 31, 2023, we paid an aggregate of RMB0.8 million (approximately $0.1 million) to our executive officers, and we paid an aggregate of US$ 180,000 cash compensation to our non-executive directors. We have not set aside or accrued any amount to provide pension, retirement or other similar benefits to our directors and executive officers. Our PRC subsidiaries and consolidated variable interest entity are required by law to make contributions equal to certain percentages of each employee’s salary for his or her pension insurance, medical insurance, unemployment insurance and other statutory benefits and a housing provident fund.

Equity Awards

We have not granted any equity awards to our directors or executive officers during the fiscal year ended March 31, 2023.

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Employment Agreements

We have entered into employment agreements with each of our executive officers. Under these agreements, each of our executive officers is employed for an initial term of one year and is subject to successive, automatic one-year extensions unless either party gives notice of non-extension to the other party at least 30 days prior to the end of the applicable term.

The executive officers are entitled to a fixed salary and to participate in our equity incentive plans, if any and other company benefits, each as determined by the Board from time to time.

We may terminate the executive officer’s employment for cause, at any time, without notice or remuneration, for certain acts, such as conviction or plea of guilty to a felony or grossly negligent or dishonest acts to our detriment, or misconduct or a failure to perform agreed duties. In such case, the executive officer will not be entitled to receive payment of any severance benefits or other amounts by reason of the termination, and his right to all other benefits will terminate, except as required by any applicable law. We may also terminate his employment without cause upon 30 days’ advance written notice. In such case of termination by us, we are required to provide the following severance payments and benefits to the executive officer: a cash payment of one month of base salary as of the date of such termination for each year (which is any period longer than six months but no more than one year) and a cash payment of half month of base salary as of the date of such termination for any period of employment no more than six months, provided that the total severance payments shall not exceed twelve months of base salary.

The executive officer may terminate his employment at any time with 30 days’ advance written notice if there is any significant change in his duties and responsibilities or a material reduction in his annual salary. In such a case, the executive officer will be entitled to receive compensation equivalent to 3 months of his base salary. In addition, if we or our successor terminates the employment agreements upon a merger, consolidation, or transfer or sale of all or substantially all of our assets with or to any other individual(s) or entity, the executive officer shall be entitled to the following severance payments and benefits upon such termination: (1) a lump sum cash payment equal to 3 months of base salary at a rate equal to the greater of his annual salary in effect immediately prior to the termination, or his then current annua1 salary as of the date of such termination; (2) a lump sum cash payment equal to a pro-rated amount of target annual bonus for the year immediately preceding the termination; (3) payment of premiums for continued health benefits under our health plans for 3 months fo1lowing the termination; and (4) immediate vesting of 100% of the then-unvested portion of any outstanding equity awards held by the executive officer. The employment agreements also contain customary restrictive covenants relating to confidentiality, non-competition and non-solicitation, as well as indemnification of the executive officer against certain liabilities and expenses incurred by him in connection with claims made by reason of him being an officer of our company.

Director Agreements

In connection with the IPO, on April 5, 2021, the Company entered into director offer letters with David Bolocan, Lawrence G. Eckles and Mo Zou, respectively setting forth the terms and conditions of each of their service as independent directors to the Company. As such, effective April 5, 2021, the annual cash compensation for Mr. Bolocan, Mr. Eckles and Mr. Zou are $120,000, $100,000 and $100,000, respectively. Pursuant to the director offer letters, all or a portion of such fees may, in the sole discretion of the Board of Directors of the Company or a designated committee thereof, be paid in equity in lieu of cash; provided, that any such equity payments shall be made from the Company’s equity incentive plan.

On May 24, 2022, Mr. Eckles resigned from the Board of Directors, member of the Audit Committee and the Compensation Committee and Chairperson of the Nominating and Corporate Governance Committee of the Company due to his personal reasons. Mr. Eckles’ decision to resign did not arise or result from any disagreement with the Board or the Company on any matter relating to the Company’s operations, policies or practices.

Effective May 25, 2022, the Board appointed Weiyuan Wang to serve as a director on the Board, member of the Audit Committee and the Compensation Committee and Chairperson of the Nominating and Corporate Governance Committee to fill in the vacancy created by Mr. Eckles’ resignation until the Company’s next general meeting called for the election of directors. On May 27, 2022, the Company entered into a director offer letter with Mr. Wang pursuant to which Mr. Wang shall receive an annual compensation of $50,000.

On May 8, 2023, Mr. Min He and Mr. Weiyuan Wang resigned from the Board of Directors of the Company due to their personal reasons. Mr. He and Mr. Wang’s decisions to resign were not the result of any disagreement with the Company on any matter regarding its operation, policies (including accounting or financial policies) or practices.

Effective May 8, 2023, the Board appointed Hengcong Qiu and Xiaoqian Jia to serve as directors on the Board. The cash compensation for Mr. Qiu and Mr. Jia are approximately $435.60 (RMB 3,000) per person for each calendar year of service on a pro-rated basis which shall be paid on a quarterly basis in arrears plus reimbursement of reasonable pre-approved expenses in connection of performing their duties as the directors of the Company. All fees are subject to approval and/or change as deemed appropriate by the Board.

Effective June 11, 2023, the Board appointed Na Cai and Hailin Xie to serve as directors on the Board. The cash compensation for Ms. Cai and Mr. Xie are approximately $435.60 (RMB 3,000) per person for each calendar year of service on a pro-rated basis which shall be paid on a quarterly basis in arrears plus reimbursement of reasonable pre-approved expenses in connection of performing their duties as the directors of the Company. All fees are subject to approval and/or change as deemed appropriate by the Board.

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6.C. Board Practices

Terms of Directors and Officers

Expiration of Term of Directors

Our officers are appointed by and serve at the discretion of our board of directors and the shareholders voting by ordinary resolution. Our directors are not subject to a set term of office and hold office until the next general meeting called for the election of directors and until their successor is duly appointed or such time as they die, resign or are removed from office by a shareholders’ ordinary resolution. The office of a director will be vacated automatically if, among other things, the director resigns in writing, becomes bankrupt or makes any arrangement or composition with his/her creditors generally or is found to be or becomes of unsound mind.

Director Remuneration Upon Termination

The directors may receive such remuneration as our board of directors may determine from time to time. The compensation committee will assist the directors in reviewing and approving the compensation structure for the directors. Currently, our directors are not entitled to receive any remuneration upon termination of employment.

Audit Committee

Our board of directors consists of five directors, including two executive directors and three independent directors. We have also established an Audit Committee, a Nominating and Corporate Governance Committee and a Compensation Committee. We have adopted a charter for each of the three committees. Each of the committees of our board of directors has the composition and responsibilities described below.

Na Cai, Xiaoqian Jia and Hailin Xie serve as members of our Audit Committee. Ms. Na Cai serves as the chairman of the Audit Committee. Each of our Audit Committee members satisfies the “independence” requirements of the Nasdaq listing rules and meet the independence standards under Rule 10A-3 under the Exchange Act. We have determined that Na Cai possesses accounting or related financial management experience that qualifies him as an “audit committee financial expert” as defined by the rules and regulations of the SEC. Our Audit Committee oversees our accounting and financial reporting processes and the audits of our financial statements. Our Audit Committee performs several functions, including:

● selecting the independent registered public accounting firm and pre-approving all auditing and non-auditing services permitted to be performed by the independent registered public accounting firm;

● reviewing with the independent registered public accounting firm any audit problems or difficulties and management’s response;

● reviewing and approving all proposed related party transactions, as defined in Item 404 of Regulation S-K under the Securities Act;

● discussing the annual audited financial statements with management and the independent registered public accounting firm;

● reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any special steps taken to monitor and control major financial risk exposures;

● annually reviewing and reassessing the adequacy of our audit committee charter;

● meeting separately and periodically with management and the independent registered public accounting firm;

● monitoring compliance with our code of ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance; and

● reporting regularly to the board.

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Compensation Committee

Na Cai, Xiaoqian Jia and Hailin Xie serve as members of our Compensation Committee. Mr. Hailin Xie serves as the chair of the Compensation Committee. All of our Compensation Committee members satisfy the “independence” requirements of the Nasdaq listing rules and meet the independence standards under Rule 10A-3 under the Exchange Act. Our Compensation Committee is responsible for overseeing and making recommendations to our board of our directors regarding the salaries and other compensation of our executive officers and general employees and providing assistance and recommendations with respect to our compensation policies and practices.

Nominating and Corporate Governance Committee

Na Cai, Xiaoqian Jia and Hailin Xie serve as members of our Nominating and Corporate Governance Committee. Mr. Xiaoqian Jia serves as the chair of the Nominating and Corporate Governance Committee. All of our Nominating and Corporate Governance Committee members satisfy the “independence” requirements of the Nasdaq listing rules and meet the independence standards under Rule 10A-3 under the Exchange Act. Our Nominating and Corporate Governance Committee is responsible for identifying and proposing new potential director nominees to the board of directors for consideration and reviewing our corporate governance policies.

6.D. Employees

See the section entitled “Employees” in Item 4.B above.

6.E. Share Ownership

As of August 15, 2022, 8,267,793 of our ordinary shares were outstanding. Holders of our ordinary shares are entitled to vote together as a single class on all matters submitted to shareholders for approval. No holder of ordinary shares has different voting rights from any other holders of ordinary shares. We are not aware of any arrangement that may, at a subsequent date, result in a change of control of the Company.

Beneficial ownership is determined in accordance with the rules and regulations of the SEC. The percentages of shares beneficially owned in the table below are based on 13,567,793 ordinary shares outstanding as of August 8, 2023.

The following table sets forth information with respect to the beneficial ownership of our common shares as of August 8, 2023 by:

● each of our directors and executive officers; and

● each person known to us to beneficially own more than 5% of our outstanding ordinary shares.

Unless otherwise noted below, the address for each listed shareholder, director or executive officer is 7th Floor, Building 5A, Shenzhen Software Industry Base, Nanshan District, Shenzhen, People’s Republic of China, 518061.

	Ordinary shares beneficially owned
Name	Number		%
Directors and Executive Officers(1):
Hengcong Qiu		-		-
Minfei Bao		4,380,000		32.28	%
Yihuang Chen		-		-	%
Honggang Cao		-		-	%
Shibin Yu		-		-
Xiaoqian Jia		-		-
Na Cai		-		-
Hailin Xie		-		-
All directors and executive officers as a group (eight persons)		4,380,000		32.28	%
Principal Shareholders:
Grandsky Phoenix Limited		4,380,000		32.28	%

(1) Unless otherwise noted, the business address of each of the following entities or individuals is 7th Floor, Building 5A, Shenzhen Software Industry Base, Nanshan District, Shenzhen, People’s Republic of China, 518061.

None of our major shareholders have differing voting rights, and as of the date of this annual report, none of our outstanding ordinary shares are held by record holders in the United States. We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our company.

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Incentive Compensation

On June 29, 2022, our Board of Directors approved the UTime Limited 2022 Performance Incentive Plan (the “Plan”), which allows for issuance of an aggregate of 10,000,000 ordinary shares to an Eligible Person (as defined in the Plan), including an employee, a director or an individual consultant or advisor rendering bona fide services to the Company.

On June 29, 2022, we registered the aggregate of 10,000,000 ordinary shares, par value US$0.0001 per share under the registration statement on Form S-8 filed with the SEC on June 29, 2022, which are reserved for issuance under the Plan. We have not granted any shares as of the date of this report.

On November 7, 2022, we issued the aggregate of 5,300,000 ordinary shares, par value US$0.0001 per share under the UTime Limited 2022 Performance Incentive Plan (the “Plan”).

The following is a summary of the principal terms of the Plan.

● Purpose of Plan

The purpose of the Plan is to promote the success of the Company and to increase shareholder value by providing an additional means through the grant of awards to attract, motivate, retain and reward selected employees and other eligible persons and to enhance the alignment of the interests of the selected participants with the interests of the Company’s shareholders.

● Eligibility and Plan Administration

Employees or directors or consultants or advisors may be determined as Eligible Persons and be granted awards under the Plan. The Board or committees established by the Board will administer the Plan as Administrator.

● Ordinary Shares Subject to The Plan; Share Limits

The shares that may be issued under this Plan shall be the Company’s authorized but unissued Ordinary Shares and any Ordinary Shares held as treasury shares. The maximum number of Ordinary Shares that may be issued pursuant to awards granted to each Eligible Person under this Plan is equal to 1,000,000 Ordinary Shares; the maximum number of Ordinary Shares that may be issued under this Plan is 10,000,000 Ordinary Shares.

● Awards

The types of awards that may be granted under this Plan are (i) Share Options, the grant of a right to purchase a specified number of Ordinary Shares during a specified period as determined by the Administrator; (ii) Share Appreciation Rights (“SAR”), a right to receive a payment, in cash and/or Ordinary Shares, equal to the excess of the fair market value of a specified number of Ordinary Shares on the date the SAR is exercised over the “base price” of the award, which base price shall be determined by the Administrator and set forth in the applicable award agreement; (iii) other awards, including restricted shares, restricted share units, and dividend equivalent rights.

● Effective Date, Termination and Suspension, Amendments

Unless earlier terminated by the Board, this Plan shall terminate at the close of business on the day before the tenth anniversary of the Effective Date. After the termination of this Plan, no additional awards may be granted under this Plan, but previously granted awards shall remain outstanding in accordance with their applicable terms and conditions and the terms and conditions of this Plan. The Board may, at any time, terminate or, from time to time, amend, modify or suspend this Plan, in whole or in part. No awards may be granted during any period that the Board suspends this Plan.

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ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

7.A. Major Shareholders

See Item 6.E., “Share Ownership,” for a description of our major shareholders.

7.B. Related Party Transactions

Set forth below are the related party transactions of our company that occurred since the beginning of the last fiscal year up to the date of this report. The transactions are identified in accordance with the rules prescribed under Form 20-F and may not be considered as related party transactions under PRC law.

Amounts due from/to Philectronics Inc. (“Philectronics”)

As of the date of this annual report, the amount due from Philectronics was RMB0.5 million (US$0.1 million). As of the date of this annual report, the amount due to Philectronics was RMB0.5 million (US$0.1 million).

Due from Related Parties

As of March 31, 2022, the Company had amounts due from Mr. Bao of RMB0.05 million (US$0.01 million). which was received by the Company on August 15, 2022. As of the date of this annual report, the Company had no amounts due from Mr. Bao.

As of March 31, 2022, the Company had amounts due from Grandsky Phoenix Limited of RMB0.9 million (US$0.1 million), which was received by the Company on August 26, 2022. As of the date of this annual report, the Company had no amounts due from Grandsky Phoenix Limited.

Due to Related Parties

As of March 31, 2023, the Company had amounts due to Mr. Bao of RMB4.8 million (US$0.7 million). In April and May 2020, Mr. Bao provided loans of RMB0.9 million (US$0.1 million) to the Company and the Company paid RMB1.5 million (US$0.2 million) to Mr. Bao. On September 17, 2021, Mr. Bao entered into a loan agreement with China Resources Bank of Zhuhai Co., Ltd. and borrowed RMB3.0 million (US$0.5 million). The loan is restricted on purpose only to support daily operation for the Companies that is controlled by Mr. Bao. The loan was repaid on March 17, 2022 and the agreement was renewed on March 18, 2022. On September 19, 2022, this loan was repaid and renewed, total loan amount was reduced to RMB 2.0 million (US$0.3 million). As of the date of this annual report, the Company has amounts due to Mr. Bao of RMB4.8 million (US$0.7 million).

Loans from Mr. Bao

As of March 31, 2023, a loan balance of RMB2.0 million (US$0.3 million) was included in the total amounts due to Mr. Bao. See “Due to Related Parties” above.

Variable Interest Entity Arrangements

See “History and Corporate Structure - Contractual Arrangements with the VIE and its Respective Shareholders.”

Share Issuances

In April 2020, we repurchased 7,620,000 and 239,721 ordinary shares, which were subsequently cancelled, at par value from our shareholders Grandsky Phoenix Limited and HMercury Capital Limited, respectively, pursuant to a share repurchase agreement that the Company entered into with Grandsky Phoenix Limited and HMercury Capital Limited on April 29, 2020. Both Grandsky Phoenix Limited and HMercury Capital Limited confirmed that they have opted not to receive the consideration for the Repurchased Shares and made a pure capital contribution in the sum of the purchase price in favor of the Company without the issue of additional shares of the Company. In April 2021, we completed our initial public offering of 3,750,000 ordinary shares. On November 7, 2022, we issued the aggregate of 5,300,000 ordinary shares, par value US$0.0001 per share under the UTime Limited 2022 Performance Incentive Plan (the “Plan”). As a result, Mr. Bao, through Grandsky Phoenix Limited, and Mr. He, through HMercury Capital Limited, own 4,380,000 ordinary shares, representing 32.28% of equity interest and 137,793 ordinary shares, representing 1.02% of equity interest of the Company, respectively, as of the date of this annual report.

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7.C. Interests of Experts and Counsel

Not applicable.

ITEM 8. FINANCIAL INFORMATION

8.A. Consolidated Statements and Other Financial Information

The financial statements required by this item may be found at the end of this report on 20-F, beginning on page F-1.

Legal Proceedings 

We are subject to legal proceedings and claims that have not been fully resolved and that have arisen in the ordinary course of business. Except as described below, there was not at least a reasonable possibility the Company may have incurred a material loss, or a material loss in excess of a recorded accrual, with respect to loss contingencies for asserted legal and other claims.

On September 17, 2018, Mr. Wukai Song, the majority shareholder in Bridgetime filed a complaint with THE NCLT against Ms. Grover and Mr. Li, the directors of Do Mobile at the time, alleging mismanagement of corporate affairs, embezzlement of funds and absenting themselves from the management of Do Mobile. Further, Mr. Wukai Song sought the following relief from the NCLT:

● prevent Ms. Grover and Mr. Li from exercising any of their powers as directors of Do Mobile;

● restrain Ms. Grover and Mr. Li from operating the bank account of Do Mobile and restraining DBS Bank from acting on the instructions of Ms. Ekta Grover and Mr. Yunchuan Li;

● permit the company secretary of Do Mobile to carry out the daily affairs of Do Mobile which are ordinarily carried out by the directors of a company, until a new board of directors of Do Mobile is constituted and to file an application seeking extension of the date for holding an annual general meeting beyond September 30, 2018;

● appoint Mr. Amit Kumar and Mr. Chen Huiyun as interim directors of Do Mobile; and

● direct Ms. Grover and Mr. Li, directors of Do Mobile, to hand over all documents and material related to Do Mobile in their possession, back to Do Mobile and sign all statutory documents and filings to be made for the time period when they were acting as directors of Do Mobile.

On November 16, 2018 and November 15, 2018, Ms. Grover and Mr. Li, respectively, filed an answer with the NCLT. Further, on November 17, 2018, Mr. Wukai Song filed an application for interim relief seeking removal of Ms. Grover and Mr. Li from the board of directors of Do Mobile.

On September 30, 2019, the NCLT issued its interim order which allowed Mr. Wukai Song to carry-out certain statutory compliances of Do Mobile, and the NCLT has also directed Ms. Grover, director of Do Mobile, to handover the digital signature of directors to Mr. Wukai Song for carrying-out said statutory compliances and undertaking its business pending resolution of the litigation.

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Since the litigation involves Ms. Ekta Grover and Mr. Li, who were the directors of Do Mobile and who resigned on December 24, 2020 and March 3, 2021 respectively, such directors could no longer attend to the affairs of Do Mobile. As a result, Do Mobile did not have an effective board for some time and faced significant challenges in its daily operation. For instance, Do Mobile was unable to undertake certain corporate actions, such as: (a) convening and holding board meetings of Do Mobile as mandatorily required under the provisions of the Companies Act, 2013 every year; (b) convening an annual general meeting where among other things, the Do Mobile shareholders approve and adopt the financial statements of Do Mobile as required under the Companies Act, 2013; (c) reporting annual compliances with the provisions of the Companies Act, 2013 through various e-forms with the office of the Registrar of Companies, Ministry of Corporate Affairs; (d) submitting an annual report titled ‘Foreign Liabilities and Assets’ each year as required by companies receiving foreign direct investment and other related compliances under Foreign Exchange Management Act, 1999; and (e) maintenance of statutory registers as required under various applicable laws.

Do Mobile was also made a party to two other matters initiated in connection with the aforesaid matter before the NCLT. These matters, which were filed at Tis Hazari court (district court) in Delhi, India were (i) Do Mobile Pvt. Ltd. v. DBS Bank Ltd. (civil suit no. 813/2019); and (ii) Ekta Grover v. Do Mobile India Pvt. Ltd. (civil suit no. 917/2019).

The above-mentioned instances of non-compliance expose Do Mobile to potential fines and penalties. Do Mobile directors and officers may also be prosecuted for such non-compliance under the official-in-default doctrine in the Companies Act, 2013, should they fail to undertake their statutory duties to act in the best interest of Do Mobile.

The litigation against Ekta Grover and Yunchuan Li is still pending before Delhi Bench of the NCLT and the last date of hearing in this matter was on September 23, 2021. However, the matter could not be taken up on the designated date and has been postponed. The next date of hearing is yet to be announced. Do Mobile is awaiting intimation regarding the revised date of hearing in this matter. In order to amicably settle such ongoing litigations between Do Mobile and its directors, Do Mobile and Ms. Grover have entered into a settlement agreement, dated January 16, 2020 (“Settlement Agreement”). In terms of the Settlement Agreement, Do Mobile and Ms. Grover have arrived at the following understanding:

● Ms. Grover has agreed to withdraw the litigation initiated by her against Do Mobile at the Tis Hazari court. She has also agreed not to file any claim before any tribunal or court against Do Mobile and its officers in future. In furtherance of the aforesaid, Ms. Grover has filed a withdrawal application in relation to the matter of Ekta Grover v. Do Mobile India Pvt. Ltd. (civil suit no. 917/2019) before Tis Hazari Court, New Delhi, India, consequent to which the said matter has been disposed-off as settled/ withdrawn by the Tis Hazari Court, Delhi, India vide its order dated February 23, 2021.

● Do Mobile has agreed to withdraw the name of Ms. Grover from the on-going litigation before the NCLT by filing a withdrawal application before NCLT. Do Mobile has also agreed that it will not file any claim against Ms. Grover pursuant to her resignation from the board of directors of Do Mobile. Mr. Wukai Song (through his authorized representative) on January 21, 2021, filed a withdrawal application before the NCLT requesting it to permit unconditional withdrawal of the petition filed by him against Ms. Grover and Mr. Li in their capacity as the directors of Do Mobile due to his inability to pursue the matter in light of the restrictions imposed due to the COVID-19 pandemic. However, the NCLT is yet to pass an order allowing the application and the requested withdrawal of the petition.

● In consideration of the settlement so arrived, Do Mobile has issued a post-dated cheque dated April 10, 2020 for INR 5,00,000/- (Indian Rupees Five Lakhs Only) to Ms. Grover towards her full and final settlement of all claims against Do Mobile. However, this cheque could not be en-cashed due to the lockdown. Consequently, Do Mobile issued another cheque for the same amount dated January 10, 2021 which has been en-cashed by Ms. Ekta Grover.

● Ms. Grover also agreed to cooperate in appointment of new directors of Do Mobile as recommended by Do Mobile.

● Do Mobile also agreed to change its registered office, which was situated at 3A/41, First Floor, WEA, Sat Nagar, Karol Bagh, New Delhi, India, to another location. The registered office of Do Mobile is now located at House No. 25, Street No. 7, Goyala Vihar, Near Saint Thomas School, New Delhi - 110071. Necessary filings with the jurisdictional Registrar of Companies have been made in this regard by Do Mobile.

The matter of Do Mobile Pvt. Ltd. v. DBS Bank Ltd. (civil suit no. 813/2019) was initiated by Mr. Li in the Tis Hazari district court to seek revival of the authority granted to him and Ms. Grover to operate the bank account of Do Mobile. Since the dispute regarding the powers of Mr. Li and Ms. Grover was pending before the NCLT, the district court refused to grant any interim relief to the then directors of Do Mobile. An application seeking withdrawal of the matter was filed by Do Mobile on April 1, 2021. The court vide its order dated June 3, 2022 has allowed the application requesting withdrawal of the suit and the matter stands dismissed.

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Pursuant to the commencement of the litigation against Do Mobile, all major decisions for Do Mobile have been made by the Company’s group headquarters in Shenzhen, China. Such decisions include those relating to the type and quantum of products to be released in the market. Furthermore, all sales are being made and the marketing strategy for Do Mobile is also presently being formulated from the corporate headquarter in Shenzhen, China. However, Do Mobile is making its own decisions relating to customer acquisition, recruitment of sales forces and office administration.

In order to avoid operational challenges in Do Mobile on account of on-going litigation at the NCLT, the Company has nominated the following persons to manage the daily operations of Do Mobile:

● Andy Liu, Vice President of Overseas Department at UTime SZ, managed daily external affairs related to clients, vendors, products, sales & purchase, marketing, business development, etc. from October 2019 until his resignation in August 2020. Since Mr. Liu’s resignation, Mr. Wukai Song has been managing these affairs at Do Mobile.

● Wukai Song manages daily internal affairs related to finance, human resource, office administration, etc.

● Do Mobile has also appointed another officer in India, Tarun Garg, to manage the banking and accounting operations of Do Mobile, as its Finance Head of Do Mobile with effect from June 1, 2020. He is working in close coordination with Shibin Yu, Chief Financial Officer of the Company, and Wendy Long, an accountant from corporate headquarters in Shenzhen, China. In addition to this, Tarun Garg is also assisting Wukai Song in relation to day-to-day operations of the Do Mobile in India.

In order to avoid operational challenges due to the on-going litigation in the NCLT, effective December 18, 2020, Do Mobile, at that point in time, appointed two new directors on its board namely, Mr. Wukai Song and Ms. Aayushi Gautam. Further, Ms. Grover and Mr. Li both resigned from their directorship in Do Mobile with effect from December 24, 2020 and March 3, 2021 respectively. Do Mobile appointed Mr. Tarun Garg as an additional director on its board with effect from August 09, 2022. Thereafter, Ms. Aayushi Gautam resigned from the directorship in Do Mobile with effect from September 10, 2022. At present, the board of Do Mobile consists of two directors, namely Mr. Wukai Song and Mr. Tarun Garg. Further, one share of Do Mobile which was held by Ms. Grover has been transferred to Ms. Aayushi Gautam before resignation by Ms. Grover. Pursuant to this transfer, Ms. Aayushi Gautam is the registered owner of the said share while Bridgetime Limited continues to be its beneficial owner. Do Mobile has also appointed Mr. Tarun Garg as its Finance Head, effective in June 1, 2020. As a result of the constitution of a new board of directors, Do Mobile has been able to overcome its operational challenges.

Regarding the construction contract dispute between UTime GZ and Guizhou Branch of Guangdong Jian ‘an Fire Electromechanical Engineering Co., Ltd (“Guangdong Jian ‘an”), on December 1, 2021, the People’s Court of Honghuagang District of Zunyi City, Guizhou Province (“Honghuagang Court”) issued the civil judgment (No. (2021) Qian 0302 Min Chu 20364 ), ruling that the defendant UTime GZ shall pay the amount of RMB 2,230,293.46 to the plaintiff Guangdong Jian ‘an within 10 days from the effective date of the judgment. On December 24, 2021, Utime GZ has appealed to the Intermediate People’s Court of Zunyi City, Guizhou Province (Zunyi Intermediate Court). On April 25, 2022, the Intermediate People’s Court of Zunyi City issued a civil ruling (No. (2022) Qian 03 Min Zhong 642). The Zunyi Intermediate Court held that the facts determined in the first instance were basically unclear and ruled to revoke the civil judgment of No. (2021) Qian 0302 Min Chu 20364. The case was remanded to the Honghuagang Court for retrial. On December 22, 2022, Honghuagang Court issued the civil judgment (No. (2022) Qian 0302 Min Chu 9108) after retrial, ruling that UTime GZ shall pay the amount of RMB 2,230,293.46 to the plaintiff Guangdong Jian’an within 10 days from the effective date of the judgment. Utime GZ has appealed to Zunyi Intermediate Court. On April 26, 2023, the Zunyi Intermediate Court issued a civil ruling (No. (2023) Qian 03 Min Zhong No. 671). The Zunyi Intermediate Court rejected the appeal and upheld the original judgment. On May 29, 2023, Guangdong Jian’an, Utime GZ, Jietongda and Utime SZ entered into the Implementation of Settlement Agreement based on the civil judgment (No. (2022) Qian 0302 Minchu 9108), with Utime SZ as the guarantor. According to the Implementation of Settlement Agreement, with regard to the payment of RMB 223,0293.46 and the first instance case acceptance fee of RMB 25,440, starting from June 2023, Utime GZ and Jietongda promise to pay RMB 300,000 Guangdong Jian’an before the end of each month (“Settlement Payment”), and complete the above payment before the end of January 2024. If either Utime SZ and Jietongda fails to make payment in accordance with this agreement, Guangdong Jian’an has the right to resume enforcement of all outstanding payments. As of the date of this annual report, the Settlement Payment has been being paid by Jietongda.

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Utime SZ and Dongguan Qinling Electronic Technology Co., Ltd (“Dongguan Qinling”) had a sales contract dispute case. On September 29, 2020, People’s Court of Futian District of Shenzhen, Guangdong Province (“Futian Court”) issued the civil judgment (No.（2019）Yue 0304 Min Chu 51640), ruling that the defendant Dongguan Qinling should return the loan amount of RMB 300,000 and pay relevant interest to the plaintiff Utime SZ within 10 days from the effective date of the judgment. As of the date of this annual report, Dongguan Qinling has not actually performed the judgment, and has not paid any payment and interest to Utime SZ. Furthermore, the business license of Dongguan Qinling has been revoked, and it is unlikely for Dongguan Qinling to perform this judgment as of the date of this annual report.

Besides, there is a case for sales contract dispute between Utime SZ and Jiangsu Jutai Technology Co., Ltd (“Jiangsu Jutai”). On July 27, 2022, Futian Court issued the civil judgment (No. (2021) Yue 0304 Min Chu 41025), ruling that 1) confirming that the “Procurement Framework Contract” (Contract No. CG20201231001) and “Purchase Order Contract” (Order No. SUTPOORD2020121921045) signed between the plaintiff UTime SZ and the defendant Jiangsu Jutai were terminated on March 12, 2021; 2) The defendant Jiangsu Jutai shall compensate the plaintiff UTime SZ with a loss of RMB 239,547 within ten days from the effective date of the judgment; 3) The defendant Jiangsu Jutai shall pay a guarantee fee of RMB 700 and a lawyer’s fee of RMB 30,000 to the plaintiff UTime SZ within ten days from the effective date of the judgment. On June 28, 2023, UTime SZ and Jiangsu Jutai entered into a Settlement Agreement based on the civil judgment (No. (2021)Yue 0304 Min Chu 41025). According to the Settlement Agreement, Jiangsu Jutai shall pay the full amount of the judgment amount of RMB 243,222.3 (calculated at 90% of the judgment amount, “Settlement Amount”) to UTime SZ in a lump sum before June 30, 2023. Jiangsu Jutai paid the Settlement Amount to UTime SZ on June 30, 2023.

Utime SZ and Shenzhen Wanhua Supply Chain Co., Ltd (“Shenzhen Wanhua”) had a entrustment agreement contract dispute case. On March 31, 2023, People’s Court of Shenzhen Qianhai Cooperation Zone, Guangdong Province issued the civil judgment ((No. (2023) Yue 0391 Min Chu 762), ruling that 1) the defendant Shenzhen Wanhua shall pay the plaintiff UTime SZ USD 76,639.91 within seven days from the effective date of the judgment; 2) the defendant Shenzhen Wanhua shall compensate the plaintiff UTime SZ for the overdue payment loss within seven days from the effective date of the judgment (the calculation method for the overdue payment loss is based on USD 76,639.91 , and from December 14, 2022, it shall be paid according to the same period US dollar loan interest rate standard of Bank of China until the actual settlement date). As of the date of this annual report, Shenzhen Wanhua has not actually performed the judgment, and has not paid any payment and interest to Utime SZ.

UTime SZ and Shenzhen Zhonghang Jiayikang Electronics Co., Ltd(“Jiayikang”) had a sales contract dispute. Jiayikang, which was heard by Futian Court on May 6, 2023. Jiayikang requests the judgment to 1) order the defendant UTime SZ to repay the outstanding payment to the plaintiff Jiayikang, totaling RMB 2,224,638.78; 2) order to calculate the loss of overdue payment from March 1, 2020 to the date when the principal of the loan has been fully repaid, with RMB 2,224,638.78 as the base number and 50% higher than the standard of one-year loan market quotation rate published by the National Interbank lending market Center authorized by the People’s Bank of China: the current loss of overdue payment is temporarily calculated to be RMB 354,736.94 by December 15, 2022. As of the date of this annual report, the judgment of the first instance of this case has not been issued.

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The outcome of litigation is inherently uncertain. If one or more legal matters were resolved against us in a reporting period for amounts in excess of management’s expectations, our financial condition and operating results for that reporting period could be materially adversely affected. Refer to the risk factor “We could be impacted by unfavorable results of legal proceedings, and may, from time to time, be involved in future litigation in which substantial monetary damages are sought.”

Dividends

We have never declared or paid any dividend on our ordinary shares and we do not anticipate paying any dividends on our ordinary shares in the future. We currently intend to retain all future earnings to finance our operations and to expand our business.

8.B. Significant Changes

No significant changes to our financial condition have occurred since the date of the annual financial statements contained herein.

ITEM 9. THE OFFER AND LISTING

9.A. Offer and Listing Details

Our ordinary shares are listed for trading on the NASDAQ Capital Market under the symbol “UTME.” The shares began trading on April 5, 2021 on the NASDAQ Capital Market. The closing price for the ordinary shares was $1.74 on August 11, 2022.

9.B. Plan of Distribution

Not Applicable.

9.C. Markets

Our ordinary shares are currently traded on the NASDAQ Capital Market.

9.D. Selling Shareholders

Not Applicable.

9.E. Dilution

Not Applicable.

9.F. Expenses of the Issuer

Not Applicable.

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ITEM 10. ADDITIONAL INFORMATION

10.A. Share Capital

Not Applicable.

10.B. Memorandum and Articles of Association

We are a Cayman Islands company and our affairs are governed by our amended and restated memorandum and articles of association and the Companies Act (As Revised) of the Cayman Islands, which we refer to as the Companies Act below.

Our authorized share capital consists of 140,000,000 ordinary shares, par value $0.0001 per share, and 10,000,000 preference shares, par value $0.0001 per share. As of the date of this annual report, 8,267,793 ordinary shares were issued and outstanding and no preference shares were issued and outstanding.

Share Rights

Without prejudice to any rights attached to any existing ordinary shares or class of shares, any share may be issued with such preferred, deferred or other special rights or subject to such restrictions as our board of directors shall determine. We may issue redeemable shares.

Our memorandum and articles of association provide that, subject to Cayman Islands law, all or any of the special rights for the time being attached to the shares or any class of shares may, unless otherwise provided by the terms of issue of the shares of that class, from time to time be varied, modified or abrogated with the sanction of a special resolution passed at a separate general meeting of the holders of the shares of that class.

Voting Rights

A quorum required for a meeting of shareholders consists of two or more holders of shares together holding (or representing by proxy) not less than an aggregate of a majority of the total voting power of all shares in issue and entitled to vote present in person or by proxy or, if a corporation or other non-natural person, by its duly authorized representative. If a quorum is not present within half an hour from the time appointed for a general meeting to commence or if during such a general meeting a quorum ceases to be present, the meeting, if convened upon a shareholders’ requisition, shall be dissolved and in any other case it shall stand adjourned to the same day in the next week at the same time and/or place or to such other day, time and/or place as our board of directors may determine, and if at the adjourned meeting a quorum is not present within half an hour from the time appointed for the meeting to commence, the shareholders present shall be a quorum.

Voting at meetings takes place by show of hands or by a poll of shares represented at the meeting. Subject to any special rights or restrictions attached to a class of shares, a shareholder present in person (or if an entity, present by a duly authorized representative, which is deemed equivalent to being present in person and is referred to as such hereafter) or by proxy is entitled to one vote on a show of hands regardless of the number of shares held, provided that where more than one proxy is appointed by a shareholder that is a clearing house or central depository house (or its nominee(s)), each such proxy shall have one vote on a show of hands. On a poll every shareholder present in person or by proxy shall have one vote for every fully paid share held.

Voting will be by show of hands unless (before or on the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll) a poll is demanded by: the chairman of the meeting or a shareholder or shareholders present in person or by proxy and representing not less than one-tenth of the total voting rights of all shareholders having the right to vote at the meeting.

An ordinary resolution to be passed by the shareholders requires a simple majority of votes cast in a general meeting, while a special resolution requires no less than two-thirds of the votes cast. A special resolution is required for important matters such as a change of name. Our shareholders may effect certain changes by ordinary resolution, including increasing the amount of our authorized share capital, consolidating and dividing all or any of our share capital into shares of larger amounts than our existing shares and cancelling any shares. As described below, some types of corporate actions may be approved only by special resolution.

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Dividends and Other Distributions; Liquidation Rights

Subject to the capital maintenance provisions of the Companies Act, which, inter alia, permit distributions to be made only out of profits available for the purpose or from share premium, the directors may declare and pay dividends and other distributions out of the funds of the Company available therefor. The Companies Act prohibits the payment of any dividend if payment would cause us to be unable to pay our debts as they fall due in the ordinary course of business. Only our board of directors may declare dividends and, except as otherwise provided by the rights attached to a particular class of shares, all dividends shall be declared and paid pro rata according to the amounts paid up on the ordinary shares on which the dividend is paid.

Except as provided by the rights and restrictions attached to any class of ordinary shares, under general law, the holders of our shares will be entitled to participate in any surplus assets in a winding up in proportion to their shareholdings. A liquidator may, with the sanction of a special resolution and any other sanction required by the Companies Act, divide among the members in specie the whole or any part of our assets and may, for that purpose, value any assets and determine how the division shall be carried out as between the members or different classes of members.

Variations of Rights of Shares

All or any of the special rights attached to any class of shares may, subject to the provisions of the Companies Act, be varied either with the consent in writing of the holders of not less than two thirds of the issued shares of that class or with the approval of a resolution passed by a majority of not less than two thirds of the votes cast at a separate meeting of the holders of the shares of that class. The rights conferred upon the holders of the shares of any class issued with preferred or other rights shall not, subject to any rights or restrictions for the time being attached to the shares of that class, be deemed to be materially adversely varied by, inter alia, the creation, allotment or issue of further shares ranking pari passu with or subsequent to them, the creation, allotment or issuance of further shares (whether ranking in priority to, pari passu or subsequent to them) pursuant to the board of director’s ability to issue preference shares in the manner described herein or the redemption or purchase of any shares of any class by the Company. The rights of the holders of shares shall not be deemed to be materially adversely varied by the creation or issue of shares with preferred or other rights including, without limitation, the creation of shares with enhanced or weighted voting rights.

Pre-Emption Rights

There are no pre-emption rights applicable to the issue of new shares under either Cayman Islands law or our memorandum and articles of association.

Alteration of Share Capital

We may by ordinary resolution increase, consolidate or sub-divide our share capital.

Purchase of Own Ordinary Shares

Subject to the provisions of the Companies Act, our board of directors may authorize the purchase of any of our own shares of any class in any way and at any price (whether at par or above or below par) out of our distributable profits, share premium capital, capital and/or the proceeds of a fresh issue of shares made for the purpose of financing the purchase, in accordance with the Companies Act.

Shareholder Meetings

Meetings of shareholders are known as general meetings and comprise of an annual general meeting and any other general meetings, known as extraordinary general meetings, that may be called and held from time to time. We may but are not obliged by our memorandum and articles of association to hold an annual general meeting in each year, other than the year in which these articles are adopted. General meetings may be held at such times and places as may be determined by our board of directors.

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Extraordinary general meetings may be called only:

● by a majority of our board of directors; or

● on the requisition of shareholders holding not less than one third of the votes attributable to the issued shares giving the right to attend and vote thereat.

A general meeting must be called by not less than 5 clear days’ notice (meaning calendar days excluding the date the notice is given or deemed given and the date of the meeting), unless shorter notice is agreed.

No business, except for the appointment of a chairman for the meeting, shall be transacted at any general meeting unless a quorum of shareholders is present at the time when the meeting proceeds to business. Other than a meeting or action regarding the modification of the rights of any class of shares, two shareholders present at a meeting in person or by proxy, entitled to vote shall be a quorum.

Directors

Our board of directors must consist of at least one director who can be appointed by ordinary resolution of shareholders or, in the case of vacancies and newly created directorships, by our board of directors. Our directors are not required to hold any ordinary shares in the capital of the Company to qualify.

Our directors may receive such compensation as they may from time to time determine. A director may be entitled to be repaid all traveling, hotel and incidental expenses reasonably incurred by him or her in attending meetings of the board of directors or committees of the board or general meetings or separate meetings of any class of shares or of debentures or otherwise in connection with the discharge of his or her duties as a director.

Our board of directors may provide benefits, whether by the payment of gratuities or pensions or by insurance or otherwise, for any past or present director or employee of our Company or any of its subsidiaries or any corporate body associated with, or any business acquired by, any of them, and for any member of his family or any person who is or was dependent on him.

Borrowing Powers

Our board of directors may exercise all the powers of our Company to borrow money and to mortgage or charge its undertaking, property and assets (present and future) and uncalled capital of our Company, and to issue debentures, debenture shares and other securities whenever money is borrowed or as security for any debt, liability or obligation of our Company or of any third-party.

Indemnity of Directors and Officers

Our amended and restated memorandum and articles of association provide that our current and former directors and officers will be indemnified out of our assets against any liability, action, proceeding, claim, demand, costs, damages or expenses, including legal expenses, whatsoever which they or any of them may incur as a result of any act or failure to act in carrying out their functions other than such liability (if any) that they may incur by reason of their own actual fraud or willful default. In addition, our memorandum and articles of association provide that our directors will not be personally liable for monetary damages to us for breaches of their fiduciary duty as directors, unless their liability arises out of actual fraud or willful default.

We intend to enter into agreements with our directors and officers to provide contractual indemnification in addition to the indemnification provided in our memorandum and articles of association. We intend to purchase a policy of directors’ and officers’ liability insurance that insures our directors and officers against the cost of defense, settlement or payment of a judgment in some circumstances and insures us against our obligations to indemnify the directors and officers.

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These provisions may discourage shareholders from bringing a lawsuit against our directors for breach of their fiduciary duty. These provisions also may have the effect of reducing the likelihood of derivative litigation against directors and officers, even though such an action, if successful, might otherwise benefit us and our shareholders. Furthermore, a shareholder’s investment may be adversely affected to the extent we pay the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions. We believe that these provisions, the insurance and the indemnity agreements are necessary to attract and retain talented and experienced directors and officers.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.

Change of Control

Provisions in our amended and restated memorandum and articles of association may discourage, delay or prevent a merger, acquisition or other change in control that shareholders may consider favorable, including transactions in which shareholders might otherwise receive a premium for their shares. In addition, these provisions may frustrate or prevent any attempt by our shareholders to replace or remove our current management by making it more difficult to replace or remove our board of directors. Such provisions may reduce the price that investors may be willing to pay for our ordinary shares in the future, which could reduce the market price of our ordinary shares.

These provisions include:

● a requirement that extraordinary general meetings of shareholders be called only by a majority of the board of directors or, in limited circumstances, by the board upon shareholder requisition; and

● the authority of our board of directors to issue preference shares with such terms as our board of directors may determine.

However, under Cayman Islands law, our directors may only exercise the rights and powers granted to them under our post-offering memorandum and articles of association for a proper purpose and for what they believe in good faith to be in the best interests of the Company. As described below in “- Differences in Corporate Law - Mergers and Similar Arrangements” the Companies Act provides for arrangements or compromises between a company and its shareholders, creditors, any class of its shareholders, or any class of its creditors that are used for certain types of reconstructions, amalgamations, capital reorganizations or takeovers.

The Companies Act includes provisions relating to takeovers and provides that where a takeover offer is made for the shares of a company incorporated in the Cayman Islands and, within four months after the making of the offer the offeror has been approved by the holders of not less than 90 percent in value of the shares affected, the offeror may, within two months, by notice require shareholders who do not accept the offer to transfer their shares to the offeror on the terms of the offer.

Authorized but Unissued Shares

Our authorized but unissued shares are available for future issuances without shareholder approval and could be utilized for a variety of corporate purposes, including future offerings to raise additional capital, acquisitions and employee benefit plans. In order to increase the number of authorized shares, we are required to obtain the approval of a majority of our shareholders.

Our board of directors is empowered to authorize and issue, out of our authorized but unissued shares, one or more classes or series of preference shares and to fix the designations, powers, preferences and relative, participating, optional and other rights, if any, and the qualifications, limitations and restrictions thereof, if any, including, without limitation, the number of shares constituting each such class or series, dividend rights, conversion rights, redemption privileges, voting powers, full or limited or no voting powers, and liquidation preferences, and to increase or decrease the size of any such class or series (but not below the number of shares of any class or series of preference shares then outstanding) to the extent permitted by Cayman Islands law. The resolution or resolutions providing for the establishment of any class or series of preference shares may, to the extent permitted by law, provide that such class or series shall be superior to, rank equally with or be junior to the preference shares of any other class or series. The existence of authorized but unissued shares and our board of directors’ authority to issue new classes of shares could render more difficult or discourage an attempt to obtain control of us by means of a proxy contest, tender offer, merger or otherwise.

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Exempted Company

We are an exempted company with limited liability under the Companies Act. The Companies Act distinguishes between ordinary resident companies and exempted companies. Any company that is registered in the Cayman Islands but conducts business mainly outside of the Cayman Islands may apply to be registered as an exempted company. The requirements for an exempted company are essentially the same as for an ordinary company except for the exemptions and privileges listed below:

● an exempted company does not have to file an annual return of its shareholders with the Registrar of Companies;

● an exempted company’s register of members is not open to inspection;

● an exempted company does not have to hold an annual general meeting;

● an exempted company may issue shares with no par value;

● an exempted company may obtain an undertaking against the imposition of any future taxation (such undertakings are usually given for 20 years in the first instance);

● an exempted company may register by way of continuation in another jurisdiction and be deregistered in the Cayman Islands;

● an exempted company may register as a limited duration company; and

● an exempted company may register as a segregated portfolio company.

“Limited liability” means that the liability of each shareholder is limited to the amount unpaid by the shareholder on the shares of the company (except in exceptional circumstances, such as involving fraud, the establishment of an agency relationship or an illegal or improper purpose or other circumstances in which a court may be prepared to pierce or lift the corporate veil).

Differences in Corporate Law

Cayman Islands companies are governed by the Companies Act. The Companies Act is modeled on English Law but does not follow recent English Law statutory enactments, and differs from laws applicable to U.S. corporations and their shareholders. Set forth below is a summary of some significant differences between the provisions of the Companies Act applicable to us and the laws applicable to companies incorporated in the State of Delaware in the United States and their shareholders.

We believe that the differences with respect to our being a Cayman Islands exempted company as opposed to a Delaware corporation do not pose additional material risks to investors, other than the risks described under “Risk Factors - As a foreign private issuer, we are subject to different U.S. securities laws and NASDAQ governance standards than domestic U.S. issuers. This may afford less protection to holders of our ordinary shares, and you may not receive corporate and company information and disclosure that you are accustomed to receiving or in a manner in which you are accustomed to receiving it, “- We may become subject to taxation in the Cayman Islands which would negatively affect our results,” “- There may be a risk of us being subject to tax in jurisdictions in which we do not currently consider ourselves to have any tax resident subsidiaries or permanent establishments” and “- Because we are incorporated under the laws of the Cayman Islands, you may face difficulties in protecting your interests, and your ability to protect your rights through the U.S. Federal courts may be limited.”

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Mergers and Similar Arrangements

In certain circumstances, the Companies Act permits mergers and consolidations between Cayman Islands companies and between Cayman Islands companies and non-Cayman Islands companies (provided that is facilitated by the laws of the other jurisdiction) and any such company may be the surviving entity for the purposes of mergers or the consolidated company for the purposes of consolidations. For these purposes, (a) “merger” means the merging of two or more constituent companies and the vesting of their undertaking, property and liabilities in one of such companies as the surviving company and (b) a “consolidation” means the combination of two or more constituent companies into a consolidated company and the vesting of the undertaking, property and liabilities of such companies to the consolidated company. In order to effect such a merger or consolidation, the directors of each constituent company must approve a written plan of merger or consolidation, which must, in most instances, then be authorized by a special resolution (usually a majority of 66 2/3% in value) of the shareholders of each constituent company and such other authorization, if any, as may be specified in such constituent company’s articles of association. A merger between a Cayman parent company and its Cayman subsidiary or subsidiaries does not require authorization by a resolution of shareholders, provided a copy of the plan of merger is given to every member of each subsidiary company to be merged (unless waived by such members). For this purpose a subsidiary is a company of which at least 90% of the votes cast at its general meeting are held by the parent company. The consent of each holder of a fixed or floating security interest over a constituent company is required unless this requirement is waived by a court in the Cayman Islands. The plan of merger or consolidation must be filed with the Registrar of Companies who, if satisfied that the requirements of the Companies Act (As Revised) which includes certain other formalities, have been complied with, will register it. The filing must include a declaration as to the solvency of the consolidated or surviving company, a list of the assets and liabilities of each constituent company and an undertaking that a copy of the certificate of merger or consolidation will be given to the members and creditors of each constituent company and published in the Cayman Islands Gazette. Dissenting shareholders have the right to be paid the fair value of their shares (which, if not agreed between the parties, will be determined by the Cayman Islands court) if they follow the required procedures, subject to certain exceptions. Court approval is not required for a merger or consolidation which is effected in compliance with these statutory procedures.

In addition, there are statutory provisions that facilitate the reconstruction and amalgamation of companies in certain circumstances, provided that the arrangement is approved by a majority in number of each class of shareholders and creditors with whom the arrangement is to be made, and who must in addition represent two-thirds in value of each such class of shareholders or creditors, as the case may be, that are present and voting either in person or by proxy at a meeting, or meetings, convened for that purpose. The convening of the meetings and subsequently the arrangement must be sanctioned by the Grand Court of the Cayman Islands. While a dissenting shareholder has the right to express to the court the view that the transaction ought not be approved, the court can be expected to approve the arrangement if it determines that:

● the company is not proposing to act illegally or beyond the scope of its corporate authority and the statutory provisions as to the required majority vote have been met;

● the shareholders have been fairly represented at the meeting in question, the statutory majority are acting bona fide without coercion of the minority to promote interests adverse to those of the class and that the meeting was properly constituted;

● the arrangement is such that it may reasonably be approved by an intelligent and honest man of that share class acting in respect of his interest; and

● the arrangement is not one which would be more properly sanctioned under some other provision of the Companies Act, or that would amount to ‘fraud on the minority’.

When a takeover offer is made and accepted by holders of 90% of the shares affected within four months, the offeror may after the expiration of such four months, within a two-month period, require the holders of the remaining shares to transfer such shares on the terms of the offer. An objection can be made to the Grand Court of the Cayman Islands but this is unlikely to succeed unless there is evidence of fraud, bad faith, collusion or inequitable treatment of the shareholders.

If the arrangement and reconstruction is thus approved, the dissenting shareholder would have no rights comparable to appraisal rights, which would otherwise ordinarily be available to dissenting shareholders of U.S. corporations, providing rights to receive payment in cash for the judicially determined value of the shares.

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Shareholder Suits

In general, we will be the proper plaintiff in any action to protect and enforce our rights and such an action cannot be brought by a minority shareholder on behalf of our company. However, this does not prevent a shareholder bringing proceedings to protect its individual rights. In addition, in some circumstances, a minority shareholder may be able to bring a derivative action on behalf of our company where:

● Those who control our company are perpetrating a ‘fraud on the minority’;

● We are acting or proposing to act illegally or beyond the scope of its authority;

● The act complained of, although not beyond the scope of our company’s authority, could be effected only if duly authorized by more than a simple majority vote, which has not been obtained.

Protection of Minority Shareholders

In the case of a company (not being a bank) having its share capital divided into shares, the Grand Court of the Cayman Islands may, on the application of members holding not less than one fifth of the shares of the company in issue, appoint an inspector to examine the affairs of the company and to report thereon in such manner as the Grand Court of the Cayman Islands shall direct.

Any of our shareholders may petition the Grand Court of the Cayman Islands which may make a winding up order if the Grand Court of the Cayman Islands is of the opinion that it is just and equitable that we should be wound up or, as an alternative to a winding up order, (a) an order regulating the conduct of our affairs in the future, (b) an order requiring us to refrain from doing or continuing an act complained of by the shareholder petitioner or to do an act which the shareholder petitioner has complained we have omitted to do, (c) an order authorizing civil proceedings to be brought in our name and on our behalf by the shareholder petitioner on such terms as the Grand Court of the Cayman Islands may direct, or (d) an order providing for the purchase of the shares of any of our shareholders by other shareholders or us and, in the case of a purchase by us, a reduction of our capital accordingly.

Generally, claims against us must be based on the general laws of contract or tort applicable in the Cayman Islands or individual rights as shareholders as established by our memorandum and articles of association.

Fiduciary Duties of Directors

Under Cayman Islands law, directors and officers owe the following fiduciary duties:

● duty to act in good faith in what the director or officer believes to be in the best interests of the company as a whole;

● duty to exercise powers for the purposes for which those powers were conferred and not for a collateral purpose;

● directors should not improperly fetter the exercise of future discretion;

● duty to exercise powers fairly as between different sections of shareholders;

● duty not to put themselves in a position in which there is a conflict between their duty to the company and their personal interests; and

● duty to exercise independent judgment.

In addition to the above, directors also owe a duty of care which is not fiduciary in nature. This duty has been defined as a requirement to act as a reasonably diligent person having both the general knowledge, skill and experience that may reasonably be expected of a person carrying out the same functions as are carried out by that director in relation to the company and the general knowledge skill and experience of that director.

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As set out above, directors have a duty not to put themselves in a position of conflict and this includes a duty not to engage in self-dealing, or to otherwise benefit as a result of their position. However, in some instances what would otherwise be a breach of this duty can be forgiven and/or authorized in advance by the shareholders provided that there is full disclosure by the directors. This can be done by way of permission granted in the amended and restated memorandum and articles of association or alternatively by shareholder approval at general meetings.

However, by contrast to Delaware law, the fiduciary duties of directors are not as clearly established under Cayman Islands law.

Anti-Money Laundering - Cayman Islands

If any person in the Cayman Islands knows or suspects or has reasonable grounds for knowing or suspecting that another person is engaged in criminal conduct or money laundering or is involved with terrorism or terrorist financing and property and the information for that knowledge or suspicion came to their attention in the course of business in the regulated sector, or other trade, profession, business or employment, the person will be required to report such knowledge or suspicion to (i) the Financial Reporting Authority of the Cayman Islands, pursuant to the Proceeds of Crime Act (As Revised) of the Cayman Islands if the disclosure relates to criminal conduct or money laundering, or (ii) a police officer of the rank of constable or higher, or the Financial Reporting Authority, pursuant to the Terrorism Act (As Revised) of the Cayman Islands, if the disclosure relates to involvement with terrorism or terrorist financing and property. Such a report shall not be treated as a breach of confidence or of any restriction upon the disclosure of information imposed by any enactment or otherwise.

Data Protection - Cayman Islands

We have certain duties under the Data Protection Act (As Revised) of the Cayman Islands (the “Data Protection Act”) based on internationally accepted principles of data privacy.

Privacy Notice

Introduction

This privacy notice puts our shareholders on notice that through your investment in the Company you will provide us with certain personal information which constitutes personal data within the meaning of the Data Protection Act (“personal data”). In the following discussion, the “company” refers to us and our affiliates and/or delegates, except where the context requires otherwise.

Investor Data

We will collect, use, disclose, retain and secure personal data to the extent reasonably required only and within the parameters that could be reasonably expected during the normal course of business. We will only process, disclose, transfer or retain personal data to the extent legitimately required to conduct our activities of on an ongoing basis or to comply with legal and regulatory obligations to which we are subject. We will only transfer personal data in accordance with the requirements of the Data Protection Act, and will apply appropriate technical and organizational information security measures designed to protect against unauthorized or unlawful processing of the personal data and against the accidental loss, destruction or damage to the personal data.

In our use of this personal data, we will be characterized as a “data controller” for the purposes of the Data Protection Act, while our affiliates and service providers who may receive this personal data from us in the conduct of our activities may either act as our “data processors” for the purposes of the Data Protection Act or may process personal information for their own lawful purposes in connection with services provided to us.

We may also obtain personal data from other public sources. Personal data includes, without limitation, the following information relating to a shareholder and/or any individuals connected with a shareholder as an investor: name, residential address, email address, contact details, corporate contact information, signature, nationality, place of birth, date of birth, tax identification, credit history, correspondence records, passport number, bank account details, source of funds details and details relating to the shareholder’s investment activity.

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Who this Affects

If you are a natural person, this will affect you directly. If you are a corporate investor (including, for these purposes, legal arrangements such as trusts or exempted limited partnerships) that provides us with personal data on individuals connected to you for any reason in relation your investment in the company, this will be relevant for those individuals and you should transmit the content of this Privacy Notice to such individuals or otherwise advise them of its content.

How the Company May Use a Shareholder’s Personal Data

The company, as the data controller, may collect, store and use personal data for lawful purposes, including, in particular:

a) where this is necessary for the performance of our rights and obligations under any purchase agreements;

b) where this is necessary for compliance with a legal and regulatory obligation to which we are subject (such as compliance with anti-money laundering and FATCA/CRS requirements); and/or

c) where this is necessary for the purposes of our legitimate interests and such interests are not overridden by your interests, fundamental rights or freedoms.

Should we wish to use personal data for other specific purposes (including, if applicable, any purpose that requires your consent), we will contact you.

Why We May Transfer Your Personal Data

In certain circumstances we may be legally obliged to share personal data and other information with respect to your shareholding with the relevant regulatory authorities such as the Cayman Islands Monetary Authority or the Tax Information Authority. They, in turn, may exchange this information with foreign authorities, including tax authorities.

We anticipates disclosing personal data to persons who provide services to us and their respective affiliates (which may include certain entities located outside the United States, the Cayman Islands or the European Economic Area), who will process your personal data on our behalf.

The Data Protection Measures We Take

Any transfer of personal data by us or our duly authorized affiliates and/or delegates outside of the Cayman Islands shall be in accordance with the requirements of the Data Protection Act.

We and our duly authorized affiliates and/or delegates shall apply appropriate technical and organizational information security measures designed to protect against unauthorized or unlawful processing of personal data, and against accidental loss or destruction of, or damage to, personal data.

We shall notify you of any personal data breach that is reasonably likely to result in a risk to your interests, fundamental rights or freedoms or those data subjects to whom the relevant personal data relates.

Written Consent

Under the Delaware General Corporation Law, a corporation may eliminate the right of shareholders to act by written consent through amendment to its certificate of incorporation. Cayman Islands law enables, and our memorandum and articles of association provide, that any action required or permitted to be taken at any annual or extraordinary general meeting may be taken only upon the vote of shareholders at an annual or extraordinary general meeting duly and may not be taken by written resolution of shareholders without a meeting.

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Shareholder Proposals

Under the Delaware General Corporation Law, a shareholder has the right to put any proposal before the shareholders at the annual meeting, provided that such shareholder complies with the notice provisions in the governing documents. In general terms, Cayman Islands’ law does not provide shareholders with an express right to put any proposal before a general meeting of shareholders. Depending on the provision of the relevant Cayman Islands company’s articles of association, a shareholder may put a proposal before the shareholders at any general meeting if it is set out in the notice calling the meeting. There is no automatic right to introduce new business at any meeting. A general meeting may be called by the board of directors or any other person authorized to do so in the articles of association, but shareholders may be precluded from calling general meetings, except in certain circumstances.

Under the Delaware General Corporation Law, a corporation is required to set a minimum quorum of one-third of the issued and outstanding shares for a shareholders’ meeting. Cayman Islands law permits a company’s articles to have any quorum. Our amended and restated memorandum and articles of association provide that a quorum consists of two qualifying persons, other than for a meeting or action regarding the modification of the rights of any class of shares, present at a meeting and entitled to vote on the business to be dealt with.

Election of Directors

Under the Delaware General Corporation Law, unless otherwise specified in the certificate of incorporation or bylaws of the corporation, directors shall be elected by a plurality of the votes of the shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors and vacancies and newly created directorships may be filled by resolution of the board. Under the laws of the Cayman Islands, directors are appointed by the board of directors or, if provided for in the articles of association, by shareholders pursuant to an ordinary resolution. Our amended and restated articles of association provide that directors nominated for election be elected by the shareholders pursuant to an ordinary resolution at a general meeting and that a vacancy on our board of directors or any additions to the existing board of directors will be filled by the resolution of directors or by ordinary resolution of our shareholders.

Cumulative Voting

Under the Delaware General Corporation Law, cumulative voting for elections of directors is not permitted unless the corporation’s certificate of incorporation specifically provides for it. Cumulative voting potentially facilitates the representation of minority shareholders on a board of directors since it permits a minority shareholder to cast all the votes to which such shareholder is entitled on a single director, which increases such shareholder’s voting power with respect to electing such director. There are no prohibitions in relation to cumulative voting under the laws of the Cayman Islands, but our memorandum and articles of association do not provide for cumulative voting. As a result, our shareholders are not afforded any less protections or rights on this issue than shareholders of a Delaware corporation.

Removal of Directors

Under the Delaware General Corporation Law, a director of a corporation may be removed only for cause with the approval of a majority of the outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise. Under our memorandum and articles of association, a director may be removed by way of an ordinary resolution of the shareholders at any time before the expiration of his period of office.

Actions by the Board of Directors

Under the Delaware General Corporation Law, unless the certificate of incorporation or bylaws of a Delaware corporation provide otherwise, a majority of the total number of directors shall constitute a quorum for the transaction of business, but in no case shall a quorum be less than one-third of the total number of directors unless the authorized number of directors is one, and an action of the board at a meeting with a quorum present requires at least a majority vote of those directors present. Directors of a Delaware corporation may also act by unanimous written consent unless the corporation’s certificate of incorporation or bylaws otherwise provide. Our amended and restated memorandum and articles of association provide for action by majority vote at a meeting or by unanimous written consent; however, the required quorum for a directors’ meeting is two directors unless our board of directors fixes a different number.

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Dissolution; Winding up

Under the Delaware General Corporation Law, unless the board of directors approves the proposal to dissolve, dissolution must be approved by shareholders holding 100% of the total voting power of the corporation. Only if the dissolution is initiated by the board of directors may it be approved by a simple majority of the corporation’s outstanding shares. Delaware law allows a Delaware corporation to include in its certificate of incorporation a supermajority voting requirement in connection with dissolutions initiated by the board. Under the Companies Act and our amended and restated memorandum and articles of association, our Company may be liquidated or wound up and subsequently dissolved by special resolution of our shareholders on the basis that we are unable to pay our debts as they fall due.

Variation of Rights of Shares

Under the Delaware General Corporation Law, a corporation may vary the rights of a class of shares with the approval of a majority of the outstanding shares of such class, unless the certificate of incorporation provides otherwise. Under our amended and restated memorandum and articles of association, if our share capital is divided into more than one class of shares, we may vary the rights attached to any class only with the vote at a separate class meeting of holders of two-thirds of the shares of such class.

Amendment of Governing Documents

Under the Delaware General Corporation Law, a corporation’s governing documents may be amended with the approval of a majority of the outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise. As permitted by Cayman Islands law, except for certain amendments to the capital structure not affecting a shareholder’s economic rights, our memorandum and articles of association may only be amended with a special resolution at a general meeting.

Rights of Non-resident or Foreign Shareholders

There are no limitations imposed by our amended and restated memorandum and articles of association on the rights of non-resident or foreign shareholders to hold or exercise voting rights on our shares. In addition, there are no provisions in our memorandum and articles of association governing the ownership threshold above which shareholder ownership must be disclosed.

10.C. Material Contracts 

Below is a summary of current material contracts to which we are a party as of the date this annual report:

Title of Contract		Party A	Party B	Signing Date	Term of Contract
Bank Credit Agreements*
Credit Agreement		United Time Technology Co., Ltd.	Shenzhen Rural Commercial Bank	August 1, 2018	3 years
Credit Agreement		United Time Technology Co., Ltd.	Shenzhen Rural Commercial Bank	June 29, 2021	July 16, 2021 to July 16, 2024
Credit Agreement		United Time Technology Co., Ltd.	Shenzhen Rural Commercial Bank	June 29, 2021	July 16, 2021 to July 16, 2024
Credit Agreement		United Time Technology Co., Ltd.	PingAn Bank Co., Ltd.	November 17, 2021	3 years
Credit Line Agreement		United Time Technology Co., Ltd.	Shenzhen Nanshan Baosheng County Bank Co., Ltd.	August 31, 2022	1 year
Working Capital Loan Agreement		United Time Technology Co., Ltd.	Shenzhen Nanshan Baosheng County Bank Co., Ltd.	August 31, 2022	1 year
Loan agreement		United Time Technology Co., Ltd.	Jiangsu Suning Bank Co., Ltd.	June 14, 2022	June 13, 2022 to May 5, 2025
Working Capital Loan Agreement	United Time Technology Co., Ltd.		China CITIC Bank	January 10, 2023		1 year
Working Capital Loan Agreement	United Time Technology Co., Ltd.		China Resources Bank of Zhuhai Co., Ltd.	November 15, 2022		2 year
Working Capital Loan Agreement	United Time Technology Co., Ltd.		China Resources Bank of Zhuhai Co., Ltd.	November 24, 2022		1 year
Working Capital Loan Agreement	United Time Technology Co., Ltd.		China Resources Bank of Zhuhai Co., Ltd.	December 2, 2022		1 year
Loan Agreement	United Time Technology Co., Ltd.		Industrial and Commercial Bank of China	December 2, 2022		1 year
Loan Agreement	United Time Technology Co., Ltd.		Industrial and Commercial Bank of China	December 7, 2022		1 year
Working Capital Loan Agreements	United Time Technology Co., Ltd.		China Resources Bank of Zhuhai Co., Ltd.	December 5, 2022		December 5, 2022 to October 25, 2023

* For more information regarding these credit agreements, see information under “Item 5. Operating And Financial Review And Prospects”

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Purchase Agreements (Production line purchase agreements) 

Procurement Agreement	Guangxi Utime Technology Co., Ltd.	P.J. Advisory Company Limited	January 5, 2022	N/A
Purchase Agreement	Guangxi Utime Technology Co., Ltd.	Shenzhen Chuangbaili Industrial Equipment Co., Ltd.	March 11, 2022	N/A

On January 5, 2022, we entered into a procurement agreement to acquire two solder pastes and ten SMT testing assembly lines for a total price of $3,997,980, inclusive of value added tax (the “Purchase Price”) from P.J. Advisory Company Limited. Pursuant to this agreement, we need to pay (i) 90% of the Purchase Price within 90 days after the equipment are transported to our place of delivery and accepted by us, and (ii) 10% of the Purchase Price after the installation and commissioning of the equipment.

On March 11, 2022, we entered into a purchase agreement to acquire an assembly production line for a total price of RMB 686,895, inclusive of 10% tax (the “Purchase Price”) from Shenzhen Chuangbaili Industrial Equipment Co., Ltd. Pursuant to this agreement, we need to pay (i) 30% of the Purchase Price as deposit within three days of signing this agreement, (ii) 50% of the Purchase Price as deposit before the equipment are transported, and (iii) the rest of the Purchase Price after the installation of the equipment and accepted by us.

Lease Agreements (Factory lease agreements)

Factory Lease Agreement Guangxi Utime Technology Co., Ltd. Nanning Industrial Investment Group Co., Ltd. November 1, 2021 60 months

In November 2021, we entered into a Factory Lease Agreement to lease Factory for production from Nanning Industrial Investment Group Co., Ltd, which was executed in November 2021. Pursuant to this agreement, (i) the lease term is from November 1, 2021 to October 31, 2026, and (ii) the rent of factory is RMB 20/m² per month and the total amount of rent shall be RMB 19,066,152 inclusive of tax.

10.D. Exchange Controls

Cayman Islands

There are currently no exchange control regulations in the Cayman Islands applicable to us or our shareholders.

The PRC

China regulates foreign currency exchanges primarily through the following rules and regulations:

● Foreign Currency Administration Rules of 1996, as amended; and

● Administrative Rules of the Settlement, Sale and Payment of Foreign Exchange of 1996.

As we disclosed in the risk factors above, Renminbi is not a freely convertible currency at present. Under the current PRC regulations, conversion of Renminbi is permitted in China for routine current-account foreign exchange transactions, including trade and service related foreign exchange transactions, payment of dividends and service of foreign debts. Conversion of Renminbi for most capital-account items, such as direct investments, investments in PRC securities markets and repatriation of investments, however, is still subject to the approval of SAFE.

Pursuant to the above-mentioned administrative rules, foreign-invested enterprises may buy, sell and/or remit foreign currencies for current account transactions at banks in China with authority to conduct foreign exchange business by complying with certain procedural requirements, such as presentment of valid commercial documents. For capital-account transactions involving foreign direct investment, foreign debts and outbound investment in securities and derivatives, approval from SAFE is a pre-condition. Capital investments by foreign-invested enterprises outside China are subject to limitations and requirements in China, such as prior approvals from the PRC Ministry of Commerce or SAFE.

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10.E. Taxation 

The following discussion of material Cayman Islands, PRC and United States federal income tax consequences of an investment in our ordinary shares is based upon laws and relevant interpretations thereof in effect as of the date of this annual report, all of which are subject to change. This discussion does not deal with all possible tax consequences relating to an investment in our ordinary shares, such as the tax consequences under state, local and other tax laws.

Cayman Islands Taxation

The following is a discussion on certain Cayman Islands income tax consequences of an investment in the Shares. The discussion is a general summary of the present law, which is subject to prospective and retroactive change. It is not intended as tax advice, does not consider any investor’s particular circumstances, and does not consider tax consequences other than those arising under Cayman Islands law.

Under Existing Cayman Islands Laws:

The Cayman Islands currently levies no taxes on individuals or corporations based upon profits, income, gains or appreciation and there is no taxation in the nature of inheritance tax or estate duty. There are no other taxes likely to be material to us levied by the Government of the Cayman Islands except for stamp duties which may be applicable on instruments executed in, or after execution brought within, the jurisdiction of the Cayman Islands. No stamp duty is payable in the Cayman Islands on the issue of shares by, or any transfers of shares of, Cayman Islands companies (except those which hold interests in land in the Cayman Islands). The Cayman Islands is not party to any double tax treaties which are applicable to any payments made to or by our company. There are no exchange control regulations or currency restrictions in the Cayman Islands.

Payments of dividends and capital in respect of our shares will not be subject to taxation in the Cayman Islands and no withholding will be required on the payment of dividends or capital to any holder of our shares, nor will gains derived from the disposal of our shares be subject to Cayman Islands income or corporation tax.

The Company has been incorporated under the laws of the Cayman Islands as an exempted company with limited liability and, as such, has applied for and received an undertaking from the Financial Secretary of the Cayman Islands in the following form:

The Tax Concessions Act

(As Revised)

Undertaking as to Tax Concessions

In accordance with the provision of Section 6 of The Tax Concessions Act (As Revised), the Financial Secretary undertakes with UTime Limited (the “Company”):

1. That no law which is hereafter enacted in the Islands imposing any tax to be levied on profits, income, gains or appreciations shall apply to the Company or its operations; and

2. In addition, that no tax to be levied on profits, income, gains or appreciations or which is in the nature of estate duty or inheritance tax shall be payable:

2.1 On or in respect of the shares, debentures or other obligations of the Company; or

2.2 by way of the withholding in whole or part, of any relevant payment as defined in Section 6(3) of the Tax Concessions Act (As Revised).

These concessions shall be for a period of 20 years from the date hereof.

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People’s Republic of China Taxation

Under the PRC Enterprise Income Tax Law and its implementation rules, an enterprise established outside of the PRC with a “de facto management body” within the PRC is considered a resident enterprise and will be subject to the enterprise income tax at the rate of 25% on its global income. The implementation rules define the term “de facto management body” as the body that exercises full and substantial control over and overall and substantial management of the business, productions, personnel, accounts and properties of an enterprise. In April 2009, the State Administration of Taxation issued the Circular on Issues Concerning the Identification of Chinese-Controlled Overseas Registered Enterprises as Resident Enterprises in Accordance With the Actual Standards of Organizational Management, known as Circular 82, which has been revised by the Decision of the State Administration of Taxation on Issuing the Lists of Invalid and Abolished Tax Departmental Rules and Taxation Normative Documents on December 29, 2017 and by the Decision of the State Council on Cancellation and Delegation of a Batch of Administrative Examination and Approval Items on November 8, 2013. Circular 82 has provided certain specific criteria for determining whether the “de facto management body” of a PRC-controlled enterprise that is incorporated offshore is located in China. Although this circular only applies to offshore enterprises controlled by PRC enterprises or PRC enterprise groups, not those controlled by PRC individuals or foreigners, the criteria set forth in the circular may reflect the State Administration of Taxation’s general position on how the “de facto management body” test should be applied in determining the tax resident status of all offshore enterprises. According to Circular 82, an offshore incorporated enterprise controlled by a PRC enterprise or a PRC enterprise group will be regarded as a PRC tax resident by virtue of having its “de facto management body” in China only if all of the following conditions are met: (i) the places where the senior management and senior management departments responsible for the daily production, operation and management of the enterprise perform their duties are mainly located within the territory of the PRC; (ii) decisions relating to the enterprise’s financial matters (such as money borrowing, lending, financing and financial risk management) and human resource matters (such as appointment, dismissal and salary and wages) are made or are subject to approval by organizations or personnel in the PRC; (iii) the enterprise’s primary assets, accounting books and records, company seals, and board and shareholder resolutions, are located or maintained in the PRC; and (iv) at least 50% of voting board members or senior executives habitually reside in the PRC.

We believe that UTime Limited is not a PRC resident enterprise for PRC tax purposes. UTime Limited is not controlled by a PRC enterprise or PRC enterprise group and we do not believe that UTime Limited meets all of the conditions above. UTime Limited is a company incorporated outside the PRC. As a holding company, its key assets are its ownership interests in its subsidiaries, and its key assets are located, and its records (including the resolutions of its board of directors and the resolutions of its shareholders) are maintained, outside the PRC. For the same reasons, we believe our other entities outside of China are not PRC resident enterprises either. However, the tax resident status of an enterprise is subject to determination by the PRC tax authorities and uncertainties remain with respect to the interpretation of the term “de facto management body.” There can be no assurance that the PRC government will ultimately take a view that is consistent with us.

Our PRC legal counsel has also advised us that there is a risk that the PRC tax authorities may deem us as a PRC resident enterprise since a substantial majority of the members of our management team are located in China. If the PRC tax authorities determine that UTime Limited is a PRC resident enterprise for enterprise income tax purposes, we may be required to withhold a 10% withholding tax from dividends we pay to our shareholders that are non-resident enterprises, including the holders of our ordinary shares. In addition, non-resident enterprise shareholders may be subject to a 10% PRC tax on gains realized on the sale or other disposition of ordinary shares, if such income is treated as sourced from within the PRC. It is unclear whether our non-PRC individual shareholders would be subject to any PRC tax on dividends or gains obtained by such non-PRC individual shareholders in the event we are determined to be a PRC resident enterprise. If any PRC tax were to apply to such dividends or gains, it would generally apply at a rate of 20% unless a reduced rate is available under an applicable tax treaty. It is also unclear whether non-PRC shareholders of UTime Limited would be able to claim the benefits of any tax treaties between their country of tax residence and the PRC in the event that UTime Limited is treated as a PRC resident enterprise. See “Risk Factors - Risks Related to Doing Business in China - If we are classified as a PRC resident enterprise for PRC income tax purposes, such classification could result in unfavourable tax consequences to us and our non-PRC shareholders.”

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In January 2009, the State Administration of Taxation promulgated the Provisional Measures for the Administration of Withholding of Enterprise Income Tax for Non-resident Enterprises, pursuant to which the entities that have the direct obligation to make certain payments to a non-resident enterprise should be the relevant tax withholders for the non-resident enterprise, and such payments include: income from equity investments (including dividends and other return on investment), interest, rents, royalties and income from assignment of property as well as other income subject to enterprise income tax received by non-resident enterprises in China. Further, the measures provide that in case of an equity transfer between two non-resident enterprises which occurs outside China, the non-resident enterprise which receives the equity transfer payment must, by itself or engage an agent to, file tax declaration with the PRC tax authority located at place of the PRC company whose equity has been transferred, and the PRC company whose equity has been transferred should assist the tax authorities to collect taxes from the relevant non-resident enterprise.

The State Administration of Taxation issued SAT Circular 59 together with the Ministry of Finance in April 2009 and SAT Circular 698 in December 2009. On February 28, 2011, the SAT issued the Notice on Several Issues Regarding the Income Tax of Non-PRC Resident Enterprises, or SAT Circular 24, which became effective on April 1, 2011. By promulgating and implementing these circulars, the PRC tax authorities have enhanced their scrutiny over the direct or indirect transfer of equity interests in a PRC resident enterprise by a non-resident enterprise. Under SAT Circular 698, where a non-resident enterprise transfers the equity interests of a PRC “resident enterprise” indirectly by disposition of the equity interests of an overseas holding company, and the overseas holding company is located in a tax jurisdiction that: (1) has an effective tax rate less than 12.5% or (2) does not tax foreign income of its residents, the non-resident enterprise, being the transferor, must report to the relevant tax authority of the PRC “resident enterprise” the indirect transfer. On February 3, 2015, the SAT issued the Public Notice Regarding Certain Corporate Income Tax Matters on Indirect Transfer of Properties by Non-Tax Resident Enterprises, or SAT Bulletin 7. SAT Bulletin 7 supersedes the rules with respect to the indirect transfer under SAT Circular 698, but does not touch upon the other provisions of SAT Circular 698. SAT Bulletin 7 has introduced a new tax regime that is significantly different from the previous one under SAT Circular 698. SAT Bulletin 7 extends its tax jurisdiction to not only indirect transfers set forth under SAT Circular 698 but also transactions involving transfer of other taxable assets through offshore transfer of a foreign intermediate holding company. In addition, SAT Bulletin 7 provides clearer criteria than SAT Circular 698 for assessment of reasonable commercial purposes and has introduced safe harbors for internal group restructurings and the purchase and sale of equity through a public securities market. SAT Bulletin 7 also brings challenges to both foreign transferor and transferee (or other person who is obligated to pay for the transfer) of taxable assets. On October 17, 2017, the SAT issued the Announcement of the State Administration of Taxation on Issues Concerning the Withholding of Non-resident Enterprise Income Tax at Source, or SAT Bulletin 37. SAT Bulletin 37, which took effect on December 1, 2017, superseded the Non-resident Enterprises Measures and SAT Circular 698 as a whole and partially amended some provisions in SAT Circular 24 and SAT Bulletin 7. SAT Bulletin 37 purports to clarify certain issues in the implementation of the above regime, by providing, among others, the definition of equity transfer income and tax basis, the foreign exchange rate to be used in the calculation of withholding amount, and the date of occurrence of the withholding obligation. Specifically, SAT Bulletin 37 provides that where the transfer income subject to withholding at source is derived by a non-PRC resident enterprise in instalments, the instalments may first be treated as recovery of costs of previous investments. Upon recovery of all costs, the tax amount to be withheld must then be computed and withheld.

Provided that our Cayman Islands exempted company, UTime Limited, is not deemed to be a PRC resident enterprise, holders of our ordinary shares who are not PRC residents will not be subject to PRC income tax on dividends distributed by us or gains realized from the sale or other disposition of our shares. However, under SAT Bulletin 7 and SAT Bulletin 37, where a non-resident enterprise conducts an “indirect transfer” by transferring taxable assets, including, in particular, equity interests in a PRC resident enterprise, indirectly by disposing of the equity interests of an overseas holding company, the non-resident enterprise, being the transferor, or the transferee or the PRC entity which directly owned such taxable assets may report to the relevant tax authority such indirect transfer. Using a “substance over form” principle, the PRC tax authority may disregard the existence of the overseas holding company if it lacks a reasonable commercial purpose and was established for the purpose of reducing, avoiding or deferring PRC tax. As a result, gains derived from such indirect transfer may be subject to PRC enterprise income tax, and the transferee or other person who is obligated to pay for the transfer is obligated to withhold the applicable taxes, currently at a rate of 10% for the transfer of equity interests in a PRC resident enterprise. We and our non-PRC resident investors may be at risk of being required to file a return and being taxed under SAT Bulletin 7 and SAT Bulletin 37, and we may be required to expend valuable resources to comply with SAT Bulletin 7 and SAT Bulletin 37, or to establish that we should not be taxed under these circulars. See “Risk Factors - Risks Related to Doing Business in China - We face uncertainty with respect to indirect transfers of equity interests in PRC resident enterprises by their non-PRC holding companies.”

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India Taxation

The following is a general overview about Indian tax laws for corporates under the Income Tax Act, 1961 (“IT Act”) which inter alia governs the income tax on different categories of income accrued in the hands of an Indian company.

Corporate Taxes

As per the provisions of the IT Act, the corporate tax is paid by the companies registered in India on the net profit that it makes from businesses. It is taxed at a specific rate as prescribed by IT Act, subject to the changes in the rates announced every year by the Income Tax Department, Government of India. Both domestic as well as foreign companies are liable to pay corporate tax under IT Act in India. A domestic company is taxed on its universal income, while a foreign company is only taxed on the income earned within India.

The rates applicable to the domestic companies and foreign companies for assessment year 2022-23 (for previous year 2021-22) based on their turnover is:

Particulars	Tax Rate
DOMESTIC COMPANIES
Where total turnover or gross receipt during the previous year 2019-20 does not exceed Rs. 400 crore*		25	%
Domestic income other than referred to above		30	%
FOREIGN COMPANIES
Where royalty and technical fees is effectively connected to Permanent Establishment (PE) in India		40	%
Where PE is absent but the case is covered by section 115A(1)		10	%
Any other income		40	%

Note: One Crore is equivalent to Ten million

In addition to above rates, the following surcharge is added:

Particulars	Tax Rate
DOMESTIC COMPANIES
If total income exceeds Rs. 1 crore but less than Rs. 10 crore	7% of tax calculated
If total income exceeds Rs. 10 crore	12% of tax calculated
FOREIGN COMPANIES
If total income exceeds Rs. 1 crore but less than Rs. 10 crore	2% of tax calculated
If total income exceeds Rs. 10 crore	5% of tax calculated

Section 115BAA of the IT Act inserted w.e.f., AY 2020-21 provides an option to a domestic company to pay tax at lower rate of 22% (plus applicable surcharge and cess) as opposed to normal tax rate of 30%/ 25% (plus applicable surcharge and cess), provided the income is computed:

● without claiming exemption/ deduction inter alia, under section 32(1) (iia) additional depreciation qua new plant and machinery @ 20%/ 30%,

● without set-off of any brought forward losses to the extent such loss relates to deductions specified therein (including unabsorbed depreciation relatable to additional depreciation claimed and not set off); such losses would also not be allowed to be carried forward to subsequent years.

● after claiming depreciation other than additional depreciation under section 32(1) (iia) of the Act.

Once an Indian company has exercised this option, the chosen provision will apply for all the subsequent years.

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Thus, in order to comply with the provisions of the IT Act, it is mandatory for both Indian company and foreign company to pay corporate tax on the business income earned in India at the prescribed rates. Both companies have to file their income tax return on or before September 30 with respect to its preceding financial year (April to March), subject to certain exceptions.

Health and Education Cess

In all the cases, the amount of income tax and surcharge would be charged and increased by a health and education cess of 4%.

Taxation on Dividends

As per Section 115-O of the IT Act, any amount declared, distributed or paid by a domestic company by way of dividend shall be chargeable to dividend distribution tax (“DDT”). This provision is only applicable on domestic company (not a foreign company). DDT is in addition to income tax chargeable in respect of total income. It is applicable whether the dividend is interim or otherwise and whether such dividend is paid out of the current profits or accumulated profits. An Indian company is under the obligation to pay DDT at the rate of 15% plus surcharge and education cess on DDT. As per applicable Indian taxation law until March 31, 2020, a non-resident shareholder of an Indian company was not liable to pay any tax on the dividends received by it. However, the Finance Act, 2020 (effective from April 1, 2020) amended certain provisions relating to taxation of dividends declared by Indian companies, and provides that any distribution of dividend from April 1, 2020 onwards will only be subject to tax in the hands of the recipient shareholder and the Indian companies are not required to pay any tax on the dividend declared and distributed to the shareholders. Furthermore, non-resident shareholders would now be paying tax on the dividend income as per the rate prescribed under the relevant double taxation avoidance agreements or domestic law, whichever is more beneficial. The said amendments shall entitle foreign investors to claim credit in their country of residence of tax paid in India in respect of dividend distributed by domestic companies. The change in the tax regime by Indian Government regarding payment of taxes may increase tax burden in the hands of the parent company of our Indian Subsidiary.

Aforesaid legal provisions under the IT Act are applicable to Do Mobile, thus, Do Mobile is under an obligation to mandatorily follow the provisions under the IT Act.

Taxation on Sale of Shares

Transfer of shares of a private limited company will attract capital gains tax which will be either long-term or short-term capital gains tax, on the basis of the time period for which shares of Indian company are held. Capital gains realised in respect of shares held by a shareholder for more than 24 months are treated as long-term capital gains, while capital gains realised in respect of shares held for 24 months or less are treated as short-term capital gains.

Remittance on Sale Proceeds

The Foreign Exchange Management (Non-debt Instruments) Rules, 2019 and the FEMA (Remittance of Assets) Regulations, 2016 govern the remittance of sale proceeds of an Indian security held by a person resident outside India.

Return of Income

As per IT Act, a person having income liable to tax in India is required to file a return of its income with the Income Tax Department, Government of India. The return of income must be filed before specific due dates prescribed for various kinds of entities for each financial year. Every company, including a foreign company, deriving income from India, is required to file such return in India.

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Tax Treaties

The tax levied upon foreign company shall be subject to any benefits available to it by virtue of any double taxation avoidance agreement (“DTAA”) entered into by the Government of India with the government of that country where that foreign company has been incorporated. Where there is no DTAA signed between India and another foreign country, the company could be taxed both by the source country (India) as well as the residence (foreign) country. Article 5(1) of most of DTAA signed between India and other countries defines “Permanent Establishment” as a fixed place of business through which the business of the enterprise is wholly or partly carried on. In computation of the income of a non-resident, the provisions of DTAA between India and the country of residence of the non-resident are required to be examined, since the IT Act provides that its provisions shall be applicable only insofar as they are more beneficial to the taxpayer.

Transfer Pricing

Section 92 of the IT Act provides that income arising from an ‘international transaction’ shall be computed having regard to the arm’s length price. The expression ‘international transaction’ has been defined to mean a transaction between two or more ‘associated enterprises’, either or both of whom are non-residents, in the nature of purchase, sale or lease of tangible or intangible property, or provision of services, or lending or borrowing money, or any other transaction having a bearing on the profits, income, losses or assets of such enterprises. Further, two enterprises shall be treated as associated enterprises if any of the criteria as enumerated in Section 92A of the IT Act is being satisfied.

Taxation on Buyback

Sections 115-QA to 115-QC of the IT Act laid down that tax shall be payable by the company on buy back of its own shares at the rate 20% of the ‘distributed income’ (plus applicable surcharge and health cess). The distributed income here refers to the amount computed by reducing the amount received by the company on issuance of shares from the consideration paid on buyback. Such income tax paid by the company shall be the final tax liability and consequently, the amount/ consideration received by the shareholder(s) would be exempt from tax in their respective hands.

Withholding Tax

A person (except individuals in certain cases) is required to withhold tax from certain specified payments. Separate provisions exist in respect of tax to be deducted on specific transactions with residents and non-residents. The IT Act provides for withholding of taxes from payments made to non-residents, which are chargeable to tax under the IT Act. Any person, whether resident or non-resident, making payment to a non-resident would be liable to withhold tax from such payment and deposit the same with the Government of India within the prescribed time. Moreover, prescribed returns are also required to be filed periodically with the tax authorities. The payee is entitled to adjust the taxes so withheld against his tax liability in India on production of a (tax credit) certificate to be issued by the person withholding the tax.

Compliances under Goods and Services Tax (GST)

Goods and Services Act, 2017 (“GST Act”) prescribes the applicability of indirect taxes in India, which is applicable on supplying of goods and services by business enterprises in India. Therefore, a business enterprise in India dealing in goods and services has to comply with certain obligations under the GST Act:

● GST Registration: An Indian company requires registration under GST Act, which will be used for the future correspondences of the business of the company.

● Filing of Returns: An Indian company is required to file the periodical (monthly & annually) returns as prescribed under the GST Act on the prescribed due dates to provide detail regarding sale and purchase of goods & services and for claiming the input credit also.

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GST Compliances on Import of Goods

As understood generally, import of goods means bringing goods into the territory of India. Import of goods under GST Act is treated as inter-State supplies and hence, is subject to Integrated GST in addition to the applicable customs duties. However, in such a case, since the service provider is situated outside India, it is the responsibility of the service recipient to deposit Integrated GST under reverse charge mechanism and undertake related compliances.

Material United States Federal Income Tax Considerations

Subject to the limitations described below, the following are the material U.S. federal income tax consequences of the purchase, ownership and disposition of ordinary shares to a “U.S. Holder.” Non-U.S. Holders are urged to consult their own tax advisors regarding the U.S. federal income tax consequences of the purchase, ownership and disposition of ordinary shares to them. For purposes of this discussion, a “U.S. Holder” means a beneficial owner of ordinary shares that is, for U.S. federal income tax purposes:

● an individual who is a citizen or resident of the United States;

● a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States or any of its political subdivisions;

● an estate, whose income is includible in gross income for U.S. federal income tax purposes regardless of its source; or

● a trust if (i) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust, or (ii) it has a valid election to be treated as a U.S. person.

A “non-U.S. Holder” is any individual, corporation, trust or estate that is a beneficial owner of ordinary shares and is not a U.S. Holder or a partnership (or other entity treated as a partnership for U.S. federal income tax purposes).

This discussion is based on current provisions of the Internal Revenue Code of 1986, as amended, or the Code, applicable U.S. Treasury Regulations promulgated thereunder, and administrative and judicial decisions as of the date of this annual report, all of which are subject to change, possibly on a retroactive basis, and any change could affect the continuing accuracy of this discussion.

This summary does not purport to be a comprehensive description of all of the tax considerations that may be relevant to each person’s decision to purchase ordinary shares. This discussion does not address all aspects of U.S. federal income taxation that may be relevant to any particular U.S. Holder based on such holder’s particular circumstances, including Medicare tax imposed on certain investment income. In particular, this discussion considers only U.S. Holders that will own ordinary shares as capital assets within the meaning of section 1221 of the Code and does not address the potential application of U.S. federal alternative minimum tax or the U.S. federal income tax consequences to U.S. Holders that are subject to special treatment, including:

● broker dealers or insurance companies;

● U.S. Holders who have elected mark-to-market accounting;

● tax-exempt organizations or pension funds;

● regulated investment companies, real estate investment trusts, insurance companies, financial institutions or “financial services entities”;

● U.S. Holders who hold ordinary shares as part of a “straddle,” “hedge,” “constructive sale” or “conversion transaction” or other integrated investment;

● U.S. Holders who own or owned, directly, indirectly or by attribution, at least 10% of the voting power of our ordinary shares;

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● U.S. Holders whose functional currency is not the U.S. Dollar;

● U.S. Holders who received ordinary shares as compensation;

● persons holding ordinary shares in connection with a trade or business outside of the United States; and

● certain expatriates or former long-term residents of the United States.

This discussion does not address the tax treatment of holders that are entities treated as partnerships for U.S. federal income tax purposes or other pass-through entities or persons who hold ordinary shares through a partnership or other pass-through entity. In addition, this discussion does not address any aspect of state, local or non-U.S. tax laws, or the possible application of U.S. federal gift or estate tax.

BECAUSE OF THE COMPLEXITY OF THE TAX LAWS AND BECAUSE THE TAX CONSEQUENCES TO ANY PARTICULAR HOLDER OF ORDINARY SHARES MAY BE AFFECTED BY MATTERS NOT DISCUSSED HEREIN, EACH HOLDER OF ORDINARY SHARES IS URGED TO CONSULT WITH ITS TAX ADVISOR WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF THE ACQUISITION AND THE OWNERSHIP AND DISPOSITION OF ORDINARY SHARES, INCLUDING THE APPLICABILITY AND EFFECT OF STATE, LOCAL AND NON-U.S. TAX LAWS, AS WELL AS U.S. FEDERAL TAX LAWS AND APPLICABLE TAX TREATIES.

Taxation of Dividends Paid on Ordinary Shares

Subject to the passive foreign investment company rules discussed below, the gross amount of distributions made by us with respect to our ordinary shares generally will be includable in the gross income of U.S. Holders as dividend income. Because we do not determine our earnings and profits for U.S. federal income tax purposes, a U.S. Holder will be required to treat any distribution paid on ordinary shares, including the amount of non-U.S. taxes, if any, withheld from the amount paid, as a dividend on the date the distribution is received. Such distribution generally will not be eligible for the dividends-received deduction generally allowed to U.S. corporations in respect of dividends received from other U.S. corporations.

Cash distributions paid in a non-U.S. currency will be included in the income of U.S. Holders at a U.S. Dollar amount equal to the spot rate of exchange in effect on the date the dividends are includible in the income of the U.S. Holders, regardless of whether the payment is in fact converted to U.S. Dollars, and U.S. Holders will have a tax basis in such non-U.S. currency for U.S. federal income tax purposes equal to such U.S. Dollar value. If a U.S. Holder converts a distribution paid in non-U.S. currency into U.S. Dollars on the day the dividend is includible in the income of the U.S. Holder, the U.S. Holder generally should not be required to recognize gain or loss arising from exchange rate fluctuations. If a U.S. Holder subsequently converts the non-U.S. currency, any subsequent gain or loss in respect of such non-U.S. currency arising from exchange rate fluctuations will be U.S.-source ordinary income or loss.

Dividends we pay with respect to our ordinary shares to non-corporate U.S. Holders may be “qualified dividend income,” which is currently taxable at a reduced rate; provided that (i) our ordinary shares are readily tradable on an established securities market in the United States, (ii) we are not a passive foreign investment company (as discussed below) with respect to the U.S. Holder for either our taxable year in which the dividend was paid or the preceding taxable year, (iii) the U.S. Holder has held our ordinary shares for at least 61 days of the 121-day period beginning on the date which is 60 days before the ex-dividend date, and (v) the U.S. Holder is not under an obligation to make related payments on substantially similar or related property. We believe our ordinary shares, which are expected to be listed on the NASDAQ, will be considered to be readily tradable on an established securities market in the United States, although there can be no assurance that this will continue to be the case in the future. Any days during which a U.S. Holder has diminished its risk of loss on our ordinary shares are not counted towards meeting the 61-day holding period. U.S. Holders should consult their own tax advisors on their eligibility for reduced rates of taxation with respect to any dividends paid by us.

Distributions paid on ordinary shares generally will be foreign-source passive category income for U.S. foreign tax credit purposes and will not qualify for the dividends received deduction generally available to corporations. Subject to certain conditions and limitations, non-U.S. taxes, if any, withheld from a distribution may be eligible for credit against a U.S. Holder’s U.S. federal income tax liability. In addition, if 50 percent or more of the voting power or value of our shares is owned, or is treated as owned, by U.S. persons (whether or not we are a “controlled foreign corporation” for U.S. federal income tax purposes), the portion of our dividends attributable to income which we derive from sources within the United States (whether or not in connection with a trade or business) would generally be U.S.-source income. U.S. Holders would not be able directly to utilize foreign tax credits arising from non U.S. taxes considered to be imposed upon U.S.-source income.

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Taxation of the Sale or Other Disposition of Ordinary Shares

Subject to the passive foreign investment company rules discussed below, a U.S. Holder generally will recognize a capital gain or loss on the taxable sale or other disposition of our ordinary shares in an amount equal to the difference between the U.S. Dollar amount realized on such sale or other disposition (determined in the case of consideration in currencies other than the U.S. Dollar by reference to the spot exchange rate in effect on the date of the sale or other disposition or, if the ordinary shares are treated as traded on an established securities market and the U.S. Holder is a cash basis taxpayer or an electing accrual basis taxpayer, the spot exchange rate in effect on the settlement date) and the U.S. Holder’s adjusted tax basis in such ordinary shares determined in U.S. Dollars. The initial tax basis of ordinary shares to a U.S. Holder will be the U.S. Holder’s U.S. Dollar cost for ordinary shares (determined in the case of consideration in currencies other than the U.S. Dollar by reference to the spot exchange rate in effect on the date of the purchase or, if the ordinary shares are treated as traded on an established securities market and the U.S. Holder is a cash basis taxpayer or an electing accrual basis taxpayer, the spot exchange rate in effect on the settlement date).

Capital gain from the sale, exchange or other disposition of ordinary shares held more than one year generally will be treated as long-term capital gain and is eligible for a reduced rate of taxation for non-corporate holders. Gain or loss recognized by a U.S. Holder on a sale or other disposition of ordinary shares generally will be treated as U.S.-source income or loss for U.S. foreign tax credit purposes. The deductibility of a capital loss recognized on the sale or exchange of ordinary shares is subject to limitations. A U.S. Holder that receives currencies other than U.S. Dollars upon disposition of the ordinary shares and converts such currencies into U.S. Dollars subsequent to receipt will have foreign exchange gain or loss based on any appreciation or depreciation in the value of such currencies against the U.S. Dollar, which generally will be U.S.-source ordinary income or loss.

Passive Foreign Investment Company

In general, a non-U.S. corporation will be classified as a passive foreign investment company (a “PFIC”) for any taxable year if at least (i) 75% of its gross income is classified as “passive income” or (ii) 50% of its assets (determined on the basis of a quarterly average) produce or are held for the production of passive income. For these purposes, cash is generally considered a passive asset. In making this determination, the non-U.S. corporation is treated as earning its proportionate share of any income and owning its proportionate share of any assets of any corporation in which it holds 25% or more (by value) of the stock. Although the law in this regard is unclear, we treat our consolidated affiliated entities as being owned by us for United States federal income tax purposes, not only because we exercise effective control over the operation of such entities but also because we are entitled to substantially all of their economic benefits.

Based on our current composition of assets and income, we believe that we are not currently a PFIC for U.S. federal income tax purposes. However, the determination of whether we are a PFIC is made annually, after the close of the relevant taxable year. Therefore, it is possible that we could be classified as a PFIC for the current taxable year or in future years due to changes in the composition of our assets (including as a result of the cash we raise in our initial public offering) or income, as well as changes to our market capitalization. The market value of our assets may be determined in large part by reference to the market price of our ordinary shares, which may fluctuate.

Under the PFIC rules, if we were considered a PFIC at any time that a U.S. Holder holds our shares, we would continue to be treated as a PFIC with respect to such holder’s investment unless (i) we cease to be a PFIC and (ii) the U.S. Holder has made a “deemed sale” election under the PFIC rules.

If we are considered a PFIC at any time that a U.S. Holder holds our shares, and unless such U.S. Holder makes a valid and timely “mark to market” election as described below, any gain recognized by the U.S. Holder on a sale or other disposition of the shares, as well as the amount of an “excess distribution” (defined below) received by such holder, would be allocated ratably over the U.S. Holder’s holding period for the shares. The amounts allocated to the taxable year of the sale or other disposition and to any year before we became a PFIC would be taxed as ordinary income. The amount allocated to each other taxable year would be subject to tax at the highest rate in effect for individuals or corporations, as appropriate, for that taxable year, and an interest charge would be imposed. For purposes of these rules, an excess distribution is the amount by which any distribution received by a U.S. Holder on its shares exceeds 125% of the average of the annual distributions on the shares received during the preceding three years or the U.S. Holder’s holding period, whichever is shorter.

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If we are treated as a PFIC with respect to a U.S. Holder for any taxable year, the U.S. Holder will be deemed to own shares in any of our subsidiaries that are also PFICs. However, an election for mark-to-market treatment would likely not be available with respect to any such subsidiaries. If we are considered a PFIC, a U.S. Holder will also be subject to information reporting requirements on an annual basis. U.S. Holders should consult their own tax advisors about the potential application of the PFIC rules to an investment in our shares.

If we were classified as a PFIC, a U.S. Holder may be able to make a “mark-to-market” election with respect to our ordinary shares (but not with respect to the shares of any lower-tier PFICs) if the ordinary shares are “regularly traded” on a “qualified exchange”. In general, our ordinary shares will be treated as “regularly traded” in any calendar year in which more than a de minimis quantity of ordinary shares are traded on a qualified exchange on at least 15 days during each calendar quarter. However, the Company can make no assurance that the ordinary shares will be listed on a “qualified exchange” or that there will be sufficient trading activity for the ordinary shares to be treated as “regularly traded”. Accordingly, U.S. Holders should consult their own tax advisers as to whether their ordinary shares would qualify for the mark-to-market election.

If a U.S. Holder makes a valid mark-to-market election for the first taxable year that such U.S. Holder holds our ordinary shares and as to which the Company is classified as a PFIC, the holder will generally include as ordinary income the excess, if any, of the fair market value of the ordinary shares at the end of the taxable year over their adjusted tax basis, and will be permitted an ordinary loss in respect of the excess, if any, of the adjusted tax basis of the ordinary shares over their fair market value at the end of the taxable year (but only to the extent of the net amount of previously included income as a result of the mark-to-market election). If a U.S. Holder makes the election, the holder’s tax basis in our ordinary shares will be adjusted to reflect any such income or loss amounts. Any gain recognized on the sale or other disposition of our ordinary shares will be treated as ordinary income, and any loss will be treated as an ordinary loss to the extent of any prior mark-to-market gains.

If a U.S. Holder makes the mark-to-market election, it will be effective for the taxable year for which the election is made and all subsequent taxable years unless the ordinary shares are no longer regularly traded on a qualified exchange or the IRS consents to the revocation of the election.

If we were classified as a PFIC, U.S. Holders would not be eligible to make an election to treat us as a “qualified electing fund,” or a QEF election, because we do not anticipate providing U.S. Holders with the information required to permit a QEF election to be made.

U.S. Information Reporting and Backup Withholding

A U.S. Holder is generally subject to information reporting requirements with respect to dividends paid in the United States on ordinary shares and proceeds paid from the sale, exchange, redemption or other disposition of ordinary shares. A U.S. Holder is subject to backup withholding (currently at 24%) on dividends paid in the United States on ordinary shares and proceeds paid from the sale, exchange, redemption or other disposition of our ordinary shares unless the U.S. Holder is a corporation, provides an IRS Form W-9 or otherwise establishes a basis for exemption.

Backup withholding is not an additional tax. Amounts withheld under the backup withholding rules may be credited against a U.S. Holder’s U.S. federal income tax liability, and a U.S. Holder may obtain a refund from the IRS of any excess amount withheld under the backup withholding rules, provided that certain information is timely furnished to the IRS. Holders are urged to consult their own tax advisors regarding the application of backup withholding and the availability of and procedures for obtaining an exemption from backup withholding in their particular circumstances.

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Certain Reporting Obligations

If a U.S. Holder (together with persons considered to be related to the U.S. Holder) subscribes for ordinary shares for a total initial public offering price in excess of $100,000 (or the equivalent in a foreign currency), such holder may be required to file IRS Form 926 for the holder’s taxable year in which the initial public offering price is paid. U.S. Holders should consult their own tax advisors to determine whether they are subject to any Form 926 filing requirements.

Individuals that own “specified foreign financial assets” may be required to file an information report with respect to such assets with their tax returns. Subject to certain exceptions, “specified foreign financial assets” include any financial accounts maintained by foreign financial institutions, as well as any of the following, but only if they are not held in accounts maintained by financial institutions: (i) stocks and securities issued by non U.S. persons, (ii) financial instruments and contracts held for investment that have non U.S. issuers or counterparties, and (iii) interests in foreign entities. The ordinary shares may be subject to these rules. Persons required to file U.S. tax returns that are individuals are urged to consult their tax advisers regarding the application of this legislation to their ownership of the ordinary shares.

10.F. Dividends and Paying Agents

Not Applicable.

10.G. Statement by Experts

Not Applicable.

10.H. Documents on Display

The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended, and will file reports, registration statements and other information with the SEC. The Company’s reports, registration statements and other information can be inspected on the SEC’s website at www.sec.gov. You may also visit us on website at www.utimemobile.com. However, information contained on our website does not constitute a part of this annual report.

10.I. Subsidiary Information

Not Applicable.

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ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Foreign exchange risk

We transact business globally in multiple currencies. Our international revenue, as well as costs and expenses denominated in foreign currencies, expose us to the risk of fluctuations in foreign currency exchange rates against the U.S. dollar. We have foreign currency risks related to our revenue and operating expenses denominated in currencies of the U.S. dollar and Renminbi. Accordingly, changes in exchange rates in the future may negatively affect our future revenue and other operating results as expressed in U.S. dollars. Our foreign currency risk is partially mitigated as our revenue recognized in currencies other than the U.S. dollar is diversified across geographic regions and we incur expenses in the same currencies in these regions. We have not used any derivative financial instruments to hedge exposure to such risk.

The value of U.S. dollar against Renminbi may fluctuate and is affected by, among other things, changes in political and economic conditions and the foreign exchange policy adopted by the PRC government. The Renminbi is not freely convertible into foreign currencies. Remittances of foreign currencies into the PRC or remittances of Renminbi out of the PRC as well as exchange between Renminbi and foreign currencies require approval by foreign exchange administrative authorities and certain supporting documentation. The State Administration for Foreign Exchange, under the authority of the People’s Bank of China, controls the conversion of Renminbi into other currencies. To the extent that we need to convert U.S. dollars into Renminbi for our operations, appreciation of Renminbi against the U.S. dollar would reduce the Renminbi amount we receive from the conversion. Conversely, if we decide to convert Renminbi into U.S. dollars for the purpose of making payments for dividends on our ordinary shares or ADSs, servicing our outstanding debt, or for other business purposes, appreciation of the U.S. dollar against the Renminbi would reduce the U.S. dollar amounts available to us.

Interest rate risk

Our exposure to interest rate risk primarily relates to the interest income generated by excess cash, which is mostly held in interest-bearing bank deposits. Interest-earning instruments carry a degree of interest rate risk. We have not been exposed to material risks due to changes in interest rates, and we have not used any derivative financial instruments to manage our interest risk exposure.

We may invest the net proceeds we received from our initial public offering in interest-earning instruments. Investments in both fixed rate and floating rate interest earning instruments carry a degree of interest rate risk. Fixed rate securities may have their fair market value adversely impacted due to a rise in interest rates, while floating rate securities may produce less income than expected if interest rates fall.

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

12.A. Debt Securities

Not applicable.

12.B. Warrants and Rights

Not applicable.

12.C. Other Securities

Not applicable.

12.D. American Depositary Shares

Not applicable.

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PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

Not Applicable.

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

Material Modifications to the Rights of Security Holders

See “Item 10. Additional Information-B. Memorandum and Articles of Association” for a description of the rights of securities holders, which remain unchanged.

Use of Proceeds

The following “Use of Proceeds” information relates to the registration statement on Form F-1, as amended (File Number: 333-237260), or the Form F-1, in relation to our IPO of 3,750,000 ordinary shares at an initial offering price of US$4.00 per share. The Form F-1 was declared effective by the SEC on April 5, 2021. Our IPO closed on April 8, 2021. Our underwriters were Boustead Securities, LLC, Brilliant Norton Securities Company Limited and Fosun Hani Securities Ltd.

The total expenses incurred for our company’s account in connection with our IPO were approximately US$2.9 million, including underwriting discounts and commissions of approximately US$1.1 million and other expenses of approximately US$1.8 million. None of the fees and expenses were directly or indirectly paid to the directors, officers of our company or their associates, persons owning 10% or more of our ordinary shares, or our affiliates.

After deducting the total expenses, we received net proceeds of approximately US$12.1 million from our IPO.

None of the net proceeds from our initial public offering were directly or indirectly paid to the directors, officers of our company or their associates, persons owning 10% or more of our ordinary shares, or our affiliates.

ITEM 15. Controls and Procedures

(a) Disclosure Controls and Procedures

Our management, under the supervision and with the participation of our chief executive officer and chief financial officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures, which is defined in Rules 13a-15(e) of the Exchange Act, as of March 31, 2023. Disclosure controls and procedures means controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rule and forms and that such information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our chief executive officer and chief financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosures.

Based upon that evaluation, our management, with the participation of our chief executive officer and chief financial officer, has concluded that, as of the end of the period covered by this annual report, our disclosure controls and procedures were not effective as of March 31, 2023, in ensuring that the information required to be disclosed by us in the reports that we file and furnish under the Exchange Act was recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our chief executive officer and chief financial officer, to allow timely decisions regarding required disclosure

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(b) Management’s Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) under the Exchange Act. Our management evaluated the effectiveness of our internal control over financial reporting, as required by Rule 13a-15(c) of the Exchange Act, based on criteria established in the framework in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, our management has concluded that our internal control over financial reporting was not effective as of March 31, 2023.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. In addition, projections of any evaluation of effectiveness of our internal control over financial reporting to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.

A “material weakness” is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. Based on this evaluation, our management has concluded that our internal control over financial reporting was not effective as of March 31, 2023.

Based on the assessment, we identified material weaknesses. Specifically, we did not maintain appropriately designed entity-level controls impacting the control environment, risk assessment procedures, and effective monitoring controls to prevent or detect material misstatements to the consolidated financial statements. These deficiencies were attributed to (i) our lack of sufficient qualified financial reporting and accounting personnel with an appropriate knowledge under U.S. GAAP and (ii) our lack of comprehensive accounting policies and procedures manual in accordance with U.S. GAAP.

Following the identification of the material weaknesses, we have taken certain steps and plan to and will continue to take measures to strengthen our internal control over financial reporting including: (i) we are in the process of hiring additional qualified finance and accounting staff with working experience in U.S. GAAP and SEC reporting requirements; (ii) we have appointed three independent directors as of the date of this annual report. Furthermore, we plan to implement the following measures: (i) establishing a separate department which will be responsible for the reporting process; (ii) further streamlining our reporting process to support our business development as necessary; and (iii) engaging professional financial advisory firms if necessary, to provide ongoing training to our finance and accounting personnel as well as to strengthen our financial reporting expertise and system. We expect to complete the measures discussed above as soon as practicable and will continue to implement measures to remediate these material weaknesses. We expect that we will incur significant costs in the implementation of such measures.

However, the implementation of those measures may not fully address the material weaknesses identified in our internal control over financial reporting. We have disclosed the material weaknesses in our internal control over financial reporting in “Risk Factors” - Risks Related to Our Business and Industry. If we fail to develop and maintain an effective system of internal control over financial reporting, we may be unable to accurately report our financial results or prevent fraud.”

(c) Attestation report of the registered public accounting firm

We did not include an attestation report of our registered public accounting firm in this annual report. As a company with less than US$1.235 billion of revenue for last financial year, we qualified as an “emerging growth company” pursuant to the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002 in the assessment of an emerging growth company’s internal control over financial reporting.

(d) Changes in Internal Control over Financial Reporting

Other than those disclosed above, there were no changes in our internal controls over financial reporting during our fiscal year ended March 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

160

ITEM 16. RESERVED

ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT

Our audit committee consists of Na Cai, Xiaoqian Jia and Hailin Xie. Our board of directors has determined that Na Cai, Xiaoqian Jia and Hailin Xie are “independent directors” within the meaning of NASDAQ Stock Market Rule 5605(a)(2) and meet the criteria for independence set forth in Rule 10A−3(b) of the Exchange Act. David Sherman meets the criteria of an audit committee financial expert as set forth under the applicable rules of the SEC.

ITEM 16B. CODE OF ETHICS

Our board of directors has adopted a code of ethics that applies to all of our executive officers, directors and employees in accordance with the rules of the NASDAQ and the SEC. The purpose of the code is to promote ethical conduct and deter wrongdoing. The policies outlined in the Code are designed to ensure that our directors, executive officers and employees act in accordance with not only the letter but also the spirit of the laws and regulations that apply to our business. We expect our directors, executive officers and employees to exercise good judgment, to uphold these standards in their day-to-day activities, and to comply with all applicable policies and procedures in the course of their relationship with the company. Any amendment to or waivers of the Code for members of our board of directors and our executive officers that are required to be disclosed by the rules of the SEC or NASDAQ will be disclosed on our website at www.utimemobile.com within four business days following the amendment or waiver. During fiscal year 2023, no amendments to or waivers from the Code were made or given for any of our executive officers.

Our code of ethics is publicly available on our website at investor.utimeworld.com.

ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES

	Year Ended March 31, 2023		Year Ended March 31, 2022
Audit fees*
BDO China Shu Lun Pan Certified Public Accountants LLP.	$	-		61,000
Audit Alliance LLP	$	180,000		200,000
Total	$	180,000		261,000

* Audit Fees consist of fees billed for the annual audit of our consolidated financial statements and review of our interim condensed consolidated financial statements. They also include fees billed for other audit services, which are those services that only the external auditor reasonably can provide, and include the provision for consents relating to the review of documents filed with the SEC.

The policy of our audit committee and our board of directors is to pre-approve all audit and non-audit services provided by our principal auditors, including audit services, audit-related services, and other services as described above, other than those for de minimis services which are approved by the audit committee or our board of directors prior to the completion of the services.

ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

Not Applicable.

ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

None.

ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT

Not Applicable.

161

ITEM 16G. CORPORATE GOVERNANCE

Our ordinary shares are listed on the NASDAQ Capital Market, or NASDAQ. As such, we are subject to corporate governance requirements imposed by NASDAQ. Under NASDAQ rules, listed non-US companies such as ourselves may, in general, follow their home country corporate governance practices in lieu of some of the NASDAQ corporate governance requirements. A NASDAQ -listed non-US company is required to provide a general summary of the significant differences to its US investors either on the company website or in its annual report distributed to its US investors.

Certain corporate governance practices in Cayman Islands, which is our home country, may differ significantly from the Nasdaq corporate governance listing standards. The following summarizes some significant ways in which our corporate governance practices differ from those followed by domestic companies under the listing standards of the Nasdaq:

Pursuant to the home country rule exemption set forth under Nasdaq Listing Rule 5615(a)(3)(A), which provides (with certain exceptions not relevant to the conclusions expressed herein) that a foreign private issuer may follow its home country practice in lieu of the requirements of the Nasdaq Marketplace Rule 5600 Series, we elected to be exempt from the requirements as follows:

(a) Nasdaq Marketplace Rule 5620 which provides that (with certain exceptions not relevant to the conclusions expressed herein) each company listing common stock or voting preferred stock, and their equivalents, shall hold an annual meeting of shareholders no later than one year after the end of the company’s fiscal year-end; and

(b) Nasdaq Marketplace Rule 5635 which sets forth the circumstances under which shareholder approval is required prior to an issuance of securities in connection with: (i) the acquisition of the stock or assets of another company; (ii) equity-based compensation of officers, directors, employees or consultants; (iii) a change of control; and (iv) transactions other than public offerings.

(c) Nasdaq Listing Rule 5615(a)(3)(A) provides (with certain exceptions not relevant to the conclusions expressed herein) that a Foreign Private Issuer may follow its home country practice in lieu of the requirements of the Rule 5600 Series, the requirement to disclose third party director and nominee compensation set forth in Rule 5250(b)(3), and the requirement to distribute annual and interim reports set forth in Rule 5250(d), provided, however, that such a company shall: comply with the Notification of Noncompliance requirement (Rule 5625), the Voting Rights requirement (Rule 5640), have an audit committee that satisfies Rule 5605(c)(3), and ensure that such audit committee’s members meet the independence requirement in Rule 5605(c)(2)(A)(ii) and that Nasdaq Information Memorandum IM-5615-3 provides that a Foreign Private Issuer that elects to follow country practice in lieu of a requirement of Rules 5600, 5250(b)(3) or 5250(d) shall submit to Nasdaq a written statement from an independent counsel in such company’s home country certifying that the company’s practices are not prohibited by the home country’s laws.

Except for the foregoing, we endeavor to comply with the Nasdaq corporate governance practices and except for the foregoing, there is no significant difference between our corporate governance practices and what the Nasdaq requires of domestic U.S. companies.

ITEM 16H. MINE SAFETY DISCLOSURE

Not applicable.

ITEM 16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS 

Not applicable.

ITEM 16J. INSIDER TRADING POLICIES 

We have adopted insider trading policies governing the purchase, sale, and other dispositions of our securities by directors, senior management, and employees. A copy of the insider trading policies is attached as an exhibit to this annual report.

162

PART III

ITEM 17. FINANCIAL STATEMENTS

We have elected to provide financial statements pursuant to Item 18.

ITEM 18. FINANCIAL STATEMENTS

The consolidated financial statements and related notes required by this item are contained on pages F-1 through F-42.

ITEM 19. EXHIBITS

Exhibit Number	Description of Document
1.1	Amended and Restated Memorandum and Article of Association(7)
2.1	Description of Shares (7)
4.1	Second Amended and Restated Business Operation Agreement, dated September 4, 2019, by and among Shenzhen UTime Technology Consulting Co., Ltd., United Time Technology Company Limited, Min He and Minfei Bao. (1)
4.2	Second Amended and Restated Exclusive Call Option Agreement, dated September 4, 2019, by and among Shenzhen UTime Technology Consulting Co., Ltd., United Time Technology Company Limited, Min He and Minfei Bao. (1)
4.3	Exclusive Technical Consultation and Service Agreement, dated March 19, 2019, by and between Shenzhen UTime Technology Consulting Co., Ltd. and United Time Technology Company Limited. (1)
4.4	Second Amended and Restated Equity Pledge Agreement, dated September 4, 2019, by and among Shenzhen UTime Technology Consulting Co., Ltd., United Time Technology Company Limited, Min He and Minfei Bao. (1)
4.5	Second Amended and Restated Power of Attorney, dated September 4, 2019, executed by Minfei Bao. (1)
4.6	Amended and Restated Power of Attorney, dated September 4, 2019, executed by Min He. (1)
4.7	Second Amended and Restated Spousal Consent Letter, dated September 4, 2019, executed by Minfei Bao’s spouse. (1)
4.8	Amended and Restated Spousal Consent Letter, dated September 4, 2019, executed by Min He’s spouse. (1)
4.9	English Translation of Credit Agreement, dated April 23, 2019, by and between United Time Technology Company Limited and China Construction Bank. (2)
4.10	English Translation of Credit Agreement, dated August 1, 2019, by and between United Time Technology Company Limited and Shenzhen Rural Commercial Bank. (5)
4.11	English Translation of Credit Agreement, dated August 1, 2019, by and between United Time Technology Company Limited and Shenzhen Rural Commercial Bank. (5)
4.12	English Translation of Lease Agreement, dated February 1, 2018, by and between United Time Technology Company Limited and Shenzhen BuTa Entertainment Technology Co., Ltd. (1)
4.13	English Translation of Lease Agreement, dated September 1, 2017, by and between Guizhou United Time Technology Co., Ltd. and Guizhou Jietongda Technology Co., Ltd. (1)
4.14	English Translation of Factory Lease Agreement, dated September 1, 2017, by and between Guizhou United Time Technology Co., Ltd. and Guizhou Jietongda Technology Co., Ltd. (2)
4.15	English Translation of Supplemental Factory Lease Agreement, dated October 10, 2019, by and between Guizhou United Time Technology Co., Ltd. and Guizhou Jietongda Technology Co., Ltd. (2)
4.18	Form of Indemnification Agreement between the Registrant and its officers and directors.(2)
4.19	English Translation of Mechanical Equipment Purchase Agreement, by and between United Time Technology Company Limited and Guizhou Jietongda Technology Co., Ltd. (2)
4.20	English Translation of Credit Agreement, dated May 8, 2020, by and between United Time Technology Company Limited and China Construction Bank. (2)
4.21	English Translation of Guarantee Agreement for Credit Line Loan, dated May 8, 2020, by and between Guizhou United Time Technology Co., Ltd. and China Construction Bank. (7)
4.22	English Translation of Guarantee Agreement by Natural Person for Credit Line Loan, dated May 8, 2020, by and between Minfei Bao and China Construction Bank. (7)

163

Exhibit Number	Description of Document
4.23	English Translation of Guarantee Agreement by Natural Person for Credit Line Loan, dated May 8, 2020, by and between Qiuzi Ping and China Construction Bank. (2)
4.24	English Translation of Agreement on Maximum Amount Mortgage for Credit Line Loan, dated May 8, 2020, by and between United Time Technology Company Limited and China Construction Bank. (7)
4.25	English Translation of Agreement on Maximum Accounts Receivable Pledge for Credit Line Loan, dated May 8, 2020, by and between United Time Technology Company Limited and China Construction Bank. (7)
4.26	Share Repurchase Agreement, dated April 29, 2020, among UTime Limited, Grandsky Phoenix Limited and HMercury Capital Limited. (7)
4.27	Loan Agreements, dated between June 2018 and May 2020, by and between United Time Technology Co., Ltd. and Minfei Bao. (7)
4.28	Debt Offset Agreement, dated March 31, 2019, by and between United Time Technology Co., Ltd. and Minfei Bao. (7)
4.29	Debt Offset Agreement, dated March 31, 2019, by and among UTime Technology (HK) Co., Ltd., UTime Limited and Minfei Bao. (3)
4.30	Debt Transfer Agreement, dated March 31, 2019, by and among Bridgetime Limited, UTime Limited and Minfei Bao. (3)
4.31	English Translation of Factoring Agreement, dated July 17, 2020, by and between Guizhou United Time Technology Co., Ltd. and TCL Commercial Factoring (Shenzhen) Company Limited. (4)
4.32	English Translation of Agreement on Maximum Amount Guarantee for Factoring Agreement, by and between United Time Technology Co., Ltd. and TCL Commercial Factoring (Shenzhen) Company Limited (4)
4.33	English Translation of Agreement on Maximum Amount Guarantee for Factoring Agreement, by and between Minfei Bao and TCL Commercial Factoring (Shenzhen) Company Limited. (4)
4.34	English Translation of Lease Agreement, dated September 25, 2019, by and between United Time Technology Co., Ltd. and Shenzhen Fumeibang Technology Co., Ltd. (4)
4.35	English Translation of General Credit Agreement, dated November 13, 2020, by and between United Time Technology Company Limited and China Resources Bank of Zhuhai Co., Ltd. (6)
4.36	English Translation of Working Capital Loan Agreement, dated November 18, 2020, by and between United Time Technology Company Limited and China Resources Bank of Zhuhai Co., Ltd. (6)
4.37	English Translation of Guarantee Agreement for Credit Line Loan, dated November 13, 2020, by and among Guizhou United Time Technology Co., Ltd., Minfei Bao, Qiuzi Ping and China Resources Bank of Zhuhai Co., Ltd. (6)
4.38	English Translation of Agreement on Maximum Amount Mortgage for Credit Line Loan, dated November 13, 2020, by and between United Time Technology Company Limited and China Resources Bank of Zhuhai Co., Ltd. (6)
4.39	English Translation of Factoring Agreement, dated November 18, 2020, by and between United Time Technology Co., Ltd. and TCL Commercial Factoring (Shenzhen) Company Limited (6)
4.40	English Translation of Agreement on Maximum Amount Guarantee for Factoring Agreement, dated November 17, 2020, by and between Guizhou United Time Technology Co., Ltd. and TCL Commercial Factoring (Shenzhen) Company Limited (6)
4.41	English Translation of Agreement on Maximum Amount Guarantee for Factoring Agreement, dated November 17, 2020, by and between Minfei Bao and TCL Commercial Factoring (Shenzhen) Company Limited (6)

164

Exhibit Number	Description of Document
4.42	English Translation of Credit Agreement, dated June 29, 2021, by and between United Time Technology Company Limited and Shenzhen Rural Commercial Bank(7)
4.43	English Translation of Credit Agreement, dated June 29, 2021, by and between United Time Technology Company Limited and Shenzhen Rural Commercial Bank(7)
4.44	English Translation of Maximum Amount Mortgage for Credit Line Loan Agreement, dated June 29, 2021, by and between United Time Technology Company Limited and Shenzhen Rural Commercial Bank(7)
4.45	Share Transfer Agreement, dated November 11, 2021, by and between GESOPER LLC and UTIME Technology (HK) Company Limited(12)
4.46	Share Transfer Agreement, dated January 17, 2022, by and between JOSE JULIO SEDANO ARZOLA and GESOPER LLC.(12)
4.47	Sale Agreement, dated September 17, 2021, by and between IMPULSORA DE MERCADOS DE MEXICO, S.A. DE C.V. and GESOPER, S. DE R.L. DE C.V.(12)
4.48	English Translation of Factory Lease Agreement, dated November 1, 2021, by and between Guangxi Utime Technology Co., Ltd and Nanning Industrial Investment Group Co., Ltd. (12)
4.49	English Translation of Procurement Agreement, dated January 15, 2022, by and between Guangxi Utime Technology Co., Ltd and P.J. Advisory Company Limited(12)
4.50	English Translation of Loan Agreement, dated August, 2021 by and between Shenzhen UTime Technology Consulting Co., Ltd. and Shenzhen Nanshan Baosheng County Bank Co., Ltd.(12)
4.51	English Translation of credit line agreement, dated August, 2021 by and between Shenzhen UTime Technology Consulting Co., Ltd. and Shenzhen Nanshan Baosheng County Bank Co., Ltd.(12)
4.52	English Translation of Procurement Agreement, dated January 15, 2022, by and between Guangxi Utime Technology Co., Ltd and P.J. Advisory Company Limited(12)
4.53	English Translation of Loan Agreement, dated August, 2021 by and between Shenzhen UTime Technology Consulting Co., Ltd. and Shenzhen Nanshan Baosheng County Bank Co., Ltd.(12)
4.54	English Translation of credit line agreement, dated August, 2021 by and between Shenzhen UTime Technology Consulting Co., Ltd. and Shenzhen Nanshan Baosheng County Bank Co., Ltd.(12)
4.55	English Translation of Credit Agreement, dated November 17, 2021, by and between United Time Technology Company Limited and PingAn Bank Co., Ltd.(12)
4.56	English Translation of Agreement on Maximum Amount Guarantee for Credit Agreement, by and among Minfei Bao, Qiuzi Ping and PingAn Bank Co., Ltd.(12)
4.57	English Translation of Loan Agreement, dated June 14, 2022, by and between United Time Technology Company Limited and Jiangsu Suning Bank Co., Ltd.(12)
4.58	English Translation of Purchase Agreement, by and between Guangxi Utime Technology Co., Ltd. and Shenzhen Chuangbaili Industrial Equipment Co., Ltd.(12)
4.59*	English Translation of Pledge Agreement, dated November 24, 2022, by and between United Time Technology Company Limited and China Resources Bank of Zhuhai Co., Ltd.
4.60*	English Translation of Working Capital Loan Agreement, dated November 24, 2022, by and between United Time Technology Company Limited and China Resources Bank of Zhuhai Co., Ltd.
4.61*	English Translation of Loan Agreement, dated December 2, 2022, by and between United Time Technology Company Limited and Industrial and Commercial Bank of China Limited
4.62*	English Translation of Loan Agreement, dated December 7, 2022, by and between United Time Technology Company Limited and Industrial and Commercial Bank of China Limited
4.63*	English Translation of Working Capital Loan Agreement, dated November 24, 2022, by and between United Time Technology Company Limited and CITIC Bank Co., Ltd.

165

4.64*	English Translation of Guarantee Agreement for Loan, dated November 24, 2022, by and between Minfei Bao and China Resources Bank of Zhuhai Co., Ltd.
4.65*	English Translation of Guarantee Agreement for Loan, dated November 24, 2022, by and between Qiuzi Ping and China Resources Bank of Zhuhai Co., Ltd.
4.66*	English Translation of Guarantee Agreement for Loan, dated November 24, 2022, by and between Guangxi Utime Technology Co., Ltd and Industrial and Commercial Bank of China Limited
4.67*	English Translation of Guarantee Agreement for Loan, dated December 2, 2022, by and between Minfei Bao and Industrial and Commercial Bank of China Limited
4.68*	English Translation of Guarantee Agreement for Loan, dated December 2, 2022, by and between Qiuzi Ping and Industrial and Commercial Bank of China Limited
4.69*	English Translation of Credit line agreement, dated December 2, 2022, by and between United Time Technology Company Limited and China Resources Bank of Zhuhai Co., Ltd.
8.1	Subsidiaries of the Registrant(1)
12.1*	Certificate of Principal Executive Officer pursuant to Rule 13a-14(a) / 15d-(14)a of the Exchange Act
12.2*	Certificate of Principal Financial Officer pursuant to Rule 13a-14(a) / 15d- (14)a of the Exchange Act
13.1*	Certificate of Principal Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
13.2*	Certificate of Principal Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
15.1*	Consent of BDO China Shu Lun Pan Certified Public Accountants LLP, Independent Registered Public Accounting Firm
15.2*	Consent of Audit Alliance LLP
15.3*	Consent of B&D Law Firm
16.1	Letter from BDO China Shu Lun Pan Certified Public Accountants LLP to the U.S. Security Exchange Commission (11)
19.1*	Insider Trading Policies
101.INS*	Inline XBRL Instance Document.
101.SCH*	Inline XBRL Taxonomy Extension Schema Document.
101.CAL*	Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF*	Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB*	Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*	Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104*	Cover Page Interactive Data File (embedded within the Inline XBRL document)

* Filed as an exhibit hereto.

⁽¹⁾ Incorporated by reference to our Registration Statement on Form F-1, filed on March 18, 2020.

⁽²⁾ Incorporated by reference to Amendment No. 1 to our Registration Statement on Form F-1, filed on June 2, 2020.

⁽³⁾ Incorporated by reference to Amendment No. 2 to our Registration Statement on Form F-1, filed on June 25, 2020.

⁽⁴⁾ Incorporated by reference to Amendment No. 3 to our Registration Statement on Form F-1, filed on August 20, 2020.

⁽⁵⁾ Incorporated by reference to Amendment No. 4 to our Registration Statement on Form F-1, filed on September 22, 2020.

(6)	Incorporated by reference to Amendment No. 5 to our Registration Statement on Form F-1, filed on January 25, 2021.
(7)	Incorporated by reference to our annual report on Form 20-F, filed on July 22, 2021.
(8)	Incorporated by reference to Exhibit 99.1 of our registration statement on Form S-8 filed on June 29, 2022.
(9)	Incorporated by reference to Exhibit 99.1 of Form 6-K, filed on May 27, 2022.
(10)	Incorporated by reference to Exhibit 99.1 of Form 6-K, filed on October 6, 2021.
(11)	Incorporated by reference to Exhibit 99.1 of our Form 6-K, filed on August 31, 2022.
(12)	Incorporated by reference to our annual report on Form 20-F, filed on October 31, 2022.

166

SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

	UTIME LIMITED
	/s/ Hengcong Qiu
	Name:	Hengcong Qiu
	Title:	Chief Executive Officer
Date: August 8, 2023

167

UTIME LIMITED

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm (PCAOB ID #3487)	F-2
Report of Independent Registered Public Accounting Firm (PCAOB ID #1818)	F-3
Consolidated Balance Sheets as of March 31, 2022 and 2023	F-4
Consolidated Statements of Comprehensive Loss for the years ended March 31, 2021, 2022 and 2023	F-5
Consolidated Statements of Shareholders’ Equity for the years ended March 31, 2021, 2022 and 2023	F-6
Consolidated Statements of Cash Flows for the years ended March 31, 2021, 2022 and 2023	F-7
Notes to the Consolidated Financial Statements	F-9

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the board of directors of UTime Limited

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheet of UTime Limited (the “Company”) as of March 31, 2023 and 2022, the related consolidated statements of comprehensive loss, shareholders’ equity, and cash flows for the year ended March 31, 2023 and 2022, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated balance sheets of the Company as of March 31, 2023 and 2022, and the result of its operation and statements of cash flows for the year ended March 31, 2023 and 2022, in conformity with accounting principles generally accepted in the United States of America.

Material Uncertainty relating to Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As disclosed in Note 2 to the financial statements, the Company had an accumulated deficit of US$25.6 million The Company incurred net loss of US$13.1 million for year ended March 31, 2023. The cash used in operating activities were US$2.2 million for the year ended March 31, 2023. These conditions raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. 

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Audit Alliance LLP

We have served as the Company’s auditor since 2022.

Singapore

August 8, 2023

PCAOB ID No. 3487

F-2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of

UTime Limited

Grand Cayman, Cayman Islands

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated statements of comprehensive loss, shareholders’ equity, and cash flows of UTime Limited, its subsidiaries, variable interest entity (“VIE”) and subsidiaries of the VIE (the “Company”) for the year ended March 31, 2021, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the results of its operations and its cash flows for the year ended March 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.

/s/ BDO China Shu Lun Pan Certified Public Accountants LLP

We have served as the Company’s auditor since 2018. In 2022, we became the predecessor auditor.

Shenzhen, The People’s Republic of China

July 21, 2021

F-3

UTIME LIMITED
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share data and per share data, or otherwise noted)

			As of March 31,
	Note		2022			2023
			RMB			RMB			US$
Assets
Current assets
Cash and cash equivalents				66,692			71,934			10,468
Restricted cash				500			500			73
Accounts receivable, net		4		22,417			52,308			7,612
Prepaid expenses and other current assets, net		5		65,815			95,508			13,899
Due from related parties		15		1,422			584			85
Inventories		6		36,071			16,169			2,353
Total current assets				192,917			237,003			34,490
Non-current assets
Property and equipment, net		7		38,270			61,429			8,939
Operating lease, right-of-use assets, net		8		16,319			13,030			1,896
Equity method investment		9		-			-			-
Intangible assets, net				2,592			1,677			244
Other non-current assets		10		541			-			-
Total non-current assets				57,722			76,136			11,079
Total assets				250,639			313,139			45,569
Liabilities and shareholder’s equity
Current liabilities
Accounts payable				74,531			126,691			18,437
Short-term borrowings		11		35,780			53,935			7,849
Current portion of long-term borrowings		11		800			1,080			157
Due to related parties		15		4,499			5,500			800
Lease liabilities		8		3,360			3,673			535
Other payables and accrued liabilities		12		44,148			54,772			7,971
Income tax payables				18			18			3
Total current liabilities				163,136			245,669			35,752
Non-current liabilities
Long-term borrowings		11		8,020			6,870			1,000
Government grants				-			8,697			1,266
Deferred tax liabilities		14		466			295			43
Lease liabilities - non-current				14,549			10,876			1,583
Total non-current liabilities				23,035			26,738			3,892
Total liabilities (including amounts of the consolidated VIEs without recourse to the Company of RMB183,639 and RMB265,773 as of March 31, 2022 and 2023, respectively)				186,171			272,407			39,644
Commitments and contingencies		17		-			-			-
Shareholder’s equity
Preference share, par value US$0.0001; Authorized:10,000,000 shares; Nil issued and outstanding as of March 31, 2022 and March 31, 2023				-			-			-
Ordinary shares, par value US$0.0001; Authorized:140,000,000 shares; Issued and outstanding: 8,267,793 shares as of March 31,2022 and 13,567,793 shares as of March 31, 2023		16		5			9			1
Additional paid-in capital				152,236			216,504			31,507
Accumulated deficit				(88,277	)		(175,893	)		(25,597	)
Accumulated other comprehensive income				1,024			3,469			503
Total UTime Limited shareholder’s equity				64,988			44,089			6,414
Non-controlling interests				(520	)		(3,357	)		(489	)
Total shareholders’ equity				64,468			40,732			5,925
Total liabilities and shareholders’ equity				250,639			313,139			45,569

The accompanying notes are an integral part of these consolidated financial statements.

F-4

UTIME LIMITED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Amounts in thousands, except share data and per share data, or otherwise noted)

			For the years ended March 31,
	Note		2021			2022			2023
			RMB			RMB			RMB			US$
Net sales		18		246,899			275,508			200,547			29,184
Cost of sales				228,732			261,723			170,482			24,809
Gross profit				18,167			13,785			30,065			4,375
Operating expenses:
Selling expenses				4,127			5,459			7,391			1,076
General and administrative expenses				25,695			39,499			110,412			16,068
Other expenses (income), net		13		2,875			3,328			(3,694	)		(538	)
Total operating expenses				32,697			48,286			114,109			16,606
Loss from operations				(14,530	)		(34,501	)		(84,044	)		(12,231	)
Interest expenses				2,461			4,875			6,149			895
Loss before income taxes				(16,991	)		(39,376	)		(90,193	)		(13,126	)
Income tax benefits		14		364			46			171			25
Net loss				(16,627	)		(39,330	)		(90,022	)		(13,101	)
Less: Net loss attributable to non-controlling interests				-			497			(2,406	)		(350	)
Net loss attributable to UTime Limited				(16,627	)		(38,833	)		(87,616	)		(12,751	)
Comprehensive loss
Net loss				(16,627	)		(39,330	)		(90,022	)		(13,101	)
Foreign currency translation adjustment				1,868			(377	)		2,445			356
Total comprehensive loss				(14,759	)		(39,707	)		(87,577	)		(12,745	)
Less: Comprehensive loss/(income) attributable to non-controlling interest				-			497			(2,406	)		(350	)
Comprehensive loss attributable to UTime Limited				(14,759	)		(39,210	)		(85,171	)		(12,395	)
Losses per share attributable to UTime Limited
Basic and diluted				(3.68	)		(4.76	)		(7.80	)		(1.14	)
Weighted average ordinary shares outstanding
Basic and diluted				4,517,793			8,164,771			11,229,985			11,229,985

The accompanying notes are an integral part of these consolidated financial statements.

F-5

UTIME LIMITED
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(Amounts in thousands, except share data, or otherwise noted)

	Equity attributable to UTime Limited
	Ordinary shares				Additional					Accumulated Other			Non-			Total
	Number of Shares		Amount		Paid-in Capital		Accumulated Deficit			Comprehensive Income (Loss)			controlling Interests			Shareholders’ Equity
			RMB		RMB		RMB			RMB			RMB			RMB
Balance as of April 1, 2020		4,517,793		4		73,217		(32,817	)		(467	)		-			39,937
Net loss		-		-		-		(16,627	)		-			-			(16,627	)
Foreign currency translation difference		-		-		-		-			1,868			-			1,868
Balance as of March 31, 2021		4,517,793		4		73,217		(49,444	)		1,401			-			25,178
Net loss		-		-		-		(38,833	)		-			(497	)		(39,330	)
Issuance of ordinary shares upon initial public offering, net of offering costs		3,750,000		1		79,019		-			-			10			79,030
Foreign currency translation difference		-		-		-		-			(377	)		(33	)		(410	)
Balance as of March 31, 2022		8,267,793		5		152,236		(88,277	)		1,024			(520	)		64,468
Net loss		-		-		-		(87,616	)		-			(2,406	)		(90,022	)
Issuance of ordinary shares		5,300,000		4		64,268		-			-			-			64,272
Foreign currency translation difference		-		-		-		-			2,445			(431	)		2,014
Balance as of March 31, 2023		13,567,793		9		216,504		(175,893	)		3,469			(3,357	)		40,732

The accompanying notes are an integral part of these consolidated financial statements.

F-6

UTIME LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands or otherwise noted)

	Year ended March 31,
	2021			2022			2023
	RMB			RMB			RMB			US$
Cash flows from operating activities:
Net loss		(16,627	)		(39,330	)		(90,022	)		(13,101	)
Adjustments to reconcile net loss from operations to net cash used by operating activities:
Depreciation and amortization		3,954			4,333			5,794			843
Allowance/(write-back) for obsolete inventories, net		7,589			293			(407	)		(59	)
(Reversal of)/provision for doubtful account, net		(836	)		3,406			-			-
Loss on equity method investment		833			-			-			-
Share-based compensation and expenses		-			-			63,656			9,264
Loss on disposal of property and equipment		-			10			184			27
Impairment of an intangible asset		-			348			-			-
Deferred tax		-			-			(171	)		(25	)
Net changes in operating assets and liabilities:
Accounts receivable		21,477			(5,725	)		(27,564	)		(4,011	)
Prepaid expenses and other current assets		(26,173	)		5,937			(25,871	)		(3,765	)
Inventories		(10,934	)		(4,629	)		20,627			3,002
Accounts payable		(9,924	)		27,324			19,629			2,856
Other payables and accrued liabilities, and lease liabilities		27,993			(11,925	)		8,888			1,293
Related parties		527			(699	)		881			128
Deferred revenue		(400	)		-			-			-
Government grants		-			-			8,697			1,266
Other non-current assets		-			(208	)		541			79
Net cash used in operating activities		(2,521	)		(20,865	)		(15,138	)		(2,203	)
Cash flows from investing activities:
Payment for property and equipment		-			(5,858	)		(2,593	)		(377	)
Payment for intangible assets		(2,201	)		-			(307	)		(45	)
Cash received from consolidation, net of cash acquired		-			28			-			-
Net cash used in investing activities		(2,201	)		(5,830	)		(2,900	)		(422	)
Cash flows from financing activities:
Proceeds from short-term borrowings		47,600			46,500			66,300			9,648
Loan received from a shareholder		900			5,980			4,010			584
Proceeds from long-term borrowings		-			9,000			-			-
Repayment of loan from a shareholder		(1,500	)		(3,000	)		(3,000	)		(437	)
Repayment of short-term borrowings		(31,800	)		(41,520	)		(48,145	)		(7,006	)
Repayments of long-term borrowings		(1,200	)		(5,760	)		(870	)		(127	)
Down payment for financing services		-			(19,003	)		-			-
Contribution in a subsidiary by a shareholder		-			6,429			-			-
Proceeds from issuance of ordinary shares through initial public offering		-			88,262			-			-
Net cash provided by financing activities		14,000			86,888			18,295			2,662
Effect of exchange rate changes on cash and cash equivalent and restricted cash		(855	)		(2,478	)		4,985			725
Net increase in cash and cash equivalent and restricted cash		8,423			57,715			5,242			763
Cash and cash equivalents and restricted cash at beginning of year		1,054			9,477			67,192			9,778
Cash and cash equivalents and restricted cash at end of year		9,477			67,192			72,434			10,541

F-7

UTIME LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS — (Continued)
(Amounts in thousands or otherwise noted)

	Year ended March 31,
	2021			2022		2023
	RMB			RMB		RMB		US$
Supplemental disclosures of cash flow information:
Income taxes refunded		(364	)		-		-		-
Interest paid		2,461			4,707		6,097		887

	As of March 31,
	2021		2022		2023
	RMB		RMB		RMB		US$
Reconciliation of cash, cash equivalents and restricted cash in consolidated statements of cash flows
Restricted cash		500		500		500		73
Cash and cash equivalents		8,977		66,692		71,934		10,468
Cash, cash equivalents and restricted cash		9,477		67,192		72,434		10,541

The accompanying notes are an integral part of these consolidated financial statements.

F-8

UTIME LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share data and per share data, or otherwise noted)

NOTE 1 — ORGANIZATION AND PRINCIPAL ACTIVITIES

UTime Limited was incorporated as an exempted company with limited liability under the laws of the Cayman Islands on October 9, 2018. UTime Limited does not conduct any substantive operations on its own but instead conducts its business operations through its subsidiaries, variable interest entity (“VIE”) and subsidiaries of the VIE. UTime Limited, its subsidiaries, VIE and subsidiaries of the VIE (together, the “Company”) is primarily engaged in the operation of designing, manufacturing and marketing mobile communication devices, and selling a variety of related accessories.

(a) History and Reorganization

The Company commenced its operations in June 2008 through United Time Technology Co., Ltd. (“UTime SZ” or “VIE”), a People’s Republic of China (the “PRC” or “China”) company established by Mr. Minfei Bao (“Mr. Bao”), Mr. Junlin Zhou (“Mr. Zhou”) and Mr. Bo Tang (“Mr. Tang”). As of March 31, 2017, Mr. Bao, Mr. Zhou and Mr. Tang held 52%, 28% and 20% equity interests of UTime SZ, respectively. In February 2018, Mr. Bao acquired 28% and 20% equity interests of UTime SZ from Mr. Zhou and Mr. Tang, respectively, with the total consideration of RMB9.6 million in cash through his private fund. As of the acquisition date, such non-controlling interests amounted to RMB17.2 million and were transferred to equity attributable to UTime Limited, of which RMB1.0 million relating to foreign currency translation was transferred to the accumulated other comprehensive income, and remaining balance of RMB16.2 million was transferred to additional paid-in capital. After the acquisition, Mr. Bao became the sole shareholder of UTime SZ. Prior to the reorganization, UTime SZ’s equity interests were held by Mr. Bao.

For the purpose of an initial public offering in the United States (“IPO”), the following transactions were undertaken to reorganize the legal structure (the “Reorganization”) of the Company. In October 2018, UTime Limited was incorporated in the Cayman Islands. In November and December 2018, UTime International Limited (“UTime HK”) was incorporated in Hong Kong and Shenzhen UTime Technology Consulting Co., Ltd. (“UTime WFOE”) was incorporated in China, respectively.

In March 2019, UTime WFOE entered into a series of contractual agreements with VIE and Mr. Bao, which were further amended and restated in August and September 2019, respectively, and were entered into among UTime WFOE, VIE, Mr. Bao and Mr. Min He (“Mr. He”). Pursuant to these agreements as detailed in note 1(b), the Company believes that these contractual arrangements would enable the Company to (1) have power to direct the activities that most significantly affect the economic performance of the VIE and its subsidiaries, and (2) receive the economic benefits of the VIE and its subsidiaries that could be significant to the VIE and its subsidiaries. Accordingly, the Company is considered the primary beneficiary of the VIE and is able to consolidate the VIE and its subsidiaries.

Do Mobile India Private Ltd. (“Do Mobile”) was incorporated on October 24, 2016 in New Delhi, India. It is an operating entity that sells cell phone products and provides after-sale services for the Company’s own in-house brand products in India. Prior to the reorganization, the majority of Do Mobile’s equity interests were held by Mr. Bao through an entrust agreement with Mr. Wukai Song through a holding company, Bridgetime Limited (“Bridgetime”). Bridgetime was incorporated on September 5, 2016 in British Virgin Island (“BVI”) under the laws of BVI, with Mr. Wukai Song owning 70% through an entrust agreement between him and Mr. Bao, and Mr. Yunchuan Li owning 30% of equity interest.

On March 5, 2018, Bridgetime issued 100,000 shares to Mr. Wukai Song, changing shareholders’ structure to Mr. Wukai Song owning 90% equity interest, which are controlled by Mr. Bao through an entrust agreement between Mr. Bao and Mr. Wukai Song, and Mr. Yunchuan Li owning 10% of equity interest. On December 5, 2018, Bridgetime approved a board resolution that appointed and registered Mr. Yihuang Chen as a new director. On March 11, 2019, Bridgetime approved a board resolution that transferred 1 share of Do Mobile to Mr. Yihuang Chen and made him nominal shareholder of Do Mobile, removed Mr. Yunchuan Li as the director of Bridgetime and authorized representative of Do Mobile, and appointed Mr. Wukai Song as the authorized representative of Do Mobile. On April 4, 2019, Bridgetime approved a board resolution that forfeited 15,000 shares held by Mr. Yunchuan Li, cancelled those shares accordingly and amended Bridgetime’s memorandum of association that changed authorized shares from 150,000 to 135,000 at a par value of US$1.00 which was accounted as a cancellation of non-controlling interest in the consolidated statements of shareholders’ equity.

F-9

UTIME LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share data and per share data, or otherwise noted)

NOTE 1 — ORGANIZATION AND PRINCIPAL ACTIVITIES (cont.)

After this, Mr. WuKai Song owned 100% of equity interest of Bridgetime, which are controlled by Mr. Bao through an entrust agreement between Mr. Bao and Mr. Wukai Song. On May 23, 2019, Bridgetime approved a board resolution that transferred 135,000 ordinary shares owning by Mr. Wukai Song to UTime Limited. Since inception, Bridgetime has only made nominal investments into Do Mobile and no substantial business operations have occurred.

On May 20, 2019, the Company approved a board resolution that agreed to transfer 12,000,000 ordinary shares being owned by Mr. Bao to Grandsky Phoenix Limited, a company that was established under the laws of the BVI and 100% owned by Mr. Bao.

As all the entities involved in the process of the Reorganization are under common control before and after the Reorganization, the Reorganization is accounted for in a manner similar to a pooling-of-interest with the assets and liabilities of the parties to the Reorganization carried over at their historical amounts.

On June 3, 2019, the Company entered into a share subscription agreement with HMercury Capital Limited, a company that was incorporated under the laws of the BVI and controlled by Mr. He. HMercury Capital Limited purchased an aggregation of 377,514 ordinary shares. On the same day, the Company approved a board resolution for issuance of 377,514 ordinary shares at par value US$0.0001 to HMercury Capital Limited based on the share subscription agreement. As a result, Grandsky Phoenix Limited and HMercury Capital Limited own 96.95% and 3.05% of equity interest of the Company.

On April 29, 2020, the Company approved a board resolution, which became effective immediately, that agreed to repurchase 7,620,000 and 239,721 ordinary shares, which were subsequently cancelled, at par value (the “Repurchased Shares”) from Grandsky Phoenix Limited and HMercury Capital Limited, respectively, in accordance with their respective share percentages based on the share repurchase agreement that the Company entered into with Grandsky Phoenix Limited and HMercury Capital Limited on April 29, 2020. On August 13, 2020, the Company approved a board resolution and signed capital contribution letter with Grandsky Phoenix Limited and HMercury Capital Limited, respectively. Based on the capital contribution letter, each shareholder opted not to receive the consideration for the Repurchased Shares and made a pure capital contribution in the sum of the purchase price in favor of the Company without the issue of additional shares of the Company. Before and after the repurchase of ordinary shares, Mr. Bao, through Grandsky Phoenix Limited, and Mr. He, through HMercury Capital Limited, own 96.95% and 3.05% of our issued and outstanding ordinary shares, respectively. The Company considers this repurchase of ordinary shares was part of the Company’s recapitalization to result in 4,517,793 ordinary shares issued and outstanding prior to completion of its IPO. The Company believes it is appropriate to reflect these nominal share repurchases to result in 4,517,793 ordinary shares being issued and outstanding or reduction of 63.5% of total ordinary shares being issued and outstanding after the repurchase of ordinary shares similar to 0.365-for-1 reverse stock split.

As of March 31, 2023, details of the subsidiaries and VIE of the Company are set out below:

Name	Date of Incorporation	Place of Incorporation	Percentage of Beneficial Ownership	Principal Activities
Subsidiaries
UTime HK	November 1, 2018	Hong Kong	100%	Investment Holding
UTime WFOE	December 18, 2018	China	100%	Investment Holding
Bridgetime	September 5, 2016	British Virgin Island	100%	Investment Holding
Do Mobile	October 24, 2016	India	99.99%	Sales of in-house brand products in India

F-10

UTIME LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share data and per share data, or otherwise noted)

NOTE 1 — ORGANIZATION AND PRINCIPAL ACTIVITIES (cont.)

Name	Date of Incorporation	Place of Incorporation	Percentage of Beneficial Ownership	Principal Activities
VIE
UTime SZ	June 12, 2008	China	100%	Research and development of products, and sales
Subsidiaries of the VIE
Guizhou United Time Technology Co., Ltd. (“UTime GZ”)	September 23, 2016	China	VIE’s subsidiary	Manufacturing
UTime Technology (HK) Company Limited  (“UTime Trading”)	June 25, 2015	Hong Kong	VIE’s subsidiary	Trading
UTime India Private  Limited (“UTime India”)	February 7, 2019	India	UTime Trading’s subsidiary	Trading
Guangxi UTime Technology Co., Ltd. (“UTime Guangxi”)	November 1, 2021	China	UTime Trading’s subsidiary	Manufacturing
Gesoper S De R.L. De C.V. (“Gesoper”)	October 21, 2020	Mexico	UTime Trading’s subsidiary	Trading
Firts Communications And Technologies De Mexico S.A. De C.V. (“Firts”)	November 12, 2021	Mexico	Gesoper’s subsidiary	Trading

(b) VIE Arrangements between the VIE and the Company’s PRC subsidiary

The Company conducts substantial majority of business in the PRC through a series of contractual arrangements with the VIE and its subsidiaries. The VIE and subsidiaries of the VIE hold the requisite licenses and permits necessary to conduct the Company’s business. In addition, the VIE and subsidiaries of the VIE hold the assets necessary to operate the Company’s business and generate substantial majority of the Company’s revenues.

Our contractual arrangements with the VIE and its respective shareholders allow us to (i) determine the most significant economic activities of the VIE; (ii) receive substantially all of the economic benefits of the VIE; and (iii) have an exclusive option to purchase all or part of the equity interest in and/or assets of the VIE when and to the extent permitted by PRC laws. As a result of our direct ownership in UTime WFOE and the contractual arrangements with the VIE, we are regarded as the primary beneficiary of the VIE, and we treat the VIE and its subsidiaries as our consolidated affiliated entities under generally accepted accounting principles in the United States of America (“US GAAP”). We have consolidated the financial results of the VIE and its subsidiaries in our consolidated financial statements in accordance with US GAAP.

The following is a summary of the contractual arrangements by and among UTime WFOE, the VIE and the shareholders of the VIE and their spouses, as applicable.

Exclusive Technical Consultation and Service Agreement. Pursuant to the exclusive technical consultation and service agreement entered into between UTime WFOE and the VIE, dated on March 19, 2019, UTime WFOE has the exclusive right to provide or designate any entity to provide the VIE business support, technical and consulting services. The VIE agrees to pay UTime WFOE (i) the service fees equal to the sum of 100% of the net income of the VIE of that year or such other amount otherwise agreed by UTime WFOE and the VIE; and (ii) service fee otherwise confirmed by UTime WFOE and the VIE for specific technical services and consulting services provided by UTime WFOE in accordance with the VIE’s requirement from time to time. The exclusive consultation and service agreement will continue to be valid unless the written agreement is signed by all parties to terminate it or a mandatory termination is requested in accordance with applicable PRC laws and regulations.

F-11

UTIME LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share data and per share data, or otherwise noted)

NOTE 1 — ORGANIZATION AND PRINCIPAL ACTIVITIES (cont.)

Equity Pledge Agreement. Pursuant to the equity pledge agreement dated March 19, 2019 and amended on September 4, 2019 among UTime WFOE, the VIE and the shareholders of the VIE, the shareholders of the VIE agree to pledge their 100% equity interests in the VIE to UTime WFOE to secure the performance of the VIE’s obligations under the existing exclusive call option agreement, power of attorney, exclusive technical consultation and service agreement, business operation agreement and also the equity pledge agreement. If events of default defined therein occur, upon giving written notice to the shareholders, UTime WFOE may exercise the right to enforce the pledge to the extent permitted by PRC laws.

Exclusive Call Option Agreements. Pursuant to the exclusive call option agreement dated March 19, 2019 and amended on September 4, 2019 among UTime WFOE, the VIE and the shareholders of the VIE, each of the shareholders has irrevocably granted UTime WFOE an exclusive option to purchase all or part of its equity interests in the VIE, and the VIE has irrevocably granted UTime WFOE an exclusive option to purchase all or part of its assets. With regard to the equity transfer option, the total transfer price to be paid by UTime WFOE or any other entity or individual designated by UTime WFOE for exercising such option shall be the capital contribution mirrored by the corresponding transferred equity in the registered capital of the VIE. But if the lowest price permitted by the then-effective PRC Law is lower than the above capital contribution, the transfer price shall be the lowest price permitted by the PRC Law. With regard to the asset purchase option, the transfer price to be paid by UTime WFOE or any other entity or individual designated by UTime WFOE for exercising such option shall be the lowest price permitted by the then-effective PRC Law.

Power of Attorney. Pursuant to a series of powers of attorney dated March 19, 2019 and amended on September 4, 2019 issued by each shareholder of the VIE, each shareholder of the VIE irrevocably authorizes UTime WFOE or any natural person duly appointed by UTime WFOE to exercise on the behalf of such shareholders with respect to all matters concerning the shareholding of such shareholders in the VIE, including without limitation, attending shareholders’ meetings of the VIE, exercising all the shareholders’ rights and shareholders’ voting rights, and designating and appointing the legal representative, the chairperson, directors, supervisors, the chief executive officer and any other senior management of the VIE.

Business Operation Agreement. Pursuant to the business operation agreement dated March 19, 2019 and amended on September 4, 2019 among UTime WFOE, the VIE and the shareholders of the VIE, the shareholders of the VIE hereby acknowledge, agree and jointly and severally warrant that without the prior written consent of UTime WFOE or any party designated by UTime WFOE, the VIE shall not engage in any transaction which may have a material or adverse effect on any of its assets, businesses, employees, obligations, rights or operations (except for those occurring in the due course of business or in day-to-day business operations, or those already disclosed to UTime WFOE and with the explicit prior written consent of UTime WFOE). In addition, the VIE and its shareholders hereby jointly agree to accept and strictly implement any proposal made by UTime WFOE from time to time regarding the employment and removal of the VIE’s employees, its day-to-day business management and the financial management system of the VIE.

Spouse Consent Letter. Pursuant to a series of spousal consent letters dated March 19, 2019 and amended on September 4, 2019, executed by the spouses of the shareholders of the VIE, Mr. Bao and Mr. He, the signing spouses confirmed and agreed that the equity interests of the VIE are the own property of their spouses and shall not constitute the community property of the couples. The spouses also irrevocably waived any potential right or interest that may be granted by operation of applicable law in connection with the equity interests of the VIE held by their spouses.

F-12

UTIME LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share data and per share data, or otherwise noted)

NOTE 1 — ORGANIZATION AND PRINCIPAL ACTIVITIES (cont.)

Risks in relation to VIE structure

The Company believes that the contractual arrangements with its VIEs and their respective shareholders are in compliance with PRC laws and regulations and are legally enforceable. However, uncertainties in the PRC legal system could limit the Company’s ability to enforce the contractual arrangements. If we or the VIE are found to be in violation of any existing or future PRC laws or regulations, or fail to obtain or maintain any of the required permits or approvals, the relevant PRC regulatory authorities would have broad discretion to take action in dealing with such violations or failures, including:

● revoke the business and operating licenses of the Company’s PRC subsidiary and VIE;

● discontinue or restrict the operations of any related-party transactions between the Company’s PRC subsidiary and VIE;

● limit the Company’s business expansion in China by way of entering into contractual arrangements;

● imposing fines, confiscating the income from the Company’s PRC subsidiary or the VIE, or imposing other requirements with which we or the VIE may not be able to comply;

● requiring us to restructure our ownership structure or operations, including terminating the contractual arrangements with the VIE and deregistering the equity pledges of the VIE, which in turn would affect our ability to consolidate, derive economic interests from, or determine the most significant economic activities of the VIE; or

● restricting or prohibiting our use of the proceeds of its IPO to finance our business and operations in China.

The Company’s ability to conduct its business may be negatively affected if the PRC government were to carry out any of the aforementioned actions. As a result, the Company may not be able to consolidate its VIE in its consolidated financial statements as it may lose the ability to determine the most significant economic activities of the VIE and it may lose the ability to receive economic benefits from the VIE. The Company, however, does not believe such actions would result in the liquidation or dissolution of the Company, its PRC subsidiary or VIE.

Mr. Bao and Mr. He hold 96.95% and 3.05% equity interest in the VIE, respectively. The shareholders of the VIE may have potential conflicts of interest with us. The shareholders may breach, or cause the VIE to breach, or refuse to renew, the existing contractual arrangements we have with them and the VIE, which would have a material and adverse effect on our ability to determine the most significant economic activities of the VIE and receive economic benefits from it. For example, the shareholders may be able to cause our agreements with the VIE to be performed in a manner adverse to us by, among other things, failing to remit payments due under the contractual arrangements to us on a timely basis. We cannot assure you that when conflicts of interest arise the shareholders will act in the best interests of our company or such conflicts will be resolved in our favor. Currently, we do not have any arrangements to address potential conflicts of interest between the shareholders and our company. If we cannot resolve any conflict of interest or dispute between us and the shareholders, we would have to rely on legal proceedings, which could result in disruption of our business and subject us to substantial uncertainty as to the outcome of any such legal proceedings.

F-13

UTIME LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share data and per share data, or otherwise noted)

NOTE 1 — ORGANIZATION AND PRINCIPAL ACTIVITIES (cont.)

The Company has aggregated the financial information of the VIE and subsidiaries of the VIE in the table below. The aggregate carrying value of assets and liabilities of VIE and its subsidiaries (after elimination of intercompany transactions and balances) in the Company’s consolidated balance sheets as of March 31, 2022 and 2023 are as follows:

	As of March 31,
	2022		2023
	RMB		RMB
Assets
Current assets
Cash and cash equivalents		192		277
Restricted cash		500		500
Accounts receivable, net		22,391		52,241
Prepaid expenses and other current assets, net		42,431		70,202
Due from related parties		1,422		584
Inventories		36,018		16,169
Total current assets		102,954		139,973
Non-current assets
Property and equipment, net		38,227		61,411
Operating lease right-of-use assets, net		16,319		13,030
Equity method investment		-		-
Intangible assets, net		2,592		1,677
Other non-current assets		541		-
Total non-current assets		57,679		76,118
Total assets		160,633		216,091
Liabilities
Current liabilities
Accounts payable		74,497		126,683
Short-term borrowings		35,780		53,935
Current portion of long-term borrowings		800		1,080
Due to related parties		3,728		4,705
Lease liabilities		3,360		3,673
Other payables and accrued liabilities		42,423		48,941
Income tax payables		18		18
Total current liabilities		160,606		239,035
Non-current liabilities
Long-term borrowings		8,020		6,870
Government grants		-		8,697
Deferred tax liabilities		466		295
Lease liabilities		14,549		10,876
Total non-current liabilities		23,035		26,738
Total liabilities		183,639		265,773

The table sets forth the revenue, net loss and cash flows of the VIE and subsidiaries of VIE in the table below.

	Year ended March 31,
	2021			2022			2023
	RMB			RMB			RMB
Revenue		240,742			273,979			200,450
Net loss		(10,722	)		(29,643	)		(19,221	)
Net cash used in operating activities		(3,020	)		(19,806	)		(15,269	)
Net cash used in investing activities		(2,201	)		(5,830	)		(2,900	)
Net cash provided by financing activities		14,000			17,629			18,295

F-14

UTIME LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share data and per share data, or otherwise noted)

NOTE 1 — ORGANIZATION AND PRINCIPAL ACTIVITIES (cont.)

(c) Initial Public Offering

On April 8, 2021, the Company completed its IPO on Nasdaq Capital Market. In the offering, 3,750,000 of the Company’s ordinary shares were issued and sold to the public at a price of US$4 per share for gross proceeds of US$15 million. The Company recorded net proceeds (after deducting underwriting discounts and commissions and other offering fees and expenses) of approximately $13.9 million (approximately RMB88.2 million) from the offering.  

(d) Asset Acquisitions

On December 17, 2021, the Company, through UTime Trading, acquired a 51% of the controlling equity interest of Gesoper. Subsequently, on January 17, 2022, Gesoper acquired 85% economic equity interest in Firts, which were determined to be variable interest entities of which the Company is considered the primary beneficiary.

NOTE 2 — GOING CONCERN

The Company’s financial statements as of March 31, 2023, is prepared using generally accepted accounting principles in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has suffered recurring losses from operations that raise substantial doubt about its ability to continue as a going concern.

As of March 31, 2023, the Company had current assets of RMB237.0 million (US$34.5 million) and current liabilities of RMB245.7 million (US$35.8 million), resulting in a working capital deficit of approximately RMB8.7 million (US$1.3 million). As of March 31, 2022, we had current assets of RMB192.9 million and current liabilities of RMB163.1 million, resulting in a working capital of approximately RMB29.8 million.

The Company had accumulated deficit of RMB88.2 million (US$12.8 million) and RMB175.9 million (US$25.6 million) as of March 31, 2022 and 2023, respectively. For the fiscal year ended March 31, 2023, the Company incurred a net loss of RMB87.6 million (US$12.7 million). Net cash outflow was RMB15.1 million (US$2.2 million) from operations for the fiscal year ended March 31, 2023, a decrease of cash outflow of RMB5.8 million compared to the net cash outflow of RMB20.9 million for the fiscal year ended March 31, 2022 as a result of strengthened control on turnover of inventory. The Company continues to focus on improving operational efficiency and cost reductions, developing core cash-generating business and enhancing efficiency. The Company expects that the existing and future cash generated from operation will be sufficient to fund the future operating expenses and capital expenditure requirements.

With the new markets, such as Japan, and new product pipeline developed, the Management believes that the actions to be taken including, product offerings, geographical expansion, generate revenue through expansion of revenue streams and customer base, will further improve business efficiency and profitability. The new product pipeline aims on improvement of profitability by providing tailored and high-margin products that provide the opportunity for the Company to continue as a going concern. In addition, the Company is also working on raising additional funding to finance the operations as well as business expansion.

The consolidated financials have been prepared assuming that the Company will continue as a going concern and, accordingly financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

NOTE 3 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).

F-15

UTIME LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share data and per share data, or otherwise noted)

NOTE 3 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

Principles of consolidation

The consolidated financial statements include the financial statements of the Company and its subsidiaries, VIE and VIE’s subsidiaries for which the Company is the primary beneficiary. All significant inter-company balances and transactions between the Company, its subsidiaries, VIE and VIE’s subsidiaries are eliminated.

Use of estimates

The preparation of the consolidated financial statements in conformity with US GAAP requires management of the Company to make a number of estimates and assumptions relating to the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the period. Management evaluates these estimates and assumptions on a regular basis. Significant accounting estimates reflected in the Company’s consolidated financial statements include but are not limited to estimates and judgments applied in the allowance for receivables, write down of other assets, estimated useful lives of property and equipment, impairment on inventory, sales return, product warranties, the valuation allowance for deferred tax assets and income tax and provision for employee benefits. Actual results could differ from those estimates and judgments.

Cash and cash equivalents

Cash and cash equivalents consist of cash on hand, bank deposits and short-term, highly liquid investments with original maturities of three months or less at the date of purchase, that are readily convertible to known amounts of cash and have insignificant risk of changes in value related to changes in interest rates.

Restricted cash

Restricted cash consisted of collateral representing cash deposits for long-term borrowings.

F-16

UTIME LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share data and per share data, or otherwise noted)

NOTE 3 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

Accounts receivable, net

Accounts receivable and other receivables are reflected in the Company’s consolidated balance sheets at their estimated collectible amounts. A substantial majority of its accounts receivable are derived from sales to well-known technological clients. The Company follows the allowance method of recognizing uncollectible accounts receivable and other receivables, pursuant to which the Company regularly assesses its ability to collect outstanding customer invoices and make estimates of the collectability of accounts receivable and other receivables. The Company provides an allowance for doubtful accounts when it determines that the collection of an outstanding customer receivable is not probable. The allowance for doubtful accounts is reviewed on a timely basis to assess the adequacy of the allowance. The Company takes into consideration (a) historical bad debts experience, (b) any circumstances of which it is aware of a customer’s or debtor’s inability to meet its financial obligations, (c) changes in its customer or debtor payment history, and (d) its judgments as to prevailing economic conditions in the industry and the impact of those conditions on its customers and debtors. If circumstances change, such that the financial conditions of its customers or debtors are adversely affected and they are unable to meet their financial obligations to the Company, it may need to record additional allowances, which would result in a reduction of its net income.

Concentration of credit risk and major customers

Assets that potentially subject the Company to significant concentration of credit risk primarily consist of cash and cash equivalents, restricted cash, accounts receivable and other current assets. The maximum exposure of such assets to credit risk is their carrying amounts as at the balance sheet dates. As of March 31, 2022 and 2023, the aggregate amounts of cash and cash equivalents, and restricted cash are RMB67.2 million and RMB72.4 million respectively.

To limit exposure to credit risk relating to deposits, the Company primarily place cash deposits with large financial institutions in PRC. The Company conducts credit evaluations of its customers, and generally does not require collateral or other security from them. The Company establishes an accounting policy for allowance for doubtful accounts on the individual customer’s financial condition, credit history, and the current economic conditions. As of March 31, 2022 and 2023, the Company recorded RMB0.1 million of allowances for accounts receivable.

Major customers and accounts receivable — During the year ended March 31, 2021, the Company had two customers that accounted over 10% of revenues, and revenue from these customers amounted to RMB102.1 million and RMB44.7 million, respectively, relate to Original Equipment Manufacturer (“OEM”)/Original Design Manufacturer (“ODM”) services segment and sales of face mask. During the year ended March 31, 2022, the Company had two customers that accounted over 10% of revenues, and revenue from the customers amounted to RMB116.4 million and RMB54.6 million, respectively, relate to OEM/ ODM services segment. The Company had three customers that accounted over 10% of total accounts receivable at March 31, 2022, amounting to RMB8.3 million, RMB6.3 million and RMB4.3 million, respectively. During the year ended March 31, 2023, the Company had three customers that accounted over 10% of revenues, and revenue from the customers amounted to RMB44.4 million, RMB25.9 million and RMB25.8 million, respectively, relate to OEM/ ODM services segment. The Company had four customers that accounted over 10% of total accounts receivable at March 31, 2023, amounting to RMB14.0 million, RMB11.9 million, RMB9.4 million and RMB8.6 million, respectively.

Major suppliers — During the year ended March 31, 2021, the Company had no supplier accounted over 10% of total purchases and processing fees. During the year ended March 31, 2022, the Company had one supplier accounted over 10% of total purchases and processing fees from the supplier amounted to RMB39.5 million. During the year ended March 31, 2023, the Company had no supplier accounted over 10% of total purchases.

Inventories

Inventories of the Company consist of raw materials, finished goods and work in process. Inventories are stated at lower of cost or net realizable value with cost being determined on the weighted average method. Elements of cost in inventories include raw materials, direct labor costs, other direct costs, consignment manufacturing cost and manufacturing overhead. The Company assesses the valuation of inventory and periodically writes down the value for estimated excess and obsolete inventory based upon the product life-cycle.

F-17

UTIME LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share data and per share data, or otherwise noted)

NOTE 3 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

Property and equipment, net

Property and equipment are stated at cost less accumulated depreciation and impairment, if any. Cost represents the purchase price of the asset and other costs incurred to bring the asset into its existing use. Maintenance and repairs are charged to expenses as incurred. Depreciation of property and equipment are provided using the straight-line method over their estimated useful lives as follows:

	Useful life
Office real estate	48 years
Furniture and equipment	3 – 6 years
Production and other machineries	5 – 10 years

Upon retirement or sale of an asset, the cost of the asset and the related accumulated depreciation are eliminated from the accounts and any resulting gain or loss is credited or charged to other (income) expenses, net.

Intangible assets, net

Intangible asset results from the acquisition of the licensed software and customer relationships. Identifiable intangible assets are carried at acquisition cost less accumulated amortization and impairment loss, if any. The Company accounts for such licensed software with definite lives and amortized using the straight-line method over its estimated useful life of 3 to 10 years.

Impairment of long-lived assets

The Company reviews the carrying value of long-lived assets to be held and used when events and circumstances warrants such a review. The carrying value of a long-lived asset is considered impaired when the anticipated undiscounted cash flow from such asset is separately identifiable and is less than its carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair market value of the long-lived asset. Fair market value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved. Losses on long-lived assets to be disposed are determined in a similar manner, except that fair market values are reduced for the cost to dispose. No impairment charge was recognized for all periods presented.

Equity method investment

The Company’s long-term investments consist of equity method investment. Investment in entities in which the Company can exercise significant influence and holds an investment in voting common stock or in-substance common stock (or both) of the investee but does not own a majority equity interest or control are accounted for using the equity method of accounting in accordance with ASC topic 323 (“ASC 323”), Investments-Equity Method and Joint Ventures. Under the equity method, the Company initially records its investment at cost. The Company subsequently adjusts the carrying amount of the investments to recognize the Company’s proportionate share of each equity investee’s net income or loss into earnings after the date of investment. The Company evaluates the equity method investment for impairment under ASC 323. An impairment loss on the equity method investment is recognized in earnings when the decline in value is determined to be other-than-temporary.

F-18

UTIME LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share data and per share data, or otherwise noted)

NOTE 3 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

Fair value of financial instruments

Under the FASB’s authoritative guidance on fair value measurements, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining the fair value, the Company uses various methods including market, income and cost approaches. Based on these approaches, the Company often utilizes certain assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated or generally unobservable inputs. The Company uses valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. Based on observability of the inputs used in the valuation techniques, the Company is required to provide the following information according to the fair value hierarchy. The fair value hierarchy ranks the quality and reliability of the information used to determine fair values.

Financial assets and liabilities carried at fair value are classified and disclosed in one of the following three categories:

Level 1	Valuations for assets and liabilities traded in active exchange markets. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities.
Level 2	Valuations for assets and liabilities traded in less active dealer or broker markets. Valuations are obtained from third party pricing services for identical or similar assets or liabilities.
Level 3	Valuations for assets and liabilities that are derived from other valuation methodologies, including option pricing models, discounted cash flow models and similar techniques, and not based on market exchange, dealer or broker traded transactions. Level 3 valuations incorporate certain unobservable assumptions and projections in determining the fair value assigned to such assets.

All transfers between fair value hierarchy levels are recognized by the Company at the end of each reporting period. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement in its entirety requires judgment, and considers factors specific to the investment. The inputs or methodology used for valuing financial instruments are not necessarily an indication of the risks associated with investment in those instruments.

Fair Value Measured or Disclosed on a Recurring Basis

Borrowings — Interest rates under the borrowing agreements with the lending parties were determined based on the prevailing interest rates in the market. The Company classifies the valuation techniques that use these inputs as Level 2 fair value measurement. The carrying value of the Company’s borrowings approximates fair value as the borrowing bears interest rates that are similar to existing market rates.

Other financial items for disclosure purpose — The fair value of other financial items of the Company for disclosure purpose, including cash and cash equivalents, restricted cash, accounts receivable, other receivables, other current assets, accounts payable, other payables and accrued liabilities, approximate their carrying value due to their short-term nature.

Government Grants

Government grants are recognized in the balance sheet initially when there is reasonable assurance that they will be received and that the enterprise will comply with the conditions attached to them. When the Company received the government grants but the conditions attached to the grants have not been fulfilled, such government grants are deferred and recorded as deferred revenue. As of March 31, 2022 and 2023, the deferred revenue were RMB nil and RMB 8.7 million, respectively. The classification of short-term or long-term liabilities is depended on the management’s expectation of when the conditions attached to the grant can be fulfilled. Grants that compensate the Company for expenses incurred are recognized as other income in statement of income on a systematic basis in the same periods in which the expenses are incurred. Government subsidies recognized as other income in the consolidated statement of comprehensive loss for the years ended March 31, 2021, 2022 and 2023 were RMB1.3 million, RMB2.9 million and RMB0.6 million, respectively.

F-19

UTIME LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share data and per share data, or otherwise noted)

NOTE 3 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

Leases

The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease, right-of-use (“ROU”) assets and lease liabilities in the consolidated balance sheets.

ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease, ROU assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. It uses the implicit rate when readily determinable. The operating lease, ROU asset also includes any lease payments made and excludes lease incentives. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Company have elected not to recognize ROU assets and lease liabilities for short-term leases for all classes of underlying assets. Short-term leases are leases with terms of 12 months or less and does not include a purchase option that is reasonably certain to exercise.

Commitments and Contingencies

In the normal course of business, the Company is subject to contingencies, including legal proceedings and claims arising out of the business that relate to a wide range of matters. The Company recognizes a liability for such contingency if it determines it is probable that a loss has occurred and a reasonable estimate of the loss can be made. The Company may consider many factors in making these assessments including historical and the specific facts and circumstances of each matter.

Revenue recognition

The Company derives revenue principally from the sale of mobile phones and accessories. Revenue from contracts with customers is recognized using the following five steps:

1. Identify the contract(s) with a customer;

2. Identify the performance obligations in the contract;

3. Determine the transaction price;

4. Allocate the transaction price to the performance obligations in the contract; and

5. Recognize revenue when (or as) the entity satisfies a performance obligation.

A contract contains a promise (or promises) to transfer goods or services to a customer. A performance obligation is a promise (or a group of promises) that is distinct. The transaction price is the amount of consideration the Company expects to be entitled from a customer in exchange for providing the goods or services.

F-20

UTIME LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share data and per share data, or otherwise noted)

NOTE 3 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

The unit of account for revenue recognition is a performance obligation (a good or service). A contract may contain one or more performance obligations. Performance obligations are accounted for separately if they are distinct. A good or service is distinct if the customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer, and the good or service is distinct in the context of the contract. Otherwise, performance obligations are combined with other promised goods or services until the Company identifies a bundle of goods or services that is distinct. Promises in contracts which do not result in the transfer of a good or service are not performance obligations, as well as those promises that are administrative in nature, or are immaterial in the context of the contract. The Company has addressed whether various goods and services promised to the customer represent distinct performance obligations. The Company applied the guidance of ASC Topic 606-10-25-16 through 18 in order to verify which promises should be assessed for classification as distinct performance obligations.

The Company’s revenue is primary derived from (i) OEM and ODM services for well-known brands; (2) its own in-house brands, positioned in the emerging middle class consumer groups and price-sensitive consumers in emerging markets. Refer to Note 18 to the consolidated financial statements for disaggregation of the Company’s revenue by type of product and geography information for the years ended March 31, 2021, 2022 and 2023.

For the year ended March 31, 2021, the Company participated in efforts to stem the spread of the COVID-19 epidemic, namely, by serving as a temporary distributor of face masks to an existing overseas client in Brazil. The Company recognizes revenue from sales of face masks upon transfer of control of its products to the customer, which typically occurs upon delivery. The Company’s main performance obligation to its customers is the delivery of products in accordance with purchase orders. Each purchase order defines the transaction price for the products purchased under the arrangement. Delivery of these products occurs at that point of time when the control of the products is transferred to the customer. All the face masks sold with delivery terms entered into on a Free On Board basis at Shenzhen port.

The following table disaggregates the Company’s revenue by type of contract for the years ended March 31, 2021, 2022 and 2023:

	Year ended March 31,
	2021		2022		2023
Category	Amount		Amount		Amount
	RMB		RMB		RMB
	(in thousands)
OEM/ODM		195,995		273,979		200,450
In-house brands		6,157		1,529		98
Face mask		44,747		-		-
Total		246,899		275,508		200,548

1) Cooperation with OEM/ODM customers

Revenue is measured based on the consideration to which the Company expects to be entitled in a contract with a customer and excludes amounts collected on behalf of third parties. The Company generates its revenue through product sales, and shipping terms generally indicate when it has fulfilled its performance obligations and passed control of products to its customer, when the goods have been shipped to the customer’s specific location (delivery). Following delivery, the customer has full discretion over the manner of distribution and price to sell the goods, has the primary responsibility when selling the goods and bears the risks of obsolescence and loss in relation to the goods but has no right to return the products (other than for defective products). A receivable is recognized by the Company when the goods are delivered to the customer as this represents the point in time at which the right to consideration becomes unconditional, as only the passage of time is required before payment is due. Revenue from OEM/ODM customers does not meet the criteria to be recognized over time since 1) it does not have the right of payment for the performance completed to date, 2) its work neither creates or enhances an asset controlled by customers until goods are delivered to the customer, 3) customers do not receive and consume benefits simultaneously provided by its performance.

F-21

UTIME LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share data and per share data, or otherwise noted)

NOTE 3 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

2) Sales of products for in-house brands

For revenue realized in Indian market, additional term of goods return may apply. Under Do Mobile’s policy, end users have a right of return for defective devices within 7 days. At the point of sale, a refund liability and a corresponding adjustment to revenue is recognized for those products expected to be returned. At the same time, Do Mobile has a right to recover the product when customers exercise their right of return so consequently recognizes a right to returned goods asset and a corresponding adjustment to cost of sales. Do Mobile uses its accumulated historical experience to estimate the number of returns on a portfolio level using the expected value method, taking into consideration the type of products.

Contract assets and liabilities

Contract assets, such as costs to obtain or fulfill contracts, are an insignificant component of the Company’s revenue recognition process. The majority of the Company’s cost of fulfillment as a manufacturer of products is classified as inventories and property and equipment, which are accounted for under the respective guidance for those asset types. Other costs of contract fulfillment are immaterial due to the nature of the Company’s products and their respective manufacturing processes.

Contract liabilities are mainly advance from customers.

Warranty

The Company offers a standard product warranty that the product will operate under normal use. For products sold to OEM/ODM customers, the warranty period generally ranges from one to two years from the time of final acceptance. In general, the Company ships free spare parts as product warranty to these customers while the products are sold. For products sold to end users through retailers in India, the warranty period includes a one year warranty to end users. The Company has the obligation, at its option, to either repair or replace the defective product. The customers cannot separately purchase the warranty and the warranty doesn’t provide the customer with additional service other than assurance that the product will function as expected. At the time revenue is recognized, an estimate of future warranty costs is recorded as a component of cost of revenues. The reserves established are regularly monitored based upon historical experience and any actual claims charged against the reserve. 

Value added tax

In the PRC, value added tax (the “VAT”) of 17% (before May 1, 2018), 16% (from May 1, 2018 to April 1, 2019) and 13% (after April 1, 2019 until now) on invoice amount is collected in respect of the sales of goods on behalf of tax authorities. The Company reports revenue net of VAT. VIE and its subsidiary in China that are VAT general tax payers are allowed to offset qualified VAT paid against their output VAT liabilities.

Cost of sales

Cost of sales consists primarily of material costs, direct labor costs, other direct costs, consignment manufacturing cost and manufacturing overhead, which are directly attributable to the production of products. Write-down of inventories to lower of cost or net realizable value is also recorded in cost of sales.

F-22

UTIME LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share data and per share data, or otherwise noted)

NOTE 3 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

Selling and marketing expenses

Selling and marketing expenses consist primarily of (i) advertising and market promotion expenses, (ii) shipping expenses and (iii) salaries and welfare for sales and marketing personnel. The advertising and market promotion expenses amounted to RMB0.1 million, RMB0.1 million and RMB nil for the years ended March 31, 2021, 2022 and 2023, respectively. The shipping and handling fees amounted to RMB1.2 million, RMB1.4 million and RMB1.6 million for the years ended March 31, 2021, 2022 and 2023.

Research and development costs

All research and development costs, including patent application costs, are expensed as incurred. Research and development costs were total of RMB7.2 million, RMB14.1 million and RMB16.0 million for the years ended March 31, 2021, 2022 and 2023, respectively, and are included within general and administrative expenses in the consolidated statements of comprehensive loss.

Employee social security and welfare benefits

The employees of the Company are entitled to social benefits in accordance with the relevant regulations of the countries in which these companies are incorporated. The social benefits of the employees of the Company in the PRC include medical care, welfare subsidies, unemployment insurance, employment housing fund and pension benefits. The Company’s subsidiary in India is also required to pay for employee social benefits based upon certain percentages of employees’ salaries in accordance with the relevant local regulation. The Company has no legal obligation for the benefits beyond the contributions made. The total amounts of such employee benefit expenses, which were expensed as incurred, were approximately RMB0.4 million, RMB1.1 million and RMB1.3 million for the years ended March 31, 2021, 2022 and 2023, respectively.

Borrowing cost

Borrowing costs attributable directly to the acquisition, construction or production of qualifying assets which require a substantial period of time to be ready for their intended use or sale, are capitalized as part of the cost of those assets. Income earned on temporary investments of specific borrowings pending their expenditure on those assets is deducted from borrowing costs capitalized. All other borrowing costs are recognized in interest expenses in the consolidated statement of comprehensive loss in the period in which they are incurred.

Income taxes

Income taxes are accounted for using the asset and liability method as prescribed by ASC 740 “Income Taxes.” Under this method, deferred income tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which these temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance would be provided for those deferred tax assets for which if it is more likely than not that the related benefit will not be realized.

Uncertain tax positions

The guidance on accounting for uncertainties in income taxes prescribes a more likely than not threshold for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Guidance was also provided on the recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, accounting for income taxes in interim periods, and income tax disclosures. Significant judgment is required in evaluating the Company’s uncertain tax positions and determining its provision for income taxes. The Company recognizes interests and penalties, if any, under accrued expenses and other current liabilities on its balance sheet and under other expenses in its statement of comprehensive income. The Company did not recognize any interest and penalties associated with uncertain tax positions for the years ended March 31, 2021, 2022 and 2023. As of March 31, 2022 and 2023, the Company did not have any significant unrecognized uncertain tax positions.

F-23

UTIME LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share data and per share data, or otherwise noted)

NOTE 3 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

Statutory reserves

Pursuant to the laws applicable to the PRC, domestic PRC entities must make appropriations from after-tax profit to non-distributable reserves funds. Subject to the limits of 50% of the entity’s registered capital, the statutory surplus reserve fund requires annual appropriations of 10% of after-tax profit (as determined under accounting principles generally accepted in the PRC (“PRC GAAP”) at each year-end). These reserve funds can only be used for specific purposes and are not distributable as cash dividends. Appropriation has been made to these statutory reserve funds of RMB0.2 million, RMB nil and RMB nil for the years ended March 31, 2021, 2022 and 2023, respectively.

Non-controlling interest

A non-controlling interest in a subsidiary of the Company represents the portion of the equity (net assets) in the subsidiary not directly or indirectly attributable to the Company. Non-controlling interests are presented as a separate component of equity on the consolidated balance sheets and net loss and other comprehensive loss are attributed to controlling and non-controlling interests.

Foreign currency translation and transactions

The reporting currency of the Company is the RMB. The Company’s subsidiaries, consolidated VIE and VIE’s subsidiaries with operations in the PRC, Hong Kong, and other jurisdictions generally use their respective local currencies as their functional currencies, except that UTime Trading uses United States dollar (“US$”) as functional currency. The financial statements of the Company’s subsidiaries, other than the consolidated VIE and VIE’s subsidiary with the functional currency in RMB, are translated into RMB using the exchange rate as of the balance sheet date for assets and liabilities, historical exchange rate for equity amounts and the average rate during the reporting period for income and expense items. Translation gains and losses are recorded in accumulated other comprehensive income or loss as a component of shareholders’ equity.

In the financial statements of the Company’s subsidiaries and consolidated VIE and VIE’s subsidiary, transactions in currencies other than the functional currency are measured and recorded in the functional currency using the exchange rate in effect at the date of the transaction. At the balance sheet date, monetary assets and liabilities that are denominated in currencies other than the functional currency are translated into the functional currency using the exchange rate at the balance sheet date. All gains and losses arising from foreign currency transactions are recorded in other (income) expenses, net in the consolidated statements of comprehensive loss.

Convenience translation

Translations of balances in the consolidated balance sheets, consolidated statements of comprehensive loss and consolidated statements of cash flows from RMB into USD as of and for the year ended March 31, 2023 are solely for the convenience of the reader and has been made at the exchange rate quoted by the central parity of RMB against the USD by the People’s Bank of China on March 31, 2023 of USD1.00 = RMB6.8717. No representation is made that the RMB amounts could have been, or could be, converted, realized or settled into USD at that rate on March 31, 2023, or at any other rate.

F-24

UTIME LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share data and per share data, or otherwise noted)

NOTE 3 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

Comprehensive loss

Comprehensive loss is comprised of the Company’s net loss and comprehensive loss. The component of comprehensive loss is consisted solely of foreign currency translation adjustments.

Related parties

Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control or significant influence, such as a family member or relative, shareholder, or a related corporation.

Segment reporting

FASB ASC Topic 280, “Segment Reporting” establishes standards for reporting information about reportable segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group in deciding how to allocate resources and in assessing performance.

Management views the business as consisting of revenue streams; however, they do not produce reports for, assess the performance of, or allocate resources to these revenue streams based upon any asset-based metrics, or based upon income or expenses, operating income or net income. Therefore, the Company believes that it operates in one business segment. Substantively all of the Company’s long-lived assets are located in the PRC.

Loss per share

Basic net loss per share is the amount of net loss available to each share of ordinary shares outstanding during the reporting period. Diluted net loss per share is the amount of net loss available to each share of ordinary shares outstanding during the reporting period adjusted to include the effect of potentially dilutive ordinary shares, if any. Basic and diluted loss per share for each of the periods presented are calculated as follows:

	Year ended March 31,
	2021			2022			2023
	RMB			RMB			RMB
Numerator:
Net loss attributable to UTime Limited, basic and diluted		(16,627	)		(38,833	)		(87,616	)
Denominator:
Weighted average shares outstanding, basic and diluted		4,517,793			8,164,771			11,229,985
Net loss attributable to UTime Limited per ordinary share:
Basic and diluted		(3.68	)		(4.76	)		(7.80	)

F-25

UTIME LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share data and per share data, or otherwise noted)

NOTE 3 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)

Acquisitions

The Company accounts for acquisitions of an asset or group of similar identifiable assets that do not meet the definition of a business as an asset acquisition using the cost accumulated method, whereby the cost of the acquisition, including certain transaction costs, is allocated to the assets acquired on the basis of their relative fair values. No goodwill is recognized in an asset acquisition. Intangible assets acquired in an asset acquisition for use in research and development activities which have no alternative future use are expensed as in-process research and development on the acquisition date. Intangible assets acquired for use in research and development activities which have an alternative future use are capitalized as in-process research and development. Future costs to develop these assets are recorded to research and development expense as they are incurred.

Recently issued accounting standards

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 replaced the incurred loss impairment methodology under current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. ASU 2016-13 requires use of a forward-looking expected credit loss model for accounts receivables, loans, and other financial instruments. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, with early adoption permitted. In October 2019, the FASB issued ASU No. 2019-10, “Financial Instruments-Credit Losses (Topic 326): Effective Dates”, to finalize the effective date delays for private companies, not-for-profits, and smaller reporting companies applying the current expected credit loss (CECL) standards. In March 31, 2023, the FASB issued ASU 2022-02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures, which eliminates the TDR accounting model for creditors that have already adopted Topic 326, which is commonly referred to as the CECL model. These ASUs are effective for reporting periods beginning after December 15, 2022 and interim periods within those fiscal years. Early adoption is permitted. The Company has not early adopted this update and it will become effective on April 1, 2023 assuming the Company will remain an emerging growth company. The Company is currently assessing the impact of adopting this standard on its consolidated financial statements.

In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (ASU 2021-08), which clarifies that an acquirer of a business should recognize and measure contract assets and contract liabilities in a business combination in accordance with Topic 606, Revenue from Contracts with Customers. The new amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. The amendments should be applied prospectively to business combinations occurring on or after the effective date of the amendments, with early adoption permitted. The Company is currently evaluating the impact of the new guidance on the consolidated financial statements.

NOTE 4 — ACCOUNTS RECEIVABLE, NET

	As of March 31,
	2022			2023
	RMB			RMB
Accounts receivable		22,543			52,444
Allowance for doubtful accounts		(126	)		(136	)
Accounts receivable, net		22,417			52,308

The Company analyzed the collectability of accounts receivable based on historical collection and the customers’ intention of payment. As a result of such analysis, the allowance for doubtful accounts was as follows:

	2021			2022			2023
	RMB			RMB			RMB
Balance at beginning of year		838			878			126
Additions for the year		50			—			—
Written off for the year		—			(748	)		—
Foreign currency translation difference		(10	)		(4	)		10
Balance at the end of year		878			126			136

F-26

UTIME LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share data and per share data, or otherwise noted)

NOTE 4 — ACCOUNTS RECEIVABLE, NET (cont.)

As of March 31, 2022 and 2023, the allowance for doubtful accounts amounted to RMB0.1 million. The Company determined that the collection of these customers’ receivable is not probable due to financial difficulties experienced by related customers.

NOTE 5 — PREPAID EXPENSES AND OTHER CURRENT ASSETS, NET

	As of March 31,
	2022			2023
	RMB			RMB
Advance to suppliers		40,620			64,827
Input GST/IVA		568			412
Receivables from supply chain service provider		4,829			7,648
Expected return assets		1			1
Other receivables		21,460			24,282
Allowance for doubtful accounts		(1,663	)		(1,662	)
Prepaid expenses and other current assets, net		65,815			95,508

As of March 31, 2022, other receivables consisted of deposits for leased equipment and factory building and utility amounted to RMB5 million and RMB8 million. As of March 31, 2023, other receivables consisted of deposits for leased equipment and VAT accrued for purchase of raw materials amounted to RMB2 million and RMB7 million.

The Company analyzed the collectability of other current assets based on historical collection. As a result of such analysis, the movement of allowance for doubtful accounts was as follows:

	As of March 31,
	2021			2022			2023
	RMB			RMB			RMB
Balance at beginning of year		4,006			674			1,663
Additions (reversal) for the year		(886	)		3,406			—
Written off for the year		(2,446	)		(2,359	)		—
Foreign currency translation difference		—			(58	)		(1	)
Balance at the end of year		674			1,663			1,662

As of March 31, 2022 and 2023, the allowance for doubtful accounts on advance to suppliers of RMB1.7 million were primarily consist of unrecoverable prepayment related to cancellation of abundant purchase orders caused by termination of cooperation with certain OEM/ODM customers, significant decline in operating activities in India and VAT recoverable from certain supply chain companies.

F-27

UTIME LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share data and per share data, or otherwise noted)

NOTE 6 — INVENTORIES

	As of March 31,
	2022			2023
	RMB			RMB
Raw materials		32,004			12,294
Work in progress		1,326			2,972
Finished goods		13,533			11,217
Total inventory, gross		46,863			26,483
Inventory reserve		(10,792	)		(10,314	)
Total inventory, net		36,071			16,169

The Company analyzed the valuation of inventory and disposed obsolete inventories. As a result of such analysis, the movement of inventory reserve was as follows:

	Year ended March 31,
	2021			2022			2023
	RMB			RMB			RMB
Balance at beginning of year		5,962			13,393			10,792
Additional charge (written off), net		7,589			(2,467	)		407
Foreign currency translation difference		(158	)		(134	)		(885	)
Balance at the end of year		13,393			10,792			10,314

NOTE 7 — PROPERTY AND EQUIPMENT, NET

	As of March 31,
	2022		2023
	RMB		RMB
Office real estate		20,995		20,996
Furniture and equipment		5,100		6,267
Production and other machineries		29,713		55,015
Total		55,808		82,278
Less: accumulated depreciation		17,538		20,849
Property and equipment, net		38,270		61,429

Included in furniture and equipment is computer software with net values of RMB0.04 million and RMB0.02 million as of March 31, 2022 and 2023, respectively.

Depreciation charged to expense amounted to RMB3.2 million, RMB3.3 million and RMB4.6 million for the years ended March 31, 2021, 2022 and 2023, respectively.

No impairment for property and equipment was recorded for the years ended March 31, 2021, 2022 and 2023.

F-28

UTIME LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share data and per share data, or otherwise noted)

NOTE 7 — PROPERTY AND EQUIPMENT, NET (cont.)

Details of production and other machineries lease out under operating lease are as follows:

	As of March 31,
	2022		2023
	RMB		RMB
Cost		29,578		29,578
Less: accumulated depreciation and amortization		9,436		12,094
Net book value		20,142		17,484

NOTE 8 — LEASE LIABILITIES

Operating leases as lessor

The Company has non-cancellable agreements to lease our equipment to tenant under operating lease for 1 to 3 years. The leases do not contain contingent payments. At March 31, 2023, the minimum future rental income to be received is as follows:

Year ending March 31,	RMB
2024		804
2025		201
Total		1,005

For the years ended March 31, 2021, 2022 and 2023, the operating lease income of RMB2.4 million, RMB2.9 million and RMB3.1 million, respectively, net of the depreciation charges of corresponding equipment of RMB2.3 million, RMB2.7 million and RMB2.9 million, respectively, were recorded in other expenses, net in the consolidated statements of comprehensive loss.

Operating leases as lessee

The Company leases space under non-cancelable operating leases for office and manufacturing locations and production equipment. These leases do not have significant rent escalation holidays, concessions, leasehold improvement incentives, or other build-out clauses. Further, the leases do not contain contingent rent provisions.

Most leases include option to renew in condition that it is agreed by the landlord before expiry. Therefore, the majority of renewals to extend the lease terms are not included in its right-of-use assets and lease liabilities as they are not reasonably certain of exercise. The Company regularly evaluate the renewal options and when they are reasonably certain of exercise, the Company includes the renewal period in its lease term.

As most of the Company’s leases do not provide an implicit rate, it uses its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of the lease payments.

The components of the Company’s lease expense are as follows:

	Year ended March 31,
	2021		2022		2023
	RMB		RMB		RMB
Operating lease cost		1,016		2,265		3,289
Short-term lease cost		1,163		973		—
Lease cost		2,179		3,238		3,289

F-29

UTIME LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share data and per share data, or otherwise noted)

NOTE 8 — LEASE LIABILITIES (cont.)

Supplemental cash flow information related to its operating leases was as follows for the years ended March 31, 2021, 2022 and 2023:

	Year ended March 31,
	2021		2022		2023
	RMB		RMB		RMB
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflow from operating leases		1,325		1,249		4,514

Maturities of its lease liabilities for all operating leases are as follows as of March 31, 2023:

	RMB			USD
2024		4,575			666
2025		4,575			666
2026 and after		7,356			1,071
Total lease payments		16,506			2,403
Less: Interest		(1,957	)		(285	)
Present value of lease liabilities		14,549			2,118
Less current portion, record in current liabilities		(3,673	)		(535	)
Present value of lease liabilities		10,876			1,583

The weighted average remaining lease terms and discount rates for all of its operating leases were as follows as of March 31, 2022 and 2023:

	As of March 31,			As of March 31,
	2022			2023
Remaining lease term and discount rate:	RMB			RMB
Weighted average remaining lease term (years)		4.56			3.61
Weighted average discount rate		7.03	%		7.00	%

NOTE 9 — EQUITY METHOD INVESTMENT

During the year ended March 31, 2018, the Company invested an aggregate amount of RMB1.4 million in exchange for 35% of the equity interest of Philectronics Inc. (“Philectronics”), which was recorded under the equity method. For the year ended March 31, 2021, 2022 and 2023, the Company recorded its pro-rata share of losses in Philectronics of RMBnil, as other (income) expenses, net in the consolidated statements of comprehensive loss. The Company recorded RMB0.8 million, RMBnil and RMBnil impairment losses on its investment during the years ended March 31, 2021, 2022 and 2023, respectively, as other expenses, net in the consolidated statements of comprehensive loss. Philectronics has net liability position and temporarily ceased its operation without foreseeable plan for resuming its business operation. 

	Year ended March 31,
	2022			2023
	RMB			RMB
Cost		1,425			1,425
Less: accumulated impairment		(1,425	)		(1,425	)
Equity method investment, net		-			-

F-30

UTIME LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share data and per share data, or otherwise noted)

NOTE 10 — OTHER NON-CURRENT ASSETS

	As of March 31,
	2022		2023
	RMB		RMB
Prepayment for property and equipment, and intangible asset		541		-
Total other non-current assets		541		-

NOTE 11 — BORROWINGS

		As of March 31,
	Note	2022		2023
		RMB		RMB
Short-term borrowings
China Resources Bank of Zhuhai Co., Ltd. Loan 1	(a)		22,000		-
Secured loan	(b)		4,980		7,800
Bank of Communications	(c)		2,500		-
Baosheng County Bank 1	(d)		2,300		-
China Resources Bank of Zhuhai Co., Ltd. Loan 2	(e)		2,000		-
PingAn Bank Co., Ltd.	(f)		2,000		2,000
China Resources Bank of Zhuhai Co., Ltd. Loan 3	(g)		-		22,000
China Resources Bank of Zhuhai Co., Ltd. Loan 4	(h)		-		2,000
Baosheng County Bank 2	(i)		-		2,400
WeBank Co., Ltd. 1	(j)		-		1,990
WeBank Co., Ltd. 2	(k)		-		1,000
WeBank Co., Ltd. 3	(l)		-		1,745
China Resources SZITIC Trust Company Limited	(m)		-		3,000
Industrial and Commercial Bank of China (“ICBC”) Loan	(n)		-		5,000
Industrial and Commercial Bank of China (“ICBC”) Loan	(o)				5,000
			35,780		53,935
Long-term borrowings
Shenzhen Rural Commercial Bank loan 1	(p)		7,000		6,370
Shenzhen Rural Commercial Bank loan 2	(q)		1,820		1,580
			8,820		7,950
Representing by:
Current portion of long-term borrowings			800		1,080
Non-current portion of long-term borrowings			8,020		6,870

(a) On November 13, 2020, UTime SZ entered into a credit agreement with China Resources Bank of Zhuhai Co., Ltd., according to which China Resources Bank of Zhuhai Co., Ltd. agreed to provide UTime SZ with a credit facility of up to RMB22 million with a two-year term from November 13, 2020 to November 13, 2022. On November 18, 2020, UTime SZ entered into a working capital loan agreement with China Resources Bank of Zhuhai Co., Ltd. to borrow RMB22 million as working capital for one year at an annual effective interest rate of 5.5%. The Company repaid the loan on November 18, 2021 and borrowed RMB22 million as working capital for one year at an annual effective interest rate of 5.5% on November 22, 2021. The Company repaid the loan on November 21, 2022. The loan is secured by the office owned by UTime SZ and guaranteed by UTime GZ, Mr. Bao and his spouse.

F-31

UTIME LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share data and per share data, or otherwise noted)

NOTE 11 — BORROWINGS (cont.)

(b) In November 2020, UTime SZ and TCL Commercial Factoring (Shenzhen) Company Limited (“TCL Factoring”) executed a factoring agreement, pursuant to which UTime SZ received a revolving credit facility and may submit unlimited number of loan applications, so long as, among other conditions, the balance of the loan does not exceed the credit line. The annual effective interest rate range is from 8.0% to 9.0%. TCL Factoring has the right of recourse to UTime SZ, and as a result, these transactions were recognized as secured borrowings. UTime SZ agreed to pledge to TCL Factoring its accounts receivable from TCL Mobile Communication Company Limited (“TCL Huizhou”). This credit facility was also guaranteed respectively by Mr. Bao and UTime GZ, each for an amount up to RMB20 million. UTime SZ agreed not to withdraw, utilize or dispose the accounts receivables paid to it by TCL Huizhou without the prior consent of TCL Factoring. As of March 31, 2022 and 2023, UTime SZ obtained loans under the factoring agreement at the total amount of RMB4.98 million and RMB7.8 million, respectively.

(c) In July 2021, UTime SZ entered into a credit agreement with Bank of Communications to borrow RMB10 million for an unfixed term. On July 19, 2021, UTime SZ obtained a loan under this working capital loan agreement at the amount of RMB3 million which is due on July 6, 2022. The loan was guaranteed by Mr. Bao and his spouse. The loan bears a fixed interest rate of 4.6% per annum and will be due on July 6, 2022. The loan was fully repaid in July 2022.

(d) In August 2021, UTime SZ entered into a credit line agreement with Shenzhen Nanshan Baosheng County Bank Co., Ltd. (“Baosheng County Bank”) according to which Baosheng County Bank agreed to provide UTime SZ with a credit facility of up to RMB3 million with a one-year term from July 28, 2021 to July 28, 2022. On August 23, 2021, UTime SZ entered into a working capital loan agreement with Baosheng County Bank to borrow RMB3 million as working capital for one year at an annual effective interest rate of 8.0%. It is payable at monthly installment of RMB0.1 million from September 2021 to August 2022, with a balloon payment of the remaining balance in the last installment. The loan was fully repaid in August 2022.

(e) On December 2, 2021, UTime SZ entered into a working capital loan agreement with China Resources Bank of Zhuhai Co., Ltd., to borrow RMB2 million as working capital at an annual effective interest rate of 8.0%. The loan was repaid in October 2022.

(f) In November 2021, UTime SZ entered into a credit agreement with PingAn Bank Co., Ltd. to borrow RMB2 million for a term of 3 years, with an annual effective rate of 12.96%. The loan is guaranteed by Mr. Bao and his spouse. As of March 31, 2023 UTime SZ obtained loans under the credit agreement at the total amount of RMB2 million which will be due on November 2023.

(g) On November 24, 2022, UTime SZ entered into a working capital loan agreement with China Resources Bank of Zhuhai Co., Ltd., to borrow RMB22 million as working capital at an annual effective interest rate of 5.5%. The loan is secured by the office owned by UTime SZ and guaranteed by UTime GZ, Mr. Bao and his spouse. The loan will be due in November 2023.

(h) On December 5, 2022, UTime SZ entered into a working capital loan agreement with China Resources Bank of Zhuhai Co., Ltd., to borrow RMB2 million as working capital at an annual effective interest rate of 8.0%. The loan will be due on October 25, 2023.

(i) On August 31, 2022, UTime SZ entered into a credit line agreement with Shenzhen Nanshan Baosheng County Bank Co., Ltd. (“Baosheng County Bank”) according to which Baosheng County Bank agreed to provide UTime SZ with a credit facility of up to RMB3 million with a one-year term from August 31, 2022 to August 31, 2023. On August 31, 2022, UTime SZ entered into a working capital loan agreement with Baosheng County Bank to borrow RMB3 million as working capital for one year at an annual effective interest rate of 8.0%. It is payable at monthly installment of RMB0.1 million from September 2021 to August 2022, with a balloon payment of the remaining balance in the last installment. The loan is secured by the office owned by UTime SZ and guaranteed by UTime Guangxi, Mr. Bao and his spouse.

F-32

UTIME LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share data and per share data, or otherwise noted)

NOTE 11 — BORROWINGS (cont.)

(j) On May 19, 2022, UTime SZ entered into a credit line agreement with WeBank Co., Ltd. (“WeBank”) according to which WeBank agreed to provide UTime SZ with a credit facility of up to RMB1.99 million with a two-year term from May 19, 2022 to May 19, 2024, with an annual effective interest rate of 9.45%. The loan is guaranteed by Mr. Bao. As of March 31, 2023 UTime SZ loans under the credit agreement was RMB1.99 million.

(k) On May 19, 2022, UTime SZ entered into a credit line agreement with WeBank Co., Ltd. (“WeBank”) according to which WeBank agreed to provide UTime SZ with a credit facility of up to RMB1 million with a two-year term from May 19, 2022 to May 19, 2024, with an annual effective interest rate of 9%. The loan is guaranteed by Mr. Bao. As of March 31, 2023 UTime SZ loans under the credit agreement was RMB1 million.

(l)	On May 18, 2022, UTime SZ entered into a credit line agreement with WeBank Co., Ltd. (“WeBank”) according to which WeBank agreed to provide UTime SZ with a credit facility of up to RMB3 million with a two-year term from May 18, 2022 to May 18, 2024, with an annual effective interest rate of 11.34%. The loan is guaranteed by Mr. Bao. As of March 31, 2023 UTime SZ loans under the credit agreement was RMB1.7 million.
(m)	On January 10, 2023, UTime SZ entered into a working capital loan agreement with China CITIC Bank, to borrow RMB3 million as working capital at an annual effective interest rate of 4.35%. The loan will be due in January 2024.
(n)	On December 2, 2022, UTime SZ entered into a loan agreement with Industrial and Commercial Bank of China (“ICBC”), to borrow RMB 5 million as working capital at an annual effective interest rate of 3.75%. The loan will be due in 12 months.
(o)	On December 7, 2022, UTime SZ entered into a loan agreement with Industrial and Commercial Bank of China (“ICBC”), to borrow RMB 5 million as working capital at an annual effective interest rate of 3.75%. The loan will be due in 12 months.
(p)	On June 29, 2021, UTime SZ entered into a credit agreement with Shenzhen Rural Commercial Bank to borrow RMB7 million for a term of 3 years, which is payable at monthly installment of RMB0.07 million from August 2022 to July 2024, with a balloon payment of the remaining balance in the last installment. The loan bears a fixed interest rate of 4.5% per annum. The loan was secured by real estate owned by Mr. Bao and guaranteed by Mr. Bao. As of March 31, 2022 and 2023, the balance of the loan was RMB7 million and RMB6.4 million, respectively. Out of the total outstanding loan balance, current portion amounted were RMB0.56 million and RMB0.84 million, which is presented as current liabilities in the consolidated balance sheet and the remaining balance of RMB6.44 million and RMB5.53 million, which is presented as non-current liabilities in the consolidated balance sheet as of March 31, 2022 and 2023, respectively.
(q)	In July 2021, UTime SZ entered into a credit agreement with Shenzhen Rural Commercial Bank to borrow RMB2 million for a term of 3 years, which is payable at monthly installment of RMB0.02 million from July 2021 to July 2024, with a balloon payment of the remaining balance in the last installment. The loan is secured by real estate owned by Mr. Bao and guaranteed by Mr. Bao. As of March 31, 2022 and 2023, the balance of the loan are RMB1.82 million and RMB1.58 million, respectively. Out of the total outstanding loan balance, current portion amounted were RMB0.24 million and RMB0.24 million, which is presented as current liabilities in the consolidated balance sheet and the remaining balance of RMB1.82 million and RMB1.58 million, which is presented as non-current liabilities in the consolidated balance sheet as of March 31, 2022 and 2023, respectively.

NOTE 12 — OTHER PAYABLES AND ACCRUED LIABILITIES

	As of March 31,
	2022		2023
	RMB		RMB
Advance from customers		16,607		17,087
Accrued payroll		10,220		11,910
VAT payable		1,484		7,292
Refund liabilities		1		1
Product warranty		50		50
Other payables		15,786		18,432
Total		44,148		54,772

As of March 31, 2022, other payables mainly included RMB6.8 million advance from supply chain service provider, RMB3.4 million advance refundable to a customer and RMB2.3 million payable for materials provided by a customer for processing and assembling mobile phones. As of March 31, 2023, other payables mainly included RMB6.8 million advance from supply chain service provider, RMB2.2 million advance refundable to a customer and RMB3 million refundable to a vendor.

F-33

UTIME LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share data and per share data, or otherwise noted)

NOTE 13 — OTHER EXPENSES/(INCOME), NET

	Year ended March 31,
	2021			2022			2023
	RMB			RMB			RMB
Exchange losses (gains)		3,703			2,316			(3,179	)
Provision for doubtful accounts, net		(836	)		3,406			-
Impairment of intangible asset		-			348			-
Government grants		(1,289	)		(2,851	)		(594	)
Loss on equity method investment		833
Others		464			109			79
Total		2,875			3,328			(3,694	)

NOTE 14 — INCOME TAX BENEFITS

Net loss before taxes of RMB17.0 million, RMB39.4 million and RMB90.2 million were attributed by non-U.S. entities for the years ended March 31, 2021, 2022 and 2023, respectively.

Cayman Islands

UTime Limited is incorporated in the Cayman Islands. Under the current laws of the Cayman Islands, the Company is not subject to income or capital gains taxes. In addition, dividend payments are not subject to withholdings tax in the Cayman Islands.

British Virgin Islands

Bridgetime is incorporated in the British Virgin Islands and is not subject to tax on income or capital gains under current British Virgin Islands law. In addition, dividend payments are not subject to withholdings tax in British Virgin Islands.

Hong Kong

UTime HK and UTime Trading, which were incorporated in Hong Kong, are subject to a two-tiered income tax rates for taxable income earned in Hong Kong with effect from April 1, 2018. The first HK$2 million of profits earned will be taxed at 8.25%, while the remaining profits will continue to be taxed at the existing 16.5% tax rate. Additionally, payments of dividends by the subsidiary incorporated in Hong Kong to the Company are not subject to any Hong Kong withholding tax.

India

Do Mobile, which was incorporated in India, is subject to a corporate income tax rate of 25% on the assessable profits, plus any surcharge if required.

Mexico

Gesoper and Firts, which were incorporated in Mexico, are subject to federal corporate income tax rate of 30% on the assessable profits.

PRC

In accordance with the Enterprise Income Tax Law (“EIT Law”), Foreign Investment Enterprises (“FIEs”) and domestic companies are subject to Enterprise Income Tax (“EIT”) at a uniform rate of 25%. The subsidiary, VIE and subsidiary of VIE in the PRC are subject to a uniform income tax rate of 25% for the years presented. UTime SZ is regarded as a Certified High and New Technology Enterprise (“HNTE”) and entitled to a favorable statutory tax rate of 15%. Preferential tax treatment of UTime SZ as HNTE from November 2, 2015 to December 23, 2024 has been granted by the relevant tax authorities. UTime SZ is entitled to a preferential tax rate of 15% which is subject to review by State Taxation Administration every three years. As a result of these preferential tax treatments, the reduced tax rates applicable to UTime SZ for the years ended March 31, 2021, 2022 and 2023 are 15%. However, UTime SZ has not enjoyed the above-mentioned preferential tax treatments for the years ended March 31, 2021, 2022 and 2023 due to its loss position and as such there is no impact of these tax holidays on net loss per share.

F-34

UTIME LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share data and per share data, or otherwise noted)

NOTE 14 — INCOME TAX BENEFITS (cont.)

According to a policy promulgated by the State Tax Bureau of the PRC and effective from 2008 onwards, enterprises engaged in research and development activities are entitled to claim an additional tax deduction amounting to 50% of the qualified research and development expenses incurred in determining its tax assessable profits for that year. The additional tax deduction has been increased from 50% of the qualified research and development expenses to 75%, effective from January 1, 2018 according to a tax incentives policy promulgated by the State Tax Bureau of the PRC in September 2018 (“Super Deduction”). The additional tax deduction has been increased from 75% of the qualified research and development expenses to 100%, effective from October 1, 2022 according to a tax incentives policy promulgated by the State Tax Bureau of the PRC in September 2022.

In general, the PRC tax authority has up to five years to conduct examinations of the Company’s tax filings. In addition, under applicable PRC tax laws and regulations, arrangements and transactions among related parties may be subject to audit or scrutiny by the PRC tax authorities within ten years after the taxable year when the arrangements or transactions are conducted. The Company is subject to the applicable transfer pricing rules in the PRC in connection to the transactions between its subsidiaries, VIE and subsidiaries of VIE located inside and outside PRC.

Withholding tax on undistributed dividends

Under the EIT Law and its implementation rules, the profits of a foreign-invested enterprise arising in 2008 and thereafter that are distributed to its immediate holding company outside the PRC are subject to withholding tax at a rate of 10%. A lower withholding tax rate will be applied if there is a beneficial tax treaty between the PRC and the jurisdiction of the foreign holding company. A holding company in Hong Kong, for example, will be eligible, with approval of the PRC local tax authority, to be subject to a 5% withholding tax rate under Arrangement between the 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, if such holding company is considered to be a non-PRC resident enterprise and holds at least 25% of the equity interests in the PRC foreign-invested enterprise distributing the dividends. However, if the Hong Kong holding company is not considered to be the beneficial owner of such dividends under applicable PRC tax regulations, such dividend will remain subject to withholding tax at a rate of 10%. The Company does not intend to have any of its subsidiaries located in PRC distribute any undistributed profits of such subsidiaries in the foreseeable future, but rather expects that such profits will be reinvested by such subsidiaries for their PRC operations. Accordingly, no withholding tax was recorded as of March 31, 2021, 2022 and 2023.

The current and deferred components of income taxes appearing in the consolidated statements of comprehensive loss are as follows:

	Year ended March 31,
	2021		2022		2023
	RMB		RMB		RMB
Current tax benefits		364		-		-
Deferred tax benefit		-		46		171
Total income tax benefit		364		46		171

F-35

UTIME LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share data and per share data, or otherwise noted)

NOTE 14 — INCOME TAX BENEFITS (cont.)

The principal components of the deferred tax assets and liabilities are as follows:

	As of March 31,
	2022			2023
	RMB			RMB
Deferred income tax assets (liabilities) :
Impairment on receivables		2,590			450
Inventories		3,358			1,889
Deferred revenue		977			2,174
Accrued expenses and employee benefits		1,411			3,258
Equity method investment and others		1,075			-
Net operating loss carry forwards		21,678			27,977
Total gross deferred tax assets		31,089			35,748
Less: valuation allowances		(27,747	)		(32,490)
Total deferred tax assets, net of valuation allowance		3,342			3,258
Prepaid expenses and other current assets		(1,299	)		(3,258	)
Unrealized foreign exchange difference and others		(2,217	)		-
Amortization & impairment of intangible asset		(292	)		(295	)
Deferred tax liabilities		(466	)		(295	)

The Company considers positive and negative evidence to determine whether some portion or all of the deferred tax assets will more likely than not be realized. This assessment considers, among other matters, the nature, frequency and severity of recent losses, forecasts of future profitability, the duration of statutory carry forward periods, the Company’s experience with tax attributes expiring unused and tax planning alternatives. Valuation allowances have been established for deferred tax assets based on a more-likely-than-not threshold. The Company’s ability to realize deferred tax assets depends on its ability to generate sufficient taxable income within the carry forward periods provided for in the tax law. While the Company has optimistic plans for its business strategy, it determined that a full valuation allowance was necessary against all net deferred tax assets as of March 31, 2022 and 2023, given the current and expected near term losses and the uncertainty with respect to its ability to generate sufficient profits from its business model.

As of March 31, 2022, the Company’s total net operating loss carry forwards of RMB116.2 million, out of which, RMB83.2 million would expire from 2022 through 2031, RMB33.9 million can be carried forward indefinitely. As of March 31, 2023, the Company’s total net operating loss carry forwards was RMB152.0 million out of which, RMB109.8 million would expire from 2023 through 2032, RMB42.2 million can be carried forward indefinitely.

Reconciliation between total income tax benefits and the amount computed by applying the statutory income tax rate to income before taxes is as follows:

	Year ended March 31,
	2021			2022			2023
		%			%			%
Statutory rate in PRC		25			25			25
Effect of preferential tax treatment		(2	)		(4	)		(1	)
Effect of different tax jurisdiction		(6	)		(4	)		(19	)
Effect of permanence differences		(1	)		(2	)		-
Research and development super-deduction		5			4			2
Changes in valuation allowance		(21	)		(19	)		(7	)
Over provision in prior year		2			-			-
Total income tax benefits		2			-			-

F-36

UTIME LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share data and per share data, or otherwise noted)

NOTE 14 — INCOME TAX BENEFITS (cont.)

The Company accounts for uncertainty in income taxes using a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. Interest and penalties related to uncertain tax positions are recognized and recorded as necessary in the provision for income taxes.

The Company evaluates the level of authority for each uncertain tax position (including the potential application of interest and penalties) based on the technical merits, and measures the unrecognized benefits associated with the tax positions. As of March 31, 2022 and 2023, the Company did not have any significant uncertain tax positions.

The Company is subject to taxation in China, Hong Kong and India. According to the PRC Tax Administration and Collection Law, the statute of limitations is three years if the underpayment of taxes is due to computational errors made by the taxpayer or the withholding agent. The statute of limitations is extended to five years under special circumstances, where the underpayment of taxes is more than RMB0.1 million. In the case of transfer pricing issues, the statute of limitation is ten years. There is no statute of limitation in the case of tax evasion.

NOTE 15 — RELATED PARTIES BALANCES AND TRANSACTIONS

Related parties with whom the Company had transactions are:

Related Parties	Relationship
Mr. Bao	Controlling shareholder of the Company
Mr. He	Beneficial shareholder of the Company
Mr. Yu	Chief Financial Officer of the Company
Philectronics	An equity method investee of the Company
Grandsky Phoenix Limited	100% owned by Mr. Bao

(1) Due from related parties

	As of March 31,
	2022		2023
	RMB		RMB
Philectronics		486		536
Mr. Bao		47		-
GRANDSKY PHOENIX LIMITED		889		-
Mr. Yu		-		48
		1,422		584

F-37

UTIME LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share data and per share data, or otherwise noted)

NOTE 15 — RELATED PARTIES BALANCES AND TRANSACTIONS (cont.)

(2) Due to related parties

	As of March 31,
	2022		2023
	RMB		RMB
Mr. Bao		3,819		4,779
Philectronics		482		482
GRANDSKY PHOENIX LIMITED		198		239
		4,499		5,500

(1) On September 17, 2021, Mr. Bao entered into a loan agreement with China Resources Bank of Zhuhai Co., Ltd. and borrowed RMB3.0 million (US$0.5 million). The loan is restricted on purpose only to support daily operation for the Companies that is controlled by Mr. Bao. The loan was repaid on March 17, 2022 and the agreement was renewed on March 18, 2022.

NOTE 16 — SHAREHOLDERS’ EQUITY

As of March 31, 2021, the Company had 140,000,000 authorized ordinary shares, and 4,517,793 ordinary shares were issued and outstanding, respectively.

On April 8, 2021, the Company completed its IPO on Nasdaq Capital Market. In the offering, 3,750,000 of the Company’s ordinary shares were issued and sold to the public at a price of US$4 per share for gross proceeds of US$15 million. The Company recorded net proceeds (after deducting underwriting discounts and commissions and other offering fees and expenses) of approximately $13.9 million (approximately RMB88.2 million) from the offering.  As of March 31, 2023, the Company had 140,000,000 authorized ordinary shares, and 8,267,793 ordinary shares were issued and outstanding, respectively.

On June 29, 2022, the board of directors of the Company approved the 2022 Performance Incentive Plan (the “2022 PIP”). Under the 2022 PIP, the Company has reserved a total of 5,300,000 shares of common stock for issuance as or under awards to be made to the participants of the Company. On November 7, 2022, 5,300,000 shares of common stock were issued and granted under the 2022 PIP. Total fair value of the shares of common stock granted was calculated at $9,301,500 as of the date of issuance at $1.755 per share.

F-38

UTIME LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share data and per share data, or otherwise noted)

NOTE 17 — COMMITMENTS AND CONTINGENCIES

(a) Capital commitment

At March 31, 2023, the Company had no capital commitments.

(b) Legal proceedings

From time to time, the Company is involved in claims and legal proceedings that arise in the ordinary course of business. Based on currently available information, management does not believe that the ultimate outcome of these unresolved matters, individually and in the aggregate, is likely to have a material adverse effect on the Company’s financial position, results of operations or cash flows. The Company has not recorded any material liabilities in this regard as of March 31, 2022 and 2023.

However, litigation is subject to inherent uncertainties and the Company’s view of these matters may change in the future. If an unfavorable outcome were to occur, there exists the possibility of a material adverse impact on the Company’s financial position and results of operations for the periods in which the unfavorable outcome occurs.

NOTE 18 — REVENUE AND GEOGRAPHY INFORMATION

	Year ended March 31,
	2021		2022		2023
	RMB		RMB		RMB
Feature phone		144,032		111,066		106,279
Smart phone		56,885		154,143		73,819
Face mask		44,747		-		-
Others		1,235		10,299		20,449
Total		246,899		275,508		200,547

The Company’s sales breakdown based on location of customers is as follows:

	Year ended March 31,
	2021		2022		2023
	RMB		RMB		RMB
Mainland China		112,400		70,314		82,481
Hong Kong		30,030		18,949		14,228
India		6,157		1,529		97
Africa		19,536		25,905		39,515
The United States		17,277		28,154		18,158
Mexico		-		12,372		29,085
South America		45,743		118,285		951
Others		15,756		-		16,032
Total		246,899		275,508		200,547

The location of the Company’s long-lived assets is as follows:

	As of March 31,
	2022		2023
	RMB		RMB
PRC		54,543		74,438
India		46		19
Mexico		-		3
Total		54,589		74,460

Pursuant to ASC 280-10-50-41, the other non-current assets of RMB0.5 million and RMBnil, and the intangible assets, net of RMB2.6 million and RMB1.8 million were excluded from long-lived assets as of March 31, 2022 and 2023 respectively.

F-39

UTIME LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share data and per share data, or otherwise noted)

NOTE 19 — CONDENSED FINANCIAL INFORMATION OF THE PARENT COMPANY

The Company performed a test on the restricted net assets of consolidated subsidiary in accordance with Securities and Exchange Commission Regulation S-X Rule 4-08 (e) (3), “General Notes to Financial Statements” and concluded that it was applicable for the Company to disclose the financial statements for the parent company. The amounts restricted include paid-in capital, capital surplus and statutory reserves, after intercompany eliminations, as determined pursuant to PRC generally accepted accounting principles, totaling RMB71.9 million and RMB72.1 million as of March 31, 2022 and 2023.

The subsidiaries did not pay any dividend to the parent for the periods presented. For the purpose of presenting parent only financial information, the Company records investment in its subsidiary under the equity method of accounting. Such investment is presented on the separate condensed balance sheets of the Company as “Investment in subsidiary” and the income of the subsidiary is presented as “Income from equity method investments.” Certain information and footnote disclosures generally included in financial statements prepared in accordance with U.S. GAAP have been condensed and omitted.

BALANCE SHEETS

	As of March 31,
	2022			2023
	RMB			RMB
ASSETS
Current assets
Cash and cash equivalents		1			2
Prepaid expenses and other current assets		23,195			25,109
Inter-company receivable		73,345			79,393
Non-current assets
Investment in subsidiary		1,610			(18,929	)
Total assets		98,151			85,575
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Inter-company payable		31,492			35,634
Due to related parties		289			313
Other payables and accrued liabilities		1,382			5,539
Total liabilities		33,163			41,486
Shareholders’ equity
Preference share, par value US$0.0001; Authorized:10,000,000 shares; Nil issued and outstanding as of March 31, 2022 and March 31, 2023, respectively		-			-
Ordinary shares, par value US$0.0001; Authorized:140,000,000 shares; Issued and outstanding: 8,267,793 shares as of March 31, 2022 and 13,567,793 shares as of March 31, 2023		5			9
Additional paid-in capital		152,236			216,504
Accumulated deficit		(88,277	)		(175,893	)
Accumulated other comprehensive income		1,024			3,469
Total shareholder’s equity		64,988			44,089
Total liabilities and shareholders’ equity		98,151			85,575

F-40

UTIME LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share data and per share data, or otherwise noted)

NOTE 19 — CONDENSED FINANCIAL INFORMATION OF THE PARENT COMPANY (cont.)

STATEMENTS OF COMPREHENSIVE LOSS

	Year ended March 31,
	2021			2022			2023
	RMB			RMB			RMB
Loss from equity method investments		(12,618	)		(32,350	)		(18,396	)
Operating expenses		(4,009	)		(6,483	)		(69,220	)
Net loss		(16,627	)		(38,833	)		(87,616	)
Foreign currency translation difference		1,868			(377	)		2,445
Comprehensive loss		(14,759	)		(39,210	)		(85,171	)

STATEMENTS OF CASH FLOWS

	Year ended March 31,
	2021			2022			2023
	RMB			RMB			RMB
CASH FLOW FROM OPERATING ACTIVTIES
Net loss		(16,627	)		(38,833	)		(87,616	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Equity loss of subsidiaries		12,618			32,350			18,396
Share-based compensation and expenses		-			-			63,656
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		(8,424	)		(1,173	)		-
Inter-company payable (i)		12,206			8,000			1,539
Related parties		(23	)		-			-
Other payables and accrued liabilities		131			1,269			4,026
Net cash (used in) provided by operating activities		(119	)		1,613			1
Effect of exchange rate changes on cash and cash equivalent and restricted cash		125			(1,618	)		-
Net change in cash and cash equivalent		6			(5	)		1
Cash and cash equivalents, beginning of year		-			6			1
Cash and cash equivalents, end of year		6			1			2

(i) For the year ended March 31, 2022, UTime HK received the IPO proceeds of RMB88.2 million and made down payment for financing services of RMB19 million on behalf of UTime Limited.

The Company did not have significant capital and other commitments, long-term obligations, or guarantees as of March 31, 2022 and 2023, respectively.

F-41

UTIME LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except share data and per share data, or otherwise noted)

NOTE 20 — SUBSEQUENT EVENTS

The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the financial statements were issued. Based upon this review, the Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statements.

F-42

EX-4.59

Exhibit 4.59

Contract No.: H. Y. (2022) S. E. D. Zi (TUO YI) No. [ ]

Contract on Mortgage

under the Debt Ceiling

(Corporate Business)

China Resources Bank of Zhuhai Co., Ltd.

September 2022 Edition

Contract on Mortgage under the Debt Ceiling

Mortgagee: China Resources Bank of Zhuhai Co., Ltd. Shenzhen Branch

Mortgagor: Shenzhen United Time Technology Co., Ltd.

Whereas the Mortgagor (if the mortgaged asset is shared by the Mortgagor and the third party, all references to the “Mortgagor” hereunder shall also include the co-owner of the mortgaged asset) is willing to provide the maximum mortgage guarantee for the successive creditor’s rights between the Mortgagee and Shenzhen United Time Technology Co., Ltd. (hereinafter referred to as the Debtor) in accordance with the relevant State laws and regulations, the parties have hereby entered into this Contract by consensus.

Chapter 1 Types and Amounts of Guaranteed Creditor’s Rights

Article 1 Types and Amounts of Guaranteed Creditor’s Rights

1. The creditor’s rights guaranteed by the Mortgagor are the creditor’s rights (including the starting date and the expiration date of the period; hereinafter referred to as: the creditor’s rights determination term) enjoyed by the Mortgagee against the Debtor based on the master contract (all credit granting business contracts) signed with the Debtor, the various types of credit granting business processed, and the purchase of bonds/bills/asset-backed securities issued by the Debtor or the assumption of payment obligations, etc., (including contingent creditor’s rights, hereinafter the same), as well as prior creditor’s rights agreed by both parties within the maximum creditor’s rights amount of RMB forty-four million yuan only (in words) during the period from November 15, 2022 to November 15, 2024; the guaranteed creditor’s rights include but are not limited to:

(1) All creditor’s rights enjoyed by the Mortgagee against the Debtor under the Comprehensive Credit Granting Contract with contract No. H. Y. (2022) S. E. D. Zi (TUO YI) No.[   ] in respect of all specific credit granting business contracts with the Debtor.

(2) All outstanding creditor’s rights enjoyed by the Mortgagee against the Debtor under Contract No.     /                   .

2

(3) The creditor’s rights enjoyed by the Mortgagee against the Debtor as a result of all the credit granting business contracts to be signed with the Debtor in succession during the creditor’s rights determination term.

(4) The creditor’s rights enjoyed by the Mortgagee against the Debtor as a result of granting a loan, etc., to the Debtor during the creditor’s rights determination term.

(5) The creditor’s rights (including contingent creditor’s rights) enjoyed by the Mortgagee against the Debtor as a result of the issuance of bank acceptances, L/Cs, or L/Gs (including a standby L/Cs, hereinafter the same), etc., during the creditor’s rights determination term.

(6) The creditor’s rights (including contingent creditor’s rights) enjoyed by the Mortgagee against the Debtor as a result of the processing of factoring business, commercial bill discounting business, commercial bill pledge business, forfaiting business, etc. during the creditor’s rights determination term.

(7) The creditor’s rights enjoyed by the Mortgagee against the Debtor as a result of the purchase of short-term financing, medium-term notes, private placement note (PPN), corporate bonds, enterprise bonds, credit asset securitization, enterprise asset securitization, asset-backed notes, asset-backed programs, etc., issued by the Debtor or subject to a payment obligation during the creditor’s rights determination term.

2. The aforesaid maximum creditor’s rights amount refers to the maximum balance of all the guaranteed creditor’s right in different currencies converted into RMB in accordance with the mid-rate of foreign exchange published by the Mortgagee on the creditor’s rights determination date for which the Mortgagor has assumed the maximum mortgage guarantee.

3. Regardless of whether the above principal creditor’s rights have expired or formed at the expiration of the creditor’s rights determination term, as long as any of the dates, such as the signing date, effective date and maturity date of the aforesaid master contract (all credit granting business contracts), the occurrence date, formation date, maturity date of the principal creditor’s rights, the occurrence date, acceptance date, bill issue date, discount date, confirmation date of the credit granting business, the transfer date of loan/discount payment/forfaiting payment/factoring financing payment, the issuance date of L/G (including standby L/C), the registration date of commercial bill pledge, the endorsement date, payment reminder date, advance date of the commercial bill, the transfer date, notification date, starting date, maturity date of the creditor’s rights/accounts receivables falls within the creditor’s rights determination term, the corresponding principal creditor’s rights shall be covered by the mortgage guarantee of the Mortgagor.

3

4. Where the principal creditor’s right is in a currency other than RMB, it shall be converted into RMB at the mid-price published by the Mortgagee on the creditor’s rights determination date.

Article 2 The credit granting business stipulated herein refers to the Bank’s provision of direct financial support to the customer, or its guarantee of the customer’s liability for indemnification or payment that may arise from the customer’s relevant economic activities. It includes but is not limited to all kinds of loans, overdrafts, discounts and/or all kinds of trade financing (including but not limited to import bill advance, import collection financing, import outward remittance financing, export bill purchase, export collection financing, export invoice financing, export order financing, packing loans, domestic documentary letter of credit, domestic letter of credit negotiation, import/export factoring financing, etc.), the issuance of bank acceptance, L/C or L/G (including standby L/C, the same below), discounting, bill pledge, factoring, etc.

Article 3 Any principal of principal creditor’s rights such as the currency, amount, interest rate and debt performance period shall be specifically agreed upon between the Mortgagee and the Debtor in the master contract (including the application for the use of the line of credit/credit granting business under the master contract and/or other documents signed by both the Mortgagee and the Debtor, etc.) and the corresponding credit granting business agreement in respect of the principal creditor’s rights. The Mortgagor has carefully read the Master Contract and confirmed all the terms and conditions.

Article 4 During the creditor’s rights determination term and the maximum creditor’s rights amount agreed herein, the Mortgagor shall not be required to confirm or register the guarantee on a case-by-case basis upon the Mortgagee’s issuance of the loan or provision of other credit granting business as agreed herein.

Chapter 2 Scope of Maximum Mortgage Guarantee

Article 5 Scope of Guarantee

The scope of the Mortgagor’s maximum mortgage guarantee is as follows: including but not limited to the principal and interest of principal creditor’s rights, compound interest, penalty interest, liquidated damages, damage compensation, interest on the debt for delay in performance, the costs of realizing creditor’s rights and the mortgage rights; the costs for the realization of the creditor’s rights and the mortgage right include but are not limited to, the collection costs, litigation costs (or arbitration costs), the costs of safekeeping the mortgaged asset, the costs of disposing of the mortgaged asset, the transfer fees, the preservation fees, the announcement fees , execution fees, attorney fees, travel expenses and other expenses.

4

Each of the above creditor’s rights is collectively referred to as the guaranteed creditor’s rights herein.

Article 6 In case the principal creditor’s right is an advance payment, or any of the other principal creditor’s rights actually formed is beyond the creditor’s rights determination term, it is still covered by this Maximum Mortgage. The maturity date of the principal creditor’s right is not limited by the expiration date of the creditor’s rights determination term.

Chapter 3 Mortgaged Property

Article 7 The mortgaged property hereunder is detailed in the attached “List of Mortgaged Property” (hereinafter: “List of Mortgaged Property”). The “List of Mortgaged Property” is attached as an annex to this Contract and has the same legal effect as this Contract.

Article 8 The value of the mortgaged asset recorded in the “List of Mortgaged Property” hereof or otherwise agreed upon by both parties (hereinafter referred to as the “provisional value”), regardless of whether it is recorded in the register book of the registration authority or not, does not indicate the final value of the mortgaged asset, which is subject to the net amount after deduction of taxes and fees from the actual disposal of the mortgaged asset upon the realization of the mortgaged right.

In the event that the mortgaged property is used to offset the creditor’s rights of the Mortgagee, the above provisional value shall not serve as a basis for offsetting the mortgaged property against the creditor’s rights of the Mortgagee, and the value of the mortgaged property shall then be determined by the consensus of the Mortgagor and the Mortgagee, or by a fair appraisal in accordance with the law.

In respect of mortgaged property for which a mortgage has been registered, if the mortgage term exceeds two years, a pre-appraisal by an appraisal company with a simplified appraisal report is carried out once a year (except for the year in which a formal appraisal report is issued); in addition, a formal appraisal shall be conducted every three years with a formal assessment report. The qualification of the assessment company shall be subject to approval by the Mortgagee.

5

During the term of this Contract, the Mortgagor shall be obliged to take remedial measures approved by the Mortgagee to realize or restore the said value of the Mortgaged Assets, regardless of the reasons for the reduction of the value of the Mortgaged Assets.

Article 9 In case the issuance of new certificate of ownership or other rights in respect of the mortgaged property leads to inconsistency between the “List of Mortgaged Property” hereof or the real estate registration certificate or mortgage rights certification document received by the Mortgagee and the relevant entries in the aforesaid new certificate of ownership or register book of the registration authority, the Mortgagor shall not refuse to assume the guarantee liability on this ground.

Article 10: The effects of a mortgage right shall extend to the subordination of mortgaged asset, subordinate rights, appurtenances, additions (attachments, mixtures and processed items), natural and legal fruits, subrogation of mortgaged asset, and insurance, indemnification and compensation arising from the destruction, loss or expropriation of the mortgaged asset.

Article 11 In the event that a mortgaged asset is destroyed, lost or expropriated, the Mortgagor shall immediately inform the Mortgagee and promptly submit to the Mortgagee the certificate of destruction, loss or expropriation of the mortgaged asset issued by the relevant competent authority or authorized department.

Where the mortgaged asset is destroyed, lost or expropriated, the insurance, indemnity or compensation received by the Mortgagor shall be used to pay off the guaranteed creditor’s right in advance or, with the consent of the Mortgagee, be used to restore the value of the mortgaged asset or be deposited in the margin account designated by the Mortgagor to provide security for the guaranteed creditor’s right. The unreduced value of the mortgaged asset shall still serve as security for the guaranteed creditor’s right.

Article 12 Proof of ownership and relevant information of the mortgaged asset shall be kept by the Mortgagee after mutual confirmation by both parties, unless otherwise provided for by laws and regulations or agreed upon by both parties.

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Chapter 4 Statement and Guarantee of Mortgagor

Article 13 The Mortgagor hereby makes the following statements and guarantees to the Mortgagee:

1. The mortgagor is in possession of civil rights and full capacity for civil conduct ( if the mortgagor is a natural person) / the mortgagor is legally incorporated and legally subsisting, with all the necessary rights and capacities (if the mortgagor is a non-natural person), and competent to fulfill the obligations of the present contract and bear civil liabilities in its own name.

2. The signing and performance hereof is a true intention of the mortgagor. The mortgagor is legally qualified as a guarantor, and the mortgagor’s guarantees hereunder are in compliance with the laws, administrative regulations, rules and regulations and the mortgagor’s articles of incorporation or internal organizational documents, and have been approved by the company’s internal competent divisions and/or the relevant State competent authorities. All liabilities arising from the Mortgagor’s or its legal representative’s unauthorized execution hereof shall be borne by the Mortgagor, including but not limited to, full indemnification of the Mortgagee for any damages suffered by the Mortgagor as a result thereof.

3. All documents, information, statements and certificates provided by the Mortgagor to the Mortgagee are accurate, true, complete and valid, and the documents provided in the form of photocopies correspond to the originals.

4. The Mortgagor has full and undisputed ownership or disposition of the mortgaged asset.

5. The mortgaged asset is legally negotiable or transferable. The mortgaged asset is free from any defects, has not been legally seized, detained, or supervised, and is not subject to any controversial situations such as restriction on transactions, unpaid taxes, or delinquent payments on construction work in progress, as well as mortgages, pledges, and lawsuits (arbitration).

6. The Mortgagor has completed or shall complete all the required registration, filing or notarization procedures, including but not limited to the registration of the mortgaged asset with the relevant registration authorities.

7. The mortgaged asset is not sealed up, detained or supervised.

8. The Mortgagor shall truthfully inform of the arrears of taxes, the price of the construction work and other payments in respect of the mortgaged asset, and the fact that the mortgaged asset has been mortgaged or leased.

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9. In case there are other co-owners or share-owners on the mortgaged asset, the Mortgagor shall truthfully, accurately and completely disclose to the Mortgagee all the facts about the co-ownership, and obtain all necessary consents and approvals from the co-owners as required by the Mortgagee in respect of the mortgaged matters hereunder. Upon the signing hereof, the Mortgagor shall not change the common nature and status of the mortgaged asset (including but not limited to, the conversion of co-owners into share-owners, the conversion of share-owners into co-owners, or the change of share-owners) without the written consent of the Mortgagee.

10. Where the mortgaged asset hereunder is on real estate, no right of residence, has been set up on the mortgaged real estate as of the time of the Mortgagor’s signing hereof; where the mortgaged asset is on movable property, no right of pledge of the price has been set up as of the mortgaged asset.

11. Where the Mortgagor and its controlling shareholders at all levels belong to the publicly listed company (including companies whose shares are traded on other national securities exchanges approved by the State Council) or the controlling subsidiary within the scope of the consolidated statement of accounts of a publicly listed company, it is guaranteed that it shall promptly fulfill the information disclosure obligations in respect of such guarantee in accordance with the requirements of the Security Law, the Rules Governing the Listing of Stocks on Stock Exchanges and other laws, rules and regulations.

12. The mortgaged asset has no priority over the Mortgagee’s right of first payment and there are no other circumstances that affects the Mortgagee to realize the mortgage.

13. Regardless of whether the Mortgagee holds other guarantees (including but not limited to guarantees, mortgages, pledges, L/Gs, standby L/Cs and other forms of guarantees) for the guaranteed creditor’s rights, regardless of when the aforesaid other guarantees are established and valid, whether the Mortgagee has made a claim against the other guarantee subjects, regardless of whether a third party agrees to assume all or part of the debts under the master contract, and regardless of whether the other guarantees are provided by the Borrower itself, the guarantee liability of the Mortgagor hereunder and the guarantees established hereunder shall not be reduced or otherwise affected, and the Mortgagee may directly require the Mortgagor to assume the guarantee liability within the scope of the guaranteed debts as agreed upon herein, or to directly execute the guarantees established hereunder, and the Mortgagor shall have no objection to this.

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Article 14 In case of any of the following circumstances during the duration of the mortgage, the Mortgagor shall provide a new guarantee as required by the Mortgagee:

1. The mortgaged asset may be damaged or substantially reduced in value.

2. The security and integrity of the mortgaged asset are or may be adversely affected.

3. The ownership of the mortgaged asset is in dispute.

4. The mortgaged asset is subject to property preservation or execution measures such as seizure, attachment or other coercive measures during the mortgage period.

5. The mortgage right is or may be infringed by any third party.

6. The Mortgagor (if the Mortgagor is a non-natural person) shall cease business, dissolve, be suspended for rectification, be subject to revocation of its business license, be revoked, or file (be filed) for bankruptcy.

7. The Mortgagor has a major safety or environmental accident.

8. The audit opinion issued by the Mortgagor’s external auditor on its financial statements is not a standard unqualified opinion.

9. The mortgagor is or may be investigated, penalized or subject to similar other measures by the competent authorities for violation of laws and regulations and/or regulatory requirements; applying for bankruptcy or reorganization.

Chapter 5 Mortgagor’s Commitment

Article 15 Before all the guaranteed creditor’s right are paid off, the Mortgagor is committed to abide by the following provisions:

1. The Mortgagor shall ensure that the ownership/disposal right of the mortgaged asset is always legal and valid.

2. The Mortgagor shall provide the Mortgagee with all valid information about the mortgaged asset.

3. At the request of the Mortgagee, the Mortgagor shall at all times submit to the Mortgagee financial reports, financial statements or other materials reflecting the state of its operations and creditworthiness.

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4. The Mortgagor shall report to the Mortgagee the contents of any notice or order relating to the mortgaged asset issued by any government department within 5 workdays upon receipt of such notice or order.

5. The Mortgagor shall pay all taxes and expenses payable in respect of the mortgaged asset on schedule.

6. The Mortgagor shall promptly notify the Mortgagee of any material matter in regard to the Mortgagor and of any event that may affect the mortgaged asset or its value. Where the Mortgagee believes that such event causes or may cause depreciation of the collateral, it may require the Mortgagor to provide a guarantee as recognized by it.

7. Without the written consent of the Mortgagee, the Mortgagor shall not engage in any act that diminishes or may diminish the value of the mortgaged asset; and shall not dispose of the mortgaged asset by any means, such as by transfer, gift, lease, creation of a real right for security, establishment of a right of residence, etc.

Article 16 The Mortgagor makes the following commitments to the Mortgagee:

1. In case of any of the following circumstances, the Mortgagor shall continue to perform its guarantee liability hereunder without the consent of the Mortgagor, and cooperate with the corresponding mortgage transfer and change registration procedures (if required):

(1) The Mortgagee and the Debtor have negotiated a change in the master contract/principal creditor’s rights that does not aggravate the Debtor’s liability (unless otherwise agreed in this Contract).

(2) The Mortgagee and the Debtor negotiate an extension of the period for the performance of the principal creditor’s rights.

(3) Under international and domestic trade financing, the Mortgagee and the Debtor amend the L/C related to the principal creditor’s rights in a way that does not aggravate the Debtor’s payment obligations under the L/C.

(4) The Mortgagee transfers the principal creditor’s right and the maximum mortgage.

(5) The Mortgagee and the Debtor agree to raise the loan interest rate under the Master Contract through negotiation.

(6) The amount of principal creditor’s rights changes as a result of the adjustment of floating interest rate or loan prime rate (LPR) in the Master Contract.

2. The Mortgagor shall bear all expenses incurred by the Mortgagee for the realization of the mortgage right hereunder, including but not limited to litigation costs, attorney fees, auction fees, and selling fees, etc.

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3. The Mortgagor shall be liable for any damage caused to the Mortgagee or a third person by the mortgaged asset other than by the Mortgagee.

4. In the event that the Mortgagee’s mortgage is or may be infringed upon by any third party, the Mortgagor shall promptly notify the Mortgagee in writing and assist the Mortgagee in avoiding the infringement.

5. The Mortgagor actively cooperates in the realization of the mortgage right and does not set up any obstacles to restrict the exercise of the mortgage right of the Mortgagee.

6. Any of the following circumstances shall be promptly notified to the Mortgagee:

(1) Changes in legal registered name, articles of association, scope of business, registered capital, legal representative, and equity;

(2) Closure of business, dissolution, liquidation, suspension of business for reorganization, revocation of business license, revocation or filing (being filed) for bankruptcy;

(3) Involvement or possible involvement in major economic disputes, litigation, arbitration, or property that has been legally seized, detained or supervised;

(4) Any change in the valid ID number, residence, work unit, contact information, etc. when with respect to a natural person Mortgagor;

(5) Any other event that may affect the mortgaged asset’s value or the Mortgagee’s right to mortgage hereunder.

7. The Mortgagor shall promptly sign for the written notice issued by the Mortgagee.

8. In case the guaranteed creditor’s right is also guaranteed by the guarantee, mortgage or pledge provided by the Debtor or a third party, the Mortgagee shall be entitled to exercise the guarantee right at its own discretion, including but not limited to: the Mortgagee has the right to request the Mortgagor to make immediate payment for all sums due and payable by the Debtor without first exercising its real right for security or claiming its rights against other Guarantors, and has the right to claim part or all of its security rights against one or more guarantors, including the Mortgagor, individually or simultaneously and without regard to any particular order of priority; should the Mortgagee waive or alter its guarantee rights against other Guarantors, or waive or alter the right of subordination of the real right for security, the Mortgagor shall still be liable for the guarantee as stipulated herein and not exempted from any liability.

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9. In the event of any of the following circumstances under domestic L/C, buyer financing under domestic L/C, import L/C and import bill advance/import payment agency business, the Mortgagor shall have an irrefutable mortgage guarantee obligation, and the Mortgagor shall not be exempted or defended by any judicial or administrative authority that issues a stop-payment order, injunction, or takes measures to seal up, detain, freeze the property related to the L/C or similar measures with respect to the payment obligations under such L/C:

(1) The Mortgagee’s designee or authorized person has made payment in good faith in accordance with the Mortgagee’s instructions;

(2) The Mortgagee or its designee or authorized person has in good faith issued a confirmation of payment due for the goods under the domestic L/C or has in good faith made an acceptance of the documents under the import L/C;

(3) The confirming bank of the L/C has performed its payment obligations in good faith;

(4) The negotiating bank of the L/C has negotiated the payment in good faith.

10. Under the business of delivery guarantee, endorsement of bill of lading and authorized delivery of goods, the Mortgagor shall not raise exemption or defense as a result of the Debtor’s refusal to pay the corresponding L/C.

11. The mortgaged asset is not a residential house necessary for the Mortgagor and his dependent family members.

12. The Mortgagor shall abide by the anti-money laundering laws and regulations of the People’s Republic of China, and shall not be involved in suspected money laundering, terrorist financing, proliferation financing and other illegal and criminal activities; take the initiative to cooperate with the Mortgagee’s customer identification and due diligence, provide true, accurate and complete customer information, and comply with the Mortgagee’s anti-money laundering and anti-terrorist financing related management regulations. For customers suspected of money laundering and terrorist financing based on reasonable suspicion, the Mortgagee shall take necessary control measures in accordance with the anti-money laundering supervisions of the People’s Bank of China.

13. In case the mortgaged asset provided by the Mortgagor to the Mortgagee is movable property, the Mortgagor guarantees that there are no outstanding payments for the goods and outstanding financing payments arising from the purchase of the mortgaged asset, and pledges not to establish any other guarantees for the purchase price of the mortgaged asset by the Mortgagor, except for those cases which have been disclosed to the mortgagor in writing.

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Chapter 6 Occupancy and Management of Mortgaged Asset

Article 17 Prior to the realization of the mortgage right by the Mortgagee, the mortgaged asset hereunder shall be occupied and managed by the Mortgagor. The Mortgagor shall keep the collateral intact when it is possessed, and the Mortgagee shall have the right to check the management of the collateral. Expenses incurred from the collateral management and maintenance shall be borne by the Mortgagor.

Article 18 In the event of damage or loss of the mortgaged asset or the insurance accident agreed upon in the insurance policy, the Mortgagor shall promptly inform the Mortgagee and take immediate measures to prevent the loss from expanding, and at the same time shall promptly submit to the Mortgagee the proof of the reasons for the damage or loss issued by the relevant competent authorities, and timely file the claim with the insured insurance company.

Chapter 7 Disposition of Mortgaged Asset

Article 19 All proceeds received by the Mortgagor from the transfer or other disposition of the mortgaged asset with the consent of the Mortgagee shall be immediately deposited in the security deposit account designated by the Mortgagee to secure or satisfy the guaranteed creditor’s right. The Mortgagor shall not withdraw any funds from such account without the written consent of the Mortgagee. The Mortgagee shall have the priority of compensation for the monies mentioned above.

Article 20 During the mortgage period, in the event of any of the events of default agreed upon herein, the Mortgagee shall be entitled to take the following actions in accordance with the law:

1. To the extent permitted by law, the Mortgagee shall have the right to sell the mortgaged asset at auction or in the appropriate time at a market price that the Mortgagee deems appropriate and shall not be liable for any loss suffered by the Mortgagor as a result thereof.

2. The Mortgagee requires the Mortgagor to reimburse the necessary expenses incurred by the Mortgagee in exercising any of its rights hereunder or by law.

The Mortgagee shall have the right to choose to exercise all or part of the above-mentioned rights or to suspend the exercise of any right, and the Mortgagor shall provide necessary cooperation.

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Article 21 The proceeds from the disposition of the mortgaged asset by the Mortgagee shall be handled in the following order:

1. For payment of all expenses and expenditures incurred by the Mortgagee in the exercise of its rights or its disposition of the mortgaged asset (including expenses incurred by the Mortgagee in engaging any professional or managers for the purpose of exercising its rights).

2. For payment of taxes payable by the Mortgagee on the disposition of the mortgaged asset.

3. For repayment of guaranteed creditor’s right.

4. Upon deduction of the above payments, the Mortgagee shall deliver the balance to the Mortgagor, if any.

In case the proceeds from the disposition of the mortgaged asset by the Mortgagee are insufficient to satisfy the guaranteed creditor’s right, the Mortgagee still has the right to further pursue the debtor in accordance with the law.

Article 22 Whenever the Mortgagee exercise its rights hereunder or dispose of the mortgaged asset in accordance with the law, the Mortgagee shall not be liable for any losses caused to the Mortgagor or the mortgaged asset as a result of the exercise of its rights or the disposal of the mortgaged asset, except due to its willfulness or gross negligence.

Article 23 Special provisions on the demolition and relocation of the mortgaged buildings, other land attachments and the construction land use right:

1. Where the mortgaged asset hereunder is building, other land attachment or construction land use right, and subject to requisition, expropriation or similar circumstances that necessitate demolition or relocation (hereinafter collectively referred to as “demolition or relocation”), the Mortgagor shall notify the Mortgagee of such demolition or relocation within three days thereof.

2. Where the demolition or relocation takes the form of right-for-right compensation and the Debtor fails to pay off the guaranteed creditor’s right in advance, the mortgagor shall keep on granting mortgage for the guaranteed creditor’s right with the buildings, other land attachments and construction land use rights exchanged for the demolition or relocation and sign the relevant contracts, and cooperate with the Mortgagee in the procedures of mortgage advance-notice registration and mortgage registration of such mortgages for the building, other land attachment and construction land-use right exchanged for the demolition or relocation. Before the mortgage registration is refreshed, the Mortgagee shall have the right to require the Mortgagor to provide other guarantees.

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3. Where the demolition and relocation takes the form of monetary compensation, the Mortgagee shall have the right to receive priority compensation for the demolition and relocation compensation received by the Mortgagor; where the performance term of the principal creditor’s rights has not expired, the Mortgagee shall have the right to require the Mortgagor to deposit the demolition and relocation compensation into a security deposit account or to provide guarantee for the guaranteed creditor’s right in the form of a deposit certificate pledge or other form of guarantee.

4. In case the Mortgagor violates the provisions of this Article, it shall pay liquidated damages to the Mortgagee at 5% of the maximum creditor’s rights amount hereunder and compensate the Mortgagee for the losses arising therefrom.

Article 24 Any mortgaged asset that is legally sealed (detained) by the people’s court due to the late payment of principal and interest of the principal creditor’s rights or other circumstances stipulated herein for the realization of the mortgage right, the Mortgagee shall have the right to collect the natural fruits or legal fruits of the mortgaged property from the date of the sealing ( detention ), and the fruits shall be offset against the costs of collecting the fruits first.

Chapter 8 Registration of Mortgages

Article 25 The Mortgagor and the Mortgagee or the Mortgagee’s authorized agent shall conduct the mortgage registration formalities as stipulated within ten workdays upon the signing hereof. The real estate registration certificate with respect to this mortgage registration or other mortgage registration documents issued by the mortgage registration authority shall be held by the Mortgagee.

Article 26 During the mortgage period, if it is necessary to register the alter or transfer by the registration authority, the Mortgagor shall assist the Mortgagee and the transferee in registering the corresponding change.

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Chapter 9 Guarantee Clauses

Article 27 Guarantee Clauses

1. In the event that the mortgage right has not been set up or is invalid due to the following causes, and the Mortgagor and the Debtor are not the same person, the Mortgagor shall provide the guarantee under the debt ceiling with respect to the guaranteed creditor’s right, which shall be subject to the agreement in Article 1 hereof. And the guarantee shall be in the form of joint and several liability guarantee:

(1) The Mortgagor fails to register the mortgaged asset as specified herein;

(2) The statements and guarantees made by the Mortgagor are false.

(3) Other reasons of the Mortgagor.

2. The guaranteed creditor’s right and guarantee scope guaranteed by the guarantee under the debt ceiling are consistent with the guaranteed creditor’s right and guarantee scope guaranteed by mortgage guarantee hereunder.

3. The guarantee period shall be respectively calculated based on the performance period of the principal creditor’s rights (under the issuance of banker acceptances/L/Cs/L/Gs, based on the date of the Mortgagee’s advance, hereinafter referred to as the same). The guarantee period for each principal creditor’s rights shall be three years from the day following the expiry date of the performance period of the creditor’s rights (or the date of advancement by the Mortgagee).

Where the Mortgagee declares the early maturity of any of the principal creditor’s rights, the expiry date for the performance of that principal creditor’s rights shall be the early maturity date declared by the Mortgagee.

4. In case the guaranteed creditor’s right is also guaranteed by the guarantee, mortgage or pledge provided by the Debtor or a third party, the Mortgagee shall be entitled to exercise the guarantee right at its own discretion, including but not limited to: the Mortgagee has the right to request the Mortgagor to pay immediately all sums due and payable by the Debtor without first exercising its security interest or claiming its rights against other Guarantors, and has the right to claim part or all of its security rights against one or more guarantors, including the Mortgagor, individually or simultaneously and without regard to any particular order of priority; should the Mortgagee waive or change its guarantee rights against other Guarantors, or waive or change the right of subordination of the security interest, the Mortgagor shall still be liable for the guarantee as stipulated herein and not exempted from any liability.

5. This guarantee clause shall take effect independently of the other articles hereof, and the guarantee clause shall enter into force on the condition that the mortgage right hereunder has not been set up or is invalid for the reasons set forth the Article 1.

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Chapter 10 Insurance of Mortgaged Asset

Article 28 The mortgaged asset hereunder is required (required/not required to be) insured. If the mortgaged asset is required to be insured, the assumption of premium is agreed as follows:

Article 29 The mortgaged asset to be insured is agreed as follows:

1. The mortgage insurance shall be determined at the request of the Mortgagee in terms of the amount and duration of the insurance, and the Mortgagee shall be designated as the first beneficiary or insured of the insurance rights and interests. After the insurance formalities are finished, if the corresponding policy is a paper document, the original policy shall be kept by the Mortgagee. Provided that the mortgage insurance fails to complete in one go, the Mortgagor shall promptly renew the insurance to ensure that the property insurance of the mortgaged asset is uninterrupted during the survival of the principal creditor’s rights.

2. In case the mortgage insurance is required to be handled by the Mortgagor and/or the Mortgagee, the Mortgagor and/or the Mortgagee shall timely handle the relevant procedures or provide the necessary assistance and support, as well as fulfill other obligations necessary to preserve the effective survival of the insurance.

3. In case the Mortgagor is required to assume the premiums pursuant to the contract, the Mortgagor shall pay the corresponding premiums on time during the validity period hereof.

4. Where the Mortgagor fails to promptly go through the relevant insurance (renewal) procedures or provide the necessary assistance and support or perform the necessary obligations, or fails to pay the premiums payable by the Mortgagor as agreed herein, the Mortgagee shall have the right to go through the relevant insurance (renewal) procedures on behalf of the Mortgagor and/or pay the premiums payable by the Mortgagor on behalf of the Mortgagor and/or take other measures for the continuity of the insurance, and the Mortgagee shall have the right to recover from the Mortgagor the insurance premiums thus incurred and other related expenses payable by the Mortgagor.

5. During the mortgage period, the Mortgagor shall not alter, cancel or terminate the Insurance Contract unilaterally or in consultation with the insurer without the written consent of the Mortgagee; and shall not waive the right to claim for insurance benefits or the right to claim for compensation from a third party.

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6. During the contractual validity period, in the event of loss or damage of the mortgaged asset, the Mortgagee shall be compensated in priority in respect of the insurance, indemnity or compensation of the mortgaged asset, etc.

Chapter 11 Realization of Mortgage Right

Article 30 The Mortgagee shall have the right to realize the mortgage right under any of the following circumstances:

1. The Debtor fails to satisfy the guaranteed creditor’s right when it expires (including early expiration).

2. The Mortgagor fails to provide a separate guarantee as agreed herein.

3. The Mortgagor or Debtor is filed for bankruptcy or closure of business, dissolution, liquidation or suspension of business for rectification, suspension of business license, or revocation.

4. The Mortgagor fails to follow the principle of fair trade in dispose of the mortgaged asset for which a floating mortgage on movable property has been set in the course of production and operation.

5. The Mortgagor fails to keep the mortgaged asset intact and in good condition, or there are matters that impair the value of the mortgaged asset, and the Mortgagor refuses to provide supplementary guarantee.

6. The Mortgagor transfers the mortgaged asset without the written consent of the Mortgagee.

7. Other cases stipulated by laws and regulations that the Mortgagee may realize the mortgage right.

Article 31 In the event of the realization of the mortgage right, the Mortgagee may, through consultation with the Mortgagor, auction or sell the mortgaged asset and receive the proceeds in priority, or discount the value of the mortgaged asset to offset the guaranteed creditor’s rights. Where the Mortgagor and the Mortgagee have not reached an agreement on the way to realize the mortgage right, the Mortgagee may directly request the people’s court to auction or sell the mortgaged property.

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Article 32 In case the proceeds from disposition of the mortgaged asset do not correspond to the currency of the principal creditor’s rights, the guaranteed creditor’s right shall be satisfied by converting the proceeds of disposition into the currency of the principal creditor’s rights at the applicable exchange rate of the corresponding currency announced by the Mortgagee.

Article 33 Where the Mortgagee waives, modifies or forfeits other security interests in the guaranteed creditor’s right, the Mortgagor’s security liability shall prevail and shall not be invalidated or reduced as a result.

Article 34 Where the Mortgagor grants guarantee by the mortgaged asset hereunder for several creditor’s rights between the Debtor and the Mortgagee, including but not limited to the guaranteed creditor’s right hereunder, and the discounted value or the proceeds from auction or sale of the mortgaged asset are not sufficient to settle all the creditor’s rights due, the creditor’s rights to be settled and the order of setoff shall be determined by the Mortgagee.

Article 35 When the Mortgagee disposes of the mortgaged asset pursuant to this Contract, the Mortgagor shall not set up any obstacle (including intervention from any third party) or take any action that may hinder or delay the Mortgagee’s disposition of the mortgaged asset pursuant to this Contract. In case there are other co-owners on the mortgaged asset, the Mortgagor shall notify the other co-owners of the conditions for the transfer of the mortgaged asset within [3] days upon the determination of the conditions for the transfer of the mortgaged asset; if the Mortgagor fails to notify the other co-owners after the deadline, the Mortgagee shall have the right to perform the aforesaid notification obligation on behalf of the Mortgagor, and the aforesaid notification act shall be legally binding on the Mortgagor. The Mortgagor pledges to provide active assistance at the request of the Mortgagee in order to enable the Mortgagee to realize its mortgage as soon as possible.

Chapter 12 Breach of Contract

Article 36 Once this Contract comes into effect, any party that fails to perform any of its obligations hereunder or breaches any of its representations, warranties and commitments hereunder shall constitute a breach of contract. Any loss caused to the other party as a result shall be compensated.

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Article 37 In the event of the Mortgagor’s aforesaid breach of contract, the Mortgagee shall have the right to take one or more of the following measures:

1. The Mortgagee shall request the Mortgagor to remedy the default by a deadline;

2. The Mortgagee shall request the Mortgagor to restore the value or original state of the mortgaged asset by a deadline, or to provide the guarantee approved by the Mortgagee as compensation;

3. The Mortgagee shall request the Mortgagor to deposit the proceeds obtained from the disposition, etc., of the mortgaged asset or apply to the early repayment for the debt under the master contract in advance;

4. The Mortgagee shall request the Mortgagor to compensate for losses (the amount of compensation shall not limited to the value of the mortgaged asset);

5. The Mortgagee shall declare the early maturity of the creditor’s rights under the master contract and realize the mortgage right pursuant to this Contract;

6. Other measures permitted by laws and regulations.

Article 38 In case this Contract is invalidated due to the fault of the Mortgagor, the Mortgagor shall compensate the Mortgagee for all losses within the scope of the original mortgage guarantee.

Article 39 Unless otherwise agreed herein, in the event of default by either party, the other party shall have the right to take any other measures prescribed by the laws, regulations and rules of the People’s Republic of China.

Chapter 13 Miscellaneous

Article 40 Expenses incurred as a result of the conclusion and performance hereof shall be determined by agreement between the contracting parties, on condition that there are laws, regulations and rules stipulating the cost bearing entity.

Both Parties agree that an appraisal institution approved by the Mortgagee should be commissioned to appraise the value of the mortgaged asset and issue an appraisal report, with the Mortgagee (Mortgagor/Mortgagee) to bear the relevant appraisal costs.

Article 41 The Mortgagor shall not transfer or otherwise dispose of all or part of its obligations hereunder without the prior consent of the Mortgagee.

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Article 42 Regardless of whether the creditor’s rights guaranteed by the maximum mortgage guarantee is determined, if the Mortgagee transfers the principal creditor’s rights in its entirety to a third party, the maximum mortgage right shall be transfered to the Assignee of the creditor’s rights as well.

After the creditor’s rights mortgaged under the Contract are determined, if the Mortgagee transfers part of the creditor’s rights, the Mortgagee agrees that the mortgage right will also be partially transferred, then the Mortgagee shall jointly enjoy the mortgage right to the Collateral in proportion to the amount of the creditor’s rights that have not been transferred with the Assignee of the transferred part; prior to the confirmation of the creditor’s rights secured by the mortgage under the Contract, if the Mortgagee assigns part of the creditor’s rights, the Mortgagor agrees that the mortgage will also be partially transferred, and the maximum amount of the Mortgagee’s principal creditor’s rights guaranteed by the original maximum amount of mortgage shall be correspondingly reduced (i.e. The maximum amount of the Mortgagee’s principal creditor’s rights guaranteed by the original maximum amount of mortgage shall be deducted from the amount of the transferred part of the creditor’s rights). After the part of the principal creditor’s rights to the mortgage that has not been transferred is determined, the Mortgagee shall jointly enjoy the right of the Collateral in proportion to the amount of the creditor’s rights that has not been transferred with the Assignee of the transferred creditor’s rights.

Article 43 The Mortgagor is fully aware of the interest rate risk. If the Mortgagee adjusts the interest rate level, interest bearing or interest settlement method according to the agreement in the Master Contract or the change of the national interest rate policy, resulting in an increase in the interest, default interest and compound interest payable by the Debtor under the Master Contract, the Mortgagor shall also bear joint and several guarantee liabilities for the increase.

Article 44 In the event that the Debtor owes other due debts to the Mortgagee in addition to the guaranteed creditor’s right, the Mortgagee has the right to withhold the amount in RMB or other currencies in the Debtor’s accounts opened in the branches of China Resources Bank of Zhuhai Co., Ltd. to pay off any of the due debts in the order of settlement to be determined by the Mortgagee.

Article 45 Any grace, favor or delay granted by the Mortgagee to the Mortgagor shall not affect, damage or restrict all the rights enjoyed by the Mortgagee pursuant to this Contract and the laws and regulations; and shall not be regarded as a waiver of the rights and interests of the Mortgagee hereunder, nor shall it affect any of the Mortgagor’s liabilities and obligations hereunder.

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Article 46 In accordance with the Regulation on the Administration of Credit Investigation Industry and other relevant national laws and regulations, the Mortgagor confirms that it is aware of and understands the contents and meanings of these Articles, and hereby irrevocably agrees in writing and authorizes the Mortgagee (including the Mortgagee’s head office and each other branch of the head office) to query, use, collect, provide and report the relevant information about the Mortgagor, and the Mortgagee has the right to carry out the specific operations as follows:

1. In order to promptly understand the credit status of the Mortgagor, exclude the Mortgagor’s violation of laws and regulations, and ensure the business security between the Mortgagee and the Mortgagor hereunder, the Mortgagor shall, in accordance with the relevant state regulations, query and make use of the relevant information of the Mortgagor through the basic financial credit information database and __________ and other credit reporting agencies __________ approved and set up by the supervisory and administrative department of the State Council in charge of the credit collection industry (hereinafter referred to as “Mortgagor’s Information”).

2. Pursuant to the relevant provisions of the State, the Mortgagee shall collect the relevant information hereunder and the relevant legal documents signed between the Mortgagor and the Mortgagee, as well as other information relating to the Mortgagor obtained by the Mortgagee through the signing hereof and the relevant legal documents (hereinafter referred to as the “Credit Information Collected by the Mortgagee”), and provide it to the basic financial credit information database and ___ other credit reporting agencies __________ approved and established by the State Council’s Credit Collection Industry Supervision and Administration Department of the State Council.

3. The Mortgagee shall keep the “Mortgagor’s Information” and the “Credit Information Collected by the Mortgagee” for the purpose of internal archiving in accordance with national laws and regulations and the provisions of the Mortgagee on the business file management system, and the retention period shall not be limited to the provisions of Article 7 of this Authorization.

4. In accordance with the applicable laws and regulations and regulatory requirements, the Mortgagee shall provide the “Mortgagor’s information” and the “Credit Information Collected by the Mortgagee” to the relevant regulatory authorities such as the China Banking and Insurance Regulatory Commission and the relevant judicial and administrative authorities.

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5. For the sake of providing financial services, the Mortgagee shares “Mortgagor’s Information” and the “Credit Information Collected by the Mortgagee” within the Mortgagee internal, including among its branches.

6. The Mortgagee provides “Mortgagor’s Information” and the “Credit Information Collected by the Mortgagee” to the relevant third-party institutions in accordance with the requirements of arrears collection, creditor’s rights transfer and financial services outsourcing.

7. This authorization shall commence on the date hereof and shall expire on the date of termination of all businesses hereunder.

8. The Mortgagee shall be liable for any legal obligations arising from the Mortgagee’s inquiries, use and provision of the “Mortgagor’s Information” and the “Credit Information Collected by the Mortgagee” beyond the scope of the authorization stipulated herein.

Article 47 The Mortgagor hereby irrevocably pledges that, in the event of a breach of the obligations agreed upon herein, the Mortgagee may report the information on the Mortgagor’s breach of contract to credit reporting agencies and banking associations. The relevant banking association is also authorized to share the Mortgagor’s default information among banking financial institutions and even make it public through appropriate means.

The Mortgagor voluntarily accepts the joint malicious disciplinary rights protection measures such as reduction or cessation of credit granting, cessation of opening new settlement accounts, etc. taken by the Mortgagee together with other banking financial institutions.

Article 48 The Mortgagor hereby confirms and declares that the Mortgagee has, in accordance with the law, prompted and explained to the Mortgagor the clauses in respect of the exemption or mitigation of the Mortgagee’s liability and other clauses of material interest to the Mortgagor, the black and bold font clauses, and the authorization clauses, and that the Mortgagee has already provided adequate explanations of such clauses at the Mortgagor’s request. The Mortgagor has been fully aware of and understands the meaning of such clauses and the corresponding legal consequences, and is willing to bear the legal consequences of such clauses. The Mortgagor promises to strictly abide by all obligations hereunder.

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Article 49 The Mortgagor guarantees that the Mortgagor and the Mortgagor’s employees and agents shall not offer, give, solicit or accept any form of material benefits (including but not limited to cash, cards in kind, trips, etc.) or other non-material benefits other than those stipulated herein to the Mortgagee or the Mortgagee’s employees in any form; the Mortgagor shall not use the funds or services furnished by the Mortgagee in any form, either directly or indirectly, for the purpose of corruption or bribery activities associated with corruption or bribery; if the Mortgagor is aware of any violation of the provisions of this Article, it shall provide the Mortgagor with timely, truthful, complete and accurate clues and relevant information, and cooperate with the Mortgagee in the relevant matters as requested by the Mortgagee.

Article 50 The Mortgagor pledges to abide by China’s anti-money laundering related laws and regulations and not to participate in illegal and criminal activities such as suspected money laundering, terrorist financing; to actively cooperate with the Mortgagee’s customer identification and due diligence, to provide truthful, accurate, complete and effective customer information, and to comply with the Mortgagee’s anti-money laundering and anti-terrorist financing related management regulations.

In case the Mortgagee requests the Mortgagor’s assistance in compliance with anti-money laundering or other regulatory requirements, the Mortgagor shall cooperate and provide corresponding written materials.

Article 51 During the Debtor’s bankruptcy proceedings, where the Mortgagee reaches a settlement agreement with the Debtor or agrees to a reorganization plan, the rights of the Mortgagee hereunder shall not be prejudiced by the settlement agreement or the reorganization plan, and the Debtor’s liability for the guarantees shall not be reduced or exempted. The Mortgagor shall not oppose the Mortgagee’s claim with the conditions stipulated in the settlement agreement or reorganization plan. For the credit rights that the Mortgagee has made concessions to the Debtor in the settlement agreement and reorganization plan and has not obtained the settlement, the Mortgagee shall still have the right to require the Mortgagor bear the guaranty liability.

Article 52 Confirmation and Notice of Service Address

1. Confirmation of Delivery Address

(1). The contact information and service address hereunder are as follows:

Address of the Mortgagor: 702, Block A, Building 5, Software Industry Base, Shenzhen City;

The Addressee: Yu Shibin; Tel: [     ]; Fax: / ; Email: / .

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Address of the Mortgagee: Unit A-01 of 21st Floor, and 22nd Floor, 23rd Floor, 24th Floor, 25th Floor, China Resources Financial Building, No. 2700 Keyuan Avenue, Nanshan Houhai Central District, Yuehai Street, Nanshan District, Shenzhen City; The Addressee: Shenzhen Branch of China Resources Bank of Zhuhai Co., Ltd.

(2) The Mortgagor understands and agrees that the contact information and service address hereunder shall be served as the address for service of the court/arbitration institution/Mortgagor’s litigation materials and legal documents involved in disputes hereunder.

(3) The Mortgagor understands and agrees that lawsuit materials and legal documents can be delivered through postal service by the court/arbitration institution with the aforesaid service address; and through electronic service (including e-mail, mobile phone SMS and other modern communication methods) with the above-mentioned agreed mobile phone number, fax, and e-mail address.

(4) The Mortgagor understands and agrees that during the performance hereof, once the contracting parties enter into judicial/arbitration proceedings in respect of a dispute covered hereby, the court/arbitration institution may serve the litigation materials or legal documents to Mortgagor through one or more of the aforesaid service methods, and that the service time shall be subject to the first service of the aforesaid service methods.

(5) The Mortgagor understands and agrees that the aforesaid service agreement is applicable to mediation, first instance, second instance, retrial (including retrial review) and execution stages in the litigation procedure.

(6) The Mortgagor understands and agrees that all the information such as address, mobile phone number, contact person, fax, e-mail address, etc. agreed aforesaid shall be assured to be true and valid, and that the Mortgagor shall promptly notify the Mortgagee in writing for any change in the relevant information, otherwise such service process according to the original address and other information shall still be valid, and the Mortgagor shall be liable for the legal consequences arising therefrom.

(7) The Mortgagor understands and agrees that the aforesaid agreed mobile phone number, e-mail address, etc. can be used to receive litigation materials and legal documents served by the court/arbitration institution in a timely and effective manner.

(8) The Mortgagor understands and agrees that the litigation materials and legal documents can be served by the court/arbitration institution through electronic service, and no paper documents shall be served to the legal/other agreed address of the Mortgagor.

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(9) The Mortgagor is clear that in case the aforesaid agreed address, mobile phone number, e-mail address or other service information is not true, accurate and up-to-date, resulting in the failure from actual service or timely service or refusal of signature of the litigation materials and legal documents, it shall be deemed to have been validly served, and the Mortgagor shall bear the corresponding legal consequences. In case of inconsistency in the service address, the service address submitted to the court (arbitration institution) for confirmation shall prevail.

2. Notification

Where the Mortgagee sends the notice by way of announcement on its website, online banking, telephone banking, mobile banking or business outlets, the date of announcement shall be deemed as the date of delivery. Under no circumstances shall the Mortgagee be responsible for any transmission error, omission or delays in mail, fax, telephone or any other communication system.

Article 53 The Mortgagor agrees that the Mortgagee shall authorize other branches of China Resources Bank of Zhuhai Co., Ltd. to perform the rights and obligations hereunder due its business demands. Other branches of China Resources Bank of Zhuhai Co., Ltd. authorized by the Mortgagee shall have the right to exercise all rights under the Contract, and have the right to bring a lawsuit to the court or submit the dispute under the Contract to the arbitration institution for adjudication.

Article 54 In the event that the Debtor or the Mortgagor of the master contract has repaid all the guaranteed creditor’s rights to the Mortgagee and has fully fulfilled its responsibilities and obligations hereunder and other relevant documents, the Mortgagee shall assist the Mortgagor in the formalities for the release or cancellation of the mortgage.

Article 55 The lease relationship and lease information on mortgaged property are agreed as follows:

1. As of the date hereof, the Mortgagor confirms that the mortgaged property is not (is /is not) under a leasing relationship; in case of a leasing relationship, the specific information of leasing relationship such as the lessee, leasing time, rent and payment method, etc. shall be detailed in the leasing contract and other written instruments signed between the Mortgagor and the Lessee delivered by the Mortgagor to the Mortgagee, which is not/do not exist in the form of a lease to offset a debt.

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The Mortgagor pledges that prior to the registration of mortgage on mortgaged property, the Mortgagor shall not alter the lease status of the mortgaged property as agreed in the preceding Articles without the consent of the Mortgagor; in case of any change in the lease of the mortgaged property as agreed in the preceding Articles, the Mortgagor shall notify the Mortgagee of the change in writing within 3 days thereafter.

2. The Mortgagee and the Mortgagor confirm that, when Both Parties register the mortgage on the mortgaged property, and declare to the registration authority the lease information such as the Lessee of the mortgaged property, the time of the lease, the rent, etc., the information on the lease shall be subject to the registration/record of the registration authority.

Both Parties agree that, in the event of the realization of the mortgage and other rights, the people’s court shall, in the course of trial and execution, take the lease contract recorded by the registration authority as the basis for determining the order of establishment of the mortgage and lease right of the mortgaged property, to which the Mortgagor shall not object.

3. In case the Mortgagor refuses to truthfully confirm/declare the leasing relationship and leasing information on the mortgaged property, the Mortgagor shall be liable for any loss caused to others.

4. In case the mortgaged property has been leased prior to the establishment of the mortgage, during the subsistence of the mortgage, the Mortgagor pledges not to extend the lease term with the Lessee without the written consent of the Mortgagee (who may re-sign a new lease contract), not to collect more than three months’ rent from the Lessee in advance, and not to utilize the accounts receivable under the lease for factoring financing, transfer, transfer of guarantees, or creation of security such as pledges.

5. During the subsistence of the mortgage, the Mortgagor shall not rent out the mortgaged property in the form of a lease against the debt without the written consent of the Mortgagee.

Chapter 14 Applicable Law and Dispute Resolution

Article 56 The laws of the People’s Republic of China (excluding the laws of Hong Kong, Macao and Taiwan) shall apply hereto and all matters relating thereto.

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Article 57 Disputes hereunder shall be prosecuted to the court with jurisdiction at the location of the Mortgagee, unless otherwise specified in the clause of “Other Agreed Matters” hereof. During the litigation or arbitration, the provisions of this Contract that do not involve the disputes shall still be performed.

Chapter 15 Effectiveness, Alteration and Dissolution of Contract

Article 58 The contract shall take effect on the date of its signature by Both Parties and shall terminate on the date of the Mortgagor’s full performance of its contractual obligations.

Article 59 Once the contract comes into force, neither party may alter or prematurely terminate the contract without authorization. If this Contract needs to be changed or terminated, the Mortgagor and the Mortgagee shall reach a written contract through negotiation.

Chapter 16 Supplementary Provisions

Article 60 The subheadings herein are for the convenience of reading only and shall not be used for the interpretation hereof or for any other purpose. The terms “borrowing” and “loan” herein shall have the same meaning.

Article 61 The Mortgagor shall take the initiative to understand the operations of the Debtor and the occurrence and fulfillment of various types of credit granting business hereunder.

Article 62 The original hereof is in three counterparts, one for the Mortgagor and one for the Mortgagee, all of which have the same legal effect.

Article 63 Other Agreed Matters: The original of the contract stipulated in Article 62 hereof constitutes one copy retained by the mortgage registration authority.

(There is no text below)

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(The page is intentionally left blank for signature and seal)

THIS CONTRACT is executed by the Mortgagor and Mortgagee on November 15, 2022. The Mortgagor confirms that when signing the Contract, Both Parties have explained and discussed all the terms in detail, Both Parties have no doubt about all the terms of the Contract and have an accurate understanding of the legal significance of the parties’ rights, obligations and limitation or exemption clauses.

Mortgagee (Seal): China Resources Bank of Zhuhai Co., Ltd. Shenzhen Branch

China Resources Bank of Zhuhai Co., Ltd. Shenzhen Branch (Seal)

Legal Representative or Authorized Agent (Seal): Wu Zhaoyu (Seal)

Mortgagor (signature):	Mortgagor (signature):
Legal Representative or Authorized Agent (signature): Bao Minfei (Seal)	Certificate Type: _______________
	ID No.: ______________________

Shenzhen United Time Technology Co., Ltd.(Seal)
(The above applies to legal person)	(The above applies to natural person)

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Attachments:

List of Mortgaged Property Mortgage Contract No.: H. Y. (2022) S. E. D. Zi (TUO YI) No. 022

Names	Ownership Certificate and Number	Property owner (including the co-owner)	Quantity	Location	Condition	Insurance Policy No.	Others
702, 7/F, Block A, Building 5, Software Industry Base, Shenzhen City	S.F.D.Z. No.4000630679	Shenzhen United Time Technology Co., Ltd.	1	702, Block A, Building 5, Shenzhen Software Industry Base, Binhai Avenue, Nanshan District	For use own

Other Matters/Remarks: __________.

_____________________________________________________________________________________________ 

Mortgagor (Signature):	Mortgagee (Signature):
Shenzhen United Time Technology Co., Ltd.(Seal)	Bao Minfei (Seal)
China Resources Bank of Zhuhai Co., Ltd. Shenzhen Branch (Seal)	Wu Zhaoyu (Seal)

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EX-4.60

Exhibit 4.60

Contract No.: H.Y. (2022) S. L.D. Zi (TUO YI) No. [ ]

Working Capital Loan Contract

(Corporate Business)

China Resources Bank of Zhuhai Co., Ltd.

September 2022 Edition

Working Capital Loan Contract

This Contract is (mark “√” in ☐ if applicable, and mark “☒” if not applicable, the same below):

☐ Single business contract that is not within the quota.

☒ Specific business contract within the quota, name of the Quota Contract: Comprehensive Credit Granting Contract

Quota Contract No.: H.Y. (2022) S.Z.Zi (TUO YI) No. [ ]

Borrower: Shenzhen United Time Technology Co., Ltd.

Lender: China Resources Bank of Zhuhai Co., Ltd. Shenzhen Branch

The Borrower applies to the Lender for a working capital loan for capital turnover. Upon examination, the Lender agrees to issue the loan according to the terms and conditions of this Contract. In order to clarify the rights and obligations of the Borrower and the Lender, this Contract is hereby entered into by and between both parties through friendly negotiation in accordance with laws, regulations and rules of the People’s Republic of China.

Chapter I Purpose of the Loan

Article I Upon negotiation, both parties agree that:

1. The loan hereunder shall only be used by the Borrower for working capital turnover, specifically for the payment of goods

2. Without the prior written consent of the Lender, the Borrower shall not change the purpose of loan specified in this Contract.

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3. The Borrower shall use the credit funds in strict accordance with the provisions of national laws and regulations and the purposes agreed herein, and shall not misappropriate the loan funds. The Borrower guarantees that the credit funds hereunder shall not be used in any form to flow into the securities market, the futures market and for equity investment, or for borrowing and lending, and shall not flow into the real estate sector in violation of the law, including but not limited to, misappropriation of the credit funds for the development of real estate projects, purchase of houses, replacement of mortgage loans and other investments in the real estate sector, and shall not be used for any other areas and purposes prohibited by national laws and regulations.

4. The Lender has the right to monitor and verify the flow and use of the Borrower’s credit funds by means of system monitoring, telephone verification and field investigation, etc. The Borrower shall actively cooperate with the Lender in carrying out various supervision and inspections on the use of the credit funds, and provide truthful supporting materials and relevant information on the use of the credit funds as required by the Lender.

5. The Borrower fully recognizes and agrees that any breach of any of the above commitments shall be deemed to be a “fundamental breach” by the Borrower hereunder. In such case, the Lender shall be entitled to take remedies including but not limited to the following:

The Lender shall have the right to immediately recover the credit funds issued hereunder, reduce or revoke the undrawn credit line hereunder, as well as the right to exercise various other remedies for breach of contract in accordance with this Contract (including, but not limited to, the imposition of penalty interest, declaring the early expiry of the business under other contracts between the Borrower and the Lender, enforcing any guarantee measures, realizing any security rights, requiring the Borrower to take additional guarantee measures approved by the Lender, requiring the Borrower to compensate for losses, etc.), and investigating other relevant legal liabilities of the Borrower.

Chapter II Currency, Amount and Term of Loan

Article II The loan amount hereunder shall be RMB (currency) twenty-two million yuan only (in words).

Article III The loan term hereunder shall be _12_ months from the first date of loan, and the maturity date of all the loans hereunder shall not exceed the expiration date of the loan term; the term of each loan shall be subject to the agreement of the corresponding loan IOU/loan voucher, which shall be an integral part hereof and has the same legal effect as that hereof.

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The period during which the Borrower may apply for loan withdrawal hereunder (hereinafter referred to as: the withdrawal period) shall be from the effective date hereof to ___/___, and after the expiration of the withdrawal period, the loan limit that the Borrower has not applied for a withdrawal shall be automatically canceled.

Chapter III Loan Interest Rate and Interest Calculation Method

Article IV The Borrower shall pay the loan interest to the Lender in respect of the loan hereunder issued by the Lender in accordance with this Contract, and the annual interest rate of the loan hereunder shall be simple interest as follows:

1. RMB interest rate:

☒ Adopting fixed interest rate. The loan interest rate hereunder is based on the 1-year (1-year/5-year or above) Loan Prime Rate (LPR) published by the National Interbank Funding Center on the workday prior to the loan issue date, plus (plus/minus) 185 basis points (one basis point is 0.01%), i.e., the annual interest rate is 5.5%. Where the loan is withdrawn in installments, the loan interest rate for each withdrawal shall be based on the written confirmation documents or loan IOUs between both parties. Where the fixed interest rate is adopted, the loan interest rate of the withdrawn portion shall not be adjusted during the agreed loan term.

☐ Adopting floating interest rate, that is, the loan interest rate for the first installment of the loan hereunder shall be based on the ___/___(1-year/5-year or above) Loan Prime Rate (LPR) published by the National Interbank Funding Center on the workday prior to the loan issue date, and ___/___ (plus/minus) ___/___ basis points (one basis point is 0.01%), i.e. an annual interest rate of ___/___ %; in case of withdrawal in installments, the loan interest rate of the first installment of the loan for each withdrawal shall be based on the written confirmation documents or loan IOUs between both parties; each loan shall be issued on the basis of ___/__ (1/3/6/12) month(s) from the loan issue date to the date of full repayment of the principal and interest hereunder, and be adjusted on a one-period basis (adjusted in accordance with the change of the referenced LPR with the basis point/float range remaining unchanged), and the interest rate shall be calculated on an incremental basis. The interest rate of the second and later periods shall be determined on the day corresponding to the date after a period of a deposit is fully withdrawn. On that day, the Lender shall adjust the loan interest rate and apply the new interest rate according to the LPR and the floating range of the aforesaid period issued by the National Interbank Funding Center on the previous workday. Should no date be corresponding to the day of withdrawal in the current month, the last day of the said month shall be the corresponding date.

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2. Foreign currency interest rate:

☐ (1) Floating interest rate with a floating period of / month:

The loan interest rate shall be repriced every ___/___ month(s) from the actual withdrawal date (or the first actual withdrawal date in the case of split withdrawals). The repricing date is the date corresponding to the actual date of withdrawal in the month of repricing. If there is no corresponding date in the current month, the last day of the month shall be the repricing date.

The loan interest rate for the first floating cycle is composed of ___/___(in words) months ___/___ (LIBOR/HIBOR) + / BP spreads.

After each full floating cycle, he loan interest rate shall be repriced with the interest margin of ___/___(in words) months ___/___(LIBOR/HIBOR) + ___/___BP as the applicable rate for the next floating period.

☐ (2) The loan interest rate hereunder shall be a fixed rate, i.e., / , which shall not vary during the loan term.

☐ (3) Other Agreements: ___/___

LIBOR and HIBOR rates respectively refer to the interbank offered rates of the above maturities and currencies then in effect as provided by Reuters and other financial telecommunication terminals by 9:00 a.m. [Beijing time] on the statutory working day in China prior to the actual withdrawal date or the repricing date.

BP (BASIS POINT) refers to the minimum changeable unit of interest margin, 1BP = 0.01%.

3. Method of loan interest calculation and payment:

The date of interest payment shall be subject to Article XV of this Contract. The loan interest shall be accrued on a daily basis, and a fixed interest rate shall be applied. The interest shall be calculated at the agreed rate for settlement. For loans with floating interest rate, the interest shall be calculated as per the interest rate determined in the current floating period. If interest rate fluctuates several times in a single settlement period, the interest in each floating period shall be calculated first, and then the interest in such settlement period shall be calculated by summing up the interest in repayment date and that of total floating periods.

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The Borrower shall pay due interest to the Lender on the repayment date. The first interest payment date shall be the first repayment date after the issuance of loan. At the last repayment, interest shall be settled along with the principal. If the Borrower fails to pay interest at the repayment date under this Contract, a compound interest shall be calculated and collected from the next day.

Article V The Loan hereunder shall bear interest on a daily basis from the actual withdrawal date. The calculation formula for interest on loans in pounds sterling and Hong Kong dollars shall be: loan balance x annual interest rate of the loan x actual number of days of the corresponding interest period ÷ 365; the calculation formula for interest on loans other than pounds sterling and Hong Kong dollars shall be: loan balance x annual interest rate of the loan x actual number of days of the corresponding interest period ÷ 360.

Article VI Penalty interest and penalty interest rate

1.  Where the Borrower fails to repay the RMB Loan as stipulated herein, the Lender shall have the right to charge penalty interest, which shall be the actual number of overdue days from the date of overdue loan to the date of its actual settlement. And the penalty interest rate shall be 50% on top of the loan interest rate as stipulated herein, and compound interest at the penalty interest rate shall be charged on the interest that is not payable on time.

2. The foreign currency overdue penalty interest rate shall be:

☐ The loan interest rate in Article IV of this Contract plus 50% thereof.

☐ LIBOR/HIBOR+ / BP by 9:00 a.m. [Beijing time] on the statutory working day in China prior to the day on which the loan is overdue.

3. Where the Borrower fails to use the loan as stipulated herein, the Lender shall have the right to charge the penalty interest, which shall be the actual number of overdue days from the date of misappropriation of the loan by the Borrower to the date on which the Borrower pays off the entire loan. And the penalty interest shall be 100% on top of the loan interest rate agreed herein, and the compound interest at the penalty interest shall be charged on the interest that is not payable on time.

Article VII Where the Borrower fails to pay the interest on time, compound interest shall be charged in accordance with the contractual penalty interest for overdue loans; Where the Borrower fails to pay the penalty interest for overdue or misappropriated loan, compound interest shall be charged in accordance with the penalty interest for overdue or misappropriated loans, respectively. In case the same loan is both overdue and misappropriated, the compound interest rate is charged at the rate of the heaviest penalty interest rate; the compounding cycle is consistent with the interest rate of the loan and is charged on a rolling basis.

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Chapter IV Loan Issuance and Use

Article VIII Except the waiver by the Lender in full or in part, the Lender shall be obliged to issue the loan only if the following preconditions are constantly satisfied:

1.  Documents (including but not limited to the fund payment plan to be submitted by the Borrower before loan issuance, or the transaction information on the loan payment like the Power of Attorney for Payment of Loan Funds and transaction contract) required by the Lender have been fully provided by the Borrower, and the information stated therein remains unchanged. Meanwhile, such documents remain valid without any major or substantial adverse change or any other major adverse circumstance that may affect the performance of this Contract.

2. If the loan under this Contract is secured, the Borrower shall ensure that the legal procedures such as notarization and registration of the guarantee contract and/or insurance of the guarantee shall be completed as required by the Lender, and such guarantee and insurance shall remain valid.

3. The loan is used in compliance with laws and regulations, loan contract and related business contract.

4. The Borrower has completed the loan receipt/loan voucher related to this withdrawal.

The loan receipt/loan voucher is an integral part of this Contract and has the same legal effect as this Contract. If the loan amount, loan term and interest rate of the day of issuance under this Contract are inconsistent with those specified in the loan receipt/loan voucher, the loan receipt/loan voucher shall prevail.

5. The Borrower has not committed any of the event of default set forth herein.

6. Other agreements: _____/_____

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Article IX The Lender shall transfer the loan amount to the loan issuance account in the following ways. The account information is as follows:

Bank of Deposit: Shenzhen Science and Technology Park Branch of China Resources Bank of Zhuhai Co., Ltd.

Account name: Shenzhen United Time Technology Co., Ltd.

Account No.: [ ]

Without the consent of the Lender, the online bank payment and exchange services shall not be provided to the loan issuing account.

☒ 1. One-time transfer: the Lender shall transfer the entire loan amount to the loan issuance account on November 24, 2022.

☐ 2. Transfer in batches on irregular basis:

The specific number of times, amount and period of time shall be subject to the record of the IOU/loan voucher at the time of transfer according to the actual needs at any time.

☐ 3. Other agreements: ___________/__________

Article X The payment methods of loan funds under this Contract include entrusted payment by the Lender and independent payment by the Borrower.

1.  Entrusted payment by the Lender means that the Lender pays the loan to the Borrower’s trading object to the purpose specified in this Contract through the loan issuance account based on the Borrower’s withdrawal application and payment entrustment.

2.  Independent payment by the Borrower means that, after the Lender directly remits the loan funds to the loan issuance account based on the Borrower’s withdrawal application, the Borrower will independently pay the Borrower’s trading object to the purpose specified in this Contract.

3. The specific payment amount is as follows:

The fiduciary payment amount of the loan hereunder shall be RMB (currency) twenty-two million yuan only (in words); the autonomous payment amount shall be ___/___ (currency) ___/___ (in words).

Article XI The Borrower agrees that the Lender has the right to apply entrusted payment in accordance with the relevant state laws and regulations and the rules of regulators for the working capital loan in any of the following circumstances:

1. The credit business relationship is newly established with the Borrower, and the Borrower’s credit standing is average.

2. The object of payment is definite and the amount of single payment is relatively huge.

3. Other circumstances identified by the Lender.

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The Borrower agrees that the starting point for a single fiduciary payment hereunder shall be RMB (currency) five million yuan (in words). Within the validity period of this Contract, the Lender shall have the right to adjust the starting point of the amount of a single payment according to its management requirements.

If the amount of a single payment exceeds the above-mentioned starting point, the entrusted payment by the Lender shall apply. In other cases, independent payment by the Borrower shall be applicable.

Article XII For entrusted payment, the Borrower shall submit the withdrawal application and Power of Attorney for Payment of Loan Funds attached herein to the Lender / days in advance, and provide the commercial contract, invoices, vouchers and other materials related to the payment as required by the Lender. After verification and confirmation by the Lender, the loan shall be directly remitted to the Borrower’s counterparty through the loan issuance account. If the Borrower’s withdrawal application does not meet the conditions under this Contract, the withdrawal application is inconsistent with this Contract, or the transaction information is incomplete or untrue, the Lender shall have the right to refuse to issue or pay the loans, without bearing any responsibility for the breach of this Contract to the counterparty or for any other losses arising therefrom. If the payment information provided by the Borrower is inaccurate and incomplete, resulting in delay or failure of fund payment, the Lender shall not be held responsible.

If the Borrower applies for suspending payment or withdrawing the payment entrustment, such application shall be made to the Lender in written before payment. After verification and confirmation by the lender, the entrusted payment may be suspended and the corresponding loan may be recovered. During this period, interest shall be charged on the corresponding loan according to this Contract.

The payment entrustment shall not be conditional. If the Borrower attaches conditions to the Power of Attorney for Payment of Loan Funds, the Lender shall not be bound to such conditions. Unless otherwise agreed in writing by both parties, the Borrower shall not be obliged to notify the receiver of entrusted payment, suspension of payment, withdrawal of payment, resumption of payment.

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Article XIII For the independent payment by the Borrower, the Borrower shall submit the loan fund payment plan as required by the Lender. After the approval by the Lender, the loan fund shall be remitted to the loan issuing account according to the payment plan, and the Borrower shall make payment of pay loan as per the said payment plan. The Borrower shall report to the Lender the usage of the loan and the payment of the loan funds on ______ (monthly/quarterly) basis, and submit the actual payment list until the loan payment is completed.

Article XIV Where the Borrower is involved in any of the following circumstances during the loan payment, the Lender shall have the right to negotiate with the Borrower to add supplementary conditions to loan issuance and payment, or to change the loan payment methods or stop loan fund issuance and payment according to this Contract:

1. The Borrower’s creditworthiness has declined.

2. The main business is not very profitable.

3. The loan fund is abnormally utilized.

4. The loan fund is not paid as agreed.

5. The regulatory authority adjusts the criteria for fiduciary payments.

The Lender shall have the right to require the Borrower to timely provide the records and materials on the use of loan funds. If the Lender finds that the Borrower fails to pay or use the funds for the purpose as agreed and breaches this Contract for other causes, the Lender shall have the right to announce the early maturity of the loan and investigate the liabilities of the Borrower for breach of this Contract, including but not limited to restriction or prohibition of the loan fund payment.

Chapter V Repayment

Article XV The Borrower shall repay the principal of the loan and pay the interest on schedule in accordance with the currency specified in the Contract, and remit the amount payable (principal and interest) to the repayment account on the repayment date specified in the Contract in accordance with the item 1 below; the specific repayment amount and date shall be subject to the repayment schedule (if any) provided by the Lender.

1. The interest shall be paid monthly, and the interest payment date shall be the 21st day of each month from the loan issue date; the principal shall be paid once due.

2. The repayment of principal and interest in equal amount on a monthly basis (interest is calculated on a daily basis), and the repayment date is the 21st of each month from the loan issue date.

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3. The repayment of principal in equal amount on a monthly basis (interest is calculated on a daily basis), and the repayment date is the 21st of each month from the loan issue date.

4.  The repayment of equal principal shall be made in ___/___ installments every 3 months (interest is calculated on a daily basis), and the repayment date shall be the 21st day of every three months from the loan issue date; if February *, 2020 is the loan issue date, then the repayment date is May 21, 2020, August 21, 2020, and so on.

5. The repayment of equal principal shall be made in ___/___ installments every 6 months (interest is calculated on a daily basis), and the repayment date shall be the 21st day of every six months from the loan issue date; if the loan issue date is February *, 2020, then the repayment date is August 21, 2020, February 21, 2021, and so on.

6.  The repayments in equal amount of the principal are paid back yearly in ___/___ installments (the interest will be calculated daily), and the repayment date is the 21st of the corresponding month starting from the next year of the month where the loan date is issued, for example, if February *, 2020 is the loan issue date, the repayment date is February 21, 2021, February 21, 2022, and so on.

7. The repayment in equal amount of the principal in ___/___ installments (quarterly/semi-annual/annual) (the interest will be calculated daily); for quarterly repayment, the repayment date shall be the 21st of March, June, September and December of each year from the date of issuance date of load; for semi-annual repayment, the repayment date shall be the 21st of June and December of each year from the date of issuance date of load; for annual repayment, the repayment date shall be December 21 of each year from the date of issuance date of the loan; if there is no need to repay the loan on the repayment date in the month when the loan is issued, the repayment will be postponed to the next repayment date.

8. Other repayment methods are agreed upon: _______________________

If the loan is repaid on a monthly basis, the repayment shall start from the month following the issuance of the loan. The repayment date of the last installment is the maturity date of the loan, and the interest will be paid off with the principal. If the maturity date of the loan is not the Lender’s working day, the repayment will be postponed to the Lender’s first working day thereafter.

Article XVI If the maturity date of the loan is a legal holiday, the repayment shall be postponed to the first working day of the Lender, and the non-working day of the Lender shall be included in the actual occupation days of the loan. When the Borrower repays the principal of the last installment of the loan, the interest shall be settled with the principal and shall not be bound by the repayment date agreed in the Contract.

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Article XVII The Borrower shall obtain the consent of the Lender 30 days in advance for prepayment. If the Lender agrees that the Borrower shall repay the loan in advance, the interest shall be calculated and collected according to the interest rate agreed in the Contract and the actual service life of the loan, and both parties shall separately agree as follows: ________.

If the Borrower is unable to repay the loan under the Loan Contract on time and needs to extend the repayment, it shall formally submit a written application for extension of the loan to the Lender 30 working days before the maturity date of the loan. Upon examination and approval by the Lender, both parties shall separately sign an extension contract as a supplementary contract to the Contract.

Article XVIII In the event that the amount repaid by the Borrower to the Lender is less than the total amount of the debt due on that date as agreed herein, such amount shall be repaid in the following order:

1. Payment of taxes and expenses (including but not limited to value-added tax and additional tax, litigation fees, etc.), compensation, indemnification, and liquidated damages payable pursuant to law or as agreed herein;

2. Payment of interest payable (penalty interest and compound interest, if any, shall be paid first);

3. Payment of principal payable.

In case the amount repaid by the Borrower is insufficient to pay off all debts in the same order, the debts shall be paid off in the order that the debts in question have been incurred.

The Lender has the right to unilaterally adjust the order of repayment stipulated herein.

In case the Lender exercises the right of set-off against the Borrower as stipulated by law or agreed herein, the debts to be set off and the order of set-off shall be determined by the Lender.

Chapter VI Undertaking of Expenses

Article XIX All expenses arising from the conclusion and performance of the Contract shall be determined by both parties through negotiation, except for those whose undertaking subject is specified in laws, regulations and rules.

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If there is any mortgage or pledge guarantee under the Contract, an evaluation institution approved by the Lender shall be entrusted to evaluate the value of the collateral or pledge and issue an evaluation report, and the relevant evaluation expenses shall be borne by the Lender (Borrower/Lender).

Article XX All expenses incurred by the Lender to realize the creditor’s rights (including but not limited to legal fees, arbitration fees, property preservation fees, travel expenses, execution fees, assessment fees, auction fees, notarial fees, service fees, announcement fees, lawyer fees, etc.) shall be borne by the Borrower.

Chapter VII Commitment and Guarantee of the Borrower

Article XXI Loan applications shall be in compliance with laws and regulations: the Borrower is a legal person of enterprise (or the government-sponsored institution) established in accordance with the laws and approved and registered by the competent department or other authorities that can be as borrowers as stipulated by the State; the Borrower has good credit and no major bad records; The purpose of the loan and the source of repayment are clear and legal; there are no other violations of laws and regulations.

Article XXII The act of signing the Contract is flawless: in order to sign the Contract or perform its obligations under the Contract, the Borrower has performed the necessary procedures in accordance with laws and regulations or the Articles of Association; the person who signs or seals this contract is the legal representative or authorized agent of the Borrower; the procedures of contract approval, registration or filing shall be actively handled or handled with the cooperation of the Lender.

Article XXIII The guarantee provided is legal and valid: the borrower ensures that the guarantor has performed the necessary procedures in accordance with laws and regulations or the Articles of Association of the Company in order to sign the Guarantee Contract or perform its obligations under the Guarantee Contract; the guarantor has the right to set up a guarantee with the collateral; the person who signs the Guarantee Contract is the authorized signatory; the guarantor shall be urged to actively handle or cooperate with the Lender in handling the approval, registration or filing procedures of the Guarantee Contract and the registration procedures of the guarantee; There are no other defects in the effectiveness of the guarantee or circumstances that may cause significant adverse changes.

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Article XXIV The contractual rights and obligations shall be fulfilled in good faith: the loan shall be used in accordance with the terms, purposes, and methods stipulated therein, and shall not be utilized to engage in unlawful or illegal acts; the loan payment management, post-loan management and related inspections shall be conducted in active cooperation with the relevant state authorities and the Lender; the loan shall be repaid in full and on time in accordance with the contractual agreements, and not be evaded in any way; the Borrower obtains the consent of the Lender before making foreign investments, materially increasing debt financing, and undertaking merger, division, equity transfer, and other significant matters that may adversely affect the rights and interests of the Lender; in case of major adverse events affecting solvency, the Lender shall be promptly notified; no other breaches of contractual obligations shall occur.

Article XXV The documents and materials provided by the Borrower regarding the Borrower, Guarantor and Shareholder are true, complete, accurate, legal and valid.

Article XXVI The Borrower has not had any litigation, arbitration or administrative procedures that have substantial adverse effects on its ability to perform its obligations under the Contract.

The Borrower declares that at the time of the conclusion hereof, it does not have any act or circumstance that violates the laws, rules and regulations on environmental protection, energy conservation, emission reduction and pollution reduction, and pledges that after the conclusion hereof, it shall also strictly abide by the laws, rules and regulations on environmental protection, energy conservation, emission reduction and pollution reduction; in case that the Borrower’s aforesaid declaration is false, or the aforesaid pledge has not been fulfilled, or the Borrower may be exposed to the risk of energy consumption or pollution. The Lender has the right to stop issuing the Loan, or declare the early maturity of the principal and interest of the Loan, or take other remedies as agreed herein or permitted by law.

Article XXVII The Borrower hereby confirms and declares that the Lender has, in accordance with the law, prompted and explained to the Borrower the clauses in respect of the exemption or mitigation of the Lender’s liability and other clauses of material interest to the Borrower, the black and bold font clauses, and the authorization clauses, and that the Lender has already provided adequate explanations of such clauses at the Borrower’s request. The Borrower has been fully aware of and understands the meaning of such clauses and the corresponding legal consequences, and is willing to bear the legal consequences of such clauses. The Borrower promises to strictly abide by all obligations hereunder.

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Chapter VIII Rights and Obligations of the Borrower

Article XXVIII The Borrower shall have the right to request the Lender to issue loans to the Borrower according to the terms and conditions agreed herein. However, if the Lender is unable to issue loans under the Contract due to changes in national macro-control policies, regulatory authorities’ requirements for the Lender to control the credit scale or investment direction, and other reasons other than those of the Lender, the Lender has the right to stop issuing loans or terminate the Contract.

Article XXIX The Borrower shall have the right to use the Loan for the purposes agreed herein.

Article XXX The Borrower shall have the right to require the Lender to keep the relevant financial information provided by the Borrower and the business secrets in production and operation confidential, unless otherwise provided by laws, regulations and rules, required by the competent authorities, or agreed by both parties.

Article XXXI The Borrower shall make withdrawals in accordance with this Contract and pay the principal and interest of the Loan on time and in full.

Article XXXII The Borrower shall provide various financial and accounting information, production and operation status information and other materials in accordance with the requirements of the Lender, including but not limited to providing the Lender with the balance sheet at the end of the previous quarter and the income statement as of the end of the previous quarter (public institutions shall provide the statement of income and expenditure) within ten working days before the first month of each quarter. At the end of the year, the Borrower shall timely provide the cash flow statement of the year, and ensure that the information provided is legal, true, complete, accurate and effective, and shall not provide false materials or conceal important business and financial facts.

Article XXXIII The Borrower shall notify the Lender in writing within 10 working days after the occurrence of any major adverse event affecting its solvency, guarantee ability of the Guarantor,or any other circumstance endangering the Lender’s creditor’s rights, or any change in the name, legal representative (person in charge), domicile, business scope, registered capital or articles of association of the company (enterprise) and other business registration matters, and attach relevant materials after the change.

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Article XXXIV The Borrower shall use the loan according to the purposes agreed in the Contract, shall not occupy, misappropriate the loan or use bank loans to engage in unlawful or illegal transactions; shall not use the loan for fixed-asset investment , equity investment and other investments, shall not use the loan for the fields and purposes prohibited by the state from production and operation, and shall not replace the liabilities arising from the Borrower’s investment in fixed-asset investment , equity investment and other investments, shall cooperate with and accept the Lender’s inspection and supervision for production, operation and financial activities of the Borrower as well as the use and payment of loans under the Contract, and shall cooperate with and accept the relevant requirements of the Lender’s post-loan management; shall not withdraw funds, transfer assets or use related party transactions to evade debts to the Lender; shall not use false contracts with related parties to discount or pledge bank funds or credit with bills receivable, accounts receivable and other creditor’s rights without actual trade background; and the Borrower shall pay the loan funds as agreed in the Contract, and shall not evade the entrusted payment of the Lender by breaking up the whole into parts. Before paying off the loan principal and interest to the Lender, the Borrower shall not use the assets formed by the loan under the Contract to provide guarantee to the third party without the consent of the Lender.

Article XXXV The Borrower shall abide by the relevant national regulations on environmental protection in case that the Borrower uses the loan under the Contract for production and manufacturing.

Article XXXVI The Borrower pledges to abide by China’s anti-money laundering related laws and regulations and not to participate in illegal and criminal activities such as suspected money laundering, terrorist financing; to actively cooperate with the Lender’s customer identification and due diligence, to provide truthful, accurate, complete and effective customer information, and to comply with the Lender’s anti-money laundering and anti-terrorist financing related management regulations.

In case the Lender requests the Borrower’s assistance in compliance with anti-money laundering or other regulatory requirements, the Borrower shall cooperate and provide corresponding written materials.

Article XXXVII If the Borrower is a group customer, the Borrower shall promptly report to the Lender any related transactions of more than 10% of the Borrower’s net assets, including association relationship among transaction parties, transaction item and nature, transaction amount or corresponding ratio and pricing policy (including transactions involving no amount or only nominal amount). Group customer means enterprises and institutions with the following characteristics:

1. Directly or indirectly controlling or being controlled by legal person of other enterprises or institutions in equity or business.

2. Jointly controlled by legal person of a third party enterprise or institution.

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3.  Under jointly direct control or indirect control of the main individual investors, key managers or close family members (including lineal relatives within three generations and collateral relatives within two generations).

4. Have other related relationships and assets and profits may not be transferred according to the fair price principle, and shall be regarded as credit management for group customers.

Article XXXVIII The Borrower shall obtain the written consent of the Lender before carrying out major issues such as merger, separation, equity transfer, foreign investment and substantial increase in debt financing. However, the written consent of the Lender shall not affect the Lender’s right to use the remedies agreed in the Contract when the Lender believes that the above-mentioned acts may endanger the safety of the Lender’s creditor’s rights in the future.

Chapter IX Rights and Obligations of the Lender

Article XXXIX The Lender shall have the right to recover the principal, interest, penalty interest and compound interest of the debt in accordance with the provisions of the Contract, collect the fees payable by the Borrower, and have the right to directly transfer the above principal, interest and fees from the repayment account.

Article XL The Lender shall have the right to require the Borrower to provide information related to the loan, enter the Borrower’s business premises, investigate, examine and inspect the use of credit and the Borrower’s assets, financial status and business conditions. The Borrower shall provide support and have the right to supervise the Borrower’s use of the Loan according to the purposes agreed herein.

Article XLI The Lender shall be obligated to keep the information provided by the Borrower confidential, unless otherwise provided by laws, regulations and rules, required by the competent authorities, or agreed by both parties.

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Article XLII The Lender shall have the right to require the Borrower to open the following account in the bank of the Lender as a special fund withdrawal account. The Borrower shall open the account according to the requirements of the Lender and sign the relevant account management agreement, and timely provide the Lender with the inflow and outflow of funds in the account, and accept the Lender’s management over the withdrawal of fund. The Lender shall have the right to recover the loan in advance according to the Borrower’s withdrawal of fund. The specific account information is as follows:

Bank of Deposit: ___/______

Account No.: ___/______

Unless approved by the Lender, the account for withdrawal of fund will not be open to online banking payment and circulating or exchange business.

Chapter X Event of Default and Remedies for Breach of Contract

Article XLIII Any of the following events shall constitute a breach of contract by the Borrower under the Contract:

1. The Borrower violates any provision of the Contract or any legal obligation.

2. The Borrower fails to fulfill the statements, commitments and guarantees made in the Contract.

3. The Borrower expressly indicates or acts to indicate that it will not perform any obligation under the Contract.

4. Fails to continuously meet any preconditions for loan issuance as agreed in the Contract.

5. The Borrower or the Guarantor (including but not limited to the Guarantor, Pledgor and Mortgagor, the same below) neglects to manage and recourse its due creditor’s rights, or transfer property or other acts of evading debts by disposing of its main property without compensation, at an unreasonable low price or in other inappropriate ways.

6. The Borrower uses false contracts and arrangements entered with any third party, including but not limited to discounting or pledging creditor’s rights such as bills receivable without real trade background, to obtain funds or credit from the Lender or other banks.

7. The Borrower or the Guarantor violates other contracts (including but not limited to credit contracts, loan contracts and guarantee contracts) signed with the Lender or any debt securities issued by the Lender.

8. The Borrower or the Guarantor violates other contracts (including but not limited to credit contracts, loan contracts and guarantee contracts) signed with other banks or issue any debt securities.

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9.  The Borrower’s Guarantor violates the provisions of the guarantee contract (including but not limited to the guarantee contract, mortgage contract and pledge contract, the same hereinafter) or breaches the guarantee contract, or the guarantee contract is not in force, is invalid or has been revoked; The value of the collateral is obviously reduced, lost and the ownership is disputed, or the collateral is sealed up, detained, frozen, deducted, retained, auctioned, etc.

10. Other events of default that affect the business activities of the Borrower and the Guarantor and the loan safety of the Lender, including but not limited to:

(1) The Borrower or the Guarantor has deficit in operation or financial condition, or has significant financial losses. Asset losses (including but not limited to asset losses due to its external guarantees) or other financial crises.

(2)  The Borrower is subject to administrative penalty or criminal sanction or is involved in major legal disputes due to illegal business practices.

(3) The Borrower, the shareholder or the actual controller of the Borrower, the Legal Representative or the main administrative staff of the Guarantor are involved in major cases or their main assets are subject to compulsory measures such as property preservation or are subject to administrative penalty or criminal sanctions, or other events that lead to their inability to perform their duties normally.

(4)  The guarantee provided by the Borrower or Guarantor to a third party has a significant adverse impact on its financial status or its ability to perform its obligations under the Contract.

(5) The Borrower or the Guarantor has separation, merger, major merger, acquisition and reorganization, disposal of major assets, reduction of capital, closure, suspension of business for rectification, liquidation, reorganization, cancellation, dissolution, bankruptcy, revocation of business license, etc.

(6) Other circumstances that the Lender deems would impair the security of the loan.

Article XLIV In the event of any of the above-mentioned breach of Contract, the Lender shall be entitled to take any one or more of the following measures:

1. Require the Borrower and the Guarantor to correct defaults or other circumstances that are not conducive to the safety of loans within a time limit, implement other debt guarantee measures or provide other effective guarantees.

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2. Calculate and collect default interest and compound interest as agreed in the Contract until the principal and interest are paid off when the Borrower fails to use or repay the loan or pay the interest payable as agreed.

If the loan is overdue for less than 90 days (including 90 days), the repayment order of the loan principal and interest shall be: (1) Charges; (2) Interest, penalty interest and compound interest; (3) Principal.

If the loan is overdue for more than 90 days, the repayment order of the loan principal and interest shall be: (1) Charges; (2) Principal; (3) Interest, penalty interest and compound interest.

The Lender shall have the right to adjust the above repayment order.

3.  Reduce or cancel the loan amount of the Borrower, stop issuing loans, recover the issued loans in advance, require the Borrower to immediately repay all due and undue principal, interest and expenses under the Contract, and announce the maturity of loans under other loan contracts signed by the Borrower and the Lender.

4. Receive corresponding amounts in RMB or other currencies from the Borrower’s accounts opened by the Lender or all branches of the Lender’s system without prior notice; if it is necessary to go through the formalities for settlement and sale of foreign exchange or foreign exchange trading, the Borrower shall be obligated to assist the Lender in handling the procedures of foreign exchange settlement and sale or foreign exchange trading, and the Borrower shall bear the exchange rate risks.

5. Require the Borrower to bear damages and other legal liabilities.

6.  Exercise security rights and take corresponding asset preservation measures and other legal measures.

7. Other remedies for breach of contract that the Lender is entitled to take.

Chapter XI Others

Article XLV Any extension, preference or postponement granted by the Lender to the Borrower shall not affect, impair or limit the Lender's rights under the Contract and laws and regulations; and shall not be deemed to be a waiver of the Lender's rights and interests under the Contract, nor shall it affect any of the Borrower's or Lender's responsibilities and obligations under the Contract.

Article XLVI If any provision of this Contract is illegal, invalid or unenforceable at any time, the legality, validity or enforceability of other provisions of this Contract will not be affected or impaired in any way.

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Unless there is reliable and definite evidence to the contrary, the Lender’s internal accounting records about the principal, interest,compound interest,penalty interest, expenses and repayment records, the documents and vouchers produced or retained by the Lender in the process of the Borrower’s withdrawal, repayment, payment of interest and other business, as well as the records and vouchers of the Lender’s collection of loans, shall constitute the confirmation evidence effectively proving the creditor’s rights relationship between the Borrower and the Lender. The Borrower shall not raise any objection just on the ground that the above records, documents and vouchers are made or retained by the Lender unilaterally.

Article XLVII Any alterations and additions to the present Contract are valid only in written form and are properly signed by the Parties of the Contract.

Article XLVIII The headings of the Contract are for convenience of reading only and shall not be used for the interpretation of the Contract or any other purpose. The options selected and filled contents in the Contract shall have the same legal effect as the printed contents of the Contract.

Article XLIX Confirmation and notification of delivery address

1. Confirmation of delivery address

(1) The contact information and service address hereunder are as follows:

Address of the Borrower: 702, Block A, Building 5, Software Industry Base, Shenzhen City; The Addressee: Yu Shibin; Tel: 15817405072; Fax: ___/___ ; Email:___/___ .

Address of the Lender: Unit A-01 of 21st Floor, and 22nd Floor, 23rd Floor, 24th Floor, 25th Floor, China Resources Financial Building, No. 2700 Keyuan Avenue, Nanshan Houhai Central District, Yuehai Street, Nanshan District, Shenzhen City; The Addressee: China Resources Bank of Zhuhai Co., Ltd. Shenzhen Branch

(2) The Borrower understands and agrees that the contact information and service address hereunder shall be served as the address for service of the court/arbitration institution/Lender’s litigation materials and legal documents involved in disputes hereunder.

(3) The Borrower understands and agrees that lawsuit materials and legal documents can be delivered through postal service by the court/arbitration institution with the aforesaid service address; and through electronic service (including e-mail, mobile phone SMS and other modern communication methods) with the aforesaid agreed mobile phone number, fax, and e-mail address.

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(4) The Borrower understands and agrees that during the performance hereof, once the contracting parties enter into judicial/arbitration proceedings in respect of a dispute covered hereby, the court/arbitration institution may serve the litigation materials or legal documents to the Borrower through one or more of the aforesaid service methods, and that the service time shall be subject to the first service of the aforesaid service methods.

(5)  The Borrower understands and agrees that the aforesaid service agreement is applicable to mediation, first instance, second instance, retrial (including retrial review) and execution stages in the litigation procedure.

(6)  The Borrower understands and agrees that all the information such as address, mobile phone number, contact person, fax, e-mail address, etc. agreed aforesaid shall be assured to be true and valid, and that the Borrower shall promptly notify the Lender in writing for any change in the relevant information, otherwise such service process according to the original address and other information shall be still valid, and the Borrower shall be liable for the legal consequences arising therefrom.

(7) The Borrower understands and agrees that the aforesaid agreed mobile phone number, e-mail address, etc. can be used to receive litigation materials and legal documents served by the court/arbitration institution in a timely and effective manner.

(8) The Borrower understands and agrees that the litigation materials and legal documents can be served by the court/arbitration institution through electronic service, and no paper documents shall be served to the legal/other agreed address of the Borrower.

(9)  The Borrower is clear that in case the aforesaid agreed address, mobile phone number, e-mail address or other service information is untrue, inaccurate or not up-to-date, resulting in the failure from actual service or timely service or refusal of signature of the litigation materials and legal documents, it shall be deemed to have been validly served, and the Borrower shall bear the corresponding legal consequences.

2. Notification

Where the Lender sends the notice by way of announcement on its website, online banking, telephone banking, mobile banking or business outlets, the date of announcement shall be deemed as the date of delivery. Under no circumstances shall the Lender be responsible for any transmission errors, omissions or delays in mail, fax, telephone or any other communication system.

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Article L If the Lender needs to entrust other branches of China Resources Bank of Zhuhai Co., Ltd. to perform its rights and obligations under the Contract due to business needs, the Borrower shall approve this. Other branches of China Resources Bank of Zhuhai Co., Ltd. authorized by the Lender shall have the right to exercise all rights under the Contract, and have the right to bring a lawsuit to the court or submit the dispute under the Contract to the arbitration institution for adjudication.

Chapter XII Effectiveness, Alteration and Dissolution of Contract

Article LI The contract shall take effect on the date of its signature by Both Parties and shall terminate on the date of the Borrower’s full performance of its contractual obligations.

Article LII After the Contract comes into effect, unless otherwise stipulated by laws and regulations and the Contract, neither party may arbitrarily change or terminate the Contract in advance. If it is necessary to change or terminate the Contract, both parties shall reach a written contract through negotiation. The terms of the Contract remain in effect until the written contract is reached.

Chapter XIII Application of Laws and Settlement of Disputes

Article LIII The laws of the People’s Republic of China (excluding the laws of Hong Kong, Macao and Taiwan) shall apply to the Contract and any matters involved herein. Disputes hereunder shall be brought to the court of competent jurisdiction in the place where the Lender is located, unless otherwise stipulated in the article of “Other Agreed Matters” hereof. During the litigation or arbitration, the provisions of this Contract that do not involve the disputes shall still be performed.

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Chapter XIV Supplementary Provisions

Article LIV In accordance with the Regulation on the Administration of Credit Investigation Industry and other relevant national laws and regulations, the Borrower confirms that it is aware of and understands the contents and meanings of these Articles, and hereby irrevocably agrees in writing and authorizes the Lender (including the Lender’s head office and each other branch of the head office) to query, use, collect, provide and report the relevant information about the Borrower, and the Lender has the right to carry out the specific operations as follows:

1. In order to promptly understand the credit status of the Borrower, exclude the Borrower’s violation of laws and regulations, and ensure the business security between the Lender and the Borrower hereunder, the Lender shall, in accordance with the relevant state regulations, query and make use of the relevant information of the Borrower through the basic financial credit information database and ______________ and other credit reporting agencies ___________ approved and set up by the supervisory and administrative department of the State Council in charge of the credit collection industry (hereinafter referred to as “Borrower’s Information”).

2. Pursuant to the relevant provisions of the State, the Lender shall collect the relevant information hereunder and the relevant legal documents signed between the Borrower and the Lender, as well as other information relating to the Borrower obtained by the Lender through the signing hereof and the relevant legal documents (hereinafter referred to as the “Credit Information Collected by the Lender”), and provide it to the basic financial credit information database and other credit reporting agencies ____________ approved and established by the State Council’s Credit Collection Industry Supervision and Administration Department of the State Council.

3. The Lender shall keep the “Borrower’s Information” and the “Credit Information Collected by the Lender” for the purpose of internal archiving in accordance with national laws and regulations and the provisions of the Lender on the business file management system, and the retention period shall not be limited to the provisions of Article 7 of this Authorization.

4.  In accordance with the applicable laws and regulations and regulatory requirements, the Lender shall provide the “Borrower’s information” and the “Credit Information Collected by the Lender” to the relevant regulatory authorities such as the China Banking and Insurance Regulatory Commission and the relevant judicial and administrative authorities.

5. For the sake of providing financial services, the Lender shares “Borrower’s Information” and the “Credit Information Collected by the Lender” within the Lender internal, including among its branches.

6. The Lender provides “Borrower’s Information” and the “Credit Information Collected by the Lender” to the relevant third-party institutions in accordance with the requirements of arrears collection, creditor’s rights transfer and financial services outsourcing.

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7. This authorization shall commence on the date hereof and shall expire on the date of termination of all businesses hereunder.

8. The Lender shall be liable for any legal obligations arising from the Lender’s inquiries, use and provision of the “Borrower’s Information” and the “Credit Information Collected by the Lender” beyond the scope of the authorization stipulated herein.

The Borrower hereby acknowledges and declares that the Lender has prompted and explained the terms of this Authorization to the Borrower as required by law, and that the Lender has provided an adequate explanation of the terms of this authorization as requested by the Borrower. The Borrower has been fully aware of and understands the meaning of such authorization clauses and the corresponding legal consequences, and is willing to bear the legal consequences of such authorization clauses.

Article LV The Borrower hereby irrevocably pledges that, in the event of a breach of the obligations agreed upon herein, the Lender may report the information on the Borrower’s breach of contract to credit reporting agencies and banking associations. The relevant banking association is also authorized to share the Borrower’s default information among banking financial institutions and even make it public through appropriate means.

The Borrower voluntarily accepts the disciplinary and rights defense measures against dishonesty jointly taken by the Lender and other banking financial institutions, such as reducing or stopping credit granting, stopping the opening of new settlement accounts, and stopping the legal representative from opening new credit cards.

Article LVI The Borrower guarantees that the Borrower and its employees and agents shall not provide, give, ask for or accept any form of material benefits (including but not limited to cash, physical cards, tourism, etc.) or other non-material benefits to the Lender or its employees in any form except as agreed herein, shall not directly or indirectly use the funds or services provided by the Lender in any form for activities related to corruption or bribery. Where the Borrower knows any violation of the Agreement, it shall provide clues and relevant information to the Lender in a timely, truthful, complete and accurate manner and cooperate with relevant matters as required by the Lender.

Article LVII The Lender may transfer all or part of its creditor’s rights hereunder to a third party, and the Lender shall notify the Borrower in time when transferring its creditor’s rights. If the Borrower transfers all or part of its debts hereunder to a third party, it shall notify the Lender in writing in advance and obtain the Lender’s written consent.

Article LVIII The terms “borrowing” and “loan” herein shall have the same meaning.

Article LIX The original hereof shall be in two copies, one for the Borrower, one for the Lender and ____ for the other, all of which shall have the same legal effect.

Article LX Other Agreed Matters:__________________________

/

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(The page is intentionally left blank for signature and seal)

This Contract is signed by the Borrower and the Lender on November 24, 2022. The Borrower acknowledges that, at the time of signing this Contract, the Borrower and the Lender have explained and discussed all the terms in detail, and both parties have no doubt about all the terms of the Contract and have an accurate and correct understanding of the legal significance of the provisions relating to the rights and obligations of the parties, the exemption or mitigation of the Lender’s liability, and other provisions in which the Borrower has a material interest.

Borrower (Signature): Shenzhen United Time Technology Co., Ltd. (Seal)

Legal Representative or Authorized Agent (Signature): Bao Minfei (Seal)

Lender (Signature): China Resources Bank of Zhuhai Co., Ltd. Shenzhen Branch

China Resources Bank of Zhuhai Co., Ltd. Shenzhen Branch (Seal)

Legal Representative or Authorized Agent (Signature): Wu Zhaoyu (Seal)

Tang Qi (Signature) 74560005

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EX-4.61

Exhibit 4.61

Contract No.:

Loan Contract for Small Business

Special note: This Contract is negotiated and signed by the Borrower and the Lender on an equal and voluntary basis. All Contract terms are true representations of the Parties. In order to safeguard the legitimate rights and interests of the Borrower, the Lender hereby draws the Borrower’s full attention to all the clauses relating to the rights and obligations of both Parties, especially the contents in bold.

Lender: Industrial and Commercial Bank of China Limited Shenzhen Longgang Sub-branch

Principal: Yang Duoping	Contact: Deng Jiazhen
Domicile (Address): F1,3,4 Business Street Store, New Asia Garden Zone 10,
Zhongxincheng, Longgang District, Shenzhen City		Zip Code: _518000
Tel: _________________	Fax: _____/_____	E-mail: ____/______
Borrower: Shenzhen United Time Technology Co., Ltd.
Legal Representative: Bao Minfei	Contact: Yu Shibin	Mobile Number: _______
Domicile (Address): F2. 64D-403 Tianzhan Mansion, Tian-an-che-gong-miao
Industrial Park, Xiangmi Lake, Futian District, Shenzhen City		Zip Code: _518000
Tel: _________________	Fax: _____/______	E-mail: ____/______

[The Borrower shall fill in the above information accurately and completely in order to ensure the timely delivery of the subsequent relevant notices and legal documents.]

The Borrower and the Lender, on the basis of equal consultation, have reached an agreement on the granting of the loan by the Lender to the Borrower and hereby enter into this Contract.

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Part I Basic Agreements

Article I Purpose of Loan

The purpose of the loan hereunder is _for capital turnover_. Without the written consent of the Lender, the Borrower shall not divert the loan for other purposes, and the Lender has the right to supervise the use of the money.

Article II Amount and Term of Loan

2.1 The currency of the loan hereunder is RMB , and the amount is _5,000,000.00 (in words: _five million yuan only_) yuan (in case of any discrepancy, the amount in words shall prevail).

2.2 The loan term of this Contract is _12 months_, starting from the first Withdrawal Date hereunder.

2.3 As for each withdrawal, the Withdrawal Date shall be the date when the loan funds are actually transferred to the lending account, and the maturity date shall be the repayment date recorded on the IOU (in case of installment repayment, the maturity date shall be according to the repayment plan agreed herein or otherwise by the Borrower and Lender), and the repayment date of any withdrawal shall not exceed the loan term hereof.

Article III Interest Rate and Interest

3.1 [Determination of RMB Loan Interest Rate]

The RMB loan interest rate shall be determined as follows:

The interest rate for each loan is determined by the pricing benchmark plus floating points, where the pricing benchmark is the 1-year (1-year/5-year or above) Loan Prime Rate (LPR) published by the National Interbank Funding Center on the workday prior to the _withdrawal date (withdrawal date/contract effective date) (hereinafter referred to as the “First Interest Rate Determination Date”) of each loan, and the floating points are plus (plus/minus)

10 basis points (one basis point is 0.01%, the same below). The number of floating points shall not be changed during the term of the loan. In case the National Interbank Funding Center does not announce the LPR for the corresponding maturity on the workday prior to the Interest Rate Determination Date, the LPR issued by the National Interbank Funding Center on the previous workday shall prevail, and so on. Subsequent to the First Interest Rate Determination Date, regardless of whether or not the withdrawal has been made at that time, the interest rate on loan shall be adjusted in the following A (A/B) method:

A 、 The loan rate is calculated on the basis of _12 (1/3/6/12) months as one installment, with one adjustment per installment, and interest is accrued in segments. The Interest Rate Determination Date for the second and subsequent installments shall be the date corresponding to the expiry of the First Interest Rate Determination Date, on which the Lender adjusts the loan rate according to the LPR and the floating points of the aforesaid period published by the National Interbank Funding Center on the preceding workday. In the event that there is no date corresponding to the First Interest Rate Determination Date on the adjustment month, the last day of the month shall be used as the corresponding date.

B 、 No adjustment shall be made during the term of the loan.

3.2 [Determination of Foreign Exchange Loan Interest Rate]

The foreign exchange loan interest rate shall be determined in the following / (1/2/3) method:

(1) The fixed interest rate of _/_% per annum, which shall not vary during the Contract Term.

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(2) The term interest rate, where its interest rate for each loan is determined by a pricing benchmark plus a spread, where the pricing benchmark is the __/__ (LIBOR term rate/S0FR term rate/SONIA term rate/EURIB0R term rate/T0RF term rate, etc.) for the maturity variety of __/__   (week/month/year) applicable to the __/__ (Withdrawal Date/Contract Effective Date) of each loan (the First Interest Rate Determination Date), and the spread is (plus/minus) __/__ basis points (one basis point is 0.01%). The plus point spread shall not be changed during the Contract Term. Where split withdrawals are employed, the interest rate is calculated separately for each withdrawal. Subsequent to the First Interest Rate Determination Date, regardless of whether or not the withdrawal has been made at that time, the interest rate on loan shall be adjusted in the following __/__ (A/B/C) method, and interest is accrued in segments:

A 、 The loan rate is calculated on the basis of / (1/3/6/12) months as one installment, with one adjustment per installment. The Interest Rate Determination Date for the second and subsequent installments shall be the date corresponding to the expiry of the First Interest Rate Determination Date, and the loan rate shall be adjusted from that date onwards in accordance with the pricing benchmark and interest spread applicable on that date. In the event that there is no date corresponding to the First Interest Rate Determination Date on the adjustment month, the last day of the month shall be used as the corresponding date.

B 、 The first day of each interest period (i.e., the day following the end of the previous interest accruing period) shall be used as the Interest Rate Determination Date, and the loan rate shall be adjusted from that date onwards in accordance with the pricing benchmark and interest spread applicable on that date.

C 、 No adjustment shall be made during the term of the loan.

The aforesaid Interest Rate Determination Date shall be determined by the applicable ricing benchmark in accordance with the relevant rules in Article 1.1 of Part II.

(3) Floating overnight interest rate, where the loan rate is based on each interest accrual date during the interest accruing period (referred to as each natural day on and after the Withdrawal Date)

The overnight financing interest rate __/__ (S0FR/S0NIA/€ STR/SAR0N/T0NA, etc.) applicable to the loan currency shall be determined as the spread over the pricing benchmark __/__ (plus/minus) __/__ basis points, and the spread shall not be changed during the Contract Term. Subsequent lenders determine the interest accrual rate based on the applicable pricing benchmark for each interest accrual date and the aforesaid spreads. The First Interest Rate Determination Date is the Withdrawal Date for each loan, and the subsequent Interest Rate Determination Dates are each interest accrual date following the First Interest Rate Determination Date. The loan interest shall be calculated by the __/__ (simple interest/combination of simple and compound interest) method.

The aforesaid Interest Rate Determination Date shall be determined by the applicable ricing benchmark in accordance with the relevant rules in Article 1.1 of Part II.

3.3 The loan hereunder shall accrue interest daily from the actual Withdrawal Date and shall be settled on monthly (monthly/quarterly/semi-annually) basis. Upon expiry of the loan, the remaining outstanding interest shall be settled together with the principal. Where the loan currency is GBP, AUD, CAD, SGD or HKD, the daily interest rate on each interest-bearing day = annual interest rate/365; for other currencies, the daily interest rate on each interest-bearing day = annual interest rate/360.

3.4 Where the loan currency is RMB, the overdue penalty interest rate hereunder shall be determined by adding 50% to the original loan interest rate; where the loan currency is foreign currency, the overdue penalty interest rate hereunder shall be determined by adding __/__ basis points (one basis point is 0.01%) to the original borrowing interest rate. The penalty interest rate on misappropriation loan shall be determined by adding 50% to the original loan interest rate.

Article IV Withdrawals

4.1 The Borrower shall make withdrawals in accordance with the actual demand for funds in the following （2） (1/2/3) method:

(1) Withdrawal of the loan in one lump sum before the date of __/__;

(2) One or more withdrawals of the loan from the effective date hereof until the date of December 8, 2023;

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(3) Withdrawals shall be made in the following installments. In case the Borrower needs to alter the time or amount of withdrawal based on the progress of the loan use, it shall be approved by the Lender, provided that the Borrower shall liquidate the loan by no later than the date of __/__ .

Withdrawal Date	Withdrawal Amount
_/_	_/_
_/_	_/_
_/_	_/_

4.2 In case the Borrower fails to withdraw the loan as stipulated, the Lender has the right to cancel the Borrower’s loan that has not been withdrawn in part or in full:

Article V Repayment

5.1 The Borrower shall repay the loan hereunder in the following 1_ (1/2) method:

(1) Repayment of the loan in one lump sum at maturity.

(2) Repayment in installments based on the following repayment plan (additional sheet attached in case of more content):

Scheduled Repayment Date	Scheduled Repayment Amount
_/_	_/_
_/_	_/_
_/_	_/_
_/_	_/_
_/_	_/_
_/_	_/_
_/_	_/_
_/_	_/_
_/_	_/_
_/_	_/_
_/_	_/_
_/_	_/_

5.2 If any loan hereunder is one of the following, the Borrower shall repay the loan forthwith after the corresponding funds are in place:

______________/ ____________________________________

Article VI Undertakings

Where the guarantee for the loan hereunder is a maximum guarantee, the corresponding maximum guarantee Contract is 1 (1/2/3, multiple options available)

1. Contract on Guarantee under the Debt Ceiling (No.: _G. Y. S. (Bao). L. Zi 2022 No. 2062, 2063 ___________ ) Guarantor: _Bao Minfei, Ping Qiuzi

2. Contract on Mortgage under the Debt Ceiling (No.: / ) Mortgagor:          /                  

3. Contract on Pledge under the Debt Ceiling(No.: ________/______ ) Pledgee:       /             

Article VII Financial Engagement (the optional clause, this article is non-applicable (applicable/non-applicable))

During the Contract Term, the Borrower shall abide by the following financial indicators:

                                        /                          

Article VIII Dispute Resolution

During the performance of the Contract, all disputes and controversies arising from or in connection with the performance of this Contract may be resolved through consultation between the Parties. If consultation fails, either Party may settle it by the following A means.

A 、 Any dispute arising from or in connection with this Contract shall be submitted to the Shenzhen Court of International Arbitration (Shenzhen Arbitration Commission) for arbitration in accordance with the arbitration rules of the Commission. The arbitration award shall be final and binding on both Parties.

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B、 Settlement by litigation in the court of the place where Party A is located.

Article IX Miscellaneous

9.1 This Contract shall be executed in _two_ copies, one_ copy (copies) by each of the Borrower, the Lender, and the _/ , and shall have the same legal effect.

9.2 The following annexes and other annexes confirmed by both Parties constitute an integral part of this Contract and have the same legal effect as this Contract:

Annex 1: Notification of Withdrawal (Format)

Annex 2: Entrusted Payment Agreement

9.3 For related inquiries (complaints), please contact 95588 or the Lender’s business outlets.

Article X Other Matters Agreed by Both Parties

_/

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Part II Specific Terms

Article I Interest Rate and Interest

1.1 Where the loan currency is a foreign currency and priced on a term interest rate or floating overnight interest rate basis, the applicable pricing benchmark on the Interest Rate Determination Date (T day, or the latest workday prior to the Interest Rate Determination Date in the event that it is not a workday) shall be the interest rate value for the T-N workdays corresponding to the pricing benchmark agreed upon herein as displayed on the page of the terminal of Refinitiv or Bloomberg Financial Telecommunications. In case the pricing benchmark on interest rate is negative, it shall be executed at zero. The aforesaid workdays are the local business days of the loan currency pricing benchmark administrators. For applicable term interest rates, the value of N is 2; for applicable floating overnight interest rates, the value of N is 5.

Lest there be any doubt that the SOFR term rate agreed upon herein refers to the SOFR term rate issued by the Chicago Mercantile Exchange (CME) as determined by the Alternative Reference Rate Committee (ARRC); the SONIA term rate agreed upon herein refers to the SONIA term rate issued by Refinitiv.

Any significant change in the pricing benchmark shall be handled based on the market rules in force at the time. Should the Lender then request the Borrower to sign a supplementary agreement on the relevant matters, the Borrower shall cooperate.

1.2 In case the loan interest rate hereunder adopts a floating rate, the rules of interest rate adjustment shall still be implemented in the original method upon the overdue loan.

1.3 For monthly interest settlement, the settlement date shall be the 20th day of each month; for quarterly interest settlement, the settlement date shall be the 20th day of the last month of each quarter; and for semi-annual interest settlement, the settlement date shall be June 20 and December 20 of each year.

1.4 The first interest period is from the date of the Borrower’s actual withdrawal to the first interest settlement date; the last interest accruing period is from the day following the end of the previous interest accruing period to the final repayment date; and the rest of the interest accruing period is from the day following the end of the previous interest accruing period to the next interest settlement date.

1.5 Loan interest = loan principal x daily interest rate x actual days of use.

Where the interest rate is determined by Method (3) set forth in Article 3.2 of Part I of this Contract, and the interest on the loan shall be calculated by the combination of simple and compound interest, the interest accrual rule shall be as follows: for the portion calculated on a pricing benchmark, such portion of interest for each workday = (loan principal + total interest on this portion accrued as of the previous natural day) x the benchmark date interest rate applicable for that day; for non-working days, the interest on this portion is the same as that on the latest workday prior to that day, but if the loan principal amount changes, the interest on this portion shall be adjusted accordingly by reference to the aforementioned formula. The spread-based portion is calculated on a simple interest basis. The workdays mentioned in this Article are the local business days of the loan currency pricing benchmark administrators.

For the average capital plus interest repayment method, the calculation formula for principal and interest repayable is as follows:

Total principal and interest per installment =	Loan principal × installment interest rate × (1 + installment interest rate) number of repayment periods
	(1 + installment interest rate) number of repayment periods - 1

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1.6 In the event that the People’s Bank of China adjusts the loan interest rate determination method, it shall be handled in accordance with the relevant provisions of the People’s Bank of China, and the Lender shall not notify the Borrower separately.

1.7 Where the loan interest rate is executed by reducing a certain number of basis points in accordance with the Loan Prime Rate (LPR) published by the National Interbank Funding Center at the time of signing this Contract, the Lender has the right to reassess the interest rate preference granted to the Borrower annually, and to cancel the interest rate preference granted to the Borrower in full or in part at its own discretion in accordance with the national policy, credit status of the Borrower and changes in the loan guarantee, and to notify the Borrower promptly.

1.8 Unless otherwise specified, the loan interest rate herein shall be the annualized interest rate calculated by simple interest method.

Article II Issuance and Payment of Loan

2.1 The Borrower’s withdrawal of the loan is conditional upon the fulfillment of the following prerequisites, failing which the Lender shall not be obliged to issue any amount to the Borrower, unless the Lender agrees to issue the loan in advance:

(1) Except for the credit loans, the Borrower has provided corresponding guarantees as required by the Lender, where the relevant guarantee procedures have been completed and the guarantees have not been subject to any detrimental changes to the Lender;

(2) Upon each withdrawal, Borrower’s statements and warranties hereunder are still true, accurate and complete, and no breach of Contract has occurred hereunder or under any other Contract between Borrower and Lender;

(3) The documentation provided to support the purpose of the loan is consistent with the agreed purpose;

(4) Submission of other information required by the Lender.

2.2 In the event that the Borrower utilizes the loans hereunder for investment in fixed assets, the Borrower shall, in addition to fulfilling the prerequisites set forth in Article 2.1, also fulfill the following prerequisite:

(1) The loan project has been approved, authorized or filed by the competent state authorities (if required);

(2) The capital or other matching funds for the loan project have been in place in full at the prescribed time and proportion;

(3) No cost overruns have been incurred or cost overruns have been addressed by self-financing;

(4) The project progress has been completed as planned and the actual progress of the project is in line with the amount invested.

2.3 The Borrower shall withdraw the loan by submitting a Notification of Withdrawal to the Lender at least 5 banking days in advance. Once the withdrawal notice is submitted, it shall not be revoked without the written consent of the Lender. The Borrower shall affix its official seal or special seal for finance on the IOU in accordance with the reserved account seal of the lending account specified in the Notification of Withdrawal. The Borrower hereby confirms that if the reserved seal consists of an official seal and a special seal for finance, for which one or more of the seals are affixed on the IOU, the IOU is a valid IOU.

2.4 Upon the Borrower’s fulfillment of the prerequisites for withdrawal or the Lender’s consent to issue the loan in advance, the Lender shall be deemed to have issued the loan to the Borrower in accordance with this Contract when the Lender transfers the loan to the designated Borrower’s account.

2.5 According to the relevant regulatory provisions and the management requirements of the Lender, the loan shall be withdrawn and utilized by the Lender in the form of entrusted payment. The Lender shall, based on the Borrower’s withdrawal application and entrusted payment, issue the loan Funds to the payment recipients that conform to the purposes agreed upon herein. In this respect, the Borrower shall enter into a separate entrusted payment agreement with the Lender as an annex hereto and open or designate a special account with the Lender for handling the entrusted payment.

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Article III Repayment

3.1 The Borrower shall repay the loan principal, interest and other payables in full and on time as agreed herein. On the repayment date and the banking day preceding each interest settlement date, the Borrower shall deposit the full amount of current interest, principal and other payables into the repayment account opened at the Lender, and the Lender shall have the right to take the initiative to make a transfer on such repayment date and the interest settlement date, or to request the Borrower to cooperate in the relevant transfer procedures. In case the amount in the repayment account is insufficient to pay all the amounts due and payable by the Borrower, the Lender has the right to determine the order of liquidation.

Where the repayment account is lost, frozen, suspended or canceled, or where the Borrower needs to change the repayment account, the Borrower is required to attend the Lender’s counter for the change of repayment account. Before the change procedure takes effect, if the original repayment account can no longer be fully debited, the Borrower is required to attend the Lender’s counter for repayment of the loan. In case the Borrower fails to apply for the change of repayment account in time or fails to make repayment at the Lender’s counter in time, resulting in failure to repay the principal and interest of the loan and other expenses due on time and in full, the Borrower shall be liable for breach of Contract.

3.2 Where the Borrower applies for early repayment of all or part of the loan, he/she shall submit a written application to the Lender 10 banking days in advance for the Lender’s consent.

3.3 In case of early repayment with the consent of the Lender, the Borrower shall, on the early repayment date, simultaneously pay the principal of the Borrowing, interest and other sums due and payable pursuant to this Contract up to the early repayment date. The interest shall be calculated by the combination of simple and compound interest. In case the Borrower fails to pay off the said interest at the time of making the early repayment, the outstanding interest shall continue to be calculated in accordance with Article 1.5 of Part II on and after the date of early repayment until the interest is paid in full.

3.4 The Lender shall have the right to recoup the loan in advance based on the Borrower’s withdrawal of funds.

3.5 In case the actual loan period is shortened due to early repayment of the loan by the Borrower or early recouping of the loan by the Lender in accordance with this Contract, the corresponding interest rate shall not be adjusted and the original loan interest rate shall still be applied.

Article IV Undertakings

4.1 Except for credit loans, the Borrower shall provide legal and effective guarantees recognized by the Lender for the performance of its obligations hereunder. The guarantee Contract shall be signed separately.

4.2 In the event of damage, depreciation in value, dispute over property rights, seizure or attachment of the collateral hereunder, or breach of the agreement of the guarantee Contract by the guarantor, or adverse changes in the financial position of the guarantor of the guarantee, or any other change detrimental to the creditor’s rights of the lender, the Borrower shall promptly notify the lender, and shall provide other guarantees that are acceptable to the lender.

4.3 The Lender has the right to reassess the value of the collateral and the guarantee capacity of the Guarantor periodically or irregularly, and should the assessment find that the value of the collateral has decreased or the guarantee capacity of the Guarantor has been reduced, the Borrower shall provide additional guarantees equivalent to the reduced value or reduced guarantee capacity, or it may separately provide other guarantees approved by the Lender.

4.4 Upon the consent of the Lender, in case the loan hereunder is guaranteed by the pledge of accounts receivable, the Lender shall have the right to declare the loan to be immediately due and require the Borrower to forthwith repay part or all of the principal and interest of the loan or to provide additional legal, effective and sufficient guarantee approved by the Lender, if any of the following circumstances occurs during the Contract Term:

(1) The bad debt rate of accounts receivable from the Pledgor to the payer has increased for two consecutive months;

(2) The accounts receivable that the Pledgor has not recovered from the payer accounts receivable accounts for more than 5% of the balance of the payer’s accounts receivable;

(3) The trade disputes (including but not limited to disputes over quality, technology or services) or debt disputes between the Pledgor of accounts receivable and the payer or other third Parties, resulting in the accounts receivable may fail to be repaid on time when due.

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Article V Account Management

5.1 Where the loan hereunder is used for the Borrower’s working capital needs such as production and operation turnover, the Borrower shall designate a special fund withdrawal account with the Lender for the purpose of collecting the corresponding sales incomes or scheduled repayment funds. In case the corresponding sales incomes are settled on a non-cash basis, the Borrower shall ensure that the funds are promptly transferred to the fund withdrawal account upon receipt of payment.

5.2 The Lender shall have the right to supervise the fund withdrawal account, including but not limited to, the knowledge and supervision of the income and expenditure of the funds in such account, and the Borrower shall cooperate with such supervision. If requested by the Lender, the Borrower shall sign a special account supervision agreement with the Lender.

Article VI Representations and Warranties

The Borrower makes the following statements and warranties to the Lender, which are valid at all times during the Contract Term:

6.1 The Borrower is qualified as a Borrower by law and has the qualifications and ability to enter into and perform this Contract.

6.2 All necessary authorizations or approvals have been obtained for the signing of this Contract, and the signing and performance of this Contract shall not violate the provisions of the Company’s Articles of Association, the Shareholders’ Capital Contribution Agreement, the Joint Venture Agreement, the Partnership Agreement, and relevant laws and regulations, and is not conflict with the obligations under any other contracts to which it is liable.

6.3 Other debts payable have been repaid on schedule and there is no malicious default in payment of principal and interest on bank loans.

6.4 There is no major violation of rules and regulations in the course of production and operation within the last one year, and the incumbent senior management personnel do not have any major adverse records.

6.5 All documents and information provided to the Lender are true, accurate, complete and valid, and there are no false records, material omissions or misleading statements.

6.6 Failure to conceal from the Lender any litigation, arbitration or claim involved.

6.7 Where the Borrower utilizes the loan hereunder for investment in fixed assets, the relevant project and its loan matters are in compliance with the requirements of laws and regulations;

Article VII Borrower’s Commitment

7.1 The loan shall be withdrawn and utilized in accordance with the term and purpose as agreed herein, and the loaned funds shall not flow into the securities market or futures market in any form, and shall not be used for real estate development, purchase of real estate and other purposes prohibited or restricted by relevant laws and regulations.

7.2 The principal, interest and other payables of the loan shall be paid off as stipulated herein.

7.3 The Borrower shall submit to and actively cooperate with the Lender’s inspection and supervision on the usage of the loan funds including the purpose by means of account analysis, voucher inspection, on-site investigation, etc., and regularly summarize and report the usage of the loan funds as requested by the Lender.

7.4 The Borrower shall accept the Lender’s credit inspection, provide timely, true, accurate and complete financial information and other information that reflects the Borrower’s solvency as requested by the Lender, including all opening banks, bank account numbers, deposit balances, etc., and actively assist and cooperate with the Lender in the investigation, understanding and supervision of its production and operation and financial situation.

7.5 In the event that there are outstanding principal and interest on loans and other payables hereunder that are due (including those declared to be immediately due), no dividends or bonuses shall be distributed in any form whatsoever.

7.6 In the case of merger, division, capital reduction, changes in equity, equity pledge, partnership admission, withdrawal of partnership, transfer of major assets and creditor’s rights, significant foreign investment, material increase in debt financing, and other actions that may adversely affect the rights and interests of the Lender, prior written consent of the Lender shall be obtained.

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7.7 Any of the following circumstances shall be promptly notified to the Lender:

(1) Change of name, official seal, Articles of Association, domicile, legal representative or person in charge, mailing address and other matters;

(2) Closure of business, dissolution, liquidation, suspension of business for reorganization, revocation of business license, revocation or filing (being filed) for bankruptcy;

(3) The involvement or possible involvement in major economic disputes, litigation, arbitration, or assets being seized, detained or compulsorily enforced, or subject to investigation or punitive measures taken by the judiciary, taxation, industry and commerce, and other competent authorities in accordance with the law;

(4) Shareholders, directors and incumbent senior management personnel or shareholders and contributors are suspected of major cases or economic disputes.

7.8 Timely, comprehensive and accurate disclosure of related parties relationships and related transactions to Lenders.

7.9 The prompt signature for all types of notices mailed or otherwise delivered by the Lender.

7.10 Own assets are not disposed of in a way that reduces its solvency; the guarantees to third parties are not detrimental to the rights and interests of the Lender.

7.11 The Borrower’s debts hereunder shall be satisfied in priority to Borrower’s debts to its shareholders, legal representatives or principals, partners, major contributors or key management personnel and shall be at least on an equal footing with other creditors of the borrower for debts of the same type.

7.12 In case the Borrower’s repayment funds (including but not limited to, the amount obtained by the Lender through withholding and disposal of the collateral, etc.) are insufficient to pay off all the debts of the Borrower to the Lender hereunder and under the other Contracts, the Lender shall have the right to determine the order of repayment.

7.13 The Borrower shall strengthen environmental and social risk management and shall be submitted to supervision and inspection by the Lender in this regard. Upon request by the Lender, the Borrower shall submit environmental and social risk reports to the Lender.

Article VIII Lender’s Commitment

8.1 The Lender shall issue loans to the Borrower in accordance with this Contract.

8.2 The Lender shall keep confidential the non-public data and information provided by the Borrower concerning its financial and production and operation, except as otherwise stipulated by laws and regulations and agreed herein.

8.3 The Lender shall not charge the Borrower commitment fee, fund management fee, financial advisory fee, consulting fee, corporate account overdraft commitment fee and credit reference fee and other fees that the regulatory authorities explicitly require commercial banks not to charge for loans to small and micro-enterprises.

Article IX Breach

9.1 Any of the following circumstances shall constitute a breach of contract by the Borrower:

(1) The Borrower fails to repay the principal and interest of the loan and other payables hereunder as agreed, or fails to perform any other obligations hereunder, or breaches any statement, warranty or commitment hereunder;

(2) The Borrower fails to separately provide other guarantees approved by the Lender in case that the guarantee hereunder has been altered to the detriment of the Lender’s creditor’s rights or that the Guarantor has breached the guarantee contract;

(3) The Borrower’s failure to pay off any other debt upon its maturity (including declared early expiration) or its failure to perform or breach of its obligations under other agreements, which has affected or may affect the performance of its obligations hereunder:

(4) The Borrower’s financial indicators, such as profitability, solvency, operating capacity and cash flow, have breached the agreed standards, or have deteriorated in a way that has or may affect the performance of its obligations hereunder;

(5) The Borrower’s production and operation, foreign investment, etc. suffer significant detrimental changes that have affected or may affect the performance of its obligations hereunder;

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(6) The Borrower or its shareholders, legal representatives or principals, partners, individual major investors or key management personnel are engaged in or may be engaged in major economic disputes, litigation or arbitration, or assets are seized, detained or compulsorily enforced, or are subject to investigation or punitive measures taken by judicial or administrative authorities in accordance with the law, or are exposed by the media due to the violation of relevant state regulations or policies, which has affected or may affect the performance of its obligations hereunder;

(7) The Borrower’s change of equity or change of shareholding relationship, partnership or joint venture relationship, abnormal change of partners, individual major investors, key management personnel, disappearance or being investigated by judicial authorities in accordance with the law, or restriction of personal freedom, which has affected or may affect the performance of its obligations hereunder;

(8) The Borrower obtains funds or credit from the Lender by false contracts with related parties and transactions with no actual transaction background, or the Borrower intentionally evades the Lender’s creditor’s rights through related transactions;

(9) The Borrower has or may cease business, dissolve, liquidate, suspend for reorganization, be subject to revocation of its business license, be revoked, or file (be filed) for bankruptcy;

(10) The Borrower’s performance of its obligations hereunder has been or may be affected by liability accidents, major environmental and social risk events caused by the Borrower’s violation of laws and regulations, regulatory provisions or industry standards relating to food safety, production safety, environmental protection and other environmental and social risk management;

(11) The Borrower’s legal representatives or principals, partners, individual major investors or key management personnel have been involved in illegal activities such as underworld activities, drug abuse, gambling, smuggling, etc.;

(12) The Borrower is in arrears with taxes, fees, or regularly defaults on employee paychecks;

(13) The Borrower’s legal representative or principals, partners, individual major investors, or key management personnel default on personal loans or credit cards;

(14) Other circumstances that may adversely affect the fulfillment of the Lender’s creditor’s rights hereunder.

9.2 In case the Borrower breaches the contract, the Lender is entitled to take one or more of the following measures:

(1) The Lender shall request the Borrower to remedy the breach by a deadline;

(2) The Lender shall cease to issue loans and other financing payments to the Borrower pursuant to this Contract and other contracts between the Lender and the Borrower, and partially or fully cancel the Borrower’s loans and other financing payments that have not yet withdrawn;

(3) The Lender shall declare that the outstanding loans and other financing amounts pursuant to this Contract and under other contracts between the Lender and the Borrower are due immediately, and shall forthwith collect the outstanding amounts;

(4) The Lender shall require the Borrower to reimburse its losses caused by the Borrower’s breach of contract, including but not limited to, attorney fees, auction fees, and other expenditures incurred by the Lender in the fulfillment of its creditor’s rights hereunder;

(5) Other measures prescribed by laws and regulations, agreed in this Contract or deemed necessary by the Lender.

9.3 Where the Borrower fails to repay the loan upon its maturity (including declared immediate maturity), the Lender has the right to charge penalty interest from the overdue date based on the overdue penalty interest rate agreed herein. Compound interest shall be charged based on the overdue penalty interest rate for the interest (including penalty interest) that the Borrower fails to pay on time. The settlement rules for penalty interest/compound interest shall apply to the settlement rules for interest agreed herein.

9.4 Where the Borrower fails to use the loan for the purpose agreed herein, the Lender shall have the right to charge penalty interest on the misappropriated portion of the loan at the misappropriated loan penalty rate from the date of misappropriation of the loan, and compound interest at the misappropriated loan penalty rate on the interest (including penalty interest) that is not paid on time during the period in which the loan has been misappropriated. The settlement rules for penalty interest/compound interest shall apply to the settlement rules for interest agreed herein.

9.5 In the event that the Borrower has concurrently incurred the circumstances listed in Articles 9.3 and 9.4 above, the penalty interest rate shall be determined by whichever is heavier and cannot be concurrently applied.

9.6 Where the Borrower fails to repay the loan principal, interest (including penalty interest and compound interest) or other payables on schedule, the Lender has the right to collect the amount through media announcements.

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9.7 Any change in the controlling or controlled relationship between the Borrower’s related parties and the Borrower, or any other circumstances other than (1) and (2) in Article 9.1 aforesaid with respect to the Borrower’s related parties, which have affected or may affect the performance of the Borrower’s obligations hereunder, the Lenders shall have the right to take the various measures agreed upon herein.

Article X Automatic Cancellation of the Lender’s Loan Commitment

10.1 In the event of deterioration of the Borrower’s creditworthiness, the Lender may, without prior notice, automatically cancel its commitment for all the Borrower’s loans that have not yet withdrawn.

10.2 Any of the circumstances set forth in Articles 9.1 and 9.7 of Part II hereof shall constitute a deterioration in the creditworthiness of the Borrower.

Article XI Withholding

11.1 In the event that the Borrower fails to repay the debts due (including immediately declared due) hereunder as agreed, the Borrower agrees that the Lender shall debit the corresponding repayment amount from all local and foreign currency accounts opened by the Borrower in ICBC until all debts of the Borrower hereunder have been fully paid off.

11.2 Any amount withheld that is inconsistent with the currency hereof shall be converted at the exchange rate applicable to the Lender on the date of withholding. Interest and other expenses incurred between the date of withholding and the date of settlement (the date on which the Lender converts the withheld amount into the contract currency in accordance with the national foreign exchange management policy and actually pays off the debts hereunder), as well as the difference due to the fluctuation of exchange rate during the period, shall be borne by the Borrower.

Article XII Transfer of Rights and Obligations

12.1 The Lender has the right to transfer part or all of its rights hereunder to a third party, and the Lender’s assignment is not subject to the Borrower’s consent. The Borrower may not transfer any of its rights and obligations hereunder without the written consent of the Lender.

12.2 The Lender or Ningguo Subranch of Industrial and Commercial Bank of China Limited (“ICBC”) may authorize or entrust other sub-branches of ICBC to perform the rights and obligations hereunder or transfer the creditor’s rights of the Loan hereunder to other sub-branches of ICBC in the assumption and management of the loans according to the needs of its operation and management, which the Borrower acknowledges, and the Lender shall not be required to obtain the Borrower’s consent to the aforesaid acts of the Lender. The other branches of ICBC which assume the rights and obligations of the Lender shall have the right to exercise all the rights hereunder, and shall have the right to file lawsuits, submit to arbitration or apply for compulsory execution in the name of the institution in respect of disputes hereunder.

Article XIII Entry into force, Alteration and Dissolution

13.1 This Contract shall take effect from the date when the official seal or special seal thereof is affixed by both the Borrower and the Lender, and shall terminate on the date when the Borrower’s obligations hereunder have been fully performed.

13.2 Any changes to this Contract shall be made by consensus of the parties and in writing. The changed terms or agreements constitute a part of this Contract and have the same legal effect as this Contract. The rest of this Contract is still valid except for the changed portion, and the original terms and conditions shall remain in force before the changed part comes into effect.

13.3 The modification and termination of this Contract shall not affect the right of the contracting parties to claim compensation for damages. The dissolution of this Contract shall not affect the validity of relevant dispute resolution clauses.

Article XIV Application of Law and Dispute Resolution

The conclusion, validity, interpretation, fulfillment and dispute resolution of this Contract shall be under the laws of the People’s Republic of China. Any disputes and controversies arising from or in connection herewith shall be first resolved by consultation between the Borrower and the Lender; in the event that no negotiation is possible or no agreement can be reached through consultation, it shall be resolved as stipulated herein.

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Article XV Confirmation of Service Address of Litigation/Arbitration Documents

15.1 Party B confirms that the address recorded on the first page of the main text hereof shall be the effective service address for Party B to receive all kinds of notices, letters, legal documents from the people’s court or arbitration institution (including but not limited to summonses, notices of court hearings, judgments, rulings, conciliation statement, and notices of deadlines for fulfillment, etc.).

15.2 The above service agreement is applicable to all stages of arbitration and litigation proceedings at first instance, second instance, retrial and execution. For the above-mentioned service address, the court and arbitration institution may serve the legal documents directly by mail. Even if the party fails to receive the legal document served by the court or arbitration institution by mail, it shall be deemed to have been served due to its agreement therein.

15.3 Party B agrees that the court or arbitration institution may use the fax or e-mail recorded on the first page of the main text of this Contract for the service of legal documents, with the exception of judgments, rulings, conciliation statement and awards.

15.4 Party B guarantees that the above-mentioned service address and other information is accurate and effective, and if the above service address and other information changes, it should promptly notify Party A in writing. Otherwise, the service in accordance with the address set out herein shall still be valid, and Party B shall bear the legal consequences arising therefrom on its own.

15.5 In case the legal documents are not actually received by Party B due to inaccurate information such as Party B’s service address, failure to promptly notify Party A in writing of address change, unavailability of signature, or refusal of signature by Party B or the designated receiver, the return date of the documents shall be deemed as the date of service if the documents are sent by post (if the return date of the mails varies from address to address, whichever is later shall be considered as the date of delivery); in the case of direct service, the date recorded by the server on the return of service on the spot shall be deemed as the date of service; in the case of fulfillment of the obligation to notify the change of service address, the changed service address shall be the valid service address.

15.6 Once the dispute has entered into litigation or arbitration, should Party B directly submit the confirmation of service address to the court or arbitration institution, and the confirmation is inconsistent with the service address set forth herein, the service address submitted to the court or arbitration institution shall prevail, but the service made by Party A in accordance with the address set forth herein before that shall still be valid.

Article XVI Entirety

Part I, Basic Agreements, and Part II, Specific Terms, hereof together comprise a complete Loan Contract for Small Business, and the same words in both parts shall have the same meaning. The Borrower’s loan is subject to the joint constraints of the above two parts.

Article XVII Notice

17.1 All notifications to the Borrower and the Lender hereunder shall be in writing. Unless otherwise agreed, both Parties shall designate the domicile set forth herein as the address for correspondence and contact. Either party shall promptly notify the other party in writing of any change in its mailing address or other contact information.

17. 2 Any party to this Contract that refuses to sign or is otherwise undeliverable may be served by the notifying party in the form of a notarization or public notice.

Article XVIII Special Agreement on Value-added Tax

18.1 The interest and expenses paid by the Borrower to the Lender hereunder are all tax-inclusive prices.

18.2 Where the Borrower requests the Lender to issue VAT invoices, the Borrower shall first register the information with the Lender, which include the Borrower’s full name, taxpayer identification number or social credit code, address, telephone number, bank of deposit and account number. The Borrower shall ensure that the relevant information provided to the Lender is true, accurate and complete, and provide the relevant supporting materials as required by the Lender, which shall be released by the Lender through branch notices or website announcements, etc.

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18.3 Where the Borrower collects the VAT invoice on its own, it shall provide the Lender with a stamped authorization letter, designate the collector and specify the collector’s identity card number and other information, and the designated collector shall collect the VAT invoice with the original identity card; in case the designated collector changes, the Borrower shall reissue a stamped authorization letter to the Lender. Where the Borrower prefers to collect the VAT invoice by mail, the Borrower shall also provide accurate and deliverable postal information; in case of any change in the postal information, the Borrower shall promptly notify the Lender in writing.

18.4 Any force majeure such as natural disasters, governmental actions, abnormal social events or reasons of the tax authorities that prevent the Lender from prompt issuance of VAT invoices, the Lender has the right to delay the issuance of the invoices and shall not be liable for any responsibility.

18.5 In case the invoice is lost, damaged or overdue after the VAT invoice has been collected by the Borrower or delivered by the Lender to a third party by mail, which is not due to the Lender, and as a result of which the Borrower fails to receive the corresponding coupon of the VAT invoice or is unable to deduct it after the expiry of the time limit, the Lender shall not be liable to compensate for any relevant economic loss of the Borrower.

18.6 Where the issuance of Red-letter Special VAT Invoice is required due to the occurrence of sales return, suspension of taxable services or incorrect invoicing, or the fact that both the credit copy and the invoice copy cannot be certified, and in case that it is necessary for the Borrower to submit the Information Sheet on Issuance of Red-letter Special VAT Invoice to the tax authorities in accordance with the provisions of the relevant laws, regulations and policy documents, the Borrower shall submit the Information Sheet on Issuance of Red-word Special VAT Invoice to the tax authorities, and upon the examination and notification of the Lenders by the tax authorities, the Lenders shall issue the Red-letter Special VAT Invoice.

18.7 During the performance of the contract, in case of national tax rate adjustment, the Lender has the right to adjust the price agreed herein according to the change of national tax rate.

Article XIX Miscellaneous

19.1 The failure of the Lender to exercise or partially exercise or delay in exercising any right hereunder shall not constitute a waiver or change of that right or other right, nor shall it affect its further exercise of that right or other right.

19.2 The invalidity or unenforceability of any provision hereof shall not affect the validity and enforceability of the other provisions, nor the validity of the contract as a whole.

19.3 The Lender has the right to provide the information with respect to this Contract and other relevant information of the Borrower to the Credit Reference Center of the Peoples’ Bank of China and other credit information databases set up in accordance with laws and regulations or the requirements of the financial supervisory institutions for inquiry and use by appropriately qualified institutions or individuals. The Lender also has the right to inquire the relevant information from the Borrower through the Credit Reference Center of the Peoples’ Bank of China and other credit information databases established in accordance with the law for the purpose of the conclusion and performance of this Contract.

19.4 The terms “related parties”, “related party relationships”, “related party transactions”, “individual major investors”, “key management personnel” and other terms used herein shall have the same meanings as those used in the Accounting Standard for Business Enterprises No. 36 - Related Party Disclosure (C.K. [2006] No. 3) issued by the Ministry of Finance and the subsequent revisions to the standard.

19.5 The environmental and social risks referred to herein refer to the hazards and related risks that may be brought to the environment and society by the Borrower and its significant related parties in the course of its construction, production and operating activities, including environmental and social issues related to energy consumption, pollution, land, health, safety, migration and resettlement, ecological preservation, climate change and so on.

19.6 The documents and vouchers made and retained by the Lender based on its business rules in respect of the loan hereunder shall constitute valid evidence of the debtor-creditor relationship between the Borrower and the Lender and shall be binding upon the Borrower.

19.7 In this Contract, (1) any reference hereto shall include modifications or supplements hereof; and (2) the headings of the Articles are for reference purposes only and do not constitute any interpretation hereof, nor do they constitute any restriction on the contents and scope under the headings.

Both Parties confirm that all the terms and conditions hereof have been fully negotiated between the Lender and the Borrower. The Lender has drawn the Borrower’s special attention to all the terms concerning the rights and obligations of both Parties, made a full and accurate understanding of them, and provided explanations and clarifications of the relevant terms and conditions at the Borrower’s request. The Borrower has carefully read and fully understood all the terms and conditions of the contract (including Part I Basic Agreements and Part II Specific Terms), and both the Borrower and the Lender have a complete and accurate understanding of all the terms and conditions of the contract, and have no objection to the contents of the contract.

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(The page is intentionally left blank for signature and seal.)

Lender (Seal): Industrial and Commercial Bank of China Limited Shenzhen Longgang Sub-branch

Special Seal for Business Contract of Industrial and Commercial Bank of China Limited Shenzhen Longgang Sub-branch 8C59C6B01036 (Seal)

Date of Contract: December 2, 2022

Borrower (Seal):	Shenzhen United Time Technology Co., Ltd.
	Shenzhen United Time Technology Co., Ltd. (Seal)

Date of Contract:

As the legal representative/authorized representative of the Borrower, I hereby confirm that the loan made by the Borrower from the Lender in accordance with the agreement herein and the seal hereon is true and valid, and that the procedures required for borrowing the money have been fulfilled.

Legal Representative/Authorized Representative of the Borrower (Signature): Bao Minfei

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EX-4.62

Exhibit 4.62

Contract No.:

Loan Contract for Small Business

Special note: This Contract is negotiated and signed by the Borrower and the Lender on an equal and voluntary basis. All Contract terms are true representations of the Parties. In order to safeguard the legitimate rights and interests of the Borrower, the Lender hereby draws the Borrower’s full attention to all the clauses relating to the rights and obligations of both Parties, especially the contents in bold.

Lender: Industrial and Commercial Bank of China Limited Shenzhen Longgang Sub-branch

Principal: Yang Duoping Contact: Deng Jiazhen

Domicile (Address):  F1,3,4 Business Street Store, New Asia Garden Zone 10,
Zhongxincheng, Longgang District, Shenzhen City   Zip Code: 518000

Tel:                        Fax:    /    E-mail:     /   

Borrower:  Shenzhen United Time Technology Co., Ltd.

Legal Representative: Bao Minfei Contact: Yu Shibin Mobile Number:                       

Domicile (Address): F2. 64D-403 Tianzhan Mansion, Tian-an-che-gong-miao
Industrial Park, Xiangmi Lake, Futian District, Shenzhen City Zip Code: 518000

Tel:                        Fax:          /                   E-mail:       /              

[The Borrower shall fill in the above information accurately and completely in order to ensure the timely delivery of the subsequent relevant notices and legal documents.]

The Borrower and the Lender, on the basis of equal consultation, have reached an agreement on the granting of the loan by the Lender to the Borrower and hereby enter into this Contract.

Part I Basic Agreements

Article I Purpose of Loan

The purpose of the loan hereunder is for capital turnover. Without the written consent of the Lender, the Borrower shall not divert the loan for other purposes, and the Lender has the right to supervise the use of the money.

Article II Amount and Term of Loan

2.1 The currency of the loan hereunder is RMB , and the amount is 5,000,000.00 (in words: five million yuan only) yuan (in case of any discrepancy, the amount in words shall prevail).

2.2 The loan term of this Contract is 12 months, starting from the first Withdrawal Date hereunder.

2.3 As for each withdrawal, the Withdrawal Date shall be the date when the loan funds are actually transferred to the lending account, and the maturity date shall be the repayment date recorded on the IOU (in case of installment repayment, the maturity date shall be according to the repayment plan agreed herein or otherwise by the Borrower and Lender), and the repayment date of any withdrawal shall not exceed the loan term hereof.

Article III Interest Rate and Interest

3.1 [Determination of RMB Loan Interest Rate]

The RMB loan interest rate shall be determined as follows:

The interest rate for each loan is determined by the pricing benchmark plus floating points, where the pricing benchmark is the 1-year (1-year/5-year or above) Loan Prime Rate (LPR) published by the National Interbank Funding Center on the workday prior to the withdrawal date (withdrawal date/contract effective date) (hereinafter referred to as the “First Interest Rate Determination Date”) of each loan, and the floating points are plus (plus/minus)

10 basis points (one basis point is 0.01%, the same below). The number of floating points shall not be changed during the term of the loan. In case the National Interbank Funding Center does not announce the LPR for the corresponding maturity on the workday prior to the Interest Rate Determination Date, the LPR issued by the National Interbank Funding Center on the previous workday shall prevail, and so on. Subsequent to the First Interest Rate Determination Date, regardless of whether or not the withdrawal has been made at that time, the interest rate on loan shall be adjusted in the following A (A/B) method:

A 、The loan rate is calculated on the basis of 12 (1/3/6/12) months as one installment, with one adjustment per installment, and interest is accrued in segments. The Interest Rate Determination Date for the second and subsequent installments shall be the date corresponding to the expiry of the First Interest Rate Determination Date, on which the Lender adjusts the loan rate according to the LPR and the floating points of the aforesaid period published by the National Interbank Funding Center on the preceding workday. In the event that there is no date corresponding to the First Interest Rate Determination Date on the adjustment month, the last day of the month shall be used as the corresponding date.

B 、 No adjustment shall be made during the term of the loan.

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3.2 [Determination of Foreign Exchange Loan Interest Rate]

The foreign exchange loan interest rate shall be determined in the following   / (1/2/3) method:

(1) The fixed interest rate of _/_% per annum, which shall not vary during the Contract Term.

(2) The term interest rate, where its interest rate for each loan is determined by a pricing benchmark plus a spread, where the pricing benchmark is the     /     (LIBOR term rate/S0FR term rate/SONIA term rate/EURIB0R term rate/T0RF term rate, etc.) for the maturity variety of     /     (week/month/year) applicable to the    /        (Withdrawal Date/Contract Effective Date) of each loan (the First Interest Rate Determination Date), and the spread is (plus/minus)   /  basis points (one basis point is 0.01%). The plus point spread shall not be changed during the Contract Term. Where split withdrawals are employed, the interest rate is calculated separately for each withdrawal. Subsequent to the First Interest Rate Determination Date, regardless of whether or not the withdrawal has been made at that time, the interest rate on loan shall be adjusted in the following  / (A/B/C) method, and interest is accrued in segments:

A 、 The loan rate is calculated on the basis of / (1/3/6/12) months as one installment, with one adjustment per installment. The Interest Rate Determination Date for the second and subsequent installments shall be the date corresponding to the expiry of the First Interest Rate Determination Date, and the loan rate shall be adjusted from that date onwards in accordance with the pricing benchmark and interest spread applicable on that date. In the event that there is no date corresponding to the First Interest Rate Determination Date on the adjustment month, the last day of the month shall be used as the corresponding date.

B 、 The first day of each interest period (i.e., the day following the end of the previous interest accruing period) shall be used as the Interest Rate Determination Date, and the loan rate shall be adjusted from that date onwards in accordance with the pricing benchmark and interest spread applicable on that date.

C 、 No adjustment shall be made during the term of the loan.

The aforesaid Interest Rate Determination Date shall be determined by the applicable ricing benchmark in accordance with the relevant rules in Article 1.1 of Part II.

(3)Floating overnight interest rate, where the loan rate is based on each interest accrual date during the interest accruing period (referred to as each natural day on and after the Withdrawal Date)

The overnight financing interest rate    / (S0FR/S0NIA/€ STR/SAR0N/T0NA, etc.) applicable to the loan currency shall be determined as the spread over the pricing benchmark     /    (plus/minus)     /    basis points, and the spread shall not be changed during the Contract Term. Subsequent lenders determine the interest accrual rate based on the applicable pricing benchmark for each interest accrual date and the aforesaid spreads. The First Interest Rate Determination Date is the Withdrawal Date for each loan, and the subsequent Interest Rate Determination Dates are each interest accrual date following the First Interest Rate Determination Date. The loan interest shall be calculated by the     / (simple interest/combination of simple and compound interest) method.

The aforesaid Interest Rate Determination Date shall be determined by the applicable ricing benchmark in accordance with the relevant rules in Article 1.1 of Part II.

3.3 The loan hereunder shall accrue interest daily from the actual Withdrawal Date and shall be settled on monthly (monthly/quarterly/semi-annually) basis. Upon expiry of the loan, the remaining outstanding interest shall be settled together with the principal. Where the loan currency is GBP, AUD, CAD, SGD or HKD, the daily interest rate on each interest-bearing day = annual interest rate/365; for other currencies, the daily interest rate on each interest-bearing day = annual interest rate/360.

3.4 Where the loan currency is RMB, the overdue penalty interest rate hereunder shall be determined by adding 50% to the original loan interest rate; where the loan currency is foreign currency, the overdue penalty interest rate hereunder shall be determined by adding   /   basis points (one basis point is 0.01%) to the original borrowing interest rate. The penalty interest rate on misappropriation loan shall be determined by adding 50 % to the original loan interest rate.

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Article IV Withdrawals

4.1 The Borrower shall make withdrawals in accordance with the actual demand for funds in the following （2 ）(1/2/3) method:

(1) Withdrawal of the loan in one lump sum before the date of   /   ;

(2)One or more withdrawals of the loan from the effective date hereof until the date of __ December 8, 2023 ;

(3)Withdrawals shall be made in the following installments. In case the Borrower needs to alter the time or amount of withdrawal based on the progress of the loan use, it shall be approved by the Lender, provided that the Borrower shall liquidate the loan by no later than the date of / .

Withdrawal Date	Withdrawal Amount
_/_	_/_
_/_	_/_
_/_	_/_

4.2In case the Borrower fails to withdraw the loan as stipulated, the Lender has the right to cancel the Borrower’s loan that has not been withdrawn in part or in full:

Article V Repayment

5.1 The Borrower shall repay the loan hereunder in the following 1 (1/2) method:

(1) Repayment of the loan in one lump sum at maturity.

(2) Repayment in installments based on the following repayment plan (additional sheet attached in case of more content):

Scheduled Repayment Date	Scheduled Repayment Amount
_/_	_/_
_/_	_/_
_/_	_/_
_/_	_/_
_/_	_/_
_/_	_/_
_/_	_/_
_/_	_/_
_/_	_/_
_/_	_/_
_/_	_/_
_/_	_/_

5.2If any loan hereunder is one of the following, the Borrower shall repay the loan forthwith after the corresponding funds are in place:

_________/________________________________________________________________

Article VI Undertakings

Where the guarantee for the loan hereunder is a maximum guarantee, the corresponding maximum guarantee Contract is 1 (1/2/3, multiple options available)

1. Contract on Guarantee under the Debt Ceiling (No.: G. Y. S. (Bao) L. Zi 2022 No. 2062, 2063) Guarantor: Bao Minfei, Ping Qiuzi

2. Contract on Mortgage under the Debt Ceiling (No.:    /   ) Mortgagor:    /   

3. Contract on Pledge under the Debt Ceiling(No.:   /   ) Pledgee:    /   

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Article VII Financial Engagement (the optional clause, this article is non-applicable (applicable/non-applicable))

During the Contract Term, the Borrower shall abide by the following financial indicators:

___________________/______________________________________________________

Article VIII Dispute Resolution

During the performance of the Contract, all disputes and controversies arising from or in connection with the performance of this Contract may be resolved through consultation between the Parties. If consultation fails, either Party may settle it by the following A means.

A 、 Any dispute arising from or in connection with this Contract shall be submitted to the Shenzhen Court of International Arbitration (Shenzhen Arbitration Commission) for arbitration in accordance with the arbitration rules of the Commission. The arbitration award shall be final and binding on both Parties.

B  、 Settlement by litigation in the court of the place where Party A is located.

Article IX Miscellaneous

9.1 This Contract shall be executed in two copies, one copy (copies) by each of the Borrower, the Lender, and the _/ , and shall have the same legal effect.

9.2The following annexes and other annexes confirmed by both Parties constitute an integral part of this Contract and have the same legal effect as this Contract:

Annex 1: Notification of Withdrawal (Format)

Annex 2: Entrusted Payment Agreement

9.3For related inquiries (complaints), please contact 95588 or the Lender’s business outlets. Article X Other Matters Agreed by Both Parties

   /   

   /   

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Part II Specific Terms

Article I Interest Rate and Interest

1.1Where the loan currency is a foreign currency and priced on a term interest rate or floating overnight interest rate basis, the applicable pricing benchmark on the Interest Rate Determination Date (T day, or the latest workday prior to the Interest Rate Determination Date in the event that it is not a workday) shall be the interest rate value for the T-N workdays corresponding to the pricing benchmark agreed upon herein as displayed on the page of the terminal of Refinitiv or Bloomberg Financial Telecommunications. In case the pricing benchmark on interest rate is negative, it shall be executed at zero. The aforesaid workdays are the local business days of the loan currency pricing benchmark administrators. For applicable term interest rates, the value of N is 2; for applicable floating overnight interest rates, the value of N is 5.

Lest there be any doubt that the SOFR term rate agreed upon herein refers to the SOFR term rate issued by the Chicago Mercantile Exchange (CME) as determined by the Alternative Reference Rate Committee (ARRC); the SONIA term rate agreed upon herein refers to the SONIA term rate issued by Refinitiv.

Any significant change in the pricing benchmark shall be handled based on the market rules in force at the time. Should the Lender then request the Borrower to sign a supplementary agreement on the relevant matters, the Borrower shall cooperate.

1.2In case the loan interest rate hereunder adopts a floating rate, the rules of interest rate adjustment shall still be implemented in the original method upon the overdue loan.

1.3For monthly interest settlement, the settlement date shall be the 20th day of each month; for quarterly interest settlement, the settlement date shall be the 20th day of the last month of each quarter; and for semi-annual interest settlement, the settlement date shall be June 20 and December 20 of each year.

1.4The first interest period is from the date of the Borrower’s actual withdrawal to the first interest settlement date; the last interest accruing period is from the day following the end of the previous interest accruing period to the final repayment date; and the rest of the interest accruing period is from the day following the end of the previous interest accruing period to the next interest settlement date.

1.5 Loan interest = loan principal x daily interest rate x actual days of use.

Where the interest rate is determined by Method (3) set forth in Article 3.2 of Part I of this Contract, and the interest on the loan shall be calculated by the combination of simple and compound interest, the interest accrual rule shall be as follows: for the portion calculated on a pricing benchmark, such portion of interest for each workday = (loan principal + total interest on this portion accrued as of the previous natural day) x the benchmark date interest rate applicable for that day; for non-working days, the interest on this portion is the same as that on the latest workday prior to that day, but if the loan principal amount changes, the interest on this portion shall be adjusted accordingly by reference to the aforementioned formula. The spread-based portion is calculated on a simple interest basis. The workdays mentioned in this Article are the local business days of the loan currency pricing benchmark administrators.

For the average capital plus interest repayment method, the calculation formula for principal and interest repayable is as follows:

Total principal and interest per installment =	Loan principal × installment interest rate × (1 + installment interest rate) number of repayment periods
	(1 + installment interest rate) number of repayment periods - 1

1.6 In the event that the People’s Bank of China adjusts the loan interest rate determination method, it shall be handled in accordance with the relevant provisions of the People’s Bank of China, and the Lender shall not notify the Borrower separately.

1.7Where the loan interest rate is executed by reducing a certain number of basis points in accordance with the Loan Prime Rate (LPR) published by the National Interbank Funding Center at the time of signing this Contract, the Lender has the right to reassess the interest rate preference granted to the Borrower annually, and to cancel the interest rate preference granted to the Borrower in full or in part at its own discretion in accordance with the national policy, credit status of the Borrower and changes in the loan guarantee, and to notify the Borrower promptly.

1.8Unless otherwise specified, the loan interest rate herein shall be the annualized interest rate calculated by simple interest method.

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Article II Issuance and Payment of Loan

2.1The Borrower’s withdrawal of the loan is conditional upon the fulfillment of the following prerequisites, failing which the Lender shall not be obliged to issue any amount to the Borrower, unless the Lender agrees to issue the loan in advance:

(1)Except for the credit loans, the Borrower has provided corresponding guarantees as required by the Lender, where the relevant guarantee procedures have been completed and the guarantees have not been subject to any detrimental changes to the Lender;

(2)Upon each withdrawal, Borrower’s statements and warranties hereunder are still true, accurate and complete, and no breach of Contract has occurred hereunder or under any other Contract between Borrower and Lender;

(3) The documentation provided to support the purpose of the loan is consistent with the agreed purpose;

(4) Submission of other information required by the Lender.

2.2In the event that the Borrower utilizes the loans hereunder for investment in fixed assets, the Borrower shall, in addition to fulfilling the prerequisites set forth in Article 2.1, also fulfill the following prerequisite:

(1) The loan project has been approved, authorized or filed by the competent state authorities (if required);

(2)The capital or other matching funds for the loan project have been in place in full at the prescribed time and proportion;

(3) No cost overruns have been incurred or cost overruns have been addressed by self-financing;

(4)The project progress has been completed as planned and the actual progress of the project is in line with the amount invested.

2.3The Borrower shall withdraw the loan by submitting a Notification of Withdrawal to the Lender at least 5 banking days in advance. Once the withdrawal notice is submitted, it shall not be revoked without the written consent of the Lender. The Borrower shall affix its official seal or special seal for finance on the IOU in accordance with the reserved account seal of the lending account specified in the Notification of Withdrawal. The Borrower hereby confirms that if the reserved seal consists of an official seal and a special seal for finance, for which one or more of the seals are affixed on the IOU, the IOU is a valid IOU.

2.4Upon the Borrower’s fulfillment of the prerequisites for withdrawal or the Lender’s consent to issue the loan in advance, the Lender shall be deemed to have issued the loan to the Borrower in accordance with this Contract when the Lender transfers the loan to the designated Borrower’s account.

2.5According to the relevant regulatory provisions and the management requirements of the Lender, the loan shall be withdrawn and utilized by the Lender in the form of entrusted payment. The Lender shall, based on the Borrower’s withdrawal application and entrusted payment, issue the loan Funds to the payment recipients that conform to the purposes agreed upon herein. In this respect, the Borrower shall enter into a separate entrusted payment agreement with the Lender as an annex hereto and open or designate a special account with the Lender for handling the entrusted payment.

Article III Repayment

3.1 The Borrower shall repay the loan principal, interest and other payables in full and on time as agreed herein. On the repayment date and the banking day preceding each interest settlement date, the Borrower shall deposit the full amount of current interest, principal and other payables into the repayment account opened at the Lender, and the Lender shall have the right to take the initiative to make a transfer on such repayment date and the interest settlement date, or to request the Borrower to cooperate in the relevant transfer procedures. In case the amount in the repayment account is insufficient to pay all the amounts due and payable by the Borrower, the Lender has the right to determine the order of liquidation.

Where the repayment account is lost, frozen, suspended or canceled, or where the Borrower needs to change the repayment account, the Borrower is required to attend the Lender’s counter for the change of repayment account. Before the change procedure takes effect, if the original repayment account can no longer be fully debited, the Borrower is required to attend the Lender’s counter for repayment of the loan. In case the Borrower fails to apply for the change of repayment account in time or fails to make repayment at the Lender’s counter in time, resulting in failure to repay the principal and interest of the loan and other expenses due on time and in full, the Borrower shall be liable for breach of Contract.

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3.2Where the Borrower applies for early repayment of all or part of the loan, he/she shall submit a written application to the Lender 10 banking days in advance for the Lender’s consent.

3.3In case of early repayment with the consent of the Lender, the Borrower shall, on the early repayment date, simultaneously pay the principal of the Borrowing, interest and other sums due and payable pursuant to this Contract up to the early repayment date. The interest shall be calculated by the combination of simple and compound interest. In case the Borrower fails to pay off the said interest at the time of making the early repayment, the outstanding interest shall continue to be calculated in accordance with Article 1.5 of Part II on and after the date of early repayment until the interest is paid in full.

3.4The Lender shall have the right to recoup the loan in advance based on the Borrower’s withdrawal of funds.

3.5In case the actual loan period is shortened due to early repayment of the loan by the Borrower or early recouping of the loan by the Lender in accordance with this Contract, the corresponding interest rate shall not be adjusted and the original loan interest rate shall still be applied.

Article IV Undertakings

4.1Except for credit loans, the Borrower shall provide legal and effective guarantees recognized by the Lender for the performance of its obligations hereunder. The guarantee Contract shall be signed separately.

4.2In the event of damage, depreciation in value, dispute over property rights, seizure or attachment of the collateral hereunder, or breach of the agreement of the guarantee Contract by the guarantor, or adverse changes in the financial position of the guarantor of the guarantee, or any other change detrimental to the creditor’s rights of the lender, the Borrower shall promptly notify the lender, and shall provide other guarantees that are acceptable to the lender.

4.3The Lender has the right to reassess the value of the collateral and the guarantee capacity of the Guarantor periodically or irregularly, and should the assessment find that the value of the collateral has decreased or the guarantee capacity of the Guarantor has been reduced, the Borrower shall provide additional guarantees equivalent to the reduced value or reduced guarantee capacity, or it may separately provide other guarantees approved by the Lender.

4.4Upon the consent of the Lender, in case the loan hereunder is guaranteed by the pledge of accounts receivable, the Lender shall have the right to declare the loan to be immediately due and require the Borrower to forthwith repay part or all of the principal and interest of the loan or to provide additional legal, effective and sufficient guarantee approved by the Lender, if any of the following circumstances occurs during the Contract Term:

(1)The bad debt rate of accounts receivable from the Pledgor to the payer has increased for two consecutive months;

(2)The accounts receivable that the Pledgor has not recovered from the payer accounts receivable accounts for more than 5% of the balance of the payer’s accounts receivable;

(3)The trade disputes (including but not limited to disputes over quality, technology or services) or debt disputes between the Pledgor of accounts receivable and the payer or other third Parties, resulting in the accounts receivable may fail to be repaid on time when due.

Article V Account Management

5.1Where the loan hereunder is used for the Borrower’s working capital needs such as production and operation turnover, the Borrower shall designate a special fund withdrawal account with the Lender for the purpose of collecting the corresponding sales incomes or scheduled repayment funds. In case the corresponding sales incomes are settled on a non-cash basis, the Borrower shall ensure that the funds are promptly transferred to the fund withdrawal account upon receipt of payment.

5.2The Lender shall have the right to supervise the fund withdrawal account, including but not limited to, the knowledge and supervision of the income and expenditure of the funds in such account, and the Borrower shall cooperate with such supervision. If requested by the Lender, the Borrower shall sign a special account supervision agreement with the Lender.

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Article VI Representations and Warranties

The Borrower makes the following statements and warranties to the Lender, which are valid at all times during the Contract Term:

6.1The Borrower is qualified as a Borrower by law and has the qualifications and ability to enter into and perform this Contract.

6.2All necessary authorizations or approvals have been obtained for the signing of this Contract, and the signing and performance of this Contract shall not violate the provisions of the Company’s Articles of Association, the Shareholders’ Capital Contribution Agreement, the Joint Venture Agreement, the Partnership Agreement, and relevant laws and regulations, and is not conflict with the obligations under any other contracts to which it is liable.

6.3Other debts payable have been repaid on schedule and there is no malicious default in payment of principal and interest on bank loans.

6.4There is no major violation of rules and regulations in the course of production and operation within the last one year, and the incumbent senior management personnel do not have any major adverse records.

6.5All documents and information provided to the Lender are true, accurate, complete and valid, and there are no false records, material omissions or misleading statements.

6.6 Failure to conceal from the Lender any litigation, arbitration or claim involved.

6.7Where the Borrower utilizes the loan hereunder for investment in fixed assets, the relevant project and its loan matters are in compliance with the requirements of laws and regulations;

Article VII Borrower’s Commitment

7.1The loan shall be withdrawn and utilized in accordance with the term and purpose as agreed herein, and the loaned funds shall not flow into the securities market or futures market in any form, and shall not be used for real estate development, purchase of real estate and other purposes prohibited or restricted by relevant laws and regulations.

7.2 The principal, interest and other payables of the loan shall be paid off as stipulated herein.

7.3The Borrower shall submit to and actively cooperate with the Lender’s inspection and supervision on the usage of the loan funds including the purpose by means of account analysis, voucher inspection, on-site investigation, etc., and regularly summarize and report the usage of the loan funds as requested by the Lender.

7.4The Borrower shall accept the Lender’s credit inspection, provide timely, true, accurate and complete financial information and other information that reflects the Borrower’s solvency as requested by the Lender, including all opening banks, bank account numbers, deposit balances, etc., and actively assist and cooperate with the Lender in the investigation, understanding and supervision of its production and operation and financial situation.

7.5In the event that there are outstanding principal and interest on loans and other payables hereunder that are due (including those declared to be immediately due), no dividends or bonuses shall be distributed in any form whatsoever.

7.6In the case of merger, division, capital reduction, changes in equity, equity pledge, partnership admission, withdrawal of partnership, transfer of major assets and creditor’s rights, significant foreign investment, material increase in debt financing, and other actions that may adversely affect the rights and interests of the Lender, prior written consent of the Lender shall be obtained.

7.7 Any of the following circumstances shall be promptly notified to the Lender:

(1) Change of name, official seal, Articles of Association, domicile, legal representative or person in charge, mailing address and other matters;

(2) Closure of business, dissolution, liquidation, suspension of business for reorganization, revocation of business license, revocation or filing (being filed) for bankruptcy;

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(3) The involvement or possible involvement in major economic disputes, litigation, arbitration, or assets being seized, detained or compulsorily enforced, or subject to investigation or punitive measures taken by the judiciary, taxation, industry and commerce, and other competent authorities in accordance with the law;

(4) Shareholders, directors and incumbent senior management personnel or shareholders and contributors are suspected of major cases or economic disputes.

7.8Timely, comprehensive and accurate disclosure of related parties relationships and related transactions to Lenders.

7.9 The prompt signature for all types of notices mailed or otherwise delivered by the Lender.

7.10Own assets are not disposed of in a way that reduces its solvency; the guarantees to third parties are not detrimental to the rights and interests of the Lender.

7.11The Borrower’s debts hereunder shall be satisfied in priority to Borrower’s debts to its shareholders, legal representatives or principals, partners, major contributors or key management personnel and shall be at least on an equal footing with other creditors of the borrower for debts of the same type.

7.12In case the Borrower’s repayment funds (including but not limited to, the amount obtained by the Lender through withholding and disposal of the collateral, etc.) are insufficient to pay off all the debts of the Borrower to the Lender hereunder and under the other Contracts, the Lender shall have the right to determine the order of repayment.

7.13The Borrower shall strengthen environmental and social risk management and shall be submitted to supervision and inspection by the Lender in this regard. Upon request by the Lender, the Borrower shall submit environmental and social risk reports to the Lender.

Article VIII Lender’s Commitment

8.1 The Lender shall issue loans to the Borrower in accordance with this Contract.

8.2The Lender shall keep confidential the non-public data and information provided by the Borrower concerning its financial and production and operation, except as otherwise stipulated by laws and regulations and agreed herein.

8.3The Lender shall not charge the Borrower commitment fee, fund management fee, financial advisory fee, consulting fee, corporate account overdraft commitment fee and credit reference fee and other fees that the regulatory authorities explicitly require commercial banks not to charge for loans to small and micro-enterprises.

Article IX Breach

9.1 Any of the following circumstances shall constitute a breach of contract by the Borrower:

(1) The Borrower fails to repay the principal and interest of the loan and other payables hereunder as agreed, or fails to perform any other obligations hereunder, or breaches any statement, warranty or commitment hereunder;

(2) The Borrower fails to separately provide other guarantees approved by the Lender in case that the guarantee hereunder has been altered to the detriment of the Lender’s creditor’s rights or that the Guarantor has breached the guarantee contract;

(3) The Borrower’s failure to pay off any other debt upon its maturity (including declared early expiration) or its failure to perform or breach of its obligations under other agreements, which has affected or may affect the performance of its obligations hereunder:

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(4) The Borrower’s financial indicators, such as profitability, solvency, operating capacity and cash flow, have breached the agreed standards, or have deteriorated in a way that has or may affect the performance of its obligations hereunder;

(5)The Borrower’s production and operation, foreign investment, etc. suffer significant detrimental changes that have affected or may affect the performance of its obligations hereunder;

(6) The Borrower or its shareholders, legal representatives or principals, partners, individual major investors or key management personnel are engaged in or may be engaged in major economic disputes, litigation or arbitration, or assets are seized, detained or compulsorily enforced, or are subject to investigation or punitive measures taken by judicial or administrative authorities in accordance with the law, or are exposed by the media due to the violation of relevant state regulations or policies, which has affected or may affect the performance of its obligations hereunder;

(7)The Borrower’s change of equity or change of shareholding relationship, partnership or joint venture relationship, abnormal change of partners, individual major investors, key management personnel, disappearance or being investigated by judicial authorities in accordance with the law, or restriction of personal freedom, which has affected or may affect the performance of its obligations hereunder;

(8) The Borrower obtains funds or credit from the Lender by false contracts with related parties and transactions with no actual transaction background, or the Borrower intentionally evades the Lender’s creditor’s rights through related transactions;

(9) The Borrower has or may cease business, dissolve, liquidate, suspend for reorganization, be subject to revocation of its business license, be revoked, or file (be filed) for bankruptcy;

(10)The Borrower’s performance of its obligations hereunder has been or may be affected by liability accidents, major environmental and social risk events caused by the Borrower’s violation of laws and regulations, regulatory provisions or industry standards relating to food safety, production safety, environmental protection and other environmental and social risk management;

(11)The Borrower’s legal representatives or principals, partners, individual major investors or key management personnel have been involved in illegal activities such as underworld activities, drug abuse, gambling, smuggling, etc.;

(12) The Borrower is in arrears with taxes, fees, or regularly defaults on employee paychecks;

(13)The Borrower’s legal representative or principals, partners, individual major investors, or key management personnel default on personal loans or credit cards;

(14) Other circumstances that may adversely affect the fulfillment of the Lender’s creditor’s rights hereunder.

9.2In case the Borrower breaches the contract, the Lender is entitled to take one or more of the following measures:

(1) The Lender shall request the Borrower to remedy the breach by a deadline;

(2)The Lender shall cease to issue loans and other financing payments to the Borrower pursuant to this Contract and other contracts between the Lender and the Borrower, and partially or fully cancel the Borrower’s loans and other financing payments that have not yet withdrawn;

(3) The Lender shall declare that the outstanding loans and other financing amounts pursuant to this Contract and under other contracts between the Lender and the Borrower are due immediately, and shall forthwith collect the outstanding amounts;

(4)The Lender shall require the Borrower to reimburse its losses caused by the Borrower’s breach of contract, including but not limited to, attorney fees, auction fees, and other expenditures incurred by the Lender in the fulfillment of its creditor’s rights hereunder;

(5) Other measures prescribed by laws and regulations, agreed in this Contract or deemed necessary by the Lender.

9.3Where the Borrower fails to repay the loan upon its maturity (including declared immediate maturity), the Lender has the right to charge penalty interest from the overdue date based on the overdue penalty interest rate agreed herein. Compound interest shall be charged based on the overdue penalty interest rate for the interest (including penalty interest) that the Borrower fails to pay on time. The settlement rules for penalty interest/compound interest shall apply to the settlement rules for interest agreed herein.

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9.4Where the Borrower fails to use the loan for the purpose agreed herein, the Lender shall have the right to charge penalty interest on the misappropriated portion of the loan at the misappropriated loan penalty rate from the date of misappropriation of the loan, and compound interest at the misappropriated loan penalty rate on the interest (including penalty interest) that is not paid on time during the period in which the loan has been misappropriated. The settlement rules for penalty interest/compound interest shall apply to the settlement rules for interest agreed herein.

9.5In the event that the Borrower has concurrently incurred the circumstances listed in Articles 9.3 and 9.4 above, the penalty interest rate shall be determined by whichever is heavier and cannot be concurrently applied.

9.6Where the Borrower fails to repay the loan principal, interest (including penalty interest and compound interest) or other payables on schedule, the Lender has the right to collect the amount through media announcements.

9.7 Any change in the controlling or controlled relationship between the Borrower’s related parties and the Borrower, or any other circumstances other than (1) and (2) in Article 9.1 aforesaid with respect to the Borrower’s related parties, which have affected or may affect the performance of the Borrower’s obligations hereunder, the Lenders shall have the right to take the various measures agreed upon herein.

Article X Automatic Cancellation of the Lender’s Loan Commitment

10.1In the event of deterioration of the Borrower’s creditworthiness, the Lender may, without prior notice, automatically cancel its commitment for all the Borrower’s loans that have not yet withdrawn.

10.2Any of the circumstances set forth in Articles 9.1 and 9.7 of Part II hereof shall constitute a deterioration in the creditworthiness of the Borrower.

Article XI Withholding

11.1In the event that the Borrower fails to repay the debts due (including immediately declared due) hereunder as agreed, the Borrower agrees that the Lender shall debit the corresponding repayment amount from all local and foreign currency accounts opened by the Borrower in ICBC until all debts of the Borrower hereunder have been fully paid off.

11.2Any amount withheld that is inconsistent with the currency hereof shall be converted at the exchange rate applicable to the Lender on the date of withholding. Interest and other expenses incurred between the date of withholding and the date of settlement (the date on which the Lender converts the withheld amount into the contract currency in accordance with the national foreign exchange management policy and actually pays off the debts hereunder), as well as the difference due to the fluctuation of exchange rate during the period, shall be borne by the Borrower.

Article XII Transfer of Rights and Obligations

12.1The Lender has the right to transfer part or all of its rights hereunder to a third party, and the Lender’s assignment is not subject to the Borrower’s consent. The Borrower may not transfer any of its rights and obligations hereunder without the written consent of the Lender.

12.2The Lender or Ningguo Subranch of Industrial and Commercial Bank of China Limited (“ICBC”) may authorize or entrust other sub-branches of ICBC to perform the rights and obligations hereunder or transfer the creditor’s rights of the Loan hereunder to other sub-branches of ICBC in the assumption and management of the loans according to the needs of its operation and management, which the Borrower acknowledges, and the Lender shall not be required to obtain the Borrower’s consent to the aforesaid acts of the Lender. The other branches of ICBC which assume the rights and obligations of the Lender shall have the right to exercise all the rights hereunder, and shall have the right to file lawsuits, submit to arbitration or apply for compulsory execution in the name of the institution in respect of disputes hereunder.

Article XIII Entry into force, Alteration and Dissolution

13.1This Contract shall take effect from the date when the official seal or special seal thereof is affixed by both the Borrower and the Lender, and shall terminate on the date when the Borrower’s obligations hereunder have been fully performed.

13.2Any changes to this Contract shall be made by consensus of the parties and in writing. The changed terms or agreements constitute a part of this Contract and have the same legal effect as this Contract. The rest of this Contract is still valid except for the changed portion, and the original terms and conditions shall remain in force before the changed part comes into effect.

13.3The modification and termination of this Contract shall not affect the right of the contracting parties to claim compensation for damages. The dissolution of this Contract shall not affect the validity of relevant dispute resolution clauses.

Article XIV Application of Law and Dispute Resolution

The conclusion, validity, interpretation, fulfillment and dispute resolution of this Contract shall be under the laws of the People’s Republic of China. Any disputes and controversies arising from or in connection herewith shall be first resolved by consultation between the Borrower and the Lender; in the event that no negotiation is possible or no agreement can be reached through consultation, it shall be resolved as stipulated herein.

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Article XV Confirmation of Service Address of Litigation/Arbitration Documents

15.1 Party B confirms that the address recorded on the first page of the main text hereof shall be the effective service address for Party B to receive all kinds of notices, letters, legal documents from the people’s court or arbitration institution (including but not limited to summonses, notices of court hearings, judgments, rulings, conciliation statement, and notices of deadlines for fulfillment, etc.).

15.2The above service agreement is applicable to all stages of arbitration and litigation proceedings at first instance, second instance, retrial and execution. For the above-mentioned service address, the court and arbitration institution may serve the legal documents directly by mail. Even if the party fails to receive the legal document served by the court or arbitration institution by mail, it shall be deemed to have been served due to its agreement therein.

15.3Party B agrees that the court or arbitration institution may use the fax or e-mail recorded on the first page of the main text of this Contract for the service of legal documents, with the exception of judgments, rulings, conciliation statement and awards.

15.4Party B guarantees that the above-mentioned service address and other information is accurate and effective, and if the above service address and other information changes, it should promptly notify Party A in writing. Otherwise, the service in accordance with the address set out herein shall still be valid, and Party B shall bear the legal consequences arising therefrom on its own.

15.5In case the legal documents are not actually received by Party B due to inaccurate information such as Party B’s service address, failure to promptly notify Party A in writing of address change, unavailability of signature, or refusal of signature by Party B or the designated receiver, the return date of the documents shall be deemed as the date of service if the documents are sent by post (if the return date of the mails varies from address to address, whichever is later shall be considered as the date of delivery); in the case of direct service, the date recorded by the server on the return of service on the spot shall be deemed as the date of service; in the case of fulfillment of the obligation to notify the change of service address, the changed service address shall be the valid service address.

15.6Once the dispute has entered into litigation or arbitration, should Party B directly submit the confirmation of service address to the court or arbitration institution, and the confirmation is inconsistent with the service address set forth herein, the service address submitted to the court or arbitration institution shall prevail, but the service made by Party A in accordance with the address set forth herein before that shall still be valid.

Article XVI Entirety

Part I, Basic Agreements, and Part II, Specific Terms, hereof together comprise a complete Loan Contract for Small Business, and the same words in both parts shall have the same meaning. The Borrower’s loan is subject to the joint constraints of the above two parts.

Article XVII Notice

17.1 All notifications to the Borrower and the Lender hereunder shall be in writing. Unless otherwise agreed, both Parties shall designate the domicile set forth herein as the address for correspondence and contact. Either party shall promptly notify the other party in writing of any change in its mailing address or other contact information.

17. 2 Any party to this Contract that refuses to sign or is otherwise undeliverable may be served by the notifying party in the form of a notarization or public notice.

Article XVIII Special Agreement on Value-added Tax

18.1 The interest and expenses paid by the Borrower to the Lender hereunder are all tax-inclusive prices.

18.2Where the Borrower requests the Lender to issue VAT invoices, the Borrower shall first register the information with the Lender, which include the Borrower’s full name, taxpayer identification number or social credit code, address, telephone number, bank of deposit and account number. The Borrower shall ensure that the relevant information provided to the Lender is true, accurate and complete, and provide the relevant supporting materials as required by the Lender, which shall be released by the Lender through branch notices or website announcements, etc.

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18.3 Where the Borrower collects the VAT invoice on its own, it shall provide the Lender with a stamped authorization letter, designate the collector and specify the collector’s identity card number and other information, and the designated collector shall collect the VAT invoice with the original identity card; in case the designated collector changes, the Borrower shall reissue a stamped authorization letter to the Lender. Where the Borrower prefers to collect the VAT invoice by mail, the Borrower shall also provide accurate and deliverable postal information; in case of any change in the postal information, the Borrower shall promptly notify the Lender in writing.

18.4Any force majeure such as natural disasters, governmental actions, abnormal social events or reasons of the tax authorities that prevent the Lender from prompt issuance of VAT invoices, the Lender has the right to delay the issuance of the invoices and shall not be liable for any responsibility.

18.5In case the invoice is lost, damaged or overdue after the VAT invoice has been collected by the Borrower or delivered by the Lender to a third party by mail, which is not due to the Lender, and as a result of which the Borrower fails to receive the corresponding coupon of the VAT invoice or is unable to deduct it after the expiry of the time limit, the Lender shall not be liable to compensate for any relevant economic loss of the Borrower.

18.6Where the issuance of Red-letter Special VAT Invoice is required due to the occurrence of sales return, suspension of taxable services or incorrect invoicing, or the fact that both the credit copy and the invoice copy cannot be certified, and in case that it is necessary for the Borrower to submit the Information Sheet on Issuance of Red-letter Special VAT Invoice to the tax authorities in accordance with the provisions of the relevant laws, regulations and policy documents, the Borrower shall submit the Information Sheet on Issuance of Red-word Special VAT Invoice to the tax authorities, and upon the examination and notification of the Lenders by the tax authorities, the Lenders shall issue the Red-letter Special VAT Invoice.

18.7During the performance of the contract, in case of national tax rate adjustment, the Lender has the right to adjust the price agreed herein according to the change of national tax rate.

Article XIX Miscellaneous

19.1The failure of the Lender to exercise or partially exercise or delay in exercising any right hereunder shall not constitute a waiver or change of that right or other right, nor shall it affect its further exercise of that right or other right.

19.2The invalidity or unenforceability of any provision hereof shall not affect the validity and enforceability of the other provisions, nor the validity of the contract as a whole.

19.3The Lender has the right to provide the information with respect to this Contract and other relevant information of the Borrower to the Credit Reference Center of the Peoples’ Bank of China and other credit information databases set up in accordance with laws and regulations or the requirements of the financial supervisory institutions for inquiry and use by appropriately qualified institutions or individuals. The Lender also has the right to inquire the relevant information from the Borrower through the Credit Reference Center of the Peoples’ Bank of China and other credit information databases established in accordance with the law for the purpose of the conclusion and performance of this Contract.

19.4The terms “related parties”, “related party relationships”, “related party transactions”, “individual major investors”, “key management personnel” and other terms used herein shall have the same meanings as those used in the Accounting Standard for Business Enterprises No. 36 - Related Party Disclosure (C.K. [2006] No. 3) issued by the Ministry of Finance and the subsequent revisions to the standard.

19.5The environmental and social risks referred to herein refer to the hazards and related risks that may be brought to the environment and society by the Borrower and its significant related parties in the course of its construction, production and operating activities, including environmental and social issues related to energy consumption, pollution, land, health, safety, migration and resettlement, ecological preservation, climate change and so on.

19.6The documents and vouchers made and retained by the Lender based on its business rules in respect of the loan hereunder shall constitute valid evidence of the debtor-creditor relationship between the Borrower and the Lender and shall be binding upon the Borrower.

19.7In this Contract, (1) any reference hereto shall include modifications or supplements hereof; and (2) the headings of the Articles are for reference purposes only and do not constitute any interpretation hereof, nor do they constitute any restriction on the contents and scope under the headings.

Both Parties confirm that all the terms and conditions hereof have been fully negotiated between the Lender and the Borrower. The Lender has drawn the Borrower’s special attention to all the terms concerning the rights and obligations of both Parties, made a full and accurate understanding of them, and provided explanations and clarifications of the relevant terms and conditions at the Borrower’s request. The Borrower has carefully read and fully understood all the terms and conditions of the contract (including Part I Basic Agreements and Part II Specific Terms), and both the Borrower and the Lender have a complete and accurate understanding of all the terms and conditions of the contract, and have no objection to the contents of the contract.

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(The page is intentionally left blank for signature and seal.)

Lender (Seal): Industrial and Commercial Bank of China Limited Shenzhen Longgang Sub-branch

Special Seal for Business Contract of Industrial and Commercial Bank of China Limited Shenzhen Longgang Sub-branch 855E09BAF036 (Seal)

Date of Contract: December 7, 2022

Borrower (Seal): Shenzhen United Time Technology Co., Ltd.

Shenzhen United Time Technology Co., Ltd. (Seal)

Date of Contract: December 7, 2022

As the legal representative/authorized representative of the Borrower, I hereby confirm that the loan made by the Borrower from the Lender in accordance with the agreement herein and the seal hereon is true and valid, and that the procedures required for borrowing the money have been fulfilled.

Legal Representative/Authorized Representative of the Borrower (Signature): Bao Minfei

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EX-4.63

Exhibit 4.63

No.: Yin [Puhui] Zi/No. [   ]

RMB Working Capital Loan Contract

(Online version)
(Version 1.0, 2021)

Customer Instructions

In order to protect the rights and interests of your company, please read the terms of this Contract carefully before signing, and pay particular attention to the following matters:

1. Please ensure that the application materials submitted by your company are true, legal and valid.

2. You will voluntarily sign and perform this Contract in accordance with the principles of honesty and credibility.

3. You shall sign this Contract by USBkey electronic signature, which has the same legal effect as the signature and official seal of the legal representative of your Company. The online signing of the Contract must be operated by the legal representative of your Company or authorized online banking operator in person. It shall not be performed by others.

4. As a valid certificate of your identity, you shall hereby irrevocably confirm that any signing of this Contract by USBkey electronic signature will be deemed to be your Company’s signature. And you shall promptly perform all obligations in accordance with this Contract.

5. Before signing this Contract, you should carefully read and fully understand the terms of the Contract, and be clear about the corresponding legal consequences. After signing this Contract, it will be deemed as agreeing and accepting all the terms of this Contract.

RMB Working Capital Loan Contract

Party A: Shenzhen United Time Technology Co., Ltd.

Legal Representative: Bao Yufei

Address: F2.64D-403, Tianzhan Building, Tian’an Chegongmiao Industrial Zone, Xiangmi Lake, Futian District, Shenzhen

Opening bank and account: Shenzhen Futian Sub-branch of China CITIC Bank

Party B: China CITIC Bank Co., Ltd. [Shenzhen Branch]

Person in charge: /

Address: Floor 1 and Floor 5-10, North Block, Zhuoyue Times Square (Phase II), No. 8 Zhongxin Third Road, Futian District, Shenzhen

Signing place: Guangzhou, Guangdong Province

Signing date: January 10, 2023

Whereas: Party A hereby applies to Party B for working capital loan due to financing needs. In order to clarify the rights and obligations of both parties, Party A and Party B reach the following Contract through equal negotiation and in accordance with Civil Code of the People’s Republic of China, Electronic Signature Law of the People’s Republic of China as well as other relevant laws, regulations and rules:

Article 1 Loan Type

Party B agrees to provide working capital loan to Party A as agreed in this Contract.

Article 2 Loan Amount (refers to principal, the same below) and Loan Term

1. Party B agrees to provide working capital loan to Party A in accordance with the following [(1)] mode:

(1) Non-“Borrowing and Repayment at Any Time” mode: the loan amount under this mode is (in capitals): RMB [Three million Yuan Only], (in lowercase): Y [3000,000.00]. And the loan period is from [January 10, 2023] to [January 10, 2024].

(2) “Borrowing and Repayment at Any Time” mode: The loan amount under this mode is (in capitals): RMB “/”, (in lowercase): Y “/“. And the loan term is from [/] to [/].

The loan amount under the “Borrowing and Repayment at Any Time” mode is a revolving credit. Party A can apply for withdrawal from Party B at any time within the above loan amount and loan term, and repay the loan at any time within the term of IOU corresponding to a single withdrawal. The loan amount released after loan repayment can continue to be used within the loan term.

2. Party A and Party B hereby specify that the terms and conditions expressly applicable to one mode hereunder shall apply only to that mode, and the terms and conditions not expressly applicable to one mode hereunder shall apply to both modes (non-“Borrowing and Repayment at Any Time” mode and “Borrowing and Repayment at Any Time” mode).

3. The actual loan term, actual withdrawal date, loan amount and the initial loan interest rate shall be subject to the term, date, amount and interest rate recorded in IOU hereunder, which is an integral part of this Contract and shall have the same legal effect as this Contract.

4. The following terms are [not applicable] in this Contract:

This Contract, as a specific business contract under the Comprehensive Credit Granting Contract (Contract No.: [/]), is an inseparable part of the Comprehensive Credit Granting Contract. The loan under this contract occupies the comprehensive credit line under the Comprehensive Credit Granting Contract. The definitions and other relevant provisions in the Comprehensive Credit Granting Contract shall apply to this Contract; If the definition and other relevant provisions in the Comprehensive Credit Granting Contract are inconsistent with this Contract, this Contract shall prevail.

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Article 3 Purpose of Loan

1. The loan under this Contract is used for:

[Production and operation]

If Party A selects “Borrowing and Repayment at Any Time” mode, the loan under this Contract can only be used to meet the working capital demand of Party A in its daily production and operation.

2. Party A shall not change the specific purpose of the loan without the written consent of Party B. Party A shall not use the above loans for investment in fixed assets, real estate, equity, futures, securities, trusts, funds, guarantees, options, small loans, etc., or for private lending. The loan shall not be used in fields where bank loans are prohibited by regulators, in fields and for purposes prohibited by national laws and policies such as production (operation) and illegal fund-raising. Party A shall not arbitrarily misappropriate the loan funds, otherwise Party A shall bear any losses caused to Party B.

3. Party B shall not be liable for any consequences caused by Party A changing the purpose of the Loan without Party B’s written consent or violating the General Provisions of Loans or other laws and regulations.

Article 4 Loan Interest Rate and Interest Settlement

1. Loan interest rate

(1) Under the non-“Borrowing and Repayment at Any Time” mode, the loan interest rate under this Contract is an annual interest rate. When the interval between the actual single withdrawal date and the signing date of this Contract is less than six months (inclusive), the loan interest rate shall be implemented according to the following [①] mode:

① Loan interest rate = base interest rate on the signing date of this Contract [+] [70] basis points (1 basis point = 0.01%);

② Loan interest rate = base interest rate on the actual withdrawal date of the loan [+] [/] basis points (1 basis point= 0.01%).

(2) Under the “Borrowing and Repayment at Any Time” mode, when the interval between the actual single withdrawal date and the signing date of this Contract is less than six months (inclusive), the loan interest rate = the loan prime rate on the signing date of this Contract [/] (for terms over 1 year/5 years) + [/] basis points (1 basis point = 0.01%), that is, the loan interest rate of this Contract is [/]%.

(3) If the interval between the actual single withdrawal date and the signing date of this Contract exceeds six months, Party B shall have the right to adjust the loan interest rate according to the relevant interest rate policy of Party B at that time. The specific adjustment method of loan interest rate shall be re-defined in writing through negotiation between both parties. And the initial loan interest rate of this loan shall be subject to the records of IOU.

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2. Adjustment method of interest rate

(1) Under the non-“Borrowing and Repayment at Any Time” mode, the adjustment method of interest rate of this loan is determined by the following method [①].

① For fixed interest rate, the interest rate remains unchanged during the loan term.

② The floating interest rate shall be adjusted in accordance with the following method [/]. The adjusted loan interest rate shall be determined after the fluctuation of the base interest rate released on rate adjustment day in accordance with the interest adjustment mode agreed in Article 4, paragraph 1 of this Contract. If the interest rate is adjusted on the release day of the base interest rate, the last day of the adjustment month shall be the interest rate adjustment day.

A. The interest rate shall be adjusted every (in words) [/] (□month/□quarter/□half year/□year) from the actual withdrawal date. The interest adjustment date is the corresponding day of the actual withdrawal date in the adjustment month. If there is no corresponding day of the actual withdrawal date in the adjustment month, the last day of the adjustment month is the interest adjustment date.

B. From the actual withdrawal date, the first interest rate adjustment day is determined as [/]. And the interest rate is adjusted every (in words) [/] (□month/□quarter/□half year/□year) after the first interest adjustment day. The interest adjustment date is the corresponding day of the first interest adjustment date in the adjustment month. If there is no corresponding day of the first interest adjustment date in the adjustment month, the last day of the adjustment month is the interest adjustment date.

C. Adjustment on a fixed date, that is, the interest adjustment date is set as [ ] of each year during the loan term (such as July 1).

(2) Under the “Borrowing and Repayment at Any Time” mode, the loan interest rate under this Contract is a fixed interest rate, which shall remain unchanged during the loan term.

(3) Under the non-“Borrowing and Repayment at Any Time” mode, when the interest rate adjustment adopts the floating interest rate, the base interest rate applicable to the loan on the Contract signing date, the actual withdrawal date and the interest adjustment date shall be determined by the following [/] method:

① The latest loan prime rate “/” (for 1 year/5 years) issued by the National Interbank Funding Center at the current time.

② Shanghai interbank offered rate [/] (for overnight/1 week/2 weeks/1 month/2 months/3 months/6 months/9 months/1 year) issued by the National Interbank Funding Center on the previous working day.

③ Other ways of negotiating by both parties: [/]

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(4) Under the non-“Borrowing and Repayment at Any Time” mode, when the interest rate adjustment adopts the fixed interest rate, the base interest rate applicable to the loan on the Contract signing date and the actual withdrawal date is the latest loan prime rate for [1 year] (over 1 year/5 years) issued by the National Interbank Funding Center at the current time.

(5) In case the state cancels the base interest rate, the market no longer announces the base interest rate or the current loan interest rate cannot meet the cost of raising funds for Party B, Party B shall have the right to re-determine the loan interest rate in accordance with the national interest rate policy of the same period on the principle of fairness and good faith, and with reference to industry practices, interest rates and other factors. After that, Party B shall notify Party A in time. If Party A has any objection, it shall negotiate with Party B. If no agreement can be reached through negotiation within five working days from the date of Party B’s notification, Party B shall have the right to declare the loan hereunder to expire in advance. And Party A shall immediately pay off the remaining principal and interest of the loan.

(6) The “adjustment method of interest rate” agreed in this article is also applicable to penalty interest and compound interest.

3. Interest settlement

(1) Interest settlement of loans under non-“Borrowing and Repayment at Any Time” mode

①   This loan bears interest from the actual withdrawal date, and the calculation formula of interest payable by Party A under this Contract is: interest payable by Party A = actual loan balance X actual days during the interest-bearing period X annual interest rate/360 days.

If the actual loan balance changes during the interest-bearing period, it shall be calculated in sections according to the actual number of days.

②  For loans of non-one-time repayment of principal and interest, the first interest settlement date is [/]. And the interest settlement method is the following [/]:

A. For interest to be settled on a monthly basis, the interest settlement date shall be the 20th day of each month (if the loan interest rate is not uniform during the interest period, the interest shall be calculated by sections according to the actual number of days);

B. For interest to be settled on a quarterly basis, the interest settlement date shall be the 20th day of the end of each quarter (if the loan interest rate is not uniform during the interest period, the interest will be calculated in sections according to the actual number of days);

C. Other time agreed by both parties: [/].

(2) Loan interest settlement under the “Borrowing and Repayment at Any Time” mode

①  During the loan term, the interest settlement date and interest payable for different loans of Party A shall be determined according to the self-service repayment date of Party A.

②  When Party A repays the loan principal, the interest, which is calculated on a daily basis, shall be paid with the principal. And the repayment date shall be the interest settlement date of the loan. At this time, the interest payable by Party A = the loan amount X the actual number of days during the interest-bearing period X the annual interest rate/360 days.

(3) Party A shall reserve the corresponding amount in the account opened by Party B (account number: [8110301012800656729]) before the close of Party B’s business on each interest settlement date. And Party A hereby irrevocably authorizes Party B to deduct the payables directly from the account, and has the obligation to keep the funds in the account sufficient to pay the current payables before Party B finally deducts it; If Party A chooses to pay interest to Party B by other means, it shall ensure that the interest is received on time. If the interest settlement date is not a bank working day, the interest remittance shall be made in advance to the previous bank working day. And Party A is obligated to maintain sufficient funds in the account to repay the current payable amount before the final deduction. If Party B fails to receive the corresponding interest in full, it shall be deemed that Party A has not paid the interest on time.

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4. When the loan expires, the interest payable shall be paid with the principal. If the maturity date of the loan is a legal holiday or public holiday, Party A shall have the right to repay the loan on the last bank working day before the legal holiday or public holiday. Interest shall be calculated at the contract interest rate. But the interest corresponding to interval between the due date and the repayment date shall be deducted; If Party A chooses to repay the loan on the first bank working day after the legal holidays or public holidays, the interest corresponding to the interval between the maturity date and the repayment date shall be charged according to the contract interest rate. If Party A fails to repay the loan on the first bank working day after the legal holidays or public holidays, the interest shall be charged according to the overdue loan from that date.

5. If interest is paid by a third party hereunder, the third party shall voluntarily bear part or all of the loan interest under this Contract. And the third party who promises to pay interest shall sign a commitment agreement on relevant interest payment with Party B. Party A and Party B agree that the third party shall bear [/]% of the loan interest under this contract and Party A shall bear [/]%. If Party B fails to fully deduct the loan interest (including the interest payable by the third party), it shall be deemed that Party A fails to pay the interest on time, and Party A shall bear the responsibility of paying off all the loan interest (including penalty interest and compound interest).

Article 5 Loan Release and Payment

1. Prerequisites for initial withdrawal

Party A shall fully meet the following conditions when withdrawing money for the first time:

【/】

2. Prerequisites for each withdrawal

For each withdrawal under this Contract (including the first withdrawal), Party A shall also meet the following conditions:

(1) Party A has not violated the provisions or agreements of this Contract as well as guarantee documents and other relevant documents.

(2) The guarantee documents remain valid. And there is no or will not be any adverse change in the guarantee that Party B believes may be detrimental to its creditor’s rights.

(3) The mortgaged asset or pledge under the guarantee document has not been sealed up. And the creditor’s rights have not been determined for the maximum guarantee.

(4) There is no adverse change in Party A’s financial situation that may endanger, delay or prevent Party A from performing its obligations and responsibilities under this Contract and guarantee documents.

(5) Party A has signed or provided Party B with the agreed or reasonably requested documents.

(6) Party A has opened relevant accounts as agreed in this Contract or as required by Party B.

(7) Under the “Borrowing and Repayment at Any Time” mode, Party A meets the access conditions set by Party B for credit products of small and micro enterprises and the relevant institutional requirements on the business function of “Borrowing and Repayment at Any Time” for small and micro enterprises. Party A has no misappropriation of Party B’s loans, no record of unpaid non-performing loans, unpaid advances or unpaid interest in the credit information system of the People’s Bank of China. Party A’s actual controller or its guarantor currently has no loans overdue recorded in the Credit Reference Center of the Peoples’ Bank of China. And Party A is not a borrower of a restructured loan business.

(8) There are no legal or regulatory requirements that prohibit or limit the loan release under this Contract.

(9) 【/】

(10) Other conditions required by Party B.

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3. Withdrawal plan

(1) Under the non-“Borrowing and Repayment at Any Time” mode, Party A shall make withdrawals according to the plan in item [②] below.

① Withdrawal schedule

Planned withdrawal date	Withdrawal amount
[  ]Day [  ]Month [  ] Year	RMB￥【/】
[  ]Day [  ]Month [  ] Year	RMB￥【/】
[  ]Day [  ]Month [  ] Year	RMB￥【/】
[  ]Day [  ]Month [  ] Year	RMB￥【/】
[  ]Day [  ]Month [  ] Year	RMB￥【/】

The planned withdrawal date shall be a bank working day. If the planned withdrawal date is not a bank working day, it will be adjusted to the previous bank working day.

②  [Party A shall make withdrawal on demand through Party B’s online banking and other electronic channels]

(2) Under the “Borrowing and Repayment at Any Time” mode, Party A can make self-service withdrawals at any time within the loan limit and loan term through Party B’s online banking and other electronic channels according to its own fund utilization plan.

(3) Party B shall have the right to review the loan amount every (in words) [/] months (no more than 12 months) from the signing date of the Contract, so as to decide whether to continue to provide or adjust the unused loan amount to Party A.

4. Party A agrees that Party B shall have the right to change the above withdrawal plan if Party A or the guarantor fails to fulfill all legal obligations or obligations agreed in this Contract, including but not limited to Party A’s failure to provide complete loan materials as required by Party B, or the guarantor fails to complete the guarantee registration formalities as scheduled. If the loan term changes due to the change of withdrawal plan, it shall be handled according to Article 2, Paragraph 3 of this Contract.

5. Under the non-“Borrowing and Repayment at Any Time” mode, Party A shall make withdrawals according to the withdrawal plan agreed in this Contract; Party A shall not change the withdrawal plan without the written consent of Party B. In case of any change in the planned withdrawal date and/or withdrawal amount, Party A shall submit a written application to Party B [/] banking working days before the planned withdrawal date agreed in this Contract. With the consent of Party B, Party A can withdraw according to the updated date and/or amount. If Party A fails to withdraw according to the updated date and/or amount, Party B shall have the right to cancel the loan and no longer allow Party A to make withdrawals.

6. If the actual loan principal released by Party B is changed due to the circumstances set forth in paragraph 5 of Article 5 hereof, the loan principal under this Contract shall be calculated on the basis of actual IOU under this Contract.

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7. Loan Release and Payment

(1) Withdrawal application

①  Under the non-“Borrowing and Repayment at Any Time” mode, Party A shall issue a withdrawal application through electronic channels such as Party B’s online banking or in written application at least [/] banking working days prior to each planned withdrawal date, and submit all withdrawal documents according to the Contract and Party B’s requirements. The withdrawal application issued by Party A is irrevocable; Upon approval by Party B, Party A shall apply for withdrawal according to the above withdrawal application.

②  Under the “Borrowing and Repayment at Any Time” mode, Party A can make self-service withdrawal at any time within the loan limit and loan term through electronic channels such as Party B’s online banking according to its own fund utilization plan without sending a written withdrawal application to Party B.

③ Party B shall transfer the loan funds to the settlement account opened by Party A (account number: [8110301012800656729]), or make the entrusted payment to Party A’s counterparty as agreed. Once the loan is released to the above settlement account, it shall be deemed that Party B has fulfilled its loan obligation. Party A shall bear the risks, responsibilities and losses arising from the freezing and deduction of the loan by the competent authority after the loan is released to the above settlement account. And Party A shall compensate Party B for all losses incurred therefrom.

(2) Loan payment method

There are two ways of loan payment: independent payment and entrusted payment. In case of any of the following circumstances, entrusted payment shall be adopted:

① A single loan fund exceeding [10,000,000.00 yuan] shall be made with entrusted payment by Lender;

② 【/】

③ 【/】

④ 【/】

⑤ 【/】

If the entrusted payment is adopted, Party B shall, prior to the release of loan funds, have the right to check whether the information such as payee and payment amount in the payment application submitted by Party A is consistent with the corresponding commercial contract and other certification materials. After examination and approval, Party B shall transfer the loan funds through the settlement account opened by Party A (account number: [/]) to Party A’s counterparty account specified in the payment authorization letter (see Annex I for the format) submitted by Party A.

Party B’s formal review of the above-mentioned commercial contract and other documents does not mean that Party B confirms the authenticity and legal compliance of the relevant transactions, nor does it mean that Party B intervenes in disputes between Party A and its counterparty or third parties, or requires Party A to bear responsibilities and obligations.

If the loan is not paid to the bank account of the designated counterparty in time and successfully due to the refund of the counterparty’s opening bank of Party A or the wrong information provided by Party A, Party B shall not bear any responsibility. And the risks, responsibilities and losses caused to Party A, Party B and/or the counterparty designated by Party A shall be borne by Party A. For the funds returned by the bank of Party A’s counterparty, Party A shall not use it without the approval of Party B.

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(3) Payment management

①  After the loan is released, Party B shall have the right to review and check whether the use of loan funds by Party A conforms to the provisions of this Contract and relevant commercial contracts as well as other documents on a regular or irregular basis. Party A shall have the obligation to fully cooperate with Party B and provide the use records and materials of loan funds in time according to Party B’s requirements, including but not limited to commercial contracts related to the payment of loan funds and other transaction vouchers and materials proving the use of funds. If Party B finds that the purpose of the loan funds is inconsistent with the relevant provisions upon inspection, it shall have the right to request Party A to make corrections within a time limit. If Party A refuses to make corrections, Party B shall have the right to deal with the situation according to Article 13 hereof. If the “Borrowing and Repayment at Any Time” mode is adopted, Party A shall also provide Party B with loan purpose certification materials such as invoices, transaction contracts, transaction flow or accounting vouchers within 7 days after each loan is released; If the non-“Borrowing and Repayment at Any Time” mode is adopted, Party A shall provide the above-mentioned loan purpose certification materials at any time according to Party B’s requirements.

②  Under non-“Borrowing and Repayment at Any Time” mode, where payment is made by Party A, Party A shall provide Party B with business contracts and other transaction materials related to the payment of loan funds for proving the use of funds as requested by Party B, and report the payment of loan funds in aggregate. Party B has the right to verify whether the loan payment is in conformity with the agreed use and the project progress by means of account analysis, voucher inspection and on-site investigation.

③  During the process of loan issuance and payment hereunder, Party B has the right to negotiate with Party A for supplementing or changing the terms of loan issuance and payment, or to stop the issuance and payment of loan funds on its own, as the case may be, if Party A has any of the following circumstances:

A. Declining credit standing and weak profitability of the main business;

B. Failure to use loan funds as contractually stipulated;

C. Violation of the contractual agreement to circumvent Party B’s fiduciary payment by breaking up the whole into parts.

8. Other Agreements

【/】

Article 6 Repayment

1. Under the non-“Borrowing and Repayment at Any Time” model, the loan hereunder shall be repaid in the following [(1)] method:

(1) Regular interest payments with principal repayment at maturity;

(2) Repayment of principal and interest in one lump sum

(3) Other ways：【/】

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2. Under the non-“Borrowing and Repayment at Any Time” model, Party A shall repay the principal according to the following【/】plan:

(1) Repayment Schedule:

Serial No.	Repayment Date	Repayment Amount
【/】	[  ]Day [  ]Month [  ] Year	RMB￥ [/]
【/】	[  ]Day [  ]Month [  ] Year	RMB￥ [/]
【/】	[  ]Day [  ]Month [  ] Year	RMB￥ [/]
【/】	[  ]Day [  ]Month [  ] Year	RMB￥ [/]
【/】	[  ]Day [  ]Month [  ] Year	RMB￥ [/]
【/】	[  ]Day [  ]Month [  ] Year	RMB￥ [/]
【/】	[  ]Day [  ]Month [  ] Year	RMB￥ [/]
【/】	[  ]Day [  ]Month [  ] Year	RMB￥ [/]
【/】	[  ]Day [  ]Month [  ] Year	RMB￥ [/]
【/】	[  ]Day [  ]Month [  ] Year	RMB￥ [/]

(2) 【/】

3. Under the “Borrowing and Repayment at Any Time” model, Party A is free to repay all or part of the loan principal hereunder at any time through electronic channels such as Party B’s online banking based on its own business needs. Both Party A and Party B hereby confirm that under this mode, Party A can repay all or part of the loan principal by itself, without any limitation on the number of times. Where Party A repays the principal in full, the interest shall be paid off with the principal. Where Party A partially repays the principal, it can select the corresponding IOU to repay each loan on its own, and the interest on the loan shall be calculated separately. In case the amount of partial repayment can cover the principal and interest of a single IOU, the loan interest shall be paid off with the principal; otherwise, the loan shall continue to accrue interest according to the remaining principal after repayment.

4. Party A shall remit the amount of not less than the principal and interest repayable to the account opened by Party A in Party B (account number: [811030101012800656729]) before the close of business of Party B on the repayment date. Such an account shall serve as the repayment account of Party A. Party A hereby authorizes Party B to automatically deduct the principal and interest of the Loan from such an account.

5. Unless otherwise agreed herein, if the amount repaid or paid by Party A is insufficient to repay or pay the total amount to be repaid or paid for that period, its repayments shall be processed in the following order:

(1) Payment of all fees, liquidated damages and compensation, etc. payable under this contract and related laws and regulations;

(2) Payment of penalty interest and compound interest payable;

(3) Payment of interest payable (including unpaid interest by third parties who have committed to pay interest);

(4) Payment of principal payable.

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Where the amount repaid or paid by Party A is insufficient to repay or pay all the amounts in the same order, it shall be paid off in the order that such amounts occurred.

6. Voluntary early repayment under the non-“Borrowing and Repayment at Any Time” model

(1) Voluntary early repayment under the non-“Borrowing and Repayment at Any Time” model is carried out in the following [②] way:

①  Party A can repay all or partial of the loan principal corresponding to the non-“Borrowing and Repayment at Any Time” mode hereunder at any time through electronic channels such as Party B’s online banking based on its own business needs, without any limitation on the number of times.

②  Party A can repay all or part of the loan in advance only after all of the following conditions have been met:

A. Party A has paid all the due and payable amounts that it should pay to Party B before the prepayment date;

B. Party A shall issue a written application for early repayment to Party B at least 20 banking days prior to its intended early repayment date and obtain Party B’s written consent;

C. Except for the early repayment of the entire loan hereunder, the early repayment amount shall be an integer multiple of RMB [/] ten thousand yuan and the amount of any early repayment shall be not less than RMB [/] ten thousand yuan.

D. Party A shall pay Party B the interest and other fees payable in relation to the early repayment amount at the same time as the early repayment.

E. Unless agreed in writing by Party B, Party A shall not repay in advance more than [ / ] times within the loan term.

F. Other conditions [/].

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(2) Where voluntary early repayment under the non-“Borrowing and Repayment at Any Time” mode is executed in the ② method mentioned above, the application for early repayment is irrevocable. Upon Party B’s written consent to Party A’s early repayment, Party A shall repay the loan hereunder in advance based on the amount and date stated in the early repayment application, otherwise Party B has the right to deem the loan as overdue.

(3) The principal amount of the loan repaid in advance shall be repaid in reverse order, i.e., in the reverse order of the repayment schedule agreed herein. The interest on the loan involved in the early repayment portion shall be calculated on the basis of the actual number of days used for that portion of the loan, and the interest shall follow the principal.

Article 7 Loan Restructuring

In case Party A fails to repay the loan due on schedule, it shall submit a written application for loan restructuring to Party B at least one month before the maturity date of the current loan, and upon Party B’s approval of Party A’s application, both parties shall sign a loan restructuring agreement. Where Party B dissents from Party A’s application, Party A shall still repay the loan due as stipulated herein, otherwise, Party B shall have the right to deal with the loan as an overdue loan.

Article 8 Guarantees of the Loan

1. The guarantees of the loan hereunder include the guarantee as stipulated in this Article and other relevant guarantees, which shall be subject to the agreement of the specific guarantee contract.

S/N	Contract No.	Company Name
1	[(2023) X. P. H. Y. Z. B. Zi No. 00127703]	[Maximum Guarantee Contract]
2	【/】	【/】
3	【/】	【/】
4	【/】	【/】
5	【/】	【/】

2. During the loan term, in case the above-mentioned guarantee method is changed or the specific guarantee registration procedures cannot be handled at the time of signing this contract, Party A hereby irrevocably pledges and agrees that Party A guarantees to change the guarantee method as specified by both parties and urges the guarantor to sign the relevant guarantee documents upon the change and/or urges the guarantor to handle the relevant guarantee registration procedures within three days after the guarantee registration procedures are complied with, otherwise it shall be deemed as Party A’s breach of contract, and Party B has the right to investigate Party A liability for breach of contract and take corresponding remedies in accordance with this Contract.

Article 9 Party A’s Statement and Guarantee

1. Party A is a Chinese legal person or unincorporated organization legally established and validly surviving under the laws of the People’s Republic of China, which has the civil rights and capacity necessary to enter into and perform this contract in accordance with the law, and can independently assume civil liabilities, and has independent property and assets and is entitled to conduct business within the scope of its business license. Party A and the signatories who sign this contract on behalf of Party A have obtained all necessary and legal internal and external approvals and authorizations to sign this Contract. Party A shall ensure that Party A’s actual situation is consistent with the registered matters.

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2. All documents (including but not limited to documents proving the use of funds such as trade background contracts provided by Party A) and statements in relation to this loan provided by Party A in accordance with the law and at Party B’s request are valid, legal, true, accurate and complete.

3. The signing and performance of this Contract by Party A shall not violate the provisions of laws, regulations and other legally binding documents, the Party A’s Articles of Association, or the contracts, agreements and other documents signed with third parties. The representative of Party A who signs this Contract and related documents has legally obtained the necessary authorization and is entitled to sign the said contract or documents in compliance with the law and Party A’s internal regulations.

4. Except for the guarantees agreed herein or agreed in writing by Party B, Party A and the Guarantor have not set up any other guarantees on the secured assets hereunder provided by them, and there are no other forms of third-party rights on such assets that are detrimental to the interests of Party B (including but not limited to the establishment of residence rights and leasehold rights on the mortgaged property, as well as the pledge, mortgage or other guarantees to any third party), nor are they involved in any disputes or free from any ownership defects, such as being sealed, seized, frozen or subject to other compulsory measures, etc.; Party A has no outstanding records of non-performing loans, outstanding advances or outstanding interest arrears in the Credit Reference Center of the Peoples’ Bank of China. Party A’s actual controller and its guarantors have no overdue loans in the current Credit Reference Center of the Peoples’ Bank of China.

5. Other than the default and litigation, arbitration or administrative penalty procedures which have been disclosed to and approved by Party B, there are no other events of default or potential events of default by Party A, nor are there any other litigation, arbitration or administrative penalty proceedings which are pending or probable.

6. Party A guarantees that the funds shall be used strictly in accordance with the contractual use of the loan, and shall not be used for short-term loans or long-term loans, and that the loan funds shall not be invested in any form in securities, real estate, futures market, equity investments, refinancing and purchase of other financial products for arbitrage, and shall not be used for illegal fund-raising and other areas prohibited by the policies, and shall not misappropriate the loan.

7. Party A guarantees that the sources of funds used to repay Party B’s loan are legal and compliant.

8. Party A shall abide by the anti-money laundering laws and regulations of the People’s Republic of China and not participate in illegal and criminal activities suspected of money laundering, terrorist financing and proliferation financing, etc.; actively cooperate with Party B in customer identification and due diligence, provide real, accurate and complete customer information and comply with Party B’s anti-money laundering and anti-terrorist financing related management regulations. For customers whom Party B has reasonable grounds to suspect of money laundering or terrorist financing, Party B shall take the necessary control measures in accordance with the Anti-Money Laundering Supervisions of the People’s Bank of China.

9. The online banking user name, login password and digital certificate of Party A and Party A’s authorized online banking operator shall serve as security tools for Party A to confirm its identity when handling business on Party B’s online banking platform. Party A shall properly keep the above security tools for identity confirmation. All operations conducted with Party A’s and authorized Internet banking operators’ online banking user names, login passwords, digital certificates and other security tools shall be regarded as Party A’s actions, and the resulting electronic information records shall be regarded as valid evidence of Party A’s operations, and Party A shall be liable for the consequences arising therefrom.

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Article 10 Party A’s Commitment

1. Party A shall provide Party B with statements and other documents that truly reflect its operation and financial positions on a regular basis or at any time upon Party B’s request. Under the “Borrowing and Repayment at Any Time” mode, Party A shall also mail invoices, transaction contracts, transaction flow or accounting vouchers and other documents proving the use of the loan to the address designated by Party B or Party B’s staff shall collect the relevant materials at door-to-door within 7 days from the date of withdrawal (or at any time as requested by Party B under the non-“Borrowing and Repayment at Any Time” mode), and Party A pledges that the above-mentioned materials provided are legal, valid, true and complete.

2. During the loan term, any change in Party A’s business decision-making, including but not limited to equity conversion, reorganization, large-scale financing, acquisition and restructuring, asset or debt restructuring, asset disposal, merger, consolidation, division, shareholding system reform, joint venture, cooperation, joint venture, contracting, leasing, foreign investment, agreement or arrangement with any person to share its incomes or profits, provision of any form of capital or financial support to anyone, the substantial increase in debt financing, change of business scope and registered capital, change of articles of association and other circumstances that may affect Party B’s rights and interests, Party A shall notify Party B in writing at least 30 working days in advance and obtain Party B’s prior written consent to implement the loan liquidation liability or to pay off the loan in advance or to provide Party B ’s approved guarantee.

3. Party A shall actively cooperate with Party B in its operation and loan payment management and post-loan management, including the investigation, understanding and supervision on the basic situation of the enterprise, loan usage, operation and management matters, financial operation status, settlement transactions and related transactions, etc. by means of on-site or off-site inspection. All expenses incurred by Party B due to Party A’s non-cooperation shall be borne by Party A.

4. Without the prior written consent of Party B, Party A shall not transfer or disguise the debts hereunder by any means.

5. Where Party A disposes of all or part of its assets or operating income by way of transferring, leasing or setting guarantees for debts other than debts hereunder, Party A shall notify Party B in writing at least 30 working days in advance and obtain Party B’s prior written consent.

6. In case of any of the following events, Party A shall notify Party B in writing and submit relevant materials within three days from the date of occurrence or probable occurrence:

(1) Force majeure events or default events related to loan;

(2) Party A, Party A’s actual controller or Party A’s controlling shareholder is involved in litigation, arbitration, criminal prosecution, administrative penalty, suspension of business, closure of business, reorganization, dissolution, filing for bankruptcy, acceptance of bankruptcy petition, declaration of bankruptcy, revocation of business license, revocation, deterioration of financial position, or property being sealed, frozen, seized or supervised in accordance with the law;

(3) Any significant changes in the members of the Board of Directors and senior management personnel of Party A, such as changes in their duties, inability to perform their duties, suspected of major cases or economic disputes or given administrative penalties by relevant authorities;

(4) Liability accidents caused by violations of food safety, production safety, environmental protection and other relevant laws and regulations, regulatory provisions or industry standards have or may have adverse effects on the performance of its obligations hereunder.

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(5) Any breach of this contract, the relevant business contracts or the Articles of Association;

(6) Any event that adversely affects the performance of the obligations hereunder.

7. In the event that the guarantor partially or fully loses its guarantee capacity corresponding to this loan, or the value of the collateral, pledge or pledge rights securing this loan hereunder is reduced in circumstances including but not limited to suspension of business, closure of business, filing for bankruptcy, acceptance of bankruptcy application, declaration of bankruptcy, dissolution, revocation of business license, revocation and operating losses, etc., Party A shall provide a new guarantee approved by Party B.

8. During the loan term, should Party A alter its name, registered address, legal representative / person in charge, etc., it shall notify Party B in writing within three days upon the change.

9. Party A shall promptly report to Party B in writing the connected transactions of more than 10% (including 10%) of Party A’s net assets that have occurred or will occur, including but not limited to the connected relationship between the parties to the transaction, the items and nature of the transaction, the amount or corresponding proportion of the transaction, and the pricing policies (including transactions with no amount or only symbolic amount).

10. Party A’s production and operation and its related behaviors comply with relevant regulations including but not limited to industrial policies, fiscal and taxation policies, market access, environmental protection assessment, energy conservation and emission reduction, energy consumption and pollution control, resource utilization, land and urban planning, labor safety, etc.

11. Party A pledges to truthfully disclose the marital status of its actual controller ( if any) to Party B. Article 11 Rights and Obligations of Both Parties

1. Party A has the right to withdraw and use the loan in accordance with the term and purpose agreed herein.

2. Party A shall pay off the principal, interest and expenses of the loan as agreed herein.

3. Party A agrees that Party B shall provide its credit information to the basic financial credit information database and/or the credit agency approved by the People’s Bank of China, and authorizes and agrees that Party B shall query, download, copy, print and use its credit information from the basic financial credit information database and/or the credit agency approved by the People’s Bank of China or the websites of relevant units or departments for the purpose of this contract, and use it for legal and compliant purposes related to this contract; if Party A fails to repay the principal and interest of the loan in accordance with the contract, the adverse credit consequences arising therefrom shall be borne by Party A itself.

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4. Party A authorizes Party B to query, download, copy, print and use Party A’s account transaction information, including but not limited to transaction flow and statements, for Party B’s review and approval, post-loan management or necessary notarization procedures, and for submission as information/evidence materials to judicial authorities, arbitration institutions and regulatory authorities.

5. Party A understands and agrees that Party B has the right to transfer the creditor’s rights and corresponding security rights to third parties during the duration of the loan, and to provide the loan contract and loan-related materials to potential assignee financial institutions to the extent necessary in compliance with the law, without the need to obtain Party A’s consent separately. When Party A provides guarantee on its own, Party A agrees to continue to assume the relevant guarantee liability to the assignee of the creditor’s rights upon the transfer of the claim.

6. Party A agrees that during the loan duration, Party B has the right to act as the initiator of credit asset securitization, trust the creditor’s rights and the corresponding security rights hereunder to the trustee institution for the establishment of a special purpose trust, and provide this loan contract and loan-related information for the trustee institution to issue asset-backed securities. When Party A provides guarantee on its own, Party A agrees to continue to assume the relevant guarantee liability to the aforesaid trustee institution. Party A agrees that if Party B publishes the transfer of creditor’s rights and corresponding security rights through a special purpose trust by means of public notice ( in either way such as newspaper or website), it shall be deemed to have effectively notified and served on Party A.

7. In the case that Party A provides guarantee on its own, Party A understands and agrees that if Party B transfers or trusts the creditor’s rights hereunder to a third party, resulting in the need to handle the transfer of security, Party A has the unconditional obligation to cooperate and negotiate with Party B and the third party and to determine the relevant expenses assumed at that time. Where the transfer of the guarantee is not registered, Party A pledges to waive the defense it enjoys as a result. Where Party A fails to cooperate with the transfer registration in accordance with the laws and regulations, the provisions of the registration authority or at the request of Party B, Party B shall have the right to request Party A to bear the liability for breach of contract and to request Party A to bear all expenses (including but not limited to litigation costs, attorney’s fees, travel expenses, etc.).

8. Party B has the right to inspect, supervise and understand Party A’s operation, use of loan and related transactions. Party B has the right to inspect and understand Party A’s operation and use of loan at least once a quarter, and has the right to decide whether to stop issuing loans hereunder or stop processing the business hereunder based on the inspection results.

9. On the premise that Party A has fulfilled its obligations as stipulated herein and at the same time satisfied Party B’s lending conditions, Party B shall issue the loan to Party A in full and on time.

10. Party B has the right to request Party A to provide relevant documents according to the review needs of issuing loan, and Party B shall keep the materials, documents and information provided by Party A in relation to Party A confidential, except for those that shall be inquired or disclosed in accordance with the laws, regulations and requirements of government authorities.

11. Party B has the right to recoup partial or all of the loans in advance according to Party A’s withdrawal of fund.

12. Under the “Borrowing and Repayment at Any Time” mode, Party B has the right to suspend Party A’s Borrowing and Repayment at Any Time business function as appropriate, and shall not be liable for any breach of contract.

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Article 12 Accounts

Party A shall open accounts in Party B as follows [1] (optional):

1. The settlement account with the account number: [], to which the parties agree as follows:

(1) The loan funds are issued and disbursed through this account. Party B has the right to manage and control the disbursement of loan funds as stipulated herein and to supervise the use of loan funds with respect to the stipulated purposes.

(2) 【/】

2. The account for withdrawal of fund with the account number: [], to which the parties agree as follows:

(1) Party A shall provide the funds inflow and outflow of this account, and Party B shall have the right to supervise the funds inflow and outflow of this account.

(2) 【/】

3. [/] account with the account number: [/], to which the parties agree as follows:

【/】

Article 13 Liability for Breach of Contract

1. Once this contract comes into effect, both parties A and B shall perform the obligations stipulated herein, in case either party violates any agreement, commitment or guarantee hereof, it shall bear the corresponding liabilities for breach of contract.

2. Events of default:

(1) Party A breaches any of its obligations, declarations, warranties or commitments hereunder, or the certificates and documents submitted to Party B in connection with this loan, the declarations and warranties in Article 9 hereof proved to be illegal, untrue, inaccurate, incomplete or intentionally misleading;

(2) Party A fails to make payment of loan funds in the way agreed in Article 5, Paragraph 7 of this Contract;

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(3) Party A fails to use the loan for the agreed purpose, changes the use of the loan funds without authorization, misappropriates the loan or engages in illegal or irregular transactions with the loan;

(4) Party A fails to repay the principal and interest of the loan and other payables agreed herein, or fails (including indicating that it cannot) fulfill its obligations according to this Contract;

(5) Party A conceals important business and financial facts from Party B;

(6) Party A uses false contracts with shareholders and other affiliated companies to obtain this loan;

(7) Party A transfers its property at low price and free of charge, transfers other people’s property at an obviously unreasonable high price or provides guarantee for the debts of other people, reduces and remits the debts of the third party, prolongs the performance period of third-party debts in bad faith, delays in exercising the creditor’s rights or other rights; Abnormal fluctuation of funds in any account of Party A (including but not limited to the account for withdrawal of fund) is found; After Party B’s supervision and inspection, it is determined that the profitability of Party A’s main business has declined, which may affect the realization of Party B’s creditor’s rights; the use of loan funds is abnormal; Party A violates Party B’s supervision requirements on the account for withdrawal of fund;

(8) Party A, Party A’s actual controller and Party A’s controlling shareholder are involved in suspension of business, termination of business, or apply for, are applied for liquidation, dissolution or reorganization, enter into takeover, custody or similar legal procedures, apply for bankruptcy, accept the bankruptcy application, be declared bankrupt, and have their business licenses revoked, are revoked, involved in private financing, or have any lawsuit, arbitration or criminal or administrative punishment that has adverse consequences on their own operation or property status, which Party B believes that it may or has affected or damaged Party B’s rights and interests under this Contract;

(9) The realization of Party B’s creditor’s rights is adversely affected or threatened due to the change of registered items such as Party A’s domicile, business scope, legal representative, responsible person and executive partner, or the change of controlling shareholder/actual controller, or outward investment;

(10) Party A suffers financial loss, asset loss or asset loss due to its external guarantee, or other financial crisis, which Party B believes that it may or has affected or damaged Party B’s rights and interests under this Contract;

(11) The normal operation of Party A is affected due to the operation or financial crisis of Party A’s controlling shareholders and other related companies, or due to the related party transaction between Party A and the controlling shareholders and other related companies, or the realization of Party B’s debt rights is adversely affected or threatened by the related party transaction between Party A and the controlling shareholders and other related companies;

(12) If the realization of Party B’s creditor’s rights is seriously affected or threatened by adverse changes in Party A’s industry, the situation described in this clause is not a force majeure event;

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(13) Party A also constitutes a breach of the contract if it defaults in performing other debt documents and fails to correct them when the applicable grace period expires, resulting in any of the following circumstances:

①  Party A’s debts in other debt documents are declared or can be declared to be accelerated due;

② Although Party A’s debts under other debt documents are not declared or can be declared to be accelerated due, Party A has defaulted on payment.

Other debt documents refer to the loan contracts signed by Party A and the Creditors (including Party B and other third parties other than Party B) and their guarantee documents, and documents of Party A’s public or non-public bond project.

(14) Party A refuses to accept Party B’s supervision and inspection on the use of its loans and related business and financial activities;

(15) Party A’s shareholder, legal representative, person in charge, senior management personnel, and actual controller are missing, or out of reach, or suspected of corruption, bribery, fraud, illegal business operations, or other criminal offenses, and involving illegal fundraising, Party B believes that such actions may or have affected or damaged Party B’s rights and interests under this Contract;

(16) The guarantor of Party A violates the provisions of the Guarantee Contract or there is a breach of the Guarantee Contract, or the guarantor (natural person) or the actual controller of the guarantor is missing or out of reach;

(17) The mortgaged and pledged properties under this Contract are seized, detained, reported for lost, subject to suspension of payment or other compulsory measures, the ownership of which is in dispute, being or may be infringed by any third party, and the ownership’s security or sound condition is being or may be adversely affected;

(18) Party A causes liability accidents due to violation of laws and regulations, regulatory requirements or industry standards related to food safety, production safety and environmental protection;

(19) Party A transfers the loan funds or purchases other financial products for arbitrage;

(20) Party A has other events that will or may endanger, damage Party B’s rights and interests, or Party A fails to fulfill other provisions of this Contract;

(21) Others: 【/】

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3. In case of any of the above-mentioned breach of contract, Party B has the right to take the following remedies:

(1) Party B has the right to (directly and unilaterally) stop or terminate granting any funds hereunder that have not been withdrawn by Party A (including the loan that Party A has submitted the withdrawal application but has not actually withdrawn) without the consent of Party A;

(2) Party B has the right to (directly and unilaterally) announce that all the loans under this Contract are due immediately without Party A’s consent and has the right to require Party A to repay the loans immediately. The date on which Party B requires Party A to repay the aforesaid amount is the date on which the debts under this Contract are due in advance;

(3) Party B has the right to immediately execute the mortgage, pledge or other guarantee under this contract and guarantee documents;

(4) Party B has the right to freeze any account opened by Party A in any Operating Agency of China CITIC Bank Co., Ltd. (hereinafter referred to as “China CITIC Bank”), and has the right to directly deduct the money in the account of Party A to offset Party A’s debts under the Contract without Party A’s consent; If the money deducted from Party A’s account is foreign currency and it is necessary to go through the procedures of settlement and sale of foreign exchange or foreign exchange trading for such money, Party A has the obligation to assist Party B in handling the formalities, and the exchange rate risk shall be borne by Party A;

(5) Party B has the right to exercise any other rights and remedies available according to laws and regulations.

4. Under the “Borrowing and Repayment at Any Time” mode, Party B has the right to suspend the business function of “Borrowing and Repayment at Any Time” opened by Party A in any of the following circumstances:

(1) Party A misappropriates the loans or fails to provide authentic, valid, legal and complete proof materials for the purpose of the loans in time as agreed;

(2) The counterparty account name for loan payment withdrawn by Party A includes sensitive fields such as real estate, home ownership, property, small loan, guarantee, equity, option, futures, securities, trust and fund;

(3) Party A’s loans to Party B or other banks are overdue;

(4) The loan of Party A’s actual controller or his/her spouse to Party B or in other banks is overdue;

(5) Other circumstances in which Party B considers it necessary to suspend “Borrowing and Repayment at Any Time”.

If Party B suspends the function of “Borrowing and Repayment at Any Time” of Party A according to the above agreement, Party A shall repay the principal and interest of the loan, and the unused loan amount shall not be re-used. If Party A needs to apply for restoring the business function of “Borrowing and Repayment at Any Time”, it must re-submit materials to Party B, and the function can only be restored after Party B’s written approval.

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5. For the principal that Party A fails to repay as agreed in this Contract, Party B has the right to exercise the rights agreed in paragraphs 3 and 4 of Article 13 of this Contract, and Party B also has the right to collect the penalty interest by the following [①] method. Party A agrees to accept the above calculation method of penalty interest, and the amount of penalty interest calculated by Party B shall prevail:

①  The penalty interest shall be calculated and collected according to the loan interest rate applicable to the contract at that time plus the annual interest rate standard of “217.5” basis points (1 basis point = 0.01%) according to the actual overdue days;

②  The penalty interest shall be calculated and collected by adding “/”% penalty interest rate on the basis of the loan interest rate applicable to this contract at that time according to the actual overdue days;

6. If Party A fails to use the loan for the purposes agreed in this Contract, Party B shall have the right to exercise the rights agreed in Paragraph 3 and Paragraph 4 of Article 13 of this Contract and shall have the right to collect penalty interest for the part used in breach of contract from the date of misappropriation according to the (①) method below. Party A agrees that the calculation of the above penalty interest amount shall be subject to the calculation result of Party B.

① The penalty interest shall be calculated and collected according to the loan interest rate applicable to the contract at that time plus the annual interest rate standard of “217.5” basis points (1 basis point = 0.01%) according to the days of default use;

② The penalty interest shall be calculated and collected by adding “/”% penalty interest rate on the basis of the loan interest rate applicable to this contract at that time according to the days of default use;

7. For loans that are both overdue and not used according to the agreed purpose in the Contract, Party B has the right to charge penalty interest at the higher penalty interest rate specified in Paragraph 5 and Paragraph 6 of Article 13 of this Contract.

8. For the interest and penalty interest that Party A fails to pay off on time (including the interest corresponding to the principal declared by Party B to be fully or partially due), compound interest shall be charged according to the penalty interest rate of overdue loans agreed in this Contract and the interest settlement method agreed in this Contract from the overdue date to the date of full settlement; If the loan is overdue and not used for the purpose agreed in this contract, the compound interest shall be charged on the more serious one, and shall not be imposed concurrently.

9. All expenses incurred by Party B to realize the creditor’s rights (including but not limited to legal fees, arbitration fees, execution fees, insurance premiums, travel expenses, lawyer fees, property preservation fees, notarial and authentication fees, translation fees, assessment and auction fees, etc.) shall be borne by Party A.

Article 14 Continuity of Obligations

All of Party A’s obligations hereunder shall have continuity and full binding force upon its successor, receiver, assignee and the subject after it is merged and acquired, reorganized and renamed, and free from the influence of any dispute, claim, legal proceeding and any directive of superordinate, or any contract and document signed by Party A and any natural person, legal person or other organization, nor shall it be modified because of Party A’s bankruptcy, insolvency, loss of enterprise qualification, change of articles of association, or any other material change.

Article 15 Notarization

1. If any party to this Contract requests notarization, it shall be notarized at the notary office stipulated by the state.

2. If Party B requests to obtain a Notarial Certificate with compulsory execution effect, Party A agrees that Party B may apply to the notarial office for issuing a Notarial Certificate with compulsory execution effect by presenting this Contract. The notarial charge paid for the Notarial Certificate shall be borne by (Party B). If the principal and interest of Party B’s loan and the relevant expenses that Party A should bear in accordance with the law have not been fully repaid within the repayment period stipulated in this Contract, Party B may apply to the relevant court for compulsory execution with this Notarial Certificate in accordance with legal provisions.

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Article 16 Validity of this Contract

If some article of the Contract or some content of some article is invalid at present or in the future, this invalid article or this invalid part will not influence the validity of the Contract and other articles of the Contract or other contents of the article.

Article 17 Other Agreed Matters

【/】

In case of conflict between this clause and other clauses of this Contract, this clause shall prevail.

Article 18 Governing Law and Dispute Settlement

This Contract shall be governed by the laws of the People’s Republic of China (for the purpose of this Contract, the laws of the Hong Kong, Macao Special Administrative Regions and Taiwan shall not be included).

Article 19 Dispute Resolution

Any dispute arising from and in connection with this Contract shall first be resolved by friendly consultation between the parties; If the consultation fails, the parties agree to resolve the dispute by method [ 2 ]:

1. Apply for arbitration to [/], the place of arbitration shall be [/], the arbitration rules of the Commission in force at the time of application for arbitration shall apply;

2. File a lawsuit with the people’s court having jurisdiction in the place where Party B resides.

Article 20 Force Majeure Events

1. The force majeure events in this Contract refer to unforeseeable, unavoidable, and insurmountable objective circumstances that cause either party to fail to perform this contract normally, including wars, strikes, martial law, severe floods, fires, wind disasters, earthquakes, and other accidents recognized as force majeure by both parties through negotiation.

2. If either party is unable to perform the Contract due to force majeure events, the affected party may be exempted from performing its responsibilities or obligations hereunder in part or in whole based on the effects of force majeure. The party affected by force majeure shall notify the other party of the occurrence of the said event in writing in time to mitigate potential losses to the other party, and shall provide appropriate proof of the occurrence and duration of the said event within a reasonable period. At the same time, the party affected by force majeure shall make every effort to reduce the potential impact of the force majeure event on the other party.

3. In the event of Force Majeure, the Parties shall immediately consult with each other within a reasonable period of time to seek a fair and reasonable solution, and make every effort to minimize the consequences of the force majeure event.

Article 21 No Waiver

Party B’s rights under this Contract are cumulative and will not affect or exclude any rights that Party B may enjoy in accordance with laws, regulations and other contracts. Unless otherwise stated in writing by Party B, Party B’s nonperformance, partial performance and/or delayed performance to any right shall not constitute its waiver or part waiver to the right, nor will it influence, hinder and stop Party B’s continuous performance to such rights or any other rights.

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Article 22 Validity, Modification and Termination of the Contract

1. For the validity of this Contract, both parties agree that the following method [①] shall prevail:

①  This contract will come into force after Party A completes the E-channel security verification operation and signs on the online banking or mobile banking of China CITIC Bank in the form of USBKey electronic signature, and it shall be reviewed and approved by Party B. This contract shall be valid until [January 10, 2024];

②  This Contract shall come into force from the date when Party A completes the E-channel security verification operation and signs on the online banking or mobile banking of China CITIC Bank in the form of USBKey electronic signature, and Party B completes the electronic signature and seal. This Contract will be valid until [ ] month, [ ] day, [ ] year;

2. After the Contract comes into effect, unless otherwise stipulated by the Contract, neither party may arbitrarily change or terminate the Contract; If it is necessary to change or terminate the Contract, both parties shall reach a written contract separately through negotiation.

3. After this Contract comes into force, Party A shall not transfer all or any part of its rights or obligations under this Contract and its annexes without Party B’s written consent. When Party A transfers all or part of the debts under the Contract to a third party, it shall submit to Party B a written document that the guarantor agrees to transfer and continue to undertake the guarantee obligations or provide a new guarantee, and obtain the written consent of Party B.

Article 23 Notification and Service

Unless otherwise agreed in this Contract, both parties make the following agreement on all notices, letters, annexes, agreements and other documents involved in this contract, and the address (including contact information, the same below) at which relevant documents and legal documents are delivered, as well as legal consequences in case of disputes in this Contract:

1. Valid service address confirmed by both parties:

Party A confirms that its valid service address is as follows:
Contact Address		[F2.64D-403, Tianzhan Building, Tian’an Chegongmiao Industrial Zone, Xiangmi Lake, Futian District, Shenzhen City]
Postal Code		【518000】
Contact		【/】
Contact phone no.		【】
Electronic delivery	Email address	【】
	Fax	【】
	Mobile phone number	【/】
	WeChat ID	【/】
Party B confirms that its valid service address is as follows:
Contact Address		[Floor 1 and Floor 5-10, North Block, Zhuoyue Times Square (Phase II), No. 8 Zhongxin Third Road, Futian District, Shenzhen]
Postal Code		【518001】
Contact		【】
Contact phone no.		【】
Electronic delivery	Email address	【/】
	Fax	【】
	Mobile phone number	【/】
	WeChat ID	【/】

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2. In case of any change in the service address confirmed by both parties in this clause, the other parties shall be notified in writing within three days from the date of change. However, both parties agree and acknowledge that if CITIC Bank and its branches display change information related to this Contract, such as tips, announcements, notices, contact address and postal code, through CITIC Bank’s Online Banking, Mobile Banking, Official Website, etc., such information shall be deemed to have been notified/delivered to other parties once displayed (if the displayed information indicates the effective date, the stated date shall prevail). When involving arbitration, civil litigation, and enforcement procedures, if the service address of either party changes, the changing party shall notify the arbitration institution and court in writing on the day of the change. If either party fails to fulfill its obligation to notify or inform the other party in the aforementioned manner, the service address confirmed by that party shall still be deemed as a valid service address.

3. The service address confirmed by both parties in this clause can be used to deliver various notices, letters, attachments, agreements and other documents during the performance of this Contract, as well as relevant documents and legal documents in case of disputes arising from this Contract, including relevant case materials and legal documents at various stages of the first, second, retrial, rehear, and execution procedures (including disposal of collateral) after the dispute enters notarization, arbitration, and civil litigation procedures (including but not limited to: various procedural documents, such as pleadings, arbitration applications, notice of accepting cases, notice of respondence to action, subpoenas, evidentiary notices, payment notices, etc.; and various legal documents, such as arbitration awards, judgments, rulings, mediation documents, etc.) Unless otherwise specified in paragraph 2 of this article, if one party sends the above-mentioned documents to the service address, such documents shall be deemed to have been delivered on the following dates:

(1) If it is sent by post (including Express mail, ordinary mail, registered mail), the third day after the date of delivery shall be deemed as the date of service;

(2) If it is sent by telephone, fax, email, WeChat or other electronic communication methods, the date of transmission shall be deemed as the date of service;

(3) If it is sent by hand, the date on which the recipient signs is deemed to be the day of service; If the recipient refuses or no one receives the document, the server can record the service process by taking photos and videos, and retain the document, which is also deemed to have been served;

(4) If the above methods of delivery are used simultaneously, the one that reaches the other party the fastest shall prevail.

If legal documents, enforcement documents, arbitration awards, or notary enforcement certificates and other legal documents or related documents cannot be delivered, are not served in time or are not actually received by the Receiving Party due to the inaccurate address provided or confirmed by either party, failure to promptly notify or inform other party, courts, arbitration agencies, or notary authorities according to the procedures above after the change of address for service, or refusing to sign for delivery by either party or its designated recipient, and the Sending Party, courts, arbitration agencies, or notary authorities deliver the above documents in accordance with the above effective delivery rules, such documents shall be deemed as effective delivery, the Receiving Party shall bear all legal consequences that may arise from not receiving the above documents. Both parties agree that courts, arbitration agencies, or notary authorities may use one or more methods of delivery to deliver legal documents, the delivery time shall be the first to arrive in the above delivery methods.

4. The content agreed in this article is a special clause expressly agreed by both parties to this Contract, and its validity is independent of other clauses of this Contract. Notwithstanding that any other clause of this Contract is deemed invalid or revoked by the court, arbitration authority or other competent authority for any reason, the contents of this clause shall be valid.

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Article 24 Other Provisions

1. For the purpose of this Contract, “working day”/“bank working day” refers to the bank business day on which the Bank handles general public business, excluding national holidays and public holidays.

2. For matters not covered in this Contract, Party A and Party B may sign a written agreement separately, which shall be an annex to this Contract. Any annex, modification or supplement to this Contract shall form an integral part of this Contract and have the same legal effect as this Contract.

3. Party B has taken reasonable way such as bolding, blackening, highlighting to remind Party A of the clauses exempting or restricting the liabilities under the Contract, and has fully explained the relevant clauses as required by Party A. Party A has read all the terms of this Contract, has fully understood the meaning of the terms of this Contract and the corresponding legal consequences, and agrees to abide by the above terms. Party A and Party B have no objection to the understanding of all clauses and contents of this Contract.

Annex:

Annex I: Power of Attorney for Payment

Party A: Shenzhen United Time Technology Co., Ltd.

Party B: China CITIC Bank Co., Ltd. [Shenzhen Branch]

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Annex I:

Power of Attorney for Payment

(Applicable to bank entrusted payment)

China CITIC Bank Co., Ltd. Branch:

According to the “RMB Working Capital Loan Contract” No. (hereinafter referred to as the “Loan Contract”), I hereby entrust your bank to transfer the payment amount from our company’s settlement account (account number: ) to the following accounts of our company’s counterparties on the following payment days. The specific use plan is as follows: . See attached annex for relevant business contract.

Full Legal Name of Counterparty 1:
Opening bank:
Account No.:
Payment amount:	(in words): (in figures): Yuan
Payment date:	MM/DD/YYYY
Full Legal Name of Counterparty 2:
Opening bank:
Account No.:
Payment amount:	(in words): (in figures): Yuan
Payment date:	MM/DD/YYYY
Full Legal Name of Counterparty 3:
Opening bank:
Account No.:
Payment amount:	(in words): (in figures): Yuan
Payment date:	MM/DD/YYYY
Full Legal Name of Counterparty 4:
Opening bank:
Account No.:
Payment amount:	(in words): (in figures): Yuan
Payment date:	MM/DD/YYYY
Full Legal Name of Counterparty 5:
Opening bank:
Account No.:
Payment amount:	(in words): (in figures): Yuan
Payment date:	MM/DD/YYYY
Full Legal Name of Counterparty 6:
Opening bank:
Account No.
Payment amount:	(in words): (in figures): Yuan
Payment date:	MM/DD/YYYY

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The Company confirms as follows:

(1) The statements, warranties and promises made by the Company in the Loan Contract are still true, accurate and complete on the date when this Power of Attorney is made; and

(2) The Company has not violated any agreement in the Loan Contract or has not had any default event or potential default event stipulated in the Loan Contract; and

(3) This Power of Attorney is irrevocable.

Annex: Business Contract is made _________copies

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Company Name:

Legal Representative/Person in charge or Authorized Agent:

Date:

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EX-4.64

Exhibit 4.64

Contract No.: H.Y. (2022) S. E. B. Zi (TUO YI) No.[    ]

Contract on Guarantee under the Debt Ceiling

(Corporate Business)

China Resources Bank of Zhuhai Co., Ltd.

September 2022 Edition

Contract on Guarantee under the Debt Ceiling

Creditor: China Resources Bank of Zhuhai Co., Ltd. Shenzhen Branch

Guarantor: Bao Minfei

Whereas, the Guarantor is willing to provide the maximum amount guarantee for the continuous creditor’s rights between the Creditor and Shenzhen United Time Technology Co., Ltd. (hereinafter referred to as the “Debtor”), and in accordance with the relevant national laws and regulations, the Parties have entered into the Contract through negotiation.

Chapter 1 Types and Amounts of Guaranteed Creditor’s Rights

Article 1 Types and Amounts of Guaranteed Creditor’s Rights

1.The principal creditor’s rights guaranteed by the Guarantor are the creditor’s rights enjoyed by the Creditor against the Debtor based on the Master Contract (all credit granting business contracts) signed with the Debtor, the various types of credit granting business processed, and the purchase of bonds/bills/asset-backed securities issued by the Debtor or the assumption of payment obligations, etc., (including contingent creditor’s rights, hereinafter the same), as well as prior creditor’s rights (hereinafter collectively referred to as “principal creditor’s rights”) agreed by both parties, for the period from November 15, 2022 to November 15, 2024 (including the starting date and the expiration date of the period; hereinafter referred to as: the creditor’s rights determination term); the principal creditor’s rights include but are not limited to:

(1) All creditor’s rights enjoyed by the Creditor against the Debtor under the Comprehensive Credit Granting Contract with contract No. H. Y. (2022) S. Z. Zi (TUO YI) No.022 in respect of all specific credit granting business contracts with the Debtor.

(2)All outstanding creditor’s rights enjoyed by the Creditor against the Debtor under Contract No. / .

(3)The creditor’s rights enjoyed by the Creditor against the Debtor as a result of all the credit granting business contracts to be signed with the Debtor in succession during the creditor’s rights determination term.

(4)The creditor’s rights enjoyed by the Creditor against the Debtor as a result of granting a loan, etc., to the Debtor during the creditor’s rights determination term.

(5)The creditor’s rights (including contingent creditor’s rights) enjoyed by the Creditor against the Debtor as a result of the issuance of bank acceptances, L/Cs, or L/Gs (including a standby L/Cs, hereinafter the same), etc., during the creditor’s rights determination term.

(6)The creditor’s rights (including contingent creditor’s rights) enjoyed by the Creditor against the Debtor as a result of the processing of factoring business, commercial bill discounting business, commercial bill pledge business, forfaiting business, etc. during the creditor’s rights determination term.

(7)The creditor’s rights enjoyed by the Creditor against the Debtor as a result of the purchase of short-term financing, medium-term notes, private placement note (PPN)s, corporate bonds, enterprise bonds, credit asset securitization, enterprise asset securitization, asset-backed notes, asset-backed programs, etc., issued by the Debtor or subject to a payment obligation during the creditor’s rights determination term.

2.The maximum principal of principal creditor’s right guaranteed by the Guarantor shall be agreed in item 1 below:

(1)The maximum principal of the principal creditor’s right of the guarantee shall be RMB twenty-two million yuan only (in words), and the “maximum principal of principal creditor’s right” in this Article refers to the maximum amount of principal balance of the principal creditor’s right (including contingent creditor’s rights) guaranteed by the Guarantor under the guaranteed creditor’s right.

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(2) The maximum principal of the principal creditor’s right of the guarantee shall be RMB        /      yuan only (in words), and the “maximum principal of principal creditor’s right” in this Article refers to the maximum amount of principal balance of the principal creditor’s right (including contingent creditor’s rights) guaranteed by the Guarantor after deducting the amount of the security deposit, the pledged bank deposit certificate, and the national debt under the guaranteed creditor’s right . In the event that all or part of the security deposit, pledged bank deposit certificate or national debt referred to in this Article is frozen or deducted for reasons not attributable to the Creditor, resulting in the Creditor’s loss or failure to realize the guaranteed right of the security deposit, pledged bank deposit certificate or national debt, the Guarantor agrees to assume joint and several liabilities for the principal creditor’s right corresponding to the amount of the guaranteed right as a result of the Creditor’s loss or failure to realize the security deposit, pledged bank deposit certificate or national debt as agreed hereof; the amount of the “maximum principal of principal creditor’s right” shall be automatically adjusted accordingly, without a separate written confirmation between the Creditor and the Guarantor.

3.The credit granting business stipulated herein refers to the Bank’s provision of direct financial support to the customer, or its guarantee of the customer’s liability for indemnification or payment that may arise from the customer’s relevant economic activities. It includes but is not limited to all kinds of loans, overdrafts, discounts and/or all kinds of trade financing (including but not limited to import bill advance, import collection financing, import outward remittance financing, export bill purchase, export collection financing, export invoice financing, export order financing, packing loans, domestic documentary letter of credit, domestic letter of credit negotiation, import/export factoring financing, etc.), the issuance of bank acceptance, L/C or L/G (including standby L/C, the same below), discounting, factoring, guarantee, etc.

4.Regardless of whether the above principal creditor’s rights have expired or formed at the expiration of the creditor’s rights determination term, as long as any of the dates, such as the signing date, effective date and maturity date of the aforesaid Master Contract (all credit granting business contracts), the occurrence date, formation date, maturity date of the principal creditor’s rights, the occurrence date, acceptance date, bill issue date, discount date, confirmation date of the credit granting business, the transfer date of loan/discount payment/forfaiting payment/factoring financing payment, the issuance date of L/G (including standby L/C), the registration date of commercial bill pledge, the endorsement date, payment reminder date, advance date of the commercial bill, the transfer date, notification date, starting date, maturity date of the creditor’s rights/accounts receivables falls within the creditor’s rights determination term, the corresponding principal creditor’s rights shall be covered by the guarantee of the Guarantor.

5.Where the principal creditor’s right is in a currency other than RMB, it shall be converted into RMB at the mid-price published by the Creditor on the creditor’s rights determination date.

Article 2 The type, amount, interest rate and term of each credit granting business guaranteed hereby shall be subject to the relevant legal documents or certificates. The Guarantor has carefully read the Master Contract and confirmed all the terms and conditions.

Article 3 During the creditor’s rights determination term and within the maximum principal of principal creditor’s right agreed herein, the Creditor shall not be required to confirm on a case-by-case basis upon the Creditor’s issuance of the loan or provision of other credit granting business as agreed herein.

Article 4 During the creditor’s rights determination term and the maximum principal of principal creditor’s right agreed herein, credit granting business shall be conducted in any currency.

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Chapter 2 Scope of Guarantee

Article 5 Scope of Guarantee

1. The scope of the Guarantor’s guarantee under the debt ceiling includes but are not limited to the principal creditor’s rights’ principal, interest, compound interest, penalty interest, liquidated damages, damage compensation, interest on the debt for delay in performance, and the costs of realizing creditor’s rights; the costs for the realization of the creditor’s rights include but are not limited to, the collection costs, litigation costs (or arbitration costs), the preservation fees, the announcement fees , execution fees, attorney fees, travel expenses and other expenses. The aforesaid creditor’s rights are collectively referred to as guaranteed creditor’s right herein.

The proportion of guaranteed creditor’s right guaranteed by the Guarantor is 100%.

2. The maximum principal of principal creditor’s right agreed herein refers only to the maximum limit of the principal of the principal creditor’s right, and the Guarantor agrees to assume the liability of guaranty for all the payables and obligations arising therefrom within the scope of the guarantee agreed herein on the premise that the principal does not exceed the agreed limit.

Article 6 The advance, interest, expense under the principal creditor’s right, or even the actual formation of the principal creditor’s rights beyond the period of creditor’s rights determination term, shall be covered by this guarantee under the debt ceiling. The maturity date of the principal creditor’s right is not limited by the expiration date of the creditor’s rights determination term.

Chapter 3 Mode of Guarantee

Article 7 The mode of guarantee hereof is the joint and several liabilities guarantee.

Chapter 4 Guarantee Period

Article 8 Guarantee Period

1.Where the Master Contract is a borrowing contract/loan contract, the guarantee period hereunder shall be three years from the day following the expiration of the loan term under the Master Contract; where the Creditor declares the early maturity of the loan as agreed upon in the Master Contract, the guarantee period shall be three years from the day following the early maturity date of the loan.

2. Where the Master Contract is a bank acceptance contract, the guarantee period shall be three years from the day following the date of the Creditor’s external commitment.

3. Where the Master Contract is a guarantee opening contract, the guarantee period shall be three years from the day following the Creditor’s performance of the guarantee obligation.

4. Where the Master Contract is an L/C opening agreement/contract, the guarantee period shall be three years from the day following the Creditor pays the amount under the L/C.

5. Where the Master Contract is a discount contract, the guarantee period shall be three years from the day following the maturity date of the discounted instrument.

6. Where the Master Contract is another financing document, the guarantee period shall be three years from the day following the expiration or early maturity of the creditor’s rights determined by the Master Contract.

7. Where the principal creditor’s right is under factoring business, the guarantee period shall be three years from the day following the maturity date (the payment date by the Debtor) of the accounts receivable under factoring business.

8. Where the principal creditor’s right is under the business of discount and pledge of commercial bills, the guarantee period shall be three years from the day following the maturity date of the commercial bill.

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9.Whenever the Creditor and the Debtor reach an extension contract with respect to the creditor’s rights performance period and the Guarantor shall extend its liability of guaranty, the guarantee period shall be three years from the day following the expiration of the debt performance period as agreed in the extension contract; the Guarantor agrees that the Creditor and the Debtor shall have the right to enter into an extension contract with respect to the principal creditor’s rights performance period without obtaining the Guarantor’s consent.

10.In the event that the Creditor declares the early maturity of the debt or principal creditor’s rights under the Master Contract resulting from any matters stipulated in laws and regulations or agreed in the Master Contract, the guarantee period shall be three years from the date of the early maturity of the debts or principal creditor’s rights under the Master Contract as determined by the Creditor.

Where the principal creditor’s right is performed in installments, the guarantee period for each instalment shall be three years from the day following the expiration of the debt performance period of the last installment.

Chapter 5 Statement and Guarantee of Guarantor

Article 9 The Guarantor hereby makes the following statements and guarantees to the Creditor:

1.The signing and performance hereof is a true intention of the Guarantor. The Guarantor is legally qualified as a Guarantor, and the Guarantor’s guarantees hereunder are in compliance with the laws, administrative regulations, rules and regulations and the Guarantor’s articles of incorporation or internal organizational documents, and have been approved by the company’s internal competent divisions and/or the relevant State competent authorities. All liabilities arising from the Guarantor’s or its legal representative’s unauthorized execution hereof shall be borne by the Guarantor, including but not limited to, full indemnification of the Guarantor for any damages suffered by the Creditor as a result thereof.

2. The Guarantor shall provide the Creditor with true, complete and valid financial statements, Articles of Association or other relevant materials and information as required, and accept the Creditor’s supervision and inspection on the Guarantor’s production and operation and financial status.

3. The Guarantor has completed or shall complete all the required filing or notarization procedures.

4. There is currently no litigation, arbitration or administrative procedure involving the Guarantor or its major operating assets that would have a material adverse effect on the financial condition of the Guarantor or the ability of the Guarantor to perform its obligations hereunder.

5. Where the Guarantor and its controlling shareholders at all levels belong to the publicly listed company (including companies whose shares are traded on other national securities exchanges approved by the State Council) or the controlling subsidiary within the scope of the consolidated statement of accounts of a publicly listed company, it is guaranteed that it shall promptly fulfill the information disclosure obligations in respect of such guarantee in accordance with the requirements of the Security Law, the Rules Governing the Listing of Stocks on Stock Exchanges and other laws, rules and regulations.

Chapter 6 Guarantor’s Commitment

Article 10 Before all the principal creditor’s right are paid off, the Guarantor is committed to abide by the following provisions:

1.In case the principal creditor’s rights expires or the Creditor declares early expiration as agreed in the Master Contract or stipulated in the law, and the Debtor fails to perform it in full and on time, or the Debtor violates any other agreements of the Master Contract, the Guarantor shall immediately assume the liability of guaranty within the scope of the guarantee.

2.In case the Guarantor fails to fulfill the liability of guaranty as agreed herein, the Creditor has the right to directly deduct the relevant funds from the Guarantor’s accounts opened in various institutions of China Resources Bank of Zhuhai Co., Ltd.

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3.The Guarantor shall immediately notify the Creditor in writing, in case of any of the following circumstances:

(1)Changes in the Guarantor’s name, domicile, legal representative, contact information, etc.; changes in the Guarantor’s (a natural person’s) personal information such as occupation, income, address, correspondence address, and contact number during the loan period.

(2)Changes in the Guarantor’s affiliation, senior personnel, amendments to the articles of association, and organizational restructuring.

(3)Deterioration of the Guarantor’s financial condition, serious difficulties in production and operation, or major litigation or arbitration.

(4)Cessation of production, closure of business, suspension of business reorganization or application for bankruptcy or reorganization of the Guarantor.

(5)Suspension or Revocation of the Guarantor’s business license, closure of business by order or other reasons for dissolution.

(6)Any other circumstances of the Guarantor that are detrimental to the realization of the Creditor’s creditor’s rights.

4.The Guarantor shall notify the creditor in writing fifteen days in advance and obtain the creditor’s written consent in case one of the following acts is committed:

(1)The Guarantor changes its capital structure or operation system, including but not limited to contracting, leasing, shareholding system reform, joint venture, merger, division, joint capital, capital reduction, asset transfer, application for reorganization, application for settlement and application for bankruptcy.

(2) The Guarantor provides a guarantee for the third party’s debt or sets a mortgage or pledge guarantee for itself or the third party ’s debt with its assets, which seriously affects its performance of its liability of guaranty hereunder.

5.In case the Guarantor has assumed the liability of guaranty and is entitled to recoup from the Debtor, if the Debtor is exposed to both the Guarantor’s recoupment and any recoupment by the Creditor under the guaranteed creditor’s right, the Guarantor agrees that the Debtor shall have priority in the payment of its debt to the Creditor.

Article 11 In the event that the Debtor and the Guarantor have entered into or shall enter into a counter-guarantee contract in respect of the guarantee obligations hereunder, such counter-guarantee contract shall not prejudice, in law or in fact, any of the creditor’s rights hereunder.

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Article 12 The Guarantor shall continue to assume the liability of guaranty as agreed hereof in case of any of the following circumstances:

1.The Creditor and the Debtor have negotiated a change in the Master Contract/principal creditor’s rights that does not aggravate the Debtor’s debt (unless otherwise agreed herein).

2.Under international and domestic trade financing, the Creditor and the Debtor have amended the L/C related to the Master Contract in a way that does not aggravate the Debtor’s payment obligations under the L/C.

3.The Creditor and the Debtor have negotiated and agreed to increase the loan interest rate under the principal creditor’s right.

4.The amount of principal creditor’s rights have changed as a result of the adjustment of floating interest rate or loan prime rate (LPR) in the Master Contract.

5. The Creditor has transferred the principal creditor’s right to a third party.

6.The Creditor and the Debtor have signed an extension contract to extend the maturity date of the principal creditor’s rights.

Article 13 In the event of any of the following circumstances under domestic L/C, buyer financing under domestic L/C, import L/C and import bill advance/import payment agency business, the Guarantor shall have an irrefutable mortgage guarantee obligation, and the Guarantor shall not be exempted or defended by any judicial or administrative authority that issues a stop-payment order, injunction, or takes measures to seal up, detain, freeze the property related to the L/C or similar measures with respect to the payment obligations under such L/C:

1.The Creditor’s designee or authorized person has made payment in good faith in accordance with the Creditor’s instructions.

2.The Creditor or its designee or authorized person has in good faith issued a confirmation of payment due for the goods under the domestic L/C or has in good faith made an acceptance of the documents under the import L/C.

3. The confirming bank of the L/C has performed its payment obligations in good faith.

4. The negotiating bank of the L/C has negotiated the payment in good faith.

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Article 14 The Guarantor agrees that: in case the principal creditor’s right is also guaranteed by the guarantee, mortgage or pledge provided by the Debtor or a third party, the Creditor shall be entitled to exercise the guarantee right at its own discretion, including but not limited to: the Creditor has the right to request the Guarantor to make immediate payment for all sums due and payable by the Debtor without first exercising its real right for security or claiming its rights against other Guarantors, and has the right to claim part or all of its security rights against one or more Guarantors, including the Guarantor, individually or simultaneously and without regard to any particular order of priority; in case the Creditor waive or alter its guarantee rights against other Guarantors, or waive or alter the right of subordination of the real right for security, the Guarantor shall still be liable for the guarantee as stipulated herein and not exempted from any liability.

Article 15 In the event that the Creditor waives, alters or loses other security interests under the master contract, the Guarantor’s liability of guaranty shall prevail, and the Guarantor pledges to continue to assume the liability of guaranty as agreed herein.

Chapter 7 Sequence of Settlement

Article 16 Where the Guarantor guarantees several creditor’s rights between the Debtor and the Creditor, including but not limited to the creditor’s rights hereunder, and the Guarantor’s payment is insufficient to pay off all the debts due, the creditor’s rights to be paid off and the order of payment shall be determined by the Creditor.

In case the Creditor exercises the rights of set-off against the Guarantor as stipulated by law or agreed herein, the debts to be set off and the orders thereof shall be determined by the Creditor; in case the Creditor exercises the rights of subrogation as stipulated by law, the Creditor’s rights to be paid off by the payment of the secondary Debtor to the Creditor and the order thereof shall be determined by the Creditor.

Provided that the Debtor owes other due creditor’s rights to the Creditor in addition to the principal creditor’s rights, the Creditor has the right to debit RMB or other currencies in the Debtor’s accounts opened in various institutions of China Resources Bank of Zhuhai in order to pay off any one of the due creditor’s rights in an order to be determined by the Creditor.

Chapter 8 Breach of Contract

Article 17 Each of the following events and matters shall constitute the Guarantor’s breach of contract hereunder:

1. The Debtor is declared dissolved or bankrupt during the contract term.

2.Other circumstances arise that make the principal creditor’s rights difficult or impossible to achieve.

3.The Guarantor suspends or ceases its business or enters into bankruptcy, liquidation, closure of business or other similar proceedings, or the Guarantor is subject to a petition for bankruptcy, liquidation or a decision by the competent authority to discontinue or suspend its operations; the Guarantor is dead, declared missing or declared dead.

4.Major litigation, arbitration or administrative proceedings have taken place against the Guarantor or its material operating assets, resulting in the possibility of the Guarantor’s inability to perform its liability of guaranty.

5. The Guarantor has a material event of default under other contracts with the Creditor.

6. The Guarantor has a material event of default under other contracts with other banks.

7.The Guarantor or Debtor fails to comply with laws, regulations or rules on environmental protection, energy conservation and emission reduction, and pollution reduction, or may suffer from energy consumption and pollution risks.

8.The Guarantor breaches its other obligations hereunder, or other events that the Creditor believes shall materially and adversely affect its rights hereunder.

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Article 18 After an event of default as described above, the Creditor shall be entitled to take any or several of the following measures, as the case may be:

1.The Creditor shall exercise its security rights hereunder or its default remedies under the master contract and this contract.

2.The Creditor shall reduce, suspend or terminate, in whole or in part, other credit lines granted to the Guarantor.

3.The Creditor shall suspend or terminate, in whole or in part, the acceptance of the Guarantor’s business applications under other contracts; and suspend or terminate, in whole or in part, the issuance and processing of outstanding loans and outstanding trade finance.

4.The Creditor shall declare, in whole or in part, Guarantor’s principal and interest on the outstanding loan/trade financing payments and other payables under other contracts forthwith due.

5. The Creditor shall terminate or rescind this contract or terminate or rescind, in whole or in part, any other contract between the Guarantor and the Creditor.

6.The Creditor shall request the Guarantor to compensate for the loss caused to the Creditor.

7.In the event that the Guarantor fails to perform its liability of guaranty hereunder, the Guarantor shall agree that the Creditor deducts funds from all accounts opened by the Guarantor in institutions of China Resources Bank of Zhuhai Co., Ltd. in order to pay off the Creditor’s Rights.

Chapter 9 Expenses and Compensation

Article 19 Expenses incurred as a result of the conclusion and performance hereof shall be determined by agreement between the contracting parties, on condition that there are laws, regulations and rules stipulating the cost bearing entity.

The Guarantor shall immediately pay or indemnify the Creditor as requested by the Creditor for all costs and expenses incurred by the Creditor in exercising its rights hereunder or in instituting litigation against the Guarantor or in seeking indemnification or defending, waiving or assigning this contract on the basis of the foregoing (including but not limited to, the fees for attorney services, accounting services, audits, appraisals of litigation, and all other actual expenditures).

Chapter 10 Miscellaneous

Article 20 The Guarantor shall not transfer or otherwise dispose of all or part of its obligations hereunder without the prior consent of the Creditor.

Article 21 The Creditor shall transfer the principal creditor’s rights, in whole or in part, to a third party without the consent of the Guarantor, and the security interests hereunder shall be transferred to the third party at the same time, and the Guarantor shall assume the liability of guaranty to the new Creditor within the scope of the original guarantee.

Article 22 In the event of a separation or merger of the Guarantor after the effective date hereof, the changed organization shall assume the Guarantor’s obligations hereunder.

Article 23 The guarantor has fully recognized the interest rate risk. In case the Creditor adjusts the interest rate level, the way of calculating or settling the interest rate according to the agreement of the master contract or the change of the national interest rate policy, which results in the increase of the interest, penalty interest and compound interest to be repaid by the Debtor of the master contract, the Guarantor also bears the liability of guaranty for the increased portion.

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Article 24 Any grace, favor or delay granted by the Creditor to the Guarantor shall not affect, damage or restrict all the rights enjoyed by the Creditor pursuant to this contract and the laws and regulations; and shall not be regarded as a waiver of the rights and interests of the Creditor hereunder, nor shall it affect any of the Guarantor’s liabilities and obligations hereunder.

Article 25 In accordance with the Regulation on the Administration of Credit Investigation Industry and other relevant national laws and regulations, the Guarantor confirms that it is aware of and understands the contents and meanings of these Articles, and hereby irrevocably agrees in writing and authorizes the Creditor (including the Creditor’s head office and each other branch of the head office) to query, use, collect, provide and report the relevant information about the Guarantor, and the Creditor has the right to carry out the specific operations as follows:

1.In order to promptly understand the credit status of the Guarantor, exclude the Guarantor’s violation of laws and regulations, and ensure the business security between the Creditor and the Guarantor hereunder, the Creditor shall, in accordance with the relevant state regulations, query and make use of the relevant information of the Guarantor through the basic financial credit information database and [other credit reporting agencies approved and established by the State Council’s Credit Collection Industry Supervision and Administration Department of the State Council] (hereinafter referred to as “Guarantor’s Information”).

2. Pursuant to the relevant provisions of the State, the Creditor shall collect the relevant information hereunder and the relevant legal documents signed between the Guarantor and the Creditor, as well as other information relating to the Guarantor obtained by the Creditor through the signing hereof and the relevant legal documents (hereinafter referred to as the “Credit Information Collected by the Creditor”), and provide it to the basic financial credit information database and [other credit reporting agencies approved and established by the State Council’s Credit Collection Industry Supervision and Administration Department of the State Council].

3. The Creditor shall keep the “Guarantor’s Information” and the “Credit Information Collected by the Creditor” for the purpose of internal archiving in accordance with national laws and regulations and the provisions of the Creditor on the business file management system, and the retention period shall not be limited to the provisions of Article 7 of this Authorization.

4. In accordance with the applicable laws and regulations and regulatory requirements, the Creditor shall provide the “Guarantor’s information” and the “Credit Information Collected by the Creditor” to the relevant regulatory authorities such as the China Banking and Insurance Regulatory Commission and the relevant judicial and administrative authorities.

5.For the sake of providing financial services, the Creditor shares “Guarantor’s Information” and the “Credit Information Collected by the Creditor” within the Creditor internal, including among its branches.

6.The Creditor provides “Guarantor’s Information” and the “Credit Information Collected by the Creditor” to the relevant third-party institutions in accordance with the requirements of arrears collection, creditor’s rights transfer and financial services outsourcing.

7. This authorization shall commence on the date hereof and shall expire on the date of termination of all businesses hereunder.

8.The Creditor shall be liable for any legal obligations arising from the Creditor’s inquiries, use and provision of the “Guarantor’s Information” and the “Credit Information Collected by the Creditor” beyond the scope of the authorization stipulated herein.

Article 26 The Guarantor hereby irrevocably pledges that, in the event of a breach of the obligations agreed upon herein, the Creditor may report the information on the Guarantor’s breach of contract to credit reporting agencies and banking associations. The relevant banking association is also authorized to share the Guarantor’s default information among banking financial institutions and even make it public through appropriate means.

The Guarantor voluntarily accepts the joint malicious disciplinary rights protection measures such as reduction or cessation of credit granting, cessation of opening new settlement accounts, etc. taken by the Creditor together with other banking financial institutions.

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Article 27 The Guarantor hereby confirms and declares that the Creditor has, in accordance with the law, prompted and explained to the Guarantor the clauses in respect of the exemption or mitigation of the Creditor’s liability and other clauses of material interest to the Guarantor, the black and bold font clauses, and the authorization clauses, and that the Creditor has already provided adequate explanations of such clauses at the Guarantor’s request. The Guarantor has been fully aware of and understands the meaning of such clauses and the corresponding legal consequences, and is willing to bear the legal consequences of such clauses. The Guarantor promises to strictly abide by all obligations hereunder.

Article 28 The Guarantor guarantees that the Guarantor and the Guarantor’s employees and agents shall not offer, give, solicit or accept any form of material benefits (including but not limited to cash, cards in kind, trips, etc.) or other non-material benefits other than those stipulated herein to the Creditor or the Creditor’s employees in any form; the Guarantor shall not use the funds or services furnished by the Creditor in any form, either directly or indirectly, for the purpose of corruption or bribery activities associated with corruption or bribery; if the Guarantor is aware of any violation of the provisions of this Article, it shall provide the Creditor with timely, truthful, complete and accurate clues and relevant information, and cooperate with the Creditor in the relevant matters as requested by the Creditor.

Article 29 The Guarantor pledges to abide by China’s anti-money laundering related laws and regulations and not to participate in illegal and criminal activities such as suspected money laundering, terrorist financing; to actively cooperate with the Creditor’s customer identification and due diligence, to provide truthful, accurate, complete and effective customer information, and to comply with the Creditor’s anti-money laundering and anti-terrorist financing related management regulations.

In case the Creditor requests the Guarantor’s assistance in compliance with anti-money laundering or other regulatory requirements, the Guarantor shall cooperate and provide corresponding written materials.

Article 30 During the Debtor’s bankruptcy proceedings, where the Creditor reaches a settlement agreement with the Debtor or agrees to a reorganization plan, the rights of the Creditor hereunder shall not be prejudiced by the settlement agreement or the reorganization plan, and the Guarantor’s liability of guaranty shall not be reduced or exempted. The Guarantor shall not oppose the Creditor’s claims with the conditions stipulated in the settlement agreement or reorganization plan. For the part of the creditor’s rights that are not paid off due to the concession made by the Creditor to the Debtor in the settlement agreement or reorganization plan, the Creditor shall still have the right to demand the Guarantor to assume the guarantee responsibility.

Article 31 Confirmation and Notice of Service Address

1. Confirmation of Delivery Address

(1) The contact information and service address hereunder are as follows:

Address of the Guarantor: 702, Block A, Building 5, Software Industry Base, Shenzhen City;

The Addressee: Yu Shibin; Tel: [  ]; Fax: / ; Email: / .

Address of the Creditor: Unit A-01 of 21st Floor, and 22nd Floor, 23rd Floor, 24th Floor, 25th Floor, China Resources Financial Building, No. 2700 Keyuan Avenue, Nanshan Houhai Central District, Yuehai Street, Nanshan District, Shenzhen City; The Addressee: China Resources Bank of Zhuhai Co., Ltd. Shenzhen Branch

(2)The Guarantor understands and agrees that the contact information and service address hereunder shall be served as the address for service of the court/arbitration institution/Creditor’s litigation materials and legal documents involved in disputes hereunder.

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(3)The Guarantor understands and agrees that lawsuit materials and legal documents can be delivered through postal service by the court/arbitration institution with the aforesaid service address; and through electronic service (including e-mail, mobile phone SMS and other modern communication methods) with the above-mentioned agreed mobile phone number, fax, and e-mail address.

(4)The Guarantor understands and agrees that during the performance hereof, once the contracting parties enter into judicial/arbitration proceedings in respect of a dispute covered hereby, the court/arbitration institution may serve the litigation materials or legal documents to Guarantor through one or more of the aforesaid service methods, and that the service time shall be subject to the first service of the aforesaid service methods.

(5)The Guarantor understands and agrees that the aforesaid service agreement is applicable to mediation, first instance, second instance, retrial (including retrial review) and execution stages in the litigation procedure.

(6)The Guarantor understands and agrees that all the information such as address, mobile phone number, contact person, fax, e-mail address, etc. agreed aforesaid shall be assured to be true and valid, and that the Guarantor shall promptly notify the Creditor in writing for any change in the relevant information, otherwise such service process according to the original address and other information shall still be valid, and the Guarantor shall be liable for the legal consequences arising therefrom.

(7) The Guarantor understands and agrees that the aforesaid agreed mobile phone number, e-mail address, etc. can be used to receive litigation materials and legal documents served by the court/arbitration institution in a timely and effective manner.

(8) The Guarantor understands and agrees that the litigation materials and legal documents can be served by the court/arbitration institution through electronic service, and no paper documents shall be served to the legal/other agreed address of the Guarantor.

(9)The Guarantor is clear that in case the aforesaid agreed address, mobile phone number, e-mail address or other service information is not true, accurate or up-to-date, resulting in the failure from actual service or timely service or refusal of signature of the litigation materials and legal documents, it shall be deemed to have been validly served, and the Guarantor shall bear the corresponding legal consequences. In case of inconsistency in the service address, the service address submitted to the court (arbitration institution) for confirmation shall prevail.

2. Notification

Where the Creditor sends the notice by way of announcement on its website, online banking, telephone banking, mobile banking or business outlets, the date of announcement shall be deemed as the date of delivery. Under no circumstances shall the Creditor be responsible for any transmission errors, omissions or delays in mail, fax, telephone or any other communication system.

Article 32 The Guarantor shall agree that when the Creditor authorizes other branches of China Resources Bank of Zhuhai Co., Ltd. to perform the rights and obligations hereunder due its business demands. Other branches of China Resources Bank of Zhuhai Co., Ltd. authorized by the Creditor shall have the right to exercise all rights under the Contract, and have the right to bring a lawsuit to the court or submit the dispute under the Contract to the arbitration institution for adjudication.

Article 33 The subheadings herein are for the convenience of reading only and shall not be used for the interpretation hereof or for any other purpose. The terms “borrowing” and “loan” herein shall have the same meaning.

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Chapter 11 Applicable Law and Dispute Resolution

Article 34 The laws of the People’s Republic of China (excluding the laws of Hong Kong, Macao and Taiwan) shall apply hereto and all matters relating thereto.

Article 35 Disputes hereunder shall be prosecuted to the court with jurisdiction at the location of the Creditor, unless otherwise specified in the clause of “Other Agreed Matters” hereof. During the litigation or arbitration, the provisions of this Contract that do not involve the disputes shall still be performed.

Chapter 12 Effectiveness, Alteration and Dissolution of Contract

Article 36 The contract shall take effect on the date of its signature by the parties and shall terminate on the date of full performance of Guarantor’s contractual obligations.

Article 37 Once the contract comes into force, neither party may alter nor prematurely terminate the contract without authorization. If this Contract needs to be changed or terminated, the Guarantor and the Creditor shall reach a written contract through negotiation. Until the written contract is entered into, the terms and conditions of this Contract shall remain in force.

Chapter 13 Supplementary Provisions

Article 38 The Guarantor shall take the initiative to understand the operations of the Debtor and the occurrence and fulfillment of various types of credit granting business hereunder. The Master Contract, relevant legal documents or certificates for various businesses under this Contract will no longer be delivered to the Guarantor.

Article 39 Other Agreed Matters: The original hereof is in two counterparts, one for the Creditor and one for the Guarantor, all of which have the same legal effect.

(The remainder of this page is intentionally left blank)

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(The page is intentionally left blank for signature and seal)

THIS CONTRACT is executed by the Creditor and Guarantor on November 15, 2022. The Guarantor confirms that when signing the Contract, both parties have explained and discussed all the terms in detail, both parties have no doubt about all the terms of the Contract and have an accurate understanding of the legal significance of the parties’ rights, obligations and limitation or exemption clauses.

Creditor (Seal): China Resources Bank of Zhuhai Co., Ltd. Shenzhen Branch

China Resources Bank of Zhuhai Co., Ltd. Shenzhen Branch (Seal)

Legal Representative or Authorized Agent (Seal): Wu Zhaoyu (Seal)

Guarantor (Seal):	Guarantor (Seal): Minfei Bao
Legal Representative or Authorized Agent (Seal):	Certificate Type: Identity Card
	ID No.: [ ]
(The above applies to legal person)	(The above applies to natural person)

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EX-4.65

Exhibit 4.65

Contract No.: H. Y. (2022) S. E. B. Zi (TUO YI) No.[    ]

Contract on Guarantee
under the Debt Ceiling

(Corporate Business)

China Resources Bank of Zhuhai Co., Ltd.

September 2022 Edition

Contract on Guarantee under the Debt Ceiling

Creditor: China Resources Bank of Zhuhai Co., Ltd. Shenzhen Branch

Guarantor: Ping Qiuzi

Whereas, the Guarantor is willing to provide the maximum amount guarantee for the continuous creditor’s rights between the Creditor and Shenzhen United Time Technology Co., Ltd. (hereinafter referred to as the “Debtor”), and in accordance with the relevant national laws and regulations, the Parties have entered into the Contract through negotiation.

Chapter 1 Types and Amounts of Guaranteed Creditor’s Rights

Article 1 Types and Amounts of Guaranteed Creditor’s Rights

1. The principal creditor’s rights guaranteed by the Guarantor are the creditor’s rights enjoyed by the Creditor against the Debtor based on the Master Contract (all credit granting business contracts) signed with the Debtor, the various types of credit granting business processed, and the purchase of bonds/bills/asset-backed securities issued by the Debtor or the assumption of payment obligations, etc., (including contingent creditor’s rights, hereinafter the same), as well as prior creditor’s rights (hereinafter collectively referred to as “principal creditor’s rights”) agreed by both parties, for the period from November 15, 2022 to November 15, 2024 (including the starting date and the expiration date of the period; hereinafter referred to as: the creditor’s rights determination term); the principal creditor’s rights include but are not limited to:

(1) All creditor’s rights enjoyed by the Creditor against the Debtor under the Comprehensive Credit Granting Contract with contract No. H. Y. (2022) S.Z. Zi (TUO YI) No.022 in respect of all specific credit granting business contracts with the Debtor.

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(2) All outstanding creditor’s rights enjoyed by the Creditor against the Debtor under Contract No. ___/______.

(3)  The creditor’s rights enjoyed by the Creditor against the Debtor as a result of all the credit granting business contracts to be signed with the Debtor in succession during the creditor’s rights determination term.

(4) The creditor’s rights enjoyed by the Creditor against the Debtor as a result of granting a loan, etc., to the Debtor during the creditor’s rights determination term.

(5) The creditor’s rights (including contingent creditor’s rights) enjoyed by the Creditor against the Debtor as a result of the issuance of bank acceptances, L/Cs, or L/Gs (including a standby L/Cs, hereinafter the same), etc., during the creditor’s rights determination term.

(6)  The creditor’s rights (including contingent creditor’s rights) enjoyed by the Creditor against the Debtor as a result of the processing of factoring business, commercial bill discounting business, commercial bill pledge business, forfaiting business, etc. during the creditor’s rights determination term.

(7)  The creditor’s rights enjoyed by the Creditor against the Debtor as a result of the purchase of short-term financing, medium-term notes, private placement note (PPN)s, corporate bonds, enterprise bonds, credit asset securitization, enterprise asset securitization, asset-backed notes, asset-backed programs, etc., issued by the Debtor or subject to a payment obligation during the creditor’s rights determination term.

2. The maximum principal of principal creditor’s right guaranteed by the Guarantor shall be agreed in item 1 below:

(1) The maximum principal of the principal creditor’s right of the guarantee shall be RMB twenty-two million yuan only (in words), and the “maximum principal of principal creditor’s right” in this Article refers to the maximum amount of principal balance of the principal creditor’s right (including contingent creditor’s rights) guaranteed by the Guarantor under the guaranteed creditor’s right.

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(2) The maximum principal of the principal creditor’s right of the guarantee shall be RMB ____/______  yuan only (in words), and the “maximum principal of principal creditor’s right” in this Article refers to the maximum amount of principal balance of the principal creditor’s right (including contingent creditor’s rights) guaranteed by the Guarantor after deducting the amount of the security deposit, the pledged bank deposit certificate, and the national debt under the guaranteed creditor’s right . In the event that all or part of the security deposit, pledged bank deposit certificate or national debt referred to in this Article is frozen or deducted for reasons not attributable to the Creditor, resulting in the Creditor’s loss or failure to realize the guaranteed right of the security deposit, pledged bank deposit certificate or national debt, the Guarantor agrees to assume joint and several liabilities for the principal creditor’s right corresponding to the amount of the guaranteed right as a result of the Creditor’s loss or failure to realize the security deposit, pledged bank deposit certificate or national debt as agreed hereof; the amount of the “maximum principal of principal creditor’s right” shall be automatically adjusted accordingly, without a separate written confirmation between the Creditor and the Guarantor.

3. The credit granting business stipulated herein refers to the Bank’s provision of direct financial support to the customer, or its guarantee of the customer’s liability for indemnification or payment that may arise from the customer’s relevant economic activities. It includes but is not limited to all kinds of loans, overdrafts, discounts and/or all kinds of trade financing (including but not limited to import bill advance, import collection financing, import outward remittance financing, export bill purchase, export collection financing, export invoice financing, export order financing, packing loans, domestic documentary letter of credit, domestic letter of credit negotiation, import/export factoring financing, etc.), the issuance of bank acceptance, L/C or L/G (including standby L/C, the same below), discounting, factoring, guarantee, etc.

4. Regardless of whether the above principal creditor’s rights have expired or formed at the expiration of the creditor’s rights determination term, as long as any of the dates, such as the signing date, effective date and maturity date of the aforesaid Master Contract (all credit granting business contracts), the occurrence date, formation date, maturity date of the principal creditor’s rights, the occurrence date, acceptance date, bill issue date, discount date, confirmation date of the credit granting business, the transfer date of loan/discount payment/forfaiting payment/factoring financing payment, the issuance date of L/G (including standby L/C), the registration date of commercial bill pledge, the endorsement date, payment reminder date, advance date of the commercial bill, the transfer date, notification date, starting date, maturity date of the creditor’s rights/accounts receivables falls within the creditor’s rights determination term, the corresponding principal creditor’s rights shall be covered by the guarantee of the Guarantor.

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5. Where the principal creditor’s right is in a currency other than RMB, it shall be converted into RMB at the mid-price published by the Creditor on the creditor’s rights determination date.

Article 2 The type, amount, interest rate and term of each credit granting business guaranteed hereby shall be subject to the relevant legal documents or certificates. The Guarantor has carefully read the Master Contract and confirmed all the terms and conditions.

Article 3 During the creditor’s rights determination term and within the maximum principal of principal creditor’s right agreed herein, the Creditor shall not be required to confirm on a case-by-case basis upon the Creditor’s issuance of the loan or provision of other credit granting business as agreed herein.

Article 4 During the creditor’s rights determination term and the maximum principal of principal creditor’s right agreed herein, credit granting business shall be conducted in any currency.

Chapter 2 Scope of Guarantee

Article 5 Scope of Guarantee

1. The scope of the Guarantor’s guarantee under the debt ceiling includes but are not limited to the principal creditor’s rights’ principal, interest, compound interest, penalty interest, liquidated damages, damage compensation, interest on the debt for delay in performance, and the costs of realizing creditor’s rights; the costs for the realization of the creditor’s rights include but are not limited to, the collection costs, litigation costs (or arbitration costs), the preservation fees, the announcement fees , execution fees, attorney fees, travel expenses and other expenses. The aforesaid creditor’s rights are collectively referred to as guaranteed creditor’s right herein.

The proportion of guaranteed creditor’s right guaranteed by the Guarantor is 100%.

2. The maximum principal of principal creditor’s right agreed herein refers only to the maximum limit of the principal of the principal creditor’s right, and the Guarantor agrees to assume the liability of guaranty for all the payables and obligations arising therefrom within the scope of the guarantee agreed herein on the premise that the principal does not exceed the agreed limit.

Article 6 The advance, interest, expense under the principal creditor’s right, or even the actual formation of the principal creditor’s rights beyond the period of creditor’s rights determination term, shall be covered by this guarantee under the debt ceiling. The maturity date of the principal creditor’s right is not limited by the expiration date of the creditor’s rights determination term.

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Chapter 3 Mode of Guarantee

Article 7 The mode of guarantee hereof is the joint and several liabilities guarantee.

Chapter 4 Guarantee Period

Article 8 Guarantee Period

1.  Where the Master Contract is a borrowing contract/loan contract, the guarantee period hereunder shall be three years from the day following the expiration of the loan term under the Master Contract; where the Creditor declares the early maturity of the loan as agreed upon in the Master Contract, the guarantee period shall be three years from the day following the early maturity date of the loan.

2. Where the Master Contract is a bank acceptance contract, the guarantee period shall be three years from the day following the date of the Creditor’s external commitment.

3. Where the Master Contract is a guarantee opening contract, the guarantee period shall be three years from the day following the Creditor’s performance of the guarantee obligation.

4.  Where the Master Contract is an L/C opening agreement/contract, the guarantee period shall be three years from the day following the Creditor pays the amount under the L/C.

5. Where the Master Contract is a discount contract, the guarantee period shall be three years from the day following the maturity date of the discounted instrument.

6. Where the Master Contract is another financing document, the guarantee period shall be three years from the day following the expiration or early maturity of the creditor’s rights determined by the Master Contract.

7. Where the principal creditor’s right is under factoring business, the guarantee period shall be three years from the day following the maturity date (the payment date by the Debtor) of the accounts receivable under factoring business.

8. Where the principal creditor’s right is under the business of discount and pledge of commercial bills, the guarantee period shall be three years from the day following the maturity date of the commercial bill.

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9. Whenever the Creditor and the Debtor reach an extension contract with respect to the creditor’s rights performance period and the Guarantor shall extend its liability of guaranty, the guarantee period shall be three years from the day following the expiration of the debt performance period as agreed in the extension contract; the Guarantor agrees that the Creditor and the Debtor shall have the right to enter into an extension contract with respect to the principal creditor’s rights performance period without obtaining the Guarantor’s consent.

10. In the event that the Creditor declares the early maturity of the debt or principal creditor’s rights under the Master Contract resulting from any matters stipulated in laws and regulations or agreed in the Master Contract, the guarantee period shall be three years from the date of the early maturity of the debts or principal creditor’s rights under the Master Contract as determined by the Creditor.

Where the principal creditor’s right is performed in installments, the guarantee period for each instalment shall be three years from the day following the expiration of the debt performance period of the last installment.

Chapter 5 Statement and Guarantee of Guarantor

Article 9 The Guarantor hereby makes the following statements and guarantees to the Creditor:

1. The signing and performance hereof is a true intention of the Guarantor. The Guarantor is legally qualified as a Guarantor, and the Guarantor’s guarantees hereunder are in compliance with the laws, administrative regulations, rules and regulations and the Guarantor’s articles of incorporation or internal organizational documents, and have been approved by the company’s internal competent divisions and/or the relevant State competent authorities. All liabilities arising from the Guarantor’s or its legal representative’s unauthorized execution hereof shall be borne by the Guarantor, including but not limited to, full indemnification of the Guarantor for any damages suffered by the Creditor as a result thereof.

2. The Guarantor shall provide the Creditor with true, complete and valid financial statements, Articles of Association or other relevant materials and information as required, and accept the Creditor’s supervision and inspection on the Guarantor’s production and operation and financial status.

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3. The Guarantor has completed or shall complete all the required filing or notarization procedures.

4. There is currently no litigation, arbitration or administrative procedure involving the Guarantor or its major operating assets that would have a material adverse effect on the financial condition of the Guarantor or the ability of the Guarantor to perform its obligations hereunder.

5. Where the Guarantor and its controlling shareholders at all levels belong to the publicly listed company (including companies whose shares are traded on other national securities exchanges approved by the State Council) or the controlling subsidiary within the scope of the consolidated statement of accounts of a publicly listed company, it is guaranteed that it shall promptly fulfill the information disclosure obligations in respect of such guarantee in accordance with the requirements of the Security Law, the Rules Governing the Listing of Stocks on Stock Exchanges and other laws, rules and regulations.

Chapter 6 Guarantor’s Commitment

Article 10 Before all the principal creditor’s right are paid off, the Guarantor is committed to abide by the following provisions:

1. In case the principal creditor’s rights expires or the Creditor declares early expiration as agreed in the Master Contract or stipulated in the law, and the Debtor fails to perform it in full and on time, or the Debtor violates any other agreements of the Master Contract, the Guarantor shall immediately assume the liability of guaranty within the scope of the guarantee.

2. In case the Guarantor fails to fulfill the liability of guaranty as agreed herein, the Creditor has the right to directly deduct the relevant funds from the Guarantor’s accounts opened in various institutions of China Resources Bank of Zhuhai Co., Ltd.

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3. The Guarantor shall immediately notify the Creditor in writing, in case of any of the following circumstances:

(1) Changes in the Guarantor’s name, domicile, legal representative, contact information, etc.; changes in the Guarantor’s (a natural person’s) personal information such as occupation, income, address, correspondence address, and contact number during the loan period.

(2) Changes in the Guarantor’s affiliation, senior personnel, amendments to the articles of association, and organizational restructuring.

(3) Deterioration of the Guarantor’s financial condition, serious difficulties in production and operation, or major litigation or arbitration.

(4) Cessation of production, closure of business, suspension of business reorganization or application for bankruptcy or reorganization of the Guarantor.

(5) Suspension or Revocation of the Guarantor’s business license, closure of business by order or other reasons for dissolution.

(6) Any other circumstances of the Guarantor that are detrimental to the realization of the Creditor’s creditor’s rights.

4. The Guarantor shall notify the creditor in writing fifteen days in advance and obtain the creditor’s written consent in case one of the following acts is committed:

(1) The Guarantor changes its capital structure or operation system, including but not limited to contracting, leasing, shareholding system reform, joint venture, merger, division, joint capital, capital reduction, asset transfer, application for reorganization, application for settlement and application for bankruptcy.

(2) The Guarantor provides a guarantee for the third party ’s debt or sets a mortgage or pledge guarantee for itself or the third party ’s debt with its assets, which seriously affects its performance of its liability of guaranty hereunder.

5. In case the Guarantor has assumed the liability of guaranty and is entitled to recoup from the Debtor, if the Debtor is exposed to both the Guarantor’s recoupment and any recoupment by the Creditor under the guaranteed creditor’s right, the Guarantor agrees that the Debtor shall have priority in the payment of its debt to the Creditor.

Article 11 In the event that the Debtor and the Guarantor have entered into or shall enter into a counter-guarantee contract in respect of the guarantee obligations hereunder, such counter-guarantee contract shall not prejudice, in law or in fact, any of the creditor’s rights hereunder.

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Article 12 The Guarantor shall continue to assume the liability of guaranty as agreed hereof in case of any of the following circumstances:

1. The Creditor and the Debtor have negotiated a change in the Master Contract/principal creditor’s rights that does not aggravate the Debtor’s debt (unless otherwise agreed herein).

2. Under international and domestic trade financing, the Creditor and the Debtor have amended the L/C related to the Master Contract in a way that does not aggravate the Debtor’s payment obligations under the L/C.

3. The Creditor and the Debtor have negotiated and agreed to increase the loan interest rate under the principal creditor’s right.

4. The amount of principal creditor’s rights have changed as a result of the adjustment of floating interest rate or loan prime rate (LPR) in the Master Contract.

5. The Creditor has transferred the principal creditor’s right to a third party.

6. The Creditor and the Debtor have signed an extension contract to extend the maturity date of the principal creditor’s rights.

Article 13 In the event of any of the following circumstances under domestic L/C, buyer financing under domestic L/C, import L/C and import bill advance/import payment agency business, the Guarantor shall have an irrefutable mortgage guarantee obligation, and the Guarantor shall not be exempted or defended by any judicial or administrative authority that issues a stop-payment order, injunction, or takes measures to seal up, detain, freeze the property related to the L/C or similar measures with respect to the payment obligations under such L/C:

1. The Creditor’s designee or authorized person has made payment in good faith in accordance with the Creditor’s instructions.

2. The Creditor or its designee or authorized person has in good faith issued a confirmation of payment due for the goods under the domestic L/C or has in good faith made an acceptance of the documents under the import L/C.

3. The confirming bank of the L/C has performed its payment obligations in good faith.

4. The negotiating bank of the L/C has negotiated the payment in good faith.

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Article 14 The Guarantor agrees that: in case the principal creditor’s right is also guaranteed by the guarantee, mortgage or pledge provided by the Debtor or a third party, the Creditor shall be entitled to exercise the guarantee right at its own discretion, including but not limited to: the Creditor has the right to request the Guarantor to make immediate payment for all sums due and payable by the Debtor without first exercising its real right for security or claiming its rights against other Guarantors, and has the right to claim part or all of its security rights against one or more Guarantors, including the Guarantor, individually or simultaneously and without regard to any particular order of priority; in case the Creditor waive or alter its guarantee rights against other Guarantors, or waive or alter the right of subordination of the real right for security, the Guarantor shall still be liable for the guarantee as stipulated herein and not exempted from any liability.

Article 15 In the event that the Creditor waives, alters or loses other security interests under the master contract, the Guarantor’s liability of guaranty shall prevail, and the Guarantor pledges to continue to assume the liability of guaranty as agreed herein.

Chapter 7 Sequence of Settlement

Article 16 Where the Guarantor guarantees several creditor’s rights between the Debtor and the Creditor, including but not limited to the creditor’s rights hereunder, and the Guarantor’s payment is insufficient to pay off all the debts due, the creditor’s rights to be paid off and the order of payment shall be determined by the Creditor.

In case the Creditor exercises the rights of set-off against the Guarantor as stipulated by law or agreed herein, the debts to be set off and the orders thereof shall be determined by the Creditor; in case the Creditor exercises the rights of subrogation as stipulated by law, the Creditor’s rights to be paid off by the payment of the secondary Debtor to the Creditor and the order thereof shall be determined by the Creditor.

Provided that the Debtor owes other due creditor’s rights to the Creditor in addition to the principal creditor’s rights, the Creditor has the right to debit RMB or other currencies in the Debtor’s accounts opened in various institutions of China Resources Bank of Zhuhai in order to pay off any one of the due creditor’s rights in an order to be determined by the Creditor.

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Chapter 8 Breach of Contract

Article 17 Each of the following events and matters shall constitute the Guarantor’s breach of contract hereunder:

1. The Debtor is declared dissolved or bankrupt during the contract term.

2. Other circumstances arise that make the principal creditor’s rights difficult or impossible to achieve.

3. The Guarantor suspends or ceases its business or enters into bankruptcy, liquidation, closure of business or other similar proceedings, or the Guarantor is subject to a petition for bankruptcy, liquidation or a decision by the competent authority to discontinue or suspend its operations; the Guarantor is dead, declared missing or declared dead.

4. Major litigation, arbitration or administrative proceedings have taken place against the Guarantor or its material operating assets, resulting in the possibility of the Guarantor’s inability to perform its liability of guaranty.

5. The Guarantor has a material event of default under other contracts with the Creditor.

6. The Guarantor has a material event of default under other contracts with other banks.

7. The Guarantor or Debtor fails to comply with laws, regulations or rules on environmental protection, energy conservation and emission reduction, and pollution reduction, or may suffer from energy consumption and pollution risks.

8. The Guarantor breaches its other obligations hereunder, or other events that the Creditor believes shall materially and adversely affect its rights hereunder.

Article 18 After an event of default as described above, the Creditor shall be entitled to take any or several of the following measures, as the case may be:

1. The Creditor shall exercise its security rights hereunder or its default remedies under the master contract and this contract.

2. The Creditor shall reduce, suspend or terminate, in whole or in part, other credit lines granted to the Guarantor.

3. The Creditor shall suspend or terminate, in whole or in part, the acceptance of the Guarantor’s business applications under other contracts; and suspend or terminate, in whole or in part, the issuance and processing of outstanding loans and outstanding trade finance.

4. The Creditor shall declare, in whole or in part, Guarantor’s principal and interest on the outstanding loan/trade financing payments and other payables under other contracts forthwith due.

5. The Creditor shall terminate or rescind this contract or terminate or rescind, in whole or in part, any other contract between the Guarantor and the Creditor.

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6. The Creditor shall request the Guarantor to compensate for the loss caused to the Creditor.

7. In the event that the Guarantor fails to perform its liability of guaranty hereunder, the Guarantor shall agree that the Creditor deducts funds from all accounts opened by the Guarantor in institutions of China Resources Bank of Zhuhai Co., Ltd. in order to pay off the Creditor’s Rights.

Chapter 9 Expenses and Compensation

Article 19 Expenses incurred as a result of the conclusion and performance hereof shall be determined by agreement between the contracting parties, on condition that there are laws, regulations and rules stipulating the cost bearing entity.

The Guarantor shall immediately pay or indemnify the Creditor as requested by the Creditor for all costs and expenses incurred by the Creditor in exercising its rights hereunder or in instituting litigation against the Guarantor or in seeking indemnification or defending, waiving or assigning this contract on the basis of the foregoing (including but not limited to, the fees for attorney services, accounting services, audits, appraisals of litigation, and all other actual expenditures).

Chapter 10 Miscellaneous

Article 20 The Guarantor shall not transfer or otherwise dispose of all or part of its obligations hereunder without the prior consent of the Creditor.

Article 21 The Creditor shall transfer the principal creditor’s rights, in whole or in part, to a third party without the consent of the Guarantor, and the security interests hereunder shall be transferred to the third party at the same time, and the Guarantor shall assume the liability of guaranty to the new Creditor within the scope of the original guarantee.

Article 22 In the event of a separation or merger of the Guarantor after the effective date hereof, the changed organization shall assume the Guarantor’s obligations hereunder.

Article 23 The guarantor has fully recognized the interest rate risk. In case the Creditor adjusts the interest rate level, the way of calculating or settling the interest rate according to the agreement of the master contract or the change of the national interest rate policy, which results in the increase of the interest, penalty interest and compound interest to be repaid by the Debtor of the master contract, the Guarantor also bears the liability of guaranty for the increased portion.

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Article 24 Any grace, favor or delay granted by the Creditor to the Guarantor shall not affect, damage or restrict all the rights enjoyed by the Creditor pursuant to this contract and the laws and regulations; and shall not be regarded as a waiver of the rights and interests of the Creditor hereunder, nor shall it affect any of the Guarantor’s liabilities and obligations hereunder.

Article 25 In accordance with the Regulation on the Administration of Credit Investigation Industry and other relevant national laws and regulations, the Guarantor confirms that it is aware of and understands the contents and meanings of these Articles, and hereby irrevocably agrees in writing and authorizes the Creditor (including the Creditor’s head office and each other branch of the head office) to query, use, collect, provide and report the relevant information about the Guarantor, and the Creditor has the right to carry out the specific operations as follows:

1. In order to promptly understand the credit status of the Guarantor, exclude the Guarantor’s violation of laws and regulations, and ensure the business security between the Creditor and the Guarantor hereunder, the Creditor shall, in accordance with the relevant state regulations, query and make use of the relevant information of the Guarantor through the basic financial credit information database and [other credit reporting agencies approved and established by the State Council’s Credit Collection Industry Supervision and Administration Department of the State Council] (hereinafter referred to as “Guarantor’s Information”).

China Resources Bank of Zhuhai Co., Ltd. Shenzhen Branch (Seal)

2. Pursuant to the relevant provisions of the State, the Creditor shall collect the relevant information hereunder and the relevant legal documents signed between the Guarantor and the Creditor, as well as other information relating to the Guarantor obtained by the Creditor through the signing hereof and the relevant legal documents (hereinafter referred to as the “Credit Information Collected by the Creditor”), and provide it to the basic financial credit information database and [other credit reporting agencies approved and established by the State Council’s Credit Collection Industry Supervision and Administration Department of the State Council].

3. The Creditor shall keep the “Guarantor’s Information” and the “Credit Information Collected by the Creditor” for the purpose of internal archiving in accordance with national laws and regulations and the provisions of the Creditor on the business file management system, and the retention period shall not be limited to the provisions of Article 7 of this Authorization.

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4. In accordance with the applicable laws and regulations and regulatory requirements, the Creditor shall provide the “Guarantor’s information” and the “Credit Information Collected by the Creditor” to the relevant regulatory authorities such as the China Banking and Insurance Regulatory Commission and the relevant judicial and administrative authorities.

5. For the sake of providing financial services, the Creditor shares “Guarantor’s Information” and the “Credit Information Collected by the Creditor” within the Creditor internal, including among its branches.

6. The Creditor provides “Guarantor’s Information” and the “Credit Information Collected by the Creditor” to the relevant third-party institutions in accordance with the requirements of arrears collection, creditor’s rights transfer and financial services outsourcing.

7. This authorization shall commence on the date hereof and shall expire on the date of termination of all businesses hereunder.

8. The Creditor shall be liable for any legal obligations arising from the Creditor’s inquiries, use and provision of the “Guarantor’s Information” and the “Credit Information Collected by the Creditor” beyond the scope of the authorization stipulated herein.

Article 26 The Guarantor hereby irrevocably pledges that, in the event of a breach of the obligations agreed upon herein, the Creditor may report the information on the Guarantor’s breach of contract to credit reporting agencies and banking associations. The relevant banking association is also authorized to share the Guarantor’s default information among banking financial institutions and even make it public through appropriate means.

The Guarantor voluntarily accepts the joint malicious disciplinary rights protection measures such as reduction or cessation of credit granting, cessation of opening new settlement accounts, etc. taken by the Creditor together with other banking financial institutions.

Article 27 The Guarantor hereby confirms and declares that the Creditor has, in accordance with the law, prompted and explained to the Guarantor the clauses in respect of the exemption or mitigation of the Creditor’s liability and other clauses of material interest to the Guarantor, the black and bold font clauses, and the authorization clauses, and that the Creditor has already provided adequate explanations of such clauses at the Guarantor’s request. The Guarantor has been fully aware of and understands the meaning of such clauses and the corresponding legal consequences, and is willing to bear the legal consequences of such clauses. The Guarantor promises to strictly abide by all obligations hereunder.

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Article 28 The Guarantor guarantees that the Guarantor and the Guarantor’s employees and agents shall not offer, give, solicit or accept any form of material benefits (including but not limited to cash, cards in kind, trips, etc.) or other non-material benefits other than those stipulated herein to the Creditor or the Creditor’s employees in any form; the Guarantor shall not use the funds or services furnished by the Creditor in any form, either directly or indirectly, for the purpose of corruption or bribery activities associated with corruption or bribery; if the Guarantor is aware of any violation of the provisions of this Article, it shall provide the Creditor with timely, truthful, complete and accurate clues and relevant information, and cooperate with the Creditor in the relevant matters as requested by the Creditor.

Article 29 The Guarantor pledges to abide by China’s anti-money laundering related laws and regulations and not to participate in illegal and criminal activities such as suspected money laundering, terrorist financing; to actively cooperate with the Creditor’s customer identification and due diligence, to provide truthful, accurate, complete and effective customer information, and to comply with the Creditor’s anti-money laundering and anti-terrorist financing related management regulations.

In case the Creditor requests the Guarantor’s assistance in compliance with anti-money laundering or other regulatory requirements, the Guarantor shall cooperate and provide corresponding written materials.

Article 30 During the Debtor’s bankruptcy proceedings, where the Creditor reaches a settlement agreement with the Debtor or agrees to a reorganization plan, the rights of the Creditor hereunder shall not be prejudiced by the settlement agreement or the reorganization plan, and the Guarantor’s liability of guaranty shall not be reduced or exempted. The Guarantor shall not oppose the Creditor’s claims with the conditions stipulated in the settlement agreement or reorganization plan. For the part of the creditor’s rights that are not paid off due to the concession made by the Creditor to the Debtor in the settlement agreement or reorganization plan, the Creditor shall still have the right to demand the Guarantor to assume the guarantee responsibility.

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Article 31 Confirmation and Notice of Service Address

1. Confirmation of Delivery Address

(1) The contact information and service address hereunder are as follows:

Address of the Guarantor: 702, Block A, Building 5, Software Industry Base, Shenzhen City;

The Addressee: Yu Shibin; Tel: [ ]; Fax: ___/___; Email:___/___.

Address of the Creditor: Unit A-01 of 21st Floor, and 22nd Floor, 23rd Floor, 24th Floor, 25th Floor, China Resources Financial Building, No. 2700 Keyuan Avenue, Nanshan Houhai Central District, Yuehai Street, Nanshan District, Shenzhen City; The Addressee: China Resources Bank of Zhuhai Co., Ltd. Shenzhen Branch

(2) The Guarantor understands and agrees that the contact information and service address hereunder shall be served as the address for service of the court/arbitration institution/Creditor’s litigation materials and legal documents involved in disputes hereunder.

(3) The Guarantor understands and agrees that lawsuit materials and legal documents can be delivered through postal service by the court/arbitration institution with the aforesaid service address; and through electronic service (including e-mail, mobile phone SMS and other modern communication methods) with the above-mentioned agreed mobile phone number, fax, and e-mail address.

(4) The Guarantor understands and agrees that during the performance hereof, once the contracting parties enter into judicial/arbitration proceedings in respect of a dispute covered hereby, the court/arbitration institution may serve the litigation materials or legal documents to Guarantor through one or more of the aforesaid service methods, and that the service time shall be subject to the first service of the aforesaid service methods.

(5) The Guarantor understands and agrees that the aforesaid service agreement is applicable to mediation, first instance, second instance, retrial (including retrial review) and execution stages in the litigation procedure.

(6) The Guarantor understands and agrees that all the information such as address, mobile phone number, contact person, fax, e-mail address, etc. agreed aforesaid shall be assured to be true and valid, and that the Guarantor shall promptly notify the Creditor in writing for any change in the relevant information, otherwise such service process according to the original address and other information shall still be valid, and the Guarantor shall be liable for the legal consequences arising therefrom.

(7) The Guarantor understands and agrees that the aforesaid agreed mobile phone number, e-mail address, etc. can be used to receive litigation materials and legal documents served by the court/arbitration institution in a timely and effective manner.

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(8) The Guarantor understands and agrees that the litigation materials and legal documents can be served by the court/arbitration institution through electronic service, and no paper documents shall be served to the legal/other agreed address of the Guarantor.

(9) The Guarantor is clear that in case the aforesaid agreed address, mobile phone number, e-mail address or other service information is not true, accurate or up-to-date, resulting in the failure from actual service or timely service or refusal of signature of the litigation materials and legal documents, it shall be deemed to have been validly served, and the Guarantor shall bear the corresponding legal consequences. In case of inconsistency in the service address, the service address submitted to the court (arbitration institution) for confirmation shall prevail.

2. Notification

Where the Creditor sends the notice by way of announcement on its website, online banking, telephone banking, mobile banking or business outlets, the date of announcement shall be deemed as the date of delivery. Under no circumstances shall the Creditor be responsible for any transmission errors, omissions or delays in mail, fax, telephone or any other communication system.

Article 32 The Guarantor shall agree that when the Creditor authorizes other branches of China Resources Bank of Zhuhai Co., Ltd. to perform the rights and obligations hereunder due its business demands. Other branches of China Resources Bank of Zhuhai Co., Ltd. authorized by the Creditor shall have the right to exercise all rights under the Contract, and have the right to bring a lawsuit to the court or submit the dispute under the Contract to the arbitration institution for adjudication.

Article 33 The subheadings herein are for the convenience of reading only and shall not be used for the interpretation hereof or for any other purpose. The terms “borrowing” and “loan” herein shall have the same meaning.

Chapter 11 Applicable Law and Dispute Resolution

Article 34 The laws of the People’s Republic of China (excluding the laws of Hong Kong, Macao and Taiwan) shall apply hereto and all matters relating thereto.

Article 35 Disputes hereunder shall be prosecuted to the court with jurisdiction at the location of the Creditor, unless otherwise specified in the clause of “Other Agreed Matters” hereof. During the litigation or arbitration, the provisions of this Contract that do not involve the disputes shall still be performed.

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Chapter 12 Effectiveness, Alteration and Dissolution of Contract

Article 36 The contract shall take effect on the date of its signature by the parties and shall terminate on the date of full performance of Guarantor’s contractual obligations.

Article 37 Once the contract comes into force, neither party may alter nor prematurely terminate the contract without authorization. If this Contract needs to be changed or terminated, the Guarantor and the Creditor shall reach a written contract through negotiation. Until the written contract is entered into, the terms and conditions of this Contract shall remain in force.

Chapter 13 Supplementary Provisions

Article 38 The Guarantor shall take the initiative to understand the operations of the Debtor and the occurrence and fulfillment of various types of credit granting business hereunder. The Master Contract, relevant legal documents or certificates for various businesses under this Contract will no longer be delivered to the Guarantor.

Article 39 Other Agreed Matters: The original hereof is in two counterparts, one for the Creditor and one for the Guarantor, all of which have the same legal effect.

(The remainder of this page is intentionally left blank)

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(The page is intentionally left blank for signature and seal)

THIS CONTRACT is executed by the Creditor and Guarantor on November 15, 2022. The Guarantor confirms that when signing the Contract, both parties have explained and discussed all the terms in detail, both parties have no doubt about all the terms of the Contract and have an accurate understanding of the legal significance of the parties’ rights, obligations and limitation or exemption clauses.

Creditor (Seal): China Resources Bank of Zhuhai Co., Ltd. Shenzhen Branch

China Resources Bank of Zhuhai Co., Ltd. Shenzhen Branch (Seal)

Legal Representative or Authorized Agent (Seal): Wu Zhaoyu (Seal)

Guarantor (Seal):	Guarantor (Seal): Qiuzi Ping
Legal Representative or Authorized Agent (Seal):	Certificate Type: Identity Card
	ID No.: [   ]
(The above applies to legal person)	(The above applies to natural person)

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EX-4.66

Exhibit 4.66

Contract No.: H. Y. (2022) S. E. B. Zi (TUO YI) No. [ ]

Contract on Guarantee
under the Debt Ceiling

(Corporate Business)

China Resources Bank of Zhuhai Co., Ltd.

September 2022 Edition

Contract on Guarantee under the Debt Ceiling

Creditor: China Resources Bank of Zhuhai Co., Ltd. Shenzhen Branch

Guarantor: Guangxi Utime Technology Co., Ltd

Whereas, the Guarantor is willing to provide the maximum amount guarantee for the continuous creditor’s rights between the Creditor and Shenzhen United Time Technology Co., Ltd. (hereinafter referred to as the “Debtor”), and in accordance with the relevant national laws and regulations, the Parties have entered into the Contract through negotiation.

Chapter 1 Types and Amounts of Guaranteed Creditor’s Rights

Article 1 Types and Amounts of Guaranteed Creditor’s Rights

1. The principal creditor’s rights guaranteed by the Guarantor are the creditor’s rights enjoyed by the Creditor against the Debtor based on the Master Contract (all credit granting business contracts) signed with the Debtor, the various types of credit granting business processed, and the purchase of bonds/bills/asset-backed securities issued by the Debtor or the assumption of payment obligations, etc., (including contingent creditor’s rights, hereinafter the same), as well as prior creditor’s rights (hereinafter collectively referred to as “principal creditor’s rights”) agreed by both parties, for the period from November 15, 2022 to November 15, 2024 (including the starting date and the expiration date of the period; hereinafter referred to as: the creditor’s rights determination term); the principal creditor’s rights include but are not limited to:

(1) All creditor’s rights enjoyed by the Creditor against the Debtor under the Comprehensive Credit Granting Contract with contract No. H. Y. (2022) S. Z. Zi (TUO YI) No.[   ] in respect of all specific credit granting business contracts with the Debtor.

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(2) All outstanding creditor’s rights enjoyed by the Creditor against the Debtor under Contract No.        /                .

(3) The creditor’s rights enjoyed by the Creditor against the Debtor as a result of all the credit granting business contracts to be signed with the Debtor in succession during the creditor’s rights determination term.

(4) The creditor’s rights enjoyed by the Creditor against the Debtor as a result of granting a loan, etc., to the Debtor during the creditor’s rights determination term.

(5) The creditor’s rights (including contingent creditor’s rights) enjoyed by the Creditor against the Debtor as a result of the issuance of bank acceptances, L/Cs, or L/Gs (including a standby L/Cs, hereinafter the same), etc., during the creditor’s rights determination term.

(6) The creditor’s rights (including contingent creditor’s rights) enjoyed by the Creditor against the Debtor as a result of the processing of factoring business, commercial bill discounting business, commercial bill pledge business, forfaiting business, etc. during the creditor’s rights determination term.

(7) The creditor’s rights enjoyed by the Creditor against the Debtor as a result of the purchase of short-term financing, medium-term notes, private placement note (PPN)s, corporate bonds, enterprise bonds, credit asset securitization, enterprise asset securitization, asset-backed notes, asset-backed programs, etc., issued by the Debtor or subject to a payment obligation during the creditor’s rights determination term.

2. The maximum principal of principal creditor’s right guaranteed by the Guarantor shall be agreed in item 1 below:

(1) The maximum principal of the principal creditor’s right of the guarantee shall be RMB twenty-two million yuan only (in words), and the “maximum principal of principal creditor’s right” in this Article refers to the maximum amount of principal balance of the principal creditor’s right (including contingent creditor’s rights) guaranteed by the Guarantor under the guaranteed creditor’s right.

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(2) The maximum principal of the principal creditor’s right of the guarantee shall be RMB         /                    yuan only (in words), and the “maximum principal of principal creditor’s right” in this Article refers to the maximum amount of principal balance of the principal creditor’s right (including contingent creditor’s rights) guaranteed by the Guarantor after deducting the amount of the security deposit, the pledged bank deposit certificate, and the national debt under the guaranteed creditor’s right . In the event that all or part of the security deposit, pledged bank deposit certificate or national debt referred to in this Article is frozen or deducted for reasons not attributable to the Creditor, resulting in the Creditor’s loss or failure to realize the guaranteed right of the security deposit, pledged bank deposit certificate or national debt, the Guarantor agrees to assume joint and several liabilities for the principal creditor’s right corresponding to the amount of the guaranteed right as a result of the Creditor’s loss or failure to realize the security deposit, pledged bank deposit certificate or national debt as agreed hereof; the amount of the “maximum principal of principal creditor’s right” shall be automatically adjusted accordingly, without a separate written confirmation between the Creditor and the Guarantor.

3. The credit granting business stipulated herein refers to the Bank’s provision of direct financial support to the customer, or its guarantee of the customer’s liability for indemnification or payment that may arise from the customer’s relevant economic activities. It includes but is not limited to all kinds of loans, overdrafts, discounts and/or all kinds of trade financing (including but not limited to import bill advance, import collection financing, import outward remittance financing, export bill purchase, export collection financing, export invoice financing, export order financing, packing loans, domestic documentary letter of credit, domestic letter of credit negotiation, import/export factoring financing, etc.), the issuance of bank acceptance, L/C or L/G (including standby L/C, the same below), discounting, factoring, guarantee, etc.

4. Regardless of whether the above principal creditor’s rights have expired or formed at the expiration of the creditor’s rights determination term, as long as any of the dates, such as the signing date, effective date and maturity date of the aforesaid Master Contract (all credit granting business contracts), the occurrence date, formation date, maturity date of the principal creditor’s rights, the occurrence date, acceptance date, bill issue date, discount date, confirmation date of the credit granting business, the transfer date of loan/discount payment/forfaiting payment/factoring financing payment, the issuance date of L/G (including standby L/C), the registration date of commercial bill pledge, the endorsement date, payment reminder date, advance date of the commercial bill, the transfer date, notification date, starting date, maturity date of the creditor’s rights/accounts receivables falls within the creditor’s rights determination term, the corresponding principal creditor’s rights shall be covered by the guarantee of the Guarantor.

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5. Where the principal creditor’s right is in a currency other than RMB, it shall be converted into RMB at the mid-price published by the Creditor on the creditor’s rights determination date.

Article 2 The type, amount, interest rate and term of each credit granting business guaranteed hereby shall be subject to the relevant legal documents or certificates. The Guarantor has carefully read the Master Contract and confirmed all the terms and conditions.

Article 3 During the creditor’s rights determination term and within the maximum principal of principal creditor’s right agreed herein, the Creditor shall not be required to confirm on a case-by-case basis upon the Creditor’s issuance of the loan or provision of other credit granting business as agreed herein.

Article 4 During the creditor’s rights determination term and the maximum principal of principal creditor’s right agreed herein, credit granting business shall be conducted in any currency.

Chapter 2 Scope of Guarantee

Article 5 Scope of Guarantee

1. The scope of the Guarantor’s guarantee under the debt ceiling includes but are not limited to the principal creditor’s rights’ principal, interest, compound interest, penalty interest, liquidated damages, damage compensation, interest on the debt for delay in performance, and the costs of realizing creditor’s rights; the costs for the realization of the creditor’s rights include but are not limited to, the collection costs, litigation costs (or arbitration costs), the preservation fees, the announcement fees , execution fees, attorney fees, travel expenses and other expenses. The aforesaid creditor’s rights are collectively referred to as guaranteed creditor’s right herein.

The proportion of guaranteed creditor’s right guaranteed by the Guarantor is 100%.

2. The maximum principal of principal creditor’s right agreed herein refers only to the maximum limit of the principal of the principal creditor’s right, and the Guarantor agrees to assume the liability of guaranty for all the payables and obligations arising therefrom within the scope of the guarantee agreed herein on the premise that the principal does not exceed the agreed limit.

Article 6 The advance, interest, expense under the principal creditor’s right, or even the actual formation of the principal creditor’s rights beyond the period of creditor’s rights determination term, shall be covered by this guarantee under the debt ceiling. The maturity date of the principal creditor’s right is not limited by the expiration date of the creditor’s rights determination term.

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Chapter 3 Mode of Guarantee

Article 7 The mode of guarantee hereof is the joint and several liabilities guarantee.

Chapter 4 Guarantee Period

Article 8 Guarantee Period

1. Where the Master Contract is a borrowing contract/loan contract, the guarantee period hereunder shall be three years from the day following the expiration of the loan term under the Master Contract; where the Creditor declares the early maturity of the loan as agreed upon in the Master Contract, the guarantee period shall be three years from the day following the early maturity date of the loan.

2. Where the Master Contract is a bank acceptance contract, the guarantee period shall be three years from the day following the date of the Creditor’s external commitment.

3. Where the Master Contract is a guarantee opening contract, the guarantee period shall be three years from the day following the Creditor’s performance of the guarantee obligation.

4. Where the Master Contract is an L/C opening agreement/contract, the guarantee period shall be three years from the day following the Creditor pays the amount under the L/C.

5. Where the Master Contract is a discount contract, the guarantee period shall be three years from the day following the maturity date of the discounted instrument.

6. Where the Master Contract is another financing document, the guarantee period shall be three years from the day following the expiration or early maturity of the creditor’s rights determined by the Master Contract.

7. Where the principal creditor’s right is under factoring business, the guarantee period shall be three years from the day following the maturity date (the payment date by the Debtor) of the accounts receivable under factoring business.

8. Where the principal creditor’s right is under the business of discount and pledge of commercial bills, the guarantee period shall be three years from the day following the maturity date of the commercial bill.

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9. Whenever the Creditor and the Debtor reach an extension contract with respect to the creditor’s rights performance period and the Guarantor shall extend its liability of guaranty, the guarantee period shall be three years from the day following the expiration of the debt performance period as agreed in the extension contract; the Guarantor agrees that the Creditor and the Debtor shall have the right to enter into an extension contract with respect to the principal creditor’s rights performance period without obtaining the Guarantor’s consent.

10. In the event that the Creditor declares the early maturity of the debt or principal creditor’s rights under the Master Contract resulting from any matters stipulated in laws and regulations or agreed in the Master Contract, the guarantee period shall be three years from the date of the early maturity of the debts or principal creditor’s rights under the Master Contract as determined by the Creditor.

Where the principal creditor’s right is performed in installments, the guarantee period for each instalment shall be three years from the day following the expiration of the debt performance period of the last installment.

Chapter 5 Statement and Guarantee of Guarantor

Article 9 The Guarantor hereby makes the following statements and guarantees to the Creditor:

1. The signing and performance hereof is a true intention of the Guarantor. The Guarantor is legally qualified as a Guarantor, and the Guarantor’s guarantees hereunder are in compliance with the laws, administrative regulations, rules and regulations and the Guarantor’s articles of incorporation or internal organizational documents, and have been approved by the company’s internal competent divisions and/or the relevant State competent authorities. All liabilities arising from the Guarantor’s or its legal representative’s unauthorized execution hereof shall be borne by the Guarantor, including but not limited to, full indemnification of the Guarantor for any damages suffered by the Creditor as a result thereof.

2. The Guarantor shall provide the Creditor with true, complete and valid financial statements, Articles of Association or other relevant materials and information as required, and accept the Creditor’s supervision and inspection on the Guarantor’s production and operation and financial status.

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3. The Guarantor has completed or shall complete all the required filing or notarization procedures.

4. There is currently no litigation, arbitration or administrative procedure involving the Guarantor or its major operating assets that would have a material adverse effect on the financial condition of the Guarantor or the ability of the Guarantor to perform its obligations hereunder.

5. Where the Guarantor and its controlling shareholders at all levels belong to the publicly listed company (including companies whose shares are traded on other national securities exchanges approved by the State Council) or the controlling subsidiary within the scope of the consolidated statement of accounts of a publicly listed company, it is guaranteed that it shall promptly fulfill the information disclosure obligations in respect of such guarantee in accordance with the requirements of the Security Law, the Rules Governing the Listing of Stocks on Stock Exchanges and other laws, rules and regulations.

Chapter 6 Guarantor’s Commitment

Article 10 Before all the principal creditor’s right are paid off, the Guarantor is committed to abide by the following provisions:

1. In case the principal creditor’s rights expires or the Creditor declares early expiration as agreed in the Master Contract or stipulated in the law, and the Debtor fails to perform it in full and on time, or the Debtor violates any other agreements of the Master Contract, the Guarantor shall immediately assume the liability of guaranty within the scope of the guarantee.

2. In case the Guarantor fails to fulfill the liability of guaranty as agreed herein, the Creditor has the right to directly deduct the relevant funds from the Guarantor’s accounts opened in various institutions of China Resources Bank of Zhuhai Co., Ltd.

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3. The Guarantor shall immediately notify the Creditor in writing, in case of any of the following circumstances:

(1) Changes in the Guarantor’s name, domicile, legal representative, contact information, etc.; changes in the Guarantor’s (a natural person’s) personal information such as occupation, income, address, correspondence address, and contact number during the loan period.

(2) Changes in the Guarantor’s affiliation, senior personnel, amendments to the articles of association, and organizational restructuring.

(3) Deterioration of the Guarantor’s financial condition, serious difficulties in production and operation, or major litigation or arbitration.

(4) Cessation of production, closure of business, suspension of business reorganization or application for bankruptcy or reorganization of the Guarantor.

(5) Suspension or Revocation of the Guarantor’s business license, closure of business by order or other reasons for dissolution.

(6) Any other circumstances of the Guarantor that are detrimental to the realization of the Creditor’s creditor’s rights.

4. The Guarantor shall notify the creditor in writing fifteen days in advance and obtain the creditor’s written consent in case one of the following acts is committed:

(1) The Guarantor changes its capital structure or operation system, including but not limited to contracting, leasing, shareholding system reform, joint venture, merger, division, joint capital, capital reduction, asset transfer, application for reorganization, application for settlement and application for bankruptcy.

(2) The Guarantor provides a guarantee for the third party ’s debt or sets a mortgage or pledge guarantee for itself or the third party ’s debt with its assets, which seriously affects its performance of its liability of guaranty hereunder.

5. In case the Guarantor has assumed the liability of guaranty and is entitled to recoup from the Debtor, if the Debtor is exposed to both the Guarantor’s recoupment and any recoupment by the Creditor under the guaranteed creditor’s right, the Guarantor agrees that the Debtor shall have priority in the payment of its debt to the Creditor.

Article 11 In the event that the Debtor and the Guarantor have entered into or shall enter into a counter-guarantee contract in respect of the guarantee obligations hereunder, such counter-guarantee contract shall not prejudice, in law or in fact, any of the creditor’s rights hereunder.

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Article 12 The Guarantor shall continue to assume the liability of guaranty as agreed hereof in case of any of the following circumstances:

1. The Creditor and the Debtor have negotiated a change in the Master Contract/principal creditor’s rights that does not aggravate the Debtor’s debt (unless otherwise agreed herein).

2. Under international and domestic trade financing, the Creditor and the Debtor have amended the L/C related to the Master Contract in a way that does not aggravate the Debtor’s payment obligations under the L/C.

3. The Creditor and the Debtor have negotiated and agreed to increase the loan interest rate under the principal creditor’s right.

4. The amount of principal creditor’s rights have changed as a result of the adjustment of floating interest rate or loan prime rate (LPR) in the Master Contract.

5. The Creditor has transferred the principal creditor’s right to a third party.

6. The Creditor and the Debtor have signed an extension contract to extend the maturity date of the principal creditor’s rights.

Article 13 In the event of any of the following circumstances under domestic L/C, buyer financing under domestic L/C, import L/C and import bill advance/import payment agency business, the Guarantor shall have an irrefutable mortgage guarantee obligation, and the Guarantor shall not be exempted or defended by any judicial or administrative authority that issues a stop-payment order, injunction, or takes measures to seal up, detain, freeze the property related to the L/C or similar measures with respect to the payment obligations under such L/C:

1. The Creditor’s designee or authorized person has made payment in good faith in accordance with the Creditor’s instructions.

2. The Creditor or its designee or authorized person has in good faith issued a confirmation of payment due for the goods under the domestic L/C or has in good faith made an acceptance of the documents under the import L/C.

3. The confirming bank of the L/C has performed its payment obligations in good faith.

4. The negotiating bank of the L/C has negotiated the payment in good faith.

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Article 14 The Guarantor agrees that: in case the principal creditor’s right is also guaranteed by the guarantee, mortgage or pledge provided by the Debtor or a third party, the Creditor shall be entitled to exercise the guarantee right at its own discretion, including but not limited to: the Creditor has the right to request the Guarantor to make immediate payment for all sums due and payable by the Debtor without first exercising its real right for security or claiming its rights against other Guarantors, and has the right to claim part or all of its security rights against one or more Guarantors, including the Guarantor, individually or simultaneously and without regard to any particular order of priority; in case the Creditor waive or alter its guarantee rights against other Guarantors, or waive or alter the right of subordination of the real right for security, the Guarantor shall still be liable for the guarantee as stipulated herein and not exempted from any liability.

Article 15 In the event that the Creditor waives, alters or loses other security interests under the master contract, the Guarantor’s liability of guaranty shall prevail, and the Guarantor pledges to continue to assume the liability of guaranty as agreed herein.

Chapter 7 Sequence of Settlement

Article 16 Where the Guarantor guarantees several creditor’s rights between the Debtor and the Creditor, including but not limited to the creditor’s rights hereunder, and the Guarantor’s payment is insufficient to pay off all the debts due, the creditor’s rights to be paid off and the order of payment shall be determined by the Creditor.

In case the Creditor exercises the rights of set-off against the Guarantor as stipulated by law or agreed herein, the debts to be set off and the orders thereof shall be determined by the Creditor; in case the Creditor exercises the rights of subrogation as stipulated by law, the Creditor’s rights to be paid off by the payment of the secondary Debtor to the Creditor and the order thereof shall be determined by the Creditor.

Provided that the Debtor owes other due creditor’s rights to the Creditor in addition to the principal creditor’s rights, the Creditor has the right to debit RMB or other currencies in the Debtor’s accounts opened in various institutions of China Resources Bank of Zhuhai in order to pay off any one of the due creditor’s rights in an order to be determined by the Creditor.

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Chapter 8 Breach of Contract

Article 17 Each of the following events and matters shall constitute the Guarantor’s breach of contract hereunder:

1. The Debtor is declared dissolved or bankrupt during the contract term.

2. Other circumstances arise that make the principal creditor’s rights difficult or impossible to achieve.

3. The Guarantor suspends or ceases its business or enters into bankruptcy, liquidation, closure of business or other similar proceedings, or the Guarantor is subject to a petition for bankruptcy, liquidation or a decision by the competent authority to discontinue or suspend its operations; the Guarantor is dead, declared missing or declared dead.

4. Major litigation, arbitration or administrative proceedings have taken place against the Guarantor or its material operating assets, resulting in the possibility of the Guarantor’s inability to perform its liability of guaranty.

5. The Guarantor has a material event of default under other contracts with the Creditor.

6. The Guarantor has a material event of default under other contracts with other banks.

7. The Guarantor or Debtor fails to comply with laws, regulations or rules on environmental protection, energy conservation and emission reduction, and pollution reduction, or may suffer from energy consumption and pollution risks.

8. The Guarantor breaches its other obligations hereunder, or other events that the Creditor believes shall materially and adversely affect its rights hereunder.

Article 18 After an event of default as described above, the Creditor shall be entitled to take any or several of the following measures, as the case may be:

1. The Creditor shall exercise its security rights hereunder or its default remedies under the master contract and this contract.

2. The Creditor shall reduce, suspend or terminate, in whole or in part, other credit lines granted to the Guarantor.

3. The Creditor shall suspend or terminate, in whole or in part, the acceptance of the Guarantor’s business applications under other contracts; and suspend or terminate, in whole or in part, the issuance and processing of outstanding loans and outstanding trade finance.

4. The Creditor shall declare, in whole or in part, Guarantor’s principal and interest on the outstanding loan/trade financing payments and other payables under other contracts forthwith due.

5. The Creditor shall terminate or rescind this contract or terminate or rescind, in whole or in part, any other contract between the Guarantor and the Creditor.

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6. The Creditor shall request the Guarantor to compensate for the loss caused to the Creditor.

7. In the event that the Guarantor fails to perform its liability of guaranty hereunder, the Guarantor shall agree that the Creditor deducts funds from all accounts opened by the Guarantor in institutions of China Resources Bank of Zhuhai Co., Ltd. in order to pay off the Creditor’s Rights.

Chapter 9 Expenses and Compensation

Article 19 Expenses incurred as a result of the conclusion and performance hereof shall be determined by agreement between the contracting parties, on condition that there are laws, regulations and rules stipulating the cost bearing entity.

The Guarantor shall immediately pay or indemnify the Creditor as requested by the Creditor for all costs and expenses incurred by the Creditor in exercising its rights hereunder or in instituting litigation against the Guarantor or in seeking indemnification or defending, waiving or assigning this contract on the basis of the foregoing (including but not limited to, the fees for attorney services, accounting services, audits, appraisals of litigation, and all other actual expenditures).

Chapter 10 Miscellaneous

Article 20 The Guarantor shall not transfer or otherwise dispose of all or part of its obligations hereunder without the prior consent of the Creditor.

Article 21 The Creditor shall transfer the principal creditor’s rights, in whole or in part, to a third party without the consent of the Guarantor, and the security interests hereunder shall be transferred to the third party at the same time, and the Guarantor shall assume the liability of guaranty to the new Creditor within the scope of the original guarantee.

Article 22 In the event of a separation or merger of the Guarantor after the effective date hereof, the changed organization shall assume the Guarantor’s obligations hereunder.

Article 23 The guarantor has fully recognized the interest rate risk. In case the Creditor adjusts the interest rate level, the way of calculating or settling the interest rate according to the agreement of the master contract or the change of the national interest rate policy, which results in the increase of the interest, penalty interest and compound interest to be repaid by the Debtor of the master contract, the Guarantor also bears the liability of guaranty for the increased portion.

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Article 24 Any grace, favor or delay granted by the Creditor to the Guarantor shall not affect, damage or restrict all the rights enjoyed by the Creditor pursuant to this contract and the laws and regulations; and shall not be regarded as a waiver of the rights and interests of the Creditor hereunder, nor shall it affect any of the Guarantor’s liabilities and obligations hereunder.

Article 25 In accordance with the Regulation on the Administration of Credit Investigation Industry and other relevant national laws and regulations, the Guarantor confirms that it is aware of and understands the contents and meanings of these Articles, and hereby irrevocably agrees in writing and authorizes the Creditor (including the Creditor’s head office and each other branch of the head office) to query, use, collect, provide and report the relevant information about the Guarantor, and the Creditor has the right to carry out the specific operations as follows:

1. In order to promptly understand the credit status of the Guarantor, exclude the Guarantor’s violation of laws and regulations, and ensure the business security between the Creditor and the Guarantor hereunder, the Creditor shall, in accordance with the relevant state regulations, query and make use of the relevant information of the Guarantor through the basic financial credit information database and [other credit reporting agencies approved and established by the State Council’s Credit Collection Industry Supervision and Administration Department of the State Council] (hereinafter referred to as “Guarantor’s Information”).

2. Pursuant to the relevant provisions of the State, the Creditor shall collect the relevant information hereunder and the relevant legal documents signed between the Guarantor and the Creditor, as well as other information relating to the Guarantor obtained by the Creditor through the signing hereof and the relevant legal documents (hereinafter referred to as the “Credit Information Collected by the Creditor”), and provide it to the basic financial credit information database and [other credit reporting agencies approved and established by the State Council’s Credit Collection Industry Supervision and Administration Department of the State Council] .

3. The Creditor shall keep the “Guarantor’s Information” and the “Credit Information Collected by the Creditor” for the purpose of internal archiving in accordance with national laws and regulations and the provisions of the Creditor on the business file management system, and the retention period shall not be limited to the provisions of Article 7 of this Authorization.

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4. In accordance with the applicable laws and regulations and regulatory requirements, the Creditor shall provide the “Guarantor’s information” and the “Credit Information Collected by the Creditor” to the relevant regulatory authorities such as the China Banking and Insurance Regulatory Commission and the relevant judicial and administrative authorities.

5. For the sake of providing financial services, the Creditor shares “Guarantor’s Information” and the “Credit Information Collected by the Creditor” within the Creditor internal, including among its branches.

6. The Creditor provides “Guarantor’s Information” and the “Credit Information Collected by the Creditor” to the relevant third-party institutions in accordance with the requirements of arrears collection, creditor’s rights transfer and financial services outsourcing.

7. This authorization shall commence on the date hereof and shall expire on the date of termination of all businesses hereunder.

8. The Creditor shall be liable for any legal obligations arising from the Creditor’s inquiries, use and provision of the “Guarantor’s Information” and the “Credit Information Collected by the Creditor” beyond the scope of the authorization stipulated herein.

Article 26 The Guarantor hereby irrevocably pledges that, in the event of a breach of the obligations agreed upon herein, the Creditor may report the information on the Guarantor’s breach of contract to credit reporting agencies and banking associations. The relevant banking association is also authorized to share the Guarantor’s default information among banking financial institutions and even make it public through appropriate means.

The Guarantor voluntarily accepts the joint malicious disciplinary rights protection measures such as reduction or cessation of credit granting, cessation of opening new settlement accounts, etc. taken by the Creditor together with other banking financial institutions.

Article 27 The Guarantor hereby confirms and declares that the Creditor has, in accordance with the law, prompted and explained to the Guarantor the clauses in respect of the exemption or mitigation of the Creditor’s liability and other clauses of material interest to the Guarantor, the black and bold font clauses, and the authorization clauses, and that the Creditor has already provided adequate explanations of such clauses at the Guarantor’s request. The Guarantor has been fully aware of and understands the meaning of such clauses and the corresponding legal consequences, and is willing to bear the legal consequences of such clauses. The Guarantor promises to strictly abide by all obligations hereunder.

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Article 28 The Guarantor guarantees that the Guarantor and the Guarantor’s employees and agents shall not offer, give, solicit or accept any form of material benefits (including but not limited to cash, cards in kind, trips, etc.) or other non-material benefits other than those stipulated herein to the Creditor or the Creditor’s employees in any form; the Guarantor shall not use the funds or services furnished by the Creditor in any form, either directly or indirectly, for the purpose of corruption or bribery activities associated with corruption or bribery; if the Guarantor is aware of any violation of the provisions of this Article, it shall provide the Creditor with timely, truthful, complete and accurate clues and relevant information, and cooperate with the Creditor in the relevant matters as requested by the Creditor.

Article 29 The Guarantor pledges to abide by China’s anti-money laundering related laws and regulations and not to participate in illegal and criminal activities such as suspected money laundering, terrorist financing; to actively cooperate with the Creditor’s customer identification and due diligence, to provide truthful, accurate, complete and effective customer information, and to comply with the Creditor’s anti-money laundering and anti-terrorist financing related management regulations.

In case the Creditor requests the Guarantor’s assistance in compliance with anti-money laundering or other regulatory requirements, the Guarantor shall cooperate and provide corresponding written materials.

Article 30 During the Debtor’s bankruptcy proceedings, where the Creditor reaches a settlement agreement with the Debtor or agrees to a reorganization plan, the rights of the Creditor hereunder shall not be prejudiced by the settlement agreement or the reorganization plan, and the Guarantor’s liability of guaranty shall not be reduced or exempted. The Guarantor shall not oppose the Creditor’s claims with the conditions stipulated in the settlement agreement or reorganization plan. For the part of the creditor’s rights that are not paid off due to the concession made by the Creditor to the Debtor in the settlement agreement or reorganization plan, the Creditor shall still have the right to demand the Guarantor to assume the guarantee responsibility.

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Article 31 Confirmation and Notice of Service Address

1. Confirmation of Delivery Address

(1) The contact information and service address hereunder are as follows:

Address of the Guarantor: 702, Block A, Building 5, Software Industry Base, Shenzhen City;

The Addressee: Yu Shibin; Tel: [ ]; Fax: / ; Email: / .

Address of the Creditor: Unit A-01 of 21st Floor, and 22nd Floor, 23rd Floor, 24th Floor, 25th Floor, China Resources Financial Building, No. 2700 Keyuan Avenue, Nanshan Houhai Central District, Yuehai Street, Nanshan District, Shenzhen City; The Addressee: China Resources Bank of Zhuhai Co., Ltd. Shenzhen Branch

(2) The Guarantor understands and agrees that the contact information and service address hereunder shall be served as the address for service of the court/arbitration institution/Creditor’s litigation materials and legal documents involved in disputes hereunder.

(3) The Guarantor understands and agrees that lawsuit materials and legal documents can be delivered through postal service by the court/arbitration institution with the aforesaid service address; and through electronic service (including e-mail, mobile phone SMS and other modern communication methods) with the above-mentioned agreed mobile phone number, fax, and e-mail address.

(4) The Guarantor understands and agrees that during the performance hereof, once the contracting parties enter into judicial/arbitration proceedings in respect of a dispute covered hereby, the court/arbitration institution may serve the litigation materials or legal documents to Guarantor through one or more of the aforesaid service methods, and that the service time shall be subject to the first service of the aforesaid service methods.

(5) The Guarantor understands and agrees that the aforesaid service agreement is applicable to mediation, first instance, second instance, retrial (including retrial review) and execution stages in the litigation procedure.

(6) The Guarantor understands and agrees that all the information such as address, mobile phone number, contact person, fax, e-mail address, etc. agreed aforesaid shall be assured to be true and valid, and that the Guarantor shall promptly notify the Creditor in writing for any change in the relevant information, otherwise such service process according to the original address and other information shall still be valid, and the Guarantor shall be liable for the legal consequences arising therefrom.

(7) The Guarantor understands and agrees that the aforesaid agreed mobile phone number, e-mail address, etc. can be used to receive litigation materials and legal documents served by the court/arbitration institution in a timely and effective manner.

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(8) The Guarantor understands and agrees that the litigation materials and legal documents can be served by the court/arbitration institution through electronic service, and no paper documents shall be served to the legal/other agreed address of the Guarantor.

(9) The Guarantor is clear that in case the aforesaid agreed address, mobile phone number, e-mail address or other service information is not true, accurate or up-to-date, resulting in the failure from actual service or timely service or refusal of signature of the litigation materials and legal documents, it shall be deemed to have been validly served, and the Guarantor shall bear the corresponding legal consequences. In case of inconsistency in the service address, the service address submitted to the court (arbitration institution) for confirmation shall prevail.

2. Notification

Where the Creditor sends the notice by way of announcement on its website, online banking, telephone banking, mobile banking or business outlets, the date of announcement shall be deemed as the date of delivery. Under no circumstances shall the Creditor be responsible for any transmission errors, omissions or delays in mail, fax, telephone or any other communication system.

Article 32 The Guarantor shall agree that when the Creditor authorizes other branches of China Resources Bank of Zhuhai Co., Ltd. to perform the rights and obligations hereunder due its business demands. Other branches of China Resources Bank of Zhuhai Co., Ltd. authorized by the Creditor shall have the right to exercise all rights under the Contract, and have the right to bring a lawsuit to the court or submit the dispute under the Contract to the arbitration institution for adjudication.

Article 33 The subheadings herein are for the convenience of reading only and shall not be used for the interpretation hereof or for any other purpose. The terms “borrowing” and “loan” herein shall have the same meaning.

Chapter 11 Applicable Law and Dispute Resolution

Article 34 The laws of the People’s Republic of China (excluding the laws of Hong Kong, Macao and Taiwan) shall apply hereto and all matters relating thereto.

Article 35 Disputes hereunder shall be prosecuted to the court with jurisdiction at the location of the Creditor, unless otherwise specified in the clause of “Other Agreed Matters” hereof. During the litigation or arbitration, the provisions of this Contract that do not involve the disputes shall still be performed.

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Chapter 12 Effectiveness, Alteration and Dissolution of Contract

Article 36 The contract shall take effect on the date of its signature by the parties and shall terminate on the date of full performance of Guarantor’s contractual obligations.

Article 37 Once the contract comes into force, neither party may alter nor prematurely terminate the contract without authorization. If this Contract needs to be changed or terminated, the Guarantor and the Creditor shall reach a written contract through negotiation. Until the written contract is entered into, the terms and conditions of this Contract shall remain in force.

Chapter 13 Supplementary Provisions

Article 38 The Guarantor shall take the initiative to understand the operations of the Debtor and the occurrence and fulfillment of various types of credit granting business hereunder. The Master Contract, relevant legal documents or certificates for various businesses under this Contract will no longer be delivered to the Guarantor.

Article 39 Other Agreed Matters: The original hereof is in two copies, one for the Creditor and one for the Guarantor, all of which have the same legal effect.

(The remainder of this page is intentionally left blank)

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(The page is intentionally left blank for signature and seal)

THIS CONTRACT is executed by the Creditor and Guarantor on November 15, 2022. The Guarantor confirms that when signing the Contract, both parties have explained and discussed all the terms in detail, both parties have no doubt about all the terms of the Contract and have an accurate understanding of the legal significance of the parties’ rights, obligations and limitation or exemption clauses.

Creditor (Seal): China Resources Bank of Zhuhai Co., Ltd. Shenzhen Branch

China Resources Bank of Zhuhai Co., Ltd. Shenzhen Branch (Seal)

Legal Representative or Authorized Agent (Seal): Wu Zhaoyu (Seal)

Guarantor (Seal): Guangxi Utime Technology Co., Ltd (Seal)	Guarantor (Seal):
Legal Representative or Authorized Agent (signature): Bao Minfei (Seal)	Certificate Type: _______________
	ID No.: ______________________

(The above applies to legal person) (The above applies to natural person)

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EX-4.67

Exhibit 4.67

Contract No.: _G.Y.S.(B.)L.Zi 2022 No.[   ]

Contract on Guarantee under the Debt Ceiling

(Applicable to small and micro customers)

Important notice: This Contract is negotiated and signed by the Parties on an equal and voluntary basis. All contract terms are true representations of the parties. In order to safeguard the legitimate rights and interests of the Guarantor, the Creditor specially requests the Guarantor to pay full attention to the bold part of the contract clauses.

Creditor: Industrial and Commercial Bank of China Limited Shenzhen Longgang Sub-branch (hereinafter referred to as "Party A")

Principal: Yang Duoping

Business address: F1,3,4 Business Street Store, New Asia Garden Zone 10, Zhongxincheng, Longgang District, Shenzhen City

Telephone and fax: [    ]

Guarantor: _Bao Minfei [    ] (hereinafter referred to as "Party B") Legal representative: /

Business address or domicile: F2. 64D-403 Tianzhan Mansion, Tian-an-che-gong-miao Industrial Park, Xiangmi Lake, Futian District, Shenzhen City

Zip code: 518000 Fax: _/_ Telephone: [    ]

E-mail: / Contact: Yu Shibin Cell phone number: [    ]

[Party B shall fill in the above information accurately and completely to ensure timely deliveries of subsequent notices and legal documents]

In order to guarantee the creditor's rights of Party A, Party B voluntarily provides guarantee (counter guarantee) to Party A. To clarify the rights and obligations of both Parties, Party A and Party B have entered into this Contract through equal consultation in accordance with relevant laws and regulations.

Article I Guaranteed Principal Creditor's Rights

1.1 The principal creditor's rights guaranteed by Party B refers to Party A's creditor's rights against the Debtor raising from the local and foreign currency loan contracts, foreign exchange sub-loan contracts, bank acceptance agreements, L/C issuing agreements/contracts, guarantee agreements, international and domestic trade financing agreements, future foreign exchange settlement agreements and other financial agreements as well as lease contracts of precious metals (including gold, silver, uranium gold, the same below) and other documents (hereinafter referred to as the Master Contract) signed with Shenzhen United Time Technology Co., Ltd. (hereinafter referred to as Debtor) during the period from December 2, 2022 to December 31, 2025 (including the start and expire date) under the debt ceiling of RMB 11,000,000.00 (In words: Say RMB Eleven Million Yuan Only) (In case of any discrepancy between the upper case amount and the lower case amount, the upper case amount shall prevail). Whether the creditor's rights are due or not at the expiration of the said period shall not affect the execution of this guarantee.

1.2 The debt ceiling mentioned in the preceding article refers to the sum of the principal balance of the creditor's rights expressed in RMB on the date when the principal creditor's rights under Party B's guarantee liability are confirmed.

Where the currency of the principal creditor's rights is a foreign currency, it shall be converted into amount in RMB according to the central parity rate of foreign exchange announced by Party A; If precious metal leasing is involved, it shall be converted to amount in RMB according to the formula agreed in the precious metal leasing contract for RMB conversion (if the conversion method agreed in the precious metal leasing contract is not applicable on the date when the principal creditor's rights are confirmed, for the purpose of this Article, the above-mentioned principal shall be converted into RMB according to the closing price of the precious metal on the trading day of Shanghai Gold Exchange prior to the date on which the principal creditor's rights are confirmed).

Article II Ways of Guarantee

Party B undertakes the guarantee of joint liability.

Article III Guarantee Scope

The scope of Party B's guarantee for the principal creditor's rights guaranteed as agreed in Article 1.1 and Article 1.2 under this Contract includes the principal of the principal creditor's rights (including the principal of precious metal lease creditor's rights and the RMB amount converted according to the agreement of precious metal lease contracts), interest, precious metal lease fee, compound interest, penalty interest, liquidated damages, damage awards, More or Less fee of precious metal, exchange loss (related losses caused by exchange rate changes), losses caused by precious metal price changes, transaction fees incurred by the Lessor in exercising corresponding rights in accordance with the Master Contract of the precious metal leasing contract, and expenses for realizing creditor's rights (including but not limited to legal fees, attorney fees, etc.).

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Article IV Guarantee Period

4.1 If the Master Contract is a loan contract or a precious metal lease contract, the guarantee period under this Contract shall be:

Three years from the day after the expiration of the loan term or precious metal lease term under the Master Contract; If Party A announces the early maturity of the loan or precious metal lease according to the agreement of the Master Contract, the guarantee period shall be three years from the day after the early maturity date of the loan or precious metal lease.

4.2 If the Master Contract is a bank acceptance agreement, the guarantee period shall be three years from the day after the Party A's external commitment. 4.3 If the Master Contract is a guarantee contract, the guarantee period shall be three years from the day after Party A performs the guarantee obligation.

4.4. If the Master Contract is an L/C issuing agreement/contract, the guarantee period shall be three years from the day after Party A settles the payment under the L/C.

4.5 If the Master Contract is another type of financing document, the guarantee period shall be three years from the day following the expiration or early expiration of the creditor's rights determined by the Master Contract.

Article V Party B's representations and warranties

Party B makes the following representations and warranties to Party A:

5.1 It is qualified as a guarantor according to law and has obtained all necessary authorization or approval for Party A according to the procedures and authority stipulated in the Articles of Association of the Company, without violating laws, regulations and other relevant provisions.

5.2 If it is a listed company or a holding subsidiary of a listed company, it will undertake to timely fulfill the obligation of information disclosure regarding the guarantee in accordance with the requirements of the Securities Law, Rules Governing the Listing of Shares of Stock Exchange and other laws, regulations and rules.

5.3 It is capable to undertake the guarantee, and does not mitigate or exempt from the liability of guaranty due to any instruction, change of financial status, or any agreement signed with any third party.

5.4 It fully understands the purpose of the debt under the Master Contract, and provides guarantee for the Debtor voluntarily. Its intention expressed under this Contract is completely true. For international and domestic trade financing, it acknowledges that the underlying transaction on which the financing is based is true without any fraud.

5.5 The materials or information provided to Party A are true, accurate and complete in all respects, without any false records, material omissions or misleading statements.

5.6 If the principal creditor's right guaranteed in this Contract is an international trade financing provided by Party A to the Debtor, it accepts and approves the relevant international practices of relevant business.

5.7 If Party B is a natural person, it also states and warrants as follows:

A. It has full capacity for civil rights and full capacity of civil conduct;

B. It has legal sources of income and sufficient compensatory ability;

C. It has no malicious default on the principal and interest of bank loans or malicious overdraft of credit cards;

D. It has no gambling, drug abuse or other bad behavior or criminal record;

E. The guarantee provided to Party A has been agreed by its spouse.

Article VI Party B's Commitments

Party B makes the following commitments to Party A:

6.1 In case of any of the following circumstances, it will perform the liability of guaranty under this Contract unconditionally according to the notification requirements of Party A:

A. The Debtor fails to pay off the principal creditor's rights when it is due (including early maturity);

B. Party B or the Debtor is applied for bankruptcy or closure of business, dissolution, liquidation or suspension of business for rectification. The business license of Party B or the Debtor is revoked or cancelled.

C. Party B's main assets are sealed up, detained or frozen;

D. As a Debtor or Guarantor, it defaults on other debts.

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6.2 If a real security is involved in Party A's principal creditor's rights, Party A shall have the right to require Party B to assume the liability of guaranty first, regardless of whether the real security is provided by the Debtor or a third party. And Party B shall promise not to raise a defense. If Party A waives, changes or loses other security interests, Party B undertakes to continue to provide Party A with joint liability guarantee as agreed herein. Party B's liability of guaranty shall remain valid and shall not be void or reduced due to changes in other security interests.

6.3 Party B provides timely financial information, tax payment vouchers and other relevant information reflecting its financial status as required by Party A.

6.4 In case of any of the following circumstances, Party B shall continue to perform its liability of guaranty under this Contract without its consent:

A. If Party A and the Debtor negotiate to change the Master Contract without heightening Party B's debt or extending the debt performance period;

B. Under international and domestic trade financing, Party A and the Debtor modify the L/C related to the Master Contract without heightening the Debtor's payment obligation under the L/C;

C. Party A transfers the principal creditor's rights to a third party.

6.5 If Party B provides any other guarantee to a third party, it will not damage the interests of Party A.

6.6 In case of merger, division, capital reduction, equity change, equity pledge, transfer of major assets and creditor's rights, major foreign investment, substantial increase in debt financing and other actions that may adversely affect Party A's rights and interests, Party B shall obtain Party A's written consent in advance or make satisfactory arrangements for its liability of guaranty under this Contract. Otherwise, Party B shall not engage in the above actions.

6.7 In case of any of the following circumstances, Party B shall notify Party A in time:

A. There is any change in the articles of association, business scope, registered capital, legal representative and equity;

B. In case of closure of business, dissolution, liquidation, suspension of business for rectification, revocation or cancellation of business license, application for bankruptcy;

C. Major economic disputes, litigation and arbitration are involved. Or the property is sealed up, detained or supervised according to law;

D. The residence, work unit and contact information of Party B are changed (appliable to natural person).

E. The debt is increased by issuing corporate bonds, short-term financing bonds or using other direct financing methods;

F. Other large loans or external guarantees are involved.

6.8 Party B shall sign for the written notice sent by Party A in time.

6.9 In case of any of the following circumstances, Party B shall have an undefensible liability of guaranty of businesses of buyer financing, import L/C and import bill advance/import payment under domestic L/C. Party B shall not be exempt from liability or defense due to any judicial or administrative authority issuing a stop-payment order, injunction order or taking measures to seal up, detain or freeze the property related to the L/C or similar measures:

A. The Party A's nominee or authorized person has paid in good faith according to the Party A's instructions;

B. Party A or its nominee or authorized person has issued in good faith a confirmation of payment due for the purchase price under the domestic L/C or has accepted in good faith the documents under the import L/C;

C. The confirming bank of the L/C has fulfilled its payment obligation in good faith;

D. The negotiating bank of the L/C has negotiated the payment in good faith.

6.10 Under the delivery guarantee, BL endorsement and authorized delivery, Party B shall not raise any exemption or defense due to the Debtor's refusal to settle the payment under corresponding L/C.

Article VII Party A's Commitments

Party A undertakes to keep confidential the non-public information in the relevant documents, financial information and other relevant information submitted by Party B when performing its obligations under this Contract, except as otherwise stipulated by relevant laws and regulations and otherwise agreed in this Contract.

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Article VIII Confirmation of principal creditor's rights

Under any of the following circumstances, the creditor's rights guaranteed by guarantee under the debt ceiling shall be confirmed:

A. The period agreed in Article 1.1 expires;

B. New creditor's rights are impossible to arise;

C. The Debtor and Party B are declared bankrupt or dissolved;

D. Any other circumstance for determining the Creditor's rights, as specified by the law.

Article IX Breach

9.1 After this Contract comes into effect, any party that fails to perform any of its obligations under this Contract or violates any representations, warranties and commitments made under this Contract shall constitute a breach of contract. Any loss caused to the other party shall be compensated by the breaching party.

Article 9.2 If Party B fails to perform its liability of guaranty under this Contract, Party B agrees that Party A to deduct the money from its accounts opened in Industrial and Commercial Bank of China to pay off the debts under the Master Contract. If the currency of deduction is inconsistent with the currency stipulated in the Master Contract, the amount to be deducted shall be calculated according to the applicable exchange rate of the corresponding currency announced by Party A on the deduction date. Interest and other expenses arising from the period from the deduction date to the settlement date (the date when Party A converts the deduction amount into the currency of the Master Contract according to the national foreign exchange control policy and actually pays off the debts under the Master Contract), and the difference arising from exchange rate fluctuations during this period shall be borne by Party B.

9.3 Unless otherwise stipulated in this Contract, if either party breaches the Contract, the other party shall have the right to take any other measures stipulated by the laws, regulations and rules of the People's Republic of China.

Article X Entry into force, Alteration and Dissolution

10.1 This Contract shall come into force upon Party A's official seal or special contract seal and Party B's signature (applicable to natural persons) or seal (applicable to units).

10.2 Any changes to this Contract shall be made in writing by mutual agreement of the parties. The changed terms or agreements constitute a part of this Contract and have the same legal effect as this Contract. Except for the modified part, the remaining parts of this Contract shall remain valid. And the original provisions of this Contract shall remain valid before the modified part becomes effective.

10.3 The invalidity or unenforceability of any provision hereof shall not affect the validity and enforceability of the other provisions, nor the validity of the contract as a whole.

10.4 The modification and termination of this Contract shall not affect the right of the contracting parties to claim compensation for damages. The termination of this Contract shall not affect the validity of the dispute resolution provisions of this Contract.

Article XI Dispute Resolution

During the performance of the Contract, all disputes and controversies arising from or in connection with the performance of this Contract may be resolved through consultation between the Parties. If negotiation fails, either Party may settle the matter in the following way

A. Any dispute arising from or in connection with this Contract shall be submitted to the Shenzhen Court of International Arbitration (Shenzhen Arbitration Commission) for arbitration in accordance with the arbitration rules of the Commission. The arbitration award shall be final and binding on both Parties.

B. Settlement by litigation in the court of the place where Party A is located.

Article XII Service Address Confirmation of Litigation/Arbitration Documents

12.1 Party B confirms that the address recorded on the first page of main body of this Contract is an effective service address to receive all kinds of notices, letters, legal documents of the people's court or arbitration institution (including but not limited to summon, court notice, judgment, ruling, mediation document, notice of performance within a time limit, etc.).

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12.2 The above service agreement is applicable to all stages of arbitration and litigation proceedings at first instance, second instance, retrial and execution. For the above-mentioned service address, the court and arbitration institution may serve the legal documents directly by mail. Even if the party fails to receive the legal document served by the court or arbitration institution by mail, it shall be deemed to have been served due to its agreement therein.

12.3 Party B agrees that the court or arbitration institution may use the fax or e-mail recorded on the first page of the main text of this Contract for the service of legal documents, with the exception of judgments, rulings, conciliation statement and awards.

12.4 Party B guarantees that the above-mentioned service address and other information is accurate and effective, and if the above service address and other information changes, it should promptly notify Party A in writing. Otherwise, the service in accordance with the address set out herein shall still be valid, and Party B shall bear the legal consequences arising therefrom on its own.

12.5 In case of the legal documents are delivered by mail, if the legal documents are not actually received by Party B due to inaccurate information such as Party B's service address, failure to notify Party A in writing of address change in time, failure to sign for the mail, refusal of Party B or the designated agent, etc., the date on which the mail returns shall be regarded as the date of delivery (if the return dates of mails at different addresses are different, the later one shall prevail); The delivery date of direct service shall be deemed as the date on which the server makes records on the service receipt on the spot; If the obligation to notify the change of address for service is fulfilled, the changed address shall be the effective address for service.

12.6 After the dispute enters the litigation or arbitration procedure, if Party B directly submits the confirmation of service address to the court or arbitration institution, and the confirmation is inconsistent with the service address stated in this Contract, the service address submitted to the court or arbitration institution shall prevail. But the previous delivery made to the service address stated by Party A according to this Contract is still valid.

Article XIII Miscellaneous

13.1 Without the written consent of Party A, Party B shall not assign all or part of its rights or obligations under this Contract.

13.2 Party A's failure or partial exercise or delay in exercising the rights under this Contract shall not constitute a waiver or alteration of such rights or any other rights, nor shall it affect its further exercise of such rights or any other rights.

13.3 Party A shall have the right to provide the information related to this Contract and other relevant information to the basic credit information database of the People's Bank of China or other legally established credit databases according to the provisions of relevant laws, regulations or other normative documents or the requirements of financial supervision institutions for inquiry and use by appropriately qualified institutions or individuals. Party A shall also have the right to inquire about the relevant information of Party B through the basic credit information database of the People's Bank of China and other legally established credit databases for the purpose of concluding and performing this Contract.

13.4 The original of this Contract is made in two copies of same legal effect, with each party holding one copy .

Article XIV Other Matters Agreed by Both Parties

(There is no text below)
Party A: Industrial and Commercial Bank of China Limited Shenzhen Longgang Sub-branch	Party B:_Bao Minfei_
(Seal) Special Seal for Business Contract of Industrial and Commercial Bank of China Limited Shenzhen Longgang Sub-branch B771CB3C9036 (Seal)	Signature (applicable to natural persons) Seal (applicable to the units)
Date: December 2, 2022	Date:

As the legal representative/authorized representative of the Guarantor, I hereby confirm that the Guarantor has provided the Creditor with the guarantee as agreed in this Contract. The seal on this Contract is true and valid. The Guarantor has fulfilled all the procedures required for providing the guarantee.

Legal Representative/Authorized Representative of Guarantor (Signature): ____________

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EX-4.68

Exhibit 4.68

Contract No.: _G.Y.S.(B.)L.Zi 2022 No.[   ]

Contract on Guarantee under the Debt Ceiling

(Applicable to small and micro customers)

Important notice: This Contract is negotiated and signed by the Parties on an equal and voluntary basis. All contract terms are true representations of the parties. In order to safeguard the legitimate rights and interests of the Guarantor, the Creditor specially requests the Guarantor to pay full attention to the bold part of the contract clauses.

Creditor: Industrial and Commercial Bank of China Limited Shenzhen Longgang Sub-branch (hereinafter referred to as “Party A”)

Principal: Yang Duoping

Business address: F1,3,4 Business Street Store, Zone 10, New Asia Garden, Zhongxincheng, Longgang District, Shenzhen City

Telephone and fax: [    ]

Guarantor: Ping Qiuzi [.   ] (hereinafter referred to as “Party B”) Legal representative:

Business address or domicile: F2. 64D-403 Tianzhan Mansion, Tian-an-che-gong-miao Industrial Park, Xiangmi Lake, Futian District, Shenzhen City

Zip code: 518000 Fax: _/_ Telephone: [    ]

E-mail: / Contact: Yu Shibin Cell phone number: [    ]

[Party B shall fill in the above information accurately and completely to ensure timely deliveries of subsequent notices and legal documents]

In order to guarantee the creditor’s rights of Party A, Party B voluntarily provides guarantee (counter guarantee) to Party A. To clarify the rights and obligations of both Parties, Party A and Party B have entered into this Contract through equal consultation in accordance with relevant laws and regulations.

Article I Guaranteed Principal Creditor’s Rights

1.1 The principal creditor’s rights guaranteed by Party B refers to Party A’s creditor’s rights against the Debtor raising from the local and foreign currency loan contracts, foreign exchange sub-loan contracts, bank acceptance agreements, L/C issuing agreements/contracts, guarantee agreements, international and domestic trade financing agreements, future foreign exchange settlement agreements and other financial agreements as well as lease contracts of precious metals (including gold, silver, uranium gold, the same below) and other documents (hereinafter referred to as the Master Contract) signed with Shenzhen United Time Technology Co., Ltd. (hereinafter referred to as Debtor) during the period from December 2, 2022 to December 31, 2025 (including the start and expire date) under the debt ceiling of RMB 11,000,000.00 (In words: Say RMB Eleven Million Yuan Only) (In case of any discrepancy between the upper case amount and the lower case amount, the upper case amount shall prevail). Whether the creditor’s rights are due or not at the expiration of the said period shall not affect the execution of this guarantee.

1.2 The debt ceiling mentioned in the preceding article refers to the sum of the principal balance of the creditor’s rights expressed in RMB on the date when the principal creditor’s rights under Party B’s guarantee liability are confirmed.

Where the currency of the principal creditor’s rights is a foreign currency, it shall be converted into amount in RMB according to the central parity rate of foreign exchange announced by Party A; If precious metal leasing is involved, it shall be converted to amount in RMB according to the formula agreed in the precious metal leasing contract for RMB conversion (if the conversion method agreed in the precious metal leasing contract is not applicable on the date when the principal creditor’s rights are confirmed, for the purpose of this Article, the above-mentioned principal shall be converted into RMB according to the closing price of the precious metal on the trading day of Shanghai Gold Exchange prior to the date on which the principal creditor’s rights are confirmed).

Article II Ways of Guarantee

Party B undertakes the guarantee of joint liability.

Article III Guarantee Scope

The scope of Party B’s guarantee for the principal creditor’s rights guaranteed as agreed in Article 1.1 and Article 1.2 under this Contract includes the principal of the principal creditor’s rights (including the principal of precious metal lease creditor’s rights and the RMB amount converted according to the agreement of precious metal lease contracts), interest, precious metal lease fee, compound interest, penalty interest, liquidated damages, damage awards, More or Less fee of precious metal, exchange loss (related losses caused by exchange rate changes), losses caused by precious metal price changes, transaction fees incurred by the Lessor in exercising corresponding rights in accordance with the Master Contract of the precious metal leasing contract, and expenses for realizing creditor’s rights (including but not limited to legal fees, attorney fees, etc.).

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Article IV Guarantee Period

4.1 If the Master Contract is a loan contract or a precious metal lease contract, the guarantee period under this Contract shall be:

Three years from the day after the expiration of the loan term or precious metal lease term under the Master Contract; If Party A announces the early maturity of the loan or precious metal lease according to the agreement of the Master Contract, the guarantee period shall be three years from the day after the early maturity date of the loan or precious metal lease.

4.2 If the Master Contract is a bank acceptance agreement, the guarantee period shall be three years from the day after the Party A’s external commitment. 4.3 If the Master Contract is a guarantee contract, the guarantee period shall be three years from the day after Party A performs the guarantee obligation.

4.4. If the Master Contract is an L/C issuing agreement/contract, the guarantee period shall be three years from the day after Party A settles the payment under the L/C.

4.5 If the Master Contract is another type of financing document, the guarantee period shall be three years from the day following the expiration or early expiration of the creditor’s rights determined by the Master Contract.

Article V Party B’s representations and warranties

Party B makes the following representations and warranties to Party A:

5.1 It is qualified as a guarantor according to law and has obtained all necessary authorization or approval for Party A according to the procedures and authority stipulated in the Articles of Association of the Company, without violating laws, regulations and other relevant provisions.

5.2 If it is a listed company or a holding subsidiary of a listed company, it will undertake to timely fulfill the obligation of information disclosure regarding the guarantee in accordance with the requirements of the Securities Law, Rules Governing the Listing of Shares of Stock Exchange and other laws, regulations and rules.

5.3 It is capable to undertake the guarantee, and does not mitigate or exempt from the liability of guaranty due to any instruction, change of financial status, or any agreement signed with any third party.

5.4 It fully understands the purpose of the debt under the Master Contract, and provides guarantee for the Debtor voluntarily. Its intention expressed under this Contract is completely true. For international and domestic trade financing, it acknowledges that the underlying transaction on which the financing is based is true without any fraud.

5.5 The materials or information provided to Party A are true, accurate and complete in all respects, without any false records, material omissions or misleading statements.

5.6 If the principal creditor’s right guaranteed in this Contract is an international trade financing provided by Party A to the Debtor, it accepts and approves the relevant international practices of relevant business.

5.7 If Party B is a natural person, it also states and warrants as follows:

A. It has full capacity for civil rights and full capacity of civil conduct;

B. It has legal sources of income and sufficient compensatory ability;

C. It has no malicious default on the principal and interest of bank loans or malicious overdraft of credit cards;

D. It has no gambling, drug abuse or other bad behavior or criminal record;

E. The guarantee provided to Party A has been agreed by its spouse.

Article VI Party B’s Commitments

Party B makes the following commitments to Party A:

6.1 In case of any of the following circumstances, it will perform the liability of guaranty under this Contract unconditionally according to the notification requirements of Party A:

A. The Debtor fails to pay off the principal creditor’s rights when it is due (including early maturity);

B. Party B or the Debtor is applied for bankruptcy or closure of business, dissolution, liquidation or suspension of business for rectification. The business license of Party B or the Debtor is revoked or cancelled.

C. Party B’s main assets are sealed up, detained or frozen;

D. As a Debtor or Guarantor, it defaults on other debts.

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6.2 If a real security is involved in Party A’s principal creditor’s rights, Party A shall have the right to require Party B to assume the liability of guaranty first, regardless of whether the real security is provided by the Debtor or a third party. And Party B shall promise not to raise a defense. If Party A waives, changes or loses other security interests, Party B undertakes to continue to provide Party A with joint liability guarantee as agreed herein. Party B’s liability of guaranty shall remain valid and shall not be void or reduced due to changes in other security interests.

6.3 Party B provides timely financial information, tax payment vouchers and other relevant information reflecting its financial status as required by Party A.

6.4 In case of any of the following circumstances, Party B shall continue to perform its liability of guaranty under this Contract without its consent:

A. If Party A and the Debtor negotiate to change the Master Contract without heightening Party B’s debt or extending the debt performance period;

B. Under international and domestic trade financing, Party A and the Debtor modify the L/C related to the Master Contract without heightening the Debtor’s payment obligation under the L/C;

C. Party A transfers the principal creditor’s rights to a third party.

6.5 If Party B provides any other guarantee to a third party, it will not damage the interests of Party A.

6.6 In case of merger, division, capital reduction, equity change, equity pledge, transfer of major assets and creditor’s rights, major foreign investment, substantial increase in debt financing and other actions that may adversely affect Party A’s rights and interests, Party B shall obtain Party A’s written consent in advance or make satisfactory arrangements for its liability of guaranty under this Contract. Otherwise, Party B shall not engage in the above actions.

6.7 In case of any of the following circumstances, Party B shall notify Party A in time:

A. There is any change in the articles of association, business scope, registered capital, legal representative and equity;

B. In case of closure of business, dissolution, liquidation, suspension of business for rectification, revocation or cancellation of business license, application for bankruptcy;

C. Major economic disputes, litigation and arbitration are involved. Or the property is sealed up, detained or supervised according to law;

D. The residence, work unit and contact information of Party B are changed (appliable to natural person).

E. The debt is increased by issuing corporate bonds, short-term financing bonds or using other direct financing methods;

F. Other large loans or external guarantees are involved.

6.8 Party B shall sign for the written notice sent by Party A in time.

6.9 In case of any of the following circumstances, Party B shall have an undefensible liability of guaranty of businesses of buyer financing, import L/C and import bill advance/import payment under domestic L/C. Party B shall not be exempt from liability or defense due to any judicial or administrative authority issuing a stop-payment order, injunction order or taking measures to seal up, detain or freeze the property related to the L/C or similar measures:

A. The Party A’s nominee or authorized person has paid in good faith according to the Party A’s instructions;

B. Party A or its nominee or authorized person has issued in good faith a confirmation of payment due for the purchase price under the domestic L/C or has accepted in good faith the documents under the import L/C;

C. The confirming bank of the L/C has fulfilled its payment obligation in good faith;

D. The negotiating bank of the L/C has negotiated the payment in good faith.

6.10 Under the delivery guarantee, BL endorsement and authorized delivery, Party B shall not raise any exemption or defense due to the Debtor’s refusal to settle the payment under corresponding L/C.

Article VII Party A’s Commitments

Party A undertakes to keep confidential the non-public information in the relevant documents, financial information and other relevant information submitted by Party B when performing its obligations under this Contract, except as otherwise stipulated by relevant laws and regulations and otherwise agreed in this Contract.

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Article VIII Confirmation of principal creditor’s rights

Under any of the following circumstances, the creditor’s rights guaranteed by guarantee under the debt ceiling shall be confirmed:

A. The period agreed in Article 1.1 expires;

B. New creditor’s rights are impossible to arise;

C. The Debtor and Party B are declared bankrupt or dissolved;

D. Any other circumstance for determining the Creditor’s rights, as specified by the law.

Article IX Breach

9.1 After this Contract comes into effect, any party that fails to perform any of its obligations under this Contract or violates any representations, warranties and commitments made under this Contract shall constitute a breach of contract. Any loss caused to the other party shall be compensated by the breaching party.

Article 9.2 If Party B fails to perform its liability of guaranty under this Contract, Party B agrees that Party A to deduct the money from its accounts opened in Industrial and Commercial Bank of China to pay off the debts under the Master Contract. If the currency of deduction is inconsistent with the currency stipulated in the Master Contract, the amount to be deducted shall be calculated according to the applicable exchange rate of the corresponding currency announced by Party A on the deduction date. Interest and other expenses arising from the period from the deduction date to the settlement date (the date when Party A converts the deduction amount into the currency of the Master Contract according to the national foreign exchange control policy and actually pays off the debts under the Master Contract), and the difference arising from exchange rate fluctuations during this period shall be borne by Party B.

9.3 Unless otherwise stipulated in this Contract, if either party breaches the Contract, the other party shall have the right to take any other measures stipulated by the laws, regulations and rules of the People’s Republic of China.

Article X Entry into force, Alteration and Dissolution

10.1 This Contract shall come into force upon Party A’s official seal or special contract seal and Party B’s signature (applicable to natural persons) or seal (applicable to units).

10.2 Any changes to this Contract shall be made in writing by mutual agreement of the parties. The changed terms or agreements constitute a part of this Contract and have the same legal effect as this Contract. Except for the modified part, the remaining parts of this Contract shall remain valid. And the original provisions of this Contract shall remain valid before the modified part becomes effective.

10.3 The invalidity or unenforceability of any provision hereof shall not affect the validity and enforceability of the other provisions, nor the validity of the contract as a whole.

10.4 The modification and termination of this Contract shall not affect the right of the contracting parties to claim compensation for damages. The termination of this Contract shall not affect the validity of the dispute resolution provisions of this Contract.

Article XI Dispute Resolution

During the performance of the Contract, all disputes and controversies arising from or in connection with the performance of this Contract may be resolved through consultation between the Parties. If negotiation fails, either Party may settle the matter in the following way

A. Any dispute arising from or in connection with this Contract shall be submitted to the Shenzhen Court of International Arbitration (Shenzhen Arbitration Commission) for arbitration in accordance with the arbitration rules of the Commission. The arbitration award shall be final and binding on both Parties.

B. Settlement by litigation in the court of the place where Party A is located.

Article XII Service Address Confirmation of Litigation/Arbitration Documents

12.1 Party B confirms that the address recorded on the first page of main body of this Contract is an effective service address to receive all kinds of notices, letters, legal documents of the people’s court or arbitration institution (including but not limited to summon, court notice, judgment, ruling, mediation document, notice of performance within a time limit, etc.).

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12.2 The above service agreement is applicable to all stages of arbitration and litigation proceedings at first instance, second instance, retrial and execution. For the above-mentioned service address, the court and arbitration institution may serve the legal documents directly by mail. Even if the party fails to receive the legal document served by the court or arbitration institution by mail, it shall be deemed to have been served due to its agreement therein.

12.3 Party B agrees that the court or arbitration institution may use the fax or e-mail recorded on the first page of the main text of this Contract for the service of legal documents, with the exception of judgments, rulings, conciliation statement and awards.

12.4 Party B guarantees that the above-mentioned service address and other information is accurate and effective, and if the above service address and other information changes, it should promptly notify Party A in writing. Otherwise, the service in accordance with the address set out herein shall still be valid, and Party B shall bear the legal consequences arising therefrom on its own.

12.5 In case of the legal documents are delivered by mail, if the legal documents are not actually received by Party B due to inaccurate information such as Party B’s service address, failure to notify Party A in writing of address change in time, failure to sign for the mail, refusal of Party B or the designated agent, etc., the date on which the mail returns shall be regarded as the date of delivery (if the return dates of mails at different addresses are different, the later one shall prevail); The delivery date of direct service shall be deemed as the date on which the server makes records on the service receipt on the spot; If the obligation to notify the change of address for service is fulfilled, the changed address shall be the effective address for service.

12.6 After the dispute enters the litigation or arbitration procedure, if Party B directly submits the confirmation of service address to the court or arbitration institution, and the confirmation is inconsistent with the service address stated in this Contract, the service address submitted to the court or arbitration institution shall prevail. But the previous delivery made to the service address stated by Party A according to this Contract is still valid.

Article XIII Miscellaneous

13.1 Without the written consent of Party A, Party B shall not assign all or part of its rights or obligations under this Contract.

13.2 Party A’s failure or partial exercise or delay in exercising the rights under this Contract shall not constitute a waiver or alteration of such rights or any other rights, nor shall it affect its further exercise of such rights or any other rights.

13.3 Party A shall have the right to provide the information related to this Contract and other relevant information to the basic credit information database of the People’s Bank of China or other legally established credit databases according to the provisions of relevant laws, regulations or other normative documents or the requirements of financial supervision institutions for inquiry and use by appropriately qualified institutions or individuals. Party A shall also have the right to inquire about the relevant information of Party B through the basic credit information database of the People’s Bank of China and other legally established credit databases for the purpose of concluding and performing this Contract.

13.4 The original of this Contract is made in two copies of same legal effect, with each party holding one copy .

Article XIV Other Matters Agreed by Both Parties

(There is no text below)
Party A: Industrial and Commercial Bank of China Limited Shenzhen Longgang Sub-branch	Party B: Ping Qiuzi
(Seal) Special Seal for Business Contract of Industrial and Commercial Bank of China Limited Shenzhen Longgang Sub-branch B6D44D4D5036 (Seal)	Signature (applicable to natural persons) Seal (applicable to the units)
Date: December 2, 2022	Date: December 2, 2022

As the legal representative/authorized representative of the Guarantor, I hereby confirm that the Guarantor has provided the Creditor with the guarantee as agreed in this Contract. The seal on this Contract is true and valid. The Guarantor has fulfilled all the procedures required for providing the guarantee.

Legal Representative/Authorized Representative of Guarantor (Signature): ____________

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EX-4.69

Exhibit 4.69

Notice

In order to protect your interests, please read the following precautions carefully before signing the Contract:

I. You already have the legal knowledge of bank loans and guarantees.

II. You have read all the terms and conditions of this Contract and know their meanings. China Resources Bank of Zhuhai has fully presented and explained the terms and conditions of this Contract to you.

III. You have ensured that the relevant documents and materials submitted to China Resources Bank of Zhuhai are true, legal and valid.

IV. You have confirmed that you have the right to confirm the Contract, and you will log in to our online financing platform/electronic system for confirmation.

V. You have ascertained that any fraud or breach of Contract shall be subject to corresponding legal liabilities.

VI. You will voluntarily sign and perform this Contract according to the agreement based on the principles of honesty and credibility.

VII. For consultation and complaint, please contact the Customer Service Center of our bank at 4008-800-338; 96588 (please dial 0756 first if you are outside Guangdong Province).

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[Special Reminder] This Contract is concluded by Party A and Party B through negotiation according to law on the basis of equality and voluntariness, and all the terms and conditions of the Contract are the true expression of both parties’ intentions. In order to safeguard the legitimate rights and interests of Party B, Party A hereby requests Party B to pay full attention to all the terms and conditions concerning the rights and obligations of both parties, especially the contents in bold.

Working capital loan Contract

(Version of online contract signing)

Contract No.: H.Y. (2022) S.S.Zi (Tax) No. [   ]

Credit Grantor (hereinafter referred to as “Party A”): Shenzhen Branch of China Resources Bank of Zhuhai Co., Ltd.

Credit Receiver (hereinafter referred to as “Party B”):

Shenzhen United Time Technology Co., Ltd.

Party A will provide Party B with loan services in RMB under the Contract. The specific loan information shall be subject to the information contained in the Loan Contract and the IOU (if any, the same below) under this Contract. The Loan Contract and the IOU are an integral part of this Contract and have the same legal effect. Party B hereby confirms and agrees that the loan relationship between Party B and Party A under the Contract shall be bound by the Contract.

This contract is signed by Party B and Party A.

Article I Content of Working capital loan

1. Working capital loan Amount: The working capital loan amount referred to in this Contract refers to the maximum loan amount provided by Party A to Party B, which is Two Million Yuan Only.

2. Validity period of working capital loan: from the effective date of this Contract to December 2, 2022. The term of a single loan shall be subject to the provisions of the Loan Contract. The signing of this Contract by both parties does not constitute a loan commitment from Party A to Party B. Party A has the right to adjust, terminate and suspend the validity period of the working capital loan according to Party A’s approval policy, Party B’s credit changes and contract performance. Party A does not need to notify Party B separately to adjust the validity period of the working capital loan. The latest maturity date of a single specific business under the working capital loan is the maturity date of the working capital loan. The withdrawal date of each specific business shall not be later than 7 days before the expiration date of the effective use period of the above working capital loan.

3. Working capital loan circulation method: The working capital loan circulation method applicable to this Contract adopts the following (1) method, and Party A has the right to adjust this treatment method according to Party B’s credit changes and contract performance. Party B has fully understood this and has no objection:

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(1) The full amount of working capital loan could be circulated. That is, under the above mentioned agreed working capital loan, if Party B’s debt to Party A has been paid off within the validity period of the above-mentioned working capital loan, and Party A restores the corresponding working capital loan to Party B as for the paid off amount, and Party B can use the working capital loan again within its validity period.

(2) The full amount of the working capital loan cannot be circulated. That is, under the above mentioned agreed working capital loan, if Party B’s debt to Party A has been paid off within the validity period of the above-mentioned working capital loan, Party A will not restore the corresponding working capital loan to Party B as for the paid off amount, and Party B cannot use the working capital loan again within its validity period.

(3) Part of the working capital loan can be circulated, that is, part of the working capital loan agreed above can be recovered by Party A to Party B after being paid off within the validity period of the working capital loan, and Party B can use the working capital loan again within its validity period.

4. For a single loan under this working capital loan, Party B shall submit a written application to Party A one by one. Party A has the right to decide whether to issue a single loan under this working capital loan to Party B. If Party A agrees to issue a single loan after review, Party A and Party B shall sign a specific business contract (including IOU/loan voucher) according to the nature of the business. If the specific business contract (including IOU/loan voucher) is inconsistent with the provisions of this Contract, the specific business contract (including IOU/loan voucher) shall prevail.

Article II Interest Rate and Interest-bearing

1. The loan interest rate under the line is simple interest, subject to the provisions of the Loan Contract signed under the line.

2. The term of a single loan under this working capital loan shall be calculated from the date when Party A issues the loan to the lending account.

3. The loan interest under the Contract shall be calculated on the basis of 360 days per year, and shall be collected according to the lending amount actually transferred to Party B’s lending account or the account designated by Party B and occupation days from the date when the loan is transferred by Party A. The interest is calculated based on the loan balance and the actual number of days. The calculation formula of interest is: loan balance × loan interest rate × actual number of days in the corresponding interest period ÷ 360.

Article III Penalty Interest and Compound Interest

1. If Party B fails to repay the loan as agreed in this Contract, Party A has the right to charge interest at the penalty interest rate for the loan principal that cannot be repaid on time. The number of days to be charged is the actual number of days overdue from the date of overdue loan to the date of actual settlement. The penalty interest rate is 50% more than the loan interest rate. Compound interest shall be charged at the penalty interest rate for the loan interest that cannot be paid on time.

2. If Party B fails to use the loan for the purposes agreed in the Contract, Party A shall have the right to collect interest on the loan principal not used for the agreed purpose at the default interest rate. The collections days shall be from the day when Party B misappropriates the loan to the actual settlement date. The penalty interest rate is plus 100% on the basis of the loan interest rate, and a compound interest shall be collected according to the default interest rate for the interest that cannot be paid on time.

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3. When the loan interest rate of the Contract is adjusted, the penalty interest rate shall be adjusted accordingly, which shall be applied at the same time as the loan interest rate and calculated in sections. If a loan is overdue and not used for the purpose specified in the Contract, the default interest rate shall be calculated at the one whichever is higher.

Article IV Issuance and Payment of Loan

1. Party A shall issue and pay the loan to Party B when the Contract comes into effect and Party B completes the loan formalities and all other formalities required by Party A. The issuance of the loan means that Party A transfers the loan under the Contract to Party B’s account. The payment of loan means, in the case of entrusted payment, that Party A is entrusted by Party B to transfer the loan issued under the Contract to Party B’s trading partners; and in the case of independent payment, that Party B transfers the loan issued under the Contract to Party B’s trading partners by itself.

2. Party A has the right to determine the payment method of the loan according to the purpose, the specific amount of the loan and relevant laws and regulations, i.e., entrusted payment by Party A and/or independent payment by Party B. Party A has the right to refuse to issue the loan if the purpose or payment method of the loan does not accord with the Contract nor meet the requirements of Party A.

3. For self-payment loan, Party A shall issue the loan fund to Party B’s account according to Party B’s withdrawal application, and Party B shall independently pay it to Party B’s trading objects that meets the agreed purpose; For the loan entrusted for payment, Party A shall pay to the designated account of the trading objects designated by Party B according to the Loan Entrusted Payment Application submitted by Party B when applying for withdrawal.

4. Party A has the right to require Party B to provide the trading objects, payment amount and other information as well as the corresponding business contract and other supporting materials as required by Party A, and to summarize and inform Party A of the loan fund payment regularly in writing. Party A has the right to check whether the loan payment meets the agreed purpose through account analysis, voucher inspection and on-site investigation and other methods, and Party B shall cooperate.

Article V Use of Working capital loan

1. The precondition for the use of working capital loan is that the Contract comes into effect, i.e. the above-mentioned working capital loan application has been approved by Party A.

2. Party B shall not use the loan fund under the working capital loan for purchasing houses, repaying mortgage loans, investment in stocks, bonds, futures, financial derivatives and asset management products, investment in fixed assets and equity, and other purposes prohibited by laws and regulations. Without the written consent of Party A, Party B shall not change the purpose of the loan nor misappropriate the loan for other purposes. (In the case that the loan under the Contract adopts the method of entrusted payment by Party A, if Party B withdraws or instructs the transaction objects to transfer all or part of the loan to other accounts of Party B or other third-party accounts unrelated to this transaction without authorization, it shall be deemed that Party B has misappropriated the loan under the Contract for other purposes). Party B shall provide relevant transaction documents, transaction vouchers or other transaction certification materials to Party A according to Party A’s requirements, and Party B shall guarantee that the materials provided are true, complete, legal and effective.

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3. The amount of a single loan under this working capital loan shall not exceed the balance of Party B’s working capital loan at that time.

4. Party B shall not use this working capital loan for tax evasion, debt evasion, cash arbitrage, money laundering and other illegal and criminal activities. If Party B has the risk features specified by the regulatory authority or determined by Party A according to its subjective judgment during the use of this working capital loan, Party A has the right to suspend or terminate Party B’s use of this working capital loan at any time without any form of prior notice or confirmation.

Article VI Identity Authentication Information

1. The identity authentication information referred to in this Contract is the information elements used by Party A to identify Party B’s identity, including but not limited to Party B’s login password and transaction password, Ukey, digital certificate, SMS verification code, face recognition and other information elements recognized by Party A or stipulated by laws and regulations in Party A’s mobile banking/online financing platform and other electronic systems.

2. Party B knows that Party A has verified the identity of the transaction using this working capital loan by identifying the identity of Party B/Party B’s legal representative, and agrees that any transaction generated after successfully identifying the identity of Party B/Party B’s legal representative by one or more means, such as face recognition, password verification, is a transaction of Party B, and Party B shall bear the corresponding transaction consequences. Electronic information records generated by various settlement transactions and working capital loan withdrawal handled by electronic data information such as transaction vouchers electronically confirmed by Party B shall be regarded as valid vouchers for such transaction.

3. Party B shall keep it properly and shall not provide the identity authentication elements to any third party or hand them over to any third party for use. Party B confirms the accuracy, authenticity, validity and integrity of the identity authentication information submitted. If Party B needs to update the identity authentication information, it shall comply with Party A’s requirements. The application and confirmation made by Party B using the above identity authentication information shall be regarded as Party B’s own behavior, and Party B shall be responsible for the consequences arising therefrom, and shall be responsible for the fraudulent use, embezzlement or illegal use of Party B’s account, password and other information not caused by Party A. The risks arising therefrom shall be borne by Party B.

Article VII Repayment

1. Party B authorizes Party A to deduct the principal and interest due from Party B’s repayment account. If the account status of the repayment account is abnormal and Party B is unable to make normal repayment through the account, or if Party B intends to change the account, Party B shall go through the corresponding change procedures. Before the effectiveness of account changing procedure, if the original repayment account cannot be fully deducted, Party B shall repay the loan at the branch designated by Party A, or Party A shall have the right to deduct from Party B’s other account of Party B and/or require Party B to continue to pay off the loan. The interest loss and any other loss caused thereby shall be borne by Party B.

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The loan account and repayment account under this Contract are the same account.

Repayment account

Account name: [    ]

Account number: Shenzhen United Time Technology Co., Ltd.

Opening bank: China Resources Bank of Zhuhai Co., Ltd.

2. Please refer to the Loan Contract separately signed by both parties for the loan repayment method and repayment plan under this Contract.

3. Party B shall deposit the full amount of the repayments into Party B’s repayment account one day before the agreed repayment date, and Party B irrevocably authorizes Party A to deduct the principal and interest, penalty interest, compound interest, prepaid expenses of Party A to Party B and other related expenses of the loan from Party B’s repayment account under the Contract.

If automatic repayment deduction fails due to various reasons (including but not limited to insufficient balance of repayment account), any overdue payment will affect Party B’s credit record.

4. Repayment order: The payments made by Party B shall be used to pay off the debts in the following order: (1) The expenses for realizing the creditor’s rights and security rights; (2) Compensation for prepayment; (3) Compound interest; (4) Penalty interest; (5) Interest; (6) Principal. However, Party A has the right to unilaterally change the aforesaid deduction order according to Party B’s credit status and Party A’s risk policy without prior notice to Party B.

5. Party B shall not cancel its repayment account until Party B has paid off all loan expenses, principal and interest, except under special circumstances. In case of special circumstances, the repayment account of Party B may be changed after the approval of Party A.

6. Party B has the right to apply for prepayment in whole or in partial, but cannot submit a prepayment application on the day of loan issuance and repayment date.

7. Party B shall actively inquire about the transaction details of the working capital loan of Party B’s account to confirm the transaction contents. The transaction records under this working capital loan kept by Party A are all authentic evidence for the use of this working capital loan and binding on Party B. Party B shall not deny the use of loan fund or transaction fund under the working capital loan on the grounds that it has not received the account statement or seen the transaction details.

Article VIII Rights and Obligations of Party A

1. Party A enjoys the following rights:

(1) Require Party B to provide information related to the use of the working capital loan.

(2) Know Party B’s credit status and economic status, have the right to inquire Party B’s credit information in the basic credit information database of the People’s Bank of China and other legally established national or local credit reporting agencies, and have the right to provide Party B’s credit information to the People’s Bank of China’s basic credit information database and other legally established national or local credit reporting agencies, unless otherwise stipulated by law.

(3) Party A and its cooperative units can send various business information to Party B.

(4) Party A has the right to adjust the amount and validity period of the working capital loan granted by Party A to Party B according to the changes in macroeconomic conditions, market conditions and Party B’s credit status.

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(5) Three months after the limit comes into effect, if Party B fails to withdraw the loan within the working capital loan, Party A has the right to adjust the amount and validity period of the working capital loan of Party B.

(6) Where Party B makes the payment independently, Party A has the right to require Party B to report or inform Party A of the payment of loan funds on a regular basis.

(7) Party A has the right to transfer all or part of the Creditors under the working capital loan. Where Party A transfers all or part of the creditor’s claims, it is not necessary to obtain the consent of Party B. Party B is obliged to cooperate with Party A in handling relevant procedures as required.

2. Party A undertakes the following obligations:

(1) Accept Party B’s loan application within the working capital loan according to this Contract and Party A’s internal approval management measures.

(2) If Party A approves Party B’s application for a single loan within the working capital loan, it shall issue the loan to Party B in accordance with this Contract and the IOU.

(3) The property, account and other information of Party B and its co-owners shall be kept confidential, unless otherwise provided to legal credit reporting agencies, laws and regulations or required by regulatory authority as authorized by Party B.

Article IX Rights and Obligations of Party B

1. Party B enjoys the following rights:

(1) Have the right to apply to Party A for the use of working capital loan according to the conditions agreed herein.

(2) Have the right to require Party A to keep confidential the property, account and other information provided by Party B, unless otherwise stipulated by laws and regulations or required by the regulatory authority.

2. Party B undertakes the following obligations:

(1) Fill in truthfully this Contract and other materials required by Party A, and cooperate with Party A to carry out investigation, review and inspection.

(2) In case of any situation that may adversely affect the creditor’s rights of Party A, Party A shall be notified in time, and Party A shall cooperate with Party A to implement the guarantee measures for the safe repayment of the amount payable under this Contract and all other related expenses.

(3) Party B shall actively cooperate with Party A to check the use of its loans, provide Party A with written reports, account information, payment vouchers and other materials as required by Party A, and accept on-site verification by Party A.

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(4) During the duration of the loan, Party B agrees and authorizes Party A to provide the credit information and related loan information provided by Party B to the basic credit information database of the People’s Bank of China and the credit database established with the approval of the credit administrative department.

(5) Where Party B makes the payment independently, it shall report or inform Party A of the payment of loan funds on a regular basis.

Article X Statement and Commitment of Party B

1. Party B has full capacity for civil rights and capacity for civil conduct to conclude and perform the Contract.

2. Party B guarantees that its credit is in good condition and has no major bad credit record.

3. The property provided by Party B to Party A and all relevant materials required by Party A are accurate, true, complete and effective, and the documents provided in the form of copies are consistent with the originals.

4. Party B guarantees that Party B will not refuse to fulfill its repayment obligations on the grounds of disputes with any third party.

5. Party B guarantees to cooperate with Party A to check the use of the loan under the working capital loan of the Contract and the credit status of Party B at any time according to the requirements of Party A.

6. Party B guarantees that upon signing the Contract, when Party B fails to meet the specified loan conditions and Party A refuses to lend funds, Party B has no objection.

7. Party B authorizes Party A to collect, query and verify Party B’s relevant qualitative and quantitative information (including but not limited to tax, social security payment, housing provident fund payment and other information) through legal channels and means such as credit management departments and third parties to fully understand Party B’s credit status.

Article XI Acceleration of Maturity

In case of any of the following circumstances, Party A has the right to announce the acceleration of maturity of the working capital loan under the Contract, and require Party B to repay all or part of the loan principal and interest under the working capital loan in advance and stop withdrawing:

1. If Party B settles in advance the stock mortgage credit business in Party A, it shall first settle all the loans under the working capital loan of this Contract (that is, in this case, the loans under this Contract expire in advance).

2. The principal and interest of any phase of any loan of Party B under the working capital loan of this contract are overdue.

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3. Party B arbitrarily changes the use of the loan under the working capital loan or misappropriates it for other purposes.

4. Party B is suspected of engaging in illegal activities with loans under the working capital loan of the Contract.

5. Party B fails to provide Party A with the information required by Party A on time, or the relevant information provided to Party A is untrue, or material matters are concealed from Party A, endangering the credit security of Party A.

6. Party B’s suspension of business, revocation or cancellation of business license and other situations that may endanger Party A’s credit security.

7. Party B is declared bankrupt/reorganized.

8. Party B is involved in litigation and arbitration, which seriously affects its ability to perform its debts, or is announced by the judicial authority to confiscate its property or take compulsory measures, which affects its ability to perform its debts to Party A.

9. If any other credit, loan, guarantee, compensation or other debt repayment liability of Party B cannot be fulfilled when due, Party B’s ability to fulfill the debt hereunder will be affected.

10. Party B loses or is likely to lose the ability to perform its debts due to major adverse changes in its business or other circumstances.

11. Party B violates the representations and warranties made to Party A, or violates any obligation under this Contract, and Party A believes that the above behaviors of Party B endanger the credit security.

12. Major adjustments have taken place in relevant national policies and regulations.

Article XII Breach of Contract and Handling

1. Party B shall be deemed to have breached the contract under any of the following circumstances:

(1) Any amount payable by Party B under the Contract is overdue.

(2) Party B violates any of its obligations under the Contract, or Party B explicitly expresses or indicates that it does not perform any of its obligations under the contract by its own behaviors.

(3) The relevant certificates and documents submitted by Party B to Party A or any statements, warranties and promises made by Party B are untrue, inaccurate, incomplete or contain false records, misleading statements or material omissions.

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(4) Party B conceals the true important information or does not cooperate with Party A’s investigation, review and inspection.

(5) Party B changes the use of loan funds without authorization, or misappropriates loans or engages in illegal and illegal transactions with bank loans.

(6) Customers making payment independently cannot provide relevant documents and vouchers for loan purposes that meet the requirements of Party A within one month after lending or before the first repayment.

(7) Party B violates other similar contracts (including but not limited to Credit Contracts, Loan Contracts and Guarantee Contracts) signed with Party A or other third parties or any securities of debt nature issued by Party B, or litigates or arbitrates due to disputes arising from such Contracts or securities.

(8) Party B uses false Contracts and Arrangements with any third party (including but not limited to the related parties of Party B), including but not limited to bills receivable and other discounting or pledging creditors without real trade background to obtain funds or credit from Party A or other banks.

(9) Party B intentionally evades bank creditors through related party transactions or other means.

(10) Party B is investigated for criminal responsibility or subject to other coercive measures or measures taken by relevant authorities to restrict one of its rights according to law, and Party A believes that the realization of creditor’s rights under this Contract has been or may be endangered.

(11) Other situations related to Party B that endanger or may endanger the realization of creditor’s rights under this Contract.

2. In the event of any breach of contract specified in paragraph 1 of the Article, Party A has the right to take any of the following measures or also take multiple measures:

(1) Adjust, cancel or suspend the working capital loan under the Contract, or adjust the validity period of the working capital loan, or adjust the withdrawal period.

(2) Declare that all or part of the debts of Party B under this working capital loan are due immediately, and require Party B to immediately repay all or part of the working capital loan used.

(3) If the loan under the working capital loan is overdue, Party A has the right to take actions it deems appropriate to collect from Party B, including sending loan repayment reminder notice and overdue repayment notice to Party B, calling for collection, employing a third-party agent for collection, or notifying relevant departments or units, or announcing collection through news media. All direct or indirect expenses arising from the aforesaid collection measures shall be borne by Party B.

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(4) Party A has the right to deduct money directly from the accounts of Party B and the guarantor to pay off all debts of Party B under the Contract and loan receipt (including debts required by Party A to be paid off in advance) without prior consent from Party B and the guarantor.

(5) Other remedies claimed by Party A according to law and in accordance with the Contract and loan receipt.

Article XIII Notification and Service

1. The contact information and service address under this Contract are as follows:

Party B’s address: Tianzhan Building, Tian’an Chegongmiao Industrial Zone, Xiangmihu, Futian District, Shenzhen, Guangdong, China; Addressee: Bao Minfei ; Tel.: [ ] ; Fax: / ; E-mail: / .

Party A’s address: Shenzhen Branch of China Resources Bank of Zhuhai Co., Ltd., Phase 2, Zhuoyue Times Square, No. 8, Zhongxin 4th Road, Futian District, Shenzhen, Guangdong Province Addressee: Shenzhen Branch of China Resources Bank of Zhuhai Co., Ltd.

2. Party B knows and agrees that the contact information and service address under this Contract shall be the service address of the court/arbitration institution/Party A’s litigation materials and legal documents involved in disputes under this Contract.

3. Party B knows and agrees that the court/arbitration institution can use the above service address to serve litigation materials and legal documents by mail; Litigation materials and legal documents can be served by using the above agreed mobile phone number, fax and e-mail through electronic delivery (including modern communication methods such as e-mail and mobile phone short message).

4. Party B knows and agrees that in the process of performing this Contract, once the disputes involved in this Contract between the parties enter into judicial/arbitration proceedings, the court/arbitration institution can serve litigation materials or legal documents to Party B through one or more of the above service methods. The service time shall be subject to the first service of the above service methods.

5. Party B knows and agrees that the above service agreement is applicable to mediation, first instance, second instance, retrial (including retrial review) and execution stages in the litigation procedure.

6. Party B knows and agrees to ensure the authenticity and validity of the above agreed address, mobile phone number, contact person, fax, e-mail and other information. In case of any change in relevant information, Party B shall promptly notify Party A in writing, otherwise, the delivery of the original address and other information is still valid, and Party B shall bear the legal consequences arising therefrom.

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7. Party B knows and agrees that the mobile phone number and e-mail address agreed above can effectively and timely receive the litigation materials and legal documents served by the court/arbitration institution.

8. Party B knows and agrees that if the court/arbitration institution serves litigation materials and legal documents by electronic service, it may not serve paper documents to the legal/other agreed address of Party B.

9. Party B knows that where the above agreed address, mobile phone number, e-mail and other service information are untrue, inaccurate and not updated in time, resulting in the failure to actually deliver the litigation materials and legal documents, or the failure to timely deliver them, or the refusal to sign for them, it shall be deemed as effective delivery, and Party B shall bear the corresponding legal consequences.

Article XIV Party A has the right to require Party B to provide the relevant information required by Party A, and has the right to query and use Party B’s credit reports and relevant information through the basic financial credit information database or other information systems recognized or approved by the national competent authorities such as legally established credit reporting agencies during the performance of the Contract and post-loan management

Party A has the right to provide the information related to the Contract (including bad information such as the Party B’s breach of contract) and other relevant information (including basic information of the Party B, credit transaction information such as transaction records formed in credit granting and external guarantee and other relevant credit information) to the basic financial credit information database or other credit reference institutions established in accordance with the law, regulations or other regulatory documents or the requirements of the financial regulatory authority.

Article XV To verify the authenticity of Party B’s identity, Party B authorizes Party A to legally understand, obtain and verify Party B’s information, including contact information and identity information, to pay/credit reporting/financial agencies or other third parties (including but not limited to qualified credit reporting agencies, telecom operators and their agents, affiliated companies, identity information inquiry center of the Ministry of Public Security, etc.) in accordance with the Regulation on the Administration of Credit Investigation Industry and relevant laws and regulations.

Article XVI Other clauses

1. Party B shall still bear the responsibility of repaying all debts owed to Party A under the Contract when the Contract becomes invalid in law for any reason or some clauses are invalid. In case of the above situation, Party A has the right to terminate the Contract and immediately recover all debts owed by Party B under the Contract.

2. During the term of this Contract, any tolerance or grace granted by Party A to Party B’s any breach or delay of contract, or delay in exercising the rights of Party A under this Contract shall not impair, affect or restrict Party A’s rights as a creditor under this Contract and relevant laws, nor be regarded as Party A’s permission or approval of any breach of contract, or as Party A’s waiver of the right to take action against Party B’s existing or future breach of contract.

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3. All expenses incurred due to the conclusion and performance of this Contract shall be determined by the parties through negotiation, except that laws, regulations and rules specify the subject to assume the expenses.

4. Where Party B fails to repay the amount due, the reasonable expenses required by Party A for collecting the amount due, including announcement, delivery, appraisal fees, attorney fees, legal fees, travel expenses, evaluation fees, auction fees, property preservation fees and enforcement fees, shall be borne by Party B.

5. Party A shall not be liable for any breach of contract or compensation if the software (hardware) system of Party A fails to work normally due to any of the following conditions, including but not limited to:

(1) During the maintenance of this service website.

(2) The telecommunication equipment fails to transmit data.

(3) Where the service operation system is obstructed and cannot execute the business due to typhoon, earthquake, tsunami, flood, power outage, war, terrorist attack and other force majeure factors.

(4) Service interruption or delay caused by hacker attacks, technical adjustment, failure, website upgrade and other reasons of relevant departments, enterprises and institutions that rely on information technology organized by telecommunications departments, repayment account opening banks and other third-party payment institutions.

6. Party B promises to abide by China’s anti-money laundering laws and regulations and not participate in illegal and criminal activities such as suspected money laundering, terrorist financing and proliferation financing; Actively cooperate with Party A’s customer identification and due diligence, provide true, accurate, complete and effective customer information, and comply with Party A’s regulations on anti-money laundering and anti-terrorist financing.

When Party A needs Party B’s assistance to comply with anti-money laundering or other regulatory requirements, Party B shall cooperate and provide corresponding written materials.

Article XVII Party A and Party B confirm and agree that this Contract shall be signed in the form of data message approved by both parties; The electronic signature mode used by Party B in Party A’s online financing platform/electronic system is a reliable electronic signature mode agreed by both parties; The way Party B logs in to Party A’s online financing platform/electronic system is the identity authentication method recognized by both parties. Any operation after the identity authentication method is considered as Party B’s own behavior, and Party B promises to be responsible for the legal consequences arising therefrom. This Contract shall come into force after Party B clicks Submit and Confirm on Party A’s online financing platform/electronic system or both parties stamp electronic signatures.

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Article XVIII The transaction voucher electronically confirmed by Party B and the electronic information records generated from various settlement transactions and working capital loan withdrawal and repayment transactions handled by the identity authentication information shall be deemed as the effective vouchers for such transaction.

Party A shall prepare and retain the relevant documents and vouchers on the loan under the Contract according to its business rules, which shall constitute valid evidence to prove the creditors and debts relationship between the borrower and the lender and shall be binding on Party B.

Article XIX The laws of the People’s Republic of China are applicable to this contract. In case of any dispute during the performance of the Contract, both parties shall negotiate or mediate; If negotiation or mediation fails, a lawsuit or other mediation methods agreed by both parties shall be filed with the people’s court with jurisdiction in the place where Party A is located.

Both parties agree that any dispute arising from the Contract shall be governed by the laws of the People’s Republic of China.

Article XX The seal for Party A to sign this Contract is “Special Seal for Tax Offset Loan Contract (Electronic) of China Resources Bank of Zhuhai Co., Ltd.”. All business development, litigation (arbitration), execution procedures and other matters under the Contract shall be specifically executed by Party A. Party B has known and agreed to the above matters, and promises not to raise any objection to Party A’s subject qualification in litigation (arbitration) and execution procedures.

(There is no text below)

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This Contract is signed by both parties online through Party A’s online financing platform/electronic system. Party B confirms that when signing this Contract, both parties have made detailed description and discussion on all the terms, both parties have no doubt about all the terms of the Contract, and have an accurate understanding of the legal significance of the parties’ rights and obligations and liability limitation or exemption clauses.

Party A: Shenzhen Branch of China Resources Bank of Zhuhai Co., Ltd.

(Stamped with the electronic seal of Party A)

Special Seal for Mortgage Contract of China Resources Bank of Zhuhai Co., Ltd. (Electronic Seal)

Party B: Shenzhen United Time Technology Co., Ltd.

(Stamped with the electronic seal of Party B)

Shenzhen United Time Technology Co., Ltd. (Electronic Seal)

15

EX-12.1

Exhibit 12.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO EXCHANGE ACT RULE 13A-14(A)/15D-14(A)
AS ADOPTED PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002

I, Hengcong Qiu, certify that:

1. I have reviewed this annual report on Form 20-F of UTime Limited;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the company and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 8, 2023	/s/ Hengcong Qiu
	Hengcong Qiu
	Chief Executive Officer
	(Principal Executive Officer)

EX-12.2

Exhibit 12.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO EXCHANGE ACT RULE 13A-14(A)/15D-14(A)

AS ADOPTED PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Shibin Yu, certify that:

1. I have reviewed this annual report on Form 20-F of UTime Limited;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the company and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 8, 2023	/s/ Shibin Yu
	Shibin Yu
	Chief Financial Officer
	(Principal Accounting Officer)

EX-13.1

Exhibit 13.1

CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of UTime Limited (the “Registrant”) on Form 20-F for the year ended March 31, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned certifies pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report, fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Date: August 8, 2023	/s/ Hengcong Qiu
	Hengcong Qiu
	Chief Executive Officer
	(Principal Executive Officer)

EX-13.2

Exhibit 13.2

CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of UTime Limited (the “Registrant”) on Form 20-F for the year ended March 31, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned certifies pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report, fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Date: August 8, 2023	/s/ Shibin Yu
	Shibin Yu
	Chief Financial Officer
	(Principal Financial Officer)

EX-15.1

Exhibit 15.1

 

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

LXSZ[2023]--ZIB021

UTime Limited

Grand Cayman, Cayman Islands

We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (File No. 333-265907) of UTime Limited of our report dated July 21, 2021, relating to the 2021 consolidated financial statements which appears in the Annual Report to Shareholders, which is incorporated by reference in this Annual Report on Form 20-F for the year ended March 31, 2023.

/s/ BDO China Shu Lun Pan Certified Public Accountants LLP

Shenzhen, The People’s Republic of China

August 8, 2023

EX-15.2

Exhibit 15.2

	AUDIT ALLIANCE LLP®
	A Top 18 Audit Firm
	10 Anson Road, #20-16 International Plaza, Singapore 079903.
UEN: T12LL1223B  GST Reg No: M90367663E  Tel: (65) 6227 5428

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (File No. 333-265907) of UTime Ltd (the “Company”) of our report dated August 8, 2023 relating to the Company’s consolidated financial statements which appears in this Annual Report on Form 20-F of the Company for the fiscal year ended March 31, 2023.

/s/ Audit Alliance LLP

Singapore

August 8, 2023

EX-15.3

Exhibit 15.3

  B & D Law Firm

12th Floor, Building B, Posco Center, No.13 Fourth Block Wangjing Dongyuan,
Chaoyang District Beijing, 100102 China

Tel: 010 6478 9105 Fax : 010 6478 9550

Email: bdproject@bdlawyer.com.cn Web: www.bdlawyer.com.cn

To: UTime Limited
7th Floor, Building 5A

Shenzhen Software Industry Base, Nanshan District

Shenzhen, People’s Republic of China 518061

August 8, 2023

Dear Sir/Madam:

We hereby consent to the reference of our name under the heading “Item 3.D. Risk Factors” in UTime Limited’s Annual Report on Form 20-F for the year ended March 31, 2023 (the “Annual Report”), which will be filed with the Securities and Exchange Commission (the “SEC”) in the month of August 2023, and the summary of our opinion under the heading “Item 3.D. Risk Factors,” “Item 4.B. Information on the Company—Business Overview—Regulations,” and “Item 10.E. Additional Information—Taxation—People’s Republic of China Taxation” in the Annual Report. We also consent to the filing of this consent letter with the SEC as an exhibit to the Annual Report.

In giving such consent, we do not thereby admit that we come within the category of persons whose consent is required under Section 7 of the Securities Act of 1933, or under the Securities Exchange Act of 1934, in each case, as amended, or the regulations promulgated thereunder.

Very truly yours,

/s/ B&D Law Firm

B&D Law Firm

EX-19.1

Exhibit 19.1

UTime Limited

Insider Trading Policy

and Guidelines with Respect to Certain Transactions in Company Securities

APPLICABILITY OF POLICY

This Policy applies to all transactions in the Company’s securities, including ordinary shares, options and warrants to purchase ordinary shares and any other securities the Company may issue from time to time, such as preferred stock and convertible notes, as well as to derivative securities relating to the Company’s shares, whether or not issued by the Company, such as exchange-traded options. It applies to all officers and directors of the Company, all other employees of the Company and its subsidiaries, all secretaries and assistants supporting such directors, officers and employees, and consultants or contractors to the Company or its subsidiaries who have or may have access to Material Nonpublic Information (as defined below) regarding the Company and members of the immediate family or household of any such person. This group of people is sometimes referred to in this Policy as “Insiders.” This Policy also applies to any person who receives Material Nonpublic Information from any Insider.

Any person who possesses Material Nonpublic Information regarding the Company is an Insider for so long as such information is not publicly known.

DEFINITION OF MATERIAL NONPUBLIC INFORMATION

It is not possible to define all categories of material information. However, information should be regarded as material if there is a reasonable likelihood that it would be considered important to an investor in making an investment decision regarding the purchase or sale of the Company’s securities. Material Nonpublic Information is information that has not been previously disclosed to the general public and is otherwise not available to the general public.

While it may be difficult to determine whether particular information is material, there are various categories of information that are particularly sensitive and, as a general rule, should always be considered material. In addition, material information may be positive or negative. Examples of such information may include:

● Financial results;

● Entry into a material agreement or discussions regarding entry into a material agreement;

● Projections of future earnings or losses;

● News of a pending or proposed merger or acquisition;

● Joint ventures/commercial partnerships with third parties;

● News of the disposition of material assets;

● New product or project announcements of a significant nature;

● Information regarding regulatory review of Company products;

● Intellectual property and other proprietary information;

● Major contract awards, cancellations or write-offs;

● Research milestones and related payments or royalties;

● Impending bankruptcy or financial liquidity problems;

● Gain or loss of a substantial customer or supplier or manufacturer;

● Significant pricing changes;

● Stock splits;

● New equity or debt offerings;

● Significant litigation exposure due to actual or threatened litigation;

● Changes in senior management or the Board of Directors of the Company;

● Capital investment plans; and

● Changes in dividend policy.

CERTAIN EXCEPTIONS

For purposes of this Policy, the Company considers that the exercise of stock options for cash under the Company’s equity incentive or similar plan (but not the sale of any such shares) to be exempt from this Policy, since the other party to the transaction is the Company itself and the price does not vary with the market but is fixed by the terms of the option agreement or the plan.

STATEMENT OF POLICY

General Policy

It is the policy of the Company to prohibit the unauthorized disclosure of any nonpublic information acquired in the workplace and the misuse of Material Nonpublic Information in securities trading related to the Company or any other company.

Specific Policies

1. Trading on Material Nonpublic Information. With certain exceptions, no Insider shall engage in any transaction involving a purchase or sale of the Company’s or any other company’s securities, including any offer to purchase or offer to sell, during any period commencing with the date that he or she possesses Material Nonpublic Information concerning the Company, and ending at the close of business on the second Trading Day following the date of public disclosure of that information, or at such time as such nonpublic information is no longer material. However, see Section 2 under “Permitted Trading Period” below for a full discussion of trading pursuant to a pre-established plan or by delegation.

As used herein, the term “Trading Day” shall mean a day on which national stock exchanges are open for trading.

2

2. Tipping. No Insider shall disclose (“tip”) Material Nonpublic Information to any other person (including family members) where such information may be used by such person to his or her profit by trading in the securities of companies to which such information relates, nor shall such Insider or related person make recommendations or express opinions on the basis of Material Nonpublic Information as to trading in the Company’s securities.

Regulation FD (Fair Disclosure) is an issuer disclosure rule implemented by the SEC that addresses selective disclosure of Material Nonpublic Information. The regulation provides that when the Company, or person acting on its behalf, discloses material nonpublic information to certain enumerated persons (in general, securities market professionals and holders of the Company’s securities who may well trade on the basis of the information), it must make public disclosure of that information. The timing of the required public disclosure depends on whether the selective disclosure was intentional or unintentional; for an intentional selective disclosure, the Company must make public disclosures simultaneously; for a non-intentional disclosure the Company must make public disclosure promptly. Under the regulation, the required public disclosure may be made by filing or furnishing a Form 8-K, or by another method or combination of methods that is reasonably designed to effect broad, non-exclusionary distribution of the information to the public.

It is the policy of the Company that all public communications of the Company (including, without limitation, communications with the press, other public statements, statements made via the Internet or social media outlets, or communications with any regulatory authority) be handled only through the Company’s Chief Executive Officer (the “CEO”), an authorized designee of the CEO or the Company’s public or investor relations firm. Please refer all press, analyst or similar requests for information to the CEO and do not respond to any inquiries without prior authorization from the CEO. If the CEO is unavailable, the Company’s Chief Financial Officer (or the authorized designee of such officer) will fill this role.

3. Confidentiality of Nonpublic Information. Nonpublic information relating to the Company is the property of the Company and the unauthorized disclosure of such information (including, without limitation, via email or by posting on Internet message boards, blogs, or social media) is strictly forbidden.

4. Duty to Report Inappropriate and Irregular Conduct. All employees, and particularly managers and/or supervisors, have a responsibility for maintaining financial integrity within the Company, consistent with generally accepted accounting principles and both federal and state securities laws. Any employee who becomes aware of any incidents involving financial or accounting manipulation or irregularities, whether by witnessing the incident or being told of it, must report it to their immediate supervisor and to any member of the Company’s Audit Committee. In certain instances, employees are allowed to participate in federal or state proceedings. For a more complete understanding of this issue, employees should consult their employee manual and or seek the advice of counsel. Our corporate and securities counsel is VCL Law LLP, attention: Fang Liu, at (703) 919-7285, email: fliu@vcllegal.com.

3

POTENTIAL CRIMINAL AND CIVIL LIABILITY

AND/OR DISCIPLINARY ACTION

1. Liability for Insider Trading. Insiders may be subject to penalties of up to $5,000,000 and up to ten (10) years in jail for engaging in transactions in the Company’s securities at a time when they possess Material Nonpublic Information regarding the Company. In addition, the SEC has the authority to seek a civil monetary penalty of up to three times the amount of profit gained or loss avoided by illegal insider trading. “Profit gained” or “loss avoided” generally means the difference between the purchase or sale price of the Company’s shares and its value as measured by the trading price of the shares a reasonable period after public dissemination of the nonpublic information.

2. Liability for Tipping. Insiders may also be liable for improper transactions by any person (commonly referred to as a “tippee”) to whom they have disclosed Material Nonpublic Information regarding the Company or to whom they have made recommendations or expressed opinions on the basis of such information as to trading in the Company’s securities. The SEC has imposed large penalties even when the disclosing person did not profit from the trading. The SEC, the stock exchanges and the Financial Industry Regulatory Authority, Inc. use sophisticated electronic surveillance techniques to monitor trading and uncover insider trading.

3. Possible Disciplinary Actions. Individuals subject to the Policy who violate this Policy shall also be subject to disciplinary action by the Company, which may include suspension, forfeiture of perquisites, ineligibility for future participation in the Company’s equity incentive plans and/or termination of employment.

PERMITTED TRADING PERIOD

1. Black-Out Period and Trading Window.

To ensure compliance with this Policy and applicable federal and state securities laws, the Company requires that all officers, directors, employees, members of the immediate family or household of any such person and others who are subject to this Policy refrain from conducting any transactions involving the purchase or sale of the Company’s securities, other than during the period in any fiscal quarter commencing at the close of business on the second Trading Day following the date of public disclosure of the financial results for the prior fiscal quarter or year and ending on the twenty-fifth day of the third month of the fiscal quarter (the “Trading Window”). If such public disclosure occurs on a Trading Day before the markets close, then such date of disclosure shall be considered the first Trading Day following such public disclosure.

Notwithstanding the foregoing, persons subject to this Policy may submit a request to the Company to purchase or sell the Company’s securities outside the Trading Window on the basis that they do not possess any Material Nonpublic Information. The Compliance Officer shall review all such requests and may grant such requests on a case-by-case basis if he or she determines that the person making such request does not possess any Material Nonpublic Information at that time.

4

It is the Company’s policy that the period when the Trading Window is “closed” is a particularly sensitive period of time for transactions in the Company’s securities from the perspective of compliance with applicable securities laws. This is because Insiders, as any quarter progresses, are increasingly likely to possess Material Nonpublic Information about the expected financial results for the quarter. The purpose of the Trading Window is to avoid any unlawful or improper transactions or the appearance of any such transactions.

It should be noted that even during the Trading Window any person possessing Material Nonpublic Information concerning the Company shall not engage in any transactions in the Company’s (or any other company’s, as applicable) securities until such information has been known publicly for at least two Trading Days. The Company has adopted the policy of delaying trading for “at least two Trading Days” because the securities laws require that the public be informed effectively of previously undisclosed material information before Insiders trade in the Company’s shares. Public disclosure may occur through a widely disseminated press release or through filings, such as Forms 10-Q and/or 8-K, with the SEC. Furthermore, in order for the public to be effectively informed, the public must be given time to evaluate the information disclosed by the Company. Although the amount of time necessary for the public to evaluate the information may vary depending on the complexity of the information, generally two Trading Days is a sufficient period of time.

From time to time, the Company may also require that Insiders suspend trading because of developments known to the Company and not yet disclosed to the public. In such event, such persons may not engage in any transaction involving the purchase or sale of the Company’s securities during such period and may not disclose to others the fact of such suspension of trading.

Although the Company may from time to time require during a Trading Window that Insiders and others suspend trading because of developments known to the Company and not yet disclosed to the public, each person is individually responsible at all times for compliance with the prohibitions against insider trading. Trading in the Company’s securities during the Trading Window should not be considered a “safe harbor,” and all directors, officers and other persons should use good judgment at all times.

Notwithstanding these general rules, Insiders may trade outside of the Trading Window provided that such trades are made pursuant to a pre-established plan or by delegation; these alternatives are discussed in the next section.

5

2. Trading According to a Pre-established Plan or by Delegation.

Trading which is not “on the basis of” material non-public information may not give rise to insider trading liability. The SEC has adopted Rule 10b5-1 under which insider trading liability can be avoided if Insiders follow very specific procedures. In general, such procedures involve trading according to pre-established instructions, plans or programs (a “10b5-1 Plan”).

10b5-1 Plans must:

(a) Be documented by a contract, written plan, or formal instruction which provides that the trade take place in the future. For example, an Insider can contract to sell his or her shares on a specific date, or simply delegate such decisions to an investment manager, 401(k) plan administrator or similar third party. This documentation must be provided to the Company’s Insider Trading Compliance Officer or legal counsel;

(b) Include in its documentation the specific amount, price and timing of the trade, or the formula for determining the amount, price and timing. For example, the Insider can buy or sell shares in a specific amount and on a specific date each month, or according to a pre-established percentage (of the Insider’s salary, for example) each time that the share price falls or rises to pre-established levels. In the case where trading decisions have been delegated, the specific amount, price and timing need not be provided;

(c) Be implemented at a time when the Insider does not possess material non-public information. As a practical matter, this means that the Insider may set up a 10b5-1 Plan, or delegate trading discretion, only during a “Trading Window” (discussed in Section 1, above); and,

(d) Remain beyond the scope of the Insider’s influence after implementation. In general, the Insider must allow the 10b5-1 Plan to be executed without changes to the accompanying instructions, and the Insider cannot later execute a hedge transaction that modifies the effect of the 10b5-1 Plan. An Insider wishing to change the amount, price or timing of a 10b5-1 Plan can do so only during a “Trading Window” (discussed in Section 1, above). Termination of a 10b5-1 Plan may be undertaken at any time, provided that the termination must be approved in advance by the Company’s Insider Trading Compliance Officer in order to ensure that the Insider is not in possession of Material Nonpublic Information.¹ If the Insider has delegated decision-making authority to a third party, the Insider cannot subsequently influence the third party in any way and such third party must not possess material non-public information at the time of any of the trades.

Prior to implementing a pre-established plan for trading, all officers and directors must receive the approval for such plan from the Company’s Insider Trading Compliance Officer or legal counsel.

¹ Insiders should be aware that termination of a 10b5-1 Plan after trades have been undertaken under such plan could negate the 10b5-1 affirmative defense afforded by such program for all such prior trades. As such, termination of a 10b5-1 Plan should only be undertaken in consultation with the Insider Trading Compliance Officer and, if necessary, the Company’s legal counsel.

6

3. Pre-Clearance of Trades.

Even during a Trading Window, all Insiders must comply with the Company’s “pre-clearance” process prior to trading in the Company’s securities, implementing a pre-established plan for trading, or delegating decision-making authority over the Insider’s trades. To do so, each Insider must contact the Company’s Insider Trading Compliance Officer or legal counsel prior to initiating any of these actions. The Company may also find it necessary, from time to time, to require compliance with the pre-clearance process from others who may be in possession of Material Nonpublic Information.

4. Individual Responsibility.

Every person subject to this Policy has the individual responsibility to comply with this Policy against insider trading, regardless of whether the Company has established a Trading Window applicable to that Insider or any other Insiders of the Company. Each individual, and not necessarily the Company, is responsible for his or her own actions and will be individually responsible for the consequences of their actions. Therefore, appropriate judgment, diligence and caution should be exercised in connection with any trade in the Company’s securities. An Insider may, from time to time, have to forego a proposed transaction in the Company’s securities even if he or she planned to make the transaction before learning of the Material Nonpublic Information and even though the Insider believes he or she may suffer an economic loss or forego anticipated profit by waiting.

5. Exceptions to the Policy.

Any exceptions to this Policy may only be made by advance written approval of each of: (i) the Company’s Chief Executive Officer, (ii) the Insider Trading Compliance Officer and (iii) the Nominating and Corporate Governance Committee of the Board. Any such exceptions shall be immediately reported to the remaining members of the Board.

APPLICABILITY OF POLICY TO MATERIAL NON-PUBLIC INFORMATION

REGARDING OTHER COMPANIES

This Policy and the guidelines described herein also apply to Material Nonpublic Information relating to other companies, including the Company’s customers, vendors or suppliers (“business partners”), when that information is obtained in the course of employment with, or other services performed on behalf of the Company. Civil and criminal penalties, as well as termination of employment, may result from trading on Material Nonpublic Information regarding the Company’s business partners. All Insiders should treat Material Nonpublic Information about the Company’s business partners with the same care as is required with respect to information relating directly to the Company.

INQUIRIES

Please direct your questions as to any of the matters discussed in this Policy to the Company’s Insider Trading Compliance Officer or legal counsel.

7

Exhibit B

UTime Limited

Insider Trading Compliance Program - Pre-Clearance Checklist

Individual Proposing to Trade:_________________________

Number of Shares covered by Proposed Trade:_________________________

Date:_________________________

☐ Trading Window. Confirm that the trade will be made during the Company’s “trading window.”

☐ Rule 144 Compliance (as applicable). Confirm that:

☐ Current public information requirement has been met;

☐ Shares are not restricted or, if restricted, the one year holding period from the closing of the Company’s initial business combination has been met;

☐ Volume limitations are not exceeded (confirm that the individual is not part of an aggregated group);

☐ The manner of sale requirements have been met; and

☐ The Notice of Form 144 Sale has been completed and filed.

☐ Rule 10b-5 Concerns. Confirm that (i) the individual has been reminded that trading is prohibited when in possession of any material information regarding the Company that has not been adequately disclosed to the public, and (ii) the Insider Trading Compliance Officer has discussed with the individual any information known to the individual or the Insider Trading Compliance Officer which might be considered material, so that the individual has made an informed judgment as to the presence of inside information.

Signature of Insider Trading Compliance Officer

8

XML

Document And Entity Information - shares	12 Months Ended
	Mar. 31, 2023	Aug. 08, 2023
Document Information Line Items
Entity Registrant Name	UTime Limited
Trading Symbol	UTME
Document Type	20-F
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		13,567,793
Amendment Flag	false
Entity Central Index Key	0001789299
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Non-accelerated Filer
Entity Well-known Seasoned Issuer	No
Document Period End Date	Mar. 31, 2023
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	FY
Entity Emerging Growth Company	true
Entity Shell Company	false
Entity Ex Transition Period	false
ICFR Auditor Attestation Flag	false
Document Registration Statement	false
Document Annual Report	true
Document Transition Report	false
Document Shell Company Report	false
Entity File Number	001-40306
Entity Incorporation, State or Country Code	E9
Entity Address, Address Line One	7th Floor
Entity Address, Address Line Two	Building 5A
Entity Address, Address Line Three	Shenzhen Software Industry Base
Entity Address, City or Town	Nanshan District
Entity Address, Country	CN
Entity Address, Postal Zip Code	518061
Title of 12(b) Security	Ordinary shares, par value US$ $0.0001 per share
Security Exchange Name	NASDAQ
Entity Interactive Data Current	Yes
Document Accounting Standard	U.S. GAAP
Document Financial Statement Error Correction [Flag]	false
Auditor Name	Audit Alliance LLP
Auditor Location	Singapore
Auditor Firm ID	3487
Business Contact
Document Information Line Items
Entity Address, Address Line One	7th Floor
Entity Address, Address Line Two	Building 5A
Entity Address, Address Line Three	Shenzhen Software Industry Base
Entity Address, City or Town	Nanshan District
Entity Address, Country	CN
Entity Address, Postal Zip Code	518061
Contact Personnel Name	Hengcong Qiu
City Area Code	(86)
Local Phone Number	755 86512266

XML

Consolidated Balance Sheets ¥ in Thousands, $ in Thousands	Mar. 31, 2023 CNY (¥)	Mar. 31, 2023 USD ($)	Mar. 31, 2022 CNY (¥)
Current assets
Cash and cash equivalents	¥ 71,934	$ 10,468	¥ 66,692
Restricted cash	500	73	500
Accounts receivable, net	52,308	7,612	22,417
Prepaid expenses and other current assets, net	95,508	13,899	65,815
Due from related parties	584	85	1,422
Inventories	16,169	2,353	36,071
Total current assets	237,003	34,490	192,917
Non-current assets
Property and equipment, net	61,429	8,939	38,270
Operating lease, right-of-use assets, net	13,030	1,896	16,319
Equity method investment
Intangible assets, net	1,677	244	2,592
Other non-current assets			541
Total non-current assets	76,136	11,079	57,722
Total assets	313,139	45,569	250,639
Current liabilities
Accounts payable	126,691	18,437	74,531
Short-term borrowings	53,935	7,849	35,780
Current portion of long-term borrowings	1,080	157	800
Due to related parties	5,500	800	4,499
Lease liabilities	3,673	535	3,360
Other payables and accrued liabilities	54,772	7,971	44,148
Income tax payables	18	3	18
Total current liabilities	245,669	35,752	163,136
Non-current liabilities
Long-term borrowings	6,870	1,000	8,020
Government grants	8,697	1,266
Deferred tax liabilities	295	43	466
Lease liabilities - non-current	10,876	1,583	14,549
Total non-current liabilities	26,738	3,892	23,035
Total liabilities (including amounts of the consolidated VIEs without recourse to the Company of RMB183,639 and RMB265,773 as of March 31, 2022 and 2023, respectively)	272,407	39,644	186,171
Commitments and contingencies
Shareholder’s equity
Preference share, par value US$0.0001; Authorized:10,000,000 shares; Nil issued and outstanding as of March 31, 2022 and March 31, 2023
Ordinary shares, par value US$0.0001; Authorized:140,000,000 shares; Issued and outstanding: 8,267,793 shares as of March 31,2022 and 13,567,793 shares as of March 31, 2023	9	1	5
Additional paid-in capital	216,504	31,507	152,236
Accumulated deficit	(175,893)	(25,597)	(88,277)
Accumulated other comprehensive income	3,469	503	1,024
Total UTime Limited shareholder’s equity	44,089	6,414	64,988
Non-controlling interests	(3,357)	(489)	(520)
Total shareholders’ equity	40,732	5,925	64,468
Total liabilities and shareholders’ equity	¥ 313,139	$ 45,569	¥ 250,639

XML

Consolidated Balance Sheets (Parentheticals) - CNY (¥) ¥ in Thousands	Mar. 31, 2023	Mar. 31, 2022
Statement of Financial Position [Abstract]
Including amounts of the consolidated VIEs (in Dollars and Yuan Renminbi)	¥ 265,773	¥ 183,639
Preferred share, par value (in Dollars per share and Yuan Renminbi per share)	¥ 0.0001	¥ 0.0001
Preferred share, shares authorized	10,000,000	10,000,000
Preferred share, shares issued
Preferred share, shares outstanding
Ordinary shares, par value (in Dollars per share and Yuan Renminbi per share)	¥ 0.0001	¥ 0.0001
Ordinary shares, shares authorized	140,000,000	140,000,000
Ordinary shares, shares issued	13,567,793	8,267,793
Ordinary shares, shares outstanding	13,567,793	8,267,793

XML

Consolidated Statements of Comprehensive Loss ¥ in Thousands, $ in Thousands	12 Months Ended
	Mar. 31, 2023 CNY (¥) ¥ / shares shares	Mar. 31, 2023 USD ($) $ / shares shares	Mar. 31, 2022 CNY (¥) ¥ / shares shares	Mar. 31, 2021 CNY (¥) ¥ / shares shares
Income Statement [Abstract]
Net sales	¥ 200,547	$ 29,184	¥ 275,508	¥ 246,899
Cost of sales	170,482	24,809	261,723	228,732
Gross profit	30,065	4,375	13,785	18,167
Operating expenses:
Selling expenses	7,391	1,076	5,459	4,127
General and administrative expenses	110,412	16,068	39,499	25,695
Other expenses (income), net	(3,694)	(538)	3,328	2,875
Total operating expenses	114,109	16,606	48,286	32,697
Loss from operations	(84,044)	(12,231)	(34,501)	(14,530)
Interest expenses	6,149	895	4,875	2,461
Loss before income taxes	(90,193)	(13,126)	(39,376)	(16,991)
Income tax benefits	171	25	46	364
Net loss	(90,022)	(13,101)	(39,330)	(16,627)
Less: Net loss attributable to non-controlling interests	(2,406)	(350)	497
Net loss attributable to UTime Limited	(87,616)	(12,751)	(38,833)	(16,627)
Net loss	(90,022)	(13,101)	(39,330)	(16,627)
Foreign currency translation adjustment	2,445	356	(377)	1,868
Total comprehensive loss	(87,577)	(12,745)	(39,707)	(14,759)
Less: Comprehensive loss/(income) attributable to non-controlling interest	(2,406)	(350)	497
Comprehensive loss attributable to UTime Limited	¥ (85,171)	$ (12,395)	¥ (39,210)	¥ (14,759)
Losses per share attributable to UTime Limited
Basic (in Dollars per share and Yuan Renminbi per share) | (per share)	¥ (7.8)	$ (1.14)	¥ (4.76)	¥ (3.68)
Weighted average ordinary shares outstanding
Basic (in Shares)	11,229,985	11,229,985	8,164,771	4,517,793

XML

Consolidated Statements of Comprehensive Loss (Parentheticals)	12 Months Ended
	Mar. 31, 2023 ¥ / shares shares	Mar. 31, 2023 $ / shares shares	Mar. 31, 2022 ¥ / shares shares	Mar. 31, 2021 ¥ / shares shares
Income Statement [Abstract]
Diluted (in Dollars per share and Yuan Renminbi per share) | (per share)	¥ (7.80)	$ (1.14)	¥ (4.76)	¥ (3.68)
Diluted	11,229,985	11,229,985	8,164,771	4,517,793

XML

Consolidated Statements of Shareholders’ Equity ¥ in Thousands, $ in Thousands	Ordinary Shares CNY (¥) shares	Additional Paid-in Capital CNY (¥)	Accumulated Deficit CNY (¥)	Accumulated Other Comprehensive Income (Loss) CNY (¥)	Non- Controlling Interests CNY (¥)	CNY (¥)	USD ($)
Balance at Mar. 31, 2020	¥ 4	¥ 73,217	¥ (32,817)	¥ (467)		¥ 39,937
Balance (in Shares) at Mar. 31, 2020 | shares	4,517,793
Net loss			(16,627)			(16,627)
Foreign currency translation difference				1,868		1,868
Balance at Mar. 31, 2021	¥ 4	73,217	(49,444)	1,401		25,178
Balance (in Shares) at Mar. 31, 2021 | shares	4,517,793
Net loss			(38,833)		(497)	(39,330)
Issuance of ordinary shares upon initial public offering, net of offering costs	¥ 1	79,019			10	79,030
Issuance of ordinary shares upon initial public offering, net of offering costs (in Shares) | shares	3,750,000
Foreign currency translation difference				(377)	(33)	(410)
Balance at Mar. 31, 2022	¥ 5	152,236	(88,277)	1,024	(520)	64,468
Balance (in Shares) at Mar. 31, 2022 | shares	8,267,793
Net loss			(87,616)		(2,406)	(90,022)	$ (13,101)
Issuance of ordinary shares	¥ 4	64,268				64,272
Issuance of ordinary shares (in Shares) | shares	5,300,000
Foreign currency translation difference				2,445	(431)	2,014
Balance at Mar. 31, 2023	¥ 9	¥ 216,504	¥ (175,893)	¥ 3,469	¥ (3,357)	¥ 40,732	$ 5,925
Balance (in Shares) at Mar. 31, 2023 | shares	13,567,793

XML

Consolidated Statements of Cash Flows ¥ in Thousands, $ in Thousands	12 Months Ended
	Mar. 31, 2023 CNY (¥)	Mar. 31, 2023 USD ($)	Mar. 31, 2022 CNY (¥)	Mar. 31, 2021 CNY (¥)
Cash flows from operating activities:
Net loss	¥ (90,022)	$ (13,101)	¥ (39,330)	¥ (16,627)
Adjustments to reconcile net loss from operations to net cash used by operating activities:
Depreciation and amortization	5,794	843	4,333	3,954
Allowance/(write-back) for obsolete inventories, net	(407)	(59)	293	7,589
(Reversal of)/provision for doubtful account, net			3,406	(836)
Loss on equity method investment				833
Share-based compensation and expenses	63,656	9,264
Loss on disposal of property and equipment	184	27	10
Impairment of an intangible asset			348
Deferred tax	(171)	(25)
Net changes in operating assets and liabilities:
Accounts receivable	(27,564)	(4,011)	(5,725)	21,477
Prepaid expenses and other current assets	(25,871)	(3,765)	5,937	(26,173)
Inventories	20,627	3,002	(4,629)	(10,934)
Accounts payable	19,629	2,856	27,324	(9,924)
Other payables and accrued liabilities, and lease liabilities	8,888	1,293	(11,925)	27,993
Related parties	881	128	(699)	527
Deferred revenue				(400)
Government grants	8,697	1,266
Other non-current assets	541	79	(208)
Net cash used in operating activities	(15,138)	(2,203)	(20,865)	(2,521)
Cash flows from investing activities:
Payment for property and equipment	(2,593)	(377)	(5,858)
Payment for intangible assets	(307)	(45)		(2,201)
Cash received from consolidation, net of cash acquired			28
Net cash used in investing activities	(2,900)	(422)	(5,830)	(2,201)
Cash flows from financing activities:
Proceeds from short-term borrowings	66,300	9,648	46,500	47,600
Loan received from a shareholder	4,010	584	5,980	900
Proceeds from long-term borrowings			9,000
Repayment of loan from a shareholder	(3,000)	(437)	(3,000)	(1,500)
Repayment of short-term borrowings	(48,145)	(7,006)	(41,520)	(31,800)
Repayments of long-term borrowings	(870)	(127)	(5,760)	(1,200)
Down payment for financing services			(19,003)
Contribution in a subsidiary by a shareholder			6,429
Proceeds from issuance of ordinary shares through initial public offering			88,262
Net cash provided by financing activities	18,295	2,662	86,888	14,000
Effect of exchange rate changes on cash and cash equivalent and restricted cash	4,985	725	(2,478)	(855)
Net increase in cash and cash equivalent and restricted cash	5,242	763	57,715	8,423
Cash and cash equivalents and restricted cash at beginning of year	67,192	9,778	9,477	1,054
Cash and cash equivalents and restricted cash at end of year	72,434	10,541	67,192	9,477
Supplemental disclosures of cash flow information:
Income taxes refunded				(364)
Interest paid	6,097	887	4,707	2,461
Restricted cash	500	73	500	500
Cash and cash equivalents	71,934	10,468	66,692	8,977
Cash, cash equivalents and restricted cash	¥ 72,434	$ 10,541	¥ 67,192	¥ 9,477

XML

Organization and Principal Activities

12 Months Ended

Mar. 31, 2023

Organization and Principal Activities [Abstract]

ORGANIZATION AND PRINCIPAL ACTIVITIES

NOTE 1 — ORGANIZATION AND PRINCIPAL ACTIVITIES

UTime Limited was incorporated as an exempted company with limited liability under the laws of the Cayman Islands on October 9, 2018. UTime Limited does not conduct any substantive operations on its own but instead conducts its business operations through its subsidiaries, variable interest entity (“VIE”) and subsidiaries of the VIE. UTime Limited, its subsidiaries, VIE and subsidiaries of the VIE (together, the “Company”) is primarily engaged in the operation of designing, manufacturing and marketing mobile communication devices, and selling a variety of related accessories.

(a) History and Reorganization

The Company commenced its operations in June 2008 through United Time Technology Co., Ltd. (“UTime SZ” or “VIE”), a People’s Republic of China (the “PRC” or “China”) company established by Mr. Minfei Bao (“Mr. Bao”), Mr. Junlin Zhou (“Mr. Zhou”) and Mr. Bo Tang (“Mr. Tang”). As of March 31, 2017, Mr. Bao, Mr. Zhou and Mr. Tang held 52%, 28% and 20% equity interests of UTime SZ, respectively. In February 2018, Mr. Bao acquired 28% and 20% equity interests of UTime SZ from Mr. Zhou and Mr. Tang, respectively, with the total consideration of RMB9.6 million in cash through his private fund. As of the acquisition date, such non-controlling interests amounted to RMB17.2 million and were transferred to equity attributable to UTime Limited, of which RMB1.0 million relating to foreign currency translation was transferred to the accumulated other comprehensive income, and remaining balance of RMB16.2 million was transferred to additional paid-in capital. After the acquisition, Mr. Bao became the sole shareholder of UTime SZ. Prior to the reorganization, UTime SZ’s equity interests were held by Mr. Bao.

For the purpose of an initial public offering in the United States (“IPO”), the following transactions were undertaken to reorganize the legal structure (the “Reorganization”) of the Company. In October 2018, UTime Limited was incorporated in the Cayman Islands. In November and December 2018, UTime International Limited (“UTime HK”) was incorporated in Hong Kong and Shenzhen UTime Technology Consulting Co., Ltd. (“UTime WFOE”) was incorporated in China, respectively.

In March 2019, UTime WFOE entered into a series of contractual agreements with VIE and Mr. Bao, which were further amended and restated in August and September 2019, respectively, and were entered into among UTime WFOE, VIE, Mr. Bao and Mr. Min He (“Mr. He”). Pursuant to these agreements as detailed in note 1(b), the Company believes that these contractual arrangements would enable the Company to (1) have power to direct the activities that most significantly affect the economic performance of the VIE and its subsidiaries, and (2) receive the economic benefits of the VIE and its subsidiaries that could be significant to the VIE and its subsidiaries. Accordingly, the Company is considered the primary beneficiary of the VIE and is able to consolidate the VIE and its subsidiaries.

Do Mobile India Private Ltd. (“Do Mobile”) was incorporated on October 24, 2016 in New Delhi, India. It is an operating entity that sells cell phone products and provides after-sale services for the Company’s own in-house brand products in India. Prior to the reorganization, the majority of Do Mobile’s equity interests were held by Mr. Bao through an entrust agreement with Mr. Wukai Song through a holding company, Bridgetime Limited (“Bridgetime”). Bridgetime was incorporated on September 5, 2016 in British Virgin Island (“BVI”) under the laws of BVI, with Mr. Wukai Song owning 70% through an entrust agreement between him and Mr. Bao, and Mr. Yunchuan Li owning 30% of equity interest.

On March 5, 2018, Bridgetime issued 100,000 shares to Mr. Wukai Song, changing shareholders’ structure to Mr. Wukai Song owning 90% equity interest, which are controlled by Mr. Bao through an entrust agreement between Mr. Bao and Mr. Wukai Song, and Mr. Yunchuan Li owning 10% of equity interest. On December 5, 2018, Bridgetime approved a board resolution that appointed and registered Mr. Yihuang Chen as a new director. On March 11, 2019, Bridgetime approved a board resolution that transferred 1 share of Do Mobile to Mr. Yihuang Chen and made him nominal shareholder of Do Mobile, removed Mr. Yunchuan Li as the director of Bridgetime and authorized representative of Do Mobile, and appointed Mr. Wukai Song as the authorized representative of Do Mobile. On April 4, 2019, Bridgetime approved a board resolution that forfeited 15,000 shares held by Mr. Yunchuan Li, cancelled those shares accordingly and amended Bridgetime’s memorandum of association that changed authorized shares from 150,000 to 135,000 at a par value of US$1.00 which was accounted as a cancellation of non-controlling interest in the consolidated statements of shareholders’ equity.

After this, Mr. WuKai Song owned 100% of equity interest of Bridgetime, which are controlled by Mr. Bao through an entrust agreement between Mr. Bao and Mr. Wukai Song. On May 23, 2019, Bridgetime approved a board resolution that transferred 135,000 ordinary shares owning by Mr. Wukai Song to UTime Limited. Since inception, Bridgetime has only made nominal investments into Do Mobile and no substantial business operations have occurred.

On May 20, 2019, the Company approved a board resolution that agreed to transfer 12,000,000 ordinary shares being owned by Mr. Bao to Grandsky Phoenix Limited, a company that was established under the laws of the BVI and 100% owned by Mr. Bao.

As all the entities involved in the process of the Reorganization are under common control before and after the Reorganization, the Reorganization is accounted for in a manner similar to a pooling-of-interest with the assets and liabilities of the parties to the Reorganization carried over at their historical amounts.

On June 3, 2019, the Company entered into a share subscription agreement with HMercury Capital Limited, a company that was incorporated under the laws of the BVI and controlled by Mr. He. HMercury Capital Limited purchased an aggregation of 377,514 ordinary shares. On the same day, the Company approved a board resolution for issuance of 377,514 ordinary shares at par value US$0.0001 to HMercury Capital Limited based on the share subscription agreement. As a result, Grandsky Phoenix Limited and HMercury Capital Limited own 96.95% and 3.05% of equity interest of the Company.

On April 29, 2020, the Company approved a board resolution, which became effective immediately, that agreed to repurchase 7,620,000 and 239,721 ordinary shares, which were subsequently cancelled, at par value (the “Repurchased Shares”) from Grandsky Phoenix Limited and HMercury Capital Limited, respectively, in accordance with their respective share percentages based on the share repurchase agreement that the Company entered into with Grandsky Phoenix Limited and HMercury Capital Limited on April 29, 2020. On August 13, 2020, the Company approved a board resolution and signed capital contribution letter with Grandsky Phoenix Limited and HMercury Capital Limited, respectively. Based on the capital contribution letter, each shareholder opted not to receive the consideration for the Repurchased Shares and made a pure capital contribution in the sum of the purchase price in favor of the Company without the issue of additional shares of the Company. Before and after the repurchase of ordinary shares, Mr. Bao, through Grandsky Phoenix Limited, and Mr. He, through HMercury Capital Limited, own 96.95% and 3.05% of our issued and outstanding ordinary shares, respectively. The Company considers this repurchase of ordinary shares was part of the Company’s recapitalization to result in 4,517,793 ordinary shares issued and outstanding prior to completion of its IPO. The Company believes it is appropriate to reflect these nominal share repurchases to result in 4,517,793 ordinary shares being issued and outstanding or reduction of 63.5% of total ordinary shares being issued and outstanding after the repurchase of ordinary shares similar to 0.365-for-1 reverse stock split.

As of March 31, 2023, details of the subsidiaries and VIE of the Company are set out below:

Name	Date of Incorporation	Place of Incorporation	Percentage of Beneficial Ownership	Principal Activities
Subsidiaries
UTime HK	November 1, 2018	Hong Kong	100%	Investment Holding
UTime WFOE	December 18, 2018	China	100%	Investment Holding
Bridgetime	September 5, 2016	British Virgin Island	100%	Investment Holding
Do Mobile	October 24, 2016	India	99.99%	Sales of in-house brand products in India

Name	Date of Incorporation	Place of Incorporation	Percentage of Beneficial Ownership	Principal Activities
VIE
UTime SZ	June 12, 2008	China	100%	Research and development of products, and sales
Subsidiaries of the VIE
Guizhou United Time Technology Co., Ltd. (“UTime GZ”)	September 23, 2016	China	VIE’s subsidiary	Manufacturing
UTime Technology (HK) Company Limited  (“UTime Trading”)	June 25, 2015	Hong Kong	VIE’s subsidiary	Trading
UTime India Private  Limited (“UTime India”)	February 7, 2019	India	UTime Trading’s subsidiary	Trading
Guangxi UTime Technology Co., Ltd. (“UTime Guangxi”)	November 1, 2021	China	UTime Trading’s subsidiary	Manufacturing
Gesoper S De R.L. De C.V. (“Gesoper”)	October 21, 2020	Mexico	UTime Trading’s subsidiary	Trading
Firts Communications And Technologies De Mexico S.A. De C.V. (“Firts”)	November 12, 2021	Mexico	Gesoper’s subsidiary	Trading

(b) VIE Arrangements between the VIE and the Company’s PRC subsidiary

The Company conducts substantial majority of business in the PRC through a series of contractual arrangements with the VIE and its subsidiaries. The VIE and subsidiaries of the VIE hold the requisite licenses and permits necessary to conduct the Company’s business. In addition, the VIE and subsidiaries of the VIE hold the assets necessary to operate the Company’s business and generate substantial majority of the Company’s revenues.

Our contractual arrangements with the VIE and its respective shareholders allow us to (i) determine the most significant economic activities of the VIE; (ii) receive substantially all of the economic benefits of the VIE; and (iii) have an exclusive option to purchase all or part of the equity interest in and/or assets of the VIE when and to the extent permitted by PRC laws. As a result of our direct ownership in UTime WFOE and the contractual arrangements with the VIE, we are regarded as the primary beneficiary of the VIE, and we treat the VIE and its subsidiaries as our consolidated affiliated entities under generally accepted accounting principles in the United States of America (“US GAAP”). We have consolidated the financial results of the VIE and its subsidiaries in our consolidated financial statements in accordance with US GAAP.

The following is a summary of the contractual arrangements by and among UTime WFOE, the VIE and the shareholders of the VIE and their spouses, as applicable.

Exclusive Technical Consultation and Service Agreement. Pursuant to the exclusive technical consultation and service agreement entered into between UTime WFOE and the VIE, dated on March 19, 2019, UTime WFOE has the exclusive right to provide or designate any entity to provide the VIE business support, technical and consulting services. The VIE agrees to pay UTime WFOE (i) the service fees equal to the sum of 100% of the net income of the VIE of that year or such other amount otherwise agreed by UTime WFOE and the VIE; and (ii) service fee otherwise confirmed by UTime WFOE and the VIE for specific technical services and consulting services provided by UTime WFOE in accordance with the VIE’s requirement from time to time. The exclusive consultation and service agreement will continue to be valid unless the written agreement is signed by all parties to terminate it or a mandatory termination is requested in accordance with applicable PRC laws and regulations.

Equity Pledge Agreement. Pursuant to the equity pledge agreement dated March 19, 2019 and amended on September 4, 2019 among UTime WFOE, the VIE and the shareholders of the VIE, the shareholders of the VIE agree to pledge their 100% equity interests in the VIE to UTime WFOE to secure the performance of the VIE’s obligations under the existing exclusive call option agreement, power of attorney, exclusive technical consultation and service agreement, business operation agreement and also the equity pledge agreement. If events of default defined therein occur, upon giving written notice to the shareholders, UTime WFOE may exercise the right to enforce the pledge to the extent permitted by PRC laws.

Exclusive Call Option Agreements. Pursuant to the exclusive call option agreement dated March 19, 2019 and amended on September 4, 2019 among UTime WFOE, the VIE and the shareholders of the VIE, each of the shareholders has irrevocably granted UTime WFOE an exclusive option to purchase all or part of its equity interests in the VIE, and the VIE has irrevocably granted UTime WFOE an exclusive option to purchase all or part of its assets. With regard to the equity transfer option, the total transfer price to be paid by UTime WFOE or any other entity or individual designated by UTime WFOE for exercising such option shall be the capital contribution mirrored by the corresponding transferred equity in the registered capital of the VIE. But if the lowest price permitted by the then-effective PRC Law is lower than the above capital contribution, the transfer price shall be the lowest price permitted by the PRC Law. With regard to the asset purchase option, the transfer price to be paid by UTime WFOE or any other entity or individual designated by UTime WFOE for exercising such option shall be the lowest price permitted by the then-effective PRC Law.

Power of Attorney. Pursuant to a series of powers of attorney dated March 19, 2019 and amended on September 4, 2019 issued by each shareholder of the VIE, each shareholder of the VIE irrevocably authorizes UTime WFOE or any natural person duly appointed by UTime WFOE to exercise on the behalf of such shareholders with respect to all matters concerning the shareholding of such shareholders in the VIE, including without limitation, attending shareholders’ meetings of the VIE, exercising all the shareholders’ rights and shareholders’ voting rights, and designating and appointing the legal representative, the chairperson, directors, supervisors, the chief executive officer and any other senior management of the VIE.

Business Operation Agreement. Pursuant to the business operation agreement dated March 19, 2019 and amended on September 4, 2019 among UTime WFOE, the VIE and the shareholders of the VIE, the shareholders of the VIE hereby acknowledge, agree and jointly and severally warrant that without the prior written consent of UTime WFOE or any party designated by UTime WFOE, the VIE shall not engage in any transaction which may have a material or adverse effect on any of its assets, businesses, employees, obligations, rights or operations (except for those occurring in the due course of business or in day-to-day business operations, or those already disclosed to UTime WFOE and with the explicit prior written consent of UTime WFOE). In addition, the VIE and its shareholders hereby jointly agree to accept and strictly implement any proposal made by UTime WFOE from time to time regarding the employment and removal of the VIE’s employees, its day-to-day business management and the financial management system of the VIE.

Spouse Consent Letter. Pursuant to a series of spousal consent letters dated March 19, 2019 and amended on September 4, 2019, executed by the spouses of the shareholders of the VIE, Mr. Bao and Mr. He, the signing spouses confirmed and agreed that the equity interests of the VIE are the own property of their spouses and shall not constitute the community property of the couples. The spouses also irrevocably waived any potential right or interest that may be granted by operation of applicable law in connection with the equity interests of the VIE held by their spouses.

Risks in relation to VIE structure

The Company believes that the contractual arrangements with its VIEs and their respective shareholders are in compliance with PRC laws and regulations and are legally enforceable. However, uncertainties in the PRC legal system could limit the Company’s ability to enforce the contractual arrangements. If we or the VIE are found to be in violation of any existing or future PRC laws or regulations, or fail to obtain or maintain any of the required permits or approvals, the relevant PRC regulatory authorities would have broad discretion to take action in dealing with such violations or failures, including:

● revoke the business and operating licenses of the Company’s PRC subsidiary and VIE;

● discontinue or restrict the operations of any related-party transactions between the Company’s PRC subsidiary and VIE;

● limit the Company’s business expansion in China by way of entering into contractual arrangements;

● imposing fines, confiscating the income from the Company’s PRC subsidiary or the VIE, or imposing other requirements with which we or the VIE may not be able to comply;

● requiring us to restructure our ownership structure or operations, including terminating the contractual arrangements with the VIE and deregistering the equity pledges of the VIE, which in turn would affect our ability to consolidate, derive economic interests from, or determine the most significant economic activities of the VIE; or

● restricting or prohibiting our use of the proceeds of its IPO to finance our business and operations in China.

The Company’s ability to conduct its business may be negatively affected if the PRC government were to carry out any of the aforementioned actions. As a result, the Company may not be able to consolidate its VIE in its consolidated financial statements as it may lose the ability to determine the most significant economic activities of the VIE and it may lose the ability to receive economic benefits from the VIE. The Company, however, does not believe such actions would result in the liquidation or dissolution of the Company, its PRC subsidiary or VIE.

Mr. Bao and Mr. He hold 96.95% and 3.05% equity interest in the VIE, respectively. The shareholders of the VIE may have potential conflicts of interest with us. The shareholders may breach, or cause the VIE to breach, or refuse to renew, the existing contractual arrangements we have with them and the VIE, which would have a material and adverse effect on our ability to determine the most significant economic activities of the VIE and receive economic benefits from it. For example, the shareholders may be able to cause our agreements with the VIE to be performed in a manner adverse to us by, among other things, failing to remit payments due under the contractual arrangements to us on a timely basis. We cannot assure you that when conflicts of interest arise the shareholders will act in the best interests of our company or such conflicts will be resolved in our favor. Currently, we do not have any arrangements to address potential conflicts of interest between the shareholders and our company. If we cannot resolve any conflict of interest or dispute between us and the shareholders, we would have to rely on legal proceedings, which could result in disruption of our business and subject us to substantial uncertainty as to the outcome of any such legal proceedings.

The Company has aggregated the financial information of the VIE and subsidiaries of the VIE in the table below. The aggregate carrying value of assets and liabilities of VIE and its subsidiaries (after elimination of intercompany transactions and balances) in the Company’s consolidated balance sheets as of March 31, 2022 and 2023 are as follows:

	As of March 31,
	2022		2023
	RMB		RMB
Assets
Current assets
Cash and cash equivalents		192		277
Restricted cash		500		500
Accounts receivable, net		22,391		52,241
Prepaid expenses and other current assets, net		42,431		70,202
Due from related parties		1,422		584
Inventories		36,018		16,169
Total current assets		102,954		139,973
Non-current assets
Property and equipment, net		38,227		61,411
Operating lease right-of-use assets, net		16,319		13,030
Equity method investment		-		-
Intangible assets, net		2,592		1,677
Other non-current assets		541		-
Total non-current assets		57,679		76,118
Total assets		160,633		216,091
Liabilities
Current liabilities
Accounts payable		74,497		126,683
Short-term borrowings		35,780		53,935
Current portion of long-term borrowings		800		1,080
Due to related parties		3,728		4,705
Lease liabilities		3,360		3,673
Other payables and accrued liabilities		42,423		48,941
Income tax payables		18		18
Total current liabilities		160,606		239,035
Non-current liabilities
Long-term borrowings		8,020		6,870
Government grants		-		8,697
Deferred tax liabilities		466		295
Lease liabilities		14,549		10,876
Total non-current liabilities		23,035		26,738
Total liabilities		183,639		265,773

The table sets forth the revenue, net loss and cash flows of the VIE and subsidiaries of VIE in the table below.

	Year ended March 31,
	2021			2022			2023
	RMB			RMB			RMB
Revenue		240,742			273,979			200,450
Net loss		(10,722	)		(29,643	)		(19,221	)
Net cash used in operating activities		(3,020	)		(19,806	)		(15,269	)
Net cash used in investing activities		(2,201	)		(5,830	)		(2,900	)
Net cash provided by financing activities		14,000			17,629			18,295

(c) Initial Public Offering

On April 8, 2021, the Company completed its IPO on Nasdaq Capital Market. In the offering, 3,750,000 of the Company’s ordinary shares were issued and sold to the public at a price of US$4 per share for gross proceeds of US$15 million. The Company recorded net proceeds (after deducting underwriting discounts and commissions and other offering fees and expenses) of approximately $13.9 million (approximately RMB88.2 million) from the offering.  

(d) Asset Acquisitions

On December 17, 2021, the Company, through UTime Trading, acquired a 51% of the controlling equity interest of Gesoper. Subsequently, on January 17, 2022, Gesoper acquired 85% economic equity interest in Firts, which were determined to be variable interest entities of which the Company is considered the primary beneficiary.

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Going Concern

12 Months Ended

Mar. 31, 2023

Going Concern [Abstract]

GOING CONCERN

NOTE 2 — GOING CONCERN

The Company’s financial statements as of March 31, 2023, is prepared using generally accepted accounting principles in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has suffered recurring losses from operations that raise substantial doubt about its ability to continue as a going concern.

As of March 31, 2023, the Company had current assets of RMB237.0 million (US$34.5 million) and current liabilities of RMB245.7 million (US$35.8 million), resulting in a working capital deficit of approximately RMB8.7 million (US$1.3 million). As of March 31, 2022, we had current assets of RMB192.9 million and current liabilities of RMB163.1 million, resulting in a working capital of approximately RMB29.8 million.

The Company had accumulated deficit of RMB88.2 million (US$12.8 million) and RMB175.9 million (US$25.6 million) as of March 31, 2022 and 2023, respectively. For the fiscal year ended March 31, 2023, the Company incurred a net loss of RMB87.6 million (US$12.7 million). Net cash outflow was RMB15.1 million (US$2.2 million) from operations for the fiscal year ended March 31, 2023, a decrease of cash outflow of RMB5.8 million compared to the net cash outflow of RMB20.9 million for the fiscal year ended March 31, 2022 as a result of strengthened control on turnover of inventory. The Company continues to focus on improving operational efficiency and cost reductions, developing core cash-generating business and enhancing efficiency. The Company expects that the existing and future cash generated from operation will be sufficient to fund the future operating expenses and capital expenditure requirements.

With the new markets, such as Japan, and new product pipeline developed, the Management believes that the actions to be taken including, product offerings, geographical expansion, generate revenue through expansion of revenue streams and customer base, will further improve business efficiency and profitability. The new product pipeline aims on improvement of profitability by providing tailored and high-margin products that provide the opportunity for the Company to continue as a going concern. In addition, the Company is also working on raising additional funding to finance the operations as well as business expansion.

The consolidated financials have been prepared assuming that the Company will continue as a going concern and, accordingly financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

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Summary of Significant Accounting Policies

12 Months Ended

Mar. 31, 2023

Organization and Principal Activities [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 3 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).

Principles of consolidation

The consolidated financial statements include the financial statements of the Company and its subsidiaries, VIE and VIE’s subsidiaries for which the Company is the primary beneficiary. All significant inter-company balances and transactions between the Company, its subsidiaries, VIE and VIE’s subsidiaries are eliminated.

Use of estimates

The preparation of the consolidated financial statements in conformity with US GAAP requires management of the Company to make a number of estimates and assumptions relating to the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the period. Management evaluates these estimates and assumptions on a regular basis. Significant accounting estimates reflected in the Company’s consolidated financial statements include but are not limited to estimates and judgments applied in the allowance for receivables, write down of other assets, estimated useful lives of property and equipment, impairment on inventory, sales return, product warranties, the valuation allowance for deferred tax assets and income tax and provision for employee benefits. Actual results could differ from those estimates and judgments.

Cash and cash equivalents

Cash and cash equivalents consist of cash on hand, bank deposits and short-term, highly liquid investments with original maturities of three months or less at the date of purchase, that are readily convertible to known amounts of cash and have insignificant risk of changes in value related to changes in interest rates.

Restricted cash

Restricted cash consisted of collateral representing cash deposits for long-term borrowings.

Accounts receivable, net

Accounts receivable and other receivables are reflected in the Company’s consolidated balance sheets at their estimated collectible amounts. A substantial majority of its accounts receivable are derived from sales to well-known technological clients. The Company follows the allowance method of recognizing uncollectible accounts receivable and other receivables, pursuant to which the Company regularly assesses its ability to collect outstanding customer invoices and make estimates of the collectability of accounts receivable and other receivables. The Company provides an allowance for doubtful accounts when it determines that the collection of an outstanding customer receivable is not probable. The allowance for doubtful accounts is reviewed on a timely basis to assess the adequacy of the allowance. The Company takes into consideration (a) historical bad debts experience, (b) any circumstances of which it is aware of a customer’s or debtor’s inability to meet its financial obligations, (c) changes in its customer or debtor payment history, and (d) its judgments as to prevailing economic conditions in the industry and the impact of those conditions on its customers and debtors. If circumstances change, such that the financial conditions of its customers or debtors are adversely affected and they are unable to meet their financial obligations to the Company, it may need to record additional allowances, which would result in a reduction of its net income.

Concentration of credit risk and major customers

Assets that potentially subject the Company to significant concentration of credit risk primarily consist of cash and cash equivalents, restricted cash, accounts receivable and other current assets. The maximum exposure of such assets to credit risk is their carrying amounts as at the balance sheet dates. As of March 31, 2022 and 2023, the aggregate amounts of cash and cash equivalents, and restricted cash are RMB67.2 million and RMB72.4 million respectively.

To limit exposure to credit risk relating to deposits, the Company primarily place cash deposits with large financial institutions in PRC. The Company conducts credit evaluations of its customers, and generally does not require collateral or other security from them. The Company establishes an accounting policy for allowance for doubtful accounts on the individual customer’s financial condition, credit history, and the current economic conditions. As of March 31, 2022 and 2023, the Company recorded RMB0.1 million of allowances for accounts receivable.

Major customers and accounts receivable — During the year ended March 31, 2021, the Company had two customers that accounted over 10% of revenues, and revenue from these customers amounted to RMB102.1 million and RMB44.7 million, respectively, relate to Original Equipment Manufacturer (“OEM”)/Original Design Manufacturer (“ODM”) services segment and sales of face mask. During the year ended March 31, 2022, the Company had two customers that accounted over 10% of revenues, and revenue from the customers amounted to RMB116.4 million and RMB54.6 million, respectively, relate to OEM/ ODM services segment. The Company had three customers that accounted over 10% of total accounts receivable at March 31, 2022, amounting to RMB8.3 million, RMB6.3 million and RMB4.3 million, respectively. During the year ended March 31, 2023, the Company had three customers that accounted over 10% of revenues, and revenue from the customers amounted to RMB44.4 million, RMB25.9 million and RMB25.8 million, respectively, relate to OEM/ ODM services segment. The Company had four customers that accounted over 10% of total accounts receivable at March 31, 2023, amounting to RMB14.0 million, RMB11.9 million, RMB9.4 million and RMB8.6 million, respectively.

Major suppliers — During the year ended March 31, 2021, the Company had no supplier accounted over 10% of total purchases and processing fees. During the year ended March 31, 2022, the Company had one supplier accounted over 10% of total purchases and processing fees from the supplier amounted to RMB39.5 million. During the year ended March 31, 2023, the Company had no supplier accounted over 10% of total purchases.

Inventories

Inventories of the Company consist of raw materials, finished goods and work in process. Inventories are stated at lower of cost or net realizable value with cost being determined on the weighted average method. Elements of cost in inventories include raw materials, direct labor costs, other direct costs, consignment manufacturing cost and manufacturing overhead. The Company assesses the valuation of inventory and periodically writes down the value for estimated excess and obsolete inventory based upon the product life-cycle.

Property and equipment, net

Property and equipment are stated at cost less accumulated depreciation and impairment, if any. Cost represents the purchase price of the asset and other costs incurred to bring the asset into its existing use. Maintenance and repairs are charged to expenses as incurred. Depreciation of property and equipment are provided using the straight-line method over their estimated useful lives as follows:

	Useful life
Office real estate	48 years
Furniture and equipment	3 – 6 years
Production and other machineries	5 – 10 years

Upon retirement or sale of an asset, the cost of the asset and the related accumulated depreciation are eliminated from the accounts and any resulting gain or loss is credited or charged to other (income) expenses, net.

Intangible assets, net

Intangible asset results from the acquisition of the licensed software and customer relationships. Identifiable intangible assets are carried at acquisition cost less accumulated amortization and impairment loss, if any. The Company accounts for such licensed software with definite lives and amortized using the straight-line method over its estimated useful life of 3 to 10 years.

Impairment of long-lived assets

The Company reviews the carrying value of long-lived assets to be held and used when events and circumstances warrants such a review. The carrying value of a long-lived asset is considered impaired when the anticipated undiscounted cash flow from such asset is separately identifiable and is less than its carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair market value of the long-lived asset. Fair market value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved. Losses on long-lived assets to be disposed are determined in a similar manner, except that fair market values are reduced for the cost to dispose. No impairment charge was recognized for all periods presented.

Equity method investment

The Company’s long-term investments consist of equity method investment. Investment in entities in which the Company can exercise significant influence and holds an investment in voting common stock or in-substance common stock (or both) of the investee but does not own a majority equity interest or control are accounted for using the equity method of accounting in accordance with ASC topic 323 (“ASC 323”), Investments-Equity Method and Joint Ventures. Under the equity method, the Company initially records its investment at cost. The Company subsequently adjusts the carrying amount of the investments to recognize the Company’s proportionate share of each equity investee’s net income or loss into earnings after the date of investment. The Company evaluates the equity method investment for impairment under ASC 323. An impairment loss on the equity method investment is recognized in earnings when the decline in value is determined to be other-than-temporary.

Fair value of financial instruments

Under the FASB’s authoritative guidance on fair value measurements, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining the fair value, the Company uses various methods including market, income and cost approaches. Based on these approaches, the Company often utilizes certain assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated or generally unobservable inputs. The Company uses valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. Based on observability of the inputs used in the valuation techniques, the Company is required to provide the following information according to the fair value hierarchy. The fair value hierarchy ranks the quality and reliability of the information used to determine fair values.

Financial assets and liabilities carried at fair value are classified and disclosed in one of the following three categories:

Level 1	Valuations for assets and liabilities traded in active exchange markets. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities.
Level 2	Valuations for assets and liabilities traded in less active dealer or broker markets. Valuations are obtained from third party pricing services for identical or similar assets or liabilities.
Level 3	Valuations for assets and liabilities that are derived from other valuation methodologies, including option pricing models, discounted cash flow models and similar techniques, and not based on market exchange, dealer or broker traded transactions. Level 3 valuations incorporate certain unobservable assumptions and projections in determining the fair value assigned to such assets.

All transfers between fair value hierarchy levels are recognized by the Company at the end of each reporting period. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement in its entirety requires judgment, and considers factors specific to the investment. The inputs or methodology used for valuing financial instruments are not necessarily an indication of the risks associated with investment in those instruments.

Fair Value Measured or Disclosed on a Recurring Basis

Borrowings — Interest rates under the borrowing agreements with the lending parties were determined based on the prevailing interest rates in the market. The Company classifies the valuation techniques that use these inputs as Level 2 fair value measurement. The carrying value of the Company’s borrowings approximates fair value as the borrowing bears interest rates that are similar to existing market rates.

Other financial items for disclosure purpose — The fair value of other financial items of the Company for disclosure purpose, including cash and cash equivalents, restricted cash, accounts receivable, other receivables, other current assets, accounts payable, other payables and accrued liabilities, approximate their carrying value due to their short-term nature.

Government Grants

Government grants are recognized in the balance sheet initially when there is reasonable assurance that they will be received and that the enterprise will comply with the conditions attached to them. When the Company received the government grants but the conditions attached to the grants have not been fulfilled, such government grants are deferred and recorded as deferred revenue. As of March 31, 2022 and 2023, the deferred revenue were RMB nil and RMB 8.7 million, respectively. The classification of short-term or long-term liabilities is depended on the management’s expectation of when the conditions attached to the grant can be fulfilled. Grants that compensate the Company for expenses incurred are recognized as other income in statement of income on a systematic basis in the same periods in which the expenses are incurred. Government subsidies recognized as other income in the consolidated statement of comprehensive loss for the years ended March 31, 2021, 2022 and 2023 were RMB1.3 million, RMB2.9 million and RMB0.6 million, respectively.

Leases

The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease, right-of-use (“ROU”) assets and lease liabilities in the consolidated balance sheets.

ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease, ROU assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. It uses the implicit rate when readily determinable. The operating lease, ROU asset also includes any lease payments made and excludes lease incentives. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Company have elected not to recognize ROU assets and lease liabilities for short-term leases for all classes of underlying assets. Short-term leases are leases with terms of 12 months or less and does not include a purchase option that is reasonably certain to exercise.

Commitments and Contingencies

In the normal course of business, the Company is subject to contingencies, including legal proceedings and claims arising out of the business that relate to a wide range of matters. The Company recognizes a liability for such contingency if it determines it is probable that a loss has occurred and a reasonable estimate of the loss can be made. The Company may consider many factors in making these assessments including historical and the specific facts and circumstances of each matter.

Revenue recognition

The Company derives revenue principally from the sale of mobile phones and accessories. Revenue from contracts with customers is recognized using the following five steps:

1. Identify the contract(s) with a customer;

2. Identify the performance obligations in the contract;

3. Determine the transaction price;

4. Allocate the transaction price to the performance obligations in the contract; and

5. Recognize revenue when (or as) the entity satisfies a performance obligation.

A contract contains a promise (or promises) to transfer goods or services to a customer. A performance obligation is a promise (or a group of promises) that is distinct. The transaction price is the amount of consideration the Company expects to be entitled from a customer in exchange for providing the goods or services.

The unit of account for revenue recognition is a performance obligation (a good or service). A contract may contain one or more performance obligations. Performance obligations are accounted for separately if they are distinct. A good or service is distinct if the customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer, and the good or service is distinct in the context of the contract. Otherwise, performance obligations are combined with other promised goods or services until the Company identifies a bundle of goods or services that is distinct. Promises in contracts which do not result in the transfer of a good or service are not performance obligations, as well as those promises that are administrative in nature, or are immaterial in the context of the contract. The Company has addressed whether various goods and services promised to the customer represent distinct performance obligations. The Company applied the guidance of ASC Topic 606-10-25-16 through 18 in order to verify which promises should be assessed for classification as distinct performance obligations.

The Company’s revenue is primary derived from (i) OEM and ODM services for well-known brands; (2) its own in-house brands, positioned in the emerging middle class consumer groups and price-sensitive consumers in emerging markets. Refer to Note 18 to the consolidated financial statements for disaggregation of the Company’s revenue by type of product and geography information for the years ended March 31, 2021, 2022 and 2023.

For the year ended March 31, 2021, the Company participated in efforts to stem the spread of the COVID-19 epidemic, namely, by serving as a temporary distributor of face masks to an existing overseas client in Brazil. The Company recognizes revenue from sales of face masks upon transfer of control of its products to the customer, which typically occurs upon delivery. The Company’s main performance obligation to its customers is the delivery of products in accordance with purchase orders. Each purchase order defines the transaction price for the products purchased under the arrangement. Delivery of these products occurs at that point of time when the control of the products is transferred to the customer. All the face masks sold with delivery terms entered into on a Free On Board basis at Shenzhen port.

The following table disaggregates the Company’s revenue by type of contract for the years ended March 31, 2021, 2022 and 2023:

	Year ended March 31,
	2021		2022		2023
Category	Amount		Amount		Amount
	RMB		RMB		RMB
	(in thousands)
OEM/ODM		195,995		273,979		200,450
In-house brands		6,157		1,529		98
Face mask		44,747		-		-
Total		246,899		275,508		200,548

1) Cooperation with OEM/ODM customers

Revenue is measured based on the consideration to which the Company expects to be entitled in a contract with a customer and excludes amounts collected on behalf of third parties. The Company generates its revenue through product sales, and shipping terms generally indicate when it has fulfilled its performance obligations and passed control of products to its customer, when the goods have been shipped to the customer’s specific location (delivery). Following delivery, the customer has full discretion over the manner of distribution and price to sell the goods, has the primary responsibility when selling the goods and bears the risks of obsolescence and loss in relation to the goods but has no right to return the products (other than for defective products). A receivable is recognized by the Company when the goods are delivered to the customer as this represents the point in time at which the right to consideration becomes unconditional, as only the passage of time is required before payment is due. Revenue from OEM/ODM customers does not meet the criteria to be recognized over time since 1) it does not have the right of payment for the performance completed to date, 2) its work neither creates or enhances an asset controlled by customers until goods are delivered to the customer, 3) customers do not receive and consume benefits simultaneously provided by its performance.

2) Sales of products for in-house brands

For revenue realized in Indian market, additional term of goods return may apply. Under Do Mobile’s policy, end users have a right of return for defective devices within 7 days. At the point of sale, a refund liability and a corresponding adjustment to revenue is recognized for those products expected to be returned. At the same time, Do Mobile has a right to recover the product when customers exercise their right of return so consequently recognizes a right to returned goods asset and a corresponding adjustment to cost of sales. Do Mobile uses its accumulated historical experience to estimate the number of returns on a portfolio level using the expected value method, taking into consideration the type of products.

Contract assets and liabilities

Contract assets, such as costs to obtain or fulfill contracts, are an insignificant component of the Company’s revenue recognition process. The majority of the Company’s cost of fulfillment as a manufacturer of products is classified as inventories and property and equipment, which are accounted for under the respective guidance for those asset types. Other costs of contract fulfillment are immaterial due to the nature of the Company’s products and their respective manufacturing processes.

Contract liabilities are mainly advance from customers.

Warranty

The Company offers a standard product warranty that the product will operate under normal use. For products sold to OEM/ODM customers, the warranty period generally ranges from one to two years from the time of final acceptance. In general, the Company ships free spare parts as product warranty to these customers while the products are sold. For products sold to end users through retailers in India, the warranty period includes a one year warranty to end users. The Company has the obligation, at its option, to either repair or replace the defective product. The customers cannot separately purchase the warranty and the warranty doesn’t provide the customer with additional service other than assurance that the product will function as expected. At the time revenue is recognized, an estimate of future warranty costs is recorded as a component of cost of revenues. The reserves established are regularly monitored based upon historical experience and any actual claims charged against the reserve. 

Value added tax

In the PRC, value added tax (the “VAT”) of 17% (before May 1, 2018), 16% (from May 1, 2018 to April 1, 2019) and 13% (after April 1, 2019 until now) on invoice amount is collected in respect of the sales of goods on behalf of tax authorities. The Company reports revenue net of VAT. VIE and its subsidiary in China that are VAT general tax payers are allowed to offset qualified VAT paid against their output VAT liabilities.

Cost of sales

Cost of sales consists primarily of material costs, direct labor costs, other direct costs, consignment manufacturing cost and manufacturing overhead, which are directly attributable to the production of products. Write-down of inventories to lower of cost or net realizable value is also recorded in cost of sales.

Selling and marketing expenses

Selling and marketing expenses consist primarily of (i) advertising and market promotion expenses, (ii) shipping expenses and (iii) salaries and welfare for sales and marketing personnel. The advertising and market promotion expenses amounted to RMB0.1 million, RMB0.1 million and RMB nil for the years ended March 31, 2021, 2022 and 2023, respectively. The shipping and handling fees amounted to RMB1.2 million, RMB1.4 million and RMB1.6 million for the years ended March 31, 2021, 2022 and 2023.

Research and development costs

All research and development costs, including patent application costs, are expensed as incurred. Research and development costs were total of RMB7.2 million, RMB14.1 million and RMB16.0 million for the years ended March 31, 2021, 2022 and 2023, respectively, and are included within general and administrative expenses in the consolidated statements of comprehensive loss.

Employee social security and welfare benefits

The employees of the Company are entitled to social benefits in accordance with the relevant regulations of the countries in which these companies are incorporated. The social benefits of the employees of the Company in the PRC include medical care, welfare subsidies, unemployment insurance, employment housing fund and pension benefits. The Company’s subsidiary in India is also required to pay for employee social benefits based upon certain percentages of employees’ salaries in accordance with the relevant local regulation. The Company has no legal obligation for the benefits beyond the contributions made. The total amounts of such employee benefit expenses, which were expensed as incurred, were approximately RMB0.4 million, RMB1.1 million and RMB1.3 million for the years ended March 31, 2021, 2022 and 2023, respectively.

Borrowing cost

Borrowing costs attributable directly to the acquisition, construction or production of qualifying assets which require a substantial period of time to be ready for their intended use or sale, are capitalized as part of the cost of those assets. Income earned on temporary investments of specific borrowings pending their expenditure on those assets is deducted from borrowing costs capitalized. All other borrowing costs are recognized in interest expenses in the consolidated statement of comprehensive loss in the period in which they are incurred.

Income taxes

Income taxes are accounted for using the asset and liability method as prescribed by ASC 740 “Income Taxes.” Under this method, deferred income tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which these temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance would be provided for those deferred tax assets for which if it is more likely than not that the related benefit will not be realized.

Uncertain tax positions

The guidance on accounting for uncertainties in income taxes prescribes a more likely than not threshold for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Guidance was also provided on the recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, accounting for income taxes in interim periods, and income tax disclosures. Significant judgment is required in evaluating the Company’s uncertain tax positions and determining its provision for income taxes. The Company recognizes interests and penalties, if any, under accrued expenses and other current liabilities on its balance sheet and under other expenses in its statement of comprehensive income. The Company did not recognize any interest and penalties associated with uncertain tax positions for the years ended March 31, 2021, 2022 and 2023. As of March 31, 2022 and 2023, the Company did not have any significant unrecognized uncertain tax positions.

Statutory reserves

Pursuant to the laws applicable to the PRC, domestic PRC entities must make appropriations from after-tax profit to non-distributable reserves funds. Subject to the limits of 50% of the entity’s registered capital, the statutory surplus reserve fund requires annual appropriations of 10% of after-tax profit (as determined under accounting principles generally accepted in the PRC (“PRC GAAP”) at each year-end). These reserve funds can only be used for specific purposes and are not distributable as cash dividends. Appropriation has been made to these statutory reserve funds of RMB0.2 million, RMB nil and RMB nil for the years ended March 31, 2021, 2022 and 2023, respectively.

Non-controlling interest

A non-controlling interest in a subsidiary of the Company represents the portion of the equity (net assets) in the subsidiary not directly or indirectly attributable to the Company. Non-controlling interests are presented as a separate component of equity on the consolidated balance sheets and net loss and other comprehensive loss are attributed to controlling and non-controlling interests.

Foreign currency translation and transactions

The reporting currency of the Company is the RMB. The Company’s subsidiaries, consolidated VIE and VIE’s subsidiaries with operations in the PRC, Hong Kong, and other jurisdictions generally use their respective local currencies as their functional currencies, except that UTime Trading uses United States dollar (“US$”) as functional currency. The financial statements of the Company’s subsidiaries, other than the consolidated VIE and VIE’s subsidiary with the functional currency in RMB, are translated into RMB using the exchange rate as of the balance sheet date for assets and liabilities, historical exchange rate for equity amounts and the average rate during the reporting period for income and expense items. Translation gains and losses are recorded in accumulated other comprehensive income or loss as a component of shareholders’ equity.

In the financial statements of the Company’s subsidiaries and consolidated VIE and VIE’s subsidiary, transactions in currencies other than the functional currency are measured and recorded in the functional currency using the exchange rate in effect at the date of the transaction. At the balance sheet date, monetary assets and liabilities that are denominated in currencies other than the functional currency are translated into the functional currency using the exchange rate at the balance sheet date. All gains and losses arising from foreign currency transactions are recorded in other (income) expenses, net in the consolidated statements of comprehensive loss.

Convenience translation

Translations of balances in the consolidated balance sheets, consolidated statements of comprehensive loss and consolidated statements of cash flows from RMB into USD as of and for the year ended March 31, 2023 are solely for the convenience of the reader and has been made at the exchange rate quoted by the central parity of RMB against the USD by the People’s Bank of China on March 31, 2023 of USD1.00 = RMB6.8717. No representation is made that the RMB amounts could have been, or could be, converted, realized or settled into USD at that rate on March 31, 2023, or at any other rate.

Comprehensive loss

Comprehensive loss is comprised of the Company’s net loss and comprehensive loss. The component of comprehensive loss is consisted solely of foreign currency translation adjustments.

Related parties

Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control or significant influence, such as a family member or relative, shareholder, or a related corporation.

Segment reporting

FASB ASC Topic 280, “Segment Reporting” establishes standards for reporting information about reportable segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group in deciding how to allocate resources and in assessing performance.

Management views the business as consisting of revenue streams; however, they do not produce reports for, assess the performance of, or allocate resources to these revenue streams based upon any asset-based metrics, or based upon income or expenses, operating income or net income. Therefore, the Company believes that it operates in one business segment. Substantively all of the Company’s long-lived assets are located in the PRC.

Loss per share

Basic net loss per share is the amount of net loss available to each share of ordinary shares outstanding during the reporting period. Diluted net loss per share is the amount of net loss available to each share of ordinary shares outstanding during the reporting period adjusted to include the effect of potentially dilutive ordinary shares, if any. Basic and diluted loss per share for each of the periods presented are calculated as follows:

	Year ended March 31,
	2021			2022			2023
	RMB			RMB			RMB
Numerator:
Net loss attributable to UTime Limited, basic and diluted		(16,627	)		(38,833	)		(87,616	)
Denominator:
Weighted average shares outstanding, basic and diluted		4,517,793			8,164,771			11,229,985
Net loss attributable to UTime Limited per ordinary share:
Basic and diluted		(3.68	)		(4.76	)		(7.80	)

Acquisitions

The Company accounts for acquisitions of an asset or group of similar identifiable assets that do not meet the definition of a business as an asset acquisition using the cost accumulated method, whereby the cost of the acquisition, including certain transaction costs, is allocated to the assets acquired on the basis of their relative fair values. No goodwill is recognized in an asset acquisition. Intangible assets acquired in an asset acquisition for use in research and development activities which have no alternative future use are expensed as in-process research and development on the acquisition date. Intangible assets acquired for use in research and development activities which have an alternative future use are capitalized as in-process research and development. Future costs to develop these assets are recorded to research and development expense as they are incurred.

Recently issued accounting standards

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 replaced the incurred loss impairment methodology under current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. ASU 2016-13 requires use of a forward-looking expected credit loss model for accounts receivables, loans, and other financial instruments. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, with early adoption permitted. In October 2019, the FASB issued ASU No. 2019-10, “Financial Instruments-Credit Losses (Topic 326): Effective Dates”, to finalize the effective date delays for private companies, not-for-profits, and smaller reporting companies applying the current expected credit loss (CECL) standards. In March 31, 2023, the FASB issued ASU 2022-02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures, which eliminates the TDR accounting model for creditors that have already adopted Topic 326, which is commonly referred to as the CECL model. These ASUs are effective for reporting periods beginning after December 15, 2022 and interim periods within those fiscal years. Early adoption is permitted. The Company has not early adopted this update and it will become effective on April 1, 2023 assuming the Company will remain an emerging growth company. The Company is currently assessing the impact of adopting this standard on its consolidated financial statements.

In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (ASU 2021-08), which clarifies that an acquirer of a business should recognize and measure contract assets and contract liabilities in a business combination in accordance with Topic 606, Revenue from Contracts with Customers. The new amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. The amendments should be applied prospectively to business combinations occurring on or after the effective date of the amendments, with early adoption permitted. The Company is currently evaluating the impact of the new guidance on the consolidated financial statements.

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Accounts Receivable, Net

12 Months Ended

Mar. 31, 2023

Accounts Receivable, Net [Abstract]

ACCOUNTS RECEIVABLE, NET

NOTE 4 — ACCOUNTS RECEIVABLE, NET

	As of March 31,
	2022			2023
	RMB			RMB
Accounts receivable		22,543			52,444
Allowance for doubtful accounts		(126	)		(136	)
Accounts receivable, net		22,417			52,308

The Company analyzed the collectability of accounts receivable based on historical collection and the customers’ intention of payment. As a result of such analysis, the allowance for doubtful accounts was as follows:

	2021			2022			2023
	RMB			RMB			RMB
Balance at beginning of year		838			878			126
Additions for the year		50			—			—
Written off for the year		—			(748	)		—
Foreign currency translation difference		(10	)		(4	)		10
Balance at the end of year		878			126			136

As of March 31, 2022 and 2023, the allowance for doubtful accounts amounted to RMB0.1 million. The Company determined that the collection of these customers’ receivable is not probable due to financial difficulties experienced by related customers.

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Prepaid Expenses and Other Current Assets, Net

12 Months Ended

Mar. 31, 2023

Prepaid Expenses and Other Current Assets, Net [Abstract]

PREPAID EXPENSES AND OTHER CURRENT ASSETS, NET

NOTE 5 — PREPAID EXPENSES AND OTHER CURRENT ASSETS, NET

	As of March 31,
	2022			2023
	RMB			RMB
Advance to suppliers		40,620			64,827
Input GST/IVA		568			412
Receivables from supply chain service provider		4,829			7,648
Expected return assets		1			1
Other receivables		21,460			24,282
Allowance for doubtful accounts		(1,663	)		(1,662	)
Prepaid expenses and other current assets, net		65,815			95,508

As of March 31, 2022, other receivables consisted of deposits for leased equipment and factory building and utility amounted to RMB5 million and RMB8 million. As of March 31, 2023, other receivables consisted of deposits for leased equipment and VAT accrued for purchase of raw materials amounted to RMB2 million and RMB7 million.

The Company analyzed the collectability of other current assets based on historical collection. As a result of such analysis, the movement of allowance for doubtful accounts was as follows:

	As of March 31,
	2021			2022			2023
	RMB			RMB			RMB
Balance at beginning of year		4,006			674			1,663
Additions (reversal) for the year		(886	)		3,406			—
Written off for the year		(2,446	)		(2,359	)		—
Foreign currency translation difference		—			(58	)		(1	)
Balance at the end of year		674			1,663			1,662

As of March 31, 2022 and 2023, the allowance for doubtful accounts on advance to suppliers of RMB1.7 million were primarily consist of unrecoverable prepayment related to cancellation of abundant purchase orders caused by termination of cooperation with certain OEM/ODM customers, significant decline in operating activities in India and VAT recoverable from certain supply chain companies.

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Inventories

12 Months Ended

Mar. 31, 2023

Inventory Disclosure [Abstract]

INVENTORIES

NOTE 6 — INVENTORIES

	As of March 31,
	2022			2023
	RMB			RMB
Raw materials		32,004			12,294
Work in progress		1,326			2,972
Finished goods		13,533			11,217
Total inventory, gross		46,863			26,483
Inventory reserve		(10,792	)		(10,314	)
Total inventory, net		36,071			16,169

The Company analyzed the valuation of inventory and disposed obsolete inventories. As a result of such analysis, the movement of inventory reserve was as follows:

	Year ended March 31,
	2021			2022			2023
	RMB			RMB			RMB
Balance at beginning of year		5,962			13,393			10,792
Additional charge (written off), net		7,589			(2,467	)		407
Foreign currency translation difference		(158	)		(134	)		(885	)
Balance at the end of year		13,393			10,792			10,314

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Property and Equipment, Net

12 Months Ended

Mar. 31, 2023

Property, Plant and Equipment [Abstract]

PROPERTY AND EQUIPMENT, NET

NOTE 7 — PROPERTY AND EQUIPMENT, NET

	As of March 31,
	2022		2023
	RMB		RMB
Office real estate		20,995		20,996
Furniture and equipment		5,100		6,267
Production and other machineries		29,713		55,015
Total		55,808		82,278
Less: accumulated depreciation		17,538		20,849
Property and equipment, net		38,270		61,429

Included in furniture and equipment is computer software with net values of RMB0.04 million and RMB0.02 million as of March 31, 2022 and 2023, respectively.

Depreciation charged to expense amounted to RMB3.2 million, RMB3.3 million and RMB4.6 million for the years ended March 31, 2021, 2022 and 2023, respectively.

No impairment for property and equipment was recorded for the years ended March 31, 2021, 2022 and 2023.

Details of production and other machineries lease out under operating lease are as follows:

	As of March 31,
	2022		2023
	RMB		RMB
Cost		29,578		29,578
Less: accumulated depreciation and amortization		9,436		12,094
Net book value		20,142		17,484

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Lease Liabilities

12 Months Ended

Mar. 31, 2023

Lease Liabilities [Abstract]

LEASE LIABILITIES

NOTE 8 — LEASE LIABILITIES

Operating leases as lessor

The Company has non-cancellable agreements to lease our equipment to tenant under operating lease for 1 to 3 years. The leases do not contain contingent payments. At March 31, 2023, the minimum future rental income to be received is as follows:

Year ending March 31,	RMB
2024		804
2025		201
Total		1,005

For the years ended March 31, 2021, 2022 and 2023, the operating lease income of RMB2.4 million, RMB2.9 million and RMB3.1 million, respectively, net of the depreciation charges of corresponding equipment of RMB2.3 million, RMB2.7 million and RMB2.9 million, respectively, were recorded in other expenses, net in the consolidated statements of comprehensive loss.

Operating leases as lessee

The Company leases space under non-cancelable operating leases for office and manufacturing locations and production equipment. These leases do not have significant rent escalation holidays, concessions, leasehold improvement incentives, or other build-out clauses. Further, the leases do not contain contingent rent provisions.

Most leases include option to renew in condition that it is agreed by the landlord before expiry. Therefore, the majority of renewals to extend the lease terms are not included in its right-of-use assets and lease liabilities as they are not reasonably certain of exercise. The Company regularly evaluate the renewal options and when they are reasonably certain of exercise, the Company includes the renewal period in its lease term.

As most of the Company’s leases do not provide an implicit rate, it uses its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of the lease payments.

The components of the Company’s lease expense are as follows:

	Year ended March 31,
	2021		2022		2023
	RMB		RMB		RMB
Operating lease cost		1,016		2,265		3,289
Short-term lease cost		1,163		973		—
Lease cost		2,179		3,238		3,289

Supplemental cash flow information related to its operating leases was as follows for the years ended March 31, 2021, 2022 and 2023:

	Year ended March 31,
	2021		2022		2023
	RMB		RMB		RMB
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflow from operating leases		1,325		1,249		4,514

Maturities of its lease liabilities for all operating leases are as follows as of March 31, 2023:

	RMB			USD
2024		4,575			666
2025		4,575			666
2026 and after		7,356			1,071
Total lease payments		16,506			2,403
Less: Interest		(1,957	)		(285	)
Present value of lease liabilities		14,549			2,118
Less current portion, record in current liabilities		(3,673	)		(535	)
Present value of lease liabilities		10,876			1,583

The weighted average remaining lease terms and discount rates for all of its operating leases were as follows as of March 31, 2022 and 2023:

	As of March 31,			As of March 31,
	2022			2023
Remaining lease term and discount rate:	RMB			RMB
Weighted average remaining lease term (years)		4.56			3.61
Weighted average discount rate		7.03	%		7.00	%

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Equity Method Investment

12 Months Ended

Mar. 31, 2023

Equity Method Investments and Joint Ventures [Abstract]

EQUITY METHOD INVESTMENT

NOTE 9 — EQUITY METHOD INVESTMENT

During the year ended March 31, 2018, the Company invested an aggregate amount of RMB1.4 million in exchange for 35% of the equity interest of Philectronics Inc. (“Philectronics”), which was recorded under the equity method. For the year ended March 31, 2021, 2022 and 2023, the Company recorded its pro-rata share of losses in Philectronics of RMBnil, as other (income) expenses, net in the consolidated statements of comprehensive loss. The Company recorded RMB0.8 million, RMBnil and RMBnil impairment losses on its investment during the years ended March 31, 2021, 2022 and 2023, respectively, as other expenses, net in the consolidated statements of comprehensive loss. Philectronics has net liability position and temporarily ceased its operation without foreseeable plan for resuming its business operation. 

	Year ended March 31,
	2022			2023
	RMB			RMB
Cost		1,425			1,425
Less: accumulated impairment		(1,425	)		(1,425	)
Equity method investment, net		-			-

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Other Non-Current Assets

12 Months Ended

Mar. 31, 2023

Other Non-Current Assets [Abstract]

OTHER NON-CURRENT ASSETS

NOTE 10 — OTHER NON-CURRENT ASSETS

	As of March 31,
	2022		2023
	RMB		RMB
Prepayment for property and equipment, and intangible asset		541		-
Total other non-current assets		541		-

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Borrowings

12 Months Ended

Mar. 31, 2023

Debt Disclosure [Abstract]

BORROWINGS

NOTE 11 — BORROWINGS

		As of March 31,
	Note	2022		2023
		RMB		RMB
Short-term borrowings
China Resources Bank of Zhuhai Co., Ltd. Loan 1	(a)		22,000		-
Secured loan	(b)		4,980		7,800
Bank of Communications	(c)		2,500		-
Baosheng County Bank 1	(d)		2,300		-
China Resources Bank of Zhuhai Co., Ltd. Loan 2	(e)		2,000		-
PingAn Bank Co., Ltd.	(f)		2,000		2,000
China Resources Bank of Zhuhai Co., Ltd. Loan 3	(g)		-		22,000
China Resources Bank of Zhuhai Co., Ltd. Loan 4	(h)		-		2,000
Baosheng County Bank 2	(i)		-		2,400
WeBank Co., Ltd. 1	(j)		-		1,990
WeBank Co., Ltd. 2	(k)		-		1,000
WeBank Co., Ltd. 3	(l)		-		1,745
China Resources SZITIC Trust Company Limited	(m)		-		3,000
Industrial and Commercial Bank of China (“ICBC”) Loan	(n)		-		5,000
Industrial and Commercial Bank of China (“ICBC”) Loan	(o)				5,000
			35,780		53,935
Long-term borrowings
Shenzhen Rural Commercial Bank loan 1	(p)		7,000		6,370
Shenzhen Rural Commercial Bank loan 2	(q)		1,820		1,580
			8,820		7,950
Representing by:
Current portion of long-term borrowings			800		1,080
Non-current portion of long-term borrowings			8,020		6,870

(a) On November 13, 2020, UTime SZ entered into a credit agreement with China Resources Bank of Zhuhai Co., Ltd., according to which China Resources Bank of Zhuhai Co., Ltd. agreed to provide UTime SZ with a credit facility of up to RMB22 million with a two-year term from November 13, 2020 to November 13, 2022. On November 18, 2020, UTime SZ entered into a working capital loan agreement with China Resources Bank of Zhuhai Co., Ltd. to borrow RMB22 million as working capital for one year at an annual effective interest rate of 5.5%. The Company repaid the loan on November 18, 2021 and borrowed RMB22 million as working capital for one year at an annual effective interest rate of 5.5% on November 22, 2021. The Company repaid the loan on November 21, 2022. The loan is secured by the office owned by UTime SZ and guaranteed by UTime GZ, Mr. Bao and his spouse.

(b) In November 2020, UTime SZ and TCL Commercial Factoring (Shenzhen) Company Limited (“TCL Factoring”) executed a factoring agreement, pursuant to which UTime SZ received a revolving credit facility and may submit unlimited number of loan applications, so long as, among other conditions, the balance of the loan does not exceed the credit line. The annual effective interest rate range is from 8.0% to 9.0%. TCL Factoring has the right of recourse to UTime SZ, and as a result, these transactions were recognized as secured borrowings. UTime SZ agreed to pledge to TCL Factoring its accounts receivable from TCL Mobile Communication Company Limited (“TCL Huizhou”). This credit facility was also guaranteed respectively by Mr. Bao and UTime GZ, each for an amount up to RMB20 million. UTime SZ agreed not to withdraw, utilize or dispose the accounts receivables paid to it by TCL Huizhou without the prior consent of TCL Factoring. As of March 31, 2022 and 2023, UTime SZ obtained loans under the factoring agreement at the total amount of RMB4.98 million and RMB7.8 million, respectively.

(c) In July 2021, UTime SZ entered into a credit agreement with Bank of Communications to borrow RMB10 million for an unfixed term. On July 19, 2021, UTime SZ obtained a loan under this working capital loan agreement at the amount of RMB3 million which is due on July 6, 2022. The loan was guaranteed by Mr. Bao and his spouse. The loan bears a fixed interest rate of 4.6% per annum and will be due on July 6, 2022. The loan was fully repaid in July 2022.

(d) In August 2021, UTime SZ entered into a credit line agreement with Shenzhen Nanshan Baosheng County Bank Co., Ltd. (“Baosheng County Bank”) according to which Baosheng County Bank agreed to provide UTime SZ with a credit facility of up to RMB3 million with a one-year term from July 28, 2021 to July 28, 2022. On August 23, 2021, UTime SZ entered into a working capital loan agreement with Baosheng County Bank to borrow RMB3 million as working capital for one year at an annual effective interest rate of 8.0%. It is payable at monthly installment of RMB0.1 million from September 2021 to August 2022, with a balloon payment of the remaining balance in the last installment. The loan was fully repaid in August 2022.

(e) On December 2, 2021, UTime SZ entered into a working capital loan agreement with China Resources Bank of Zhuhai Co., Ltd., to borrow RMB2 million as working capital at an annual effective interest rate of 8.0%. The loan was repaid in October 2022.

(f) In November 2021, UTime SZ entered into a credit agreement with PingAn Bank Co., Ltd. to borrow RMB2 million for a term of 3 years, with an annual effective rate of 12.96%. The loan is guaranteed by Mr. Bao and his spouse. As of March 31, 2023 UTime SZ obtained loans under the credit agreement at the total amount of RMB2 million which will be due on November 2023.

(g) On November 24, 2022, UTime SZ entered into a working capital loan agreement with China Resources Bank of Zhuhai Co., Ltd., to borrow RMB22 million as working capital at an annual effective interest rate of 5.5%. The loan is secured by the office owned by UTime SZ and guaranteed by UTime GZ, Mr. Bao and his spouse. The loan will be due in November 2023.

(h) On December 5, 2022, UTime SZ entered into a working capital loan agreement with China Resources Bank of Zhuhai Co., Ltd., to borrow RMB2 million as working capital at an annual effective interest rate of 8.0%. The loan will be due on October 25, 2023.

(i) On August 31, 2022, UTime SZ entered into a credit line agreement with Shenzhen Nanshan Baosheng County Bank Co., Ltd. (“Baosheng County Bank”) according to which Baosheng County Bank agreed to provide UTime SZ with a credit facility of up to RMB3 million with a one-year term from August 31, 2022 to August 31, 2023. On August 31, 2022, UTime SZ entered into a working capital loan agreement with Baosheng County Bank to borrow RMB3 million as working capital for one year at an annual effective interest rate of 8.0%. It is payable at monthly installment of RMB0.1 million from September 2021 to August 2022, with a balloon payment of the remaining balance in the last installment. The loan is secured by the office owned by UTime SZ and guaranteed by UTime Guangxi, Mr. Bao and his spouse.

(j) On May 19, 2022, UTime SZ entered into a credit line agreement with WeBank Co., Ltd. (“WeBank”) according to which WeBank agreed to provide UTime SZ with a credit facility of up to RMB1.99 million with a two-year term from May 19, 2022 to May 19, 2024, with an annual effective interest rate of 9.45%. The loan is guaranteed by Mr. Bao. As of March 31, 2023 UTime SZ loans under the credit agreement was RMB1.99 million.

(k) On May 19, 2022, UTime SZ entered into a credit line agreement with WeBank Co., Ltd. (“WeBank”) according to which WeBank agreed to provide UTime SZ with a credit facility of up to RMB1 million with a two-year term from May 19, 2022 to May 19, 2024, with an annual effective interest rate of 9%. The loan is guaranteed by Mr. Bao. As of March 31, 2023 UTime SZ loans under the credit agreement was RMB1 million.

(l)	On May 18, 2022, UTime SZ entered into a credit line agreement with WeBank Co., Ltd. (“WeBank”) according to which WeBank agreed to provide UTime SZ with a credit facility of up to RMB3 million with a two-year term from May 18, 2022 to May 18, 2024, with an annual effective interest rate of 11.34%. The loan is guaranteed by Mr. Bao. As of March 31, 2023 UTime SZ loans under the credit agreement was RMB1.7 million.
(m)	On January 10, 2023, UTime SZ entered into a working capital loan agreement with China CITIC Bank, to borrow RMB3 million as working capital at an annual effective interest rate of 4.35%. The loan will be due in January 2024.
(n)	On December 2, 2022, UTime SZ entered into a loan agreement with Industrial and Commercial Bank of China (“ICBC”), to borrow RMB 5 million as working capital at an annual effective interest rate of 3.75%. The loan will be due in 12 months.
(o)	On December 7, 2022, UTime SZ entered into a loan agreement with Industrial and Commercial Bank of China (“ICBC”), to borrow RMB 5 million as working capital at an annual effective interest rate of 3.75%. The loan will be due in 12 months.
(p)	On June 29, 2021, UTime SZ entered into a credit agreement with Shenzhen Rural Commercial Bank to borrow RMB7 million for a term of 3 years, which is payable at monthly installment of RMB0.07 million from August 2022 to July 2024, with a balloon payment of the remaining balance in the last installment. The loan bears a fixed interest rate of 4.5% per annum. The loan was secured by real estate owned by Mr. Bao and guaranteed by Mr. Bao. As of March 31, 2022 and 2023, the balance of the loan was RMB7 million and RMB6.4 million, respectively. Out of the total outstanding loan balance, current portion amounted were RMB0.56 million and RMB0.84 million, which is presented as current liabilities in the consolidated balance sheet and the remaining balance of RMB6.44 million and RMB5.53 million, which is presented as non-current liabilities in the consolidated balance sheet as of March 31, 2022 and 2023, respectively.
(q)	In July 2021, UTime SZ entered into a credit agreement with Shenzhen Rural Commercial Bank to borrow RMB2 million for a term of 3 years, which is payable at monthly installment of RMB0.02 million from July 2021 to July 2024, with a balloon payment of the remaining balance in the last installment. The loan is secured by real estate owned by Mr. Bao and guaranteed by Mr. Bao. As of March 31, 2022 and 2023, the balance of the loan are RMB1.82 million and RMB1.58 million, respectively. Out of the total outstanding loan balance, current portion amounted were RMB0.24 million and RMB0.24 million, which is presented as current liabilities in the consolidated balance sheet and the remaining balance of RMB1.82 million and RMB1.58 million, which is presented as non-current liabilities in the consolidated balance sheet as of March 31, 2022 and 2023, respectively.

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Other Payables and Accrued Liabilities

12 Months Ended

Mar. 31, 2023

Payables and Accruals [Abstract]

OTHER PAYABLES AND ACCRUED LIABILITIES

NOTE 12 — OTHER PAYABLES AND ACCRUED LIABILITIES

	As of March 31,
	2022		2023
	RMB		RMB
Advance from customers		16,607		17,087
Accrued payroll		10,220		11,910
VAT payable		1,484		7,292
Refund liabilities		1		1
Product warranty		50		50
Other payables		15,786		18,432
Total		44,148		54,772

As of March 31, 2022, other payables mainly included RMB6.8 million advance from supply chain service provider, RMB3.4 million advance refundable to a customer and RMB2.3 million payable for materials provided by a customer for processing and assembling mobile phones. As of March 31, 2023, other payables mainly included RMB6.8 million advance from supply chain service provider, RMB2.2 million advance refundable to a customer and RMB3 million refundable to a vendor.

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Other Expenses/(Income), Net

12 Months Ended

Mar. 31, 2023

Other (Income) Expenses, Net [Abstract]

OTHER EXPENSES/(INCOME), NET

NOTE 13 — OTHER EXPENSES/(INCOME), NET

	Year ended March 31,
	2021			2022			2023
	RMB			RMB			RMB
Exchange losses (gains)		3,703			2,316			(3,179	)
Provision for doubtful accounts, net		(836	)		3,406			-
Impairment of intangible asset		-			348			-
Government grants		(1,289	)		(2,851	)		(594	)
Loss on equity method investment		833
Others		464			109			79
Total		2,875			3,328			(3,694	)

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Income Tax Benefits

12 Months Ended

Mar. 31, 2023

Income Tax Benefits [Abstract]

INCOME TAX BENEFITS

NOTE 14 — INCOME TAX BENEFITS

Net loss before taxes of RMB17.0 million, RMB39.4 million and RMB90.2 million were attributed by non-U.S. entities for the years ended March 31, 2021, 2022 and 2023, respectively.

Cayman Islands

UTime Limited is incorporated in the Cayman Islands. Under the current laws of the Cayman Islands, the Company is not subject to income or capital gains taxes. In addition, dividend payments are not subject to withholdings tax in the Cayman Islands.

British Virgin Islands

Bridgetime is incorporated in the British Virgin Islands and is not subject to tax on income or capital gains under current British Virgin Islands law. In addition, dividend payments are not subject to withholdings tax in British Virgin Islands.

Hong Kong

UTime HK and UTime Trading, which were incorporated in Hong Kong, are subject to a two-tiered income tax rates for taxable income earned in Hong Kong with effect from April 1, 2018. The first HK$2 million of profits earned will be taxed at 8.25%, while the remaining profits will continue to be taxed at the existing 16.5% tax rate. Additionally, payments of dividends by the subsidiary incorporated in Hong Kong to the Company are not subject to any Hong Kong withholding tax.

India

Do Mobile, which was incorporated in India, is subject to a corporate income tax rate of 25% on the assessable profits, plus any surcharge if required.

Mexico

Gesoper and Firts, which were incorporated in Mexico, are subject to federal corporate income tax rate of 30% on the assessable profits.

PRC

In accordance with the Enterprise Income Tax Law (“EIT Law”), Foreign Investment Enterprises (“FIEs”) and domestic companies are subject to Enterprise Income Tax (“EIT”) at a uniform rate of 25%. The subsidiary, VIE and subsidiary of VIE in the PRC are subject to a uniform income tax rate of 25% for the years presented. UTime SZ is regarded as a Certified High and New Technology Enterprise (“HNTE”) and entitled to a favorable statutory tax rate of 15%. Preferential tax treatment of UTime SZ as HNTE from November 2, 2015 to December 23, 2024 has been granted by the relevant tax authorities. UTime SZ is entitled to a preferential tax rate of 15% which is subject to review by State Taxation Administration every three years. As a result of these preferential tax treatments, the reduced tax rates applicable to UTime SZ for the years ended March 31, 2021, 2022 and 2023 are 15%. However, UTime SZ has not enjoyed the above-mentioned preferential tax treatments for the years ended March 31, 2021, 2022 and 2023 due to its loss position and as such there is no impact of these tax holidays on net loss per share.

According to a policy promulgated by the State Tax Bureau of the PRC and effective from 2008 onwards, enterprises engaged in research and development activities are entitled to claim an additional tax deduction amounting to 50% of the qualified research and development expenses incurred in determining its tax assessable profits for that year. The additional tax deduction has been increased from 50% of the qualified research and development expenses to 75%, effective from January 1, 2018 according to a tax incentives policy promulgated by the State Tax Bureau of the PRC in September 2018 (“Super Deduction”). The additional tax deduction has been increased from 75% of the qualified research and development expenses to 100%, effective from October 1, 2022 according to a tax incentives policy promulgated by the State Tax Bureau of the PRC in September 2022.

In general, the PRC tax authority has up to five years to conduct examinations of the Company’s tax filings. In addition, under applicable PRC tax laws and regulations, arrangements and transactions among related parties may be subject to audit or scrutiny by the PRC tax authorities within ten years after the taxable year when the arrangements or transactions are conducted. The Company is subject to the applicable transfer pricing rules in the PRC in connection to the transactions between its subsidiaries, VIE and subsidiaries of VIE located inside and outside PRC.

Withholding tax on undistributed dividends

Under the EIT Law and its implementation rules, the profits of a foreign-invested enterprise arising in 2008 and thereafter that are distributed to its immediate holding company outside the PRC are subject to withholding tax at a rate of 10%. A lower withholding tax rate will be applied if there is a beneficial tax treaty between the PRC and the jurisdiction of the foreign holding company. A holding company in Hong Kong, for example, will be eligible, with approval of the PRC local tax authority, to be subject to a 5% withholding tax rate under Arrangement between the 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, if such holding company is considered to be a non-PRC resident enterprise and holds at least 25% of the equity interests in the PRC foreign-invested enterprise distributing the dividends. However, if the Hong Kong holding company is not considered to be the beneficial owner of such dividends under applicable PRC tax regulations, such dividend will remain subject to withholding tax at a rate of 10%. The Company does not intend to have any of its subsidiaries located in PRC distribute any undistributed profits of such subsidiaries in the foreseeable future, but rather expects that such profits will be reinvested by such subsidiaries for their PRC operations. Accordingly, no withholding tax was recorded as of March 31, 2021, 2022 and 2023.

The current and deferred components of income taxes appearing in the consolidated statements of comprehensive loss are as follows:

	Year ended March 31,
	2021		2022		2023
	RMB		RMB		RMB
Current tax benefits		364		-		-
Deferred tax benefit		-		46		171
Total income tax benefit		364		46		171

The principal components of the deferred tax assets and liabilities are as follows:

	As of March 31,
	2022			2023
	RMB			RMB
Deferred income tax assets (liabilities) :
Impairment on receivables		2,590			450
Inventories		3,358			1,889
Deferred revenue		977			2,174
Accrued expenses and employee benefits		1,411			3,258
Equity method investment and others		1,075			-
Net operating loss carry forwards		21,678			27,977
Total gross deferred tax assets		31,089			35,748
Less: valuation allowances		(27,747	)		(32,490)
Total deferred tax assets, net of valuation allowance		3,342			3,258
Prepaid expenses and other current assets		(1,299	)		(3,258	)
Unrealized foreign exchange difference and others		(2,217	)		-
Amortization & impairment of intangible asset		(292	)		(295	)
Deferred tax liabilities		(466	)		(295	)

The Company considers positive and negative evidence to determine whether some portion or all of the deferred tax assets will more likely than not be realized. This assessment considers, among other matters, the nature, frequency and severity of recent losses, forecasts of future profitability, the duration of statutory carry forward periods, the Company’s experience with tax attributes expiring unused and tax planning alternatives. Valuation allowances have been established for deferred tax assets based on a more-likely-than-not threshold. The Company’s ability to realize deferred tax assets depends on its ability to generate sufficient taxable income within the carry forward periods provided for in the tax law. While the Company has optimistic plans for its business strategy, it determined that a full valuation allowance was necessary against all net deferred tax assets as of March 31, 2022 and 2023, given the current and expected near term losses and the uncertainty with respect to its ability to generate sufficient profits from its business model.

As of March 31, 2022, the Company’s total net operating loss carry forwards of RMB116.2 million, out of which, RMB83.2 million would expire from 2022 through 2031, RMB33.9 million can be carried forward indefinitely. As of March 31, 2023, the Company’s total net operating loss carry forwards was RMB152.0 million out of which, RMB109.8 million would expire from 2023 through 2032, RMB42.2 million can be carried forward indefinitely.

Reconciliation between total income tax benefits and the amount computed by applying the statutory income tax rate to income before taxes is as follows:

	Year ended March 31,
	2021			2022			2023
		%			%			%
Statutory rate in PRC		25			25			25
Effect of preferential tax treatment		(2	)		(4	)		(1	)
Effect of different tax jurisdiction		(6	)		(4	)		(19	)
Effect of permanence differences		(1	)		(2	)		-
Research and development super-deduction		5			4			2
Changes in valuation allowance		(21	)		(19	)		(7	)
Over provision in prior year		2			-			-
Total income tax benefits		2			-			-

The Company accounts for uncertainty in income taxes using a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. Interest and penalties related to uncertain tax positions are recognized and recorded as necessary in the provision for income taxes.

The Company evaluates the level of authority for each uncertain tax position (including the potential application of interest and penalties) based on the technical merits, and measures the unrecognized benefits associated with the tax positions. As of March 31, 2022 and 2023, the Company did not have any significant uncertain tax positions.

The Company is subject to taxation in China, Hong Kong and India. According to the PRC Tax Administration and Collection Law, the statute of limitations is three years if the underpayment of taxes is due to computational errors made by the taxpayer or the withholding agent. The statute of limitations is extended to five years under special circumstances, where the underpayment of taxes is more than RMB0.1 million. In the case of transfer pricing issues, the statute of limitation is ten years. There is no statute of limitation in the case of tax evasion.

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Related Parties Balances and Transactions

12 Months Ended

Mar. 31, 2023

Related Party Transactions [Abstract]

RELATED PARTIES BALANCES AND TRANSACTIONS

NOTE 15 — RELATED PARTIES BALANCES AND TRANSACTIONS

Related parties with whom the Company had transactions are:

Related Parties	Relationship
Mr. Bao	Controlling shareholder of the Company
Mr. He	Beneficial shareholder of the Company
Mr. Yu	Chief Financial Officer of the Company
Philectronics	An equity method investee of the Company
Grandsky Phoenix Limited	100% owned by Mr. Bao

(1) Due from related parties

	As of March 31,
	2022		2023
	RMB		RMB
Philectronics		486		536
Mr. Bao		47		-
GRANDSKY PHOENIX LIMITED		889		-
Mr. Yu		-		48
		1,422		584

(2) Due to related parties

	As of March 31,
	2022		2023
	RMB		RMB
Mr. Bao		3,819		4,779
Philectronics		482		482
GRANDSKY PHOENIX LIMITED		198		239
		4,499		5,500

(1) On September 17, 2021, Mr. Bao entered into a loan agreement with China Resources Bank of Zhuhai Co., Ltd. and borrowed RMB3.0 million (US$0.5 million). The loan is restricted on purpose only to support daily operation for the Companies that is controlled by Mr. Bao. The loan was repaid on March 17, 2022 and the agreement was renewed on March 18, 2022.

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Shareholders’ Equity

12 Months Ended

Mar. 31, 2023

Shareholders’ Equity [Abstract]

SHAREHOLDERS' EQUITY

NOTE 16 — SHAREHOLDERS’ EQUITY

As of March 31, 2021, the Company had 140,000,000 authorized ordinary shares, and 4,517,793 ordinary shares were issued and outstanding, respectively.

On April 8, 2021, the Company completed its IPO on Nasdaq Capital Market. In the offering, 3,750,000 of the Company’s ordinary shares were issued and sold to the public at a price of US$4 per share for gross proceeds of US$15 million. The Company recorded net proceeds (after deducting underwriting discounts and commissions and other offering fees and expenses) of approximately $13.9 million (approximately RMB88.2 million) from the offering.  As of March 31, 2023, the Company had 140,000,000 authorized ordinary shares, and 8,267,793 ordinary shares were issued and outstanding, respectively.

On June 29, 2022, the board of directors of the Company approved the 2022 Performance Incentive Plan (the “2022 PIP”). Under the 2022 PIP, the Company has reserved a total of 5,300,000 shares of common stock for issuance as or under awards to be made to the participants of the Company. On November 7, 2022, 5,300,000 shares of common stock were issued and granted under the 2022 PIP. Total fair value of the shares of common stock granted was calculated at $9,301,500 as of the date of issuance at $1.755 per share.

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Commitments and Contingencies

12 Months Ended

Mar. 31, 2023

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 17 — COMMITMENTS AND CONTINGENCIES

(a) Capital commitment

At March 31, 2023, the Company had no capital commitments.

(b) Legal proceedings

From time to time, the Company is involved in claims and legal proceedings that arise in the ordinary course of business. Based on currently available information, management does not believe that the ultimate outcome of these unresolved matters, individually and in the aggregate, is likely to have a material adverse effect on the Company’s financial position, results of operations or cash flows. The Company has not recorded any material liabilities in this regard as of March 31, 2022 and 2023.

However, litigation is subject to inherent uncertainties and the Company’s view of these matters may change in the future. If an unfavorable outcome were to occur, there exists the possibility of a material adverse impact on the Company’s financial position and results of operations for the periods in which the unfavorable outcome occurs.

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Revenue and Geography Information

12 Months Ended

Mar. 31, 2023

Segment Reporting [Abstract]

REVENUE AND GEOGRAPHY INFORMATION

NOTE 18 — REVENUE AND GEOGRAPHY INFORMATION

	Year ended March 31,
	2021		2022		2023
	RMB		RMB		RMB
Feature phone		144,032		111,066		106,279
Smart phone		56,885		154,143		73,819
Face mask		44,747		-		-
Others		1,235		10,299		20,449
Total		246,899		275,508		200,547

The Company’s sales breakdown based on location of customers is as follows:

	Year ended March 31,
	2021		2022		2023
	RMB		RMB		RMB
Mainland China		112,400		70,314		82,481
Hong Kong		30,030		18,949		14,228
India		6,157		1,529		97
Africa		19,536		25,905		39,515
The United States		17,277		28,154		18,158
Mexico		-		12,372		29,085
South America		45,743		118,285		951
Others		15,756		-		16,032
Total		246,899		275,508		200,547

The location of the Company’s long-lived assets is as follows:

	As of March 31,
	2022		2023
	RMB		RMB
PRC		54,543		74,438
India		46		19
Mexico		-		3
Total		54,589		74,460

Pursuant to ASC 280-10-50-41, the other non-current assets of RMB0.5 million and RMBnil, and the intangible assets, net of RMB2.6 million and RMB1.8 million were excluded from long-lived assets as of March 31, 2022 and 2023 respectively.

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Condensed Financial Information of the Parent Company

12 Months Ended

Mar. 31, 2023

Condensed Financial Information of the Parent Company [Abstract]

CONDENSED FINANCIAL INFORMATION OF THE PARENT COMPANY

NOTE 19 — CONDENSED FINANCIAL INFORMATION OF THE PARENT COMPANY

The Company performed a test on the restricted net assets of consolidated subsidiary in accordance with Securities and Exchange Commission Regulation S-X Rule 4-08 (e) (3), “General Notes to Financial Statements” and concluded that it was applicable for the Company to disclose the financial statements for the parent company. The amounts restricted include paid-in capital, capital surplus and statutory reserves, after intercompany eliminations, as determined pursuant to PRC generally accepted accounting principles, totaling RMB71.9 million and RMB72.1 million as of March 31, 2022 and 2023.

The subsidiaries did not pay any dividend to the parent for the periods presented. For the purpose of presenting parent only financial information, the Company records investment in its subsidiary under the equity method of accounting. Such investment is presented on the separate condensed balance sheets of the Company as “Investment in subsidiary” and the income of the subsidiary is presented as “Income from equity method investments.” Certain information and footnote disclosures generally included in financial statements prepared in accordance with U.S. GAAP have been condensed and omitted.

BALANCE SHEETS

	As of March 31,
	2022			2023
	RMB			RMB
ASSETS
Current assets
Cash and cash equivalents		1			2
Prepaid expenses and other current assets		23,195			25,109
Inter-company receivable		73,345			79,393
Non-current assets
Investment in subsidiary		1,610			(18,929	)
Total assets		98,151			85,575
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Inter-company payable		31,492			35,634
Due to related parties		289			313
Other payables and accrued liabilities		1,382			5,539
Total liabilities		33,163			41,486
Shareholders’ equity
Preference share, par value US$0.0001; Authorized:10,000,000 shares; Nil issued and outstanding as of March 31, 2022 and March 31, 2023, respectively		-			-
Ordinary shares, par value US$0.0001; Authorized:140,000,000 shares; Issued and outstanding: 8,267,793 shares as of March 31, 2022 and 13,567,793 shares as of March 31, 2023		5			9
Additional paid-in capital		152,236			216,504
Accumulated deficit		(88,277	)		(175,893	)
Accumulated other comprehensive income		1,024			3,469
Total shareholder’s equity		64,988			44,089
Total liabilities and shareholders’ equity		98,151			85,575

STATEMENTS OF COMPREHENSIVE LOSS

	Year ended March 31,
	2021			2022			2023
	RMB			RMB			RMB
Loss from equity method investments		(12,618	)		(32,350	)		(18,396	)
Operating expenses		(4,009	)		(6,483	)		(69,220	)
Net loss		(16,627	)		(38,833	)		(87,616	)
Foreign currency translation difference		1,868			(377	)		2,445
Comprehensive loss		(14,759	)		(39,210	)		(85,171	)

STATEMENTS OF CASH FLOWS

	Year ended March 31,
	2021			2022			2023
	RMB			RMB			RMB
CASH FLOW FROM OPERATING ACTIVTIES
Net loss		(16,627	)		(38,833	)		(87,616	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Equity loss of subsidiaries		12,618			32,350			18,396
Share-based compensation and expenses		-			-			63,656
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		(8,424	)		(1,173	)		-
Inter-company payable (i)		12,206			8,000			1,539
Related parties		(23	)		-			-
Other payables and accrued liabilities		131			1,269			4,026
Net cash (used in) provided by operating activities		(119	)		1,613			1
Effect of exchange rate changes on cash and cash equivalent and restricted cash		125			(1,618	)		-
Net change in cash and cash equivalent		6			(5	)		1
Cash and cash equivalents, beginning of year		-			6			1
Cash and cash equivalents, end of year		6			1			2

(i) For the year ended March 31, 2022, UTime HK received the IPO proceeds of RMB88.2 million and made down payment for financing services of RMB19 million on behalf of UTime Limited.

The Company did not have significant capital and other commitments, long-term obligations, or guarantees as of March 31, 2022 and 2023, respectively.

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Subsequent Events

12 Months Ended

Mar. 31, 2023

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE 20 — SUBSEQUENT EVENTS

The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the financial statements were issued. Based upon this review, the Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statements.

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Accounting Policies, by Policy (Policies)

12 Months Ended

Mar. 31, 2023

Organization and Principal Activities [Abstract]

Basis of presentation

Basis of presentation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).

Principles of consolidation

Principles of consolidation

The consolidated financial statements include the financial statements of the Company and its subsidiaries, VIE and VIE’s subsidiaries for which the Company is the primary beneficiary. All significant inter-company balances and transactions between the Company, its subsidiaries, VIE and VIE’s subsidiaries are eliminated.

Use of estimates

Use of estimates

The preparation of the consolidated financial statements in conformity with US GAAP requires management of the Company to make a number of estimates and assumptions relating to the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the period. Management evaluates these estimates and assumptions on a regular basis. Significant accounting estimates reflected in the Company’s consolidated financial statements include but are not limited to estimates and judgments applied in the allowance for receivables, write down of other assets, estimated useful lives of property and equipment, impairment on inventory, sales return, product warranties, the valuation allowance for deferred tax assets and income tax and provision for employee benefits. Actual results could differ from those estimates and judgments.

Cash and cash equivalents

Cash and cash equivalents

Cash and cash equivalents consist of cash on hand, bank deposits and short-term, highly liquid investments with original maturities of three months or less at the date of purchase, that are readily convertible to known amounts of cash and have insignificant risk of changes in value related to changes in interest rates.

Restricted cash

Restricted cash

Restricted cash consisted of collateral representing cash deposits for long-term borrowings.

Accounts receivable, net

Accounts receivable, net

Accounts receivable and other receivables are reflected in the Company’s consolidated balance sheets at their estimated collectible amounts. A substantial majority of its accounts receivable are derived from sales to well-known technological clients. The Company follows the allowance method of recognizing uncollectible accounts receivable and other receivables, pursuant to which the Company regularly assesses its ability to collect outstanding customer invoices and make estimates of the collectability of accounts receivable and other receivables. The Company provides an allowance for doubtful accounts when it determines that the collection of an outstanding customer receivable is not probable. The allowance for doubtful accounts is reviewed on a timely basis to assess the adequacy of the allowance. The Company takes into consideration (a) historical bad debts experience, (b) any circumstances of which it is aware of a customer’s or debtor’s inability to meet its financial obligations, (c) changes in its customer or debtor payment history, and (d) its judgments as to prevailing economic conditions in the industry and the impact of those conditions on its customers and debtors. If circumstances change, such that the financial conditions of its customers or debtors are adversely affected and they are unable to meet their financial obligations to the Company, it may need to record additional allowances, which would result in a reduction of its net income.

Concentration of credit risk and major customers

Concentration of credit risk and major customers

Assets that potentially subject the Company to significant concentration of credit risk primarily consist of cash and cash equivalents, restricted cash, accounts receivable and other current assets. The maximum exposure of such assets to credit risk is their carrying amounts as at the balance sheet dates. As of March 31, 2022 and 2023, the aggregate amounts of cash and cash equivalents, and restricted cash are RMB67.2 million and RMB72.4 million respectively.

To limit exposure to credit risk relating to deposits, the Company primarily place cash deposits with large financial institutions in PRC. The Company conducts credit evaluations of its customers, and generally does not require collateral or other security from them. The Company establishes an accounting policy for allowance for doubtful accounts on the individual customer’s financial condition, credit history, and the current economic conditions. As of March 31, 2022 and 2023, the Company recorded RMB0.1 million of allowances for accounts receivable.

Major customers and accounts receivable — During the year ended March 31, 2021, the Company had two customers that accounted over 10% of revenues, and revenue from these customers amounted to RMB102.1 million and RMB44.7 million, respectively, relate to Original Equipment Manufacturer (“OEM”)/Original Design Manufacturer (“ODM”) services segment and sales of face mask. During the year ended March 31, 2022, the Company had two customers that accounted over 10% of revenues, and revenue from the customers amounted to RMB116.4 million and RMB54.6 million, respectively, relate to OEM/ ODM services segment. The Company had three customers that accounted over 10% of total accounts receivable at March 31, 2022, amounting to RMB8.3 million, RMB6.3 million and RMB4.3 million, respectively. During the year ended March 31, 2023, the Company had three customers that accounted over 10% of revenues, and revenue from the customers amounted to RMB44.4 million, RMB25.9 million and RMB25.8 million, respectively, relate to OEM/ ODM services segment. The Company had four customers that accounted over 10% of total accounts receivable at March 31, 2023, amounting to RMB14.0 million, RMB11.9 million, RMB9.4 million and RMB8.6 million, respectively.

Major suppliers — During the year ended March 31, 2021, the Company had no supplier accounted over 10% of total purchases and processing fees. During the year ended March 31, 2022, the Company had one supplier accounted over 10% of total purchases and processing fees from the supplier amounted to RMB39.5 million. During the year ended March 31, 2023, the Company had no supplier accounted over 10% of total purchases.

Inventories

Inventories

Inventories of the Company consist of raw materials, finished goods and work in process. Inventories are stated at lower of cost or net realizable value with cost being determined on the weighted average method. Elements of cost in inventories include raw materials, direct labor costs, other direct costs, consignment manufacturing cost and manufacturing overhead. The Company assesses the valuation of inventory and periodically writes down the value for estimated excess and obsolete inventory based upon the product life-cycle.

Property and equipment, net

Property and equipment, net

Property and equipment are stated at cost less accumulated depreciation and impairment, if any. Cost represents the purchase price of the asset and other costs incurred to bring the asset into its existing use. Maintenance and repairs are charged to expenses as incurred. Depreciation of property and equipment are provided using the straight-line method over their estimated useful lives as follows:

	Useful life
Office real estate	48 years
Furniture and equipment	3 – 6 years
Production and other machineries	5 – 10 years

Upon retirement or sale of an asset, the cost of the asset and the related accumulated depreciation are eliminated from the accounts and any resulting gain or loss is credited or charged to other (income) expenses, net.

Intangible assets, net

Intangible assets, net

Intangible asset results from the acquisition of the licensed software and customer relationships. Identifiable intangible assets are carried at acquisition cost less accumulated amortization and impairment loss, if any. The Company accounts for such licensed software with definite lives and amortized using the straight-line method over its estimated useful life of 3 to 10 years.

Impairment of long-lived assets

Impairment of long-lived assets

The Company reviews the carrying value of long-lived assets to be held and used when events and circumstances warrants such a review. The carrying value of a long-lived asset is considered impaired when the anticipated undiscounted cash flow from such asset is separately identifiable and is less than its carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair market value of the long-lived asset. Fair market value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved. Losses on long-lived assets to be disposed are determined in a similar manner, except that fair market values are reduced for the cost to dispose. No impairment charge was recognized for all periods presented.

Equity method investment

Equity method investment

The Company’s long-term investments consist of equity method investment. Investment in entities in which the Company can exercise significant influence and holds an investment in voting common stock or in-substance common stock (or both) of the investee but does not own a majority equity interest or control are accounted for using the equity method of accounting in accordance with ASC topic 323 (“ASC 323”), Investments-Equity Method and Joint Ventures. Under the equity method, the Company initially records its investment at cost. The Company subsequently adjusts the carrying amount of the investments to recognize the Company’s proportionate share of each equity investee’s net income or loss into earnings after the date of investment. The Company evaluates the equity method investment for impairment under ASC 323. An impairment loss on the equity method investment is recognized in earnings when the decline in value is determined to be other-than-temporary.

Fair value of financial instruments

Fair value of financial instruments

Under the FASB’s authoritative guidance on fair value measurements, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining the fair value, the Company uses various methods including market, income and cost approaches. Based on these approaches, the Company often utilizes certain assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated or generally unobservable inputs. The Company uses valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. Based on observability of the inputs used in the valuation techniques, the Company is required to provide the following information according to the fair value hierarchy. The fair value hierarchy ranks the quality and reliability of the information used to determine fair values.

Financial assets and liabilities carried at fair value are classified and disclosed in one of the following three categories:

Level 1	Valuations for assets and liabilities traded in active exchange markets. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities.
Level 2	Valuations for assets and liabilities traded in less active dealer or broker markets. Valuations are obtained from third party pricing services for identical or similar assets or liabilities.
Level 3	Valuations for assets and liabilities that are derived from other valuation methodologies, including option pricing models, discounted cash flow models and similar techniques, and not based on market exchange, dealer or broker traded transactions. Level 3 valuations incorporate certain unobservable assumptions and projections in determining the fair value assigned to such assets.

All transfers between fair value hierarchy levels are recognized by the Company at the end of each reporting period. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement in its entirety requires judgment, and considers factors specific to the investment. The inputs or methodology used for valuing financial instruments are not necessarily an indication of the risks associated with investment in those instruments.

Fair Value Measured or Disclosed on a Recurring Basis

Fair Value Measured or Disclosed on a Recurring Basis

Borrowings — Interest rates under the borrowing agreements with the lending parties were determined based on the prevailing interest rates in the market. The Company classifies the valuation techniques that use these inputs as Level 2 fair value measurement. The carrying value of the Company’s borrowings approximates fair value as the borrowing bears interest rates that are similar to existing market rates.

Other financial items for disclosure purpose — The fair value of other financial items of the Company for disclosure purpose, including cash and cash equivalents, restricted cash, accounts receivable, other receivables, other current assets, accounts payable, other payables and accrued liabilities, approximate their carrying value due to their short-term nature.

Government Grants

Government Grants

Government grants are recognized in the balance sheet initially when there is reasonable assurance that they will be received and that the enterprise will comply with the conditions attached to them. When the Company received the government grants but the conditions attached to the grants have not been fulfilled, such government grants are deferred and recorded as deferred revenue. As of March 31, 2022 and 2023, the deferred revenue were RMB nil and RMB 8.7 million, respectively. The classification of short-term or long-term liabilities is depended on the management’s expectation of when the conditions attached to the grant can be fulfilled. Grants that compensate the Company for expenses incurred are recognized as other income in statement of income on a systematic basis in the same periods in which the expenses are incurred. Government subsidies recognized as other income in the consolidated statement of comprehensive loss for the years ended March 31, 2021, 2022 and 2023 were RMB1.3 million, RMB2.9 million and RMB0.6 million, respectively.

Leases

Leases

The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease, right-of-use (“ROU”) assets and lease liabilities in the consolidated balance sheets.

ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease, ROU assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. It uses the implicit rate when readily determinable. The operating lease, ROU asset also includes any lease payments made and excludes lease incentives. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Company have elected not to recognize ROU assets and lease liabilities for short-term leases for all classes of underlying assets. Short-term leases are leases with terms of 12 months or less and does not include a purchase option that is reasonably certain to exercise.

Commitments and Contingencies

Commitments and Contingencies

In the normal course of business, the Company is subject to contingencies, including legal proceedings and claims arising out of the business that relate to a wide range of matters. The Company recognizes a liability for such contingency if it determines it is probable that a loss has occurred and a reasonable estimate of the loss can be made. The Company may consider many factors in making these assessments including historical and the specific facts and circumstances of each matter.

Revenue recognition

Revenue recognition

The Company derives revenue principally from the sale of mobile phones and accessories. Revenue from contracts with customers is recognized using the following five steps:

1. Identify the contract(s) with a customer;

2. Identify the performance obligations in the contract;

3. Determine the transaction price;

4. Allocate the transaction price to the performance obligations in the contract; and

5. Recognize revenue when (or as) the entity satisfies a performance obligation.

A contract contains a promise (or promises) to transfer goods or services to a customer. A performance obligation is a promise (or a group of promises) that is distinct. The transaction price is the amount of consideration the Company expects to be entitled from a customer in exchange for providing the goods or services.

The unit of account for revenue recognition is a performance obligation (a good or service). A contract may contain one or more performance obligations. Performance obligations are accounted for separately if they are distinct. A good or service is distinct if the customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer, and the good or service is distinct in the context of the contract. Otherwise, performance obligations are combined with other promised goods or services until the Company identifies a bundle of goods or services that is distinct. Promises in contracts which do not result in the transfer of a good or service are not performance obligations, as well as those promises that are administrative in nature, or are immaterial in the context of the contract. The Company has addressed whether various goods and services promised to the customer represent distinct performance obligations. The Company applied the guidance of ASC Topic 606-10-25-16 through 18 in order to verify which promises should be assessed for classification as distinct performance obligations.

The Company’s revenue is primary derived from (i) OEM and ODM services for well-known brands; (2) its own in-house brands, positioned in the emerging middle class consumer groups and price-sensitive consumers in emerging markets. Refer to Note 18 to the consolidated financial statements for disaggregation of the Company’s revenue by type of product and geography information for the years ended March 31, 2021, 2022 and 2023.

For the year ended March 31, 2021, the Company participated in efforts to stem the spread of the COVID-19 epidemic, namely, by serving as a temporary distributor of face masks to an existing overseas client in Brazil. The Company recognizes revenue from sales of face masks upon transfer of control of its products to the customer, which typically occurs upon delivery. The Company’s main performance obligation to its customers is the delivery of products in accordance with purchase orders. Each purchase order defines the transaction price for the products purchased under the arrangement. Delivery of these products occurs at that point of time when the control of the products is transferred to the customer. All the face masks sold with delivery terms entered into on a Free On Board basis at Shenzhen port.

The following table disaggregates the Company’s revenue by type of contract for the years ended March 31, 2021, 2022 and 2023:

	Year ended March 31,
	2021		2022		2023
Category	Amount		Amount		Amount
	RMB		RMB		RMB
	(in thousands)
OEM/ODM		195,995		273,979		200,450
In-house brands		6,157		1,529		98
Face mask		44,747		-		-
Total		246,899		275,508		200,548

1) Cooperation with OEM/ODM customers

Revenue is measured based on the consideration to which the Company expects to be entitled in a contract with a customer and excludes amounts collected on behalf of third parties. The Company generates its revenue through product sales, and shipping terms generally indicate when it has fulfilled its performance obligations and passed control of products to its customer, when the goods have been shipped to the customer’s specific location (delivery). Following delivery, the customer has full discretion over the manner of distribution and price to sell the goods, has the primary responsibility when selling the goods and bears the risks of obsolescence and loss in relation to the goods but has no right to return the products (other than for defective products). A receivable is recognized by the Company when the goods are delivered to the customer as this represents the point in time at which the right to consideration becomes unconditional, as only the passage of time is required before payment is due. Revenue from OEM/ODM customers does not meet the criteria to be recognized over time since 1) it does not have the right of payment for the performance completed to date, 2) its work neither creates or enhances an asset controlled by customers until goods are delivered to the customer, 3) customers do not receive and consume benefits simultaneously provided by its performance.

2) Sales of products for in-house brands

For revenue realized in Indian market, additional term of goods return may apply. Under Do Mobile’s policy, end users have a right of return for defective devices within 7 days. At the point of sale, a refund liability and a corresponding adjustment to revenue is recognized for those products expected to be returned. At the same time, Do Mobile has a right to recover the product when customers exercise their right of return so consequently recognizes a right to returned goods asset and a corresponding adjustment to cost of sales. Do Mobile uses its accumulated historical experience to estimate the number of returns on a portfolio level using the expected value method, taking into consideration the type of products.

Contract assets and liabilities

Contract assets and liabilities

Contract assets, such as costs to obtain or fulfill contracts, are an insignificant component of the Company’s revenue recognition process. The majority of the Company’s cost of fulfillment as a manufacturer of products is classified as inventories and property and equipment, which are accounted for under the respective guidance for those asset types. Other costs of contract fulfillment are immaterial due to the nature of the Company’s products and their respective manufacturing processes.

Contract liabilities are mainly advance from customers.

Warranty

Warranty

The Company offers a standard product warranty that the product will operate under normal use. For products sold to OEM/ODM customers, the warranty period generally ranges from one to two years from the time of final acceptance. In general, the Company ships free spare parts as product warranty to these customers while the products are sold. For products sold to end users through retailers in India, the warranty period includes a one year warranty to end users. The Company has the obligation, at its option, to either repair or replace the defective product. The customers cannot separately purchase the warranty and the warranty doesn’t provide the customer with additional service other than assurance that the product will function as expected. At the time revenue is recognized, an estimate of future warranty costs is recorded as a component of cost of revenues. The reserves established are regularly monitored based upon historical experience and any actual claims charged against the reserve. 

Value added tax

Value added tax

In the PRC, value added tax (the “VAT”) of 17% (before May 1, 2018), 16% (from May 1, 2018 to April 1, 2019) and 13% (after April 1, 2019 until now) on invoice amount is collected in respect of the sales of goods on behalf of tax authorities. The Company reports revenue net of VAT. VIE and its subsidiary in China that are VAT general tax payers are allowed to offset qualified VAT paid against their output VAT liabilities.

Cost of sales

Cost of sales

Cost of sales consists primarily of material costs, direct labor costs, other direct costs, consignment manufacturing cost and manufacturing overhead, which are directly attributable to the production of products. Write-down of inventories to lower of cost or net realizable value is also recorded in cost of sales.

Selling and marketing expenses

Selling and marketing expenses

Selling and marketing expenses consist primarily of (i) advertising and market promotion expenses, (ii) shipping expenses and (iii) salaries and welfare for sales and marketing personnel. The advertising and market promotion expenses amounted to RMB0.1 million, RMB0.1 million and RMB nil for the years ended March 31, 2021, 2022 and 2023, respectively. The shipping and handling fees amounted to RMB1.2 million, RMB1.4 million and RMB1.6 million for the years ended March 31, 2021, 2022 and 2023.

Research and development costs

Research and development costs

All research and development costs, including patent application costs, are expensed as incurred. Research and development costs were total of RMB7.2 million, RMB14.1 million and RMB16.0 million for the years ended March 31, 2021, 2022 and 2023, respectively, and are included within general and administrative expenses in the consolidated statements of comprehensive loss.

Employee social security and welfare benefits

Employee social security and welfare benefits

The employees of the Company are entitled to social benefits in accordance with the relevant regulations of the countries in which these companies are incorporated. The social benefits of the employees of the Company in the PRC include medical care, welfare subsidies, unemployment insurance, employment housing fund and pension benefits. The Company’s subsidiary in India is also required to pay for employee social benefits based upon certain percentages of employees’ salaries in accordance with the relevant local regulation. The Company has no legal obligation for the benefits beyond the contributions made. The total amounts of such employee benefit expenses, which were expensed as incurred, were approximately RMB0.4 million, RMB1.1 million and RMB1.3 million for the years ended March 31, 2021, 2022 and 2023, respectively.

Borrowing cost

Borrowing cost

Borrowing costs attributable directly to the acquisition, construction or production of qualifying assets which require a substantial period of time to be ready for their intended use or sale, are capitalized as part of the cost of those assets. Income earned on temporary investments of specific borrowings pending their expenditure on those assets is deducted from borrowing costs capitalized. All other borrowing costs are recognized in interest expenses in the consolidated statement of comprehensive loss in the period in which they are incurred.

Income taxes

Income taxes

Income taxes are accounted for using the asset and liability method as prescribed by ASC 740 “Income Taxes.” Under this method, deferred income tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which these temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance would be provided for those deferred tax assets for which if it is more likely than not that the related benefit will not be realized.

Uncertain tax positions

Uncertain tax positions

The guidance on accounting for uncertainties in income taxes prescribes a more likely than not threshold for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Guidance was also provided on the recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, accounting for income taxes in interim periods, and income tax disclosures. Significant judgment is required in evaluating the Company’s uncertain tax positions and determining its provision for income taxes. The Company recognizes interests and penalties, if any, under accrued expenses and other current liabilities on its balance sheet and under other expenses in its statement of comprehensive income. The Company did not recognize any interest and penalties associated with uncertain tax positions for the years ended March 31, 2021, 2022 and 2023. As of March 31, 2022 and 2023, the Company did not have any significant unrecognized uncertain tax positions.

Statutory reserves

Statutory reserves

Pursuant to the laws applicable to the PRC, domestic PRC entities must make appropriations from after-tax profit to non-distributable reserves funds. Subject to the limits of 50% of the entity’s registered capital, the statutory surplus reserve fund requires annual appropriations of 10% of after-tax profit (as determined under accounting principles generally accepted in the PRC (“PRC GAAP”) at each year-end). These reserve funds can only be used for specific purposes and are not distributable as cash dividends. Appropriation has been made to these statutory reserve funds of RMB0.2 million, RMB nil and RMB nil for the years ended March 31, 2021, 2022 and 2023, respectively.

Non-controlling interest

Non-controlling interest

A non-controlling interest in a subsidiary of the Company represents the portion of the equity (net assets) in the subsidiary not directly or indirectly attributable to the Company. Non-controlling interests are presented as a separate component of equity on the consolidated balance sheets and net loss and other comprehensive loss are attributed to controlling and non-controlling interests.

Foreign currency translation and transactions

Foreign currency translation and transactions

The reporting currency of the Company is the RMB. The Company’s subsidiaries, consolidated VIE and VIE’s subsidiaries with operations in the PRC, Hong Kong, and other jurisdictions generally use their respective local currencies as their functional currencies, except that UTime Trading uses United States dollar (“US$”) as functional currency. The financial statements of the Company’s subsidiaries, other than the consolidated VIE and VIE’s subsidiary with the functional currency in RMB, are translated into RMB using the exchange rate as of the balance sheet date for assets and liabilities, historical exchange rate for equity amounts and the average rate during the reporting period for income and expense items. Translation gains and losses are recorded in accumulated other comprehensive income or loss as a component of shareholders’ equity.

In the financial statements of the Company’s subsidiaries and consolidated VIE and VIE’s subsidiary, transactions in currencies other than the functional currency are measured and recorded in the functional currency using the exchange rate in effect at the date of the transaction. At the balance sheet date, monetary assets and liabilities that are denominated in currencies other than the functional currency are translated into the functional currency using the exchange rate at the balance sheet date. All gains and losses arising from foreign currency transactions are recorded in other (income) expenses, net in the consolidated statements of comprehensive loss.

Convenience translation

Convenience translation

Translations of balances in the consolidated balance sheets, consolidated statements of comprehensive loss and consolidated statements of cash flows from RMB into USD as of and for the year ended March 31, 2023 are solely for the convenience of the reader and has been made at the exchange rate quoted by the central parity of RMB against the USD by the People’s Bank of China on March 31, 2023 of USD1.00 = RMB6.8717. No representation is made that the RMB amounts could have been, or could be, converted, realized or settled into USD at that rate on March 31, 2023, or at any other rate.

Comprehensive income (loss)

Comprehensive loss

Comprehensive loss is comprised of the Company’s net loss and comprehensive loss. The component of comprehensive loss is consisted solely of foreign currency translation adjustments.

Related parties

Related parties

Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control or significant influence, such as a family member or relative, shareholder, or a related corporation.

Segment reporting

Segment reporting

FASB ASC Topic 280, “Segment Reporting” establishes standards for reporting information about reportable segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group in deciding how to allocate resources and in assessing performance.

Management views the business as consisting of revenue streams; however, they do not produce reports for, assess the performance of, or allocate resources to these revenue streams based upon any asset-based metrics, or based upon income or expenses, operating income or net income. Therefore, the Company believes that it operates in one business segment. Substantively all of the Company’s long-lived assets are located in the PRC.

Loss per share

Loss per share

Basic net loss per share is the amount of net loss available to each share of ordinary shares outstanding during the reporting period. Diluted net loss per share is the amount of net loss available to each share of ordinary shares outstanding during the reporting period adjusted to include the effect of potentially dilutive ordinary shares, if any. Basic and diluted loss per share for each of the periods presented are calculated as follows:

	Year ended March 31,
	2021			2022			2023
	RMB			RMB			RMB
Numerator:
Net loss attributable to UTime Limited, basic and diluted		(16,627	)		(38,833	)		(87,616	)
Denominator:
Weighted average shares outstanding, basic and diluted		4,517,793			8,164,771			11,229,985
Net loss attributable to UTime Limited per ordinary share:
Basic and diluted		(3.68	)		(4.76	)		(7.80	)

Acquisitions

Acquisitions

The Company accounts for acquisitions of an asset or group of similar identifiable assets that do not meet the definition of a business as an asset acquisition using the cost accumulated method, whereby the cost of the acquisition, including certain transaction costs, is allocated to the assets acquired on the basis of their relative fair values. No goodwill is recognized in an asset acquisition. Intangible assets acquired in an asset acquisition for use in research and development activities which have no alternative future use are expensed as in-process research and development on the acquisition date. Intangible assets acquired for use in research and development activities which have an alternative future use are capitalized as in-process research and development. Future costs to develop these assets are recorded to research and development expense as they are incurred.

Recently issued accounting standards

Recently issued accounting standards

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 replaced the incurred loss impairment methodology under current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. ASU 2016-13 requires use of a forward-looking expected credit loss model for accounts receivables, loans, and other financial instruments. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, with early adoption permitted. In October 2019, the FASB issued ASU No. 2019-10, “Financial Instruments-Credit Losses (Topic 326): Effective Dates”, to finalize the effective date delays for private companies, not-for-profits, and smaller reporting companies applying the current expected credit loss (CECL) standards. In March 31, 2023, the FASB issued ASU 2022-02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures, which eliminates the TDR accounting model for creditors that have already adopted Topic 326, which is commonly referred to as the CECL model. These ASUs are effective for reporting periods beginning after December 15, 2022 and interim periods within those fiscal years. Early adoption is permitted. The Company has not early adopted this update and it will become effective on April 1, 2023 assuming the Company will remain an emerging growth company. The Company is currently assessing the impact of adopting this standard on its consolidated financial statements.

In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (ASU 2021-08), which clarifies that an acquirer of a business should recognize and measure contract assets and contract liabilities in a business combination in accordance with Topic 606, Revenue from Contracts with Customers. The new amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. The amendments should be applied prospectively to business combinations occurring on or after the effective date of the amendments, with early adoption permitted. The Company is currently evaluating the impact of the new guidance on the consolidated financial statements.

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Organization and Principal Activities (Tables)

12 Months Ended

Mar. 31, 2023

Organization and Principal Activities [Abstract]

Schedule of subsidiaries and VIE

As of March 31, 2023, details of the subsidiaries and VIE of the Company are set out below:

Name	Date of Incorporation	Place of Incorporation	Percentage of Beneficial Ownership	Principal Activities
Subsidiaries
UTime HK	November 1, 2018	Hong Kong	100%	Investment Holding
UTime WFOE	December 18, 2018	China	100%	Investment Holding
Bridgetime	September 5, 2016	British Virgin Island	100%	Investment Holding
Do Mobile	October 24, 2016	India	99.99%	Sales of in-house brand products in India

Name	Date of Incorporation	Place of Incorporation	Percentage of Beneficial Ownership	Principal Activities
VIE
UTime SZ	June 12, 2008	China	100%	Research and development of products, and sales
Subsidiaries of the VIE
Guizhou United Time Technology Co., Ltd. (“UTime GZ”)	September 23, 2016	China	VIE’s subsidiary	Manufacturing
UTime Technology (HK) Company Limited  (“UTime Trading”)	June 25, 2015	Hong Kong	VIE’s subsidiary	Trading
UTime India Private  Limited (“UTime India”)	February 7, 2019	India	UTime Trading’s subsidiary	Trading
Guangxi UTime Technology Co., Ltd. (“UTime Guangxi”)	November 1, 2021	China	UTime Trading’s subsidiary	Manufacturing
Gesoper S De R.L. De C.V. (“Gesoper”)	October 21, 2020	Mexico	UTime Trading’s subsidiary	Trading
Firts Communications And Technologies De Mexico S.A. De C.V. (“Firts”)	November 12, 2021	Mexico	Gesoper’s subsidiary	Trading

Schedule of balance sheet

Company’s consolidated balance sheets as of March 31, 2022 and 2023 are as follows:

	As of March 31,
	2022		2023
	RMB		RMB
Assets
Current assets
Cash and cash equivalents		192		277
Restricted cash		500		500
Accounts receivable, net		22,391		52,241
Prepaid expenses and other current assets, net		42,431		70,202
Due from related parties		1,422		584
Inventories		36,018		16,169
Total current assets		102,954		139,973
Non-current assets
Property and equipment, net		38,227		61,411
Operating lease right-of-use assets, net		16,319		13,030
Equity method investment		-		-
Intangible assets, net		2,592		1,677
Other non-current assets		541		-
Total non-current assets		57,679		76,118
Total assets		160,633		216,091
Liabilities
Current liabilities
Accounts payable		74,497		126,683
Short-term borrowings		35,780		53,935
Current portion of long-term borrowings		800		1,080
Due to related parties		3,728		4,705
Lease liabilities		3,360		3,673
Other payables and accrued liabilities		42,423		48,941
Income tax payables		18		18
Total current liabilities		160,606		239,035
Non-current liabilities
Long-term borrowings		8,020		6,870
Government grants		-		8,697
Deferred tax liabilities		466		295
Lease liabilities		14,549		10,876
Total non-current liabilities		23,035		26,738
Total liabilities		183,639		265,773

Schedule of revenue net income and cash flows of VIE and subsidiaries

The table sets forth the revenue, net loss and cash flows of the VIE and subsidiaries of VIE in the table below.

	Year ended March 31,
	2021			2022			2023
	RMB			RMB			RMB
Revenue		240,742			273,979			200,450
Net loss		(10,722	)		(29,643	)		(19,221	)
Net cash used in operating activities		(3,020	)		(19,806	)		(15,269	)
Net cash used in investing activities		(2,201	)		(5,830	)		(2,900	)
Net cash provided by financing activities		14,000			17,629			18,295

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Summary of Significant Accounting Policies (Tables)

12 Months Ended

Mar. 31, 2023

Organization and Principal Activities [Abstract]

Schedule of property and straight-line method over their estimated useful lives

Depreciation of property and equipment are provided using the straight-line method over their estimated useful lives as follows:

	Useful life
Office real estate	48 years
Furniture and equipment	3 – 6 years
Production and other machineries	5 – 10 years

Schedule of disaggregates revenue

	Year ended March 31,
	2021		2022		2023
Category	Amount		Amount		Amount
	RMB		RMB		RMB
	(in thousands)
OEM/ODM		195,995		273,979		200,450
In-house brands		6,157		1,529		98
Face mask		44,747		-		-
Total		246,899		275,508		200,548

Schedule of basic net loss per share

Basic and diluted loss per share for each of the periods presented are calculated as follows:

	Year ended March 31,
	2021			2022			2023
	RMB			RMB			RMB
Numerator:
Net loss attributable to UTime Limited, basic and diluted		(16,627	)		(38,833	)		(87,616	)
Denominator:
Weighted average shares outstanding, basic and diluted		4,517,793			8,164,771			11,229,985
Net loss attributable to UTime Limited per ordinary share:
Basic and diluted		(3.68	)		(4.76	)		(7.80	)

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Accounts Receivable, Net (Tables)

12 Months Ended

Mar. 31, 2023

Accounts Receivable, Net [Abstract]

Schedule of accounts receivable, net

	As of March 31,
	2022			2023
	RMB			RMB
Accounts receivable		22,543			52,444
Allowance for doubtful accounts		(126	)		(136	)
Accounts receivable, net		22,417			52,308

Schedule of movement of allowance for doubtful accounts

	2021			2022			2023
	RMB			RMB			RMB
Balance at beginning of year		838			878			126
Additions for the year		50			—			—
Written off for the year		—			(748	)		—
Foreign currency translation difference		(10	)		(4	)		10
Balance at the end of year		878			126			136

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Prepaid Expenses and Other Current Assets, Net (Tables)

12 Months Ended

Mar. 31, 2023

Prepaid Expenses and Other Current Assets, Net [Abstract]

Schedule of prepaid expenses and other current assets, net

	As of March 31,
	2022			2023
	RMB			RMB
Advance to suppliers		40,620			64,827
Input GST/IVA		568			412
Receivables from supply chain service provider		4,829			7,648
Expected return assets		1			1
Other receivables		21,460			24,282
Allowance for doubtful accounts		(1,663	)		(1,662	)
Prepaid expenses and other current assets, net		65,815			95,508

Schedule of other current assets

	As of March 31,
	2021			2022			2023
	RMB			RMB			RMB
Balance at beginning of year		4,006			674			1,663
Additions (reversal) for the year		(886	)		3,406			—
Written off for the year		(2,446	)		(2,359	)		—
Foreign currency translation difference		—			(58	)		(1	)
Balance at the end of year		674			1,663			1,662

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Inventories (Tables)

12 Months Ended

Mar. 31, 2023

Inventory Disclosure [Abstract]

Schedule of inventory

	As of March 31,
	2022			2023
	RMB			RMB
Raw materials		32,004			12,294
Work in progress		1,326			2,972
Finished goods		13,533			11,217
Total inventory, gross		46,863			26,483
Inventory reserve		(10,792	)		(10,314	)
Total inventory, net		36,071			16,169

Schedule of inventory reserve

As a result of such analysis, the movement of inventory reserve was as follows:

	Year ended March 31,
	2021			2022			2023
	RMB			RMB			RMB
Balance at beginning of year		5,962			13,393			10,792
Additional charge (written off), net		7,589			(2,467	)		407
Foreign currency translation difference		(158	)		(134	)		(885	)
Balance at the end of year		13,393			10,792			10,314

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Property and Equipment, Net (Tables)

12 Months Ended

Mar. 31, 2023

Property, Plant and Equipment [Abstract]

Schedule of property and equipment, net

	As of March 31,
	2022		2023
	RMB		RMB
Office real estate		20,995		20,996
Furniture and equipment		5,100		6,267
Production and other machineries		29,713		55,015
Total		55,808		82,278
Less: accumulated depreciation		17,538		20,849
Property and equipment, net		38,270		61,429

Schedule of production and other machineries lease out under operating lease

	As of March 31,
	2022		2023
	RMB		RMB
Cost		29,578		29,578
Less: accumulated depreciation and amortization		9,436		12,094
Net book value		20,142		17,484

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Lease Liabilities (Tables)

12 Months Ended

Mar. 31, 2023

Lease Liabilities [Abstract]

Schedule of future minimum rental payments for operating leases

Year ending March 31,	RMB
2024		804
2025		201
Total		1,005

Schedule of lease expense

	Year ended March 31,
	2021		2022		2023
	RMB		RMB		RMB
Operating lease cost		1,016		2,265		3,289
Short-term lease cost		1,163		973		—
Lease cost		2,179		3,238		3,289

Schedule of cash flow supplemental disclosures

	Year ended March 31,
	2021		2022		2023
	RMB		RMB		RMB
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflow from operating leases		1,325		1,249		4,514

Schedule of lease liabilities

	RMB			USD
2024		4,575			666
2025		4,575			666
2026 and after		7,356			1,071
Total lease payments		16,506			2,403
Less: Interest		(1,957	)		(285	)
Present value of lease liabilities		14,549			2,118
Less current portion, record in current liabilities		(3,673	)		(535	)
Present value of lease liabilities		10,876			1,583

Schedule of weighted average remaining lease terms and discount rates for all operating leases

	As of March 31,			As of March 31,
	2022			2023
Remaining lease term and discount rate:	RMB			RMB
Weighted average remaining lease term (years)		4.56			3.61
Weighted average discount rate		7.03	%		7.00	%

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Equity Method Investment (Tables)

12 Months Ended

Mar. 31, 2023

Equity Method Investments and Joint Ventures [Abstract]

Schedule of equity method investments

	Year ended March 31,
	2022			2023
	RMB			RMB
Cost		1,425			1,425
Less: accumulated impairment		(1,425	)		(1,425	)
Equity method investment, net		-			-

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Other Non-Current Assets (Tables)

12 Months Ended

Mar. 31, 2023

Other Non-Current Assets [Abstract]

Schedule of other non-current assets

	As of March 31,
	2022		2023
	RMB		RMB
Prepayment for property and equipment, and intangible asset		541		-
Total other non-current assets		541		-

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Borrowings (Tables)

12 Months Ended

Mar. 31, 2023

Debt Disclosure [Abstract]

Schedule of short term and long term borrowings

		As of March 31,
	Note	2022		2023
		RMB		RMB
Short-term borrowings
China Resources Bank of Zhuhai Co., Ltd. Loan 1	(a)		22,000		-
Secured loan	(b)		4,980		7,800
Bank of Communications	(c)		2,500		-
Baosheng County Bank 1	(d)		2,300		-
China Resources Bank of Zhuhai Co., Ltd. Loan 2	(e)		2,000		-
PingAn Bank Co., Ltd.	(f)		2,000		2,000
China Resources Bank of Zhuhai Co., Ltd. Loan 3	(g)		-		22,000
China Resources Bank of Zhuhai Co., Ltd. Loan 4	(h)		-		2,000
Baosheng County Bank 2	(i)		-		2,400
WeBank Co., Ltd. 1	(j)		-		1,990
WeBank Co., Ltd. 2	(k)		-		1,000
WeBank Co., Ltd. 3	(l)		-		1,745
China Resources SZITIC Trust Company Limited	(m)		-		3,000
Industrial and Commercial Bank of China (“ICBC”) Loan	(n)		-		5,000
Industrial and Commercial Bank of China (“ICBC”) Loan	(o)				5,000
			35,780		53,935
Long-term borrowings
Shenzhen Rural Commercial Bank loan 1	(p)		7,000		6,370
Shenzhen Rural Commercial Bank loan 2	(q)		1,820		1,580
			8,820		7,950
Representing by:
Current portion of long-term borrowings			800		1,080
Non-current portion of long-term borrowings			8,020		6,870

(a) On November 13, 2020, UTime SZ entered into a credit agreement with China Resources Bank of Zhuhai Co., Ltd., according to which China Resources Bank of Zhuhai Co., Ltd. agreed to provide UTime SZ with a credit facility of up to RMB22 million with a two-year term from November 13, 2020 to November 13, 2022. On November 18, 2020, UTime SZ entered into a working capital loan agreement with China Resources Bank of Zhuhai Co., Ltd. to borrow RMB22 million as working capital for one year at an annual effective interest rate of 5.5%. The Company repaid the loan on November 18, 2021 and borrowed RMB22 million as working capital for one year at an annual effective interest rate of 5.5% on November 22, 2021. The Company repaid the loan on November 21, 2022. The loan is secured by the office owned by UTime SZ and guaranteed by UTime GZ, Mr. Bao and his spouse.

(b) In November 2020, UTime SZ and TCL Commercial Factoring (Shenzhen) Company Limited (“TCL Factoring”) executed a factoring agreement, pursuant to which UTime SZ received a revolving credit facility and may submit unlimited number of loan applications, so long as, among other conditions, the balance of the loan does not exceed the credit line. The annual effective interest rate range is from 8.0% to 9.0%. TCL Factoring has the right of recourse to UTime SZ, and as a result, these transactions were recognized as secured borrowings. UTime SZ agreed to pledge to TCL Factoring its accounts receivable from TCL Mobile Communication Company Limited (“TCL Huizhou”). This credit facility was also guaranteed respectively by Mr. Bao and UTime GZ, each for an amount up to RMB20 million. UTime SZ agreed not to withdraw, utilize or dispose the accounts receivables paid to it by TCL Huizhou without the prior consent of TCL Factoring. As of March 31, 2022 and 2023, UTime SZ obtained loans under the factoring agreement at the total amount of RMB4.98 million and RMB7.8 million, respectively.

(c) In July 2021, UTime SZ entered into a credit agreement with Bank of Communications to borrow RMB10 million for an unfixed term. On July 19, 2021, UTime SZ obtained a loan under this working capital loan agreement at the amount of RMB3 million which is due on July 6, 2022. The loan was guaranteed by Mr. Bao and his spouse. The loan bears a fixed interest rate of 4.6% per annum and will be due on July 6, 2022. The loan was fully repaid in July 2022.

(d) In August 2021, UTime SZ entered into a credit line agreement with Shenzhen Nanshan Baosheng County Bank Co., Ltd. (“Baosheng County Bank”) according to which Baosheng County Bank agreed to provide UTime SZ with a credit facility of up to RMB3 million with a one-year term from July 28, 2021 to July 28, 2022. On August 23, 2021, UTime SZ entered into a working capital loan agreement with Baosheng County Bank to borrow RMB3 million as working capital for one year at an annual effective interest rate of 8.0%. It is payable at monthly installment of RMB0.1 million from September 2021 to August 2022, with a balloon payment of the remaining balance in the last installment. The loan was fully repaid in August 2022.

(e) On December 2, 2021, UTime SZ entered into a working capital loan agreement with China Resources Bank of Zhuhai Co., Ltd., to borrow RMB2 million as working capital at an annual effective interest rate of 8.0%. The loan was repaid in October 2022.

(f) In November 2021, UTime SZ entered into a credit agreement with PingAn Bank Co., Ltd. to borrow RMB2 million for a term of 3 years, with an annual effective rate of 12.96%. The loan is guaranteed by Mr. Bao and his spouse. As of March 31, 2023 UTime SZ obtained loans under the credit agreement at the total amount of RMB2 million which will be due on November 2023.

(g) On November 24, 2022, UTime SZ entered into a working capital loan agreement with China Resources Bank of Zhuhai Co., Ltd., to borrow RMB22 million as working capital at an annual effective interest rate of 5.5%. The loan is secured by the office owned by UTime SZ and guaranteed by UTime GZ, Mr. Bao and his spouse. The loan will be due in November 2023.

(h) On December 5, 2022, UTime SZ entered into a working capital loan agreement with China Resources Bank of Zhuhai Co., Ltd., to borrow RMB2 million as working capital at an annual effective interest rate of 8.0%. The loan will be due on October 25, 2023.

(i) On August 31, 2022, UTime SZ entered into a credit line agreement with Shenzhen Nanshan Baosheng County Bank Co., Ltd. (“Baosheng County Bank”) according to which Baosheng County Bank agreed to provide UTime SZ with a credit facility of up to RMB3 million with a one-year term from August 31, 2022 to August 31, 2023. On August 31, 2022, UTime SZ entered into a working capital loan agreement with Baosheng County Bank to borrow RMB3 million as working capital for one year at an annual effective interest rate of 8.0%. It is payable at monthly installment of RMB0.1 million from September 2021 to August 2022, with a balloon payment of the remaining balance in the last installment. The loan is secured by the office owned by UTime SZ and guaranteed by UTime Guangxi, Mr. Bao and his spouse.

(j) On May 19, 2022, UTime SZ entered into a credit line agreement with WeBank Co., Ltd. (“WeBank”) according to which WeBank agreed to provide UTime SZ with a credit facility of up to RMB1.99 million with a two-year term from May 19, 2022 to May 19, 2024, with an annual effective interest rate of 9.45%. The loan is guaranteed by Mr. Bao. As of March 31, 2023 UTime SZ loans under the credit agreement was RMB1.99 million.

(k) On May 19, 2022, UTime SZ entered into a credit line agreement with WeBank Co., Ltd. (“WeBank”) according to which WeBank agreed to provide UTime SZ with a credit facility of up to RMB1 million with a two-year term from May 19, 2022 to May 19, 2024, with an annual effective interest rate of 9%. The loan is guaranteed by Mr. Bao. As of March 31, 2023 UTime SZ loans under the credit agreement was RMB1 million.

(l)	On May 18, 2022, UTime SZ entered into a credit line agreement with WeBank Co., Ltd. (“WeBank”) according to which WeBank agreed to provide UTime SZ with a credit facility of up to RMB3 million with a two-year term from May 18, 2022 to May 18, 2024, with an annual effective interest rate of 11.34%. The loan is guaranteed by Mr. Bao. As of March 31, 2023 UTime SZ loans under the credit agreement was RMB1.7 million.
(m)	On January 10, 2023, UTime SZ entered into a working capital loan agreement with China CITIC Bank, to borrow RMB3 million as working capital at an annual effective interest rate of 4.35%. The loan will be due in January 2024.
(n)	On December 2, 2022, UTime SZ entered into a loan agreement with Industrial and Commercial Bank of China (“ICBC”), to borrow RMB 5 million as working capital at an annual effective interest rate of 3.75%. The loan will be due in 12 months.
(o)	On December 7, 2022, UTime SZ entered into a loan agreement with Industrial and Commercial Bank of China (“ICBC”), to borrow RMB 5 million as working capital at an annual effective interest rate of 3.75%. The loan will be due in 12 months.
(p)	On June 29, 2021, UTime SZ entered into a credit agreement with Shenzhen Rural Commercial Bank to borrow RMB7 million for a term of 3 years, which is payable at monthly installment of RMB0.07 million from August 2022 to July 2024, with a balloon payment of the remaining balance in the last installment. The loan bears a fixed interest rate of 4.5% per annum. The loan was secured by real estate owned by Mr. Bao and guaranteed by Mr. Bao. As of March 31, 2022 and 2023, the balance of the loan was RMB7 million and RMB6.4 million, respectively. Out of the total outstanding loan balance, current portion amounted were RMB0.56 million and RMB0.84 million, which is presented as current liabilities in the consolidated balance sheet and the remaining balance of RMB6.44 million and RMB5.53 million, which is presented as non-current liabilities in the consolidated balance sheet as of March 31, 2022 and 2023, respectively.
(q)	In July 2021, UTime SZ entered into a credit agreement with Shenzhen Rural Commercial Bank to borrow RMB2 million for a term of 3 years, which is payable at monthly installment of RMB0.02 million from July 2021 to July 2024, with a balloon payment of the remaining balance in the last installment. The loan is secured by real estate owned by Mr. Bao and guaranteed by Mr. Bao. As of March 31, 2022 and 2023, the balance of the loan are RMB1.82 million and RMB1.58 million, respectively. Out of the total outstanding loan balance, current portion amounted were RMB0.24 million and RMB0.24 million, which is presented as current liabilities in the consolidated balance sheet and the remaining balance of RMB1.82 million and RMB1.58 million, which is presented as non-current liabilities in the consolidated balance sheet as of March 31, 2022 and 2023, respectively.

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Other Payables and Accrued Liabilities (Tables)

12 Months Ended

Mar. 31, 2023

Payables and Accruals [Abstract]

Schedule of other payables and accrued liabilities

	As of March 31,
	2022		2023
	RMB		RMB
Advance from customers		16,607		17,087
Accrued payroll		10,220		11,910
VAT payable		1,484		7,292
Refund liabilities		1		1
Product warranty		50		50
Other payables		15,786		18,432
Total		44,148		54,772

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Other Expenses/(Income), Net (Tables)

12 Months Ended

Mar. 31, 2023

Other (Income) Expenses, Net [Abstract]

Schedule of other expenses/(income), net

	Year ended March 31,
	2021			2022			2023
	RMB			RMB			RMB
Exchange losses (gains)		3,703			2,316			(3,179	)
Provision for doubtful accounts, net		(836	)		3,406			-
Impairment of intangible asset		-			348			-
Government grants		(1,289	)		(2,851	)		(594	)
Loss on equity method investment		833
Others		464			109			79
Total		2,875			3,328			(3,694	)

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Income Tax Benefits (Tables)

12 Months Ended

Mar. 31, 2023

Income Tax Benefits [Abstract]

Schedule of deferred components of income taxes

	Year ended March 31,
	2021		2022		2023
	RMB		RMB		RMB
Current tax benefits		364		-		-
Deferred tax benefit		-		46		171
Total income tax benefit		364		46		171

Schedule of deferred tax assets and liabilities

	As of March 31,
	2022			2023
	RMB			RMB
Deferred income tax assets (liabilities) :
Impairment on receivables		2,590			450
Inventories		3,358			1,889
Deferred revenue		977			2,174
Accrued expenses and employee benefits		1,411			3,258
Equity method investment and others		1,075			-
Net operating loss carry forwards		21,678			27,977
Total gross deferred tax assets		31,089			35,748
Less: valuation allowances		(27,747	)		(32,490)
Total deferred tax assets, net of valuation allowance		3,342			3,258
Prepaid expenses and other current assets		(1,299	)		(3,258	)
Unrealized foreign exchange difference and others		(2,217	)		-
Amortization & impairment of intangible asset		(292	)		(295	)
Deferred tax liabilities		(466	)		(295	)

Schedule of income tax benefits

	Year ended March 31,
	2021			2022			2023
		%			%			%
Statutory rate in PRC		25			25			25
Effect of preferential tax treatment		(2	)		(4	)		(1	)
Effect of different tax jurisdiction		(6	)		(4	)		(19	)
Effect of permanence differences		(1	)		(2	)		-
Research and development super-deduction		5			4			2
Changes in valuation allowance		(21	)		(19	)		(7	)
Over provision in prior year		2			-			-
Total income tax benefits		2			-			-

XML

Related Parties Balances and Transactions (Tables)

12 Months Ended

Mar. 31, 2023

Related Party Transactions [Abstract]

Schedule of related parties transactions

Related Parties	Relationship
Mr. Bao	Controlling shareholder of the Company
Mr. He	Beneficial shareholder of the Company
Mr. Yu	Chief Financial Officer of the Company
Philectronics	An equity method investee of the Company
Grandsky Phoenix Limited	100% owned by Mr. Bao

Schedule of due from related parties

	As of March 31,
	2022		2023
	RMB		RMB
Philectronics		486		536
Mr. Bao		47		-
GRANDSKY PHOENIX LIMITED		889		-
Mr. Yu		-		48
		1,422		584

(2) Due to related parties

Schedule of due to related parties

	As of March 31,
	2022		2023
	RMB		RMB
Mr. Bao		3,819		4,779
Philectronics		482		482
GRANDSKY PHOENIX LIMITED		198		239
		4,499		5,500

(1) On September 17, 2021, Mr. Bao entered into a loan agreement with China Resources Bank of Zhuhai Co., Ltd. and borrowed RMB3.0 million (US$0.5 million). The loan is restricted on purpose only to support daily operation for the Companies that is controlled by Mr. Bao. The loan was repaid on March 17, 2022 and the agreement was renewed on March 18, 2022.

XML

Revenue and Geography Information (Tables)

12 Months Ended

Mar. 31, 2023

Segment Reporting [Abstract]

Schedule of revenue and geography information

	Year ended March 31,
	2021		2022		2023
	RMB		RMB		RMB
Feature phone		144,032		111,066		106,279
Smart phone		56,885		154,143		73,819
Face mask		44,747		-		-
Others		1,235		10,299		20,449
Total		246,899		275,508		200,547

Schedule of company’s sales breakdown based on location

	Year ended March 31,
	2021		2022		2023
	RMB		RMB		RMB
Mainland China		112,400		70,314		82,481
Hong Kong		30,030		18,949		14,228
India		6,157		1,529		97
Africa		19,536		25,905		39,515
The United States		17,277		28,154		18,158
Mexico		-		12,372		29,085
South America		45,743		118,285		951
Others		15,756		-		16,032
Total		246,899		275,508		200,547

Schedule of location of company’s long-lived assets

	As of March 31,
	2022		2023
	RMB		RMB
PRC		54,543		74,438
India		46		19
Mexico		-		3
Total		54,589		74,460

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Condensed Financial Information of the Parent Company (Tables)

12 Months Ended

Mar. 31, 2023

Condensed Financial Information of the Parent Company [Abstract]

Schedule of balance sheet

	As of March 31,
	2022			2023
	RMB			RMB
ASSETS
Current assets
Cash and cash equivalents		1			2
Prepaid expenses and other current assets		23,195			25,109
Inter-company receivable		73,345			79,393
Non-current assets
Investment in subsidiary		1,610			(18,929	)
Total assets		98,151			85,575
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Inter-company payable		31,492			35,634
Due to related parties		289			313
Other payables and accrued liabilities		1,382			5,539
Total liabilities		33,163			41,486
Shareholders’ equity
Preference share, par value US$0.0001; Authorized:10,000,000 shares; Nil issued and outstanding as of March 31, 2022 and March 31, 2023, respectively		-			-
Ordinary shares, par value US$0.0001; Authorized:140,000,000 shares; Issued and outstanding: 8,267,793 shares as of March 31, 2022 and 13,567,793 shares as of March 31, 2023		5			9
Additional paid-in capital		152,236			216,504
Accumulated deficit		(88,277	)		(175,893	)
Accumulated other comprehensive income		1,024			3,469
Total shareholder’s equity		64,988			44,089
Total liabilities and shareholders’ equity		98,151			85,575

Schedule of comprehensive loss

	Year ended March 31,
	2021			2022			2023
	RMB			RMB			RMB
Loss from equity method investments		(12,618	)		(32,350	)		(18,396	)
Operating expenses		(4,009	)		(6,483	)		(69,220	)
Net loss		(16,627	)		(38,833	)		(87,616	)
Foreign currency translation difference		1,868			(377	)		2,445
Comprehensive loss		(14,759	)		(39,210	)		(85,171	)

Schedule of cash flows

	Year ended March 31,
	2021			2022			2023
	RMB			RMB			RMB
CASH FLOW FROM OPERATING ACTIVTIES
Net loss		(16,627	)		(38,833	)		(87,616	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Equity loss of subsidiaries		12,618			32,350			18,396
Share-based compensation and expenses		-			-			63,656
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		(8,424	)		(1,173	)		-
Inter-company payable (i)		12,206			8,000			1,539
Related parties		(23	)		-			-
Other payables and accrued liabilities		131			1,269			4,026
Net cash (used in) provided by operating activities		(119	)		1,613			1
Effect of exchange rate changes on cash and cash equivalent and restricted cash		125			(1,618	)		-
Net change in cash and cash equivalent		6			(5	)		1
Cash and cash equivalents, beginning of year		-			6			1
Cash and cash equivalents, end of year		6			1			2

(i) For the year ended March 31, 2022, UTime HK received the IPO proceeds of RMB88.2 million and made down payment for financing services of RMB19 million on behalf of UTime Limited.

XML

Organization and Principal Activities (Details) ¥ / shares in Units, $ / shares in Units, ¥ in Thousands					1 Months Ended		12 Months Ended
	Apr. 08, 2021 CNY (¥) shares	Apr. 08, 2021 USD ($) $ / shares shares	Apr. 04, 2019 shares	Mar. 11, 2019 shares	Apr. 29, 2021	Feb. 28, 2018 USD ($)	Mar. 31, 2023 CNY (¥) ¥ / shares shares	Mar. 31, 2022 CNY (¥) ¥ / shares shares	Mar. 31, 2023 USD ($) shares	Jan. 17, 2022	Dec. 17, 2021	Mar. 31, 2021 shares	Apr. 29, 2020 shares	Sep. 04, 2019	Jun. 03, 2019 USD ($) $ / shares shares	May 20, 2019 shares	Mar. 05, 2018 shares	Mar. 31, 2017	Sep. 05, 2016
Organization and Principal Activities (Details) [Line Items]
Total consideration (in Dollars) | $						$ 9,600,000
Non-controlling interest (in Yuan Renminbi) | ¥							¥ 17,200
Other comprehensive income (in Yuan Renminbi) | ¥							1,000
Additional paid in capital (in Yuan Renminbi) | ¥							16,200
Shares issued (in Shares)																	100,000
Share transfer (in Shares)				1
Business operations description			On April 4, 2019, Bridgetime approved a board resolution that forfeited 15,000 shares held by Mr. Yunchuan Li, cancelled those shares accordingly and amended Bridgetime’s memorandum of association that changed authorized shares from 150,000 to 135,000 at a par value of US$1.00 which was accounted as a cancellation of non-controlling interest in the consolidated statements of shareholders’ equity.After this, Mr. WuKai Song owned 100% of equity interest of Bridgetime, which are controlled by Mr. Bao through an entrust agreement between Mr. Bao and Mr. Wukai Song. On May 23, 2019, Bridgetime approved a board resolution that transferred 135,000 ordinary shares owning by Mr. Wukai Song to UTime Limited. Since inception, Bridgetime has only made nominal investments into Do Mobile and no substantial business operations have occurred.
Share forfeitures (in Shares)			15,000
Ordinary shares (in Dollars)							¥ 9	¥ 5	$ 1,000
Ordinary shares, shares issued (in Shares)							13,567,793	8,267,793	13,567,793			4,517,793
Ordinary shares, par value (in Dollars per share) | ¥ / shares							¥ 0.0001	¥ 0.0001
Repurchase of shares (in Shares)													7,620,000
Ordinary shares (in Shares)													239,721
Ordinary shares repurchased description					Before and after the repurchase of ordinary shares, Mr. Bao, through Grandsky Phoenix Limited, and Mr. He, through HMercury Capital Limited, own 96.95% and 3.05% of our issued and outstanding ordinary shares, respectively. The Company considers this repurchase of ordinary shares was part of the Company’s recapitalization to result in 4,517,793 ordinary shares issued and outstanding prior to completion of its IPO. The Company believes it is appropriate to reflect these nominal share repurchases to result in 4,517,793 ordinary shares being issued and outstanding or reduction of 63.5% of total ordinary shares being issued and outstanding after the repurchase of ordinary shares similar to 0.365-for-1 reverse stock split.
Service fee								100.00%
Equity interests percentage							25.00%		25.00%					100.00%
Gross proceeds (in Dollars) | $		$ 15,000,000
Equity interest rate										85.00%	51.00%
IPO [Member]
Organization and Principal Activities (Details) [Line Items]
Ordinary share (in Shares)	3,750,000	3,750,000
Price per share (in Dollars per share) | $ / shares		$ 4
Gross proceeds (in Dollars) | $		$ 15,000,000
Net proceeds	¥ 88,200	$ 13,900,000
Mr. Bao [Member]
Organization and Principal Activities (Details) [Line Items]
Equity interest percentage						28.00%	96.95%		96.95%							100.00%		52.00%
Shares issued (in Shares)																12,000,000
Mr Zhou [Member]
Organization and Principal Activities (Details) [Line Items]
Equity interest percentage						20.00%												28.00%
Mr Tang [Member]
Organization and Principal Activities (Details) [Line Items]
Equity interest percentage																		20.00%
Mr. Wukai Song [Member]
Organization and Principal Activities (Details) [Line Items]
Equity interest percentage																	90.00%		70.00%
Mr. Yunchuan Li [Member]
Organization and Principal Activities (Details) [Line Items]
Equity interest percentage																	10.00%		30.00%
Grandsky Phoenix Limited [Member]
Organization and Principal Activities (Details) [Line Items]
Equity interest percentage															96.95%
Mr. He. HMercury Capital Limited [Member]
Organization and Principal Activities (Details) [Line Items]
Equity interest percentage															3.05%
Mr. He [Member]
Organization and Principal Activities (Details) [Line Items]
Equity interest percentage							3.05%		3.05%
Mr. He. HMercury Capital Limited [Member]
Organization and Principal Activities (Details) [Line Items]
Ordinary shares (in Dollars) | $															$ 377,514
Ordinary shares, shares issued (in Shares)															377,514
Ordinary shares, par value (in Dollars per share) | $ / shares															$ 0.0001

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Organization and Principal Activities (Details) - Schedule of subsidiaries and VIE	12 Months Ended
	Mar. 31, 2023
UTime HK [Member]
Variable Interest Entity [Line Items]
Date of Incorporation	Nov. 01, 2018
Place of Incorporation	Hong Kong
Percentage of Beneficial Ownership	100%
Principal Activities	Investment Holding
UTime WFOE [Member]
Variable Interest Entity [Line Items]
Date of Incorporation	Dec. 18, 2018
Place of Incorporation	China
Percentage of Beneficial Ownership	100%
Principal Activities	Investment Holding
Bridgetime [Member]
Variable Interest Entity [Line Items]
Date of Incorporation	Sep. 05, 2016
Place of Incorporation	British Virgin Island
Percentage of Beneficial Ownership	100%
Principal Activities	Investment Holding
Do Mobile [Member]
Variable Interest Entity [Line Items]
Date of Incorporation	Oct. 24, 2016
Place of Incorporation	India
Percentage of Beneficial Ownership	99.99%
Principal Activities	Sales of in-house brand products in India
UTime SZ [Member]
Variable Interest Entity [Line Items]
Date of Incorporation	Jun. 12, 2008
Place of Incorporation	China
Percentage of Beneficial Ownership	100%
Principal Activities	Research and development of products, and sales
Guizhou United Time Technology Co., Ltd. (“UTime GZ”) [Member]
Variable Interest Entity [Line Items]
Date of Incorporation	Sep. 23, 2016
Place of Incorporation	China
Percentage of Beneficial Ownership	VIE’s subsidiary
Principal Activities	Manufacturing
UTime Technology (HK) Company Limited (“UTime Trading”) [Member]
Variable Interest Entity [Line Items]
Date of Incorporation	Jun. 25, 2015
Place of Incorporation	Hong Kong
Percentage of Beneficial Ownership	VIE’s subsidiary
Principal Activities	Trading
UTime India Private Limited (“UTime India”) [Member]
Variable Interest Entity [Line Items]
Date of Incorporation	Feb. 07, 2019
Place of Incorporation	India
Percentage of Beneficial Ownership	UTime Trading’s subsidiary
Principal Activities	Trading
Guangxi UTime Technology Co., Ltd. (“UTime Guangxi”) [Member]
Variable Interest Entity [Line Items]
Date of Incorporation	Nov. 01, 2021
Place of Incorporation	China
Percentage of Beneficial Ownership	UTime Trading’s subsidiary
Principal Activities	Manufacturing
Gesoper S De R.L. De C.V. (“Gesoper”) [Member]
Variable Interest Entity [Line Items]
Date of Incorporation	Oct. 21, 2020
Place of Incorporation	Mexico
Percentage of Beneficial Ownership	UTime Trading’s subsidiary
Principal Activities	Trading
Firts Communications And Technologies De Mexico S.A. De C.V. (“Firts”) [Member]
Variable Interest Entity [Line Items]
Date of Incorporation	Nov. 12, 2021
Place of Incorporation	Mexico
Percentage of Beneficial Ownership	Gesoper’s subsidiary
Principal Activities	Trading

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Organization and Principal Activities (Details) - Schedule of balance sheet - VIE [Member] - CNY (¥) ¥ in Thousands	Mar. 31, 2023	Mar. 31, 2022
Assets
Cash and cash equivalents	¥ 277	¥ 192
Restricted cash	500	500
Accounts receivable, net	52,241	22,391
Prepaid expenses and other current assets, net	70,202	42,431
Due from related parties	584	1,422
Inventories	16,169	36,018
Total current assets	139,973	102,954
Non-current assets
Property and equipment, net	61,411	38,227
Operating lease right-of-use assets, net	13,030	16,319
Equity method investment
Intangible assets, net	1,677	2,592
Other non-current assets		541
Total non-current assets	76,118	57,679
Total assets	216,091	160,633
Current liabilities
Accounts payable	126,683	74,497
Short-term borrowings	53,935	35,780
Current portion of long-term borrowings	1,080	800
Due to related parties	4,705	3,728
Lease liabilities	3,673	3,360
Other payables and accrued liabilities	48,941	42,423
Income tax payables	18	18
Total current liabilities	239,035	160,606
Non-current liabilities
Long-term borrowings	6,870	8,020
Government grants	8,697
Deferred tax liabilities	295	466
Lease liabilities	10,876	14,549
Total non-current liabilities	26,738	23,035
Total liabilities	¥ 265,773	¥ 183,639

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Organization and Principal Activities (Details) - Schedule of revenue net income and cash flows of VIE and subsidiaries - CNY (¥) ¥ in Thousands	12 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Mar. 31, 2021
Schedule of Revenue Net Income and Cash Flows of Vie and Subsidiaries [Abstract]
Revenue	¥ 200,450	¥ 273,979	¥ 240,742
Net loss	(19,221)	(29,643)	(10,722)
Net cash used in operating activities	(15,269)	(19,806)	(3,020)
Net cash used in investing activities	(2,900)	(5,830)	(2,201)
Net cash provided by financing activities	¥ 18,295	¥ 17,629	¥ 14,000

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Going Concern (Details) ¥ in Thousands, $ in Thousands	12 Months Ended
	Mar. 31, 2023 CNY (¥)	Mar. 31, 2023 USD ($)	Mar. 31, 2022 CNY (¥)	Mar. 31, 2021 CNY (¥)	Mar. 31, 2023 USD ($)	Mar. 31, 2022 USD ($)
Going Concern (Details) [Line Items]
Current assets	¥ 237,000		¥ 192,900		$ 34,500
Current liabilities	245,700		163,100		35,800
Working capital deficit	8,700		29,800		1,300
Accumulated deficit	(175,893)		(88,277)		(25,597)
Incurred net loss	87,600				12,700
Cash outflow from operation	(15,138)	$ (2,203)	(20,865)	¥ (2,521)
Cash [Member]
Going Concern (Details) [Line Items]
Accumulated deficit	(175,900)		(88,200)		$ (25,600)	$ 12,800
Cash outflow from operation	¥ (15,100)	$ (2,200)	(20,900)
Net cash outflow of time deposits			¥ 5,800

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Summary of Significant Accounting Policies (Details) $ in Thousands	12 Months Ended
	Mar. 31, 2023 CNY (¥)	Mar. 31, 2023 USD ($)	Mar. 31, 2022 CNY (¥)	Mar. 31, 2022 USD ($)	Mar. 31, 2021 CNY (¥)	Mar. 31, 2020 CNY (¥)
Summary of Significant Accounting Policies (Details) [Line Items]
Restricted cash	¥ 72,400,000		¥ 67,200,000
Allowances for accounts receivable	100,000		¥ 100,000
Revenue percentage			10.00%	10.00%
Purchase percentage					10.00%
Processing fees	4,010,000	$ 584	¥ 5,980,000		¥ 900,000
Deferred revenue	8,700,000
Other income	¥ 600,000		2,900,000		1,300,000
Warrant period	1 year	1 year
Value added tax percentage	In the PRC, value added tax (the “VAT”) of 17% (before May 1, 2018), 16% (from May 1, 2018 to April 1, 2019) and 13% (after April 1, 2019 until now) on invoice amount is collected in respect of the sales of goods on behalf of tax authorities. The Company reports revenue net of VAT. VIE and its subsidiary in China that are VAT general tax payers are allowed to offset qualified VAT paid against their output VAT liabilities.	In the PRC, value added tax (the “VAT”) of 17% (before May 1, 2018), 16% (from May 1, 2018 to April 1, 2019) and 13% (after April 1, 2019 until now) on invoice amount is collected in respect of the sales of goods on behalf of tax authorities. The Company reports revenue net of VAT. VIE and its subsidiary in China that are VAT general tax payers are allowed to offset qualified VAT paid against their output VAT liabilities.
Advertising expenses				$ 100	100,000
Shipping and handling fees	1,600,000		1,400,000		1,200,000
Research and development cost	16,000,000		14,100,000		7,200,000
Benefit expenses	¥ 1,300,000		1,100,000		400,000
Registered capital percentage	50.00%	50.00%
Reserves and surplus	10.00%	10.00%
Statutory reserve funds					¥ 200,000
Minimum [Member]
Summary of Significant Accounting Policies (Details) [Line Items]
Estimated useful life	3 years	3 years
Maximum [Member]
Summary of Significant Accounting Policies (Details) [Line Items]
Estimated useful life	10 years	10 years
Customer Two [Member]
Summary of Significant Accounting Policies (Details) [Line Items]
Revenue percentage	10.00%	10.00%			10.00%
Revenue	¥ 25,900,000			54,600	¥ 44,700,000
Accounts receivable	11,900,000		6,300,000
Customer One [Member]
Summary of Significant Accounting Policies (Details) [Line Items]
Revenue	44,400,000			$ 116,400	¥ 102,100,000
Accounts receivable	14,000,000		¥ 8,300,000
Customer Three [Member]
Summary of Significant Accounting Policies (Details) [Line Items]
Revenue percentage			10.00%	10.00%
Revenue	25,800,000
Accounts receivable	¥ 9,400,000		¥ 4,300,000
Customer Four [Member]
Summary of Significant Accounting Policies (Details) [Line Items]
Revenue percentage	10.00%	10.00%
Accounts receivable	¥ 8,600,000
Supplier One [Member]
Summary of Significant Accounting Policies (Details) [Line Items]
Purchase percentage			10.00%	10.00%
Processing fees			¥ 39,500
No supplier [Member]
Summary of Significant Accounting Policies (Details) [Line Items]
Purchase percentage	10.00%	10.00%
USD [Member]
Summary of Significant Accounting Policies (Details) [Line Items]
Exchange rate	0.00
RMB [Member]
Summary of Significant Accounting Policies (Details) [Line Items]
Exchange rate	6.8717

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Summary of Significant Accounting Policies (Details) - Schedule of property and straight-line method over their estimated useful lives	12 Months Ended
	Mar. 31, 2023
Public Utility, Property, Plant and Equipment [Line Items]
Office real estate	48 years
Minimum [Member]
Public Utility, Property, Plant and Equipment [Line Items]
Furniture and equipment	3 years
Production and other machineries	5 years
Maximum [Member]
Public Utility, Property, Plant and Equipment [Line Items]
Furniture and equipment	6 years
Production and other machineries	10 years

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Summary of Significant Accounting Policies (Details) - Schedule of disaggregates revenue - CNY (¥) ¥ in Thousands	12 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Mar. 31, 2021
Schedule Of Disaggregates Revenue Abstract
OEM/ODM	¥ 200,450	¥ 273,979	¥ 195,995
In-house brand	98	1,529	6,157
Face mask			44,747
Total	¥ 200,548	¥ 275,508	¥ 246,899

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Summary of Significant Accounting Policies (Details) - Schedule of basic net loss per share ¥ / shares in Units, ¥ in Thousands	12 Months Ended
	Mar. 31, 2023 CNY (¥) ¥ / shares shares	Mar. 31, 2023 $ / shares	Mar. 31, 2022 CNY (¥) ¥ / shares shares	Mar. 31, 2021 CNY (¥) ¥ / shares shares
Numerator:
Net loss attributable to UTime Limited, basic | ¥	¥ (87,616)		¥ (38,833)	¥ (16,627)
Denominator:
Weighted average shares outstanding, basic | shares	11,229,985		8,164,771	4,517,793
Net loss attributable to UTime Limited per ordinary share:
Basic | (per share)	¥ (7.8)	$ (1.14)	¥ (4.76)	¥ (3.68)

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Summary of Significant Accounting Policies (Details) - Schedule of basic net loss per share (Parentheticals) ¥ / shares in Units, ¥ in Thousands	12 Months Ended
	Mar. 31, 2023 CNY (¥) ¥ / shares shares	Mar. 31, 2023 $ / shares	Mar. 31, 2022 CNY (¥) ¥ / shares shares	Mar. 31, 2021 CNY (¥) ¥ / shares shares
Schedule Of Basic Net Loss Per Share Abstract
Net loss attributable to UTime Limited, diluted | ¥	¥ (87,616)		¥ (38,833)	¥ (16,267)
Weighted average shares outstanding, diluted | shares	11,229,985		8,164,771	4,517,793
Diluted | (per share)	¥ (7.80)	$ (1.14)	¥ (4.76)	¥ (3.68)

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Accounts Receivable, Net (Details) - CNY (¥) ¥ in Millions	Mar. 31, 2023	Mar. 31, 2022
Accounts Receivable, Net [Abstract]
Allowance for doubtful accounts	¥ 0.1	¥ 0.1

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Accounts Receivable, Net (Details) - Schedule of accounts receivable, net - CNY (¥) ¥ in Thousands	Mar. 31, 2023	Mar. 31, 2022
Schedule of Accounts Receivable Net [Abstract]
Accounts receivable	¥ 52,444	¥ 22,543
Allowance for doubtful accounts	(136)	(126)
Accounts receivable, net	¥ 52,308	¥ 22,417

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Accounts Receivable, Net (Details) - Schedule of movement of allowance for doubtful accounts - CNY (¥) ¥ in Thousands	12 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Mar. 31, 2021
Schedule of Movement of Allowance For Doubtful Accounts [Abstract]
Balance at beginning of year	¥ 126	¥ 878	¥ 838
Additions for the year			50
Written off for the year		(748)
Foreign currency translation difference	10	(4)	(10)
Balance at the end of year	¥ 136	¥ 126	¥ 878

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Prepaid Expenses and Other Current Assets, Net (Details) - CNY (¥) ¥ in Millions	12 Months Ended
	Mar. 31, 2022	Mar. 31, 2023
Prepaid Expenses and Other Current Assets, Net (Details) [Line Items]
Expire date	Mar. 31, 2022
Other receivables	¥ 5.0	¥ 2.0
Allowance for doubtful accounts on advance to suppliers	1.7	1.7
Prepaid Expenses and Other Current Assets [Member]
Prepaid Expenses and Other Current Assets, Net (Details) [Line Items]
Other receivables	¥ 8.0	¥ 7.0

XML

Prepaid Expenses and Other Current Assets, Net (Details) - Schedule of prepaid expenses and other current assets, net - CNY (¥) ¥ in Thousands	Mar. 31, 2023	Mar. 31, 2022
Schedule of Prepaid Expenses and Other Current Assets Net [Abstract]
Advance to suppliers	¥ 64,827	¥ 40,620
Input GST/IVA	412	568
Receivables from supply chain service provider	7,648	4,829
Expected return assets	1	1
Other receivables	24,282	21,460
Allowance for doubtful accounts	(1,662)	(1,663)
Prepaid expenses and other current assets, net	¥ 95,508	¥ 65,815

XML

Prepaid Expenses and Other Current Assets, Net (Details) - Schedule of other current assets - CNY (¥) ¥ in Thousands	12 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Mar. 31, 2021
Schedule of other current assets [Abstract]
Balance at beginning of year	¥ 1,663	¥ 674	¥ 4,006
Additions (reversal) for the year		3,406	(886)
Written off for the year		(2,359)	(2,446)
Foreign currency translation difference	(1)	(58)
Balance at the end of year	¥ 1,662	¥ 1,663	¥ 674

XML

Inventories (Details) - Schedule of inventory - CNY (¥) ¥ in Thousands	12 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Schedule Of Inventory Abstract
Raw materials	¥ 12,294	¥ 32,004
Work in progress	2,972	1,326
Finished goods	11,217	13,533
Total inventory, gross	26,483	46,863
Inventory reserve	(10,314)	(10,792)
Total inventory, net	¥ 16,169	¥ 36,071

XML

Inventories (Details) - Schedule of inventory reserve - CNY (¥) ¥ in Thousands	12 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Mar. 31, 2021
Schedule Of Inventory Reserve Abstract
Balance at beginning of year	¥ 10,792	¥ 13,393	¥ 5,962
Additional charge (written off), net	407	(2,467)	7,589
Foreign currency translation difference	(885)	(134)	(158)
Balance at the end of year	¥ 10,314	¥ 10,792	¥ 13,393

XML

Property and Equipment, Net (Details) ¥ in Thousands, $ in Millions	12 Months Ended
	Mar. 31, 2023 CNY (¥)	Mar. 31, 2022 CNY (¥)	Mar. 31, 2021 USD ($)
Property, Plant and Equipment [Abstract]
Computer software with net values	¥ 20	¥ 40
Depreciation expenses	¥ 4,600	¥ 3,300	$ 3.2

XML

Property and Equipment, Net (Details) - Schedule of property and equipment, net - CNY (¥) ¥ in Thousands	Mar. 31, 2023	Mar. 31, 2022
Property, Plant and Equipment [Line Items]
Property and equipment, gross	¥ 82,278	¥ 55,808
Less: accumulated depreciation	20,849	17,538
Property and equipment, net	61,429	38,270
Office real estate [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	20,996	20,995
Furniture and equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	6,267	5,100
Production and other machineries [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	¥ 55,015	¥ 29,713

XML

Property and Equipment, Net (Details) - Schedule of production and other machineries lease out under operating lease - CNY (¥) ¥ in Thousands	Mar. 31, 2023	Mar. 31, 2022
Schedule of Other Current Assets [Abstract]
Cost	¥ 29,578	¥ 29,578
Less: accumulated depreciation and amortization	12,094	9,436
Net book value	¥ 17,484	¥ 20,142

XML

Lease Liabilities (Details) - CNY (¥) ¥ in Millions	12 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Mar. 31, 2021
Lease Liabilities (Details) [Line Items]
Operating lease income	¥ 3.1	¥ 2.9	¥ 2.4
Depreciation charges	¥ 2.9		¥ 2.3
Minimum [Member]
Lease Liabilities (Details) [Line Items]
Lease period	1 year
Maximum [Member]
Lease Liabilities (Details) [Line Items]
Lease period	3 years
Corresponding Equipment [Member]
Lease Liabilities (Details) [Line Items]
Depreciation charges		¥ 2.7

XML

Lease Liabilities (Details) - Schedule of future minimum rental payments for operating leases ¥ in Thousands	Mar. 31, 2023 CNY (¥)
Schedule of Future Minimum Rental Payments for Operating Leases [Abstract]
2024	¥ 804
2025	201
Total	¥ 1,005

XML

Lease Liabilities (Details) - Schedule of lease expense - CNY (¥) ¥ in Thousands	12 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Mar. 31, 2021
Schedule of Lease Expense [Abstract]
Operating lease cost	¥ 3,289	¥ 2,265	¥ 1,016
Short-term lease cost		973	1,163
Lease cost	¥ 3,289	¥ 3,238	¥ 2,179

XML

Lease Liabilities (Details) - Schedule of cash flow supplemental disclosures - CNY (¥) ¥ in Thousands	12 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Mar. 31, 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflow from operating leases	¥ 4,514	¥ 1,249	¥ 1,325

XML

Lease Liabilities (Details) - Schedule of lease liabilities - Mar. 31, 2023 ¥ in Thousands, $ in Thousands	CNY (¥)	USD ($)
Schedule of Lease Liabilities [Abstract]
2024	¥ 4,575	$ 666
2025	4,575	666
2026 and after	7,356	1,071
Total lease payments	16,506	2,403
Less: Interest	(1,957)	(285)
Present value of lease liabilities	14,549	2,118
Less current portion, record in current liabilities	(3,673)	(535)
Present value of lease liabilities	¥ 10,876	$ 1,583

XML

Lease Liabilities (Details) - Schedule of weighted average remaining lease terms and discount rates for all operating leases	Mar. 31, 2023	Mar. 31, 2022
Schedule of Weighted Average Remaining Lease Terms and Discount Rates for all Operating Leases [Abstract]
Weighted average remaining lease term (years)	3 years 7 months 9 days	4 years 6 months 21 days
Weighted average discount rate	7.00%	7.03%

XML

Equity Method Investment (Details) - CNY (¥) ¥ in Millions	12 Months Ended
	Mar. 31, 2021	Mar. 31, 2018
Equity Method Investments and Joint Ventures [Abstract]
Aggregate amount		¥ 1.4
Percentage of equity interest		35.00%
Impairment losses	¥ 0.8

XML

Equity Method Investment (Details) - Schedule of equity method investments ¥ in Thousands	Mar. 31, 2023 CNY (¥)	Mar. 31, 2023 USD ($)	Mar. 31, 2022 CNY (¥)
Schedule Of Equity Method Investments Abstract
Cost	¥ 1,425		¥ 1,425
Less: accumulated impairment	(1,425)		(1,425)
Equity method investment, net

XML

Other Non-Current Assets (Details) - Schedule of other non-current assets ¥ in Thousands	12 Months Ended
	Mar. 31, 2023 CNY (¥)	Mar. 31, 2022 CNY (¥)	Mar. 31, 2023 USD ($)
Schedule of Other Non Current Assets [Abstract]
Prepayment for property and equipment, and intangible asset		¥ 541
Total other non-current assets		¥ 541

XML

Borrowings (Details) $ in Millions										1 Months Ended										12 Months Ended
	Jan. 10, 2023 CNY (¥)	Dec. 07, 2022 CNY (¥)	Dec. 02, 2022 CNY (¥)	Jul. 06, 2022	Dec. 02, 2021 CNY (¥)	Nov. 18, 2021 CNY (¥)	Aug. 23, 2021 CNY (¥)	Nov. 18, 2020 CNY (¥)	Nov. 13, 2020 CNY (¥)	Dec. 31, 2022 CNY (¥)	Nov. 24, 2022 CNY (¥)	Aug. 31, 2022 CNY (¥)	May 19, 2022 CNY (¥)	May 18, 2022 CNY (¥)	Nov. 30, 2021 CNY (¥)	Aug. 31, 2021 CNY (¥)	Jul. 30, 2021 CNY (¥)	Jun. 29, 2021 CNY (¥)	Nov. 30, 2020 CNY (¥)	Mar. 31, 2023 CNY (¥)	Mar. 31, 2022 CNY (¥)	Mar. 31, 2023 USD ($)	Jul. 31, 2021 CNY (¥)	Jul. 19, 2021 CNY (¥)
Borrowings (Details) [Line Items]
Working capital						¥ 22,000,000
Interest rate		3.75%				5.5%
Installment payment																				¥ 1,000,000
Outstanding loan balance, current																				1,820,000	¥ 1.58
Non-current liabilities																				6,440,000	5,530,000
Current liabilities																				245,700,000	163,100,000	$ 35.8
China Resources Bank of Zhuhai Co., Ltd. [Member]
Borrowings (Details) [Line Items]
Borrowing amount									¥ 22,000,000	¥ 2,000,000	¥ 22,000,000
Date description									two-year
Working capital					¥ 2,000,000			¥ 22,000,000
Interest rate					8.0%			5.5%		8.0%	5.5%
TCL Factoring [Member]
Borrowings (Details) [Line Items]
Borrowing amount																			¥ 20,000,000
TCL Factoring [Member] | UTime GZ [Member]
Borrowings (Details) [Line Items]
Factoring agreement amount																				7,800,000	4,980,000
TCL Factoring [Member] | Minimum [Member]
Borrowings (Details) [Line Items]
Interest rate																			8.0%
TCL Factoring [Member] | Maximum [Member]
Borrowings (Details) [Line Items]
Interest rate																			9.0%
Bank of Communications [Member]
Borrowings (Details) [Line Items]
Borrowing amount																							¥ 10,000,000
Working capital																								¥ 3,000,000
Interest rate				4.6%
Baosheng County Bank [Member]
Borrowings (Details) [Line Items]
Borrowing amount												¥ 3,000,000
Date description							September 2021 to August 2022,									July 28, 2021 to July 28, 2022
Working capital							¥ 3,000,000
Interest rate							8.0%					8.0%
Credit facility amount																¥ 3,000,000
Monthly installment							¥ 100,000
Installment payment												¥ 100,000
PingAn Bank Co., Ltd [Member]
Borrowings (Details) [Line Items]
Borrowing amount															¥ 2,000,000
Interest rate															12.96%
Term in years															3 years
Balance loan amount																				2,000,000
Shenzhen Nanshan Baosheng County Bank Co., Ltd [Member]
Borrowings (Details) [Line Items]
Credit facility												¥ 3,000,000
WeBank Co., Ltd. [Member]
Borrowings (Details) [Line Items]
Borrowing amount														¥ 3
Interest rate													9.45%	11.34%
Balance loan amount																				1,700,000
Credit facility													¥ 1,990,000
Mr Bao [Member]
Borrowings (Details) [Line Items]
Interest rate													9%
Balance loan amount																				6,400,000	7,000,000
Credit facility													¥ 1,000,000
Installment payment																				1,990,000
China CITIC Bank [Member]
Borrowings (Details) [Line Items]
Borrowing amount	¥ 3
Interest rate	4.35%
Industrial and Commercial Bank of China (“ICBC”) Loan [Member]
Borrowings (Details) [Line Items]
Borrowing amount		¥ 5	¥ 5
Interest rate			3.75%
Shenzhen Rural Commercial Bank [Member]
Borrowings (Details) [Line Items]
Outstanding loan balance, current																				840,000	560,000
Shenzhen Rural Commercial Bank [Member] | Minimum [Member]
Borrowings (Details) [Line Items]
Borrowing amount																		¥ 7,000,000
Monthly installment																		¥ 70,000.00
Term in years																		3 years
Current liabilities																					240,000
Shenzhen Rural Commercial Bank [Member] | Maximum [Member]
Borrowings (Details) [Line Items]
Borrowing amount																	¥ 2,000,000
Interest rate																		4.5%
Monthly installment																	¥ 20,000.00
Term in years																	3 years
Shenzhen Rural Commercial Bank Loan One [Member] | Minimum [Member]
Borrowings (Details) [Line Items]
Non-current liabilities																				1,820,000	¥ 1,580,000
Current liabilities																				¥ 240,000

XML

Borrowings (Details) - Schedule of short term and long term borrowings - CNY (¥) ¥ in Thousands		Mar. 31, 2023		Mar. 31, 2022
Short-term borrowings
Short-term borrowings		¥ 53,935		¥ 35,780
Long-term borrowings
Long-term borrowings		7,950		8,820
Current portion of long-term borrowings		1,080		800
Non-current portion of long-term borrowings		6,870		8,020
China Resources Bank of Zhuhai Co., Ltd. loan 1 [Member]
Short-term borrowings
Short-term borrowings	[1]			22,000
Secured loan 2 [Member]
Short-term borrowings
Short-term borrowings	[2]	7,800		4,980
Bank of Communications [Member]
Short-term borrowings
Short-term borrowings	[3]			2,500
Baosheng County Bank [Member]
Short-term borrowings
Short-term borrowings	[4]			2,300
China Resources Bank of Zhuhai Co., Ltd. loan 2 [Member]
Short-term borrowings
Short-term borrowings	[5]			2,000
PingAn Bank Co., Ltd. [Member]
Short-term borrowings
Short-term borrowings	[6]	2,000		2,000
China Resources Bank of Zhuhai Co., Ltd. Loan 3 [Member]
Short-term borrowings
Short-term borrowings	[7]	22,000
China Resources Bank of Zhuhai Co., Ltd. Loan 4 [Member]
Short-term borrowings
Short-term borrowings	[8]	2,000
Baosheng County Bank 2 [Member]
Short-term borrowings
Short-term borrowings	[9]	2,400
WeBank Co., Ltd. 1 [Member]
Short-term borrowings
Short-term borrowings	[10]	1,990
WeBank Co., Ltd. 2 [Member]
Short-term borrowings
Short-term borrowings	[11]	1,000
WeBank Co., Ltd. 3 [Member]
Short-term borrowings
Short-term borrowings	[12]	1,745
China Resources SZITIC Trust Company Limited [Member]
Short-term borrowings
Short-term borrowings	[13]	3,000
Industrial and Commercial Bank of China (“ICBC”) Loan [Member]
Short-term borrowings
Short-term borrowings	[14]	5,000	[15]
Shenzhen Rural Commercial Bank loan 3 [Member]
Long-term borrowings
Long-term borrowings	[16]	6,370		7,000
Shenzhen Rural Commercial Bank loan 4 [Member]
Long-term borrowings
Long-term borrowings	[17]	¥ 1,580		¥ 1,820

[1] On November 13, 2020, UTime SZ entered into a credit agreement with China Resources Bank of Zhuhai Co., Ltd., according to which China Resources Bank of Zhuhai Co., Ltd. agreed to provide UTime SZ with a credit facility of up to RMB22 million with a two-year term from November 13, 2020 to November 13, 2022. On November 18, 2020, UTime SZ entered into a working capital loan agreement with China Resources Bank of Zhuhai Co., Ltd. to borrow RMB22 million as working capital for one year at an annual effective interest rate of 5.5%. The Company repaid the loan on November 18, 2021 and borrowed RMB22 million as working capital for one year at an annual effective interest rate of 5.5% on November 22, 2021. The Company repaid the loan on November 21, 2022. The loan is secured by the office owned by UTime SZ and guaranteed by UTime GZ, Mr. Bao and his spouse.

[2] In November 2020, UTime SZ and TCL Commercial Factoring (Shenzhen) Company Limited (“TCL Factoring”) executed a factoring agreement, pursuant to which UTime SZ received a revolving credit facility and may submit unlimited number of loan applications, so long as, among other conditions, the balance of the loan does not exceed the credit line. The annual effective interest rate range is from 8.0% to 9.0%. TCL Factoring has the right of recourse to UTime SZ, and as a result, these transactions were recognized as secured borrowings. UTime SZ agreed to pledge to TCL Factoring its accounts receivable from TCL Mobile Communication Company Limited (“TCL Huizhou”). This credit facility was also guaranteed respectively by Mr. Bao and UTime GZ, each for an amount up to RMB20 million. UTime SZ agreed not to withdraw, utilize or dispose the accounts receivables paid to it by TCL Huizhou without the prior consent of TCL Factoring. As of March 31, 2022 and 2023, UTime SZ obtained loans under the factoring agreement at the total amount of RMB4.98 million and RMB7.8 million, respectively.

[3] In July 2021, UTime SZ entered into a credit agreement with Bank of Communications to borrow RMB10 million for an unfixed term. On July 19, 2021, UTime SZ obtained a loan under this working capital loan agreement at the amount of RMB3 million which is due on July 6, 2022. The loan was guaranteed by Mr. Bao and his spouse. The loan bears a fixed interest rate of 4.6% per annum and will be due on July 6, 2022. The loan was fully repaid in July 2022.

[4] In August 2021, UTime SZ entered into a credit line agreement with Shenzhen Nanshan Baosheng County Bank Co., Ltd. (“Baosheng County Bank”) according to which Baosheng County Bank agreed to provide UTime SZ with a credit facility of up to RMB3 million with a one-year term from July 28, 2021 to July 28, 2022. On August 23, 2021, UTime SZ entered into a working capital loan agreement with Baosheng County Bank to borrow RMB3 million as working capital for one year at an annual effective interest rate of 8.0%. It is payable at monthly installment of RMB0.1 million from September 2021 to August 2022, with a balloon payment of the remaining balance in the last installment. The loan was fully repaid in August 2022.

[5] On December 2, 2021, UTime SZ entered into a working capital loan agreement with China Resources Bank of Zhuhai Co., Ltd., to borrow RMB2 million as working capital at an annual effective interest rate of 8.0%. The loan was repaid in October 2022.

[6] In November 2021, UTime SZ entered into a credit agreement with PingAn Bank Co., Ltd. to borrow RMB2 million for a term of 3 years, with an annual effective rate of 12.96%. The loan is guaranteed by Mr. Bao and his spouse. As of March 31, 2023 UTime SZ obtained loans under the credit agreement at the total amount of RMB2 million which will be due on November 2023.

[7] On November 24, 2022, UTime SZ entered into a working capital loan agreement with China Resources Bank of Zhuhai Co., Ltd., to borrow RMB22 million as working capital at an annual effective interest rate of 5.5%. The loan is secured by the office owned by UTime SZ and guaranteed by UTime GZ, Mr. Bao and his spouse. The loan will be due in November 2023.

[8] On December 5, 2022, UTime SZ entered into a working capital loan agreement with China Resources Bank of Zhuhai Co., Ltd., to borrow RMB2 million as working capital at an annual effective interest rate of 8.0%. The loan will be due on October 25, 2023.

[9] On August 31, 2022, UTime SZ entered into a credit line agreement with Shenzhen Nanshan Baosheng County Bank Co., Ltd. (“Baosheng County Bank”) according to which Baosheng County Bank agreed to provide UTime SZ with a credit facility of up to RMB3 million with a one-year term from August 31, 2022 to August 31, 2023. On August 31, 2022, UTime SZ entered into a working capital loan agreement with Baosheng County Bank to borrow RMB3 million as working capital for one year at an annual effective interest rate of 8.0%. It is payable at monthly installment of RMB0.1 million from September 2021 to August 2022, with a balloon payment of the remaining balance in the last installment. The loan is secured by the office owned by UTime SZ and guaranteed by UTime Guangxi, Mr. Bao and his spouse.

[10] On May 19, 2022, UTime SZ entered into a credit line agreement with WeBank Co., Ltd. (“WeBank”) according to which WeBank agreed to provide UTime SZ with a credit facility of up to RMB1.99 million with a two-year term from May 19, 2022 to May 19, 2024, with an annual effective interest rate of 9.45%. The loan is guaranteed by Mr. Bao. As of March 31, 2023 UTime SZ loans under the credit agreement was RMB1.99 million.

[11] On May 19, 2022, UTime SZ entered into a credit line agreement with WeBank Co., Ltd. (“WeBank”) according to which WeBank agreed to provide UTime SZ with a credit facility of up to RMB1 million with a two-year term from May 19, 2022 to May 19, 2024, with an annual effective interest rate of 9%. The loan is guaranteed by Mr. Bao. As of March 31, 2023 UTime SZ loans under the credit agreement was RMB1 million.

[12] On May 18, 2022, UTime SZ entered into a credit line agreement with WeBank Co., Ltd. (“WeBank”) according to which WeBank agreed to provide UTime SZ with a credit facility of up to RMB3 million with a two-year term from May 18, 2022 to May 18, 2024, with an annual effective interest rate of 11.34%. The loan is guaranteed by Mr. Bao. As of March 31, 2023 UTime SZ loans under the credit agreement was RMB1.7 million.

[13] On January 10, 2023, UTime SZ entered into a working capital loan agreement with China CITIC Bank, to borrow RMB3 million as working capital at an annual effective interest rate of 4.35%. The loan will be due in January 2024.

[14] On December 2, 2022, UTime SZ entered into a loan agreement with Industrial and Commercial Bank of China (“ICBC”), to borrow RMB 5 million as working capital at an annual effective interest rate of 3.75%. The loan will be due in 12 months.

[15] On December 7, 2022, UTime SZ entered into a loan agreement with Industrial and Commercial Bank of China (“ICBC”), to borrow RMB 5 million as working capital at an annual effective interest rate of 3.75%. The loan will be due in 12 months.

[16] On June 29, 2021, UTime SZ entered into a credit agreement with Shenzhen Rural Commercial Bank to borrow RMB7 million for a term of 3 years, which is payable at monthly installment of RMB0.07 million from August 2022 to July 2024, with a balloon payment of the remaining balance in the last installment. The loan bears a fixed interest rate of 4.5% per annum. The loan was secured by real estate owned by Mr. Bao and guaranteed by Mr. Bao. As of March 31, 2022 and 2023, the balance of the loan was RMB7 million and RMB6.4 million, respectively. Out of the total outstanding loan balance, current portion amounted were RMB0.56 million and RMB0.84 million, which is presented as current liabilities in the consolidated balance sheet and the remaining balance of RMB6.44 million and RMB5.53 million, which is presented as non-current liabilities in the consolidated balance sheet as of March 31, 2022 and 2023, respectively.

[17] In July 2021, UTime SZ entered into a credit agreement with Shenzhen Rural Commercial Bank to borrow RMB2 million for a term of 3 years, which is payable at monthly installment of RMB0.02 million from July 2021 to July 2024, with a balloon payment of the remaining balance in the last installment. The loan is secured by real estate owned by Mr. Bao and guaranteed by Mr. Bao. As of March 31, 2022 and 2023, the balance of the loan are RMB1.82 million and RMB1.58 million, respectively. Out of the total outstanding loan balance, current portion amounted were RMB0.24 million and RMB0.24 million, which is presented as current liabilities in the consolidated balance sheet and the remaining balance of RMB1.82 million and RMB1.58 million, which is presented as non-current liabilities in the consolidated balance sheet as of March 31, 2022 and 2023, respectively.

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Other Payables and Accrued Liabilities (Details) - CNY (¥) ¥ in Millions	Mar. 31, 2023	Mar. 31, 2022
Supply chain service provider [Member]
Other Payables and Accrued Liabilities (Details) [Line Items]
Advance and services	¥ 6.8	¥ 6.8
Advance refundable to a customer [Member]
Other Payables and Accrued Liabilities (Details) [Line Items]
Advance and services	2.2	3.4
Materials Provided Customer [Member]
Other Payables and Accrued Liabilities (Details) [Line Items]
Advance and services		¥ 2.3
Advances refundable to a vendor [Member]
Other Payables and Accrued Liabilities (Details) [Line Items]
Advance and services	¥ 3.0

XML

Other Payables and Accrued Liabilities (Details) - Schedule of other payables and accrued liabilities - CNY (¥) ¥ in Thousands	Mar. 31, 2023	Mar. 31, 2022
Schedule Of Other Payables And Accrued Liabilities Abstract
Advance from customers	¥ 17,087	¥ 16,607
Accrued payroll	11,910	10,220
VAT payable	7,292	1,484
Refund liabilities	1	1
Product warranty	50	50
Other payables	18,432	15,786
Total	¥ 54,772	¥ 44,148

XML

Other Expenses/(Income), Net (Details) - Schedule of other expenses/(income), net - CNY (¥) ¥ in Thousands	12 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Mar. 31, 2021
Schedule Of Other Expenses Income Net Abstract
Exchange losses	¥ (3,179)	¥ 2,316	¥ 3,703
Provision for doubtful accounts, net		3,406	(836)
Impairment of intangible asset		348
Government grants	(594)	(2,851)	(1,289)
Loss on equity method investment			833
Others	79	109	464
Total	¥ (3,694)	¥ 3,328	¥ 2,875

XML

Income Tax Benefits (Details) - CNY (¥)	12 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Mar. 31, 2021	Sep. 04, 2019
Income Tax Benefits (Details) [Line Items]
Net loss before taxes (in Yuan Renminbi)	¥ 90,200,000	¥ 39,400,000	¥ 17,000,000
Income tax description	The subsidiary, VIE and subsidiary of VIE in the PRC are subject to a uniform income tax rate of 25% for the years presented. UTime SZ is regarded as a Certified High and New Technology Enterprise (“HNTE”) and entitled to a favorable statutory tax rate of 15%. Preferential tax treatment of UTime SZ as HNTE from November 2, 2015 to December 23, 2024 has been granted by the relevant tax authorities. UTime SZ is entitled to a preferential tax rate of 15% which is subject to review by State Taxation Administration every three years. As a result of these preferential tax treatments, the reduced tax rates applicable to UTime SZ for the years ended March 31, 2021, 2022 and 2023 are 15%. However, UTime SZ has not enjoyed the above-mentioned preferential tax treatments for the years ended March 31, 2021, 2022 and 2023 due to its loss position and as such there is no impact of these tax holidays on net loss per share.
Additional tax deductions	50.00%
Additional tax deductions, description	The additional tax deduction has been increased from 50% of the qualified research and development expenses to 75%, effective from January 1, 2018 according to a tax incentives policy promulgated by the State Tax Bureau of the PRC in September 2018 (“Super Deduction”).
Additional tax deduction rate	75.00%
Qualified research and development expenses rate	100.00%
Withholding tax rate	10.00%
Dividend of tax rate	10.00%
Equity interest, percentage	25.00%			100.00%
Operating loss (in Yuan Renminbi)	¥ 152	116,200,000
Valuation allowance (in Yuan Renminbi)	109.8	83,200,000
Carryforward amount (in Yuan Renminbi)	¥ 42.2	¥ 33,900,000
Income tax benefit	50.00%
underpayment of taxes (in Yuan Renminbi)	¥ 100,000
Hong Kong [Member]
Income Tax Benefits (Details) [Line Items]
Income tax rate percentage, description	The first HK$2 million of profits earned will be taxed at 8.25%, while the remaining profits will continue to be taxed at the existing 16.5% tax rate.
Dividend of tax rate	5.00%
India [Member]
Income Tax Benefits (Details) [Line Items]
Income tax rate	25.00%
Mexico [Member]
Income Tax Benefits (Details) [Line Items]
Income tax rate	30.00%
PRC [Member]
Income Tax Benefits (Details) [Line Items]
Income tax rate	25.00%

XML

Income Tax Benefits (Details) - Schedule of deferred components of income taxes - CNY (¥) ¥ in Thousands	12 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Mar. 31, 2021
Schedule of Deferred Components of Income Tax Expense [Abstract]
Current tax benefits			¥ 364
Deferred tax benefit	171	46
Total income tax benefit	¥ 171	¥ 46	¥ 364

XML

Income Tax Benefits (Details) - Schedule of deferred tax assets and liabilities - CNY (¥) ¥ in Thousands	12 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Deferred income tax assets (liabilities) :
Impairment on receivables	¥ 450	¥ 2,590
Inventories	1,889	3,358
Deferred revenue	2,174	977
Accrued expenses and employee benefits	3,258	1,411
Equity method investment and others		1,075
Net operating loss carry forwards	27,977	21,678
Total gross deferred tax assets	35,748	31,089
Less: valuation allowances	(32,490)	(27,747)
Total deferred tax assets, net of valuation allowance	3,258	3,342
Prepaid expenses and other current assets	(3,258)	(1,299)
Unrealized foreign exchange difference and others		(2,217)
Amortization & impairment of intangible asset	(295)	(292)
Deferred tax liabilities	¥ (295)	¥ (466)

XML

Income Tax Benefits (Details) - Schedule of income tax benefits	12 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Mar. 31, 2021
Schedule of Effective Income Tax Rate Reconciliation [Abstract]
Statutory rate in PRC	25.00%	25.00%	25.00%
Effect of preferential tax treatment	(1.00%)	(4.00%)	(2.00%)
Effect of different tax jurisdiction	(19.00%)	(4.00%)	(6.00%)
Effect of permanence differences		(2.00%)	(1.00%)
Research and development super-deduction	2.00%	4.00%	5.00%
Changes in valuation allowance	(7.00%)	(19.00%)	(21.00%)
Over provision in prior year			2.00%
Total income tax benefits			2.00%

XML

Related Parties Balances and Transactions (Details) - Sep. 17, 2021 ¥ in Millions, $ in Millions	CNY (¥)	USD ($)
Mr Bao [Member]
Related Parties Balances and Transactions (Details) [Line Items]
Borrowed amount	¥ 3.0	$ 0.5

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Related Parties Balances and Transactions (Details) - Schedule of related parties transactions	12 Months Ended
	Mar. 31, 2023
Mr. Bao [Member]
Related Party Transaction [Line Items]
Related parties, relationship	Controlling shareholder of the Company
Mr. He [Member]
Related Party Transaction [Line Items]
Related parties, relationship	Beneficial shareholder of the Company
Mr. Yu [Member]
Related Party Transaction [Line Items]
Related parties, relationship	Chief Financial Officer of the Company
Philectronics [Member]
Related Party Transaction [Line Items]
Related parties, relationship	An equity method investee of the Company
Grandsky Phoenix Limited [Member]
Related Party Transaction [Line Items]
Related parties, relationship	100% owned by Mr. Bao

XML

Related Parties Balances and Transactions (Details) - Schedule of due from related parties - CNY (¥) ¥ in Thousands	12 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Short-Term Debt [Line Items]
Due from related parties	¥ 584	¥ 1,422
Philectronics [Member]
Short-Term Debt [Line Items]
Due from related parties	536	486
Mr. Bao [Member]
Short-Term Debt [Line Items]
Due from related parties		47
Grandsky Phoenix Limited [Member]
Short-Term Debt [Line Items]
Due from related parties		889
Mr. He [Member]
Short-Term Debt [Line Items]
Due from related parties	¥ 48

XML

Related Parties Balances and Transactions (Details) - Schedule of due to related parties - CNY (¥) ¥ in Thousands	Mar. 31, 2023	Mar. 31, 2022
Related Parties Balances and Transactions (Details) - Schedule of due to related parties [Line Items]
Due to related parties	¥ 5,500	¥ 4,499
Mr. Bao [Member]
Related Parties Balances and Transactions (Details) - Schedule of due to related parties [Line Items]
Due to related parties	4,779	3,819
Philectronics [Member]
Related Parties Balances and Transactions (Details) - Schedule of due to related parties [Line Items]
Due to related parties	482	482
Grandsky Phoenix Limited [Member]
Related Parties Balances and Transactions (Details) - Schedule of due to related parties [Line Items]
Due to related parties	¥ 239	¥ 198

XML

Shareholders’ Equity (Details) $ / shares in Units, $ in Thousands, ¥ in Millions				12 Months Ended
	Nov. 07, 2023 shares	Apr. 08, 2021 CNY (¥) shares	Apr. 08, 2021 USD ($) $ / shares shares	Mar. 31, 2023 USD ($) $ / shares shares	Sep. 09, 2022 shares	Mar. 31, 2022 shares	Mar. 31, 2021 shares
Shareholders’ Equity (Details) [Line Items]
Ordinary shares authorized				140,000,000		140,000,000	140,000,000
Ordinary shares issued				13,567,793		8,267,793	4,517,793
Ordinary shares outstanding				13,567,793		8,267,793	4,517,793
Public price per share (in Dollars per share) | $ / shares			$ 4
Gross proceeds (in Dollars) | $			$ 15,000
Offering fees and expenses		¥ 88.2	$ 13,900
Ordinary shares issued				8,267,793
Ordinary shares outstanding				8,267,793
Common stock for issuance					5,300,000
Common stock issued and granted	5,300,000
Common stock granted fair value (in Dollars) | $				$ 9,301,500
Share issuance per share (in Dollars per share) | $ / shares				$ 1.755
Grandsky Phoenix Limited [Member]
Shareholders’ Equity (Details) [Line Items]
Repurchase of ordinary shares		3,750,000	3,750,000

XML

Revenue and Geography Information (Details) ¥ in Millions, $ in Millions	Mar. 31, 2023 CNY (¥)	Mar. 31, 2023 USD ($)	Mar. 31, 2022 CNY (¥)
Revenue and Geography Information (Details) [Line Items]
Other non-current assets	¥ 237.0	$ 34.5	¥ 192.9
Intangible assets	1.8		2.6
Other Current Assets [Member]
Revenue and Geography Information (Details) [Line Items]
Other non-current assets			¥ 0.5

XML

Revenue and Geography Information (Details) - Schedule of revenue and geography information - CNY (¥) ¥ in Thousands	12 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Mar. 31, 2021
Segment Reporting Information [Line Items]
Total	¥ 200,547	¥ 275,508	¥ 246,899
Feature phone [Member]
Segment Reporting Information [Line Items]
Total	106,279	111,066	144,032
Smart phone [Member]
Segment Reporting Information [Line Items]
Total	73,819	154,143	56,885
Face mask [Member]
Segment Reporting Information [Line Items]
Total			44,747
Others [Member]
Segment Reporting Information [Line Items]
Total	¥ 20,449	¥ 10,299	¥ 1,235

XML

Revenue and Geography Information (Details) - Schedule of company’s sales breakdown based on location - CNY (¥) ¥ in Thousands	12 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Mar. 31, 2021
Revenues from External Customers and Long-Lived Assets [Line Items]
Total	¥ 200,547	¥ 275,508	¥ 246,899
Mainland China [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total	82,481	70,314	112,400
Hong Kong [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total	14,228	18,949	30,030
India [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total	97	1,529	6,157
Africa [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total	39,515	25,905	19,536
The United States [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total	18,158	28,154	17,277
Mexico [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total	29,085	12,372
South America [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total	951	118,285	45,743
Others [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total	¥ 16,032		¥ 15,756

XML

Revenue and Geography Information (Details) - Schedule of location of company’s long-lived assets - CNY (¥) ¥ in Thousands	Mar. 31, 2023	Mar. 31, 2022
Revenue, Major Customer [Line Items]
Total	¥ 74,460	¥ 54,589
PRC [Member]
Revenue, Major Customer [Line Items]
Total	74,438	54,543
India [Member]
Revenue, Major Customer [Line Items]
Total	19	46
Mexico [Member]
Revenue, Major Customer [Line Items]
Total	¥ 3

XML

Condensed Financial Information of the Parent Company (Details) - CNY (¥) ¥ in Millions	12 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Condensed Financial Information of the Parent Company (Details) [Line Items]
Totaling amount	¥ 72.1	¥ 71.9
Financing services	19.0
IPO [Member]
Condensed Financial Information of the Parent Company (Details) [Line Items]
Financing services	¥ 88.2

XML

Condensed Financial Information of the Parent Company (Details) - Schedule of balance sheet - Parent Company [Member] - CNY (¥) ¥ in Thousands	Mar. 31, 2023	Mar. 31, 2022
Current assets
Cash and cash equivalents	¥ 2	¥ 1
Prepaid expenses and other current assets	25,109	23,195
Inter-company receivable	79,393	73,345
Non-current assets
Investment in subsidiary	(18,929)	1,610
Total assets	85,575	98,151
Current liabilities
Inter-company payable	35,634	31,492
Due to related parties	313	289
Other payables and accrued liabilities	5,539	1,382
Total liabilities	41,486	33,163
Shareholders’ equity
Preference share, par value US$0.0001; Authorized:10,000,000 shares; none issued and outstanding as at As of March 31, 2022 and As of March 31, 2023, respectively
Ordinary shares, par value US$0.0001; Authorized:140,000,000 shares; Issued and outstanding: 8,267,793 shares as at March 31,2022 and 13,567,793 shares as at March 31, 2023	9	5
Additional paid-in capital	216,504	152,236
Accumulated deficit	(175,893)	(88,277)
Accumulated other comprehensive income	3,469	1,024
Total shareholder’s equity	44,089	64,988
Total liabilities and shareholders’ equity	¥ 85,575	¥ 98,151

XML

Condensed Financial Information of the Parent Company (Details) - Schedule of balance sheet (Parentheticals) - Parent Company [Member] - $ / shares	Mar. 31, 2023	Mar. 31, 2022
Schedule of Balance Sheet [Abstract]
Preferred share, par value (in Dollars per share)	$ 0.0001	$ 0.0001
Preferred share, shares authorized	10,000,000	10,000,000
Preferred share, shares issued	0	0
Preferred share, shares outstanding	0	0
Ordinary shares, par value (in Dollars per share)	$ 0.0001	$ 0.0001
Ordinary shares, shares authorized	140,000,000	140,000,000
Ordinary shares, shares issued	13,567,793	8,267,793
Ordinary shares, shares outstanding	13,567,793	8,267,793

XML

Condensed Financial Information of the Parent Company (Details) - Schedule of comprehensive loss - CNY (¥) ¥ in Thousands	12 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Mar. 31, 2021
Schedule of Comprehensive Loss [Abstract]
Loss from equity method investments	¥ (18,396)	¥ (32,350)	¥ (12,618)
Operating expenses	(69,220)	(6,483)	(4,009)
Net loss	(87,616)	(38,833)	(16,627)
Foreign currency translation difference	2,445	(377)	1,868
Comprehensive loss	¥ (85,171)	¥ (39,210)	¥ (14,759)

XML

Condensed Financial Information of the Parent Company (Details) - Schedule of cash flows ¥ in Thousands, $ in Thousands	12 Months Ended
	Mar. 31, 2023 CNY (¥)	Mar. 31, 2023 USD ($)	Mar. 31, 2022 CNY (¥)		Mar. 31, 2021 CNY (¥)
CASH FLOW FROM OPERATING ACTIVTIES
Net loss	¥ (87,616)		¥ (38,833)		¥ (16,627)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Equity loss of subsidiaries	18,396		32,350		12,618
Share-based compensation and expenses	63,656	$ 9,264
Changes in operating assets and liabilities:
Prepaid expenses and other current assets			(1,173)		(8,424)
Inter-company payable	1,539		8,000	[1]	12,206	[1]
Related parties					(23)
Other payables and accrued liabilities	4,026		1,269		131
Net cash used in operating activities	1		1,613		(119)
Effect of exchange rate changes on cash and cash equivalent and restricted cash			(1,618)		125
Net change in cash and cash equivalent	1		(5)		6
Cash and cash equivalents, beginning of year	1		6
Cash and cash equivalents, end of year	¥ 2		¥ 1		¥ 6

[1] For the year ended March 31, 2022, UTime HK received the IPO proceeds of RMB88.2 million and made down payment for financing services of RMB19 million on behalf of UTime Limited.